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Sohu posts third-quarter loss on slow ads and games business

PUBLISHED : Monday, 24 October, 2016, 6:48pm
UPDATED : Monday, 24 October, 2016, 10:54pm

Chinese internet company Sohu.com posted another lacklustre set of financial results in the third quarter, despite the continued steady performance of its Sogou online search engine business.

Charles Zhang Chaoyang, chairman and chief executive of Nasdaq-traded Sohu, said on Monday that the “challenging operating climate mainly affected our online advertising businesses”.

The company reported a net loss of US$75 million in the three months ended September 30, its fourth consecutive quarterly net loss. It had a net profit of US$93 million in the same period last year.

The shortfall last quarter was impacted by a 27 per cent year-on-year drop in brand advertising revenue to US$111 million and a 35 per cent plunge in online game revenue to US$99 million.

Total third-quarter revenue was down 21 per cent to US$410.82 million from US$522.09 million a year earlier.

Sogou search revenue managed to advance 2 per cent year on year to US$151 million, despite the negative impact of more rigid government regulations in search advertising.

The search engine “continued its efforts in product differentiation and focused on artificial intelligence-powered technology innovation”, said Wang Xiaochuan, chief executive of Sogou.

Data from Analysys International and Jefferies showed that Sogou had a 5.8 per cent revenue share of China’s online search market in the second quarter, behind Google China’s 9.6 per cent share and Baidu’s 81.2 per cent.

Dewen Chen, chief executive of Changyou, Sohu’s online game subsidiary, said it has been working to diversify its portfolio of video games and set a higher assessment criteria to draw new online desktop and mobile players. “We have full confidence in this process and believe we have set ourselves up well for the coming year,” Chen said.

According to Sohu, the group estimated its total revenue in the fourth quarter to be between US$370 million and US$400 million.