Ladies and gentlemen, thank you for standing by, and good evening. Thank you for joining Sohu's Second Quarter 2025 Earnings Conference Call. Today's conference call is being recorded. I'd now like to turn the conference over to your host for today's conference call, Huang Pu, Investor Relations Director of Sohu. Please go ahead.

Thanks, Huang Pu, and thank you, everyone, for joining our call. In the second quarter of 2025, our Marketing Services revenues were in line with our expectations, while our online game revenues and bottom line performance hit the high end of our guidance. For Sohu media platform, we continue to focus on refining products, enhancing the operation of our social networks, and improving synergies across our product metrics. During the quarter, we hosted differentiated events that not only attracted numerous participants with shared interests but also encouraged them to build social connections and interact vibrantly with each other on our platform. With these efforts, we were able to increase our user engagement, further consolidate our brand influence, and capture more monetization opportunities. Our online games delivered solid results underpinned by our dedication to serving users' needs through compelling new content and continued optimization of our games. Before going through each business unit in more detail, let me first give you a quick overview of our financial performance. For the second quarter of 2025, total revenues were $126 million, down 27% year-over-year and 7% quarter-over-quarter. Marketing services revenues were $16 million, down 21% year-over-year and up 14% quarter-over-quarter. Online game revenues were $106 million, down 28% year-over-year and 10% quarter-over-quarter. GAAP net loss attributable to Sohu.com Limited was $20 million compared with a net loss of $38 million in the second quarter of 2024 and a net income of $182 million in the first quarter of 2025. Non-GAAP net loss attributable to Sohu.com Limited was $20 million compared with a net loss of $34 million in the second quarter of last year and a net loss of $16 million in the first quarter of 2025. Now I will go through our key businesses in more detail. For Sohu media platform, we kept optimizing our products and refining operations while continuing to enhance its social features. We actively hosted diverse and distinctive events and activities, generated plenty of premium content, and stimulated social distributions and improved the interactive experience inherent in our product metrics. These robustly supported the striving development of our online communities. This quarter, building on last year's success, we continue to expand our influence in the area of K-pop and the Chinese costume, Hanfu, by hosting a series of attractive events and competitions. For example, in June, in K-pop, we launched the 2025 Sohu K-pop Dancing Festival, and we'll do it every year, which attracted the participation of numerous K-pop enthusiasts and quickly became a blockbuster event in the field of K-pop dancing. For this July, we held a special K-pop random dancing event with K-pop superstar, Leejung Lee, in South Korea, which also gained significant traction. During the quarter, we also hosted the 2025 Chinese costume model competition, Li Yi Hua Xia Hanfu, which has completed almost 80 contacts in nearly 30 regions in China so far this year. In addition, we continue to explore new verticals. In June, we held The First Salute to The Ultimate Explorer, attracting many outdoor Ultimate Explorer broadcasters, self-media hosts, and celebrities who share their insights through speeches and panel discussions. These events provided opportunities for participants to connect and communicate, but also stimulated them to actively interact with each other on our platform in the longer term. With these, we were able to successfully enhance user metrics and foster a vibrant social atmosphere. In terms of leading IP, my Physics Class is continuing to deliver cutting-edge physics knowledge to a wide range of audiences under various scenarios. During the quarter, I conducted several high-end dialogues with Nobel Laureates and renowned physicists and entrepreneurs discussing topics ranging from physics knowledge to the latest industry trends and social interest, promoting a multidimensional dissemination of Sohu's brand influence and attracting greater traffic to our platform. These competitions and live broadcasting events not only brought vitality and premium content to our platform but also increased exposure and recognition from advertisers, providing us with additional monetization opportunities. Leveraging the advantages of our product matrix and our brand influence, we were able to satisfy the needs of advertisers by delivering differentiated marketing solutions through targeted campaigns. Next, turning to our online game business. During the quarter, our online game business performed well with revenues reaching the high end of our guidance. In our PC game businesses, we launched an expansion pack for TLBB PC to celebrate its 18th anniversary as well as various events for the Dragon Boat Festival, which received an enthusiastic response from the community. We fully upgraded the skill enhancement system of TLBB Vintage to refresh the combat experience of players of each client, and we celebrated the eighth anniversary of legacy TLBB Mobile with an expansion pack filled with diverse gameplay and generous rewards, effectively increasing player engagement. Next quarter, we will continue to launch expansion packs and content updates for the TLBB series and other titles to further keep players engaged. Amid intensifying market competition and growing user demand for quality and innovation, we will advance our top games strategy anchored in user trend-centric principles. By continuously optimizing our research and development system, we aim to enhance efficiency and product success rate. Specifically in product offerings, we are actively exploring opportunities to unlock the potential of our TLBB IP. Meanwhile, building upon our core strengths, leveraging MMORPGs, we are diversifying into multiple types of games, including card-based RPGs, sports games, and casual games as well as expanding our offerings for global markets. Now I'd like to give an update on the ongoing share repurchase program. As of July 31 this year, Sohu has repurchased 6.6 million ADS for an aggregate cost of approximately $83 million, which is about more than half of the total commitment.

