Sohu turned losses into profits in the second quarter, Changyou played the role of “cash cow”, short video or become a growth pole

On August 10, Sohu released its financial report for the second quarter of 2020. According to the financial report, Sohu’s total revenue in the quarter was 421 million US dollars, down 9% year-on-year and 3% month on month. However, in the second quarter, Sohu turned losses into profits. After deducting the effect of Changyou’s withholding income tax, the non US GAAP net profit attributable to Sohu company is $11 million. After further deducting the net loss of Sogou, the non US GAAP net profit attributable to Sohu was US $12 million, compared with us $41 million in the same period of the previous year and US $8 million in the previous quarter. In terms of specific revenue, brand advertising revenue was $38 million, down 14% from the same period in 2019 and 48% higher than the previous quarter; search and search related advertising revenue was $241 million, down 13% from the same period in 2019 and 1% higher than the previous quarter; online game revenue was $106 million, down 4% from the same period in 2019 and 21% lower than the previous quarter. Sohu explained that the year-on-year decline in various businesses was mainly due to the continuous negative impact of the outbreak on the company. < / P > < p > “in the second quarter of 2020, our brand advertising revenue and net profit were better than expected, and the brand advertising business grew by 48% month on month. As the epidemic began to ease, all industries resumed work and production, leading to a decline in game business income on a month on month basis, in line with the company’s previous expectations. In the second quarter, Sogou’s business also met expectations. Sogou’s share of search traffic was stable, and the number of active users of mobile phone input method increased further. ” Sohu CEO Zhang Chaoyang said. Sohu’s total revenue of $421 million is in the range of $410 million to $445 million previously expected. After achieving a net profit of 12 million US dollars, Sohu began to return to the safety zone after continuous losses. According to the financial report, Changyou’s privatization transaction was completed on April 17, and all profits / losses of Changyou will belong to Sohu. In the second quarter of 2020, after the completion of privatization, Changyou adjusted the dividend distribution policy of its subsidiaries in China and made up about 88 million US dollars of withholding income tax. After deducting the influence of income tax, the non US GAAP net profit attributable to Sohu company was 11 million US dollars, accounting for 91% of the total profit. < / P > < p > it is recognized in the industry that game business is the “cash cow” of Internet enterprises. “All along, Changyou’s net profit margin is very high. After privatization, Sohu has achieved profits, and Changyou has made great contributions.” Easy view data game industry analyst Liao Xuhua told time finance. According to Yi Guan’s statistics, Changyou ranks seventh among the top 20 game companies in China in 2019. < p > < p > according to public data, in July 2002, Sohu established Sohu’s game division, the predecessor of Changyou. In December 2007, part of Sohu’s game business was dismantled into an independent operating company. Within a few years, Sohu Changyou independently developed and operated a number of games, such as, etc., and the number of game users and income maintained a strong growth. According to Changyou financial report, in 2019, Changyou achieved a total revenue of 455 million U.S. dollars, a year-on-year increase of 9%, and a net profit of 179 million dollars. However, in Sohu’s second quarter financial report, the game business declined. According to the financial report, Sohu’s online game revenue was $106 million in the second quarter, down 4% from the same period in 2019 and 21% lower than the previous quarter. Sohu explained that as the epidemic began to ease, various industries returned to work and production, leading to a decline in game business income on a month on month basis. < / P > < p > industry insiders further analyzed and said, “there are two reasons for the year-on-year decline. First, there are no new products in the quarter, but as long-term products, this range is acceptable. In addition, it may be because Tianlong 3D made a big expansion film last May. ” Liao Xuhua said. < p > < p > in Liao Xuhua’s opinion, Changyou’s competitiveness mainly lies in IP and R & D capability. Although the pace of new product launch in recent two years is slow, Tianlong’s IP competitiveness and long-term performance are still at the top 10 of domestic MMO, and its research project reserve is relatively rich. Under the escort of R & D capability, the future performance is worth looking forward to. In addition, Liao Xuhua believes that Changyou may be split into Hong Kong shares after its return to China. “After Sohu’s big dividend, Changyou’s account is not much cash. If it is not listed in Hong Kong stock market, it is also necessary to introduce war investment, otherwise there will be some pressure on cash flow. ” In addition to Changyou, Sohu’s second quarter financial report also emphasized the relevant situation of search engine business. After further deducting the net loss of Sogou, the non US GAAP net profit attributable to Sohu is 12 million US dollars. Sohu launched Sogou, the world’s first third generation interactive Chinese search engine in 2004. Its purpose is to enhance the search skills of sohu.com and mainly manage the search business of Sohu company. According to Sogou’s second quarter financial report, search and search related advertising revenue was $241 million, down 13% from the same period in 2019 and 1% higher than the previous quarter. According to the financial report, the number of active users of Sogou mobile phone input method in the second quarter reached 484 million, a year-on-year increase of 6%, and the peak of daily average voice requests exceeded 1.4 billion. With the trinity of browser, search and input method, Sogou has formed a complete search process, greatly increasing the development space of portal website and game, and opened a search era for Sohu. However, since its establishment 16 years ago, the search industry has changed. The once search engine companies Netease Youdao, Tencent soso, people’s search, Pangu