Sohu recorded revenues of $307.6 million in the quarter that ended March 31, a 36% jump over last year's $226.6 million and above Wall Street's estimates of $292.2 million. On the bottom line, it generated $58.2 million, or $0.62 per share, up 13% from last year's $0.53 figure, which was where analysts had pegged GAAP earnings to come in. On an adjusted basis, earnings were $0.73 per share, also above Wall Street's $0.70 estimate.
Despite the first quarter typically being the slowest quarter of the year, Sohu's online video segment doubled revenues as Changyou (games) set new records for both sales and profits while Sogou (search engine) gained solid traction. The company pointed to analysis by iResearch which found that Sohu Group has approximately 450 million monthly users, making it "a solid No.3 in China's internet industry," while two of its mobile apps surpassed the 100-million-user mark.
Brand advertising revenues rose 32% in the quarter to $80 million, though they were down 2% sequentially, as real estate and consumer goods continued to pace the sectors.
Search and others revenues jumped 67% to $36 million, though also down 7% sequentially reflecting the seasonal weakness, as pay-for-click services and online marketing services on Sogou increased traffic and improved monetization of the traffic.
Online game revenues also saw a solid first quarter with revenues coming in at $167 million, up 33% year-over-year and 6% higher quarter-over-quarter, while wireless revenues for the first quarter were at $14 million, 3% higher from last year and 9% higher than the fourth quarter.
Sohu Co-President and COO Belinda Wang was quoted as saying: "Recognizing Internet sector's profound shift from PC to mobile, Sohu Group has made mobile one of the most important parts of our strategy. ... Our range of products are becoming indispensable for tens of millions of China's mobile Internet users."
The Internet technology leader believes second-quarter revenues will come in between $333 million and $342 million, well ahead of Wall Street's consensus expectations of $318.2 million. But Sohu also expects adjusted earnings to range between $0.50 and $0.55 per share, and that's well below the normalized $0.71 EPS of Capital IQ's consensus outlook.