A month has gone by since the last earnings report for Sohu.com Inc. SOHU. Shares have lost about 7.1% in that time frame, underperforming the market.
Will the recent negative trend continue leading up to the stock's next earnings release, or is it due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Sohu.com's Q4 Loss Widens, Revenues Fall Y/Y
Sohu.com reported fourth-quarter 2016 non GAAP loss of $1.79 per share, compared with loss of $1.68 reported in the prior-year quarter.
Sohu’s revenues of $412 million decreased 12% on a year-over-year basis due to lower revenues from advertising and online gaming.
Quarterly Details
Total online advertising revenues (inclusive of revenues from brand advertising, search and search related businesses) fell 14% to $251 million.
Brand advertising revenues in the reported quarter fell 30% to $99 million on a year-over-year basis while search and search-related revenues increased 1% to $153 million.
Online game revenues for the quarter plunged 25% year over year to $95 million.
Sogou’s revenues grew 4% to $172 million.
Margins
Non-GAAP gross margin in the quarter decreased to 44% from 57% in the year-ago quarter. Non-GAAP gross margin of the company’s online advertising business was 33%, down from 47% in the prior-year quarter.
Brand advertising business margin was 9%, a sharp drop from 38% reported in the year-ago quarter but marked an increase of 1% from the third quarter. Non-GAAP gross margin for the search and search-related business in the quarter was 48%, down from 55% in the year-ago quarter.
Non-GAAP gross margin of the company’s online game business remained flat year over year at 78%.
Sohu’s non GAAP net loss was $69 million as against profit of $$65 million reported in the year-ago quarter.
Balance Sheet
Sohu exited the quarter with cash and cash equivalents (and short-term investments) of $1.30 billion, compared with $1.42 million as of Dec 31, 2015.
Outlook
For the first quarter of 2017, Sohu expects revenues in a range of $345 million–$375 million.
Management estimates brand advertising revenues in a range of $75 million to $85 million, representing 32% to 40% year-over-year decline.
Sogou revenues are expected to be in a range of $145 million to $155 million. Online game revenues are expected in a band of $80 million–$90 million, indicating a year-over-year decline of 12% to 22%.