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) | ||
† |
The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April 5, 2012. |
International Financial Reporting Standards as issued by the International Accounting Standards Board ☐ |
Other ☐ |
• | “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 (“VIEs”). As described elsewhere in this annual report, we do not own the VIEs, and the results of the VIEs’ operations only accrue to us through contractual arrangements between the VIEs, and the VIEs’ nominee shareholders, and certain of our subsidiaries. Accordingly, in appropriate contexts we will describe the VIEs’ activities separately from those of our direct and indirect owned subsidiaries and our use of the terms “we,” “us,” and “our” may not include the VIEs in those contexts. 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 exempted company, and unless the context requires otherwise, includes its subsidiaries and VIEs; |
• | “China,” the “PRC,” or “Mainland China” refers to the People’s Republic of China, and for the purpose of this annual report, excludes Hong Kong, Macau, and Taiwan; |
• | “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; |
• | “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; |
• | “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 exempted company, and unless the context requires otherwise, includes its subsidiaries and VIEs; |
• | “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” or “TLBB PC” 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, video, and game business 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, video, and game industries in China; |
• | the PRC government policies relating to the Internet and Internet content providers, including online media, video, and game developers and operators; and |
• | the effect that PRC laws and regulations; PRC government policies; and the views of courts, arbitral tribunals, and other governmental authorities may have on our ability to rely on contractual rights to effect control and management of the VIEs that are consolidated with us and our ability to consolidate such VIEs’ results of operations, assets, and liabilities in our consolidated financial statements and/or to transfer the revenues of such VIEs to our corresponding PRC subsidiaries. |
ITEM 1. |
IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS |
ITEM 2. |
OFFER STATISTICS AND EXPECTED TIMETABLE |
ITEM 3. |
KEY INFORMATION |
As of December 31, 2020 |
||||||||||||||||||||||||
Sohu.com Limited |
Other Subsidiaries |
Primary Beneficiaries of VIEs |
VIEs and their subsidiaries |
Eliminating adjustments |
Consolidated totals |
|||||||||||||||||||
ASSETS |
||||||||||||||||||||||||
Current assets: |
||||||||||||||||||||||||
Cash and cash equivalents |
$ | 586 | 61,505 | 107,938 | 47,028 | 0 | 217,057 | |||||||||||||||||
Restricted cash |
0 | 112,028 | 217,552 | 1,211 | 0 | 330,791 | ||||||||||||||||||
Short-term investments |
0 | 31,429 | 69,163 | 153 | 0 | 100,745 | ||||||||||||||||||
Accounts receivable, net |
0 | 19,870 | 20,417 | 47,234 | 0 | 87,521 | ||||||||||||||||||
Prepaid and other current assets |
1,609 | 9,932 | 110,316 | 15,385 | (30,652 | ) | 106,590 | |||||||||||||||||
Intra-Group receivables due from the Company’s subsidiaries (1) |
533,678 | 486,704 | 1,015,652 | 506,659 | (2,542,693 | ) | 0 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Total current assets from continuing operations |
535,873 | 721,468 | 1,541,038 | 617,670 | (2,573,345 | ) | 842,704 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Assets held for sale (current) |
1,412,168 | |||||||||||||||||||||||
|
|
|||||||||||||||||||||||
Total current assets |
2,254,872 | |||||||||||||||||||||||
|
|
|||||||||||||||||||||||
Fixed assets, net |
0 | 55,929 | 281,450 | 295 | 0 | 337,674 | ||||||||||||||||||
Investment in subsidiaries and VIEs (2) |
0 | 898,680 | 347,153 | 0 | (1,245,833 | ) | 0 | |||||||||||||||||
Restricted time deposits |
0 | 19,924 | 81,595 | 0 | 0 | 101,519 | ||||||||||||||||||
Other non-current assets |
22,036 | 22,324 | 15,945 | 69,284 | (1,533 | ) | 128,056 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Total assets |
$ | 2,822,121 | ||||||||||||||||||||||
|
|
|||||||||||||||||||||||
LIABILITIES |
||||||||||||||||||||||||
