Online games drive Sohu's revenue growth in the second quarter, but the advertising business still faces challenges.
On August 5, the Internet company Sohu (Nasdaq: SOHU) released its financial report for the second quarter of 2024. According to the financial report, Sohu's total revenue for the second quarter was $172 million, a year-on-year increase of 13%, exceeding market expectations; The non GAAP net loss attributable to Sohu Corporation was $34 million, compared to $18 million in the same period last year, representing an 88.89% year-on-year increase in loss. The net profit met previous expectations. Sohu stated that the company has increased its forward-looking investment in expanding platform scale and user acquisition.
Evaluating the performance of the second quarter, Zhang Chaoyang, founder, chairman, and CEO of Sohu, stated, "In the second quarter of 2024, our brand advertising revenue reached the previously expected high line, and our online gaming revenue exceeded expectations." Zhang Chaoyang believes that Sohu Media and Sohu Video have further promoted the generation and consumption of high-quality content, effectively enhancing social interaction among users. Thanks to the company's differentiated projects and marketing activities, Sohu is continuously strengthening its brand influence and exploring diverse commercial opportunities.
Specifically, in the second quarter, Sohu's online gaming revenue was $147 million, a year-on-year increase of 24% and a month on month increase of 25%. This business is the main driving force behind Sohu's overall revenue growth; Brand advertising revenue was $20 million, a year-on-year decrease of 17% and a month on month increase of 24%.
When it comes to advertising business, Zhang Chaoyang said in a conference call that advertising remains a challenge because advertisers are very cautious in their consumption and brand owners spend less. From an industry perspective, the automotive industry spent relatively more in the first and second quarters, and we still have a positive outlook on the automotive industry's advertising spending in the long run.
According to Sohu's previously announced $150 million American Depositary Share Repurchase Program, as of August 1, 2024, Sohu has repurchased approximately 2.347 million shares of Sohu's American Depositary Shares for a total amount of approximately $26 million.
Sohu also separately released supplementary information on Changyou's performance in its financial report. Changyou, which went public in the United States in April 2009, became a wholly-owned subsidiary of Sohu in 2020, and Changyou's American depositary shares are no longer traded on NASDAQ.
According to the financial report, in the second quarter, the average monthly active users (MAU) of Changyou PC client games was 2.2 million, a year-on-year increase of 2% and a month on month decrease of 2%. The total number of quarterly active payment accounts (APA) was 900000, a year-on-year decrease of 3% and a month on month decrease of 8%. The main reason for the month on month decline is the decrease in in-game promotional activities for "Dragon Saber" in the second quarter.
In terms of mobile gaming, the total average monthly active users (MAU) was 4.9 million, a year-on-year increase of 273% and a month on month increase of 77%. The total number of quarterly active payment accounts (APA) was 1.1 million, a year-on-year increase of 299% and a month on month increase of 240%. The year-on-year and quarter on quarter growth of MAU and APA mainly comes from the launch of the new game "Journey to the West: Pen Drawing Westward Journey" in the second quarter.
Looking ahead to the third quarter of 2024, Sohu expects its online gaming revenue to be between $104 million and $114 million in the next quarter, a year-on-year decrease of 3% to 11% and a month on month decrease of 22% to 29%; Brand advertising revenue ranges from $17 million to $19 million, a year-on-year decrease of 14% to 23% and a month on month decrease of 4% to 14%; The non GAAP net loss attributable to Sohu Company is between $30 million and $40 million.
Regarding why online games experienced a month on month decline in the third quarter, Sohu executives stated during a conference call that the decline was partly due to the decline in users of the game "Journey to the West" and partly due to the natural decline of other old game users. "Journey to the West has the opportunity to rebound, and we have postponed our plans to launch overseas in the hope of improving the game. The gross profit margin of games in the third quarter will rebound because marketing and revenue sharing payments will decrease in the third quarter
As of June 30, 2024, Sohu's total cash and cash equivalents, short-term investments, and long-term term deposits were approximately $1.3 billion.