REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934 |
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
(Title of each class) |
(Trading Symbol(s)) |
(Name of each exchange on which registered) | ||
Large accelerated filer |
☐ |
☒ |
Non-accelerated filer |
☐ |
Emerging growth company |
International Financial Reporting Standards as issued | Other ☐ | |||||||
by the International Accounting Standards Board ☐ |
4 |
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5 |
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PART I |
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Item 1. |
6 |
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Item 2. |
6 |
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Item 3. |
6 |
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Item 4. |
66 |
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Item 4A. |
113 |
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Item 5. |
114 |
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Item 6. |
147 |
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Item 7. |
156 |
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Item 8. |
161 |
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Item 9. |
161 |
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Item 10. |
161 |
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Item 11. |
171 |
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Item 12. |
172 |
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PART II |
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Item 13. |
173 |
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Item 14. |
173 |
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Item 15. |
174 |
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Item 16A. |
174 |
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Item 16B. |
174 |
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Item 16C. |
175 |
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Item 16D. |
175 |
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Item 16E. |
175 |
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Item 16F. |
175 |
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Item 16G. |
175 |
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Item 16H. |
175 |
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PART III |
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Item 17. |
175 |
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Item 18. |
176 |
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Item 19. |
177 |
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184 |
• | “we,” “us,” “our,” “our company,” “our Group,” the “Sohu Group,” the “Group,” and “Sohu” refer to Sohu.com Limited (or our predecessor Sohu.com Inc., as applicable), and unless the context requires otherwise, include its subsidiaries and variable interest entities. Sohu.com Inc., a Delaware corporation, was dissolved on May 31, 2018 and Sohu.com Limited, which before then was a direct wholly-owned subsidiary of Sohu.com Inc., replaced Sohu.com Inc. as the top-tier, publicly-traded holding company of the Sohu Group. See “Information on the Company-History and Development of the Company” in Item 4 of this annual report. |
• | “ADSs” refers to our American depositary shares, each of which represents one ordinary share, par value $0.001 per share; |
• | “Changyou” refers to Changyou.com Limited, a Cayman Islands company, and unless the context requires otherwise, includes its subsidiaries and variable interest entities, or VIEs; |
• | “China” or “PRC” refers to the People’s Republic of China, and for the purpose of this annual report, excludes Hong Kong, Macau and Taiwan; |
• | “DAU,” for active users quoted from iResearch, for any given month, refers to the average number of active users per day during that month. A user who uses the applicable product more than once in a day is counted as one active user for that day. Each distinguishable device or application is treated as a separate user for purposes of calculating such DAU; |
• | “HNTE” refers to high and new technology enterprises; |
• | “IVAS” refers to our Internet value-added services; |
• | “IPO” refers to an initial public offering; |
• | “KNSE” refers to key national software enterprises; |
• | “Legacy TLBB Mobile” refers to a mobile game that Changyou developed based on the title and characters of Tian Long Ba Bu, which is operated by Tencent under license from Changyou and was launched in May 2017; |
• | “MAU,” for active users quoted from iResearch, for any given month, refers to the number of active users during that month. A user who uses the applicable product more than once in a month is counted as one active user for that month. Each distinguishable device or application is treated as a separate user for purposes of calculating such MAU; |
• | “Memorandum and Articles of Association” refers to our Amended and Restated Memorandum of Association and our Amended and Restated Articles of Association; |
• | “MMORPGs” refers to massively multiplayer online role-playing games; |
• | “Offshore” refers to nations and territories outside of Mainland China, and for this purpose includes Hong Kong, Macau, and Taiwan; |
• | “Paid clicks” refers to the number of paid clicks, including clicks by users on advertisers’ promotional links displayed on Sogou’s search result pages and other Internet properties and third parties’ Internet properties; |
• | “PC games” refers to interactive online games that may be accessed and played simultaneously by hundreds of thousands of game players through personal computers with local game client-end access software installation requirements. In previous annual reports, we have sometimes used the terms “MMOGs” and “MMORPGs” when referring to these client-end installed games played through personal computers; |
• | “PRC GAAP” refers to generally accepted accounting principles of the PRC; |
• | “RMB” refers to the Renminbi, which is the legal currency of China; |
• | “Sogou” refers to Sogou Inc., a Cayman Islands company, and unless the context requires otherwise, includes its subsidiaries and variable interest entities, or VIEs; |
• | “Sogou Pre-IPO Class A Ordinary Shares” refers to the Sogou Class A ordinary shares that were authorized and outstanding prior to the completion of Sogou’s IPO; |
• | “Sogou Pre-IPO Series A Preferred Shares” refers to the Sogou Series A Preferred Shares that were authorized and outstanding prior to the completion of Sogou’s IPO; |
• | “Sogou Class A Ordinary Shares” refers to the Sogou Class A Ordinary Shares, which carry one vote per share; |
• | “Sogou Class B Ordinary Shares” refers to the Sogou Class B Ordinary Shares which carry ten votes per share; |
• | “Tencent” refers to Tencent Holdings Limited and its subsidiaries under International Financial Reporting Standards; |
• | “Tian Long Ba Bu,” refers to the popular novel of that name by the famous Chinese writer Louis Cha; |
• | “TLBB” refers to the PC game developed based on the title and characters of Tian Long Ba Bu; |
• | “TLBB 3D” refers to a mobile game that was developed based on the title and characters of Tian Long Ba Bu; |
• | “TLBB Honor” refers to another mobile game that was developed based on the title and characters of Tian Long Ba Bu, which adopts an innovative portrait interface; |
• | “U.S. GAAP” refers to generally accepted accounting principles in the United States; |
• | “U.S. TCJA” refers to the U.S. Tax Cuts and Jobs Act signed into law on December 22, 2017; and |
• | “VIE” refers to an entity that is a variable interest entity under U.S. GAAP, including a subsidiary of an entity that is a variable interest entity under U.S. GAAP. |
• | our ability to maintain and strengthen our position as a leading Chinese online media, game and search service group in China; |
• | our expected development, launch and market acceptance of our products and services; |
• | our various initiatives to implement our business strategies to expand our business; |
• | our future business development, results of operations and financial condition; |
• | the expected growth of and change in the online media, search and game industries in China |
• | the impact of the completion or termination of the currently pending Tencent/Sohu Sogou Share Purchase and Sogou Merger described in “Item 4. Information on the Company-History and Development of the Company;” and |
• | the PRC government policies relating to the Internet and Internet content providers, including online media, search and game developers and operators. |
ITEM 1. |
IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS |
ITEM 2. |
OFFER STATISTICS AND EXPECTED TIMETABLE |
ITEM 3. |
KEY INFORMATION |
Year Ended December 31, |
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2016 |
2017 |
2018 |
2019 |
2020 |
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(In thousands, except per ADS data) |
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Statements of Comprehensive Income Data: |
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Revenues: |
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Brand advertising |
$ | 450,448 | $ | 315,235 | $ | 232,339 | $ | 175,056 | $ | 146,526 | ||||||||||
Online games |
395,709 | 449,533 | 389,788 | 440,902 | 536,684 | |||||||||||||||
Others |
77,905 | 97,937 | 68,048 | 57,845 | 66,680 | |||||||||||||||
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Total revenues |
924,062 | 862,705 | 690,175 | 673,803 | 749,890 | |||||||||||||||
Cost of revenues (1): |
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Brand advertising |
371,066 | 363,624 | 184,473 | 126,406 | 105,604 | |||||||||||||||
Online games |
96,168 | 62,775 | 60,981 | 88,992 | 91,526 | |||||||||||||||
Others |
43,879 | 66,467 | 43,562 | 28,249 | 20,307 | |||||||||||||||
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Total cost of revenues |
511,113 | 492,866 | 289,016 | 243,647 | 217,437 | |||||||||||||||
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Gross profit |
412,949 | 369,839 | 401,159 | 430,156 | 532,453 | |||||||||||||||
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Operating expenses: |
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Product development (1) |
219,121 | 245,536 | 246,155 | 234,852 | 241,941 | |||||||||||||||
Sales and marketing (1) |
299,020 | 237,252 | 236,898 | 204,665 | 159,787 | |||||||||||||||
General and administrative (1) |
94,964 | 86,448 | 70,129 | 54,591 | 57,354 | |||||||||||||||
Goodwill impairment and impairment of intangible assets acquired as part of business acquisitions |
0 | 86,882 | 16,369 | 7,245 | 0 | |||||||||||||||
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Total operating expenses |
613,105 | 656,118 | 569,551 | 501,353 | 459,082 | |||||||||||||||
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Operating profit/(loss) |
(200,156 | ) | (286,279 | ) | (168,392 | ) | (71,197 | ) | 73,371 | |||||||||||
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Other income/(expense), net |
19,832 | 13,207 | 30,701 | 7,963 | 25,993 | |||||||||||||||
Interest income |
17,302 | 15,012 | 16,036 | 6,103 | 7,369 | |||||||||||||||
Interest expense |
(1,356 | ) | (4,088 | ) | (17,538 | ) | (14,370 | ) | (6,234 | ) | ||||||||||
Exchange difference |
7,456 | (7,303 | ) | 3,301 | 1,430 | (3,800 | ) | |||||||||||||
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Income/(loss) before income tax expense/(benefit) |
(156,922 | ) | (269,451 | ) | (135,892 | ) | (70,071 | ) | 96,699 | |||||||||||
Income tax expense/(benefit) |
23,311 | 258,214 | (14,586 | ) | 28,428 | 133,226 | ||||||||||||||
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Net loss from continuing operations |
(180,233 | ) | (527,665 | ) | (121,306 | ) | (98,499 | ) | (36,527 | ) | ||||||||||
Net income/(loss) from discontinued operations, net of tax |
65,260 | 57,662 | 53,947 | 55,108 | (91,793 | ) | ||||||||||||||
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Net loss |
(114,973 | ) | (470,003 | ) | (67,359 | ) | (43,391 | ) | (128,320 | ) | ||||||||||
Less: Net income from continuing operations attributable to the noncontrolling interest shareholders |
46,031 | 14,050 | 41,732 | 58,223 | 18,448 | |||||||||||||||
Less: Net income/(loss) from discontinued operations attributable to the noncontrolling interest shareholders |
63,017 | 70,473 | 50,991 | 47,722 | (60,656 | ) | ||||||||||||||
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Net loss from continuing operations attributable to Sohu.com Limited |
$ | (226,264 | ) | $ | (541,715 | ) | $ | (163,038 | ) | $ | (156,722 | ) | $ | (54,975 | ) | |||||
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Net income/(loss) from discontinued operations attributable to Sohu.com Limited |
2,243 | (12,811 | ) | 2,956 | 7,386 | (31,137 | ) | |||||||||||||
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Net loss attributable to Sohu.com Limited |
$ | (224,021 | ) | $ | (554,526 | ) | $ | (160,082 | ) | $ | (149,336 | ) | $ | (86,112 | ) | |||||
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Net loss |
$ | (114,973 | ) | $ | (470,003 | ) | $ | (67,359 | ) | $ | (43,391 | ) | $ | (128,320 | ) | |||||
Other comprehensive income/(loss) |
(77,155 | ) | 68,429 | (37,339 | ) | (13,069 | ) | 11,972 | ||||||||||||
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Comprehensive loss |
(192,128 | ) | (401,574 | ) | (104,698 | ) | (56,460 | ) | (116,348 | ) | ||||||||||
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Less: Comprehensive income attributable to noncontrolling interest shareholders |
78,824 | 117,960 | 61,376 | 93,244 | (35,074 | ) | ||||||||||||||
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Comprehensive loss attributable to Sohu.com Limited. |
(270,952 | ) | (519,534 | ) | (166,074 | ) | (149,704 | ) | (81,274 | ) | ||||||||||
Basic net (loss)/income per ADS |
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Continuing operations |
$ | (5.85 | ) | $ | (13.94 | ) | $ | (4.18 | ) | $ | (3.99 | ) | $ | (1.39 | ) | |||||
Discontinued operations |
0.06 | (0.33 | ) | 0.07 | 0.19 | (0.79 | ) | |||||||||||||
Net loss per share |
(5.79 | ) | (14.27 | ) | (4.11 | ) | (3.80 | ) | (2.18 | ) | ||||||||||
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Shares used in computing basic net (loss)/income per ADS |
38,706 | 38,858 | 38,959 | 39,249 | 39,452 | |||||||||||||||
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Diluted net (loss)/income per ADS |
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Continuing operations |
$ | (5.89 | ) | $ | (13.98 | ) | $ | (4.20 | ) | $ | (4.01 | ) | $ | (1.40 | ) | |||||
Discontinued operations |
0.06 | (0.32 | ) | 0.07 | 0.18 | (0.79 | ) | |||||||||||||
Net loss per share |
(5.83 | ) | (14.30 | ) | (4.13 | ) | (3.83 | ) | (2.19 | ) | ||||||||||
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Shares used in computing diluted net (loss)/income per ADS |
38,706 | 38,858 | 38,959 | 39,249 | 39,452 | |||||||||||||||
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(1) | Share-based compensation expenses are included in the following financial statements line items: |
Year Ended December 31, |
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2016 |
2017 |
2018 |
2019 |
2020 |
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(In thousands) |
||||||||||||||||||||
Cost of revenues |
$ | 195 | $ | (342 | ) | $ | (739 | ) | $ | 142 | $ | 720 | ||||||||
Product development expenses |
3,570 | 7,078 | (4,182 | ) | 1,364 | 7,325 | ||||||||||||||
Sales and marketing expenses |
578 | 1,614 | (920 | ) | (326 | ) | 460 | |||||||||||||
General and administrative expenses |
5,927 | 13,404 | (6,267 | ) | 1,170 | 5,975 |
As of December 31, |
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2016 |
2017 |
2018 |
2019 |
2020 |
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(In thousands) |
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Balance Sheets Data: |
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Cash and cash equivalents |
$ | 764,731 | $ | 669,646 | $ | 634,310 | $ | 162,662 | $ | 217,057 | ||||||||||
Restricted cash |
0 | 3,928 | 3,539 | 3,290 | 330,791 | |||||||||||||||
Restricted time deposits |
240 | 240 | 244,150 | 240 | 101,519 | |||||||||||||||
Working capital |
918,522 | 1,472,485 | 1,131,571 | 914,801 | 970,142 | |||||||||||||||
Total assets |
2,592,450 | 3,442,985 | 3,372,956 | 2,691,864 | 2,822,121 | |||||||||||||||
Short-term bank loans |
0 | 61,216 | 129,677 | 114,528 | 315,550 | |||||||||||||||
Long-term bank loans |
0 | 122,433 | 302,323 | 0 | 92,000 | |||||||||||||||
Total liabilities |
1,034,655 | 1,625,748 | 1,820,005 | 1,384,947 | 1,790,140 | |||||||||||||||
Ordinary Shares: $0.001 par value per share (75,400 shares authorized; 38,742 shares, 38,898 shares, 39,229 shares, 39,269 shares, and 39,306 shares, respectively, issued and outstanding as of December 31, 2016, 2017, 2018, 2019, and 2020) |
45 | 45 | 39 | 39 | 39 | |||||||||||||||
Total Sohu.com Limited shareholders’ equity |
993,580 | 750,634 | 588,840 | 428,454 | 347,369 | |||||||||||||||
Noncontrolling interest |
564,215 | 1,066,603 | 964,111 | 878,463 | 684,612 | |||||||||||||||
Total shareholders’ equity |
1,557,795 | 1,817,237 | 1,552,951 | 1,306,917 | 1,031,981 |
• | continue to attract users to remain with us and use our products and services as the primary means of surfing the Internet switches from traditional PCs to mobile phones and other portable devices; |
• | continue to attract a large audience to our matrices of Chinese language content and services by expanding the type and technical sophistication of the content and services we offer; |
• | maintain and develop a sufficiently large advertiser base for our brand advertising and search and search-related advertising businesses; |
• | maintain and attract online game users by periodically updating our existing online games and developing and launching new online games; |
• | increase the revenues derived from our fee-based services and products we offer online; |
• | build our businesses such as Sohu Media Portal, Sohu Video, Focus, online games, search and search-related, and other businesses successfully; |
• | attract and retain qualified personnel; and |
• | effectively control our increased costs and expenses. |
• | access to financial resources; |
• | gateway to a host of Internet user activities; |
• | technological advancements; |
• | attractiveness of products; |