Thank you, Charles. I will now walk you through the key financials of our major segments for the second quarter of 2025. All the numbers are on a non-GAAP basis. You may find a reconciliation of non-GAAP to GAAP measures on our IR website. For Sohu media platform, quarterly revenues were $19 million compared with $24 million in the same quarter last year. Quarterly operating loss was $69 million compared with an operating loss of $72 million in the same quarter last year. For Changyou, quarterly revenues were $107 million compared with $148 million in the same quarter last year. Quarterly operating profit was $51 million compared with an operating profit of $32 million in the same quarter last year. For the third quarter of 2025, we expect marketing services revenues to be between $40 million and $50 million. This implies an annual decrease of 20% to 25% and a sequential decrease of 4% to 10%. Online game revenues are expected to be between $107 million and $117 million. This implies an annual decrease of 8% to 16% and a sequential increase of 1% to 10%. Both non-GAAP and GAAP net loss attributable to Sohu.com Limited is expected to be between $25 million and $35 million. This forecast reflects Sohu's management's current and preliminary view, which is subject to substantial uncertainty.

We would now like to open the call to questions.

I mean, first of all, may I ask about our marketing services revenue? We talked about our marketing services revenue basically largely in line with the low end of the previous guidance. And we saw that in Q3, it seems that the advertising revenue is still suffering some sequential weaknesses. I just want to get some color from management with regard to our thoughts about the recent advertising sentiment. Is there any changes or deterioration because of the macro uncertainties? Any color that can be shared about the trend of different categories like auto, IT, FMCG, these categories. That's on the marketing services part. And then on the AI part, can management comment about how AI is applied into our operations, in advertising and gaming? And are we also using our own model or third-party models? And then lastly, regarding the share buyback program, can management share about other than share buyback program, are we thinking of any other capital return like a dividend or other program to shareholders?

Okay. All right. So the question about the forecast of the future Q3 advertising situation. Yes, there is a weakness because of the macroeconomic situation which is not that good, and there are a lot of uncertainties, and also the downgrade of consumptions because people have less disposable income to buy things and also the competition among companies has caused profit margins to lower. Therefore, they are more cautious in investing in marketing spending. As for sectors, our largest sector is still the auto sector, followed by FMCG and IT services. In the auto sector, it has stabilized with the price war getting steady, and the new energy, or electric cars, market share is expanding while the luxury cars and joint ventures are kind of shrinking. Given this market situation, we have unique events and IPs that create or launch distinctive events combined with our online properties to provide unique marketing opportunities, encouraging spending on Sohu. The overall macroeconomic situation is really not that good. But since our advertising market share is very small, if we are successful in our social media platform, we may get a larger share. However, this will not happen in the next few quarters. We will continue to build our user base. Regarding your question about AI application, it has improved, especially in the online games part, which enhances efficiency and productivity. For the media platform and social networks, it assists our users in getting answers or results through search capabilities in each app. Now people are actually conducting information searches on each separate app. Thus, we are using AI to improve the answering capability of the Sohu Video and Sohu News app, shifting from traditional use toward a social network platform. However, AI's assistance here is marginal. We are employing open-source language models and building upon that to develop further. We are using various large language models. As for the share buyback, we are halfway into it, having consumed $83 million already, and we do not have plans for other investments or capital investments as we are focused on building our user base and social networking.

Can you hear me okay?

Yes.

A few questions from me. First is that, just wondering if you can share with us when should we expect the loss from the marketing service revenue to last? In other words, do you have a breakeven timing that you can share with us? This is the first question. Second question is related to the gaming guidance. It seems like sequentially, we are guiding for a sequential increase. So if management can elaborate a little bit on the reason for the sequential improvement on the game revenue. And then the third question is, I think, Charles, on your opening remarks, you mentioned a little bit on those K-pop artist events. So just wondering how those events can help you accelerate your user growth for your Sohu app users. That's all my questions.

Well, as I said, with the current traditional Internet media platform, it's very hard to breakeven, especially since we have 3 products that we're focusing on. It’s like fighting on multiple battlefields. Therefore, user base growth is nonlinear, and it could reach a critical mass that leads to exponential growth at some point in the future, though we do not know what that critical point is. Until that happens, I don’t think we will be able to breakeven because we have many uncertainties. However, I am hopeful, optimistic, and confident that we will reach this critical point for our social network to breakeven and grow. Concerning the increase in gaming sequentially, yes?

The old games are expected to perform relatively stable during the third quarter. We also rolled out a new version, a new game for TLBB PC on July 25, which is called TLBB Return. We expect the new game will bring some additional revenue.

So regarding the K-pop events and the Hanfu events, yes, these events help build communities. When people participate in these competitions throughout the whole year and get to know each other, they become users and broadcasters or self-media. They enter our communities in groups. Currently, Sohu Video is the leading K-pop platform in China. This is why when South Korean K-pop teams come to China for events, Sohu Video is chosen as the designated platform, due to our leadership in this field. Furthermore, we are building verticals one after the other, aiming to become the best in each vertical, which helps consolidate and attract our user base.

I see. Just a follow-up on that. Is there any revenue implication from these events that will contribute to the second quarter or maybe carry forward to the third quarter?

Yes, the revenue from sponsorships for these events, unlike those of the physics class or other events, is secondary. It's not a priority, but we do get sponsorships for the K-pop and Hanfu events. We accept top sponsors but refuse title sponsorships, as our goal is to develop users and market our brand and product.

I'm showing no further questions. And with that, we conclude our conference call for today. Thank you for your participation. You may now disconnect your lines.