Current liabilities: |
||||||||||||||||||||||||
Accounts payable |
$ | 0 | 15,824 | 80,642 | 11,145 | 0 | 107,611 | |||||||||||||||||
Accrued liabilities |
1,739 | 13,677 | 95,209 | 46,888 | 0 | 157,513 | ||||||||||||||||||
Receipts in advance and deferred revenue |
0 | 1,402 | 7,577 | 43,076 | 0 | 52,055 | ||||||||||||||||||
Accrued salary and benefits |
138 | 48,396 | 44,594 | 7,698 | 0 | 100,826 | ||||||||||||||||||
Tax payables |
0 | 4,322 | 19,262 | 4,422 | 0 | 28,006 | ||||||||||||||||||
Short-term bank loans |
0 | 315,550 | 0 | 0 | 0 | 315,550 | ||||||||||||||||||
Intra-Group payables due to the Company’s subsidiaries (1) |
0 | 1,216,889 | 975,205 | 350,599 | (2,542,693 | ) | 0 | |||||||||||||||||
Other short-term liabilities |
55 | 89,751 | 21,989 | 25,028 | (30,652 | ) | 106,171 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Total current liabilities from continuing operations |
1,932 | 1,705,811 | 1,244,478 | 488,856 | (2,573,345 | ) | 867,732 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Liabilities held for sale (current) |
416,998 | |||||||||||||||||||||||
|
|
|||||||||||||||||||||||
Total current liabilities |
1,284,730 | |||||||||||||||||||||||
|
|
|||||||||||||||||||||||
Long-term other payables |
0 | 0 | 3,202 | 0 | 0 | 3,202 | ||||||||||||||||||
Long-term bank loans |
0 | 92,000 | 0 | 0 | 0 | 92,000 | ||||||||||||||||||
Long-term tax liabilities |
158,507 | 16,119 | 0 | 14,134 | 0 | 188,760 | ||||||||||||||||||
Deferred tax liabilities |
0 | 206,594 | 8,985 | 2,014 | 0 | 217,593 | ||||||||||||||||||
Deficit of investment in subsidiaries and VIEs |
50,101 | 0 | 0 | 0 | (50,101 | ) | 0 | |||||||||||||||||
Other non-current liabilities |
0 | 84 | 3,485 | 1,819 | (1,533 | ) | 3,855 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Total long-term liabilities |
208,608 | 314,797 | 15,672 | 17,967 | (51,634 | ) | 505,410 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Total liabilities |
$ | 1,790,140 | ||||||||||||||||||||||
|
|
|||||||||||||||||||||||
Commitments and contingencies |
||||||||||||||||||||||||
SHAREHOLDERS’ EQUITY |
||||||||||||||||||||||||
Total Sohu.com Limited shareholders’ equity |
347,369 | |||||||||||||||||||||||
Noncontrolling interest |
684,612 | |||||||||||||||||||||||
|
|
|||||||||||||||||||||||
Total shareholders’ equity (2) |
1,031,981 | |||||||||||||||||||||||
|
|
|||||||||||||||||||||||
Total liabilities and shareholders’ equity |
$ | 2,822,121 | ||||||||||||||||||||||
|
|
As of December 31, 2021 |
||||||||||||||||||||||||
Sohu.com Limited |
Other Subsidiaries |
Primary Beneficiaries of VIEs |
VIEs and their subsidiaries |
Eliminating adjustments |
Consolidated totals |
|||||||||||||||||||
ASSETS |
||||||||||||||||||||||||
Current assets: |
||||||||||||||||||||||||
Cash and cash equivalents |
$ | 13,564 | 606,306 | 346,566 | 32,513 | 0 | 998,949 | |||||||||||||||||
Restricted cash |
0 | 0 | 1,969 | 0 | 0 | 1,969 | ||||||||||||||||||
Short-term investments |
0 | 147,598 | 251,747 | 0 | 0 | 399,345 | ||||||||||||||||||
Accounts receivable, net |
0 | 25,552 | 20,971 | 36,027 | 0 | 82,550 | ||||||||||||||||||
Prepaid and other current assets |
723 | 13,224 | 74,528 | 18,836 | 0 | 107,311 | ||||||||||||||||||
Intra-Group receivables due from the Company’s subsidiaries (1) |
539,677 | 670,362 | 837,566 | 647,330 | (2,694,935 | ) | 0 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Total current assets |
553,964 | 1,463,042 | 1,533,347 | 734,706 | (2,694,935 | ) | 1,590,124 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Fixed assets, net |
0 | 55,358 | 274,212 | 427 | 0 | 329,997 | ||||||||||||||||||
Investment in subsidiaries and VIEs (2) |
918,243 | 779,717 | 562,971 | 0 | (2,260,931 | ) | 0 | |||||||||||||||||
Long-term time deposits |
0 | 0 | 189,007 | 0 | 0 | 189,007 | ||||||||||||||||||
Other non-current assets |
22,036 | 9,469 | 19,976 | 86,744 | (1,568 | ) | 136,657 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Total assets |
$ | 1,494,243 | 2,307,586 | 2,579,513 | 821,877 | (4,957,434 | ) | 2,245,785 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
LIABILITIES |
||||||||||||||||||||||||
Current liabilities: |
||||||||||||||||||||||||
Accounts payable |
$ | 0 | 21,301 | 53,821 | 12,325 | 0 | 87,447 | |||||||||||||||||