• | brand recognition; |
• | volume of traffic and users; |
• | quality of Internet platforms and content; |
• | strategic relationships; |
• | quality of services; |
• | effectiveness of sales and marketing efforts; |
• | talent of staff; and |
• | pricing; |
• | greater brand recognition among Internet users and clients; |
• | better products and services; |
• | larger user and advertiser bases; |
• | more extensive and well -developed marketing and sales networks; and |
• | substantially greater financial and technical resources. |
• | access financial resources; |
• | adapt our services and maintain and improve the quality of our services; |
• | protect our Internet platforms from hackers and unauthorized access; |
• | continue training, motivating and retaining our existing employees and attract and integrate new employees; and |
• | maintain and improve our operational, financial, accounting and other internal systems and controls. |
• | unsolicited e-mail; |
• | lost or misdirected messages; |
• | illegal or fraudulent use of e-mail; or |
• | interruptions or delays in e-mail service. |
• | The advertising market is still evolving in China. Our current and potential advertising clients may not devote a significant portion of their advertising budgets to Internet-based advertising in general, or to us in particular; |
• | Changes in government policy could restrict or curtail our brand advertising services. For example, during the last several years, the PRC government enacted a series of regulations, administrative instructions and policies to restrict online medical advertising. As a result of these regulations, we may lose some of our existing medical advertising clients. For another example, see “Government Regulation and Legal Uncertainties - Specific Statutes and Regulations - Regulation of Other Services - Real Estate Services” for a description of the Beijing Measures and other regulations affecting Focus’s business; |
• | Advertising clients may adopt new methods and strategies other than brand advertising to promote their brand and therefore our advertising revenue would be negatively affected; |
• | The acceptance of the Internet as a medium for advertising depends on the development of standards for measuring the effectiveness of advertisements disseminated over the Internet, and no standards have been widely accepted for the measurement of the effectiveness of brand advertising over the Internet. Industry-wide standards may not develop that are sufficient to support the Internet as an effective advertising medium. If these standards do not develop, advertisers may choose not to advertise on the Internet in general or through our portals or search engines; |
• | We may not have systems that are sufficiently well-developed to support our brand advertising business, and as a result, we may suffer system bugs that cause bad user experiences errors or omission in publishing our client’s advertisements, which could have a negative impact on our brand advertising business. |
• | the development of a large base of users possessing demographic characteristics attractive to advertising clients; |
• | the acceptance of brand advertisement as an effective way for business marketing by advertising clients; |
• | the effectiveness of our advertising delivery, tracking and reporting systems; |
• | the resistance pressure on brand advertising prices and limitations on inventory; and |
• | the establishment of a successful business model to make our new products adaptable to portable devices, which has required, and will continue to require us, to make significant expenditures for research, development, promotion and operations. |
• | structure; |
• | level of government involvement; |
• | level of development; |
• | level of capital reinvestment; |
• | growth rate; |
• | control of foreign exchange; and |
• | methods of allocating resources. |
• | raise Changyou’s brand recognition and game players’ loyalty; |
• | develop, license or operate new games that are appealing to game players; adapt to new trends and game player tastes; meet Changyou’s expected timetables for their launch; and, if they are successful, have acceptably long lifespans and result in an acceptable level of profit for Changyou; |
• | successfully adapt to evolving business models, industry trends and market environments by developing and investing in new business strategies, products, services and technologies, including, in particular, virtual reality, or VR, technology, for Changyou’s new games; |
• | arrange for its mobile games to be distributed through popular mobile application stores with commercial terms, including revenue-sharing arrangements, that are favorable enough to Changyou and allow it to achieve an acceptable level of profit from the games; |
• | integrate new technologies, businesses and personnel of acquired entities, and generate sufficient revenues to offset the costs and expenses of such acquisitions; and |
• | maintain or expand Changyou’s marketing efforts to attract more game players to its games and to the game information portal of the 17173.com Website in a rapidly changing and increasingly competitive business environment, and generate sufficient revenues to offset the costs and expenses of such marketing efforts; and reverse the recent decline in Changyou’s revenues from the 17173.com Website, particularly in view of the rapid emergence of mobile games and the decline in the relative popularity of PC games and Web games as users switched to mobile devices. |
• | greater financial and technical resources; |
• | more aggressive and effective strategies for hiring talent for game development, which may make it difficult for Changyou to retain its existing employees and attract new employees, which are necessary for Changyou to be able to grow its business; |
• | substantially greater financial resources and more effective methods for acquiring exclusive license rights to the titles, characters, themes and story lines of popular works in order to adapt online games from such works (which has become increasingly important for new online games to be successful); |
• | more aggressive and effective marketing strategies for promoting their online games and penetrating the mobile game market; and |
• | more capability for developing and releasing new software for mobile devices to attract a growing number of game players that access Internet products and services through mobile devices. |
• | greater brand recognition among game players and advertising clients; |
• | larger user and customer bases; |
• | more extensive and well -developed marketing and sales networks; |
• | more attractive mobile versions of their game information portals and more extensive mobile game-related products and services, such as mobile game discussion forums, in response to the rapid migration of users of Internet services from PCs to mobile devices such as tablets and mobile phones, and the unique preferences and demands of mobile users and mobile game players; and |
• | substantially greater financial and technical resources. |
• | whether the online game industry, particularly in China and the rest of the Asia-Pacific region, continues to grow and the rate of any such growth; |
• | the availability and popularity of other forms of entertainment, particularly games on console systems, which are already popular in developed countries and may gain popularity in China; |
• | growth in users of the Internet and broadband and penetration in China and other markets in which Changyou offers its games, and the rate of any such growth; |
• | whether recent declines in the use of personal computers and growth in users of mobile devices such as smart phones and tablets in general, and for purposes of accessing online games in particular, continue or accelerate in China and other markets in which Changyou offers its games; |
• | changes in consumer demographics and public tastes and preferences; and |
• | general economic conditions in China, particularly economic conditions adversely affecting discretionary consumer spending, such as the slowdown in China’s economic growth that occurred between the first quarter of 2010 and the third quarter of 2012 and from 2014 through 2020. |
• | expand the portfolio of mobile games, and particularly high -quality games, in a variety of genres that Changyou develops in-house and licenses from third-party developers; |
• | effectively develop new mobile games for multiple mobile operating systems and mobile devices; |
• | anticipate and effectively respond to the growing number of players switching to mobile games, the changing mobile landscape and the interests of players; |
• | attract, retain and motivate talented game designers, product managers and engineers with experience in developing games for mobile devices; |
• | minimize launch delays and cost overruns on the development of new games; |
• | effectively monetize mobile games without degrading the social game experience for its players; |
• | develop games that provide for a compelling and optimal user experience through existing and developing third-party technologies, including third-party software and middleware utilized by its players; and |
• | acquire and successfully integrate high- quality mobile game assets, personnel, and companies. |
• | have an adverse impact on the way Changyou designs its games and game features, which may make the games less attractive to game players; |
• | have an adverse impact on Changyou’s ability to achieve an acceptable level of revenues and profit from its mobile games; |
• | make it harder to access Changyou’s mobile games and cause a decrease in its player base; |
• | increase the cost of the development and operation of Changyou’s mobile games; and |
• | require substantial management attention and effort in monitoring the development of, and ensuring Changyou’s compliance with, existing and future PRC laws and regulations affecting the mobile games business. |
• | difficulties in identifying appropriate markets; |
• | difficulties in identifying, negotiating and maintaining good relationships with licensees or joint operators who are knowledgeable about, and can effectively operate Changyou’s games in, particular markets; |
• | difficulties in maintaining Changyou’s reputation and the reputation of its games when its games are operated by licensees or joint operators pursuant to their own standards; and |
• | difficulties in protecting Changyou’s intellectual property. |
• | difficulties and significant costs in protecting Changyou’s intellectual property in overseas markets; |
• | difficulties in retaining and maintaining local management and key development and technical personnel who are experienced and knowledgeable about, and can effectively operate Changyou’s games in, particular markets; |
• | uncertainties relating to Changyou’s ability to develop its games and/or expansion packs catering to particular overseas markets; |
• | uncertainties relating to Changyou’s ability to renew its license and joint operation agreements with licensees and joint operators upon their expiration; |
• | for Changyou’s direct operation of its games overseas, interruptions in the operation of the games due to cross-border Internet connection or other system failures; |
• | significant costs for translation of its games into the local languages of, or customization of its games for, the overseas markets in which Changyou plans to license or jointly operate its games; |
• | limited choices of third-party Internet platforms to distribute Changyou’s mobile games in certain overseas markets; |
• | difficulty for Changyou’s management to exercise timely and effective supervision and administration of local management and employees in general, and their interactions with local third-party Internet platforms or other service providers in particular, in order to identify and prevent any sloppy, dishonest or illegal activities, which could harm Changyou’s business and reputation or subject Changyou to penalties; |
• | significant marketing costs to promote Changyou’s games in certain overseas markets where third-party Internet platforms do not include marketing services as part of the revenue-sharing arrangements; |
• | different game player preferences in certain overseas markets; |
• | difficulties and significant costs relating to compliance with the different legal requirements and commercial terms, such as game export regulatory procedures, taxes and other restrictions and expenses, in the overseas markets in which Changyou licenses or directly or jointly operates its games; |
• | exposure to different regulatory systems governing the protection of intellectual property and the regulation of online games, the Internet and the export of technology; |
• | costs for compliance with different legal requirements and commercial terms in overseas markets; |
• | difficulties in verifying revenues generated from Changyou’s games by its licensees for purposes of determining royalties payable to Changyou; |
• | difficulties and delays in contract enforcement and collection of receivables through the use of foreign legal systems; |
• | changes in the political, regulatory or economic conditions, or public policy, affecting online games in particular foreign countries or regions; |
• | the risk that regulatory authorities in foreign countries or administrative regions may impose withholding taxes, or place restrictions on repatriation of Changyou’s profits; and |
• | fluctuations in currency exchange rates. |
• | Changyou may fail to provide game updates, expansion packs and other enhancements in a timely manner due to technological or resource limitations, or other factors; |
• | Changyou’s game updates, expansion packs and new versions may contain programming errors, and their installation may create other unforeseen issues that adversely affect the game-playing experience; |
• | Changyou may fail to timely respond and/or resolve complaints from its game players; |
• | Changyou may fail to eliminate computer “bots” which can disrupt its games’ smooth operation and reduce the attractiveness of its games; and |
• | Changyou’s game updates, expansion packs and other enhancements may change rules or other aspects of its games that its game players do not welcome, resulting in a reduction in the active accounts or active paying accounts of its online games. |
• | Changes in government policy could restrict or curtail Changyou’s online advertising services; |
• | The decline in the demand for online advertising services from developers and operators of PC games, as the relative popularity of such games continues to decline; |
• | Advertising clients may adopt new methods and strategies other than online advertising to promote their brands, which would have an adverse impact on Changyou’s advertising revenues; and |
• | The acceptance of the Internet as a medium for advertising depends on the development of a measurement standard. No standards for the measurement of the effectiveness of online advertising have been widely accepted. Industry-wide standards may not develop sufficiently to support the Internet as an effective advertising medium. If these standards do not develop, advertisers may choose not to advertise on the Internet in general, or through Changyou’s Websites. |
• | the development of a large base of users possessing demographic characteristics attractive to advertising clients; |
• | the development of successful mobile versions of the 17173.com Website and the provision of extensive mobile game-related products and services in response to the rapid migration of users of Internet services from PCs to mobile devices, such as tablets and mobile phone; |
• | the acceptance of online advertisements, either through PCs or mobile devices, as an effective method of business marketing; |
• | the effectiveness of Changyou’s advertising delivery, tracking and reporting systems; |
• | the extent of resistance from existing or potential customers to online advertising prices; and |
• | the development of new formats for online advertising, such as streaming video. |
ITEM 4. |
INFORMATION ON THE COMPANY |
• | $134.9 million in brand advertising revenues, of which $86.3 million was from Sohu Media Portal, $25.3 million was from Sohu Video, and $23.3 million was from Focus; and |
• | $66.6 million in other revenues, mainly attributable to revenues from paid subscription services, interactive broadcasting services, and sub-licensing of purchased video content to third parties. |
• | $536.7 million in online game revenues, of which $353.7 million was from PC games, and $183.0 million was from mobile games; and |
• | $11.6 million in brand advertising revenues, mainly attributable to Changyou’s 17173.com Website. |
• | Sohu Media Portal. |
• | Sohu Video. |
• | Focus. |
(i) | Sohu.com Limited: 127,200,000 Sogou Class B Ordinary Shares held by Sohu for its own account, and 3,717,250 Sogou Class A Ordinary Shares held by Sohu for the purpose of issuance upon the exercise of outstanding share-based awards and future share-based awards; |
(ii) | Tencent: 151,557,875 Sogou Class B Ordinary Shares; |
(iii) | Photon, an investment vehicle of the Sohu Group’s Chairman and Chief Executive Officer Charles Zhang: 24,686,863 Sogou Class A Ordinary Shares; and |
(iv) | Shareholders other than Sohu, Tencent, and Photon: 80,428,928 Sogou Class A Ordinary Shares, including Sogou Class A Ordinary Shares represented by Sogou ADSs. |
• | access to financial resources; |
• | gateway to host of Internet users’ activities; |
• | technological advancements; |
• | attractiveness of products; |
• | brand recognition; |
• | volume of traffic and users; |
• | quality of Internet platforms and content; |
• | quality and quantity of purchased video content, self-developed video content, and user-generated content; |
• | strategic relationships; |
• | quality of services; |
• | effectiveness of sales and marketing efforts; |
• | talent of staff; and |
• | pricing. |
• | greater brand recognition among Internet users and clients; |
• | better products and services; |
• | larger user and advertiser bases; |
• | more extensive and well -developed marketing and sales networks; and |
• | substantially greater financial and technical resources. |
• | online game developers and/or operators in China that are publicly traded in the United States and in Hong Kong, including IGG Inc., Kingsoft Corporation Limited, NetEase, Inc., and Tencent; |
