Ping Identity Q4 2024 Earnings Call Transcript

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February 18, 2025

There are 6 speakers on the call.

Operator

After management's prepared remarks, there will be a question and answer session. Today's conference call is being recorded. If you have any objections, you may disconnect at this time. I would now like to turn the conference over to your host for today's conference call, Huang Pu, Investor Relations Director of Sohu. Thank you.

Operator

Please go ahead.

Speaker 1

Thanks, operator. Thank you for joining us to discuss Sohu's fourth quarter twenty twenty four results. On the call are Chairman and Chief Executive Officer, Doctor. Charles Zhang CFO, Joanna Liu and Vice President, Finance, Gemstone. Also with us are Changyou, Seo, Douwen Chen and CFO, Yaobin Wang.

Speaker 1

Before management begins their prepared remarks, I would like to remind you of the conference's Safe Harbor statement in connection with today's conference call. Except for the historical information contained herein, the matters discussed on the call may contain forward looking statements. These statements are based on current plans, estimates and projections. Therefore, you should not place undue rights on them. Forward looking statements involve key risks and uncertainties.

Speaker 1

We caution you that a number of important factors could cause actual results to differ materially from those contained in the forward looking statements. For more information about the potential risks and uncertainties, please refer to the company's filings with the Securities and Exchange Commission, including the most recent annual report on Form 20 F. With that, I will now turn the call over to Doug Charles Zhang. Charles, please proceed.

Speaker 2

Thanks, Huongpu, and thank you, everyone, for joining our call. In the fourth quarter of twenty twenty four, our brand advertising revenues hit the high end of our previous guidance, while both our online game revenues and the bottom line performance was much better than expected. For social media platform, including social media and video, we continue to refine our products, optimize algorithms and strictly controlled budgets. By integrating the advantages of the Sohu product metrics with our unique ITs and the high energy events, we were able to promote the generation and the social distribution of premier content, effectively enhance user experience to attract more users and further unlock monetization potential. The online games business delivered solid performance, thanks to the relentless efforts to produce high quality new games and revitalize legacy games.

Speaker 2

Before going through each business unit in more detail, let me first give you a quick overview of our financial performance. For the fourth quarter or fourth quarter of twenty twenty four, total revenues $135,000,000, down 5% year over year and 11% quarter over quarter. Brand advertising revenues $19,000,000, down 7% year over year and 1% quarter over quarter online game revenues $110,000,000 down 4% year over year and 14% quarter over quarter GAAP net loss attributable to Sohu dot com Limited, twenty one million dollars compared with a net loss of $13,000,000 in the fourth quarter of twenty twenty three and a net loss of $16,000,000 in the third quarter of twenty twenty four. Non GAAP net loss attributable to Sohu dot com Limited, fifteen million dollars compared with a net loss of $11,000,000 in the fourth quarter of twenty twenty three and a net loss of $12,000,000 in the third quarter of twenty twenty four. For the whole year of 2024, total revenues $598,000,000 flat compared with 2023 brand advertising revenues $73,000,000 down 17% compared with 2023 online gaming revenues $5.00 $2,000,000 up 5% compared with 2023 GAAP net loss attributable to Sohu.comLimited 1 hundred million dollars compared with a net loss of $66,000,000 in 2023 Non GAAP net loss attributable to Sohu.comLimited was $83,000,000 compared with a net loss of $51,000,000 in 2023.

Speaker 2

Now let me go through our key businesses in more detail. First, the Sohu Media platform. We're consistently focused on improving our technology and optimizing our products with cutting edge technology. Meanwhile, we also kept improving user experience by closely monitoring their needs. We organically integrated our diverse online and offline events, maximizing the synergy of the Sohu product matrix and fostering a thriving online community.

Speaker 2

These efforts allowed us to attract more users, especially the younger generation to our platform, actively promoted their interactions and stimulated more content generations. So in 2024, we held a series of K Pop dancing tour competitions in several major cities in China, from which the most outstanding contestants were selected to join the twenty twenty four gym concert overseas in South Korea in October. Later in December, as a final show of the above series of dancing events, the twenty twenty four Sohu Video Dancing Festival was hosted with great success. This dancing festival brought together a lot of top dancers in The US and has become the most eye catching annual event in the field of K pop dancing for the year. Also during the last quarter during this quarter, we hosted a twenty twenty four Sohu Video Guofeng Festival, the largest nationwide competition showcasing the traditional Chinese Hanfu costume.

Speaker 2

It received widespread acclaim and sparked extensive discussions and disseminations across multiple social media platforms. These events not only strongly strengthened our leading position and influence in the K Pop and the hanfu events verticals, but also stimulated numerous social interactions and distributions on our platform. We also continued to host our flagship events such as the twenty twenty four Sohu Fashion Awards and at the end of the year end the twenty twenty four Sohu Finance Annual Forum, which further consolidated our brand influence as a mainstream media platform and provided us with abandoned premium content. These events were not only attractive for users, but also enabled us to provide unique marketing solutions to our advertisers. And Lucero further persisted in broadcasting the Charles Physics class, Ulike, which has been going on for three years with three books published.

