Stock Reaction and Trading Context
Sohu.com Limited (NASDAQ: SOHU) shares rose 2.8% in pre-market trading. This happened right after the earnings release. Investors showed optimism. Why? The company returned to profitability. However, the stock traded volatilely over the past year. Gaming revenue swung wildly. Advertising demand also fluctuated. Meanwhile, no fresh analyst ratings appeared. No price-target changes came with the earnings either.
Strong Quarterly Performance Highlights
Sohu reported Q4 2025 total revenue of $142 million. This marked a 6% year-over-year increase. Yet, it fell 21% sequentially. Seasonal softness caused the drop. For instance, online game revenue hit $120 million. It grew 10% year-over-year. However, it dropped 26% quarter-over-quarter. Marketing services revenue reached $17 million. This declined 10% year-over-year. But it rose 25% quarter-over-quarter. Therefore, gaming growth and ad improvements supported the topline. Still, sequential declines slowed momentum.
Profitability Surge and Margin Insights
Sohu posted GAAP net income of $223 million in Q4. This reversed a $21 million loss from last year. A tax reversal for Changyou helped a lot. Additionally, non-GAAP net income hit $261 million. It flipped a prior-year loss. However, excluding the tax impact, profitability stayed pressured. Therefore, margin recovery remains uneven.
FY2025 Results Overview
For fiscal 2025, Sohu generated $584 million in revenue. This dipped 2% year-over-year. Online game revenue climbed to $506 million. It rose 1% year-over-year. Meanwhile, marketing services revenue fell to $60 million. It dropped 18% year-over-year. GAAP net income soared to $394 million. This turned a $100 million loss from 2024. The tax reversal drove most gains. Non-GAAP net income reached $234 million. It improved from an $83 million loss. Yet, after one-offs, an adjusted annual loss persisted. Fortunately, it narrowed year-over-year.
Solid Balance Sheet Supports Future Growth
Sohu holds strong liquidity. Cash reserves and investments back this. Past divestments and gaming cash flows built them. Therefore, the company enjoys flexibility into 2026.
Outlook: Challenges and Strategic Focus
Management expects ongoing volatility. Advertising demand will fluctuate. Gaming seasonality persists too. Sequential revenue pressure continues short-term. However, product upgrades excite them. Content investments remain key priorities.
Analyst Actions Post-Earnings
No upgrades occurred on announcement day. No downgrades appeared either. Price-target revisions stayed absent.