• | other companies in China devoted to game development and/or operation that are publicly traded in China, such as Beijing Kunlun Tech Co., Ltd., Giant Network Group Co., Ltd., Perfect World Co., Ltd., Wuhu 37 Interactive Entertainment Network Technology Group Co., Ltd., YOOZOO Games Co., Ltd., and Zhejiang Century Huatong Group Co., Ltd. (formerly known as Shanda Games Limited); and |
• | international competitors. |
• | Duowan.com, operated by JOYY Inc.; and |
• | Game.sina.com.cn, operated by Sina Corporation. |
• | the Ministry of Industry and Information Technology (the “MIIT”), which resulted from the merger of the former Ministry of Information Industry and other governmental departments; |
• | the Ministry of Culture and Tourism of the People’s Republic of China (the “MCT”), which was established in March 2018 and resulted from the merger of the former Ministry of Culture (the “MOC”), and the former China National Tourism Administration (the “CNTA”). The “MCT” as used in this report refers to the governmental authority that resulted from the merger, as well as to the MOC and the CNTA separately for periods prior to the merger; |
• | the Ministry of Public Security (“MPS”); |
• | the Ministry of Commerce (“MOFCOM”); |
• | the State Administration of Market Regulation (the “SAMR”), which resulted from the merger of, and assumed the responsibilities previously held by, the State Administration for Industry and Commerce (the “SAIC”), the General Administration of Quality Supervision, Inspection and Quarantine (the “AQSIQ”) the Certification and Accreditation Administration, the Standardization Administration of China (the “SAC”), and the State Food and Drug Administration (the “SFDA”). The “SAMR” as used in this report refers to the governmental authority that resulted from the merger, as well as to the SAIC, the AQSIQ, the SAC, and the SFDA separately for periods prior to the merger; |
• | the State Administration of Press, Publication, Radio, Film and Television (the “SAPPRFT”) was reorganized into three separate governmental authorities, the National Radio and Television Administration (“NRTA”), the National Film Administration (the “NFA”), and the State Press Publication Administration (the “SPPA”), in March 2018. The SAPPRFT had resulted from the merger of the former General Administration of Press and Publication (the “GAPP”) with the former State Administration of Radio, Film and Television (the “SARFT”) in March 2013. The “NRTA,” the “NFA” and the “SPPA” as used in this report refer to the respective governmental authorities after the reorganization; the “SAPPRFT” as used in this report refers to the governmental authority that resulted from the merger for the period after the merger and prior to the reorganization, as well as to the GAPP and the SARFT separately for periods prior to the merger; |
• | the PRC State Council Information Office (the “SCIO”); |
• | the Cyberspace Administration of China (the “CAOC”); |
• | the State Administration of Foreign Exchange (the “SAFE”); and |
• | the China Banking and Insurance Regulatory Commission (the “CBIRC”), which resulted from the merger of, and assumed the responsibilities previously held by, the China Banking Regulatory Commission (the “CBRC”) and the China Insurance Regulatory Commission (the “CIRC”). The “CBIRC” as used in this report refers to the governmental authority that resulted from the merger, as well as to the CBRC and the CIRC separately for periods prior to the merger. |
• | Internet news information service providers must be entities duly incorporated within the territory of the PRC; |
• | Managers and chief editors of Internet news information service providers must be Chinese citizens; |
• | Internet news information service providers must have personnel who have appropriate qualification and professional training; |
• | Internet news information service providers must have sound Internet news information service management systems; |
• | Internet news information service providers must have rigorous information security management systems; |
• | Internet news information service providers must have facilities that are suitable for their proposed services, and must be adequately funded; and |
• | Internet news information service providers may only republish news published by governmental news agencies and must ensure the original sources are traceable. |
• | the production, duplication, importation, release or broadcasting of Internet cultural products; |
• | the dissemination of online cultural products on the Internet or transmission thereof via Internet or mobile phone networks to users’ terminals such as computers, fixed-line or mobile phones, television sets, gaming consoles and Internet surfing service sites such as Internet cafés for the purpose of browsing, using or downloading such products; or |
• | the exhibition or holding of contests related to Internet cultural products. |
• | Provisional Regulations of the People’s Republic of China for the Administration of International Connections to Computer Information Networks |
• | Administrative Measures for International Communications Gateways . |
• | be a PRC legal person; |
• | have the appropriate equipment, facilities and technical and administrative personnel; |
• | have implemented and registered a system of information security and censorship; and |
• | effect all international connections through an international communications gateway established with the approval of the MIIT. |
• | The Law of the People’s Republic of China on the Preservation of State Secrets |
• | The Law of the People’s Republic of China Regarding Anti-spy |
• | Rules of the People’s Republic of China for Protecting the Security of Computer Information Systems |
• | Administrative Regulations for the Protection of Secrecy on Railway Computer Information Systems Connected to International Networks |
• | Regulations for the Protection of State Secrets for Computer Information Systems on the Internet |
• | Notice issued by the Ministry of Public Security of the People’s Republic of China Regarding Issues Relating to the Implementation of the Administrative Measure for the Security Protection of International Connections to Computer Information Networks |
• | The Decision of the Standing Committee of the National People’s Congress Regarding the Safeguarding of Internet Security |
• | “A breach of public security” |
• | “Socially destabilizing content” |
• | “State secrets” |
• | filing with the Beijing AMR and obtain electronic registration marks for the Websites; |
• | placing the registration marks on the Websites’ homepages; and |
• | registering the Website names with the Beijing AMR. |
• | unauthorized use of marks that are the same as or similar to the names, packaging, or decoration of another party’s products; |
• | unauthorized use of another party’s organizational name or the name of an individual; |
• | unauthorized use of another party’s domain name, website name, or webpage; and |
• | other actions causing a third party to mistakenly believe that another party’s product is that of the business operator. |
• | the combined worldwide turnover of all of the subject enterprises in the preceding financial year is more than RMB10.00 billion (or approximately $1.45 billion), and the nationwide turnover within China of each of at least two of the subject enterprises in the preceding financial year is more than RMB400.0 million (or approximately $58.0 million); or |
• | the combined nationwide turnover within China of all the subject enterprises in the preceding financial year is more than RMB2.00 billion (or approximately $289.8 million), and the nationwide turnover within China of each of at least two of the subject enterprises in the preceding financial year is more than RMB400.0 million (or approximately $58.0 million). |
• | Sohu.com (Hong Kong) Ltd., or Sohu HK, established in 2000; |
• | Beijing Sohu New Era Information Technology Co., Ltd., or Sohu Era, established in 2003; |
• | Sohu.com (Search) Limited, or Sohu Search, established in 2005; |
• | Beijing Sohu New Media Information Technology Co., Ltd., or Sohu Media, established in 2006; |
• | Sohu.com (Game) Limited, or Sohu Game, established in 2008; |
• | Beijing Sohu New Momentum Information Technology Co., Ltd., or Sohu New Momentum, established in 2010; |
• | Fox Video Limited, or Sohu Video, established in 2011; |
• | Fox Information Technology (Tianjin) Limited, or Video Tianjin, established in 2011; and |
• | Sohu Focus Limited, or Sohu Focus, established in 2013. |
• | Changyou.com Limited, or Changyou, established in 2007; |
• | Changyou.com (HK) Limited, or Changyou HK, established in 2007; |
• | Beijing AmazGame Age Internet Technology Co., Ltd., or AmazGame, established in 2007; |
• | Beijing Changyou Gamespace Software Technology Co., Ltd., or Gamespace, established in 2009; |
• | Changyou.com Korea LLC, or Changyou Korea, established in 2010; and |
• | Beijing Changyou Chuangxiang Software Technology Co., Ltd., or Changyou Chuangxiang, established in 2016. |
• | Sogou Inc., or Sogou, established in 2005; |
• | Sogou (BVI) Limited, or Sogou BVI, established in 2005; |
• | Beijing Sogou Technology Development Co., Ltd., or Sogou Technology, established in 2006; |
• | Sogou Hong Kong Limited, or Sogou HK, established in 2007; |
• | Vast Creation Advertising Media Services Limited, or Vast Creation, established in 2004 and acquired by Sogou in 2011; |
• | Beijing Sogou Network Technology Co., Ltd., or Sogou Network, established in 2012; |
• | Sogou (Shantou) Internet Microcredit Co., Ltd., or Sogou Microcredit, established in 2017; |
• | Sogou (Hangzhou) Intelligent Technology Co., Ltd., or Sogou Hangzhou, established in 2018; and |
• | Shantou Ying Zhong Bai Fu Financing Guarantee Co., Ltd., or Sogou Financing Guarantee, established in 2019. |
• | Beijing Century High-Tech Investment Co., Ltd., or High Century, a PRC company that was incorporated in 2001. As of December 31, 2020, Dr. Charles Zhang, our Chairman of the Board and Chief Executive Officer, and Wei Li, one of our employees, held 80% and 20% interests, respectively, in this entity; |
• | Beijing Heng Da Yi Tong Information Technology Co., Ltd., or Heng Da Yi Tong, a PRC company that was incorporated in 2002. As of December 31, 2020, Dr. Charles Zhang and Wei Li held 80% and 20% interests, respectively, in this entity; |
• | Beijing Sohu Internet Information Service Co., Ltd., or Sohu Internet, a PRC company that was incorporated in 2003. As of December 31, 2020, High Century held a 100% interest in this entity; |
• | Beijing Sohu Donglin Advertising Co., Ltd., or Donglin, a PRC company that was incorporated in 2010. As of December 31, 2020, Sohu Internet held a 100% interest in this entity; |
• | Tianjin Jinhu Culture Development Co., Ltd, or Tianjin Jinhu, a PRC company that was incorporated in 2011. As of December 31, 2020, Xiufeng Deng and Xuemei Zhang, both of whom are our employees, each held a 50% interest in this entity; and |
• | Beijing Focus Interactive Information Service Co., Ltd., or Focus Interactive, a PRC company that was incorporated in July 2014. As of December 31, 2020, Heng Da Yi Tong held a 100% interest in this entity. |
• | Beijing Gamease Age Digital Technology Co., Ltd., or Gamease, a PRC company that was incorporated in 2007. As of December 31, 2020, High Century held a 100% interest in this entity; |
• | Shanghai ICE Information Technology Co., Ltd., or Shanghai ICE, a PRC company that was acquired by Changyou in 2010. As of December 31, 2020, Gamease held a 100% interest in this entity; and |
• | Beijing Guanyou Gamespace Digital Technology Co., Ltd., or Guanyou Gamespace, a PRC company that was incorporated in 2010. As of December 31, 2020, Beijing Changyou Star Digital Technology Co., Ltd (“Changyou Star”) held a 100% interest in this entity. |
• | Beijing Sogou Information Service Co., Ltd., or Sogou Information, a PRC company that was incorporated in 2005. As of December 31, 2020, Xiaochuan Wang, Sogou’s Chief Executive Officer, High Century and Tencent held 10%, 45% and 45% interests, respectively, in this entity; and |
• | Chengdu Easypay Technology Co., Ltd., or Chengdu Easypay, was incorporated in January 2015. As of December 31, 2020, Sogou Information held 100% of the equity interests in this entity. |
ITEM 4A. |
UNRESOLVED STAFF COMMENTS |
ITEM 5. |
OPERATING AND FINANCIAL REVIEW AND PROSPECTS |
Year Ended December 31, 2018 (in thousands) |
||||||||||||
Sohu |
Changyou |
Total |
||||||||||
Brand advertising: |
||||||||||||
Sohu Media Portal |
$ | 127,612 | 0 | 127,612 | ||||||||
Sohu Video |
53,886 | 0 | 53,886 | |||||||||
Focus |
31,144 | 0 | 31,144 | |||||||||
17173.com Website |
0 | 19,697 | 19,697 | |||||||||
Online games: |
||||||||||||
PC games |
0 | 236,743 | 236,743 | |||||||||
Mobile games |
0 | 151,737 | 151,737 | |||||||||
Other games |
0 | 1,308 | 1,308 | |||||||||
Others |
61,974 | 6,074 | 68,048 | |||||||||
|
|
|
|
|
|
|||||||
Total |
$ | 274,616 | 415,559 | 690,175 | ||||||||
|
|
|
|
|
|
Year Ended December 31, 2019 (in thousands) |
||||||||||||
Sohu |
Changyou |
Total |
||||||||||
Brand advertising: |
||||||||||||
Sohu Media Portal |
$ | 94,692 | 0 | 94,692 | ||||||||
Sohu Video |
34,529 | 0 | 34,529 | |||||||||
Focus |
32,120 | 0 | 32,120 | |||||||||
17173.com Website |
0 | 13,715 | 13,715 | |||||||||
Online games: |
||||||||||||
PC games |
0 | 267,752 | 267,752 | |||||||||
Mobile games |
0 | 172,718 | 172,718 | |||||||||
Other games |
0 | 432 | 432 | |||||||||
Others |
57,082 | 763 | 57,845 | |||||||||
|
|
|
|
|
|
|||||||
Total |
$ | 218,423 | 455,380 | 673,803 | ||||||||
|
|
|
|
|
|
Year Ended December 31, 2020 (in thousands) |
||||||||||||
Sohu |
Changyou |
Total |
||||||||||
Brand advertising: |
||||||||||||
Sohu Media Portal |
$ | 86,293 | 0 | 86,293 | ||||||||
Sohu Video |
25,312 | 0 | 25,312 | |||||||||
Focus |
23,281 | 0 | 23,281 | |||||||||
17173.com Website |
0 | 11,640 | 11,640 | |||||||||
Online games: |
||||||||||||
PC games |
0 | 353,737 | 353,737 | |||||||||
Mobile games |
0 | 182,947 | 182,947 | |||||||||
Other games |
0 | 0 | 0 | |||||||||
Others |
66,658 | 22 | 66,680 | |||||||||
|
|
|
|
|
|
|||||||
Total |
$ | 201,544 | 548,346 | 749,890 | ||||||||
|
|
|
|
|
|
(i) | Fixed Price model |
(ii) | CPM model |
(iii) | CPC model |
• | Sohu New Momentum. Sohu New Momentum qualified as an HNTE for the years 2019 through 2021, and will need to re-apply for HNTE qualification in 2022. |
• | Sohu Internet and Video Tianjin. Sohu Internet and Video Tianjin qualified as HNTEs for the years 2018 through 2020, and will need to re-apply for HNTE qualification in 2021. |
• | Sohu Media. Sohu Media re-applied for HNTE qualification and received approval in December 2020. Sohu Media is entitled to continue to enjoy the beneficial tax rate as an HNTE for the years 2020 through 2022, and will need to re-apply for HNTE qualification in 2023. |
• | Gamespace and Changyou Chuangxiang. Gamespace and Changyou Chuangxiang qualified as HNTEs for the years 2019 through 2021, and will need to re-apply for HNTE qualification in 2022. |
• | Gamease and AmazGame. Gamease and AmazGame re-applied for HNTE qualification and received approval in October 2020. Gamease and AmazGame are entitled to continue to enjoy the beneficial tax rate as HNTEs for the years 2020 through 2022, and will need to re-apply for HNTE qualification in 2023. |
• | Sogou Network. Sogou Network qualified as an HNTE for the years 2019 through 2021, and will need to re-apply for HNTE qualification in 2022. |
• | Sogou Information. Sogou Information qualified as an HNTE for the years 2018 through 2020, and will need to re-apply for HNTE qualification in 2021. |
• | Sogou Technology. Sogou Technology re-applied for HNTE qualification and received approval in December 2020. Sogou Technology is entitled to continue to enjoy the beneficial tax rate as an HNTE for the years 2020 through 2022, and will need to re-apply for HNTE qualification in 2023. |
• | AmazGame. In 2020, AmazGame completed a self-assessment and filed required supporting documents for KNSE status for 2019. Also in 2020, AmazGame was qualified as a KNSE after the relevant government authorities’ assessment and became entitled to a preferential income tax rate of 10% for 2019. AmazGame will follow the appropriate rules and procedures of the relevant government authorities in order to maintain its KNSE status for 2020. |
• | Changyou Chuangxiang. In 2020, Changyou Chuangxiang completed a self-assessment and filed required supporting documents for KNSE status for 2019. Also in 2020, Changyou Chuangxiang was qualified as a KNSE after the relevant government authorities’ assessment and became entitled to a preferential income tax rate of 10% for 2019. Changyou Chuangxiang will follow the appropriate rules and procedures of the relevant government authorities in order to maintain its KNSE status for 2020. |
December 31, 2019 |
ASU 2016-13 adjustment |
January 1, 2020 |
||||||||||
Allowance for credit losses |
||||||||||||
Accounts receivable, net |
$ | 126,081 | $ | (3,383 | ) | $ | 122,698 | |||||
Accounts receivable and financing receivables, net classified as assets held for sale (1) |
134,635 | (3,273 | ) | 131,362 | ||||||||
|
|
|
|
|
|
|||||||
Total assets |
2,691,864 | (6,656 | ) | 2,685,208 | ||||||||
Shareholders’ equity |
||||||||||||
Accumulated deficit |
(544,137 | ) | (6,656 | ) | (550,793 | ) |
Note | (1): Of the total adjustment of $3.3 million, $2.5 million was related to financing receivables. |
As of December 31, |
||||||||
2019 |
2020 |
|||||||
Accounts receivable, net |
||||||||
Accounts receivable |
$ | 130,037 | $ | 94,528 | ||||
Less: Allowance for credit losses |
(3,956 | ) | (7,007 | ) | ||||
|
|
|
|
|||||
$ | 126,081 | $ | 87,521 |
As of December 31, |
||||||||
2019 |
2020 |
|||||||
Less than 179 days |
$ | 113,173 | $ | 78,805 | ||||
180-359 days |
6,516 | 7,569 | ||||||
360 days and greater |
10,348 | 8,154 | ||||||
|
|
|
|
|||||
Total |
130,037 | 94,528 |
For the year ended December 31, |
||||||||||||
2018 |
2019 |
2020 |
||||||||||
Balance at the beginning of year |
$ | 4,487 | $ | 7,574 | $ | 3,956 | ||||||
Changes on initial application of ASU 2016-13 (1) |
0 | 0 | 3,383 | |||||||||
Additional allowance for credit losses, net of recoveries |
5,449 | 4,724 | 2,419 | |||||||||
Write-offs |
