Sohu.com Limited American Depositary Shares 2026 Q2 Earnings Call

Please go ahead. Thanks, operator.

Thank you for joining us to discuss Sohu second quarter 2026 results. On the call are Chairman and Chief Executive Officer, Dr. Charles Zhang, CFO Jenny Liu, and Vice President of Finance, James Deng. Also with us are Changyou CEO Dewen Chen, and CFO Yaobin Wang. Before management begins, I would like to remind you of the company's safe harbor statement shown on today's conference call. Except for the historical information contained herein, the matters discussed on this call may contain forward-looking statements. These statements are based on current plans, estimates, and projections. You should not place undue reliance on them. Forward-looking statements involve inherent risks and uncertainties. We caution you that a number of important factors could cause actual results to differ materially from those contained in any forward-looking statements.

For more information about the potential risks and uncertainties, please refer to the company's filings with the Securities and Exchange Commission, including the most recent annual report on 2025. With that, I will now turn the call over to Dr. Charles Zhang.

Thanks, Pu Huang. Thank you, everyone, for joining our call. In the second quarter of 2026, our marketing services revenues, online game revenue, and bottom line performance all exceeded our previous guidance. For the Sohu Media Platform, we continued to refine our products and host diverse events and activities to stimulate communication and interaction among users, which further strengthened the platform's social features and promoted its vigorous and healthy development. Leveraging our differentiated content and events, we were able to address advertisers' needs and continue to explore diversified monetization opportunities. For online games, we remain committed to our long-term operation strategy and continue to launch diverse content updates to deliver rich and engaging experiences for game players. Before going through each business unit in more detail, let me first give you a quick overview of our financial performance. Please be advised that this release relates to continuing operations only.

For the second quarter of 2026, total revenue were $136 million, up 7% year-over-year and down 4% quarter-over-quarter. Marketing services revenues were $15 million, down 3% year-over-year and up 21% quarter-over-quarter. Online game revenues were $116 million, up 10% year-over-year and down 7% quarter-over-quarter. After giving effect to reversal of a tax expense of approximately $30 million due to a reversal of uncertain tax positions previously, GAAP net income attributable to Sohu.com Limited was $200,000, compared with the net loss of $20 million in the second quarter of 2025 and a net loss of $4 million in the first quarter of 2026.

Non-GAAP after giving effect to the above-mentioned reversal of tax expenses, non-GAAP net income attributable to Sohu.com Limited was $500,000, compared with the net loss of $20 million in the second quarter of 2025 and the net loss of $4 million in the first quarter of 2026. I'll go through our key businesses in more detail. First, Sohu Media Platform. This quarter, we continued to refine our products with upgraded technologies and enhanced user experience and engagement across different scenarios. Leveraging the synergy between various offline activities and our online communities, we boosted active user interactions as well as the generation and dissemination of premium content. These efforts enabled us to expand genuine social connections among users on our platform and foster a virtuous cycle to build a prosperous and healthy social ecosystem.

During the quarter, in addition to the 2026 Spring Sohu Video Attention Stream Conference, [Foreign language], hosted in April, where we created opportunities for broadcasters to interact and to establish in-person social connections across various verticals. We also continued with the signature event of 2026, Kickoff the Year Annual K-pop Dancing Festival, and also the 2026 Chinese Costume Hanfu Model Competition. These competitions attracted thousands of young enthusiasts to actively participate, consolidating our appeal and competitiveness in these areas based on our long-term endeavor in a dense area, we further consolidated our influence by introducing a series of engaging activities on campus, enhancing our platform's coverage and among young people.

We hosted attractive and innovative activities in conjunction with popular events or topics across different verticals, such as the Salute to the Ultimate Explorers, the outdoor vertical, and sports and other verticals, and World Cup related activities, World Cup watching parties. As a result, a variety of online interest clubs were developing rapidly. These distinctive events and activities garnered significant attention and recognition, and spread widely across multiple social platforms, bringing active interactions to our platform and contributing to its vigorous and high-quality development. In May, we successfully hosted our traditional event of 2026 Sohu Annual Science Technology Conference. We invited a host of leading scholars to engage in cross-sector, high-end dialogues regarding the latest scientific trends and the developments attracting a large number of scientists and science enthusiasts to our platform.

At the same time, we continue to strengthen our leading position in knowledge and science-related live broadcasts class with our core IPs on myself, Charles's Physics Class, and we held live broadcasts related to the national college entry examination in physics, and provided relevant learning advice for audiences. We also kept delivering public science popularization, devoting to narrowing the gap between the public and the cutting-edge science. This month, my Charles's English Class celebrated its 10th anniversary. 10 years. We've been doing this for 10 years, and has conducted for more than 2,000 live broadcasts, continuing to generate practical content and driving traffic to the platform. Relying on our unique IPs, product matrix, and differentiated campaigns, we're able to tailor marketing solutions for advertisers and tap into more monetization potential.

For example, we organically combine the physics knowledge, and deliver in the physics class with industry practices, applications of the applied physics, to help brand advertisers to showcase their technological strengths and advance brand value. Next, turning to our online game businesses. During the quarter, our online game business performed well with revenues exceeding our prior guidance. In our PC game business, we rolled out a series of crossover content with the renowned wuxia comic franchise, Storm Riders, "Feng Yun," for both regular TLBB PC and TLBB Vintage. We also introduced a new character development system for regular TLBB PC. In addition, we launched the new content and gameplay for TLBB: Return to enrich the player experience. Turning to our mobile game business.

We launched an expansion pack to celebrate the anniversary of Legacy TLBB Mobile, as well as certain in-game promotional events, which drove an increase in player engagement. Revenue for this game remained stable on a sequential basis. Next quarter, we'll continue to launch expansion packs and content updates for the TLBB series and other titles to further enhance player engagement. Looking ahead, we'll remain committed to our top game strategy. On the product development front, we'll adhere to systematic R&D processes, drive implementation of advanced technologies, and enhance our research and development R&D capabilities through continuous experimentation and validation, striving to bring more high-quality games to the players. Regarding to our pipeline, we seek to further unlock the potential of our TLBB IP.

Meanwhile, as we maintain our competitive edge in the MMORPGs, we will continue to diversify our portfolio with multiple types of games and expand our product offerings with global appeal. Now, I'd like to provide an update on the ongoing share repurchase program. As of August 6, 2026, Sohu had repurchased 9.4 million ADS for an aggregate cost approximately $124 million. Moreover, Sohu today announced that its board of directors authorized repurchases to continue on an open-ended basis until the maximum authorized amount of $150 million is reached. With that, I'll now turn the call over to our CFO, Joanna.

Please. Thank you, Charles. I will now walk you through the key financials of our major segments for the second quarter of 2026.