Sohu -9.5% and Changyou -18.7% following revenue misses

Jul. 29, 2013 10:47 AM Limited (CYOU)SOHU, CYOUBy: Eric Jhonsa, SA News Editor
  • Sohu's (NASDAQ:SOHU) Q2 numbers weren't bad. Brand ad revenue of $100M (+45% Y/Y, +32% in Q1), online game revenue of $168M (+24% Y/Y, +33% in Q1), and Sogou revenue of $50M (+64% Y/Y, +73% in Q1) met guidance.
  • Sohu's Q3 guidance is for revenue of $358M-$370M vs. a $361.3M consensus. Sogou revenue is seen growing 45%-50% Y/Y to $54M-$56M.
  • But expectations for Sohu had risen; the $340.3M Q2 rev. consensus was near the high end of a $333M-$342M guidance range.
  • Sohu's gross margin was 66%, flat Q/Q and +500 bps Y/Y. Opex +21% Q/Q and +43% Y/Y (above rev. growth of +10% and +33%).
  • Subsidiary Changyou (NASDAQ:CYOU) has also seen expectations rise. And its guidance for Q3 revenue of $180M-$186M is below a $191M consensus.
  • Changyou's online game revenue +1% Q/Q and +24% Y/Y. But active paying accounts -4% Q/Q and -25% Y/Y to 1.96M.
  • Changyou has established a new $100M buyback program in an attempt to soften the blow.
  • BofA/Merrill has cut Changyou to Neutral.
  • Q2 results: Sohu, Changyou
  • PRs: Sohu, Changyou

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