(1,940 | ) | (8,237 | ) | (3,231 | ) | ||||||
Exchange difference |
(422 | ) | (105 | ) | 480 | |||||||
|
|
|
|
|
|
|||||||
Balance at the end of year |
7,574 | 3,956 | 7,007 |
As of December 31, |
||||||||
2019 |
2020 |
|||||||
Accounts receivable |
$ | 77,210 | $ | 35,975 | ||||
Financing receivables |
66,858 | 41,911 | ||||||
Less: Allowance for credit losses (1) |
(12,255 | ) | (6,700 | ) | ||||
|
|
|
|
|||||
$ | 131,813 | $ | 71,186 |
Note | (1): The allowance for credit losses related to financing receivables was $6.4 million as of December 31, 2020. |
December 31, 2019 |
1 -30 Days Past Due |
31 -60 Days Past Due |
61 -90 Days Past Due |
Greater than 90 Days Past Due |
Total Past Due |
Current |
Total |
|||||||||||||||||||||
Financing receivables by origination year |
||||||||||||||||||||||||||||
2018 |
$ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 1,744 | $ | 1,744 | ||||||||||||||
2019 |
10,606 | 1,635 | 1,176 | 1,709 | 15,126 | 49,988 | 65,114 | |||||||||||||||||||||
Total |
10,606 | 1,635 | 1,176 | 1,709 | 15,126 | 51,732 | 66,858 | |||||||||||||||||||||
December 31, 2020 |
||||||||||||||||||||||||||||
Financing receivables by origination year |
||||||||||||||||||||||||||||
2018 |
$ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 1,081 | $ | 1,081 | ||||||||||||||
2019 |
1 | 1 | 2 | 0 | 4 | 182 | 186 | |||||||||||||||||||||
2020 |
7,037 | 576 | 548 | 501 | 8,662 | 31,982 | 40,644 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Total |
$ | 7,038 | $ | 577 | $ | 550 | $ | 501 | $ | 8,666 | $ | 33,245 | $ | 41,911 |
For the year ended December 31, |
||||||||||||
2018 |
2019 |
2020 |
||||||||||
Beginning balance |
$ | 384 | $ | 7,511 | $ | 12,255 | ||||||
Change on initial application of ASU 2016-13 (1) |
0 | 0 | 3,273 | |||||||||
Additional allowance for credit losses, net of recoveries |
9,119 | 15,620 | 3,049 | |||||||||
Write-offs |
(1,908 | ) | (11,741 | ) | (12,517 | ) | ||||||
Exchange difference |
(84 | ) | 865 | 640 | ||||||||
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Balance at the end of year |
$ | 7,511 | $ | 12,255 | $ | 6,700 |
Note | (1): We adopted ASU 2016-13 using the modified retrospective transition approach. The adjustments arising from the new CECL model are recognized in the opening consolidated balance sheet on January 1, 2020. |
Fixed Assets |
Estimated Useful Lives (years) | |
Office buildings | 36-47 | |
Leasehold improvements | Lesser of term of the lease or the estimated useful lives of the assets | |
Vehicles | 4-10 | |
Office furniture | 5 | |
Computer equipment and hardware | 2-5 |
Intangible Assets |
Estimated Useful Lives (years) | |
Purchased video content | 1 month to 2 years | |
Computer software | 1-5 | |
Developed technologies | 3-10 | |
Domain names and trademarks | 4-30 | |
Operating rights for licensed games | over the contract terms |
Year ended December 31, |
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2018 |
2019 |
2020 |
2019 VS 2018 |
2020 VS 2019 |
||||||||||||||||||||||||||||||||||||
Amount | Percentage | Amount | Percentage | Amount | Percentage | Amount | Incremental ratio |
Amount | Incremental ratio |
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Revenues: |
||||||||||||||||||||||||||||||||||||||||
Brand advertising |
$ | 232,339 | 34 | % | $ | 175,056 | 26 | % | $ | 146,526 | 20 | % | $ | (57,283 | ) | (25 | )% | $ | (28,530 | ) | (16 | )% | ||||||||||||||||||
Online games |
389,788 | 56 | % | 440,902 | 65 | % | 536,684 | 72 | % | 51,114 | 13 | % | 95,782 | 22 | % | |||||||||||||||||||||||||
Others |
68,048 | 10 | % | 57,845 | 9 | % | 66,680 | 8 | % | (10,203 | ) | (15 | )% | 8,835 | 15 | % | ||||||||||||||||||||||||
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Total revenues |
$ | 690,175 | 100 | % | $ | 673,803 | 100 | % | $ | 749,890 | 100 | % | $ | (16,372 | ) | (2 | )% | $ | 76,087 | 11 | % | |||||||||||||||||||
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• | Sohu Media Portal |
• | Sohu Video |
• | Focus |
• | 17173.com Website |
Average Monthly Active Accounts (1) |
Three Months Ended March 31 |
Three Months Ended June 30 |
Three Months Ended September 30 |
Three Months Ended December 31 |
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(in millions) | PC games | Mobile games |
PC games | Mobile games |
PC games | Mobile games |
PC games | Mobile games |
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2018 |
2.5 | 2.6 | 2.3 | 3.2 | 2.3 | 3.7 | 2.0 | 2.9 | ||||||||||||||||||||||||
2019 |
1.9 | 2.7 | 2.0 | 2.7 | 2.1 | 3.5 | 2.2 | 3.7 | ||||||||||||||||||||||||
2020 |
2.1 | 3.4 | 1.9 | 3.1 | 2.0 | 3.8 | 2.3 | 2.4 | ||||||||||||||||||||||||
Quarterly Aggregate Active Paying Accounts (2) |
Three Months Ended March 31 |
Three Months Ended June 30 |
Three Months Ended September 30 |
Three Months Ended December 31 |
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(in millions) | PC games | Mobile games |
PC games | Mobile games |
PC games | Mobile games |
PC games | Mobile games |
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2018 |
0.8 | 0.8 | 0.7 | 0.7 | 0.8 | 0.7 | 0.9 | 0.7 | ||||||||||||||||||||||||
2019 |
0.9 | 0.6 | 0.9 | 0.6 | 1.0 | 1.1 | 1.0 | 1.1 | ||||||||||||||||||||||||
2020 |
1.0 | 1.0 | 0.9 | 0.6 | 1.0 | 0.6 | 0.9 | 0.6 |
(1) | Average Monthly Active Accounts for a given period refers to the number of registered accounts that were logged in to these games at least once during the period. |
(2) | Quarterly Aggregate Active Paying Accounts for a given quarter refers to the number of accounts from which game points are used at least once during the quarter. |
Year ended December 31, |
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2018 |
2019 |
2020 |
2019 VS 2018 |
2020 VS 2019 |
||||||||||||||||||||||||||||||||||||
Amount | Percentage | Amount | Percentage | Amount | Percentage | Amount | Incremental ratio |
Amount | Incremental ratio |
|||||||||||||||||||||||||||||||
Cost of revenues: |
||||||||||||||||||||||||||||||||||||||||
Brand advertising |
$ | 184,473 | 64 | % | $ | 126,406 | 52 | % | $ | 105,604 | 49 | % | $ | (58,067 | ) | (31 | )% | $ | (20,802 | ) | (16 | )% | ||||||||||||||||||
Online games |
60,981 | 21 | % | 88,992 | 37 | % | 91,526 | 42 | % | 28,011 | 46 | % | 2,534 | 3 | % | |||||||||||||||||||||||||
Others |
43,562 | 15 | % | 28,249 | 11 | % | 20,307 | 9 | % | (15,313 | ) | (35 | )% | (7,942 | ) | (28 | )% | |||||||||||||||||||||||
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Total cost of revenues |
$ | 289,016 | 100 | % | $ | 243,647 | 100 | % | $ | 217,437 | 100 | % | $ | (45,369 | ) | (16 | )% | $ | (26,210 | ) | (11 | )% | ||||||||||||||||||
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Year ended December 31, |
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2018 |
2019 |
2020 |
2019 VS 2018 |
2020 VS 2019 |
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Amount | Percentage | Amount | Percentage | Amount | Percentage | Amount | Incremental ratio |
Amount | Incremental ratio |
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Operating expenses: |
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Product development |
$ | 246,155 | 43 | % | $ | 234,852 | 47 | % | $ | 241,941 | 53 | % | $ | (11,303 | ) | (5 | )% | $ | 7,089 | 3 | % | |||||||||||||||||||
Sales and marketing |
236,898 | 42 | % | 204,665 | 41 | % | 159,787 | 35 | % | (32,233 | ) | (14 | )% | (44,878 | ) | (22 | )% | |||||||||||||||||||||||
General and administrative |
70,129 | 12 | % | 54,591 | 11 | % | 57,354 | 12 | % | (15,538 | ) | (22 | )% | 2,763 | 5 | % | ||||||||||||||||||||||||
Goodwill impairment and impairment of intangible assets acquired as part of business acquisitions |
16,369 | 3 | % | 7,245 | 1 | % | 0 | 0 | % | (9,124 | ) | (56 | )% | (7,245 | ) | (100 | )% | |||||||||||||||||||||||
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Total operating expenses |
$ | 569,551 | 100 | % | $ | 501,353 | 100 | % | $ | 459,082 | 100 | % | $ | (68,198 | ) | (12 | )% | $ | (42,271 | ) | (8 | )% | ||||||||||||||||||
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Year Ended December 31, |
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Share-based compensation expense |
2018 |
2019 |
2020 |
|||||||||
Cost of revenues |
$ | (739 | ) | $ | 142 | $ | 720 | |||||
Product development expenses |
(4,182 | ) | 1,364 | 7,325 | ||||||||
Sales and marketing expenses |
(920 | ) | (326 | ) | 460 | |||||||
General and administrative expenses |
(6,267 | ) | 1,170 | 5,975 | ||||||||
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$ | (12,108 | ) | $ | 2,350 | $ | 14,480 | ||||||
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Year Ended December 31, |
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Share-based compensation expense |
2018 |
2019 |
2020 |
|||||||||
For Sohu (excluding Sohu Video) share-based awards |
$ | (5,100 | ) | $ | 1,940 | $ | 2,633 | |||||
For Changyou share-based awards |
(6,461 | ) | 1,305 | 12,544 | ||||||||
For Sohu Video share-based awards |
(547 | ) | (895 | ) | (697 | ) | ||||||
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$ | (12,108 | ) | $ | 2,350 | $ | 14,480 | ||||||
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Year Ended December 31, |
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2018 |
2019 |
2020 |
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Net cash provided by/(used in) continuing operating activities |
$ | (52,143 | ) | $ | (18,267 | ) | $ | 163,394 | ||||
Net cash provided by/(used in) discontinued operating activities |
136,168 | 228,857 | (68,187 | ) | ||||||||
Net cash provided by operating activities |
84,025 | 210,590 | 95,207 | |||||||||
Net cash provided by/(used in) continuing investing activities |
180,146 | (214,814 | ) | 184,393 | ||||||||
Net cash provided by/(used in) discontinued investing activities |
(639,390 | ) | (228,406 | ) | 235,374 | |||||||
Net cash provided by/(used in) investing activities |
(459,244 | ) | (443,220 | ) | 419,767 | |||||||
Net cash provided by/(used in) continuing financing activities |
96,333 | (479,748 | ) | 101,795 | ||||||||
Net cash provided by/(used in) discontinued financing activities |
1 | (33,415 | ) | (8,209 | ) | |||||||
Net cash provided by/(used in) financing activities |
96,334 | (513,163 | ) | 93,586 | ||||||||
Effect of exchange rate change on cash, cash equivalents, restricted cash and restricted time deposits |
(19,544 | ) | (10,047 | ) | 36,984 | |||||||
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Net increase/(decrease) in cash, cash equivalents, restricted cash and restricted time deposits |
(298,429 | ) | (755,840 | ) | 645,544 | |||||||
Cash, cash equivalents, restricted cash and restricted time deposits at beginning of period |
1,368,295 | 1,069,866 | 314,026 | |||||||||
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Cash, cash equivalents, restricted cash and restricted time deposits at end of period |
$ | 1,069,866 | $ | 314,026 | $ | 959,570 | ||||||
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Less: Cash, cash equivalents, restricted cash and restricted time deposits of discontinued operations, end of year |
187,867 | 147,834 | 310,203 | |||||||||
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Cash, cash equivalents, restricted cash and restricted time deposits of continuing operations, end of year |
881,999 | 166,192 | 649,367 | |||||||||
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2021 |
2022 |
2023 |
2024 |
2025 |
Thereafter |
Total |
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Repayment of principal of bank loans related to Changyou Merger |
$ | 0 | 7,500 | 7,500 | 77,000 | 0 | 0 | 92,000 | ||||||||||||||||||||
Royalties and expenditures for licensed content of games |
28,423 | 7,870 | 0 | 0 | 0 | 0 | 36,293 | |||||||||||||||||||||
Operating lease obligations |
6,101 | 5,432 | 2,586 | 264 | 132 | 0 | 14,515 | |||||||||||||||||||||
Purchase of bandwidth |
14,084 | 150 | 102 | 0 | 0 | 0 | 14,336 | |||||||||||||||||||||
Interest payment commitment |
6,623 | 1,458 | 1,334 | 628 | 0 | 0 | 10,043 | |||||||||||||||||||||
Purchase of content and services - others |
6,715 | 236 | 19 | 0 | 0 | 0 | 6,970 | |||||||||||||||||||||
Purchase of content and services - video |
5,398 | 1,006 | 0 | 0 | 0 | 0 | 6,404 | |||||||||||||||||||||
Others |
518 | 24 | 0 | 0 | 0 | 0 | 542 | |||||||||||||||||||||
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Total Payments Required |
$ | 67,862 | 23,676 | 11,541 | 77,892 | 132 | 0 | 181,103 | ||||||||||||||||||||
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ITEM 6. |
DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES |
Directors and Executive Officers |
Age |
Position | ||
Charles Zhang | 56 | Chairman of the Board and Chief Executive Officer | ||
Dewen Chen | 45 | Chief Executive Officer of Changyou |
Directors and Executive Officers |
Age |
Position | ||
Xiaochuan Wang | 42 | Chief Executive Officer of Sogou | ||
Joanna Lv | 50 | Chief Financial Officer | ||
Charles Huang | 51 | Director | ||
Zhonghan Deng (1) (2) (3) |
53 | Independent Director | ||
Dave De Yang (1) |
55 | Independent Director | ||
Dave Qi (1) (2) (3) |
57 | Independent Director | ||
Shi Wang (3) |
70 | Independent Director |
(1) | Member of the audit committee of our Board of Directors. |
(2) | Member of the compensation committee of our Board of Directors. |
(3) | Member of the nominating committee of our Board of Directors. |
• | selecting the independent auditors and pre-approving all auditing and non-auditing services permitted to be performed by the independent auditors; |
• | overseeing our accounting and financial reporting processes and audits of the financial statements of our company; |
• | reviewing with the independent auditors any audit problems or difficulties and management’s response; |
• | reviewing and approving all proposed related party transactions, as defined in the NASDAQ Listing Rules; |
• | discussing the annual audited financial statements with management and the independent auditors; |
• | reviewing major issues as to the adequacy of our internal controls over financial reporting and any special audit steps adopted in the light of any significant deficiencies or materially weakness in our internal controls; and |
• | meeting separately and periodically with management and the independent auditors. |
Directors and Executive Officers |
Ordinary Shares underlying outstanding options |
Exercise price |
Date of grant |
Expiration date |
||||||||||||
Charles Zhang |
75,000 | (1) |
$ | 0.001 | 2/16/2015 | 2/15/2025 | ||||||||||
Charles Zhang |
70,000 | (2) |
$ | 0.001 | 7/1/2019 | 6/30/2029 | ||||||||||
Joanna Lv |
7,500 | (3) |
$ | 0.001 | 2/16/2015 | 2/15/2025 | ||||||||||
Joanna Lv |
40,000 | (4) |
$ | 0.001 | 7/1/2019 | 6/30/2029 | ||||||||||
Joanna Lv |
10,000 | (5) |
$ | 0.001 | 9/1/2020 | 8/31/2030 |
(1) | Consists of options to purchase our ordinary shares at a nominal exercise price, of which 75,000 options are vested and exercisable as of February 26, 2021. |
(2) | Consists of options to purchase our ordinary shares at a nominal exercise price, of which 17,500 options are vested and exercisable as of February 26, 2021. |
(3) | Consists of options to purchase our ordinary shares at a nominal exercise price, of which 7,500 options are vested and exercisable as of February 26, 2021. |
(4) | Consists of options to purchase our ordinary shares at a nominal exercise price, of which 10,000 options are vested and exercisable as of February 26, 2021. |
(5) | Consists of options exercisable for the purchase of our ordinary shares that are subject to vesting in equal annual installments over a four-year period. |
Directors and Executive Officers |
Ordinary Shares underlying outstanding options |
Exercise price |
Date of grant |
Expiration date |
||||||||||||
Dewen Chen |
1,288,000 | (1) |
$ | 0.01 | 8/26/2019 | 9/30/2029 |
(1) | Consists of options, granted on August 26, 2019 and effective as of October 1, 2019, that are subject to vesting in equal annual installments over a four-year period commencing on October 1, 2019. |
Directors and Executive Officers |
Restricted Sogou Class A Ordinary Shares |
Exercise price |
Date of grant |
Expiration date |
||||||||||||
Xiaochuan Wang |
1,440,000 | (1) |
$ | 0.625 | 1/31/2013 | N/A |
(1) | Consists of Sogou Class A Ordinary Shares beneficially held by Mr. Wang that were issued in 2013 upon Mr. Wang’s early exercise of share options granted under the Sogou 2010 Share Incentive Plan and are still subject to vesting. Such Sogou Class A Ordinary Shares are subject to vesting upon the fourth anniversary of the completion of Sogou’s IPO, which took place on November 13, 2017. |
Directors and Executive Officers |
Ordinary Shares underlying outstanding options |
Exercise price |
Date of grant |
Expiration date |
||||||||||||
Joanna Lv |
110,000 | (1) |
$ | 0.01 | 1/4/2012 | 1/3/2022 | ||||||||||
Xiaochuan Wang |
50,000 | (2) |
$ | 0.01 | 1/4/2012 | 1/3/2022 |
(1) | Consists of options to purchase Sohu Video’s ordinary shares at a nominal exercise price, vesting in equal annual installments over a four-year period, but vesting for each year will also be subject to the achievement of annual performance milestones related to Sohu Video that our Board of Directors establishes in its discretion. As of February 26, 2021, 27,500 options are fully vested and exercisable. |
(2) | Consists of options to purchase Sohu Video’s ordinary shares at a nominal exercise price, vesting in equal annual installments over a four-year period, but vesting for each year will also be subject to the achievement of annual performance milestones related to Sohu Video that our Board of Directors establishes in its discretion. As of February 26, 2021, 12,500 options are fully vested and exercisable. |
ITEM 7. |
MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS |
Name and Address of Beneficial Owner |
Amount and Nature of Beneficial Ownership (1) |
Percent of Class (1) |
||||||
Charles Zhang |
10,282,029 | (2) |
26.09 | % | ||||
Charles Huang (3) |
76,265 | * | ||||||
Shi Wang (4) |
34,132 | * | ||||||
Dave Qi (5) |
28,940 | * | ||||||
Zhonghan Deng (6) |
14,514 | * | ||||||
Dave De Yang (7) |
— | — | ||||||
Joanna Lv |
20,500 | (8) |
* | |||||
Xiaochuan Wang (9) |
69,258 | * | ||||||
Dewen Chen (10) |
— | — | ||||||
All directors, nominees and executive officers as a group (9 persons) |
10,525,638 | (11) |
26.70 | % | ||||
Photon Group Limited (12) |
9,920,829 | 25.23 | % | |||||
