Sohu.com Inc’s Earnings Call: Gaming Success Amid Challenges

Sohu.com Inc ((SOHU)) has held its Q3 earnings call. Read on for the main highlights of the call.Meet Your ETF AI Analyst Discover how TipRanks' ETF AI Analyst can help you make smarter investment decisions Explore ETFs TipRanks' users love and see what insights the ETF AI Analyst reveals about the ones you follow. Sohu.com Inc’s recent earnings call painted a mixed picture of its financial health, with strong performance in the gaming sector and positive net income, yet challenges in marketing services and a tough macroeconomic environment. While the company celebrated successful game launches and increased revenues, it also acknowledged expected declines in gaming revenue for the fourth quarter. Strong Financial Performance Sohu.com Inc reported a total revenue of $180 million for 2025, marking a 19% increase year-over-year and a 43% rise quarter over quarter. The online game segment was a significant contributor, with revenues reaching $162 million, up 27% year-over-year and 53% quarter over quarter. Positive Net Income The company achieved a GAAP net income of $9 million, a substantial turnaround from a net loss of $60 million in 2024 and a $20 million loss in the second quarter of this year, highlighting a positive shift in financial performance. Successful Game Launches Sohu’s new PC game ‘TLBB Return’ and updates for ‘TLBB Vantage’ exceeded revenue expectations. These games attracted many former players by reducing grinding and pay-to-win elements, contributing to the company’s robust gaming revenue. Innovative Social Media Engagement The 2025 Sohu Hip Hop Dancing Festival and other model competitions enhanced platform vitality and user retention, fostering a thriving platform ecosystem and boosting user engagement. Share Repurchase Program Sohu.com Limited has repurchased 7.6 million ADS for approximately $97 million, completing two-thirds of its $150 million share repurchase program, reflecting confidence in its stock value. Decline in Marketing Services Revenue Marketing services revenues fell to $14 million, a 27% decrease year-over-year and a 13% drop quarter over quarter, highlighting challenges in this segment. Challenging Macro Environment The macroeconomic pressures, particularly in the auto and IT services sectors, have impacted advertising revenue, despite Sohu’s innovative campaigns. Social Media Revenue and Losses The social media platform reported quarterly revenues of $70 million, slightly down from $73 million in the same quarter last year, with an operating loss of $71 million, indicating ongoing challenges in this area. Expected Q4 Revenue Decline in Gaming Sohu anticipates a sequential decline in online game revenue for Q4, attributed to the natural decline post-launch and fewer promotional activities. Forward-Looking Guidance Looking ahead, Sohu expects marketing service revenues between $50 million and $60 million for 2025, indicating a potential annual decrease of 15% to 20%. Online game revenues are projected to be between $130 million and $123 million, reflecting an annual increase of 3% to 12%. The company anticipates both GAAP and non-GAAP net losses between $25 million and $35 million, subject to market uncertainties. In summary, Sohu.com Inc’s earnings call highlighted a robust performance in the gaming sector and a return to positive net income, yet challenges remain in marketing services and the broader economic environment. The company remains optimistic about its gaming segment’s growth potential while navigating expected revenue declines and market uncertainties.