Operator
Ladies and gentlemen, thank you for standing by and good evening. Thank you for joining SOHU second quarter 2026 earnings conference call. At this time, all participants are in a listen-only mode. After management prepared remarks, there will be a Q&A session. Today's conference call is being recorded. If you have any objections, you may now disconnect at this time. I would now like to turn the conference over to your host for today's conference call, Huang Poo, Investor Relations Director of Sohu. Please go ahead.
Thanks, Shobu-Ther. Thank you for joining us to discuss Sohu's second quarter 2026 results. On the call, Chairman and Chief United Officer, Dr. Charles Zhang, CEO for joining Lui, and Vash President of Finance Jamstone. Also with us, Chang Yu's CEO, Dr. Wang Chen, and the CEO of Yabing Wang. Before management begins, I would like to remind you of the comment's TFR statement that shows today's conference call. Except for the historical information contained herein, the matters discussed on this call may contain full-looking statements. These statements are based on current plans as missing projections. Therefore, you should not place annual rights on them. Full-looking statements involve in-cheorists and uncertainties. We caution you that a number of important factors could cause actual results differently from those contained in any floating statements. For more information about the potential risks and uncertainties, we refer to the companies findings with the Securities and Exchange Commission, including the most recent annual report on 2015. With that, I will now turn the call over to Dr. Charles Zhang.
Thanks, Huangpu, and thank you, everyone, for joining our call. In the second quarter of 2026, our marketing services revenues, online game revenue, and the bottom line performance all exceeded our previous guidance. For the social media platform, we continue to refine our products and host diverse events events and activities to stimulate communication and interaction among users, which further strengthened the platform's social features and promoted its vigorous and healthy development. Leveraging our differentiated content and events, we were able to address advertisers' needs and continue to explore diversified monetization opportunities. For online games, we remain committed to our long-term operation strategy and continue to launch diverse content updates to deliver rich and engaging experiences for game players. Before going through each business unit in more detail, let me first give you a quick update overview of our financial performance. Please be advised that this release relates to continuing operations only. For the second quarter of 2026, total revenue were $136 million, up 7% year-over-year, and down 4% quarter-over-quarter. Marketing services revenues were $15 million, down 3% year-over-year, and up 21% quarter-over-quarter. Online game revenues were $116 million, up 10% year-over-year, and down 7% quarter-over-quarter. After giving, in fact, a reversal of a tax expense of approximately $13 million due to a reversal of uncertain tax positions previously, gap in net income attributable to Soho.com Limited was $200,000. Compared with the net loss of $20 million in the second quarter of 2025 and a net loss of $4 million in the first quarter of 2026, non-GAAP, after giving effect to the above mentioned reversal of tax expenses, non-GAAP net income attributable to Soho.com Limited was $500,000 income. Compared with the net loss of $20 million in the second quarter of 2025 and the net loss of $4 million in the first quarter of 2026. Now I'll go through our key businesses in more detail. First, Sohu media platform, our Sohu social media platform. This quarter, we continue to refine our products with upgraded technologies and enhanced user experience and engagement across different scenarios. Leveraging the synergy between various offline activities and our online communities, we boosted active user interactions as well as the generation and dissemination of premium content. These efforts enabled us to expand genuine social connections among users on our platform and foster a virtuous cycle to build a prosperous and healthy social ecosystem. During the quarter, in addition to the the 2026 Spring Convention of Soho Video Influencers, hosted in April, where we created opportunities for broadcasters to interact and to establish in-person social connections across various verticals. We also continued with the signature event of 2026 kickoff, the year annual K-pop dancing festival. and also the 2026 Chinese Costume Hanfu model competition. These competitions attracted thousands of young enthusiasts to actively participate, consolidating our appeal and competitiveness in these areas. Based on our long-term endeavor in a dense area, we further consolidated our influence by introducing a series of engaging activities on campus enhancing our platforms coverage among young people in addition we hosted attractive and innovative activities in conjunction with popular events or topics across different verticals such as the salute to the ultimate explorers the outdoor the outdoor vertical and sports and other vertical and world cup related activities World Cup watching parties. As a result, a variety of online interest clubs were developing rapidly. These distinctive events and activities garnered a significant attention and recognition and spread widely across multiple social platforms, bringing active interactions to our platform and contributing to its vigorous and high quality development. In May, we successfully hosted our traditional event of 2026 SoFu Annual Science Technology Conference. We invited a host of leading scholars to engage in cross-sector