Macquarie Investment Management Business Trust (13) |
3,618,481 | 9.21 | % | |||||
Renaissance Technologies LLC. (14) |
2,699,355 | 7.30 | % |
* | Less than 1%. |
(1) | Includes the number of shares and percentage ownership represented by such shares determined to be beneficially owned by a person in accordance with the rules of the SEC. The number of shares beneficially owned by a person includes the number of ordinary shares subject to options or restricted stock units held by that person that are currently exercisable or settleable or that are exercisable or settleable within 60 days of February 26, 2021. Such shares are deemed outstanding for the purpose of computing the percentage of outstanding shares owned by that person. Such shares are not deemed outstanding, however, for the purpose of computing the percentage ownership of each other person. |
(2) | Includes (i) 92,500 ordinary shares subject to options exercisable within 60 days of February 26, 2021 and (ii) 9,920,829 ordinary shares beneficially owned by Photon Group Limited. Dr. Charles Zhang is a Director of Photon Group Limited, and may be deemed to be a beneficial owner of shares owned by it. Dr. Charles Zhang disclaims beneficial ownership of such shares except to the extent of his pecuniary interest in such shares. Dr. Charles Zhang’s address is c/o Sohu.com Limited., Level 18, Sohu.com Media Plaza, Block 3, No. 2 Kexueyuan South Road, Haidian District, Beijing 100190, People’s Republic of China. |
(3) | Mr. Charles Huang’s address is Suite 5206, Central Plaza, Wanchai, Hong Kong. |
(4) | Mr. Shi Wang’s address is Vanke Architecture Research Center, No. 68 Meilin Road, Futian District, Shenzhen 518049, People’s Republic of China. |
(5) | Dr. Dave Qi’s address is 3/F, Tower E3, Oriental Plaza, 1 East Chang An Avenue, Beijing 100005, People’s Republic of China. |
(6) | Dr. Zhonghan Deng’s address is 16/F, Shining Tower, No. 35, Xueyuan Road, Haidian District, Beijing 100191, People’s Republic of China. |
(7) | Mr. Dave De Yang’s address is 24W435 Arrow Ct. Naperville, IL 60540, the United States. |
(8) | Includes 17,500 ordinary shares subject to options exercisable within 60 days of February 26, 2021. Ms. Joanna Lv’s address is c/o Sohu.com Limited., Level 18, Sohu.com Media Plaza, Block 3, No. 2 Kexueyuan South Road, Haidian District, Beijing 100190, People’s Republic of China. |
(9) | Mr. Xiaochuan Wang’s address is c/o Sogou Inc., Level 15, Sohu.com Internet Plaza, No. 1 Unit, Zhongguancun East Road, Haidian District, Beijing 100084, People’s Republic of China. |
(10) | Mr. Dewen Chen’s address is c/o Changyou.com Limited, Changyou Tower, No. 65 East Bajiao Road, Shijingshan District, Beijing 100043, People’s Republic of China. |
(11) | Includes 110,000 ordinary shares that such persons have the right to acquire pursuant to currently exercisable options or options that may be exercised within 60 days of February 26, 2021. |
(12) | Photon Group Limited’s address is c/o Sohu.com Limited., Sohu.com Media Plaza, Block 3, No. 2 Kexueyuan South Road, Haidian District, Beijing 100190, People’s Republic of China. |
(13) | Data based on a Schedule 13G/A filed with the SEC on February 12, 2021. The principal business address of Macquarie Investment Management Business Trust is 2005 Market Street, Philadelphia, PA 19103. |
(14) | Data based on a Schedule 13G/A filed with the SEC on February 11, 2021. The principal business address of Renaissance Technologies LLC is 800 Third Avenue, New York, New York 10022. |
ITEM 8. |
FINANCIAL INFORMATION |
ITEM 9. |
THE OFFER AND LISTING |
ITEM 10. |
ADDITIONAL INFORMATION |
• | the statutory provisions as to the required majority vote have been met; |
• | the shareholders have been fairly represented at the meeting in question and the statutory majority are acting bona fide without coercion of the minority shareholders or creditors to promote interests adverse to those of the class; |
• | the arrangement is such that may be reasonably approved by an intelligent and honest man of that class acting in respect of his interest; and |
• | the arrangement is not one that would more properly be sanctioned under some other provision of the Companies Act. |
• | a company acts or proposes to act illegally or ultra vires; |
• | the act complained of, although not ultra vires, could only be effected duly if authorized by more than a simple majority vote of our shareholders and this has not been obtained; and |
• | those who control the company are perpetrating a “fraud on the minority.” |
• | banks or certain financial institutions; |
• | insurance companies; |
• | broker dealers; |
• | traders that elect to mark to market; |
• | tax-exempt entities; |
• | persons liable for alternative minimum tax; |
• | persons holding ADSs or ordinary shares as part of a straddle, hedging, conversion transaction or other integrated investment; |
• | regulated investments companies; |
• | persons who acquired ADSs or ordinary shares pursuant to the exercise of any employee share option or otherwise as compensation; |
• | persons who actually or constructively own 10% or more of the total combined voting power of all classes of our shares entitled to vote or 10% or more of the total value of all classes of our shares; or |
• | partnerships or other pass-through entities for United States federal income tax purposes or persons holding ADSs or ordinary shares through partnerships or other pass-through entities. |
• | a citizen or individual resident of the United States; |
• | a corporation (or other entity taxable as a corporation for United States federal income tax purposes) organized under the laws of the United States, any state thereof or the District of Columbia; |
• | an estate whose income is subject to United States federal income taxation regardless of its source; or |
• | a trust (1) whose administration is subject to the primary supervision of a court within the United States and one or more United States persons have the authority to control all substantial decisions of the trust, or (2) that has a valid election in effect under applicable United States Treasury regulations to be treated as a United States person. |
• | at least 75% of its gross income is passive income (such as certain dividends, interest or royalties) (the “income test”), or |
• | at least 50% of the value of its assets (based on an average of the quarterly values of the assets during a taxable year) is attributable to assets that produce or are held for the production of passive income (the “asset test”). |
• | the excess distribution or gain will be allocated ratably over the U.S. holder’s holding period for the ADSs or ordinary shares; |
• | the amount allocated to the current taxable year, and any taxable year prior to the first taxable year in which we became a PFIC, will be treated as ordinary income; and |
• | the amount allocated to each other taxable year will be subject to the highest tax rate in effect for that taxable year and the interest charge generally applicable to underpayments of tax will be imposed on the resulting tax attributable to each such taxable year. |
ITEM 11. |
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK |
ITEM 12. |
DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES |
Persons depositing or withdrawing shares or ADS holders must pay: |
For: | |
$5.00 (or less) per 100 ADSs (or portion of 100 ADSs) | • Issuance of ADSs, including issuances resulting from a distribution of shares or rights or other property | |
• Cancellation of ADSs for the purpose of withdrawal, including if the Deposit Agreement terminates | ||
$0.05 (or less) per ADS | • Any cash distribution to ADS holders | |
A fee equivalent to the fee that would be payable if securities distributed to you had been shares and the shares had been deposited for issuance of ADSs |
• Distribution of securities distributed to holders of deposited securities which are distributed by the depositary to ADS holders | |
$0.05 (or less) per ADSs per calendar year | • Depositary services | |
Registration or transfer fees | • Transfer and registration of shares on our share register to or from the name of the depositary or its agent when you deposit or withdraw shares |
Persons depositing or withdrawing shares or ADS holders must pay: |
For: | |
Expenses of the depositary | • Cable, telex and facsimile transmissions (when expressly provided in the Deposit Agreement) | |
• converting foreign currency to U.S. dollars | ||
Taxes and other governmental charges the depositary or the custodian have to pay on any ADS or share underlying an ADS, for example, stock transfer taxes, stamp duty or withholding taxes |
• As necessary | |
Any charges incurred by the depositary or its agents for servicing the deposited securities |
• As necessary |
ITEM 13. |
DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES |
ITEM 14. |
MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS |
ITEM 15. |
CONTROLS AND PROCEDURES |
ITEM 16A. |
AUDIT COMMITTEE FINANCIAL EXPERT |
ITEM 16B. |
CODE OF ETHICS |
ITEM 16C. |
PRINCIPAL ACCOUNTANT FEES AND SERVICES |
For the year ended December 31, |
||||||||
2019 |
2020 |
|||||||
(in thousands) |
||||||||
Audit fees (1) |
$ | 2,654 | $ | 2,304 | ||||
Tax fees (2) |
567 | 487 | ||||||
Audit related fees (3) |
142 | 67 | ||||||
All other fees |
2 | 2 | ||||||
|
|
|
|
|||||
Total |
$ | 3,365 | $ | 2,860 |
(1) | “Audit fees” means the aggregate fees incurred in each of the fiscal years listed for professional services rendered by our principal auditors for the audit of our annual financial statements and our internal controls over financial reporting. |
(2) | “Tax fees” means the aggregate fees incurred in each of the fiscal years listed for professional services rendered by our principal auditors for tax compliance and tax advice. |
(3) | “Audit-related fees” means the aggregate fees incurred in each of the fiscal years listed for professional services rendered by our principal auditors related to the audit of our financial statements and our internal controls over financial reporting that are not reported under “Audit Fees” and consultation on accounting standards or transactions. |
• | Any audit or non-audit service to be provided to us by the independent accountant must be submitted to the audit committee for review and approval, with a description of the services to be performed and the fees to be charged. |
• | The audit committee in its sole discretion then approves or disapproves the proposed services and documents such approval, if given, through written resolutions or in the minutes of meetings, as the case may be. |
ITEM 16D. |
EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES |
ITEM 16E. |
PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS |
ITEM 16F. |
CHANGE IN REGISTRANT’S CERTIFYING ACCOUNTANT |
ITEM 16G. |
CORPORATE GOVERNANCE |
ITEM 16H. |
MINE SAFETY DISCLOSURE |
ITEM 17. |
FINANCIAL STATEMENTS |
ITEM 18. |
FINANCIAL STATEMENTS |
ITEM 19. |
EXHIBITS |
(1) | Incorporated herein by reference to Sohu.com Limited’s Registration Statement on Form F-4 (File No. 333-224069) filed with the SEC on April 19, 2018. |
(2) | Incorporated herein by reference to Sohu.com Inc.’s Annual Report on Form 10-K filed on March 15, 2002. |
(3) | Incorporated herein by reference to Sohu.com Inc.’s Quarterly Report on Form 10-Q filed on May 8, 2007. |
(4) | Incorporated herein by reference to Sohu.com Inc.’s Annual Report on Form 10-K filed on February 26, 2010. |
(5) | Incorporated herein by reference to Sohu.com Inc.’s Quarterly Report on Form 10-Q filed on May 7, 2010. |
(6) | Incorporated herein by reference to Sohu.com Inc.’s Quarterly Report on Form 10-Q filed on November 8, 2010. |
(7) | Incorporated herein by reference to Sohu.com Inc.’s Current Report on Form 8-K filed on December 1, 2011. |
(8) | Incorporated herein by reference to Sohu.com Inc.’s Annual Report on Form 10-K filed on February 28, 2013. |
(9) | Incorporated herein by reference to Sohu.com Inc.’s Annual Report on Form 10-K filed on February 28, 2014. |
(10) | Incorporated herein by reference to Sohu.com Inc.’s Annual Report on Form 10-K filed on March 2, 2015. |
(11) | Incorporated herein by reference to Sohu.com Inc.’s Quarterly Report on Form 10-Q filed on August 7, 2015. |
(12) | Incorporated herein by reference to Sohu.com Inc.’s Quarterly Report on Form 10-Q filed on November 6, 2015. |
(13) | Incorporated herein by reference to Sohu.com Inc.’s Annual Report on Form 10-K filed on February 26, 2016. |
(14) | Incorporated herein by reference to Sohu.com Inc.’s Current Report on Form 8-K filed on October 24, 2016. |
(15) | Incorporated herein by reference to Sohu.com Inc.’s Annual Report on Form 10-K filed on February 27, 2017. |
(16) | Incorporated herein by reference to Sohu.com Inc.’s Current Report on Form 8-K filed on May 19, 2017. |
(17) | Incorporated herein by reference to Sohu.com Inc.’s Current Report on Form 8-K filed on September 7, 2017. |
(18) | Incorporated herein by reference to Sohu.com Inc.’s Quarterly Report on Form 10-Q filed on November 3, 2017. |
(19) | Incorporated herein by reference to Sohu.com Inc.’s Annual Report on Form 10-K filed on February 28, 2018. |
(20) | Incorporated herein by reference to Sohu.com Inc.’s Current Report on Form 8-K filed on April 16, 2018. |
(21) | Incorporated herein by reference to Sohu.com Limited’s Registration Statement on Form S-8 POS filed on June 1, 2018. |
(22) | Incorporated herein by reference to Sohu.com Limited’s Annual Report on Form 20-F filed on March 28, 2019. |
(23) | Incorporated herein by reference to Sohu.com Limited’s Annual Report on Form 20-F filed on April 21, 2020. |
(24) | Incorporated herein by reference to Sohu.com Limited’s Report of Foreign Private Issuer on Form 6-K furnished to the SEC on September 29, 2020. |
(25) | Incorporated herein by reference to Amendment No. 1 to Schedule 13E-3 filed by Sogou Inc., Tencent Holdings Limited, THL A21 Limited, TitanSupernova Limited, Tencent Mobility Limited, Sohu.com Limited and Sohu.com (Search) Limited on December 1, 2020. |
(26) | Filed herewith. |
SOHU.COM LIMITED | ||
By | /s/ Charles Zhang | |
Name: | Charles Zhang | |
Title: | Chief Executive Officer | |
By | /s/ Joanna Lv | |
Name: | Joanna Lv | |
Title: | Chief Financial Officer |
SOHU.COM LIMITED |
||||
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS |
||||
CONSOLIDATED FINANCIAL STATEMENTS: |
Page |
|||
F-2 | ||||
F-5 |
||||
F-7 |
||||
F-9 | ||||
F-11 |
||||
F-14 |
As of December 31, |
||||||||
2019 |
2020 |
|||||||
ASSETS |
||||||||
Current assets: |
||||||||
Cash and cash equivalents |
$ | $ | ||||||
Restricted cash |
||||||||
Short-term investments |
||||||||
Accounts receivable, net (including $ |
||||||||
Prepaid and other current assets (including $ |
||||||||
Assets held for sale (current) |
||||||||
|
|
|
|
|||||
Total current assets |
||||||||
|
|
|
|
|||||
Fixed assets, net |
||||||||
Goodwill |
||||||||
Long-term investments, net |
||||||||
Intangible assets, net |
||||||||
Restricted time deposits |
||||||||
Prepaid non-current assets |
||||||||
Other assets |
||||||||
Assets held for sale (non-current) |
||||||||
|
|
|
|
|||||
Total assets |
$ | $ | ||||||
|
|
|
|
|||||
LIABILITIES |
||||||||
Current liabilities: |
||||||||
Accounts payable (including accounts payable of consolidated variable interest entities (“VIEs”) without recourse to the Company of $ |
$ | $ | ||||||
Accrued liabilities (including accrued liabilities of consolidated VIEs without recourse to the Company of $ |
||||||||
Receipts in advance and deferred revenue (including receipts in advance and deferred revenue of consolidated VIEs without recourse to the Company of $ |
||||||||
Accrued salary and benefits (including accrued salary and benefits of consolidated VIEs without recourse to the Company of $ |
||||||||
Tax payables (including tax payables of consolidated VIEs without recourse to the Company of $ |
||||||||
Short-term bank loans (including short-term bank loans of consolidated VIEs without recourse to the Company of |
Other short-term liabilities (including other short-term liabilities of consolidated VIEs without recourse to the Company of $ |
||||||||
Liabilities held for sale (current) (including liabilities held for sale (current) of consolidated VIEs without recourse to the Company of $ |
||||||||
|
|
|
|
|||||
Total current liabilities |
||||||||
|
|
|
|
|||||
Long-term accounts payable (including long-term accounts payable of consolidated VIEs without recourse to the Company of |
||||||||
Long-term bank loans (including long-term bank loans of consolidated VIEs without recourse to the Company of |
||||||||
Long-term tax liabilities (including long-term tax liabilities of consolidated VIEs without recourse to the Company of $ |
||||||||
Deferred tax liabilities (including deferred tax liabilities of consolidated VIEs without recourse to the Company of $ |
||||||||
Other long-term liabilities (including other long-term liabilities of consolidated VIEs without recourse to the Company of |
||||||||
Liabilities held for sale (non-current) (including liabilities held for sale (non-current) of consolidated VIEs without recourse to the Company of $ |
||||||||
|
|
|
|
|||||
Total long-term liabilities |
||||||||
|
|
|
|
|||||
Total liabilities |
$ | $ | ||||||
|
|
|
|
|||||
Commitments and contingencies |
||||||||
SHAREHOLDERS’ EQUITY |
||||||||
Sohu.com Limited shareholders’ equity: |
||||||||
Ordinary Shares: $ |
$ | $ | ||||||
Additional paid-in capital |
||||||||
Accumulated other comprehensive income |
||||||||
Accumulated deficit |
( |
) | ( |
) | ||||
|
|
|
|
|||||
Total Sohu.com Limited shareholders’ equity |
||||||||
Noncontrolling interest |
||||||||
|
|
|
|
|||||
Total shareholders’ equity |
||||||||
|
|
|
|
|||||
Total liabilities and shareholders’ equity |
$ | $ | ||||||
|
|
|
|
Year Ended December 31, |
||||||||||||
2018 |
2019 |
2020 |
||||||||||
Revenues: |
||||||||||||
Brand advertising (including revenues generated from a related party of $ |
$ | $ | $ | |||||||||
Online games |
||||||||||||
Others (including revenues generated from a related party of $ |
||||||||||||
|
|
|
|
|
|
|||||||
Total revenues |
||||||||||||
|
|
|
|
|
|
|||||||
Cost of revenues: |
||||||||||||
Brand advertising |
||||||||||||
Online games |
||||||||||||
Others (including cost generated from a related party of $ |
||||||||||||
|
|
|
|
|
|
|||||||
Total cost of revenues |
||||||||||||
|
|
|
|
|
|
|||||||