Speaker 2

And also the Yingying Yike English class, These classes have jointly become the leading IPs for Sohu. Leveraging these unique IPs and the collaborations with science related broadcasters, we were able to attract millions of users viewers, popularize cutting edge professional knowledge to them and reinforce our core competitiveness in the field of knowledge and science related live streamings. Benefiting from the above, we were able to combine the knowledge, dissemination and brand marketing through diverse channels delivering unique experiences to advertisers and audiences and driving advertising budgets. In 2024, we continuously enriched our content library by acquiring TV dramas, rolling out original dramas and bringing in premium American TV series as well as introducing short dramas. For example, our TV drama, Hincai Ying Die, Hairpins in the Palace and the American TV series The Bear, and also the HBO series were well received by the audience.

Speaker 2

Yes, we're talking about Sohu Media platform, we include both the Sohu News and Sohu Video. Now, next, let me turn to the online game business. During the quarter, our online game business performed well with revenues exceeding our prior guidance. In our PC games business, we launched a new plan jointly for regular TLBB PC and TLBB Vintage jointly, along with the various snow and ice themed events and the gameplay, effectively boosting players' enthusiasm for the game. In addition, we introduced an innovative survival TVP gameplay for regular TL TV PC and refreshed some classic gameplays of TLBB Vintage to enhance player experience and renew their interest in the game.

Speaker 2

For legacy TLBB Mobile, we launched a new expansion pack featuring crossover content such as themed dungeons, outfits and rich innovative gameplays, which drove higher user satisfaction. Next quarter, we'll continue to launch expansion packs and content updates for the TLBB series and other titles to further keep players engaged. As market competition intensifies and user demand for quality and innovation continues to rise, we'll forge ahead with our top game strategy. Staying true to our user centric philosophy, we'll continue to optimize our research and development process and enhance execution to improve efficiency and product success rate. Meanwhile, we will intensify our efforts to expand our international presence.

Speaker 2

While maintaining our core competitiveness on MMO RPGs, we'll also actively expand our portfolio with diverse types of games, including card based RPGs, sports games and casual games, etcetera. With these efforts, we are confident that we soon can bring more high quality games to the market. Now, I would like to give an update on the ongoing share repurchase program. As of February 2025, Sohu had repurchased 4,200,000.0 ADS for an aggregated cost of approximately $52,000,000 So with that, I'll turn to the call to our CFO, Joanna. Joanna?

Speaker 3

Thank you, Charles. I will walk you through the key financials of our business segment. For the fourth quarter and full year of 2024, All the numbers on a non GAAP basis, you may find a reconciliation of non GAAP to debt measures on our IR website. For Sohu Media Platform, quarterly revenues were $24,000,000 compared with $25,000,000 in the same quarter last year. Quarterly operating loss was $69,000,000 compared with the operating loss $68,000,000 in the same quarter last year.

Speaker 3

For the full year 2024, revenues were $91,000,000 compared with $140,000,000 in 2023. The full year operating loss was $287,000,000 compared with the operating loss of $269,000,000 in 2023. For Changyou's online games business and 17,173, quarterly revenues of $111,000,000 compared with $115,000,000 in the same quarter last year. Quarterly operating profit was $48,000,000 compared with operating profit $47,000,000 in the same quarter last year. For the full year 2024, revenues were $5.00 $6,000,000 compared with revenue $485,000,000 in 2023.

Speaker 3

The full year operating profit $196,000,000 compared with the operating profit two zero three million dollars in 2023. For the first quarter of twenty twenty five, we expect brand advertising revenue to be between $30,000,000 and $40,000,000 This implies annual decrease of 13% to 19% and a sequential decrease of 26% to 31% online gaming revenues to be between $105,000,000 and $115,000,000 This implies annual decrease of 2% to 11% and a sequential decrease of 4% to a sequential increase of 5%. Non GAAP net loss attributable to Sohu dot com Limited to be between $16,000,000 and $26,000,000 and GAAP net loss attributable to Sohu Dark Ltd. To be between $20,000,000 and $30,000,000 This forecast reflects Sohu's management's current and preliminary view, which is subject to substantial uncertainty. This concludes our prepared remarks.

Speaker 3

Operator, we would now like to open the call to questions.

Operator

Thank you. We will now begin the question and answer session. The first question comes from the line of Thomas Chong from Jefferies. Please go ahead.

Speaker 4

Hi, good evening. Thanks management for taking my question. My question my first question is about the brand advertising business. It seems that for the Q1 guidance, the sequential decline is a bit soft versus previous years. And the year on year decline is a bit also more than Q4.

Speaker 4

So I just want to get some color with regard to any reason behind the latest advertising sentiment. And on the gaming business, can management comments about how we should think about when we should expect it to have a Q1-two decline or Q1-two growth? Because it seems the range is a bit wide. And how is the trend so far? And then my last question is about the implication of Citi.

Speaker 4

Can you make my comments about how we should think about the integration with Sohu? Thank you.