Accrued liabilities |
1,678 | 11,257 | 81,566 | 43,695 | 0 | 138,196 | ||||||||||||||||||
Receipts in advance and deferred revenue |
0 | 4,938 | 6,259 | 45,844 | 0 | 57,041 | ||||||||||||||||||
Accrued salary and benefits |
83 | 25,637 | 57,372 | 8,393 | 0 | 91,485 | ||||||||||||||||||
Tax payables |
9 | 7,925 | 7,241 | 1,539 | 0 | 16,714 | ||||||||||||||||||
Intra-Group payables due to the Company’s subsidiaries (1) |
36,912 | 1,011,224 | 1,184,312 | 462,487 | (2,694,935 | ) | 0 | |||||||||||||||||
Other short-term liabilities |
1,358 | 58,866 | 38,250 | 14,094 | 0 | 112,568 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Total current liabilities |
40,040 | 1,141,148 | 1,428,821 | 588,377 | (2,694,935 | ) | 503,451 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Long-term other payables |
0 | 0 | 3,922 | 0 | 0 | 3,922 | ||||||||||||||||||
Long-term tax liabilities |
163,334 | 16,119 | 0 | 14,465 | 0 | 193,918 | ||||||||||||||||||
Deferred tax liabilities |
0 | 237,116 | 8,726 | 3,323 | 0 | 249,165 | ||||||||||||||||||
Other non-current liabilities |
0 | 0 | 2,960 | 1,750 | (1,568 | ) | 3,142 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Total long-term liabilities |
163,334 | 253,235 | 15,608 | 19,538 | (1,568 | ) | 450,147 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Total liabilities |
$ | 203,374 | 1,394,383 | 1,444,429 | 607,915 | (2,696,503 | ) | 953,598 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Commitments and contingencies |
||||||||||||||||||||||||
SHAREHOLDERS’ EQUITY |
||||||||||||||||||||||||
Total Sohu.com Limited shareholders’ equity |
1,290,869 | 911,936 | 1,135,084 | 213,962 | (2,260,982 | ) | 1,290,869 | |||||||||||||||||
Noncontrolling interest |
0 | 1,267 | 0 | 0 | 51 | 1,318 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Total shareholders’ equity (2) |
1,290,869 | 913,203 | 1,135,084 | 213,962 | (2,260,931 | ) | 1,292,187 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Total liabilities and shareholders’ equity |
$ | 1,494,243 | 2,307,586 | 2,579,513 | 821,877 | (4,957,434 | ) | 2,245,785 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31, 2019 |
||||||||||||||||||||||||
Sohu.com Limited |
Other Subsidiaries |
Primary Beneficiaries of VIEs |
VIEs and their subsidiaries |
Eliminating adjustments |
Consolidated totals |
|||||||||||||||||||
Revenues: |
||||||||||||||||||||||||
Third-party revenues |
$ | 0 | 111,548 | 79,972 | 482,283 | 0 | 673,803 | |||||||||||||||||
Intra-Group revenues (3) |
0 | 25,606 | 321,469 | 29,674 | (376,749 | ) | 0 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Total revenues |
0 | 137,154 | 401,441 | 511,957 | (376,749 | ) | 673,803 | |||||||||||||||||
Cost of revenues: |
||||||||||||||||||||||||
Third-party cost of revenues |
0 | 15,105 | 127,498 | 101,044 | 0 | 243,647 | ||||||||||||||||||
Intra-Group cost of revenues (3) |
0 | 2,234 | 39,692 | 139,765 | (181,691 | ) | 0 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Total cost of revenues |
0 | 17,339 | 167,190 | 240,809 | (181,691 | ) | 243,647 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Gross profit |
0 | 119,815 | 234,251 | 271,148 | (195,058 | ) | 430,156 | |||||||||||||||||
Operating expenses: |
||||||||||||||||||||||||
Third-party operating expenses |
2,320 | 75,800 | 354,102 | 69,131 | 0 | 501,353 | ||||||||||||||||||
Intra-Group operating expenses (3) |
0 | 4,260 | 6,044 | 184,799 | (195,103 | ) | 0 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Total operating expenses |
2,320 | 80,060 | 360,146 | 253,930 | (195,103 | ) | 501,353 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Operating profit/(loss) |
(2,320 | ) | 39,755 | (125,895 | ) | 17,218 | 45 | (71,197 | ) | |||||||||||||||
Income/(loss) from subsidiaries and VIEs (2) |
(167,657 | ) | (154,566 | ) | 75,149 | 0 | 247,074 | 0 | ||||||||||||||||
Non-operating income/(expense) |
21,142 | 11,870 | (36,770 | ) | 4,929 | (45 | ) | 1,126 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Income/(loss) before income tax expense |
(148,835 | ) | (102,941 | ) | (87,516 | ) | 22,147 | 247,074 | (70,071 | ) | ||||||||||||||
Income tax expense |
7,887 | 6,493 | 11,508 | 2,540 | 0 | 28,428 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Net income/(loss) from continuing operations |
