Industry Leadership Fuels Record 1Q Revenues & Outstanding Reduction in
Burn
BEIJING, CHINA, April 19, 2001 - SOHU.COM (Nasdaq:
SOHU), China's leading Internet portal and online media services provider, today
reported results for the first quarter ended March 31, 2001.
Business Highlights - Record quarterly revenues of US$2.5
million, climbing13% sequentially and 191% year-on- year -
Non-advertising revenue grows from 5% to 15% of total revenues in Q1 -
All-time quarterly high of 6.3 million new registered users; 18.7 million in
total - Continued industry leadership; No.1 China Web Property (iamasia) -
Further monetization of large & expanding User Base, Brand and Technology
assets - Outstanding 21% reduction in quarterly burn rate, driven by further
cost containment, cost scalability & enhanced monetization - Top-line and
bottom-line growth continues to beat market consensus
In addition, SOHU expects second quarter revenues to increase by 14% and the
burn rate to decline by a further 7%.
"The record results for the first quarter of 2001 demonstrate the ability of
SOHU to capture the benefits of a growing market. We have scaled our costs and
increased margins across a diversified and sustainable revenue base while in a
challenging economic environment," said Charles Zhang, CEO and president of
SOHU.COM.
SOHU reported record total revenues of US$2.5 million for its first fiscal
quarter ended March 31, 2001. Gross margins increased from 4.8% in the fourth
quarter 2000 to 12.4% in the first quarter 2001. Pro forma net loss was US$4.2
million or US$0.12 per share for the first quarter 2001, a 14% improvement from
the previous quarter. *
* Pro forma net loss excludes non-cash charges for amortization of
intangibles, accretion on mandatorily redeemable convertible preferred stock,
investment write-down, and stock-based compensation. Taking into account
non-cash charges, net loss attributable to common stockholders for the first
quarter of 2001 was $8.5 million or $0.24 loss per share. This compares to the
net loss attributable to common stockholders of $4.1 million or $0.43 per share
for the first quarter of 2000 and the net loss attributable to common
stockholders of $8.3 million or $0.24 per share for the last quarter of 2000.
Business Results For the first quarter of 2001, online
advertising, at US$2.1 million, represented 85% of total revenues, compared to
95% in the previous quarter. Advertising revenue from domestic companies grew to
49% of total advertising revenues from 39% in the previous quarter, in line with
SOHU's desire to capture more of the steady growth and long term contracts of
domestic online advertisers over the more variable spending patterns of multi
nationals and dotcoms. Consequently, revenues from dotcoms as a percentage of
total advertising revenues decreased for the second consecutive quarter from 19%
to 13%, while multi nationals contributed 38% in the first quarter, relative to
42% in the preceding quarter. Advertisers included Chinese blue chips Kejian and
TCL, as well as Compaq, Intel and Nestle.
At March 31, 2001, SOHU enjoyed an advertising revenue backlog of US$2.5
million of which US$1.2 million is billable in the second quarter 2001. This
backlog represents a 25% increase from December 31, 2000.
Non-advertising revenue (including e-business solutions and e-commerce)
reached US$366,000 or 15% of total revenues, on track with SOHU's target for
diversified revenues to reach 20% of total revenues by the end of 2001.
E-business solutions constituted over 50% of non-advertising revenues as SOHU
leveraged its technical competencies to provide corporate portal and related
services. New clients included Tricon's China Pizza Hut operations, Beijing
Transportation and Sinopec.
Pro forma operating expenses decreased from US$6 million in fourth quarter
2000 to US$5.3 million in first quarter 2001. This 11% reduction reflects SOHU's
continued re-engineering of its cost structure, confirming its commitment to
scalability and improved operating efficiencies all during a quarter of strong
revenue growth. These improvements were due in part to a 15% headcount reduction
to 446 employees and a 50% decrease in promotional spending. SOHU's valuable
brand equity further permitted it to reduce sales & marketing expenses by
29% while growing revenues by 13%. SOHU's ability to monetize its brand is yet
another key advantage over its competitors.
SOHU continued its drive to profitability by reducing its pro forma net loss
by US$0.5 million from the fourth quarter of 2000. In addition, SOHU's monthly
burn rate in the three months ended March 31, 2001 dropped 21% from the previous
quarter to US$1.5 million, on par with its pre-ChinaRen burn rate.
"SOHU's path to profitability is more visible and predictable as a result of
its proven ability to deliver on its strategy through outstanding user
acceptance, cost reductions, increased scalability and consistent revenue growth
backed by a substantial backlog," said Derek Palaschuk, Vice President Finance.
As of March 31, 2001 SOHU's total net cash balance was US$58 million.
During the first quarter of 2001, SOHU continued to widen its competitive
lead over other China portals. SOHU was ranked the No. 1 China Web Property for
each of the first three months of 2001 by iamasia, the Hong-Kong based Internet
measurement company. In February, SOHU's lead over the No.2 China web property
exceeded 44%, compared to a gap of 22% in December 2000. Also in February,
SOHU's reach was 7.6% higher than its nearest competitor, compared to a 2.2%
lead in December 2000.
SOHU's registered users totaled 18.7 million at the end of the first quarter
2001, up an impressive 51% from 12.4 million at year-end 2000. Average daily
page views for SOHU.COM properties increased by 35%, from 79.2 million averaged
in December 2000 to 107 million average daily page views for the month of March
2001.
Business Outlook SOHU is confident that it can reach
profitability through continued revenue growth and intelligent spending
controls. As such, SOHU provides the following guidance for the upcoming second
quarter 2001:
SOHU expects total revenues for the second quarter 2001 to be between US$2.8
million and US$3.1 million. Advertising revenue for the second quarter 2001 is
expected to be between US$2.3 million and US$2.4 million on improving pro forma
gross margins of 16%. Non-advertising revenue for the same period is expected to
be between US$500,000 and US$700,000 on pro forma gross margins of 15%. Total
pro forma operating expenses are expected to be not more than US$5.2 million.
Second quarter pro forma net loss is estimated to be not more than US$3.9
million ($0.11 per share); the monthly cash burn rate to be not more than US$1.4
million. The 2001 budget for capital expenditure has been reduced from US$6.0
million to US$5.3 million, of which US$1.25 million was spent in the three
months ended March 31, 2001.
"SOHU finished the first quarter in a strong financial position," Charles
Zhang reiterated. "Solid underlying improvement in margins enabled the Company
to improve financial results while maintaining a clear lead over its
competitors."
First Quarter 2001 Conference Call Live web cast of conference call on
April 19, 2001 at 08:00 AM Hong Kong time (or 8:00 PM EST on April 18) will be
broadcast at http://www.videonewswire.com/SOHU/041801/ or at
http://www.sohu.com/about/English/earnings/index.htm. Dial-in details:
TELEPHONE: (852) 2258-4002, PASSCODE: China, LEADER: Caroline Straathof.
About SOHU.com SOHU.com is the leading Internet portal in
Mainland China with current daily page views exceeding 12 million. It provides
navigation/search, news, sports, business and finance, real estate channel,
entertainment, chat, email and e-commerce activities for a solid and wide base
of visitors. Dr. Charles Zhang founded SOHU.com in 1997. Its investors include
Intel, Dow Jones, IDG, the Morningside China Group, PCCW, Legend and Hikari. Its
content partners include CNET, DOW Jones and dozens of local media organizations
in China.
For further information: Dahlia Wei SOHU Investor
Relations and Communications Tel: +86 10 6272 6598 E-mail:
ir@sohu-inc.com
http://www.sohu.com/about/English/ |