Sohu.com Q3 2026 Earnings Call Transcript

Sohu.com (NASDAQ:SOHU) reported third-quarter financial results on Monday. The transcript from the company’s third-quarter earnings call has been provided below.

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Summary

Sohu.com reported Q3 2026 total revenues of $133 million, marking a 26% year-over-year decrease and a 2% sequential decrease. Marketing services revenues were up 10% year-over-year but down 2% quarter-over-quarter.

The company experienced a GAAP net loss of $15 million for Q3 2026, compared to a net income of $9 million in the same quarter last year and a net income of $200,000 in Q2 2026.

Sohu’s social media platform continues to focus on enhancing user engagement through iconic events and innovative marketing solutions, while its online games segment maintained engagement with new content releases.

Looking ahead to Q4 2026, Sohu expects marketing services revenues to be between $30 million and $40 million and online game revenues to range from $111 million to $121 million.

Management highlighted a completed share repurchase program totaling $134 million and noted plans to potentially extend the initiative.

The company is optimistic about the long-term coexistence of AI short dramas and gaming, with ongoing adjustments to its game offerings to remain competitive.

Full Transcript

OPERATOR

Ladies and gentlemen, thank you for standing by and good evening. Thank you for joining Sohu.com’s third quarter 2026 earnings conference call. At this time, all participants are in listen-only mode. After management’s prepared remarks, there will be a question-and-answer session. Today’s conference call is being recorded. If you have any objections, you may disconnect at this time. I would now like to turn the conference over to your host for today’s conference call, Huang Pu, Investor Relations Director of Sohu.com. Please go ahead.

Huang Pu (Investor Relations Director)

Thanks, Richard. Thank you for joining us. The Sohu third quarter 2026 results call includes Chairman and Chief Executive Officer Dr. Charles Zhang, CFO Joining Liu, and Vice President, Finance James Stone. Also with us are Chang Yun, CEO Duran Chen, and CFIU Binh Wah. Before management begins their prepared remarks, I would like to remind you of the safe harbor statement in connection with 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. Therefore, you should not place undue reliance on them. Forward-looking statements involve key 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 Form 20-F. With that, I will now turn the call over to Dr. Charles Zhang. Doctor, please proceed.

Charles Zhang (Chairman and Chief Executive Officer)

Thanks, Huang Pu, and thank you everyone for joining our call. In the third quarter of 2026, our marketing services revenues hit the high end of our guidance, while both our online game revenues and our bottom-line performance were in line with our expectations. For the Sohu social media platform, we continue to strengthen its social features through numerous iconic events, fostering genuine connections among users and boosting active user interactions across multiple verticals. We also kept leveraging our integrated product matrix with innovative and customized marketing solutions to unlock monetization potential for our clients.

For online games, we continue to introduce fresh content to sustain player interest while offering tailored gameplay experiences to meet evolving player needs. Before going through each business area 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 third quarter 2026, total revenues were $133 million, down 26% year over year and 2% quarter over quarter.

Marketing services revenues were $15 million, up 10% year over year and down 2% quarter over quarter. Online game revenues were $114 million, down 30% year over year and 2% quarter over quarter. GAAP net loss attributable to Sohu.com Ltd. was $15 million, compared with net income of $9 million in the third quarter of 2025 and net income of $200,000 in the second quarter of this year. Non-GAAP net loss attributable to Sohu.com Ltd. was also $50 million, compared with net income of $9 million in the third quarter of last year and net income of $500,000 in the second quarter of this year.

Now I’ll go through our key businesses in more detail. First, Sohu Social Media Platform: we continue to refine our products and technologies to enhance user experience across various scenarios, promote the generation and distribution of premier content, and strengthen the social features of our platform. We hosted diverse online and offline events which effectively sparked vibrant interactions among users across multiple verticals, further supporting the thriving development of the social ecosystem of our platform.

For example, in September 2026, the Autumn Convention of Social Media Influencers took place in Beijing. With genuine social networking at its core, we invited celebrities and broadcasters in diverse verticals ranging from popular interests to professional fields. We provided them with opportunities to share ideas and build social connections, which greatly enhanced interaction and engagement on our platform. The convention was well received by broadcasters and users, and we continue to expand our brand influence, further promoting and deepening authentic social connections among our users.

Also in this quarter, we continued with the 2026 Dancing Festival and 2026 Model Competition with higher professional standards and a broader international outlook. Both competitions drew large numbers of MCNs worldwide to participate and interact both online and offline. Earning widespread recognition, they have become signature events that not only consistently generate premium content, but also stimulate social connections and vitality on our platform.

In addition to Beijing and Hafu, we proactively expanded into other online interest communities and fostered a vibrant and dynamic atmosphere on our platform. Moreover, in October we launched the Sohu Video American TV Series Month, during which we presented audiences with a wide selection of classic TV dramas, films, and variety shows. At the end of October, we hosted its highlight event, the Halloween American TV Series Cosplay Party, bringing online and offline participants an exclusive carnival that combined a rich lineup of premium content covering various topics with lively social interactions.