Gross profit |
||||||||||||
|
|
|
|
|
|
|||||||
Operating expenses: |
||||||||||||
Product development |
||||||||||||
Sales and marketing |
||||||||||||
General and administrative |
||||||||||||
Goodwill impairment and impairment of intangible assets acquired as part of business acquisitions |
||||||||||||
|
|
|
|
|
|
|||||||
Total operating expenses |
||||||||||||
|
|
|
|
|
|
|||||||
Operating profit/(loss) |
( |
) | ( |
) | ||||||||
|
|
|
|
|
|
|||||||
Other income, net |
||||||||||||
Interest income (including interest income generated from a related party of $ |
||||||||||||
Interest expense (including interest expense generated from a related party of $ |
( |
) | ( |
) | ( |
) | ||||||
Exchange difference |
( |
) | ||||||||||
|
|
|
|
|
|
|||||||
Income/(loss) before income tax expense /(benefit) |
( |
) | ( |
) | ||||||||
Income tax expense /(benefit) |
( |
) | ||||||||||
Net loss from continuing operations |
( |
) | ( |
) | ( |
) | ||||||
Net income/(loss) from discontinued operations, net of tax |
( |
) | ||||||||||
|
|
|
|
|
|
|||||||
Net loss |
( |
) | ( |
) | ( |
) | ||||||
Less: Net income from continuing operations attributable to the noncontrolling interest shareholders |
||||||||||||
Less: Net income/(loss) from discontinued operations attributable to the noncontrolling interest shareholders |
( |
) | ||||||||||
Net loss from continuing operations attributable to Sohu.com Limited |
( |
) | ( |
) | ( |
) | ||||||
Net income/(loss) from discontinued operations attributable to Sohu.com Limited |
( |
) | ||||||||||
|
|
|
|
|
|
|||||||
Net loss attributable to Sohu.com Limited |
$ | ( |
) | $ | ( |
) | $ | ( |
) | |||
|
|
|
|
|
|
Net loss |
$ | ( |
) | $ | ( |
) | $ | ( |
) | |||
Foreign currency translation adjustments |
( |
) | ( |
) | ||||||||
|
|
|
|
|
|
|||||||
Other comprehensive income/(loss) |
( |
) | ( |
) | ||||||||
|
|
|
|
|
|
|||||||
Comprehensive loss |
( |
) | ( |
) | ( |
) | ||||||
Less: Comprehensive income/(loss) attributable to noncontrolling interest shareholders |
( |
) | ||||||||||
|
|
|
|
|
|
|||||||
Comprehensive loss attributable to Sohu.com Limited |
( |
) | ( |
) | ( |
) | ||||||
|
|
|
|
|
|
|||||||
Basic net (loss)/income per share attributable to Sohu.com Limited |
||||||||||||
Continuing operations |
$ | ( |
) | $ | ( |
) | $ | ( |
) | |||
Discontinued operations |
( |
) | ||||||||||
|
|
|
|
|
|
|||||||
Net loss per share |
( |
) | ( |
) | ( |
) | ||||||
|
|
|
|
|
|
|||||||
Shares used in computing basic net (loss)/income per share attributable to Sohu.com Limited |
||||||||||||
|
|
|
|
|
|
|||||||
Diluted net (loss)/income per share attributable to Sohu.com Limited |
||||||||||||
Continuing operations |
$ | ( |
) | $ | ( |
) | $ | ( |
) | |||
Discontinued operations |
( |
) | ||||||||||
|
|
|
|
|
|
|||||||
Net loss per share |
( |
) | ( |
) | ( |
) | ||||||
|
|
|
|
|
|
|||||||
Shares used in computing diluted net (loss)/income per share attributable to Sohu.com Limited |
||||||||||||
|
|
|
|
|
|
Year Ended December 31, |
||||||||||||
2018 |
2019 |
2020 |
||||||||||
Cash flows from operating activities: |
||||||||||||
Net loss |
$ | ( |
) | $ | ( |
) | $ | ( |
) | |||
Net income/(loss) from discontinued operations, net of tax |
( |
) | ||||||||||
Adjustments to reconcile net loss to net cash provided by operating activities: |
||||||||||||
Amortization of intangible assets and purchased video content in prepaid expense |
||||||||||||
Depreciation |
||||||||||||
Goodwill impairment and impairment of intangible assets acquired as part of business acquisitions |
||||||||||||
Share-based compensation expense |
( |
) | ||||||||||
Impairment of long-term investment |
||||||||||||
Impairment of other intangible assets and other assets |
||||||||||||
Research and development expense allocation |
( |
) | ||||||||||
Investment loss/(gain) from equity investments |
( |
) | ||||||||||
Allowance for credit losses |
||||||||||||
Gain from sale of equity investments |
( |
) | ||||||||||
Change in fair value of financial instruments |
( |
) | ||||||||||
Others |
( |
) | ( |
) | ||||||||
Changes in assets and liabilities: |
||||||||||||
Accounts receivable |
( |
) | ||||||||||
Prepaid and other assets |
( |
) | ||||||||||
Accounts payable |
( |
) | ( |
) | ( |
) | ||||||
Receipts in advance and deferred revenue |
( |
) | ( |
) | ( |
) | ||||||
Tax liabilities |
( |
) | ( |
) | ||||||||
Deferred tax |
||||||||||||
Accrued liabilities and other short-term liabilities |
( |
) | ( |
) | ( |
) | ||||||
|
|
|
|
|
|
|||||||
Net cash provided by/(used in) continuing operating activities |
( |
) | ( |
) | ||||||||
|
|
|
|
|
|
|||||||
Net cash provided by/(used in) discontinued operating activities |
( |
) | ||||||||||
|
|
|
|
|
|
|||||||
Net cash provided by operating activities |
||||||||||||
Cash flows from investing activities: |
||||||||||||
Purchase of fixed assets |
( |
) | ( |
) | ( |
) | ||||||
Purchase of intangible and other assets |
( |
) | ( |
) | ( |
) | ||||||
Purchase of long-term investments |
( |
) | ( |
) | ( |
) | ||||||
Return of funds from a third party |
||||||||||||
Proceeds from financial instruments |
||||||||||||
Purchase of financial instruments |
( |
) | ( |
) | ( |
) | ||||||
Proceeds received from sale of equity investment |
||||||||||||
Other cash proceeds related to investing activities |
||||||||||||
|
|
|
|
|
|
|||||||
Net cash provided by/(used in) continuing investing activities |
( |
) | ||||||||||
|
|
|
|
|
|
|||||||
Net cash provided by/(used in) discontinued investing activities |
( |
) | ( |
) | ||||||||
|
|
|
|
|
|
Net cash provided by/(used in) investing activities |
( |
) | ( |
) | ||||||||
Cash flows from financing activities: |
||||||||||||
Proceeds from long-term bank loans |
||||||||||||
Proceeds from short-term bank loans |
||||||||||||
Exercise of share-based awards in subsidiaries |
||||||||||||
Repayments of loans from banks |
( |
) | ( |
) | ( |
) | ||||||
Acquisition of noncontrolling interests in Changyou Merger |
( |
) | ||||||||||
Distribution of Changyou dividend to noncontrolling interest shareholders |
( |
( |
) | |||||||||
|
|
|
|
|
|
|||||||
Net cash provided by/(used in) continuing financing activities |
( |
) | ||||||||||
|
|
|
|
|
|
|||||||
Net cash provided by/(used in) discontinued financing activities |
( |
) | ( |
) | ||||||||
|
|
|
|
|
|
|||||||
Net cash provided by/(used in) financing activities |
( |
) | ||||||||||
Effect of exchange rate changes on cash, cash equivalents, restricted cash and restricted time deposits |
( |
) | ( |
) | ||||||||
|
|
|
|
|
|
|||||||
Net increase/(decrease) in cash, cash equivalents, restricted cash, and restricted time deposits |
( |
) | ( |
) | ||||||||
Cash, cash equivalents, restricted cash and restricted time deposits at beginning of year |
||||||||||||
|
|
|
|
|
|
|||||||
Cash, cash equivalents, restricted cash and restricted time deposits at end of year |
$ | $ | $ | |||||||||
|
|
|
|
|
|
|||||||
Less: Cash, cash equivalents, restricted cash and restricted time deposits of discontinued operations, end of year |
||||||||||||
|
|
|
|
|
|
|||||||
Cash, cash equivalents, restricted cash and restricted time deposits of continuing operations, end of year |
||||||||||||
|
|
|
|
|
|
|||||||
Supplemental cash flow disclosures from continuing operations: |
||||||||||||
Cash paid for income taxes |
( |
) | ( |
) | ( |
) | ||||||
Cash paid for interest expense |
( |
) | ( |
) | ( |
) | ||||||
Barter transactions |
||||||||||||
Supplemental schedule of non-cash investing activity from continuing operations: |
||||||||||||
Changes in payables and other liabilities related to fixed assets and intangible assets additions |
( |
) | ( |
) | ( |
) |
Sohu.com Limited Shareholders’ Equity |
||||||||||||||||||||||||||||
Total |
Ordinary Shares |
Additional Paid-in Capital |
Treasury Stock |
Accumulated Other Comprehensive Income |
Accumulated Deficit |
Noncontrolling Interest |
||||||||||||||||||||||
Beginning balance |
$ | ( |
) | ( |
) | |||||||||||||||||||||||
Impact of adoption of new accounting standards* |
( |
) | ||||||||||||||||||||||||||
Share-based compensation expense |
( |
) | ||||||||||||||||||||||||||
Settlement/Adjustment of share-based awards in subsidiary |
( |
) | ||||||||||||||||||||||||||
Distribution of Changyou dividend to noncontrolling interest shareholders |
( |
) | ( |
) | ||||||||||||||||||||||||
Disposal of a majority-owned subsidiary |
( |
) | ( |
) | ||||||||||||||||||||||||
Liquidation of Sohu.com Inc. |
( |
) | ( |
) | ||||||||||||||||||||||||
Net income/(loss) attributable to Sohu.com Limited and noncontrolling interest shareholders |
( |
) | ( |
) | ||||||||||||||||||||||||
Accumulated other comprehensive loss |
( |
) | ( |
) | ( |
) | ||||||||||||||||||||||
Others |
||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Ending balance |
$ | ( |
) | |||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
* | For details see Note 10 - Fair Value Measurements - Financial Instruments Measured at Fair Value - Equity Investments. |
Sohu.com Limited Shareholders’ Equity |
||||||||||||||||||||||||||||
Total |
Ordinary Shares |
Additional Paid-in Capital |
Treasury Stock |
Accumulated Other Comprehensive Income |
Accumulated Deficit |
Noncontrolling Interest |
||||||||||||||||||||||
Beginning balance |
$ | ( |
) | |||||||||||||||||||||||||
Share-based compensation expense |
||||||||||||||||||||||||||||
Settlement/Adjustment of share-based awards in subsidiary |
( |
) | ||||||||||||||||||||||||||
Distribution of Changyou dividend to noncontrolling interest shareholders |
( |
) | ( |
) | ||||||||||||||||||||||||
Net income/(loss) attributable to Sohu.com Limited and noncontrolling interest shareholders |
( |
) | ( |
) | ||||||||||||||||||||||||
Repurchase of Sogou Class A Ordinary Shares from noncontrolling shareholders |
( |
) | ( |
) | ( |
) | ||||||||||||||||||||||
Accumulated other comprehensive loss |
( |
) | ( |
) | ( |
) | ||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Ending balance |
$ | ( |
) | |||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sohu.com Limited Shareholders’ Equity |
||||||||||||||||||||||||||||
Total |
Ordinary Shares |
Additional Paid-in Capital |
Treasury Stock |
Accumulated Other Comprehensive Income |
Accumulated Deficit |
Noncontrolling Interest |
||||||||||||||||||||||
Beginning balance |
$ | ( |
) | |||||||||||||||||||||||||
Share-based compensation expense |
||||||||||||||||||||||||||||
Settlement/Adjustment of share-based awards in subsidiary |
( |
) | ||||||||||||||||||||||||||
Modification of share-based awards in Changyou |
( |
) | ( |
) | ||||||||||||||||||||||||
Net loss attributable to Sohu.com Limited and noncontrolling interest shareholders |
( |
) | ( |
) | ( |
) | ||||||||||||||||||||||
Repurchase of Sogou Class A Ordinary Shares from noncontrolling shareholders |
( |
) | ( |
) | ( |
) | ||||||||||||||||||||||
Acquisition of a partially-held subsidiary |
||||||||||||||||||||||||||||
Impact of adoption of new accounting standards* |
( |
) | ( |
) | ( |
) | ||||||||||||||||||||||
Acquisition of noncontrolling interests in Changyou Merger |
( |
) | ( |
) | ( |
) | ||||||||||||||||||||||
Accumulated other comprehensive loss |
||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Ending balance |
$ | ( |
) | |||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
* | For details see Note 2 – Summary of Significant Accounting Policies – Accounts Receivable, Net – Allowance of credit losses. |
1. |
THE COMPANY AND NATURE OF OPERATIONS |
Name of Entity |
Date of Incorporation/Acquisition |
Place of Incorporation/ Acquisition |
Effective Interest held |
|||||
Subsidiaries: |
||||||||
For Sohu: |
||||||||
Sohu.com (Hong Kong) Limited (“Sohu HK”) |
Incorporated on |
% | ||||||
Beijing Sohu New Era Information Technology Co., Ltd. (“Sohu Era”) |
Incorporated on |
% | ||||||
Sohu.com (Search) Limited (“Sohu Search”) |
Incorporated on |
% | ||||||
Beijing Sohu New Media Information Technology Co., Ltd. (“Sohu Media”) |
Incorporated on |
% | ||||||
Sohu.com (Game) Limited (“Sohu Game”) |
Incorporated on |
% | ||||||
Beijing Sohu New Momentum Information Technology Co., Ltd. (“Sohu New Momentum”) |
Incorporated on |
% | ||||||
Fox Video Limited (“Sohu Video”) |
Incorporated on |
% | ||||||
Fox Information Technology (Tianjin) Limited (“Video Tianjin”) |
Incorporated on |
% | ||||||
Sohu Focus Limited (“Sohu Focus”) |
Incorporated on |
% | ||||||
For Changyou: |
||||||||
Changyou.com Limited (“Changyou”) |
Incorporated on |
% | ||||||
Changyou.com (HK) Limited (“Changyou HK”) |
Incorporated on |
% | ||||||
Beijing AmazGame Age Internet Technology Co., Ltd. (“AmazGame”) |
Incorporated on |
% | ||||||
Beijing Changyou Gamespace Software Technology Co., Ltd. (“Gamespace”) |
Incorporated on |
% | ||||||
Changyou.com Korea LLC (“Changyou Korea”) |
Incorporated on |
% | ||||||
Beijing Changyou Chuangxiang Software Technology Co., Ltd. (“Changyou Chuangxiang”) |
Incorporated on |
% | ||||||
For Sogou: |
||||||||
Sogou Inc. (“Sogou”) |
Incorporated on |
% | ||||||
Sogou (BVI) Limited (“Sogou BVI”) |
Incorporated on |
% | ||||||
Beijing Sogou Technology Development Co., Ltd. (“Sogou Technology”) |
Incorporated on |
% | ||||||
Sogou Hong Kong Limited (“Sogou HK”) |
Incorporated on |
% | ||||||
Vast Creation Advertising Media Services Limited (“Vast Creation”) |
Acquired on |
% | ||||||
Beijing Sogou Network Technology Co., Ltd (“Sogou Network”) |
Incorporated on |
% |
Sogou (Shantou) Internet Microcredit Co., Ltd. (“Sogou Microcredit”) |
Incorporated on |
% | ||||||
Sogou (Hangzhou) Intelligent Technology Co., Ltd. (“Sogou Hangzhou”) |
Incorporated on |
% | ||||||
Shantou Ying Zhong Bai Fu Financing Guarantee Co., Ltd. (“Sogou Financing Guarantee”) |
Incorporated on |
% | ||||||
VIEs: |
||||||||
For Sohu: |
||||||||
Beijing Century High-Tech Investment Co., Ltd. (“High Century”) |
Incorporated on |
% | ||||||
Beijing Heng Da Yi Tong Information Technology Co., Ltd. (“Heng Da Yi Tong”) |
Incorporated on |
% | ||||||
Beijing Sohu Internet Information Service Co., Ltd. (“Sohu Internet”) |
Incorporated on |
% | ||||||
Beijing Sohu Donglin Advertising Co., Ltd. (“Donglin”) |
Incorporated on |
% | ||||||
Tianjin Jinhu Culture Development Co., Ltd (“Tianjin Jinhu”) |
Incorporated on |
% | ||||||
Beijing Focus Interactive Information Service Co., Ltd. (“Focus Interactive”) |
Incorporated on |
% | ||||||
For Changyou: |
||||||||
Beijing Gamease Age Digital Technology Co., Ltd. (“Gamease”) |
Incorporated on |
% | ||||||
Shanghai ICE Information Technology Co., Ltd. (“Shanghai ICE”) |
Acquired on |
% | ||||||
Beijing Guanyou Gamespace Digital Technology Co., Ltd. (“Guanyou Gamespace”) |
Incorporated on |
% | ||||||
For Sogou: |
||||||||
Beijing Sogou Information Service Co., Ltd.(“Sogou Information”) |
Incorporated on |
% | ||||||
Chengdu Easypay Technology Co., Ltd. (“Chengdu Easypay”) |
Incorporated on |
% |
• |
Sohu Media Portal. |
• |
Sohu Video. |
• |
Focus. |
(i) | Sohu: |
(ii) | Tencent: |
(iii) | Photon: |
(iv) | Shareholders other than Sohu, Tencent, and Photon: |
2. |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
Year Ended December 31, 2018 (in thousands) |
||||||||||||
Sohu |
Changyou |
Total |
||||||||||
Brand advertising: |
||||||||||||
Sohu Media Portal |
$ | |||||||||||
Sohu Video |
||||||||||||
Focus |
||||||||||||
17173.com Website |
||||||||||||
Online games: |
||||||||||||
PC games |
||||||||||||
Mobile games |
||||||||||||
Other games |
||||||||||||
Others |
||||||||||||
|
|
|
|
|
|
|||||||
Total |
$ | |||||||||||
|
|
|
|
|
|
Year Ended December 31, 2019 (in thousands) |
||||||||||||
Sohu |
Changyou |
Total |
||||||||||
Brand advertising: |
||||||||||||
Sohu Media Portal |
$ | |||||||||||
Sohu Video |
||||||||||||
Focus |
||||||||||||
17173.com Website |
||||||||||||
Online games: |
||||||||||||
PC games |
||||||||||||
Mobile games |
||||||||||||
Other games |
||||||||||||
Others |
||||||||||||
|
|
|
|
|
|
|||||||
Total |
$ | |||||||||||
|
|
|
|
|
|
Year Ended December 31, 2020 (in thousands) |
||||||||||||
Sohu |
Changyou |
Total |
||||||||||
Brand advertising: |
||||||||||||
Sohu Media Portal |
$ | |||||||||||
Sohu Video |
||||||||||||
Focus |
||||||||||||
17173.com Website |
||||||||||||
Online games: |
||||||||||||
PC games |
||||||||||||
Mobile games |
||||||||||||
Other games |
||||||||||||
Others |
||||||||||||
Total |
$ |
(i) | Fixed Price model |
(ii) | CPM model |
(iii) | CPC model |
December 31, 2019 |
ASU 2016-13 adjustment |
January 1, 2020 |
||||||||||
Allowance for credit losses |
||||||||||||
Accounts receivable, net |
$ | $ | ( |
) | $ | |||||||
Accounts receivable and financing receivables, net classified as assets held for sale (1) |
( |
) | ||||||||||
|
|
|
|
|
|
|||||||
Total assets |
( |
) | ||||||||||
Shareholders’ equity |
||||||||||||
Accumulated deficit |
( |
) | ( |
) | ( |
) |
As of December 31, |
||||||||
2019 |
2020 |
|||||||
Accounts receivable, net |
||||||||
Accounts receivable |
$ | $ | ||||||
Less: Allowance for credit losses |
( |
) | ( |
) | ||||
|
|
|
|
|||||
$ | $ |
As of December 31, |
||||||||
2019 |
2020 |
|||||||
Less than 179 days |
$ | $ | ||||||
180-359 days |
||||||||
360 days and greater |
||||||||
|
|
|
|
|||||
Total |
For the year ended December 31, |
||||||||||||
2018 |
2019 |
2020 |
||||||||||
Balance at the beginning of year |
$ | $ | $ | |||||||||
Changes on initial application of ASU 2016-13 (1) |
||||||||||||
Additional allowance for credit losses, net of recoveries |
||||||||||||
Write-offs |
( |
) | ( |
) | ( |
) | ||||||
Exchange difference |
( |
) | ( |
) | ||||||||
|
|
|
|
|
|
|||||||
Balance at the end of year |
As of December 31, |
||||||||
2019 |
2020 |
|||||||
Accounts receivable |
$ | $ | ||||||
Financing receivables |
||||||||
Less: Allowance for credit losses (1) |
( |
) | ( |
) | ||||
|
|
|
|
|||||
$ | $ |
1 - 30 DaysPast Due |
31 Days- Past |
6 1 -9 Days0 Past Due |
Greater Past |
Total Past Due |
Current |
Total |
||||||||||||||||||||||
December 31, 2019 |
||||||||||||||||||||||||||||
Financing receivables by origination year |
||||||||||||||||||||||||||||
2018 |
$ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||
2019 |
||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Total |
||||||||||||||||||||||||||||
December 31, 2020 |
||||||||||||||||||||||||||||
Financing receivables by origination year |
||||||||||||||||||||||||||||
2018 |
$ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||
2019 |
||||||||||||||||||||||||||||
2020 |
