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SOHU's Q4 Earnings Outpace Estimates, Revenues Down Y/Y

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Sohu.com Limited SOHU reported fourth-quarter 2021 non-GAAP earnings of 1 cent per share, which beat the Zacks Consensus Estimate by a margin of 101.6%. The company had reported earnings of $1.33 per share in the year-ago quarter.

Fourth-quarter total revenues decreased 23.8% year over year to $193 million. In 2021, revenues were up 11.4% to $835.6 million.

Sohu.com Inc. Price, Consensus and EPS Surprise

Sohu.com Inc. Price, Consensus and EPS Surprise
Sohu.com Inc. Price, Consensus and EPS Surprise

Sohu.com Inc. price-consensus-eps-surprise-chart | Sohu.com Inc. Quote

Top-Line Details

In the quarter, Brand advertising revenues declined 19.6% year over year to $33.6 million, primarily due to lower portal advertising revenues. Online games revenues of $143.7 million fell 26.7% due to the decline of TLBB Vintage, which was launched during the fourth quarter of 2020. Other revenues totaled $15.6 million, up 1.3% year over year.

For PC games, total average monthly active user accounts (MAU) were 2 million, down 12% year over year, due to the decline of Changyou’s older games. Total quarterly aggregate active paying accounts (APA) were 0.9 million, flat year over year.

For mobile games, total average MAU was 2.5 million, up 3% year over year. Total quarterly APA was 0.5 million, down 14%. The decline was mainly from TLBB Honor and Illusion Connect.

Operating Details

Quarterly non-GAAP gross margin decreased to 73% from 79% in the year-ago quarter. Brand advertising’s non-GAAP gross margin decreased to 28% from 31%. Online games’ non-GAAP gross margin was 84%, down from the year-ago quarter’s 90%. Non-GAAP operating expenses were $143.8 million, up 8.9%. Sohu’s non-GAAP operating loss was $2.6 million against the year-ago quarter’s income of $68.2 million.

Liquidity

As of Dec 31, 2021, Sohu had $998.9 million in cash and cash equivalents with $443.1 million of long-term tax liabilities.

Q1 Outlook

For the first quarter of 2022, Brand advertising revenues are estimated in the range of $23-$26 million, which implies a decline of 15% to 25% year over year. Online game revenues are expected in the band of $130-$140 million, which indicates a year-over-year decrease of 21-26%. Sohu’s non-GAAP net loss is likely to be between $10 million and $20 million. GAAP net loss is projected between $13 million and $23 million.

Zacks Rank & Stocks to Consider

Sohu currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Vocera Communications, Inc. VCRA is a better-ranked stock in the broader Zacks Computer and Technology sector that sports a Zacks Rank #1. The Zacks Consensus Estimate for its current-year earnings has been revised upward by 4.9% over the past 60 days.

Vocera Communications pulled off a trailing four-quarter earnings surprise of 115.4%, on average. The stock has returned 80.6% in the past year.

SeaChange International, Inc. SEAC carries a Zacks Rank #2 (Buy). The consensus estimate for current-year earnings has been revised upward by 10% over the past 60 days.

SeaChange International delivered a trailing four-quarter earnings surprise of 37.2%, on average. The stock has, however, declined 16.6% in the past year.

Qualcomm, Inc. QCOM, carrying a Zacks Rank #2, is another solid pick for investors. The consensus estimate for current-year earnings has been revised 12.2% upward over the past 60 days.

Qualcomm delivered a trailing four-quarter earnings surprise of 12.2%, on average. It has appreciated 22.3% in the past year.


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