Earlier in November, Tao Physics Class marked its fifth anniversary. Since its launch in 2021, it has broadcast around 300 live sessions and conducted nearly 40 offline seminars, featuring in-depth explanations of physics principles and events, discussions with long-term physicists. Together with Charles English, these two IPs have persistently disseminated professional knowledge and news events to the public, bringing them closer to science and cutting-edge developments.

We have attracted a large number of professional broadcasters and encouraged them to contribute and connect on our platform, further strengthening our unique competitive advantage in knowledge- and science-related live broadcasting. Benefiting from our long-standing brand influence and profound understanding of the market, we were able to precisely identify advertisers’ needs with customized marketing solutions and help them expand their brand influence.

Leveraging our distinctive and differentiated IPs, we gained high recognition from advertisers and secured more advertising dollars. Next, turning to our Online Game Business: during the quarter our online game business performed well, with results in line with our prior guidance. In our PC game business, we launched the Qishi Festival-themed content and gameplay for regular TLBB PC and TLBB Vintage. We also introduced game content for regular TLBB PC designed to deliver a more streamlined, low-pressure gameplay experience, which effectively improved player engagement. In addition, we rolled out crossover content for TLBB Return, generating excitement among players.

Moving on to our mobile game business, we launched new expansion packs and the Festival event for Legacy TLBB Mobile, helping maintain stable player engagement. Next quarter we will continue to release expansion packs and content updates for the TLBB series and other titles to keep players engaged. Looking ahead, we will remain committed to our top game strategy. On the product development front, we will continue to optimize our R&D processes, implement advanced technologies, and enhance R&D capabilities through continuous experimentation and validation, striving to bring more high-quality games to players. Regarding our pipeline, we seek to further unlock the potential of our TLBB IP. Meanwhile, as we maintain our competitive edge in MMORPGs, we will keep diversifying our portfolio with multiple game genres and expanding our product offering with global appeal.

Now I’d like to provide an update on the ongoing share repurchase program. As of November 5, 2026, this year Sohu has repurchased 10.1 million ADS for an aggregate cost of approximately $134 million. With that, I will now turn the call over to Deborah.

Deborah (Chief Financial Officer)

Thank you, Charles. I will walk you through the key financials of our major segments for the third quarter of 2026, all numbers on a non-GAAP basis. You may find a reconciliation of non-GAAP to GAAP measures. For social media platforms, quarterly revenues were $19 million, compared with $17 million in the same quarter last year. Quarterly operating loss was $74 million, compared with the operating loss of $71 million in the same quarter last year. For Changyou, quarterly revenue was $150 million, compared with $163 million in the same quarter last year. Quarterly operating profit was $59 million, compared with the operating profit of $88 million in the same quarter last year.

For the fourth quarter of 2026, we expect marketing services revenues to be between $30 million and $40 million. This implies an annual decrease of 18% to 24% and a sequential decrease of 6% to 13%. Online game revenues should be between $111 million and $121 million. This implies an annual decrease of 8% to an annual increase of 1% and a sequential decrease of 3% to a sequential increase of 6%. Both non-GAAP and GAAP net loss attributable to Sohu.com Limited to be between $17 million and $27 million.

This forecast reflects Sohu’s management’s current and preliminary view, which is subject to substantial uncertainty. This concludes our prepared remarks. Operator, we would now like to open the call to questions.

OPERATOR

Thank you. We will now begin the question-and-answer session. To ask a question now, please press star-11 on your telephone and wait for your name to be announced. To withdraw your question, please press star-11 again. A moment for our first question. And our first question comes from the line of Thomas Chong at Jefferies. Please go ahead. Thomas, your line is open.

Thomas Chong (Analyst)

Hi, good evening. Thanks, management, for taking my questions. I have three questions. The first question is about the marketing services. We are actually seeing brand advertising revenue in Q3 is in line with guidance. When we look into the Q4 brand advertising revenue guidance, it presents a softness on sequential and also softness on a year-on-year basis. Are we actually seeing the advertising sentiment getting worse so far quarter to date? And how should we think about the 2027 outlook?

So that’s on the advertising side. And then my other question is on the gaming side. How should we think about the impact coming from AI short drama to the gaming sector and Changyou? And my final question is about the share buyback. How should we think about the share buyback going forward? If I remember correctly, the buyback program will be ended very soon. So do we have any new plans on that front? Thank you.

Charles Zhang (Chairman and Chief Executive Officer)

Okay, Thomas, your three questions. I will answer the first one and the third one, and then I’ll get Nolan to answer the second one. So the first one is about advertising, right? In Q3, the advertising and marketing services are in line, while in Q4 it seems kind of soft. It does not mean that there’s any trend of the marketing; it remains the same or stable. It’s just that some of these projects happen to concentrate in Q3 instead of Q4. So in Q4, there were fewer projects. We have this pillar of marketing services that depend on those kinds of events and projects. Also, in Q4 this year, the Double 11 event seems not as robust as previous years on the e-commerce side.

