Sohu Posts Growing Online Media Revenues In China

Chinese online media company Sohu.com Inc. today reported its unaudited financial results for the third quarter ended September 30, 2010, and showed total revenues were USD164.1 million, up 20% year-on-year, and 12% quarter-over-quarter.

Brand advertising revenues for the third quarter of 2010 totaled a record high of USD59.1 million, up 22% year-over-year and 11% quarter-over-quarter. Search revenues for the third quarter of 2010 were USD5.4 million, up 134% year-over-year and 38% quarter-over-quarter. Online game revenues for the third quarter of 2010 were USD85.6 million, up 25% year-over-year and 10% quarter-over-quarter. Wireless revenues for the third quarter of 2010 were USD13.6 million, down 19% year-over-year and up 23% quarter-over-quarter.

Gross margin was 74% for the third quarter of 2010, compared with 73% in the second quarter of 2010 and 76% in the third quarter of 2009. Non-GAAP gross margin for the third quarter of 2010 was 74%, compared with 74% in the second quarter of 2010 and 76% in the third quarter of 2009.

Sohu maintained a strong cash position of USD534.7 million as of September 30, 2010.

For the third quarter of 2010, Sohu’s operating expenses totaled USD55.6 million. Non-GAAP operating expenses totaled USD50.1 million, down 1% sequentially from USD50.8 million and up 7% year-over-year.

For the third quarter of 2010, excluding non-cash income tax expense of USD0.7 million recorded for tax benefits from share-based awards, non-GAAP income tax expense was USD10.6 million, compared with USD5.7 million in the previous quarter.

Carol Yu, co-president and chief financial officer of Sohu, commented, “We achieved a strong third quarter with record revenues in each of our major business categories, and strong growth in our operations. The strategic investment from Alibaba gives our search business a great opportunity to compete and capture market share.”