||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Total |
$ | $ | $ | $ | $ | $ | $ |
For the year ended December 31, |
||||||||||||
2018 |
2019 |
2020 |
||||||||||
Beginning balance |
$ | $ | $ | |||||||||
Change on initial application of ASU 2016-13 (1) |
||||||||||||
Additional allowance for credit losses, net of recoveries |
||||||||||||
Write-offs |
( |
) | ( |
) | ( |
) | ||||||
Exchange difference |
( |
) | ||||||||||
|
|
|
|
|
|
|||||||
Balance at the end of year |
$ | $ | $ |
Fixed Assets |
Estimated Useful Lives (years) | |
Office buildings |
||
Leasehold improvements |
||
Vehicles |
||
Office furniture |
||
Computer equipment and hardware |
Intangible Assets |
Estimated Useful Lives (years) | |
Purchased video content |
||
Computer software |
||
Developed technologies |
||
Domain names and trademarks |
||
Operating rights for licensed games |
As of December 31, 2019 |
As of December 31, 2020 |
|||||||
ASSETS |
||||||||
Cash and cash equivalents |
$ | $ | ||||||
Restricted cash |
||||||||
Short-term investments |
||||||||
Account and financing receivables, net |
||||||||
Prepaid and other current assets |
||||||||
Long-term investments, ne t |
||||||||
Fixed assets, net |
||||||||
Goodwill |
||||||||
Intangible assets, net |
||||||||
Other assets |
||||||||
Total assets associated with discontinued operations |
$ |
$ |
||||||
LIABILITIES |
||||||||
Accounts payable |
$ | $ | ||||||
Accrued liabilities |
||||||||
Receipts in advance |
||||||||
Accrued salary and benefits |
||||||||
Taxes payable |
||||||||
Other short-term liabilities |
||||||||
Long-term liabilities |
||||||||
Total liabilities associated with discontinued operations |
$ |
$ |
||||||
Year Ended December 31, |
||||||||||||
2018 |
2019 |
2020 |
||||||||||
Revenues |
$ | $ | $ | |||||||||
Cost of revenues |
||||||||||||
Gross profit |
||||||||||||
Operating expenses: |
||||||||||||
Research and development (1) |
||||||||||||
Sales and marketing (1) |
||||||||||||
General and administrative (1) |
||||||||||||
Total operating expenses |
||||||||||||
Operating profit/(loss) |
( |
) | ||||||||||
Interest income |
||||||||||||
Foreign currency exchange gain/(loss) |
( |
) | ||||||||||
Other income, net (1) |
||||||||||||
Income/(loss) before income tax expense |
( |
) | ||||||||||
Income tax expense |
||||||||||||
Net income/(loss) from discontinued operations, net of tax |
( |
) | ||||||||||
(1) | Expenses generated from marketing services among the Sohu and Sogou, and leasing expenses generated from a building that Sohu leases to Sogou are not eliminated because those expenses are considered to continue after the disposal of the discontinued operations. |
Year Ended December 31, |
||||||||||||
2018 |
2019 |
2020 |
||||||||||
Net cash provided by/(used in) discontinued operating activities |
$ | $ | $ | ( |
) | |||||||
Net cash provided by/(used in) discontinued investing activities |
( |
) | ( |
) | ||||||||
Net cash provided by/(used in) discontinued financing activities |
( |
) | ( |
) |
Year Ended December 31, |
||||||||
2018 |
2019 (1) |
|||||||
Revenues |
$ | $ | ||||||
Cost of revenues |
||||||||
Gross loss |
( |
) | ( |
) | ||||
Operating expenses: |
||||||||
Sales and marketing |
||||||||
General and administrative |
||||||||
Total operating expenses |
||||||||
Operating loss |
( |
) | ( |
) | ||||
Interest income |
||||||||
Other income/(expense), net |
( |
) | ||||||
Loss before income tax expense |
( |
) | ( |
) | ||||
Income tax expense |
||||||||
Net loss from discontinued operations, net of tax |
( |
) |
( |
) | ||||
|
Year Ended December 31, |
|||||||
2018 |
2019 (1) |
|||||||
Net cash provided by discontinued operating activities |
$ | $ | ||||||
Net cash used in discontinued investing activities |
( |
) | ( |
) | ||||
Net cash provided by/(used in) discontinued financing activities |
Year Ended December 31, 2018 |
||||||||||||||||
Sohu |
Changyou |
Eliminations |
Consolidated |
|||||||||||||
Revenues |
$ | $ | $ | ( |
) | $ | ||||||||||
Segment cost of revenues |
( |
) | ( |
) | ( |
) | ||||||||||
|
|
|
|
|
|
|
|
|||||||||
Segment gross profit |
||||||||||||||||
SBC (1) in cost of revenues |
||||||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Gross profit |
||||||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Operating expenses: |
||||||||||||||||
Product development |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
Sales and marketing |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
General and administrative |
( |
) | ( |
) | ( |
) | ||||||||||
Goodwill impairment and impairment of intangible assets acquired as part of business acquisitions |
( |
) | ( |
) | ||||||||||||
SBC (1) in operating expenses |
||||||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total operating expenses |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Operating profit/(loss) |
( |
) | ( |
) | ( |
) | ||||||||||
|
|
|
|
|
|
|
|
|||||||||
Other income |
||||||||||||||||
Interest income |
||||||||||||||||
Interest expense |
( |
) | ||||||||||||||
Exchange difference |
||||||||||||||||
|
|
|||||||||||||||
Loss before income tax expense |
( |
) | ||||||||||||||
Income tax benefit |
||||||||||||||||
|
|
|||||||||||||||
Net loss from continuing operations |
( |
) | ||||||||||||||
Net income from discontinued operations |
||||||||||||||||
|
|
|||||||||||||||
Net loss |
$ | ( |
) | |||||||||||||
|
|
Year Ended December 31, 2019 |
||||||||||||||||
Sohu |
Changyou |
Eliminations |
Consolidated |
|||||||||||||
Revenues |
$ | $ | $ | ( |
) | $ | ||||||||||
Segment cost of revenues |
( |
) | ( |
) | ( |
) | ||||||||||
Segment gross profit |
||||||||||||||||
SBC (1) in cost of revenues |
( |
) | ( |
) | ( |
) | ||||||||||
Gross profit |
||||||||||||||||
Operating expenses: |
||||||||||||||||
Product development |
( |
) | ( |
) | ( |
) | ||||||||||
Sales and marketing |
( |
) | ( |
) | ( |
) | ||||||||||
General and administrative |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
Goodwill impairment and impairment of intangible assets acquired as part of business acquisitions |
( |
) | ( |
) | ||||||||||||
SBC (1) in operating expenses |
( |
) | ( |
) | ( |
) | ||||||||||
Total operating expenses |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
Operating profit/(loss) |
( |
) | ( |
) | ( |
) | ||||||||||
Other income |
||||||||||||||||
Interest income |
||||||||||||||||
Interest expense |
( |
) | ||||||||||||||
Exchange difference |
||||||||||||||||
Loss before income tax expense |
( |
) | ||||||||||||||
Income tax expense |
( |
) | ||||||||||||||
Net loss from continuing operations |
( |
) | ||||||||||||||
Net income from discontinued operations |
||||||||||||||||
Net loss |
$ | ( |
) | |||||||||||||
|
|
Year Ended December 31, 2020 |
||||||||||||||||
Sohu |
Changyou |
Eliminations |
Consolidated |
|||||||||||||
Revenues |
$ | $ | $ | $ | ||||||||||||
Segment cost of revenues |
( |
) | ( |
) | ( |
) | ||||||||||
|
|
|
|
|
|
|
|
|||||||||
Segment gross profit |
||||||||||||||||
SBC (1) in cost of revenues |
( |
) | ( |
) | ( |
) | ||||||||||
|
|
|
|
|
|
|
|
|||||||||
Gross profit |
||||||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Operating expenses: |
||||||||||||||||
Product development |
( |
) | ( |
) | ( |
) | ||||||||||
Sales and marketing |
( |
) | ( |
) | ( |
) | ||||||||||
General and administrative |
( |
) | ( |
) | ( |
) | ||||||||||
SBC (1) in operating expenses |
( |
) | ( |
) | ( |
) | ||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total operating expenses |
( |
) | ( |
) | ( |
) | ||||||||||
|
|
|
|
|
|
|
|
|||||||||
Operating profit/(loss) |
( |
) | ||||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Other income |
||||||||||||||||
Interest income |
||||||||||||||||
Interest expense |
( |
) | ||||||||||||||
Exchange difference |
( |
) | ||||||||||||||
|
|
|||||||||||||||
Income before income tax expense |
||||||||||||||||
Income tax expense |
( |
) | ||||||||||||||
|
|
|||||||||||||||
Net loss from continuing operations |
( |
) | ||||||||||||||
Net loss from discontinued operations |
( |
) | ||||||||||||||
|
|
|||||||||||||||
Net loss |
$ | ( |
) | |||||||||||||
|
|
As of December 31, 2019 |
||||||||||||||||
Sohu |
Changyou |
Eliminations |
Consolidated |
|||||||||||||
Cash and cash equivalents |
$ | $ | $ | $ | ||||||||||||
Accounts receivable, net |
||||||||||||||||
Fixed assets, net |
( |
) | ||||||||||||||
Total assets (1) |
$ | $ | $ | ( |
) | $ |
As of December 31, 2020 |
||||||||||||||||
Sohu |
Changyou |
Eliminations |
Consolidated |
|||||||||||||
Cash and cash equivalents |
$ | $ | $ | $ | ||||||||||||
Accounts receivable, net |
||||||||||||||||
Fixed assets, net |
( |
) | ||||||||||||||
Total assets (1) |
$ | $ | $ | ( |
) | $ |
Year Ended December 31, |
||||||||||||
Share-based compensation expense |
2018 |
2019 |
2020 |
|||||||||
Cost of revenues |
$ | ( |
) | $ | $ | |||||||
Product development expenses |
( |
) | ||||||||||
Sales and marketing expenses |
( |
) | ( |
) | ||||||||
General and administrative expenses |
( |
) | ||||||||||
$ | ( |
) | $ | $ | ||||||||
Year Ended December 31, |
||||||||||||
Share-based compensation expense |
2018 |
2019 |
2020 |
|||||||||
For Sohu (excluding Sohu Video) share-based awards |
$ |
( |
) |
$ |
$ |
|||||||
For Changyou share-based awards |
( |
) |
||||||||||
For Sohu Video share-based awards |
( |
) |
( |
) |
( |
) | ||||||
$ |
( |
) |
$ |
$ |
||||||||
Year Ended December 31, |
||||||||||||
2018 |
2019 |
2020 |
||||||||||
Rental income from Sogou (1) |
||||||||||||
Individual tax refund and additional deduction of PRC value-added tax (2) |
||||||||||||
Government grant |
||||||||||||
Gain from the changes in fair value of financial instruments (3) |
||||||||||||
Write-off of unpaid long-term accounts payable |
||||||||||||
Investment income/(expense) |
( |
) |
||||||||||
Impairment loss on equity investments (4) |
( |
) |
( |
) | ||||||||
Donations |
( |
) |
( |
) | ||||||||
Others |
||||||||||||
$ |
$ |
$ |
||||||||||
As of December 31, |
||||||||
2019 |
2020 |
|||||||
Accounts receivable, net |
||||||||
Accounts receivable |
$ | |||||||
Allowance for credit losses |
( |
) | ( |
) | ||||
|
|
|
|
|||||
$ | ||||||||
|
|
|
|
Balance at the beginning of year |
Changes on initial application of ASU 2016-13 |
Additional allowance for credit losses, net of recoveries |
Write-offs |
Exchange difference |
Balance at the end of year |
|||||||||||||||||||
2018 |
( |
) | ( |
) | ||||||||||||||||||||
2019 |
( |
) | ( |
) | ||||||||||||||||||||
2020 |
( |
) |
As of December 31, |
||||||||
2019 |
2020 |
|||||||
Prepaid and other current assets |
||||||||
Matching loan due from a related party (See Note 9) |
$ | $ | ||||||
Prepaid taxes |
||||||||
Prepaid content and license |
||||||||
Prepaid cost of revenue |
||||||||
Receivables from third party payment platforms |
||||||||
Interest receivable from bank deposits with original maturities of three months or less |
||||||||
Prepaid professional fees |
||||||||
Prepaid rental deposit |
||||||||
Prepaid office rent and facilities expenses |
||||||||
Employee advances |
||||||||
Others |
||||||||
|
|
|
|
|||||
$ | $ | |||||||
|
|
|
|
|||||
Prepaid non-current assets |
||||||||
Prepaid PRC income tax for the sale of assets associated with 17173.com by Sohu to Changyou |
$ | $ | ||||||
|
|
|
|
|||||
$ | $ | |||||||
|
|
|
|
|||||
Other short-term liabilities |
||||||||
Matching loans due to a related party (See Note 9) |
||||||||
Contingent liability related to Shanghai Jingmao liquidation (1) |
||||||||
Deposits related to Focus |
||||||||
Share-based awards in Changyou |
||||||||
Contract deposits from advertisers |
||||||||
|
||||||||
Consideration payable for equity investment |
||||||||
Others |
||||||||
|
|
|
|
|||||
$ | $ | |||||||
|
|
|
|
Receipts in advance relating to: |
||||||||
brand advertising business |
$ | $ | ||||||
online game business |
||||||||
other business |
||||||||
|
|
|
|
|||||
Total receipts in advance |
||||||||
Deferred revenue |
||||||||
|
|
|
|
|||||
$ | $ | |||||||
|
|
|
|
10. |
FAIR VALUE MEASUREMENTS |
Fair value measurements at reporting date using |
||||||||||||||||
Items |
As of December 31, 2019 |
Quoted Prices in Active Markets for Identical Assets (Level 1) |
Significant Other Observable Inputs (Level 2) |
Significant Unobservable Inputs (Level 3) |
||||||||||||
Cash equivalents |
$ | $ | $ | $ | ||||||||||||
Restricted cash |
||||||||||||||||
Restricted time deposits |
||||||||||||||||
Short-term investments |
||||||||||||||||
Equity investments with readily determinable fair values |
Fair value measurements at reporting date using |
||||||||||||||||
Items |
As of December 31, 2020 |
Quoted Prices in Active Markets for Identical Assets (Level 1) |
Significant Other Observable Inputs (Level 2) |
Significant Unobservable Inputs (Level 3) |
||||||||||||
Cash equivalents |
$ | $ | $ | $ | ||||||||||||
Restricted cash |
||||||||||||||||
Restricted time deposits |
||||||||||||||||
Short-term investments |
||||||||||||||||
Equity investments with readily determinable fair values |
• | Factoring contract with recourse with HongKong and Shanghai Banking Corporation Limited (“HSBC”) |
• | Credit agreements with Industrial and Commercial Bank of China Limited (“ICBC”) |
• | Credit agreements with the China Merchants Bank Co., Ltd. (“CMB”) |
• | Credit agreement with Industrial and Commercial Bank of China Limited, Tokyo Branch (“ICBC Tokyo”) |
Fair value measurements at reporting date using |
||||||||||||||||
Items |
As of December 31, 2019 |
Quoted Prices in Active Markets for Identical Assets (Level 1) |
Significant Other Observable Inputs (Level 2) |
Significant Unobservable Inputs (Level 3) |
||||||||||||
Purchased video content recorded in prepaid and other assets |
$ | $ | $ | $ | ||||||||||||
Intangible assets, net |
||||||||||||||||
Goodwill |
Fair value measurements at reporting date using |
||||||||||||||||
Items |
As of December 31, 2020 |
Quoted Prices in Active Markets for Identical Assets (Level 1) |
Significant Other Observable Inputs (Level 2) |
Significant Unobservable Inputs (Level 3) |
||||||||||||
Purchased video content recorded in prepaid and other assets |
$ | $ | $ | $ | ||||||||||||
Intangible assets, net |
||||||||||||||||
Goodwill |
11. |
LEASE |
Year ended December 31, |
||||||||
2019 |
2020 |
|||||||
Operating lease expense |
$ | $ | ||||||
Short-term lease expense |
||||||||
Total operating lease expense |
$ | $ | ||||||
Year ended December 31, |
||||||||
2019 |
2020 |
|||||||
Cash paid for amounts included in the measurement of lease liabilities |
||||||||
Operating cash flows from operating leases |
$ | $ |
Year ended December 31, |
||||||||
2019 |
2020 |
|||||||
Right-of-use |
||||||||
Operating leases |
$ | $ |
Year ended December 31, |
||||||||
2019 |
2020 |
|||||||
Assets: |
||||||||
Operating lease right-of-use |
$ | $ | ||||||
Liabilities: |
||||||||
Current lease liabilities |
||||||||
Non-current lease liabilities |
||||||||
Total operating lease liabilities |
$ | $ | ||||||
2021 |
$ | |||
2022 |
||||
2023 |
||||
2024 |
||||
2025 |
||||
Thereafter |
||||
Total future lease payments |
||||
Less: imputed interest |
( |
) | ||
Total present value of lease liabilities |
$ | |||
12. |
FIXED ASSETS |
As of December 31, |
||||||||
2019 |
2020 |
|||||||
Office buildings |
$ | $ | ||||||
Computer equipment and hardware |
||||||||
Leasehold and building improvements |
||||||||
Office furniture |
||||||||
Vehicles |
||||||||
Fixed assets, gross |
||||||||
Accumulated depreciation |
( |
) | ( |
) | ||||
Fixed assets, net |
$ | $ | ||||||
13. |
GOODWILL |
Sohu |
Changyou |
Total |
||||||||||
Balance as of December 31, 2018 |
||||||||||||
Goodwill |
||||||||||||
Accumulated impairment losses |
( |
) | ( |
) | ( |
) | ||||||
$ | $ | $ | ||||||||||
Transactions in 2019 |
||||||||||||
Foreign currency translation adjustment |
( |
) | ( |
) | ||||||||
Impairment losses |
||||||||||||
Balance as of December 31, 2019 |
$ | $ | $ | |||||||||
Balance as of December 31, 2019 |
||||||||||||
Goodwill |
||||||||||||
Accumulated impairment losses |
( |
) | ( |
) | ( |
) | ||||||
$ | $ | $ | ||||||||||
Transactions in 2020 |
||||||||||||
Foreign currency translation adjustment |
||||||||||||
Impairment losses |
||||||||||||
Balance as of December 31, 2020 |
$ | $ | $ | |||||||||
Balance as of December 31, 2020 |
||||||||||||
Goodwill |
||||||||||||
Accumulated impairment losses |
( |
) | ( |
) | ( |
) | ||||||
$ | $ | $ | ||||||||||
14. |
INTANGIBLE ASSETS, NET |
As of December 31, 2019 |
||||||||||||||||
Items |
Gross Carrying Amount |
Accumulated Amortization |
Impairment |
Net Carrying Amount |
||||||||||||
Purchased video content |
$ | $ | ( |
) | $ | ( |
) | $ | ||||||||
Operating rights for licensed games |
( |
) | ( |
) | ||||||||||||
Domain names and trademarks |
( |
) | ( |
) | ||||||||||||
Computer software |
( |
) | ||||||||||||||
Developed technologies |
( |
) | ( |
) | ||||||||||||
Others |
( |
) | ( |
) | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total |
$ | $ | ( |
) | $ | ( |
) | $ | ||||||||
|
|
|
|
|
|
|
|
As of December 31, 2020 |
||||||||||||||||
Items |
Gross Carrying Amount |
Accumulated Amortization |
Impairment |
Net Carrying Amount |
||||||||||||
Purchased video content |
$ | $ | ( |
) | $ | ( |
) | $ | ||||||||
Operating rights for licensed games |
( |
) | ( |
) | ||||||||||||
Domain names and trademarks |
( |
) | ( |
) | ||||||||||||
Computer software |
( |
) | ||||||||||||||
Developed technologies |
( |
) | ( |
) | ||||||||||||
Others |
( |
) | ( |
) | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total |
$ | $ | ( |
) | $ | ( |
) | $ | ||||||||
|
|
|
|
|
|
|
|
For the year ended December 31, |
(in thousands) |
|||
2021 |
||||
2022 |
||||
2023 |
||||
2024 |
||||
2025 |
||||
|
|
|||
Thereafter |
||||
|
|
|||
Total expected amortization expense |
$ | |||
|
|
15. |
TAXATION |
• | Sohu New Momentum. Sohu New Momentum qualified as an HNTE for the years 2019 through 2021, and will need to re-apply for HNTE qualification in 2022. |
• | Sohu Internet and Video Tianjin. Sohu Internet and Video Tianjin qualified as HNTEs for the years 2018 through 2020, and will need to re-apply for HNTE qualification in 2021. |
• | Sohu Media. Sohu Media re-applied for HNTE qualification and received approval in December 2020. Sohu Media is entitled to continue to enjoy the beneficial tax rate as an HNTE for the years 2020 through 2022, and will need to re-apply for HNTE qualification in 2023. |