Speaker 2

So your first question is about the advertising, right? The second question is about

Speaker 3

game? Certainly, third one, okay.

Speaker 2

All right, the third one is the application of the deep sea, right? Yes. Okay. The first one, I'll answer the third question for Q1, right, decline, right, because of the macroeconomic situation, because people are spending less. The advertisers are spending less in marketing because of the overall economic situation.

Speaker 2

And so, yes, it's overall economy. So the second question is about the game, right?

Speaker 3

The performance of the first quarter is expected to be flat quarter over quarter.

Speaker 2

Okay. So about the DeepStick application, we've been actually in the last two years, we've been applying the language model to our social media and social network products. For example, the organized of the content, the better the generation content and especially knowledge based content and the text based abstract writing and internal editing with the apply of AI technology has really increased the efficiency. And in the future, we're going to also into for example, in our live streaming, our AI technology can help us to summarize different basically to summarize the video content into text form and to automatically to mark the different sections of the streaming video content. And in terms of social network, people interaction will be our product in the future will have the AI aided interaction or and also with voice to text and also sometimes in the future probably help with a deep or DeepSeq or in large model language model to help users to generate content with the voice and word text to turn them into some pictures and videos and to have really generated some quality, really ease the production process and make it really very actually, some of the content will not be able to produce, but now will be able to do it.

Speaker 2

So there is a wide range of application of AI technology and Deepsea probably Deepsea. We haven't yet, but we're looking at that possibility. So basically help us with our media and social network, user experience and content generation, content organization and editing and yes. And also, I think it's also we are gaining, right, also applied language model, right, the AI technology, right?

Speaker 3

The AI technology application in terms of gaming development is mainly in the area of video production and second and the two dimension art design.

Speaker 2

Yes. Okay. I hope we answered your question, Thomas.

Speaker 4

Got it. Thank you, Charles.

Operator

Thank you for the questions. One moment for the next question. Our next question comes from Alicia Yap from Citi. Please go ahead.

Speaker 5

Hello. Good afternoon. Good evening, Charles and management. Thanks for taking my questions. I have a few follow-up.

Speaker 5

Number one, can management maybe comment a little bit on the overall macro sentiment as related to the advertising budget sentiment. Just curious, given there's a lot of hypes and talks about the technology breakthrough from China. So I'm not sure will some of these positive technology sentiment, would that have you seen any of these actually translate to slightly better advertiser budget spend on certain category? And also have you seen any change of the consumer behavior in terms of the consumption as related to some of these positive development? So that's the first question.

Speaker 5

And then second question is, can you remind us with your RMB 52,000,000 buyback amount, what's the outstanding amount on the buyback currently?

Speaker 3

Thank you.

Speaker 2

Well, the buyback, we bought $4,200,000 right? $4,200,000 I guess. So we spend one third of the $150,000,000 right, one third of RMB 52,000,000 already. So there's another RMB 100,000,000 to go, right, approved by the Board. So that's 4,200,000.0 ADS, okay.

Speaker 2

In terms as to the macroeconomic situation, I think it's just consumption, just people that has less money to consume, to spend. That's why companies or product companies that accordingly spend less in marketing in terms, for example, the most of our auto companies, they are advertising budget. I can see in the year 2024, I can see a trend of like almost like cut by half. A lot of companies just if they want to spend RMB6 million, now they spend RMB3 million, so instead. So it seems that because the consumption is weak, that's why market companies are spending less money in marketing.

Speaker 2

That's why we can feel that, right? As an advertising promote marketing platform, we can feel the decline, right? So as to the DeepSig not only DeepSig, but overall AI technology has brought quite an enthusiasm, right, and excitement. But I don't think it's I can now translate into any immediate benefit of marketing or companies, because it's really the problem is really people are spending less. People have less money because people bought houses and then they have much less money left to spend, right?

Speaker 2

So it's actually to pay the mortgage. That's why companies that don't have some if there is a product and sales volume drops, I think. And I don't think AI technology can help that in the short run. And sometimes the AI technology actually destroy drops, right, not creating drops. That's what I can see.

Speaker 3

I

Speaker 5

see. I see. So maybe can I follow-up a little bit Charles? So any other kind of subsector that is holding up in terms of the ad budget? For example, let's say the FMCG or even have you seen, let's say, electronics like the cell phones given the trade in and all that, have you seen any increase in terms of the ad spending on any of the categories?

Speaker 2

Yes. I think I meant FMCG become has risen to the top sector among our advertisers I mean the sectors. Previously, before I remember, automobile was always number one, right? Number one sector, but now FMCG is number one and auto and IT services are becoming number three or number four. Yes, people are actually spending more on some smaller item like food, alcohol, liquor and electronics, yes.

Speaker 2

So yes, there and also I think the trading policy also stimulated that to some extent.

Speaker 5

I see, I see. Okay. Very helpful. Thank you. Thanks Charles.

Speaker 5

Thanks management.

Operator

Thank you for the questions. With that, we now conclude the conference for today. Thank you for your participation. You may now disconnect your lines.

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Ping Identity Q4 2024
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