Sohu.com Inc’s Earnings Call: Challenges and Bright Spots

Sohu.com Inc ((SOHU)) has held its Q2 earnings call. Read on for the main highlights of the call.

Sohu.com Inc Faces Challenges Amid Declining Revenues but Sees Bright Spots in User Engagement

The recent earnings call for Sohu.com Inc painted a picture of a company grappling with significant challenges, particularly with declining revenues in key segments. However, there were also positive developments, such as increased user engagement through successful events and improved operating profits for Changyou. Despite these bright spots, the overall financial performance remains under pressure.

Marketing Services Revenue Growth Quarter-over-Quarter

Marketing services revenues reached $16 million, marking a 14% increase quarter-over-quarter. This growth indicates some recovery in the marketing services segment, providing a glimmer of hope amidst broader financial challenges.

Successful Events Driving User Engagement

Sohu has successfully hosted several events, including the 2025 Sohu K-pop Dancing Festival and the Chinese costume model competition. These events have significantly boosted user engagement and enhanced the company’s brand influence, showcasing Sohu’s ability to connect with its audience effectively.

Improvement in Operating Profit for Changyou

Changyou, a subsidiary of Sohu, reported a notable improvement in its operating profit, which increased to $51 million from $32 million in the same quarter last year. This significant improvement highlights Changyou’s operational efficiency and its contribution to Sohu’s overall financial health.

Share Repurchase Program Progress

Sohu has made substantial progress in its share repurchase program, having repurchased 6.6 million ADS for a total cost of $83 million. This achievement represents more than half of the total commitment, indicating strong capital management and confidence in the company’s future prospects.

Decrease in Total Revenue Year-over-Year

Total revenues for Sohu were $126 million, reflecting a 27% decrease year-over-year and a 7% decline quarter-over-quarter. This decrease underscores the challenging financial environment the company is navigating.

Significant Decline in Online Game Revenues

Online game revenues fell to $106 million, marking a 28% year-over-year decline and a 10% decrease quarter-over-quarter. This decline highlights struggles within the gaming segment, a critical area for Sohu’s revenue generation.

Continued GAAP Net Loss

Sohu reported a GAAP net loss of $20 million, an improvement from a $38 million net loss in the second quarter of 2024. However, this represents a decline from a net income of $182 million in the first quarter of 2025, indicating ongoing financial challenges.

Weak Advertising Market

Despite some recovery, the advertising market remains weak due to macroeconomic uncertainties and decreased consumer spending. This weakness continues to impact Sohu’s advertising revenues, adding to the company’s financial pressures.

Forward-Looking Guidance

Looking ahead, Sohu’s guidance for the third quarter of 2025 reflects mixed expectations. The company forecasts marketing services revenues between $40 million and $50 million, and online game revenues between $107 million and $117 million. However, Sohu also projects a non-GAAP and GAAP net loss ranging from $25 million to $35 million, indicating that financial challenges are expected to persist.

In summary, Sohu.com Inc’s earnings call highlighted a company facing significant financial challenges, with declining revenues in key segments. However, there are positive signs, such as increased user engagement and improved operating profits for Changyou. While the company’s financial performance remains under pressure, its strategic initiatives and capital management efforts provide some optimism for the future.