search and Shenma search have gradually disappeared. Sogou also ushered in a key choice. Recently, Sogou announced that it had received a takeover offer from Tencent at a price of $9 / ads, and said that it would seriously discuss and measure relevant issues. On the day of the announcement, Sogou’s share price rose about 45%. It is understood that Tencent’s purchase price for Sogou is $9, 5.76% higher than the opening price of $8.51 on the day of financial report release. According to insiders, if this sincere premium offer is reached, it will be a win-win result for the three parties. “For Sohu, the sale of Sogou, which has a loss in performance, will get a lot of cash flow to carry out some innovative business. For Tencent, the acquisition of a more mature enterprise, can make up for some business shortcomings. For Sogou, Tencent’s resources, traffic and channel value are definitely greater than Sohu. ” Internet industry analyst Ding Daoshi said to time financial analysis. In response to Tencent’s initial non binding offer to Sogou, Sohu disclosed relevant progress in its second quarter financial report: Sohu’s board of directors has not had the opportunity to review and evaluate the offer in detail, or decide how to respond to the offer, or whether the proposed transaction is in the best interests of Sohu and Sohu’s shareholders, so as to approve or reject the offer. < / P > < p > many market opinions believe that the continuous decline in Sogou’s performance is the guide for Sohu’s next choice. According to Sogou’s financial report in the first quarter of 2020, its total revenue is $257 million, and the net loss attributable to Sogou is $31.6 million, an increase of 710% over the net loss of 3.9 million in the same period of last year. In the second quarter, Sogou’s total revenue was 261 million US dollars, a year-on-year decrease of 14%, which was the same as that of the previous quarter of 257 million US dollars; the net loss attributable to Sogou company was 8.5 million US dollars, and the net profit in the same period of last year was 21.3 million US dollars. After the financial report was released, the stock price of Sohu was 23.69 US dollars / share, down 12.37%, with a total market value of 930 million yuan. Sogou’s share price fell 7.06% to $8.61/share, with a total market value of 3.299 billion. As one of the pioneers of the Internet in China, this year marks the 20th anniversary of Sohu’s listing. In the past 20 years, Sohu has built its business product matrix of portal website, game, search engine, mobile Internet, video, social networking, etc. in recent years, it has frequently added code for live video and social related business lines. < p > < p > based on Sohu News client and Sohu Video product platform, Sohu has developed social function. In June 2019, Sohu announced the official launch of its social product, Huyou app, which is defined as the “social software for the treatment of the lonely”, which aims to locate acquaintances and hope to enter the social circle after 90 and 95. However, Tencent and Momo control the two major markets of acquaintances and strangers respectively, and the dislocation competition pattern of other social products has been formed. With the gradual disappearance of the social dividend on the Internet, the market response of huyouyou has been flat since it was launched. At present, it ranks about 630 in the app store social list. < / P > < p > in the tide of big business people coming to the sea to bring goods live, Sohu CEO Zhang Chaoyang also launched his first personal live show with goods in Sohu Video, recommending him to use “identified” Juicers, coffee machines, coffee beans and other items for a long time. “Live delivery means chatting and sharing life.” Zhang Chaoyang said frankly his views on live broadcasting. < p > < p > in the second quarter financial report conference call, Zhang Chaoyang disclosed that at present, there are dozens of online celebrities on Sohu Video platform to do live broadcast every day, of which 10 to 20 anchors will promote products, which is called “value live broadcast”. < / P > < p > “these anchors come from the medical industry, the cosmetics industry, or have a deep understanding of lifestyle. Advertising charges are based on the number of transactions and also provide a discount for users to purchase these products. On the one hand, transaction volume is more important to improve the popularity of live broadcast, and then promote advertisers to increase their investment budget on our platform. This is the core content of cooperation. ” Zhang Chaoyang said. < / P > < p > in the market environment where short video applications get positive feedback from both capital and users, Sohu began to make new adjustments for video business. Compared with the expensive long video content, short video is becoming the platform content strategy of Sohu. “In the future, our investment in long video will not grow too much, because the company’s video business growth mainly comes from short video, user uploaded content, user professionally produced content and live broadcast.” Zhang Chaoyang. < / P > < p > this is consistent with Zhang Chaoyang’s attitude when Sohu released its 2019 annual financial report. “After the epidemic, there will be good pan Live services, including video transmission and live broadcasting. Live broadcasting, social networking and short video are also the focus of Sohu in 2020.” At that time, Zhang Chaoyang said publicly. < / P > < p > “in the future, Sohu will focus on two aspects. The first is media content. Whether it is PGC’s network media, or UGC’s we media, social products and live broadcasting services, Sohu will undoubtedly bring stable growth of users’ online time. The second is fali game. The game business is one of the businesses with the highest profit margin in the industry. Through the stable flow of media content to guide the game business and bring more revenue, maybe it is Sohu’s strategic pattern. ” Zhao Hongmin, an Internet industry observer, told Time Finance on August 10. < / P > < p > “the inherent advantages of Sohu’s product matrix still exist. According to the method of self-made programs and entertainment marketing, Sohu ecology has the opportunity to open another era.” Said Ding Daoshi. Continue ReadingDeveloped a “plug and play” solar power generation scheme, and “5B” won a $12 million round a financing

Author: zmhuaxia