Sohu, Changyou slump on poor guidance; Changyou CFO departs


For the second straight quarter (previous), Sohu (SOHU -3.6%) and subsidiary Changyou (CYOU -12.5%) are falling after posting mixed results and issuing light guidance.

Sohu expects Q1 revenue of $355M-$367M and EPS of -$1.10 to -$1.20, below a consensus of $378.6M and breakeven. Changyou expects Q1 revenue of $174M-$180M and EPS of -$0.30 to -$0.42, below a consensus of $198.8M and $1.00.

Along with its Q4 report, Changyou has announced CFO Alex Ho is leaving to "start his own business." Finance director Erin Sheng will serve as interim CFO while the game developer searches for a permanent replacement.

Changyou, responsible for over half of Sohu's Q4 revenue, attributes its guidance to a revenue drop for flagship title TLBB, seasonal ad weakness, and bigger marketing and personnel investments. Changyou also says it's implementing an employee profit-sharing plan tied to specific projects.

Though its revenue rose 9% Y/Y, Changyou's monthly active accounts fell 19% Q/Q and 34% Y/Y to 25M, thanks to declining accounts for TLBB and DDTank. Platform channel accounts rose 51% Q/Q and 93% Y/Y to 149M.

Changyou's opex soared 82% Q/Q and 156% Y/Y. Gross margin was 82%, -200 bps Q/Q and Y/Y.

Sohu's Sogou search revenue rose 23% Q/Q and 72% Y/Y to $70M. Brand ad sales fell 1% Q/Q but rose 50% Y/Y to $123M.

Sohu's opex rose 78% Y/Y, well above rev. growth of 29%. Gross margin fell 200 bps Q/Q and 500 bps Y/Y to 64%.

Q4 results: Sohu, Changyou. PRs: Sohu, Changyou.

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