Sina science and technology news on August 10 evening news, Sohu announced the second quarter of 2020 financial report, revenue 421 million U.S. dollars, net profit of 12 million dollars.
In an interview with Sina Technology and other media, Zhang Chaoyang, chairman and CEO of Sohu, explained the reasons for Q2 Profit from two aspects: “first, Changyou contributed 100% of the profits to Sohu after its return, and the online game revenue was 106 million US dollars; second, the losses of media business and video business decreased significantly. Under the epidemic situation, Sohu advertising recovered faster than the average level of the industry. The two factors are superimposed, so Q2 is profitable. ”
In addition, as to whether Changyou, which has completed the privatization, will be listed in the Asian market next, Zhang Chaoyang said, “there is such a plan, but it is not a matter of this year.”
In the second quarter, the advertising revenue of Sohu brand was 38 million US dollars, 14% lower than that of the same period in 2019, and the month on month increase was 48%. The novel coronavirus outbreak caused by the first quarter outbreak was the main reason for the year-on-year decline. The month on month growth was mainly due to our continuous efforts to increase revenue and the gradual alleviation of the epidemic situation, resulting in the increase in portal and video advertising revenue.
After deducting the impact of one-time withholding income tax generated by Changyou privatization exchange, the non US GAAP net profit attributable to Sohu company is 11 million US dollars. After further deducting the net loss of Sogou company, the non US GAAP net profit attributable to Sohu company is 12 million US dollars, which turns losses into profits.
1. Q2 Sohu profits more significant, expected Q3 loss Q4 return to normal
“This turnaround is a turning point for Sohu. We can see that the loss of the group has been declining in the past two years, and Q2 is a turning point in these two years’ efforts. ” Zhang Chaoyang thinks that the profit of Sohu Q2 is not the same as that of Q4 last year. “The profit of 12 million US dollars in the second quarter is more significant than that in the fourth quarter of last year. Last year’s profit was a flash in the pan. Changyou and Sogou made great contributions at that time. But this quarter, the cost of the group has come down. In fact, it is not only to cut down the expenditure, but also to open up sources. ”
According to the financial report, the operating expenses of Sohu Q2 was 187 million U.S. dollars, down 14% year-on-year, because of the decline in marketing expenses. “Our costs have not increased, and in terms of revenue, Q2 may enter the open source state faster than the industry. As soon as the epidemic situation has eased, we have used video split screen live broadcast technology to hold the UAV competition conference, 5g technology summit, news marathon, etc., as well as the promotion of online drama, so that people can participate in the live broadcast mode. We did make some innovations in open source. ”
According to the financial report, the advertising revenue of Sohu Q2 brand was 38 million US dollars, an increase of 48% compared with the previous quarter. For the promotion of advertising business, Zhang Chaoyang summed up: “the loss of platform business is continuously decreasing. Our marketing method is creative, through the media and video, so that Sohu’s video split screen live technology development, and with the dynamic media, produced creative activities, for brand advertisers, played a role in breaking the circle and realizing marketing. ”
Zhang Chaoyang thinks that the advertising momentum of Q2 Sohu is recovering relatively quickly, “we recover faster than the average level of the industry. At this stage when the epidemic situation has been alleviated, we are growing strongly. ” Zhang Chaoyang revealed that creative marketing activities will continue to be carried out, “including live delivery of goods, live high-end interviews, live coverage of emergencies, and do it at a higher level.”
Zhang also mentioned expectations for Q3. The financial report shows that Sohu Q3 is expected to lose money, but it is worth noting that “the main reason for the loss is that Changyou will incur expenses for promoting new games, so the cost of Q3 will be higher and Q4 will return to normal.” Zhang said.
2. There are many advantages in the US stock market, and we will consider listing in Hong Kong at the same time
Not long ago, Sogou received Tencent’s preliminary non binding acquisition proposal letter. According to the letter, Tencent will acquire all of Sogou’s outstanding common shares, including Sogou’s issued common shares representing ads, for $9 per common share or ads.
Sogou CEO Wang Xiaochuan said today that a special committee has been set up to evaluate Tencent’s proposal and will do its best to protect the interests of shareholders.
As for the sale of Sogou shares, Zhang Chaoyang said that if this work is completed, more funds will be invested in the online drama shooting market, “of course, it is still low-cost and will not spend too much money.”
He mentioned that the frequency of homemade dramas has been relatively low in the past year or two. If there is enough money, production could double.
When talking about Sohu’s choice in the capital market in the future, Zhang Chaoyang said that if it is good in the U.S. stock market, it will continue to stay. There are still many advantages in the US stock market. Of course, if the road to listing in Hong Kong can be made at the same time, it will also be considered.
In addition, for live delivery, Zhang Chaoyang thinks that this mode is very good and will continue to do so. “In the future, we will invite top stars to share life experience and goods. After the stars join, the audience will pay attention to what the stars use and recommend, and we will buy them. This is actually an introduction to lifestyle. Therefore, some advertisers are willing to sponsor. They don’t expect to sell many products in the products. However, because of the stars and content, there are many people watching, which is conducive to communication. ”
As for the future business model of Sohu Video live broadcast, Zhang Chaoyang revealed: “there will be e-commerce elements and small carts, but mainly rely on advertising.”
3. Zhang Chaoyang: don’t like to use “wolf” to describe Sohu Culture
As for Zhang Chaoyang’s expression at the beginning of the year that “Sohu should abandon the ‘good people culture'”, Zhang Chaoyang believes that the future corporate culture of Sohu should be commitment and responsibility.
“Every team has the obligation to make it the best. If they fail to fulfill their responsibilities, they may have clear rewards and punishments, or even leave their jobs. There is competition among teams. This is a culture that requires special care and implementation, and a culture of high requirements. This is a relatively big change.” Zhang Chaoyang said.
However, he does not like to use the “wolf nature” to describe Sohu’s culture, “but higher management efficiency, higher requirements for employees, responsibility, and doing the best things, which is not the same as before.” Zhang said.
For the future development of Sohu, Zhang Chaoyang expressed concern or profit. “The first thing is to have a scale of revenue, and to make the group’s media and video business scale up, which depends on users’ market share, product iteration, product innovation, etc., so that users like to use our products. In addition, the growth of platform dau and the corresponding innovative marketing will also lead to the promotion of brand advertising. Of course, this is a long way, but it is full of hope. Our goal now is to make the platform bigger. ”
To make the platform bigger, Zhang Chaoyang disclosed that in the future, it will strengthen the algorithm of Sohu News and short video, and there will be product iteration in the distribution. It is worth noting that the growth of the platform will not be realized through “throwing money”. “Our goal is that the dau growth of app does not depend on money, but on product innovation. When dau and users grow, revenue can continue to grow and scale, and the media video business itself will be profitable. ” (Yang Xuemei)