(156,722 | ) | (109,434 | ) | (99,024 | ) | 19,607 | 247,074 | (98,499 | ) | ||||||||||||||
Less: Net income from continuing operations attributable to the noncontrolling interest shareholders |
0 | 58,223 | 0 | 0 | 0 | 58,223 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Net income/(loss) from continuing operations attributable to Sohu.com Limited |
(156,722 | ) | (167,657 | ) | (99,024 | ) | 19,607 | 247,074 | (156,722 | ) | ||||||||||||||
Net income from discontinued operations, net of tax |
7,386 | |||||||||||||||||||||||
|
|
|||||||||||||||||||||||
Net loss |
$ | (149,336 | ) | |||||||||||||||||||||
|
|
Year Ended December 31, 2020 |
||||||||||||||||||||||||
Sohu.com Limited |
Other Subsidiaries |
Primary Beneficiaries of VIEs |
VIEs and their subsidiaries |
Eliminating adjustments |
Consolidated totals |
|||||||||||||||||||
Revenues: |
||||||||||||||||||||||||
Third-party revenues |
$ | 0 | 119,098 | 77,812 | 552,980 | 0 | 749,890 | |||||||||||||||||
Intra-Group revenues (3) |
0 | 19,598 | 390,062 | 30,207 | (439,867 | ) | 0 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Total revenues |
0 | 138,696 | 467,874 | 583,187 | (439,867 | ) | 749,890 | |||||||||||||||||
Cost of revenues: |
||||||||||||||||||||||||
Third-party cost of revenues |
0 | 24,674 | 99,430 | 93,333 | 0 | 217,437 | ||||||||||||||||||
Intra-Group cost of revenues (3) |
0 | 4,376 | 34,280 | 141,717 | (180,373 | ) | 0 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Total cost of revenues |
0 | 29,050 | 133,710 | 235,050 | (180,373 | ) | 217,437 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Gross profit |
0 | 109,646 | 334,164 | 348,137 | (259,494 | ) | 532,453 | |||||||||||||||||
Operating expenses: |
||||||||||||||||||||||||
Third-party operating expenses |
1,613 | 95,727 | 310,759 | 50,983 | 0 | 459,082 | ||||||||||||||||||
Intra-Group operating expenses (3) |
0 | 3,957 | 741 | 254,796 | (259,494 | ) | 0 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Total operating expenses |
1,613 | 99,684 | 311,500 | 305,779 | (259,494 | ) | 459,082 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Operating profit/(loss) |
(1,613 | ) | 9,962 | 22,664 | 42,358 | 0 | 73,371 | |||||||||||||||||
Income/(loss) from subsidiaries and VIEs (2) |
(46,084 | ) | 69,099 | 78,938 | 0 | (101,953 | ) | 0 | ||||||||||||||||
Non-operating income/(expense) |
(1,071 | ) | (3,948 | ) | 24,679 | 3,668 | 0 | 23,328 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Income/(loss) before income tax expense |
(48,768 | ) | 75,113 | 126,281 | 46,026 | (101,953 | ) | 96,699 | ||||||||||||||||
Income tax expense |
6,207 | 102,749 | 20,000 | 4,270 | 0 | 133,226 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Net income/(loss) from continuing operations |
(54,975 | ) | (27,636 | ) | 106,281 | 41,756 | (101,953 | ) | (36,527 | ) | ||||||||||||||
Less: Net income from continuing operations attributable to the noncontrolling interest shareholders |
0 | 18,448 | 0 | 0 | 0 | 18,448 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Net income/(loss) from continuing operations attributable to Sohu.com Limited |
(54,975 | ) | (46,084 | ) | 106,281 | 41,756 | (101,953 | ) | (54,975 | ) | ||||||||||||||
Net loss from discontinued operations, net of tax |
(31,137 | ) | ||||||||||||||||||||||
|
|
|||||||||||||||||||||||
Net loss |
$ | (86,112 | ) | |||||||||||||||||||||
|
|
Year Ended December 31, 2021 |
||||||||||||||||||||||||
Sohu.com Limited |
Other Subsidiaries |
Primary Beneficiaries of VIEs |
VIEs and their subsidiaries |
Eliminating adjustments |
Consolidated totals |
|||||||||||||||||||
Revenues: |
||||||||||||||||||||||||
Third-party revenues |
$ | 0 | 90,830 | 79,923 | 664,823 | 0 | 835,576 | |||||||||||||||||
Intra-Group revenues (3) |
0 | 275,774 | 256,801 | 21,488 | (554,063 | ) | 0 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Total revenues |
0 | 366,604 | 336,724 | 686,311 | (554,063 | ) | 835,576 | |||||||||||||||||
Cost of revenues: |
||||||||||||||||||||||||
Third-party cost of revenues |
0 | 26,055 | 96,891 | 81,725 | 0 | 204,671 | ||||||||||||||||||
Intra-Group cost of revenues (3) |
0 | 4,957 | 37,732 | 136,221 | (178,910 | ) | 0 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Total cost of revenues |
