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Sohu.com, Inc. (SOHU)
Q4 2011 Earnings Call
February 6, 2012 8:30 AM ET
Tip Fleming – Christensen, IR
Dr. Charles Zhang – Chairman and CEO
Belinda Wang – Co-President and COO
Carol Yu – Co-President and CFO
Dewen Chen –President and COO, Changyou
Alex Ho – Chief Financial Officer, Changyou
Xiaochuan Wang – Chief Executive Officer, Sogou
Ye Deng – Vice President, Sohu and CEO, Sohu Video
Dick Wei – JP Morgan
Alicia Yap – Barclays Capital
Eddie Leung – Merrill Lynch
Yu-Heng Fan – Morgan Stanley
Wallace Cheung – Credit Suisse
Jiong Shao – Macquarie
Catherine Leung – Goldman Sachs
Gary Ngan – UBS
Previous Statements by SOHU
» Sohu.com's CEO Discusses Q3 2011 Results - Earnings Call Transcript
» Sohu.com's CEO Discusses Q2 2011 Results - Earnings Call Transcript
» Sohu.com CEO Discusses Q1 2011 Results - Earnings Call Transcript
I would now like to turn the conference over to your host for today's call, Tip Fleming from Christensen. Please go ahead, sir.
Thank you, Operator. And thank you for joining us today to discuss Sohu.com's fourth quarter 2011 results. On the call are Chairman and Chief Executive Officer, Dr. Charles Zhang; Co-President and Chief Operating Officer, Belinda Wang; Co-President and Chief Financial Officer, Carol Yu. Also with us from Changyou are President and Chief Operating Officer, Dewen Chen; Chief Financial Officer, Alex Ho; as well as CEO of Sogou, Xiaochuan Wang; Vice President of Sohu and CEO of Sohu Video, Ye Deng.
Before management begins their prepared remarks, I would like to remind you of the company's Safe Harbor statement in connection with today's conference call. Except for the historical information contained herein, the matters discussed in this conference call are forward-looking statements. These statements are based on current plans, estimates and projections, and therefore, you should not place undue reliance on them.
Forward-looking statements involve inherent risks and uncertainties. We caution you that a number of important factors could cause actual results to differ materially from those contained in any forward-looking statement.
For more information about the potential risks and uncertainties, please refer to the company's filings with the Securities and Exchange Commission, including its registration statement and most recent annual report on Form 10-K.
Now, let me turn the call over to Dr. Charles Zhang, the Chairman and CEO. Charles, please proceed.
Dr. Charles Zhang
Thank you. Hello, everyone. We are pleased to report a strong fourth quarter that helped us finished a solid year for 2011. For online advertising, our conscientious efforts in growing online video and search businesses are bringing strong growth in revenues, users and traffic.
These businesses along with our portal business are contributing to give the Sohu Group a powerful integrated online marketing platform. In 2012, we aim to make this platform even more dominant in China's internet market.
For online gaming business in 2011, Changyou achieved a healthy growth in its MMO game portfolio and diversified into other fast growing areas such as Web-based games. In 2012, with our leading game information portal 17173.com under its leadership, Changyou will jumpstart a platform based initiative.
Now, I would like to share some fourth quarter financial highlights with you. Total revenue were US$246 million, up 42% year-over-year and 6% quarter-over-quarter. Net brand advertising revenue were $78 million, up 29% year-over-year and in line with our prior guidance.
Sogou revenues were $23 million, exceeding our guidance of $21 million. This was 248% year-over-year and 25% quarter-over-quarter growth.
Online games revenue were $123 million, up 34% year-over-year and 6% quarter-over-quarter. Non-GAAP diluted EPS were also ahead of our expectations at $1.36, compared with a $1.23 in the fourth quarter of 2010.
For the full year 2011, total revenues were US$852 million, up 39% year-over-year. Net brand advertising revenues were US$279 million, up 32% year-over-year.
Sogou revenues were $63 million, up $238% year-over-year. Online games revenue were $436 million, up 33% year-over-year. Non-GAAP diluted EPS reached $4.96, up 18% year-over-year.
Now, let me discuss our online video business in more detail. In 2011, Sogou videos content was envy of the industry, offering users 21 out of 30 most watched primetime TV dramas, as measured by CSM Media Research. Our compelling content offering and aggressive marketing efforts helped Sogou video to consistently expand its audience reach and secure first-year group position in the market.
According to comScore, in December 2011, monthly unique visitors and number of video viewed increased by 23% and 10% from September, respectively. Advertising revenue from Sohu video for the full year 2011 grew by 120% from 2010.
Looking forward to 2012, we're thrilled to have one of the strongest TV drama pipeline in the industry. None of the dramas in our exclusive pipeline have been impacted by a new government regulation which prohibits the broadcast of historical theme of TV dramas during primetime hours on satellite TV stations.
And thanks to our expertise in content selection, the TV drama series that are we secured have been recognized by other industry players. Beside -- because of this success, we are at liberty to further high-quality programs from other players or to do sublicensing transactions with them.
Having said that, given the fact that some of the dramas in our pipeline were acquired after content prices escalation during the second half of 2011, we inevitably face short-term financial pressure, this is especially the case for this coming first quarter when it is a slow season for the advertising business. We expect content prices to stabilize going forward.