On February 1, 2019, Sohu announced the unaudited financial report for the fourth quarter and full year of 2018. In the fourth quarter, Sohu's revenue was $482 million, and the total annual revenue was $1.88 billion. The cost-saving measures adopted by Sohu in various aspects have significantly improved the profit and loss situation. The group's loss decreased from US$110 million in 2017 to US$237 million, and the loss was over 20%. Sohu's video loss decreased from US$302 million in 2017 to US$140 million, reducing losses by more than 50%.
Among them, Sogou's total revenue in 2018 was US$1.12 billion, a year-on-year increase of 24%. In terms of Changyou, total revenue in the fourth quarter was US$118 million, down 18% year-on-year and flat on a quarter-on-quarter basis; total revenue in 2018 was US$468 million.
Important performance in the fourth quarter
· Total revenue was $482 million, a 5% decrease from the same period in 2017 and a 5% increase from the previous quarter.
· brand advertising revenue was $57 million, a 20% decrease from the same period in 2017 and unchanged from the previous quarter.
· Search and search-related advertising revenues were $277 million, a 12% increase from the same period in 2017 and an 8% increase from the previous quarter.
· Online game revenue was $94 million, down 14% from the same period in 2017 and down 2% from the previous quarter.
· Sohu Video's net loss was $30 million, compared with a net loss of $69 million in the same period last year.
· US GAAP net profit attributable to Sohu was $15 million, compared to a net loss of $295 million in the same period last year.
· Non-GAAP net loss attributable to Sohu was US$59 million, compared to a net loss of US$78 million in the same period last year.
· In the fourth quarter of 2018, Changyou confirmed the impairment of goodwill, amounting to approximately US$16 million. After deducting the impact of this impairment, the non-GAAP net loss attributable to Sohu was US$48 million.
2018 annual important performance
· Total revenue was $1.88 billion, an increase of 1% from 2017.
· brand advertising revenue was $232 million, a 26% decrease from 2017.
· Search and search related advertising business revenue was $1.02 billion, a 28% increase from 2017.
· Online game revenue was $390 million, down 13% from 2017.
· Sohu Video's net loss was $140 million, compared with a net loss of $302 million in the same period last year.
· The US GAAP net loss attributable to Sohu was US$161 million, compared with a net loss of US$556 million in the same period last year. The non-GAAP net loss attributable to Sohu was US$237 million, compared with a net loss of US$110 million in the same period last year.
Dr. Zhang Chaoyang, Chairman and CEO of Sohu, commented: “In 2018, in the face of a challenging macroeconomic situation, we concentrated our resources on building core mobile products and working to improve operational efficiency. The annual revenue was basically the same as in 2017, and our cost-saving measures in many aspects have significantly improved the profit and loss situation. In Sohu Media, thanks to the continuous upgrade of high-quality content and recommendation algorithms, the daily active users of our flagship mobile product Sohu News client grew faster than the industry growth rate. For Sohu video, we focus on the production of homemade content, providing users with unique and high-quality drama and variety shows. At the same time, we have substantially reduced the purchase of traditional copyrighted content, and the video sector has lost more than 50% year-on-year. In 2018, Sogou's mobile search and mobile phone input users continued to grow, and its leading artificial intelligence technology was not only recognized in international competitions, but also applied to new business scenarios. In the end, Changyou’s financial performance was in line with expectations, and its Tianlong Babu travel and mobile games performed steadily. In 2019, Changyou will strengthen product development and launch more popular games. ”
News client daily number of users increased over industry level video self-produced products continue to drive advertising, membership growth
According to the financial report, in 2018, Sohu brand advertising revenue was 232 million US dollars.
For Sohu Media, Sohu News client insists on reading quality orientation and continuously carries out innovative innovations in client product form. Through the technical iterative means such as data accumulation, image enrichment and algorithm optimization, the refined recommendation system is further improved. At the same time, Sohu News launched the content construction, upgraded the recommended content library and structured the information to provide users with a better reading experience. The number of daily users of news clients has increased beyond the industry level.
In the video business, the platform layout of self-made dramas, variety shows, self-media and live broadcasts will be strengthened. "I am a pet in Dali Temple", "Dragon's White Dew is Frost", "Heavy Mingwei", "Criminal Psychology Group X", and the second season of the self-made variety "Send a hundred girls to go home", "Magic Library Wherever, etc. have achieved high levels of various types of layers, providing more new growth drivers for advertising and membership platforms. The newly-launched "Now, BOSS wants to marry me" not only ushered in a wave of word-of-mouth climax, but also gained a hot topic. More innovative boutique projects such as "Queen of Hot Search" and "I don't know the East is white", "Seeing the Palace Lord 2" will also be on the line.
Sogou's annual revenue exceeded US$1 billion for the first time, up 24% year-on-year. Achieved a “milestone” breakthrough.
According to the financial report, the total revenue of Sogou for the first time in 2018 exceeded US$1 billion for the first time, reaching US$1.12 billion, a year-on-year increase of 24%, achieving a “milestone” breakthrough; under US GAAP, the net profit attributable to Sogou was 98.8 million. The dollar increased by 20% year-on-year.
At present, Sogou search continues to be the second largest search engine in China, and its revenue continues to grow at a higher rate than the industry average; Sogou's user volume also shows a strong growth trend. As of Q4 2018, the number of daily active users of Sogou's mobile phone input method reached 430 million, an increase of 28% from a year ago, ranking the third largest mobile phone application in China in DAU. In addition to a large-scale user base and market-competitive products, as of December 31, Sogou has cash and cash equivalents and short-term investments of US$1 billion, with sufficient cash flow and equivalent resistance to “cold winter”. Maintain steady development.