0 | 31,012 | 134,623 | 217,946 | (178,910 | ) | 204,671 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Gross profit |
0 | 335,592 | 202,101 | 468,365 | (375,153 | ) | 630,905 | |||||||||||||||||
Operating expenses: |
||||||||||||||||||||||||
Third-party operating expenses |
1,768 | 123,963 | 335,576 | 72,126 | 0 | 533,433 | ||||||||||||||||||
Intra-Group operating expenses (3) |
0 | 11,325 | 2,831 | 366,762 | (380,918 | ) | 0 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Total operating expenses |
1,768 | 135,288 | 338,407 | 438,888 | (380,918 | ) | 533,433 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Operating profit/(loss) |
(1,768 | ) | 200,304 | (136,306 | ) | 29,477 | 5,765 | 97,472 | ||||||||||||||||
Income/(loss) from subsidiaries and VIEs (2) |
75,343 | (71,989 | ) | 218,623 | 0 | (221,977 | ) | 0 | ||||||||||||||||
Non-operating income/(expense) |
526 | (3,017 | ) | 32,843 | 9,508 | (5,765 | ) | 34,095 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Income before income tax expense |
74,101 | 125,298 | 115,160 | 38,985 | (221,977 | ) | 131,567 | |||||||||||||||||
Income tax expense |
4,827 | 49,958 | 4,331 | 3,180 | 0 | 62,296 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Net income from continuing operations |
69,274 | 75,340 | 110,829 | 35,805 | (221,977 | ) | 69,271 | |||||||||||||||||
Less: Net loss from continuing operations attributable to the noncontrolling interest shareholders |
0 | (3 | ) | 0 | 0 | 0 | (3 | ) | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Net income from continuing operations attributable to Sohu.com Limited |
69,274 | 75,343 | 110,829 | 35,805 | (221,977 | ) | 69,274 | |||||||||||||||||
Net income from discontinued operations, net of tax |
858,451 | |||||||||||||||||||||||
|
|
|||||||||||||||||||||||
Net income |
$ | 927,725 | ||||||||||||||||||||||
|
|
Year Ended December 31, 2019 |
||||||||||||||||||||||||
Sohu.com Limited |
Other Subsidiaries |
Primary Beneficiaries of VIEs |
VIEs and their subsidiaries |
Eliminating adjustments |
Consolidated totals |
|||||||||||||||||||
Cash flows from operating activities: |
||||||||||||||||||||||||
Net cash provided by/(used in) transactions with external parties |
$ | (3,126 | ) | 26,983 | (377,027 | ) | 334,903 | 0 | (18,267 | ) | ||||||||||||||
Net cash provided by/(used in) transactions with intra-Group entities |
0 | 23,240 | 287,003 | (310,243 | ) | 0 | 0 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Net cash provided by/(used in) continuing operating activities (4) |
(3,126 | ) | 50,223 | (90,024 | ) | 24,660 | 0 | (18,267 | ) | |||||||||||||||
Net cash provided by discontinued operating activities |
228,857 | |||||||||||||||||||||||
|
|
|||||||||||||||||||||||
Net cash provided by operating activities |
210,590 | |||||||||||||||||||||||
Cash flows from investing activities: |
||||||||||||||||||||||||
Net cash used in transactions with external parties |
0 | (11,975 | ) | (189,567 | ) | (13,272 | ) | 0 | (214,814 | ) | ||||||||||||||
Net cash used in transactions with intra-Group entities |
(9,610 | ) | (439,805 | ) | (318,738 | ) | (40,426 | ) | 808,579 | 0 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Net cash used in continuing investing activities (4) |
(9,610 | ) | (451,780 | ) | (508,305 | ) | (53,698 | ) | 808,579 | (214,814 | ) | |||||||||||||
Net cash used in discontinued investing activities |
(228,406 | ) | ||||||||||||||||||||||
|
|
|||||||||||||||||||||||
Net cash used in investing activities |
(443,220 | ) | ||||||||||||||||||||||
Cash flows from financing activities: |
||||||||||||||||||||||||
Net cash used in transactions with external parties |
0 | (374,682 | ) | (105,066 | ) | 0 | 0 | (479,748 | ) | |||||||||||||||
Net cash provided by transactions with intra-Group entities |
0 | 294,566 | 487,454 | 26,559 | (808,579 | ) | 0 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Net cash provided by/(used in) continuing financing activities (4) |
0 | (80,116 | ) | 382,388 | 26,559 | (808,579 | ) | (479,748 | ) | |||||||||||||||
Net cash used in discontinued financing activities |
(33,415 | ) | ||||||||||||||||||||||
|
|
|||||||||||||||||||||||
Net cash used in financing activities |
(513,163 | ) |
Year Ended December 31, 2020 |
||||||||||||||||||||||||
Sohu.com Limited |
