Sohu.com (SOHU) Shares Fall On Q3 Loss, Revenues Decline
Zacks Investment Research | Oct 24, 2016 10:28PM ET
Shares of Sohu.com Inc. (NASDAQ:SOHU) fell nearly 7% yesterday after the company’s third-quarter 2016 earnings results. The company posted non GAAP loss of $1.68 as against earnings of $1.27 per share in the prior-year quarter.
Even revenues in the quarter were down 21.4% to $410.6 million, primarily due to lower revenues from advertising and online gaming. Currency depreciation had a big role to play as per Sohu.
Segment Details
Total online advertising revenues (inclusive of revenues from brand advertising, search and search related businesses) fell 13% to $262 million.
Brand advertising revenues in the reported quarter fell 27% to $111 million, owing to sluggishness in the video ads business. The company’s revenues from Sohu Media Portal decreased 6% year over year to $48 million while that from Sohu Video fell 54% to $25 million.
Search and search-related revenues increased 2% to $151 million, owing to growth in mobile traffic and monetization.
Online game revenues for the quarter plunged 35% to $99 million, primarily as a result of lower revenues from older games.
Sogou’s revenues grew 2% to $166 million, driven by higher mobile related traffic. However, Changyou’s (NASDAQ:CYOU) revenues plummeted 28% on a year-over-year basis to $136 million.
Margins
Non-GAAP gross margin in the quarter decreased to 46% from 59% in the year-ago quarter. Non-GAAP gross margin of the company’s online advertising business was 32%, down from 49% in the prior-year quarter. Brand advertising business margin was 8%, a sharp drop from 40% reported in the year-ago quarter. Non-GAAP gross margin for the search and search-related business in the quarter was 49%, down from 58% in the year-ago quarter.
Non-GAAP gross margin of the company’s online game business was 76%, down from 77% in the prior-year quarter.
Sohu’s non GAAP net loss was $38 million as against $41 million profit reported in the year-ago quarter.
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