To further enhance the overall competitiveness of products and services, Sogou continued to steadily advance the dual-engine strategy of search and input methods in 2018. In terms of search, Sogou Search continues to develop differentiated competitive advantages, use AI technology to upgrade search services, promote search to question and answer upgrades, and gradually move toward smart questions and answers, and continue to consolidate search traffic and market share. Taking vertical areas such as medical care as an example, the proportion of authoritative medical content in Sogou's medical search results has increased to 65%. At the same time, in the fourth quarter, in the whole network results click, the proportion of clicks on the first answer increased to 35%.
At the input method level, Sogou tries to expand the boundaries of product innovation, and begins to improve the efficiency of combining with search, highlighting the value of mobile input as a content and service distribution platform. The cross-language translation function enables users to break communication barriers during voice and text conversations. The average daily translation request rate of users is 60% higher than that of a year ago. Based on the continuous upgrade of dialogue technology, Sogou mobile phone input method further enhances the understanding of user intentions and provides Rich and interesting personalized response options, loved by users. Continuous innovation and exploration have enabled Sogou to generate natural flows in a vast portfolio of products and services.
At the same time, Sogou is committed to the development of language-based artificial intelligence technology, and continues to seek technological breakthroughs and application development based on core competencies such as voice, computer vision, machine translation and question and answer. In the fourth quarter of 2018, Sogou speech recognition completed a new round of core technology upgrades, Sogou search speech recognition accuracy rate reached 98%; Sogou mobile phone input method daily average voice request increased by 69% compared with a year ago, peak request volume reached 540 million times , the largest voice application in the country. In 2018, he won the IWSLT Baseline Model (baseline model) track competition in the international top-level speaking machine translation evaluation competition. He defeated many domestic and foreign competitors such as Alibaba, AFRL (American Air Force Research Laboratory) and Xunfei, demonstrating Sogou in the machine. The top technical strength in the translation field. In January 2019, the company defeated Microsoft, Allen Research Institute (AI2), Stanford University and other institutions in the Conjoining Machine Reading Challenge (CoQA), and won all the evaluation indicators. Further narrow the gap between machines and humans in this performance.
Sogou's innovative concept of avatar combines natural interaction technology and domain knowledge such as voice and image, allowing the machine to better imitate human behavior in the professional field. At the 5th Wuzhen World Internet Conference in November 2018, the company released the world's first AI composite anchor with Xinhua News Agency and put it into daily use, making the machine breakthrough for the first time to realistically simulate human professional anchoring behavior in the media, education, etc. The industry has caused great concern; in the medical field, Sogou's self-developed intelligent diagnostic assistant simulates the mode of dialogue between doctors and patients, communicates with patients, provides pre-diagnosis and medical advice for users; in the legal field, Sogou's question-and-answer robot has logic analysis And reasoning ability, on the basis of fully and accurately understanding the user's legal claims, provide users with possible judgment results, legal advice or similar cases.
Wang Xiaochuan, CEO of Sogou Company, said: “Sogou’s search and input method dual-engine strategy has brought a strong driving force for the company’s development. Our core search revenues grew faster than the industry average and enabled deep collaboration between search and input methods. More importantly, in the current uncertain period of macroeconomic development, Sogou still maintains high-quality assets, a large user base and an annual income of more than 1 billion US dollars. In addition, in the field of AI, Sogou has achieved great results in both technical and application aspects, and has established a leading position in multiple tracks such as voice, computer vision, machine translation and question and answer. Looking forward to 2019, we will deeply integrate AI technology with our business and continue to enhance our core competitiveness. ”
Changyou performance is steady focus on boutique mobile game research and development to ensure player retention
According to the financial report, in 2018, Sohu Group's subsidiary Changyou 2018 had a total annual income of 486 million US dollars. The net profit attributable to Changyou under non-US accounting standards was US$78 million. In the fourth quarter, Changyou’s revenue was US$118 million, which was the same as the company’s guidance.
Mr. Chen Dewen, CEO of Changyou, said: “In 2018, it was a year of Changyou focusing on the development of boutique mobile games. We have carried out in-depth resumption and thinking on the past experience of mobile game development, laying a good foundation for the subsequent production of quality games. In 2019, the company will continue to use the “good game” as its core strategy to comprehensively enhance the company's research and development capabilities and research and development efficiency. We believe that relying on patience and continuous innovation, Changyou will eventually be able to accumulate and re-launch heavyweight game pieces. ”
Mr. Wei Qing, the chief game development officer of Changyou added: “The classic version of Tianlong Mobile Games has a stable overall performance in 2018, mainly due to the long-term gameplay design and the constantly updated game content. This quarter we launched an expansion pack containing new martial arts and new gameplay, and the players responded positively. In the next quarter and in 2019, we will continue to update and optimize the game to ensure that players stay and maximize the game life cycle. ”
Mr. Wang Yaobin, Chief Financial Officer of Changyou, said: “If you do not consider the special matters of 17173 business impairment, the company's total revenue and net profit in the fourth quarter of 2018 will reach the guiding forecast range and perform well. For the whole year of 2018, through the active and effective adjustment of core old games including Tianlong Babu Duanyou, we have ensured continuous income contribution, which enabled us to achieve relatively stable financial performance in the rapidly changing industry environment. . ”