Other Subsidiaries |
Primary Beneficiaries of VIEs |
VIEs and their subsidiaries |
Eliminating adjustments |
Consolidated totals |
|||||||||||||||||||
Cash flows from operating activities: |
||||||||||||||||||||||||
Net cash provided by/(used in) transactions with external parties |
$ | (5,371 | ) | (25,798 | ) | (264,700 | ) | 459,263 | 0 | 163,394 | ||||||||||||||
Net cash provided by/(used in) transactions with intra-Group entities |
0 | 18,721 | 360,928 | (379,649 | ) | 0 | 0 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Net cash provided by/(used in) continuing operating activities (4) |
(5,371 | ) | (7,077 | ) | 96,228 | 79,614 | 0 | 163,394 | ||||||||||||||||
Net cash provided used in discontinued operating activities |
(68,187 | ) | ||||||||||||||||||||||
|
|
|||||||||||||||||||||||
Net cash provided by operating activities |
95,207 | |||||||||||||||||||||||
Cash flows from investing activities: |
||||||||||||||||||||||||
Net cash provided by/(used in) transactions with external parties |
0 | 167,702 | 17,464 | (773 | ) | 0 | 184,393 | |||||||||||||||||
Net cash provided by/(used in) transactions with intra-Group entities |
1,961 | 5,660 | 226,972 | (106,321 | ) | (128,272 | ) | 0 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Net cash provided by/(used in) continuing investing activities (4) |
1,961 | 173,362 | 244,436 | (107,094 | ) | (128,272 | ) | 184,393 | ||||||||||||||||
Net cash provided by discontinued investing activities |
235,374 | |||||||||||||||||||||||
|
|
|||||||||||||||||||||||
Net cash provided by investing activities |
419,767 | |||||||||||||||||||||||
Cash flows from financing activities: |
||||||||||||||||||||||||
Net cash provided by/(used in) transactions with external parties |
0 | 204,941 | (103,146 | ) | 0 | 0 | 101,795 | |||||||||||||||||
Net cash provided by/(used in) transactions with intra-Group entities |
0 | (254,216 | ) | 93,193 | 32,751 | 128,272 | 0 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Net cash provided by/(used in) continuing financing activities (4) |
0 | (49,275 | ) | (9,953 | ) | 32,751 | 128,272 | 101,795 | ||||||||||||||||
Net cash used in discontinued financing activities |
(8,209 | ) | ||||||||||||||||||||||
|
|
|||||||||||||||||||||||
Net cash provided by financing activities |
93,586 |
Year Ended December 31, 2021 |
||||||||||||||||||||||||
Sohu.com Limited |
Other Subsidiaries |
Primary Beneficiaries of VIEs |
VIEs and their subsidiaries |
Eliminating adjustments |
Consolidated totals |
|||||||||||||||||||
Cash flows from operating activities: |
||||||||||||||||||||||||
Net cash provided by/(used in) transactions with external parties |
$ |
(517 |
) |
(127,098 |
) |
(299,947 |
) |
541,172 |
0 |
113,610 |
||||||||||||||
Net cash provided by/(used in) transactions with intra-Group entities |
0 |
288,308 |
217,245 |
(505,553 |
) |
0 |
0 |
|||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Net cash provided by/(used in) continuing operating activities |
(517 |
) |
161,210 |
(82,702 |
) |
35,619 |
0 |
113,610 |
||||||||||||||||
Net cash used in discontinued operating activities |
(175,888 |
) | ||||||||||||||||||||||
|
|
|||||||||||||||||||||||
Net cash used in operating activities |
(62,278 |
) | ||||||||||||||||||||||
Cash flows from investing activities: |
||||||||||||||||||||||||
Net cash used in transactions with external parties |
0 |
(112,599 |
) |
(400,933 |
) |
(23,887 |
) |
0 |
(537,419 |
) | ||||||||||||||
Net cash provided by/(used in) transactions with intra-Group entities |
(5,999 |
) |
(172,370 |
) |
209,079 |
(140,671 |
) |
109,961 |
0 |
|||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Net cash used in continuing investing activities |
(5,999 |
) |
(284,969 |
) |
(191,854 |
) |
(164,558 |
) |
109,961 |
(537,419 |
) | |||||||||||||
Net cash provided by discontinued investing activities |
1,054,148 |
|||||||||||||||||||||||
|
|
|||||||||||||||||||||||
Net cash provided by investing activities |
516,729 |
|||||||||||||||||||||||
Cash flows from financing activities: |
||||||||||||||||||||||||
Net cash used in transactions with external parties |
(17,418 |
) |
(407,550 |
) |
0 |
0 |
0 |
(424,968 |
) | |||||||||||||||
Net cash provided by/(used in) transactions with intra-Group entities |
36,912 |
(236,658 |