So in Q4, advertising is kind of soft or weak. About 2027, since we have a relatively small base of the advertising or the marketing service numbers, it’s not that significant. Whether in 2027 we will gain growth really depends on the success of our social network that we have recently announced. We are really working on this social network. So if we have rapid growth of our social network user base, we expect advertising and marketing services to grow faster.

The third question about buyback: we finished with that $150 million buyback program. We said it would be within about $134 million, and there’s still $60 million left. We’ll continue to finish that, and when we finish soon, we’ll think more. We still don’t have a plan to have a new program to buy back yet. All right. Okay, second answer, I’m getting questions to Nolan.

Nolan

Okay, so there is some level of competition between short dramas and gaming, because by nature they are all aiming at the entertainment of users’ time. We can feel the trend from the user research that we have done in recent years. To deal with that, we’ve made a lot of adjustments and new versions of our games. The main focus is to make them lighter weight and to reduce the time burden on users, which turns out to be effective. There is still a difference between AI drama and gaming because they offer users different experiences. AI dramas offer users a passive and single-person experience, while gaming offers players interactive and multiplayer experiences. So we believe there is some level of competition, but AI drama will not take the place of gaming. Thank you.

OPERATOR

Thank you. Thank you. We will move to our next question. And our next question comes from the line of Alicia Yap at Citigroup. Please go ahead. Alicia, your line is open.

Alicia Yap (Analyst)

Hi, good evening. Thanks for taking my questions. I have a couple of follow-up. First is, can you elaborate a little bit in terms of the impact of the short drama to gaming? Do you think this is just the beginning of potentially more impact that could be coming? And second is, how do you describe the competition or the negative impact that you are seeing from the gamers? Is it more about the time spent, or is it that the gamers are now becoming less interested in playing games, but they’re more attracted because the content on the short dramas is more interesting?

Or is it just more the casual users are being attracted away? Any more details about how you have been observing this impact would be helpful. And then second is, wanted to follow up on the advertising. Can you remind us a little why, during 4Q when there is Singles’ Day, Sohu is not a beneficiary? And also, if you could give us the breakdowns on the third quarter in terms of the verticals that contribute to your advertising revenue in the third quarter, in terms of the ranking. Thank you.

Nolan

About the impact of the short AI—right, short-form—AI short-form, on gaming. Like short drama. Long term, is that what you’re asking? As for whether it impacts the casual or the hardcore gamers, to be honest we are not sure, but intuitively I think the AI dramas impact them both, and it will be a long-term impact. But we believe the impact won’t be much harder because for now the average daily time that users spend on AI drama is more than two hours a day. So we don’t think there is still much space for that to grow. Meanwhile, we believe, as we just said before, AI drama and gaming provide users different experiences.

They impact each other, and AI dramas will take users’ gaming time, but they cannot take the place of each other. So in the longer term we believe they will coexist.

Charles Zhang (Chairman and Chief Executive Officer)

All right, your second question about the advertising categories, right? We see actually an increase of the auto industry. In Q3, it had 42% of the total, and FMCG decreased a little bit to 17%, and IT 12%. As I explained earlier, Q4 is soft because the basic model, you see, it’s kind of a swing—up and down. It depends on the number of projects. If some marketing projects move from Q4 to Q3 across the date line, then you have a better Q3 than Q4. So it happened that there were some large projects in Q3, and that’s why Q3 is doing better than Q4 itself.

It also demonstrates that we changed the name for advertising to so-called marketing services revenue. Because currently, with self media and social media and the landscape of Chinese internet, the traditional advertising—Ying Guang advertising campaign—is becoming less and less. With this slow economy, advertisers are very cautious. They always want to maximize the marketing effect of their dollars a month. So they actually favor this evolvement of our advertising marketing solutions into more comprehensive, multidimensional solutions—projects with offline events, with live streaming, with the KOL, with discussion forums, and also the viral spread or separation on the internet. So it’s more creative marketing than the previous hardcore advertising. That’s actually what we’re doing better. So that’s why we can maintain, basically—still a small base—but still stable or sometimes even some growth of advertising.

And I hope, as our social network—if we are successful, and we will continue to be successful—to build up a social media network, again with the rapid growth of user base, we expect this kind of marketing services will be more popular, trending higher.

Alicia Yap (Analyst)

Okay. All right. Thank you. Thanks, Charles.

OPERATOR

Thank you. I am showing no further questions. And with that, we conclude our conference call for today. Thank you for your participation. You may now disconnect your lines. Thank you.

Disclaimer: This transcript is provided for informational purposes only. While we strive for accuracy, there may be errors or omissions in this automated transcription. For official company statements and financial information, please refer to the company’s SEC filings and official press releases. Corporate participants’ and analysts’ statements reflect their views as of the date of this call and are subject to change without notice.