Core Viewpoint - Sohu is experiencing some signs of improvement in its mobile gaming segment, but it continues to struggle with profitability, particularly in its brand advertising business [2][3][6]. Financial Performance - In Q2, Sohu reported total revenue of 172million,a13147 million, up 24% from the previous year [3]. - Despite revenue growth, Sohu recorded a non-GAAP net loss of 34million,whichisa61.919 million rise in the cost of revenue and a 22millionincreaseinoperatingcosts,primarilyduetomarketinganddevelopmentexpensesfromsubsidiaryChangyou[3].UserGrowthandProjections−Thenumberofmonthlyactiveusers(MAU)formobilegamessurgedby273104-114millioninQ3,representinga22−2917-19millioninQ3,a14−231 billion in cash following the sale of Sogou to Tencent [8]. - The company plans to allocate 150 million for a share repurchase program over two years, despite ongoing losses [8]. Competitive Landscape - Among Sohu's competitors, only two out of six companies are currently profitable, with Sohu having the largest R&D expenditures in its peer group [9][10]. - Sohu's gross margin stands at 73.69%, placing it in the middle compared to its competitors [11]. Valuation Metrics - Sohu's current Price/Sales (P/S) ratio is 0.84, indicating a 9.09% overvaluation, while the Price/Book (P/B) ratio suggests a 73.91% discount, with a fair share price estimated at 20.02 [13][14].
Sohu.com(SOHU) Seeking Alpha·2024-08-30 16:12