) |
197,819 |
111,888 |
(109,961 |
) |
0 |
||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Net cash provided by/(used in) continuing financing activities |
19,494 |
(644,208 |
) |
197,819 |
111,888 |
(109,961 |
) |
(424,968 |
) | |||||||||||||||
Net cash used in discontinued financing activities |
(9,132 |
) | ||||||||||||||||||||||
|
|
|||||||||||||||||||||||
Net cash used in financing activities |
(434,100 |
) |
Year ended December 31, |
||||||||||||
2019 |
2020 |
2021 |
||||||||||
Cash paid by the VIEs to our subsidiaries under service agreements |
$ |
(341,696 |
) |
$ |
(411,668 |
) |
$ |
(528,330 |
) | |||
Cash received by the VIEs from our subsidiaries under service agreements |
31,453 |
32,019 |
22,777 |
|||||||||
Cash paid by the VIEs to our subsidiaries for intra-Group financing |
(40,426 |
) |
(106,321 |
) |
(140,671 |
) | ||||||
Cash received by the VIEs from our subsidiaries for intra-Group financing |
26,559 |
32,751 |
111,888 |
• | 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; |
• | build our businesses such as Sohu Media Portal, Sohu Video, Focus, online games, and other businesses successfully; |
• | 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 business; |
• | 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; |
• | effectively control increases in our costs and expenses; and |
• | attract and retain qualified personnel. |
• | 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; |
• | interruptions or delays in e-mail service, or |
• | illegal or inappropriate content included in advertisements on our platforms. |
• | 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 “Governmental 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 agencies and advertisers may adopt new methods and strategies other than brand advertising to promote their brand, or may face financial difficulties that cause them to curtail their spending on brand advertising, any of which would have an adverse effect on our advertising revenues; |
• | 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 omissions 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. |
• | 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 |
- | $124.2 million in brand advertising revenues, of which $75.4 million was from Sohu Media Portal, $26.8 million was from Sohu Video, and $22.0 million was from Focus; and |
- | $62.4 million in other revenues, mainly attributable to revenues from paid subscription services, interactive broadcasting services, and revenue sharing from other platforms. |
- | $638.2 million in online game revenues, of which $469.3 million was from PC games, and $168.9 million was from mobile games; and |
- | $10.8 million in brand advertising revenues, mainly attributable to Changyou’s 17173.com Website. |
• | Sohu Media Portal. |
• | Sohu Video. |
• | Focus. |
• | 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. |
• | the MIIT, which resulted from the merger of the former Ministry of Information Industry and other governmental departments; |
• | 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 MPS; |
• | the MOFCOM; |
• | 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 SAPPRFT was reorganized into three separate governmental authorities, the NRTA, the NFA, and 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 CAOC; |
• | 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 Internet Security Law |
• | The Measures for Cybersecurity Review |
• | The Regulations on Security Protection of Critical Information Infrastructure |
• | The Data Security Law |
• | The Draft Data Security Regulations |
• | 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 |
• | The Working Regulations for the Anti-spy Security Precautions |
• | 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 $1.55 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 $62.0 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 $309.9 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 $62.0 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; |
• | Sohu Focus Limited, or Sohu Focus, established in 2013; and, |
• | Sohu Focus (HK) Limited, or Focus HK, 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. |
