Sohu.com Limited reported third‑quarter 2025 results that marked a return to profitability, with total revenue rising 19% year‑over‑year to $180 million and 43% quarter‑over‑quarter to $129 million. The jump was driven by a 53% sequential increase in online‑game revenue, which reached $162 million, and a 27% year‑over‑year rise in that segment. Marketing‑services revenue fell 27% YoY to $14 million, while the Sohu Media platform saw a sharp decline to $17 million from $73 million, contributing a $71 million operating loss in that segment.
The company’s gross margin expanded to 81% from 74% a year earlier, largely because the high‑margin online‑game segment—at 87%—offsets the lower 10% margin on marketing services. Operating profit turned positive at $14 million, reversing the operating loss recorded in Q2 2025, and net income reached $9 million, the first positive figure since Q3 2024. Cash, cash equivalents and short‑term investments stood at $1.2 billion, giving Sohu a strong liquidity cushion.
Management guidance for the fourth quarter corrects earlier figures: marketing‑services revenue is expected to be $15–$16 million, online‑game revenue $113–$123 million, and a net loss of $25–$35 million. The lower marketing‑services guidance reflects ongoing macro‑economic headwinds, especially in auto and IT services, while the sequential decline in online‑game revenue signals a slowdown in demand for the TLBB franchise. Management noted that revenues for both TLBB Return and TLBB Vintage are trending down, but emphasized that the company remains focused on sustaining growth through new game releases and content updates.
CEO Dr. Charles Zhang highlighted that the quarter’s positive net income was “in line with guidance” for marketing services and exceeded expectations for online games, attributing the turnaround to disciplined cost management and a favorable mix shift toward high‑margin titles. He also warned that the macro‑economic environment remains challenging, citing pressure on advertising spend. The company continues to invest in social‑network transformation and AI initiatives, while its share‑repurchase program has bought back 7.6 million ADS for $97 million as of November 13, underscoring confidence in its capital allocation strategy.
The results illustrate a clear pivot: Sohu’s gaming business is the primary engine of growth and profitability, while its legacy media and advertising segments face significant headwinds. The positive net income and operating profit signal that the company’s cost controls and high‑margin game portfolio are effective, but the projected Q4 net loss and declining game revenue forecast caution that the near‑term outlook remains mixed. Long‑term prospects hinge on continued success in gaming and a potential rebound in advertising demand, with AI and social‑network initiatives positioned to support future growth.
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