high-end dialogues regarding the latest scientific trends and the developments attracting a large number of scientists and science into us to our platform. At the same time, we continue to strengthen our leading position in knowledge and science related live broadcasts class with our core IPs on myself Charles physics class and we held live broadcasts related to the national college entry examination in physics and provided relevant learning advice for audiences we also kept delivering public science popularization devoting to a narrowing the gap between the public under cutting-edge science. This month, the English class, my Charles English class, celebrated its 10th anniversary, 10 years. We've been doing this for 10 years and has created, conducted for more than 2,000 live broadcasts, contributing, continuing to generate practical content and driving traffic to the platform. So relying on our unique IP product matrix and differentiated campaigns, we're able to tailor marketing solutions for advertisers and tap into more monetization potentials. For example, we organically combine the physics knowledge, physics and deliver in the physics class with industry practices applications of the applied physics to help brand advertisers to showcase their technological strengths and advanced and brand value next turning to our online game businesses during the quarter our online game business performed well with revenues exceeding our prior guidance in our pc game business we wrote out a series of crossover content with the renowned wuxia comic franchise storm for both regular TLBB PC and TLBB vintage. We also introduced a new character development system for regular TLBB PC. In addition, we launched a new content and gameplay for TLBB. Return to enrich the player experience. Turning to our mobile game business, we launched an Expansion Pack to celebrate the anniversary of Legacy TLBB Mobile, as well as certain in-game promotional events, which drove an increase in player engagement. Revenue for this game remains stable on a sequential basis. Next quarter, we will continue to launch Expansion Packs and content updates for the TLBB series and other titles to further enhance player player engagement. Looking ahead, we'll remain committed to our top game strategy. On the product development front, we'll adhere to systematic R&D processes, drive implementation of advanced technologies, and enhance our research and development R&D capabilities through continuous experimentation and the validation. Striving to bring more high-quality the games to the players. Regarding to our pipeline, we seek to further unlock the potential of our TLBP IP. Meanwhile, as we maintain our competitive edge in the MMORPGs, we will continue to diversify our portfolio with multiple types of games and expand our product offerings with global appeal. Now, I'd like to provide an update on the ongoing share repurchase program. As of August 6, 2026, Sohu had repurchased 9.4 million ADSs for an aggregate cost approximately $124 million. Moreover, Sohu today announced that its board of directors authorized repurchases to continue on an open-ended basis until the maximum authorized amount of $150 million is reached. With that, I will now turn the call over to our CFO, Joanna.
Thank you, Charles. I will now work you through the key financials of our major segment for the second quarter of 2026. All numbers on a non-GAAP basis. You may find a reconciliation of non-GAAP to GAAP measures on our website. For social media platforms, quarterly revenues were $90 million flat with the same quarter last year. Quarterly operating loss was $71 million compared with an operating loss $69 million in the same quarter last year. For Changyou, quarterly revenues $117 million compared with $107 million in the same quarter last year. Quarterly operating profit was $56 million compared with an operating profit $51 million in the same quarter last year. For third quarter of 2026, we expect marketing service revenues to be between $40 million and $50 million. This implies annual increase of 3% to 10% and a sequential decrease of 1% to 8%. Online gain revenues to be between $105 million and $150 million. This implies an annual decrease of 29% to 35% and a sequential decrease of 1% to 10%. Both net gap and gap net loss attributable to SOHU.com Limited to be between $30 million and $23 million. This forecast reflects SOHU's management current and preliminary view, which is subject to substantial uncertainty. This concludes our prepared remarks. Operator, we would now like to open the call to questions.
Operator
Thank you very much. Now, we will conduct the Q&A session. Just a moment for our first question, please. First question comes from Thomas Chun from Jefferies. Please go ahead.
Hi. Good evening, Charles and management. And thanks for taking my question. My question is about the good result that we saw in Q2. I think last earnings call, Charles, you mentioned about the advertising sentiment is just so-so, not great. Is there any change in your view about the advertising outlook in the second half? I think that's number one. And then our follow-up question is more about the World Cup. I remember last time Charles talked about World Cup should be a small event. I just want to see if there's any change in your view about the World Cup impact. That's number one. And then number two is about the recent trend in advertising sentiment, in particular for different categories like auto, IT, FMCG. Can you provide some color about the second half outlook? And then secondly, I think on the gaming side, May I ask about the quarter-to-date performance so far for the TLBB series? Is it at the low end or the high end of the guidance quarter-to-date? Thank you.