• | Gamespace and Changyou Chuangxiang. Gamespace and Changyou Chuangxiang qualified as HNTEs for the years 2019 through 2021, and will need to re-apply for HNTE qualification in 2022. |
• | Gamease and AmazGame. Gamease and AmazGame re-applied for HNTE qualification and received approval in October 2020. Gamease and AmazGame are entitled to continue to enjoy the beneficial tax rate as HNTEs for the years 2020 through 2022, and will need to re-apply for HNTE qualification in 2023. |
• | Sogou Network. Sogou Network qualified as an HNTE for the years 2019 through 2021, and will need to re-apply for HNTE qualification in 2022. |
• | Sogou Information. Sogou Information qualified as an HNTE for the years 2018 through 2020, and will need to re-apply for HNTE qualification in 2021. |
• | Sogou Technology. Sogou Technology re-applied for HNTE qualification and received approval in December 2020. Sogou Technology is entitled to continue to enjoy the beneficial tax rate as an HNTE for the years 2020 through 2022, and will need to re-apply for HNTE qualification in 2023. |
• | AmazGame. In 2020, AmazGame completed a self-assessment and filed required supporting documents for KNSE status for 2019. Also in 2020, AmazGame was qualified as a KNSE after the relevant government authorities’ assessment and became entitled to a preferential income tax rate of |
• | Changyou Chuangxiang. In 2020, Changyou Chuangxiang completed a self-assessment and filed required supporting documents for KNSE status for 2019. In 2020, Changyou Chuangxiang was qualified as a KNSE after the relevant government authorities’ assessment and became entitled to a preferential income tax rate of |
Year ended December 31, |
||||||||||||
2018 |
2019 |
2020 |
||||||||||
Income/(loss) before income tax expense |
||||||||||||
Income/(loss) from China operations |
$ | ( |
) | $ | ( |
) | $ | |||||
Income/(loss) from non-China operations |
( |
) | ( |
) | ||||||||
|
|
|
|
|
|
|||||||
Total income/(loss) before income tax expense from continuing operations |
$ | ( |
) | $ | ( |
) | $ | |||||
|
|
|
|
|
|
|||||||
Income tax expense applicable to China operations |
||||||||||||
Current tax |
$ | $ | $ | |||||||||
Deferred tax |
||||||||||||
|
|
|
|
|
|
|||||||
Subtotal income tax expense applicable to China operations |
||||||||||||
Non-China income tax expense/(benefit) |
( |
) | ||||||||||
Non-China withholding tax expense |
||||||||||||
|
|
|
|
|
|
|||||||
Total income tax expense/(benefit) from continuing operations |
$ | ( |
) | $ | $ | |||||||
|
|
|
|
|
|
Year Ended December 31, |
||||||||||||
2018 |
2019 |
2020 |
||||||||||
Tax holiday effect |
$ | $ | $ | |||||||||
Basic net income per share effect |
Year Ended December 31, |
||||||||||||
2018 |
2019 |
2020 |
||||||||||
Statutory Rate: |
% | % | % | |||||||||
Effect of tax holidays applicable to subsidiaries and consolidated VIEs (1) |
% | % | ( |
%) | ||||||||
Tax differential from statutory rate applicable to subsidiaries and consolidated VIEs |
( |
%) | % | % | ||||||||
Effect of withholding taxes (2) |
( |
%) | ( |
%) | % | |||||||
Changes in valuation allowance for deferred tax assets |
( |
%) | ( |
%) | % | |||||||
Research and development super-deduction |
% | % | ( |
%) | ||||||||
Others |
( |
%) | ( |
%) | ( |
%) | ||||||
|
|
|
|
|
|
|||||||
( |
%) | ( |
%) | % | ||||||||
|
|
|
|
|
|
As of December 31, |
||||||||
2019 |
2020 |
|||||||
Deferred tax assets: |
||||||||
Net operating loss from operations |
$ | $ | ||||||
Accrued bonus and commissions |
||||||||
Intangible assets transfer |
||||||||
Others |
||||||||
|
|
|
|
|||||
Total deferred tax assets |
||||||||
Less: Valuation allowance |
( |
) | ( |
) | ||||
|
|
|
|
|||||
Net deferred tax asset s |
$ | $ | ||||||
|
|
|
|
|||||
Deferred tax liabilities |
||||||||
Withholding tax for dividend |
$ | ( |
) | $ | ( |
) | ||
Others |
( |
) | ( |
) | ||||
|
|
|
|
|||||
Total deferred tax liabilities |
$ | ( |
) | $ | ( |
) | ||
|
|
|
|
For the Year Ended December 31, |
||||||||||||
2018 |
2019 |
2020 |
||||||||||
Beginning balance |
$ | |||||||||||
Provision for the year |
||||||||||||
Reversal for the year |
( |
) | ( |
) | ( |
) | ||||||
Foreign currency translation adjustment |
( |
) | ( |
) | ||||||||
|
|
|
|
|
|
|||||||
Ending balance |
$ | |||||||||||
|
|
|
|
|
|
As of December 31, |
||||||||||||
2018 |
2019 |
2020 |
||||||||||
Beginning balance |
$ | $ | $ | |||||||||
Increases /(decreases) related to prior year tax positions |
( |
) | ||||||||||
Increases related to current year tax positions |
||||||||||||
|
|
|
|
|
|
|||||||
Ending balance |
$ | $ | $ | |||||||||
|
|
|
|
|
|
16. |
COMMITMENTS AND CONTINGENCIES |
2021 |
2022 |
2023 |
2024 |
2025 |
Thereafter |
Total Payments Required |
||||||||||||||||||||||
Royalties and expenditures for licensed content of games |
$ | |||||||||||||||||||||||||||
Purchase of bandwidth |
||||||||||||||||||||||||||||
Interest payment commitment |
||||||||||||||||||||||||||||
Operating lease obligations |
||||||||||||||||||||||||||||
Purchase of content and services — others |
||||||||||||||||||||||||||||
Purchase of content and services — video |
||||||||||||||||||||||||||||
Others |
||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Total Payments Required |
$ | |||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
17. |
VIEs |
• | High Century |
• | Heng Da Yi Tong |
• | Sohu Internet |
• | Donglin |
• | Tianjin Jinhu |
• | Focus Interactive |
• | Gamease |
• | Shanghai ICE |
• | Guanyou Gamespace |
• | Sogou Information |
• | Chengdu Easypay |
As of December 31, |
||||||||
2019 |
2020 |
|||||||
ASSETS: |
||||||||
Cash and cash equivalent s |
$ | $ | ||||||
Restricted cash |
||||||||
Accounts receivable, net |
||||||||
Prepaid and other current assets |
||||||||
Short-term investments |
||||||||
Intra-Group receivables due from the Company’s subsidiaries |
||||||||
Assets held for sale (current) |
||||||||
|
|
|
|
|||||
Total current assets |
||||||||
|
|
|
|
|||||
Long-term investments, net |
||||||||
Fixed assets, net |
||||||||
Intangible assets, net |
||||||||
Goodwill |
||||||||
Other non-current assets |
||||||||
Assets held for sale (non-current) |
||||||||
|
|
|
|
|||||
Total assets |
$ | $ | ||||||
|
|
|
|
|||||
LIABILITIES: |
||||||||
Accounts payable |
$ | $ | ||||||
Accrued liabilities |
||||||||
Receipts in advance and deferred revenue |
||||||||
Other current liabilities |
||||||||
Intra-Group payables due to the Company’s subsidiaries |
||||||||
Liabilities held for sale (current) |
||||||||
|
|
|
|
|||||
Total current liabilities |
||||||||
|
|
|
|
|||||
Long-term tax liabilities |
||||||||
Deferred tax liabilities |
||||||||
Intra-Group payables due to the Company’s subsidiaries |
||||||||
Other long-term liabilities |
||||||||
Liabilities held for sale (non-current) |
||||||||
|
|
|
|
|||||
Total liabilities |
$ | $ | ||||||
|
|
|
|
As of December 31, |
||||||||||||
2018 |
2019 |
2020 |
||||||||||
Net revenue |
$ | $ | $ | |||||||||
Net income from continuing operations |
||||||||||||
Net loss from discontinued operations |
$ | ( |
) | $ | ( |
) | $ | ( |
) | |||
|
|
|
|
|
|
Year ended December 31, |
||||||||||||
2018 |
2019 |
2020 |
||||||||||
Net cash provided by/(used in) continuing operating activities |
$ | $ | ( |
) | $ | |||||||
Net cash provided by/(used in) discontinued operating activities |
( |
) | ( |
) | ||||||||
Net cash provided by/(used in) operating activities |
( |
) | ( |
) | ||||||||
Net cash provided by/(used in) investing activities |
( |
) | ( |
) | ||||||||
Net cash provided by/(used in) discontinued investing activities |
( |
) | ( |
) | ||||||||
Net cash provided by/(used in) investing activities |
( |
) | ( |
) | ||||||||
Net cash provided by continuing financing activities |
||||||||||||
Net cash provided by discontinued financing activities |
||||||||||||
|
|
|
|
|
|
|||||||
Net cash provided by financing activities |
$ | $ | $ | |||||||||
|
|
|
|
|
|
18. |
SOHU.COM LIMITED SHAREHOLDERS’ EQUITY |
Number of Outstanding Shares As of December 31, |
||||||||||||
2018 |
2019 |
2020 |
||||||||||
Balance, beginning of year |
||||||||||||
Issuance: |
||||||||||||
Balance, end of year |
||||||||||||
Options |
Number Of Shares (in thousands) |
Weighted Average Exercise Price |
Weighted Average Remaining Contractual Life (Years) |
Aggregate Intrinsic Value (1) (in thousands) |
||||||||||||
Outstanding as of January 1, 2020 |
$ | $ | ||||||||||||||
Granted |
||||||||||||||||
Exercised |
( |
) | ||||||||||||||
Forfeited or expired |
||||||||||||||||
Outstanding as of December 31, 2020 |
||||||||||||||||
Vested as of December 31, 2020 |
||||||||||||||||
Exercisable as of December 31, 2020 |
||||||||||||||||
(i) | Performance-based options, which vest and become exercisable either in |
(ii) | Service-based options, which vest and become exercisable either in |
(iii) | IPO-based options, which were subject to completion of an IPO and vesting/ exercisability in |
Contractually Granted |
Granted (For Purposes of Share- based Compensation Expense) |
Vested and Exercisable |
Exercised |
|||||||||||||
Performance-based options |
||||||||||||||||
Service-based options |
||||||||||||||||
IPO-based options |
||||||||||||||||
Total |
||||||||||||||||
Options |
Number Of Shares (in thousands) |
Weighted Average Exercise Price |
Weighted Average Remaining Contractual Life (Years) |
Aggregate Intrinsic Value (1) (in thousands) |
||||||||||||
Outstanding as of January 1, 2020 |
$ |
$ |
||||||||||||||
Granted |
||||||||||||||||
Exercised |
( |
) |
||||||||||||||
Forfeited or expired |
( |
) |
||||||||||||||
Outstanding as of December 31, 2020 |
||||||||||||||||
Vested as of December 31, 2020 and expected to vest thereafter |
||||||||||||||||
Exercisable as of December 31, 2020 |
||||||||||||||||
Assumptions Adopted |
2018 |
2019 |
2020 |
|||||||||
Average risk-free interest rate |
||||||||||||
Exercise multiple |
||||||||||||
Expected forfeiture rate (post-vesting) |
||||||||||||
Weighted average expected option life |
||||||||||||
Volatility rate |
||||||||||||
Dividend yield |
||||||||||||
Weighted average fair value of share options |
(i) | Performance-based options, which vest and become exercisable in |
(ii) | Service-based options, which vest and become exercisable in |
Contractually Granted |
Granted (For Purposes of Share- based Compensation Expense) |
Vested and Exercisable |
Exercised |
|||||||||||||
Performance-based options |
||||||||||||||||
Service-based options |
||||||||||||||||
Total |
||||||||||||||||
Options |
Number Of Shares (in thousands) |
Weighted Average Exercise Price |
Weighted Average Remaining Contractual Life (Years) |
Aggregate Intrinsic Value (1) (in thousands) |
||||||||||||
Outstanding as of January 1, 2020 |
$ |
$ |
||||||||||||||
Granted |
||||||||||||||||
Exercised |
( |
) |
||||||||||||||
Forfeited or expired |
( |
) |
||||||||||||||
Outstanding as of December 31, 2020 |
||||||||||||||||
Vested as of December 31, 2020 and expected to vest thereafter |
||||||||||||||||
Exercisable as of December 31, 2020 |
||||||||||||||||
Assumptions Adopted |
2018 |
2019 |
2020 |
|||||||||
Average risk-free interest rate |
||||||||||||
Exercise multiple |
||||||||||||
Expected forfeiture rate (post-vesting) |
||||||||||||
Weighted average expected option life |
||||||||||||
Volatility rate |
||||||||||||
Dividend yield |
||||||||||||
Weighted average fair value of share options |
(i) | Performance-based options, which vest and become exercisable in |
(ii) | Service-based options, which were granted to members of Sohu’s Board of Directors. All of these share options vested and became exercisable in 2015, as the service period requirement had been met. |
Contractually Granted |
Granted (For Purposes of Share- based Compensation Expense) |
Vested and Exercisable |
Exercised |
|||||||||||||
Performance-based options |
||||||||||||||||
Service-based options |
||||||||||||||||
Total |
||||||||||||||||
Number Of Shares (in thousands) |
Weighted Average Exercise Price |
Weighted Average Remaining Contractual Life (Years) |
Aggregate Intrinsic Value (1) (in thousands) |
|||||||||||||
Outstanding as of January 1, 2020 |
$ | $ | ||||||||||||||
Granted |
||||||||||||||||
Exercised |
||||||||||||||||
Forfeited or expired |
||||||||||||||||
Outstanding as of December 31, 2020 |
||||||||||||||||
Vested as of December 31, 2020 |
||||||||||||||||
Exercisable as of December 31, 2020 |
||||||||||||||||
Assumptions Adopted |
2019 |
2020 |
||||||
Average risk-free interest rate |
% | % | ||||||
Exercise multiple |
||||||||
Expected forfeiture rate (post-vesting) |
% | % | ||||||
Weighted average expected option life |
||||||||
Volatility rate |
% | % | ||||||
Dividend yield |
||||||||
Fair value |
19. |
NONCONTROLLING INTEREST |
As of December 31, |
||||||||
2019 |
2020 |
|||||||
Changyou |
$ | $ | ||||||
Sogou |
||||||||
Total |
$ | $ | ||||||
Year Ended December 31, |
||||||||||||
2018 |
2019 |
2020 |
||||||||||
Changyou |
$ | $ | $ | |||||||||
Sogou |
( |
) | ||||||||||
Total |
$ | $ | $ | ( |
) | |||||||
Year Ended December 31, |
||||||||||||
2018 |
2019 |
2020 |
||||||||||
Net income from continuing operations attributable to noncontrolling shareholders |
$ | $ | $ | |||||||||
Net income/(loss) from discontinued operations attributable to noncontrolling shareholders |
( |
) | ||||||||||
Net income/(loss) attributable to noncontrolling interest shareholders |
$ | $ | $ | ( |
) | |||||||
20. |
NET INCOME/(LOSS) PER SHARE |
Year Ended December 31, |
||||||||||||
2018 |
2019 |
2020 |
||||||||||
Numerator: |
||||||||||||
Net loss from continuing operations attributable to Sohu.com Limited, basic |
$ | ( |
) | $ | ( |
) | $ | ( |
) | |||
Net income/(loss) from discontinued operations attributable to Sohu.com Limited, basic |
( |
) | ||||||||||
Net loss attributable to Sohu.com Limited, basic |
( |
) | $ | ( |
) | ( |
) | |||||
Effect of dilutive securities: |
||||||||||||
Incremental dilution from Changyou |
( |
) | ( |
) | ( |
) | ||||||
Incremental dilution from Sogou |
( |
) | ( |
) | ||||||||
Net loss from continuing operations attributable to Sohu.com Limited, diluted |
( |
) | ( |
) | ( |
) | ||||||
Net income/(loss) from discontinued operations attributable to Sohu.com Limited, diluted |
( |
) | ||||||||||
Net loss attributable to Sohu.com Limited, diluted |
$ | ( |
) | $ | ( |
) | ( |
) | ||||
Denominator: |
||||||||||||
Weighted average basic ordinary shares outstanding |
||||||||||||
Effect of dilutive securities: |
||||||||||||
Share options and restricted share units |
||||||||||||
Weighted average diluted ordinary shares outstanding |
$ | $ | $ | |||||||||
Basic net loss per share attributable to Sohu.com Limited |
||||||||||||
Continuing operations |
$ | ( |
) | $ | ( |
) | $ | ( |
) | |||
Discontinued operations |
( |
) | ||||||||||
Net loss per share |
( |
) | ( |
) | ( |
) | ||||||
Diluted net loss per share attributable to Sohu.com Limited |
||||||||||||
Continuing operations |
$ | ( |
) | $ | ( |
) | $ | ( |
) | |||
Discontinued operations |
( |
) | ||||||||||
Net loss per share |
( |
) | ( |
) | ( |
) | ||||||
21. |
CHINA CONTRIBUTION PLAN |
22. |
PROFIT APPROPRIATION |
23. |
CONCENTRATION RISKS |
24. |
RESTRICTED NET ASSETS |
25. |
ADDITIONAL INFORMATION — CONDENSED FINANCIAL STATEMENTS |
As of December 31, |
||||||||
2019 |
2020 |
|||||||
ASSETS |
||||||||
Current assets: |
||||||||
Cash and cash equivalents |
$ |
$ |
||||||
Prepaid and other current assets |
||||||||
Due from subsidiaries and VIEs |
||||||||
Total current assets |
||||||||
Interests in subsidiaries and VIEs |
||||||||
Other assets, net |
||||||||
Total assets |
$ |
$ |
||||||
LIABILITIES AND SHAREHOLDERS’ EQUITY |
||||||||
Current liabilities |
||||||||
Deficit of investment in subsidiaries and VIEs |
||||||||
Long-term liabilities |
||||||||
Total liabilities |
||||||||
Shareholders’ equity: |
||||||||
Ordinary Shares: $ |
||||||||
Additional paid-in capital |
||||||||
Accumulated other comprehensive income |
||||||||
Accumulated deficit |
( |
) |
( |
) | ||||
Total shareholders’ equity |
||||||||
Total liabilities and shareholders’ equity |
$ |
$ |
||||||
Year Ended December 31, |
||||||||||||
2018 |
2019 |
2020 |
||||||||||
Revenues |
$ | $ | $ | |||||||||
Cost of revenues |
||||||||||||
Gross profit |
||||||||||||
Operating expenses: |
||||||||||||
General and administrative |
||||||||||||
Operating loss |
( |
) | ( |
) | ( |
) | ||||||
Share of loss of subsidiaries and VIEs |
( |
) | ( |
) | ( |
) | ||||||
Other income/(expense) |
( |
) | ||||||||||
Interest income |
||||||||||||
Loss before income tax expense/(benefit) |
( |
) | ( |
) | ( |
) | ||||||
Income tax expense/(benefit) |
( |
) | ||||||||||
Net loss |
( |
) | ( |
) | ( |
) | ||||||
Other comprehensive income/(loss) |
( |
) | ||||||||||
Comprehensive loss |
$ | ( |
) | $ | ( |
) | $ | ( |
) | |||
Year Ended December 31, |
||||||||||||
2018 |
2019 |
2020 |
||||||||||
Cash flows from operating activities: |
||||||||||||
Net loss |
$ | ( |
) | $ | ( |
) | $ | ( |
) | |||
Adjustments to reconcile net loss to net cash provided by operating activities: |
||||||||||||
Investment loss from subsidiaries and VIEs |
||||||||||||
Share-based compensation expense/(benefit) |
( |
) | ||||||||||
Others |
( |
) | ||||||||||
Changes in current assets and liabilities: |
||||||||||||
Due from subsidiaries and VIEs |
( |
) | ( |
) | ||||||||
Prepaid and other current assets |
( |
) | ( |
) | ||||||||
Tax liabilities |
( |
) | ||||||||||
Accrued liabilities |
( |
) | ( |
) | ||||||||
Net cash used in operating activities |
( |
) | ( |
) | ( |
) | ||||||
Cash flows from investing activities: |
||||||||||||
Dividend received |
||||||||||||
Net cash used in operating activities |
||||||||||||
Net decrease in cash, cash equivalents, restricted cash and restricted time deposits |
( |
) | ( |
) | ( |
) | ||||||
Cash, cash equivalents, restricted cash and restricted time deposits at beginning of year |
||||||||||||
Cash and cash equivalents, restricted cash and restricted time deposits of Sohu.com Limited at the date of the liquidation of Sohu.com Inc. |
||||||||||||
Cash, cash equivalents, restricted cash and restricted time deposits at end of year |
$ | $ | $ | |||||||||
Reconciliation of cash, cash equivalents, and restricted time deposits to the condensed balance sheets: |
||||||||||||
Cash and cash equivalents |
$ | $ | $ | |||||||||
Restricted time deposits included in other assets |
||||||||||||
Total cash, cash equivalents, restricted cash and restricted time deposits at end of year |
$ | $ | $ | |||||||||