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Sohu.com Inc. (SOHU) Announces Solid Q3 2010 Results

|Includes: Sohu.com Inc. (SOHU)

Sohu.com, sohu.com – China’s top online brand, with a domain for just about everything from searching to gaming, integrates such a dizzying array of web properties, social media/community-based and web 2.0-driven entities at its main portal that it has become an indispensable hub of activity for the lives of millions of Chinese daily and it comes as little surprise that a recent announcement of unaudited Q3 (ended Sept. 30) financials set new records.

Chairman and CEO of SOHU, Dr. Charles Zhang, beamed at the record quarter which posted solid revenue/gross margin growth in every one of the Company’s major business segments, posting record highs with operating parameters comfortably exceeding Group guidance:

Total Revenue up 20% (compared to FY09) to $164.1M (12% compared to Q3 FY09)

• Brand Advertising Revenue up 22% to $59.1M (11% over Q3 FY09)
• Search Revenue up 134% to $5.4M (38%)
• Online Games Revenue up 25% to $85.6M (10%)
• Wireless Revenue down 19% to $13.6M or up 23% on a quarter comparison to FY09
• Net Income up 15% to $54M (19%) prior to Non-Controlling Interest deductions, or $38.7M after deductions, or up 12% (24%) with $1.01/fully-diluted share
• Gross Margin was 74% in Q3, up one percent from Q2 and off by 2% from Q3 FY09
• Operating expenses were $55.6
• Operating Margin was 40% for Q3 up 5% from Q2 and 1% from Q3 FY09
• Non-Cash Income Tax Expense was $0.7M
• Strong Debt-free balance with a solid cash position of $534.7M

Dr. Zhang characterized the incredible financial performance of the Company as being driven by key elements like SOHU’s biggest segment, online games in addition to the rapidly expanding brand advertising business being driven by strong economic conditions in China.

Co-President and COO of SOHU, Belinda Wang, added that that advertising partner network and associated end markets in China, combined with the power of SOHU’s online platform was producing synergistic relationships as advertisers rally around the Company’s superior cost to performance ratios.

Online gaming has quickly grown to be a dominant force in the modern world and SOHU is leading the pack with several new and highly-successful expansions for some of its most popular games in addition to debuting new games that also proved to be big sellers.

Dr. Zhang laid out a clear game plan for continued success which includes the systematic incorporation of high-def streaming content into the overall platform as well as enhancement of the Sogou search business.

User feedback driven development initiatives were also explored further yielding substantial results as the merger between social media and active content draws ever closer.

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