Okay. Your first part about the Sohu media or social media platform, the advertising. Yeah, we actually beat the forecast. And the answer to your question is still similar to last time, that the macroeconomic situation is still very bad, actually bad, and sloppy. And, you know, advertisers kind of are now very cautious in spending. But because of our unique, you know, marketing offerings, You know, so we were able to achieve actually some kind of growth compared with Q1. Well, Q1 is seasonality, but yes, we actually have some growth, you know, be the podcast. Because of our innovative marketing solution that we provided to our advertisers, especially combined our online social media platform and also offline activities with, you know, with live streaming, with events. And so now the marketing advertising side is very different from, you know, before, like a few years ago. And actually, advertisers tend to, especially brand advertisers, tend to spend less on the, you know, the standard advertising on, you know, on channels, on the traditional, in Chinese, called it yin guang, yin guang toufang. They are all, you know, trying to create the maximum effect of the virus, you know, viral distribution or viral online through key influencers or, you know, KOLs and to use the social networks. That's, and our solution, our social platform, you know, just, you know, just provide, are able to, you know, we are able to provide exactly that, that kind of marketing services. In terms of categories, so still, the auto is 33%, and FMCG 20%, IT 17%, and all three areas are, you know, not doing well. i mean the macroeconomic situation all spending less i mean so more cautious um so the world cup actually yes there's not much impact of in terms of the income i mean the advertising uh but the world cup we did organize the activities of watching world cup um games tournament, which to promote or develop, or to acquire users, it's more to the consumer side, I mean the user side. Yeah, I hope I answer your question. Gaming question.
From the past, almost to two months, The performance is largely in line with our expectation, but still we have more than one month's time to go, and there are still some content and activities to be released which are not very easy to forecast their performance. So eventually it will depend on the performance of these content and activities. Thank you.
Operator
Thank you very much. Just a moment for our next question, please. Next question comes from the lines of Alicia Yep from Citigroup. Please go ahead with your question.
Hi, good evening. Thank you for taking my questions. Good evening, Charles and Management. I have two questions. First, I wanted to ask on the buyback. I program to be open-ended rather than it was supposed to be expired, I think, in November. So just wanted to know what's the rationale behind, does that mean that, or does that imply or suggest that the remaining 26 million of the outstanding, it is highly chance that you might not finish by that November 30th so that you are making it open-ended so that you can continue to finish that $26 million before you announce a new plan. So any kind of like, you know, the reasons that you can share with us would be great. And then the second question is follow up on the online advertising guidance for the 3Q. I know maybe it's just from previously, you know, the base wasn't that high, but still it is the first time for a long time that you are now expecting a positive growth on the year over year. I know you just mentioned, you know, the macro, the budget sentiments remain quite weak, But it does look like, I don't know whether the 3Q positive growth is the beginning of the positive growth trend after, you know, your ad revenue has been declining for such a long time. So maybe if you can also illustrate, despite this weak macro, but if this 3Q guidance is the first sign of potentially the more positive year-over-year trend going forward.
Okay, Alicia. So for your first question, you got it exactly right. Yes, because of the daily trading volume limitation, we could not finish the $150 million by November. So we extended the time to open the, you know, schedule so that we can finish that 150 million to finish the rest of, you know, the left, 26 million left. And your second question, yes. Basically, as I said earlier, that it's the macro still bad, sloppy, and people, you know, cultural spending, but I mean macro economy, but the individual, we are actually achieving some kind of, in Chinese, we are kind of, because the base is small, so we are able to provided some unique marketing solutions so that um advertise buy-in you know they they like they like the the the kind of solution that we provide to them and uh we're looking at uh yes we are
looking at uh for a long time we will look we're looking at some kind of growth for the first you know first time in a long time i see okay thanks charles uh maybe lastly um if i if i can And I wanted to follow up on the gaming question. I think typically 1Q, 3Q should be a seasonally stronger quarter. So your 2Q, you came in and you beat your guidance, but yet your 3Q guidance on gaming seems to be implying sequential decline rather than seasonality-wise, it should be a sequential increase. So maybe if you can quantify it or give it some colors how you were seeing or how you're actually thinking about the seasonality versus your portfolio performance.
The outperformance of the second quarter is mainly due to outperformance, better than expected performance of some of our older games, including TLBVPC, for which the expansion packs that we launched worked very well for our players. Several of our older games performed better than our expectations.
So the performance of the second quarter is indeed quite well.
So for the third quarter, we expect the older games to experience a natural decline, which is normal because they have been operated for a long time. mainly because the better-than-expected performance of the older games in the second quarter thank you thank you if you wish to ask a question to the management please press star 11 on your telephone keypad thank you all for all the questions this concludes the q a session
Operator
as I see no further questions. This also concludes today's conference call. Thank you for participating. You may now disconnect. Thank you.