• | Beijing Century High-Tech Investment Co., Ltd., or High Century, a PRC company that was incorporated in 2001. As of December 31, 2021, 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, 2021, 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, 2021, 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, 2021, 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, 2021, Xiufeng Deng and Xuemei Zhang, both of whom are our employees, each held a 50% interest in this entity; |
• | Beijing Focus Interactive Information Service Co., Ltd., or Focus Interactive, a PRC company that was incorporated in July 2014. As of December 31, 2021, Heng Da Yi Tong held a 100% interest in this entity; and |
• | Guangzhou Qianjun Network Technology Co., Ltd, or Guangzhou Qianjun, a PRC company that we acquired in November 2014. As of December 31, 2021, Tianjin Jinhu 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, 2021, 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, 2021, 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, 2021, Beijing Changyou Star Digital Technology Co., Ltd (“Changyou Star”) held a 100% interest in this entity. |
ITEM 4A. |
UNRESOLVED STAFF COMMENTS |
ITEM 5. |
OPERATING AND FINANCIAL REVIEW AND PROSPECTS |
Year ended December 31, |
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2019 |
2020 |
2021 |
2020 VS 2019 |
2021 VS 2020 |
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Amount | Percentage | Amount | Percentage | Amount | Percentage | Amount | Incremental ratio |
Amount | Incremental ratio |
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Revenues: |
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Brand advertising |
$ | 175,056 | 26 | % | $ | 146,526 | 20 | % | $ | 134,967 | 16 | % | $ | (28,530 | ) | (16 | )% | $ | (11,559 | ) | (8 | )% | ||||||||||||||||||
Online games |
440,902 | 65 | % | 536,684 | 72 | % | 638,225 | 76 | % | 95,782 | 22 | % | 101,541 | 19 | % | |||||||||||||||||||||||||
Others |
57,845 | 9 | % | 66,680 | 8 | % | 62,384 | 8 | % | 8,835 | 15 | % | (4,296 | ) | (6 | )% | ||||||||||||||||||||||||
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Total revenues |
$ | 673,803 | 100 | % | $ | 749,890 | 100 | % | $ | 835,576 | 100 | % | $ | 76,087 | 11 | % | $ | 85,686 | 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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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 | ||||||||||||||||||||||||
2021 |
2.3 | 2.0 | 2.1 | 1.9 | 2.0 | 4.6 | 2.0 | 2.5 |
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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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 | ||||||||||||||||||||||||
2021 |
0.9 | 0.5 | 0.9 | 0.5 | 1.0 | 1.0 | 0.9 | 0.5 |
(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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2019 |
2020 |
2021 |
2020 VS 2019 |
2021 VS 2020 |
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Amount | Percentage | Amount | Percentage | Amount | Percentage | Amount | Incremental ratio |
Amount | Incremental ratio |
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Cost of revenues: |
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Brand advertising |
$ | 126,406 | 52 | % | $ | 105,604 | 49 | % | $ | 99,522 | 49 | % | $ | (20,802 | ) | (16 | )% | $ | (6,082 | ) | (6 | )% | ||||||||||||||||||
Online games |
88,992 | 37 | % | 91,526 | 42 | % | 87,616 | 43 | % | 2,534 | 3 | % | (3,910 | ) | (4 | )% | ||||||||||||||||||||||||
Others |
28,249 | 11 | % | 20,307 | 9 | % | 17,533 | 8 | % | (7,942 | ) | (28 | )% | (2,774 | ) | (14 | )% | |||||||||||||||||||||||
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Total cost of revenues |
$ | 243,647 | 100 | % | $ | 217,437 | 100 | % | $ | 204,671 | 100 | % | $ | (26,210 | ) | (11 | )% | $ | (12,766 | ) | (6 | )% | ||||||||||||||||||
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Year ended December 31, |
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2019 |
2020 |
2021 |
2020 VS 2019 |
2021 VS 2020 |
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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 |
$ | 234,852 | 47 | % | $ | 241,941 | 53 | % | $ | 268,863 | 50 | % | $ | 7,089 | 3 | % | $ | 26,922 | 11 | % | ||||||||||||||||||||
Sales and marketing |
204,665 | 41 | % | 159,787 | 35 | % | 182,690 | 34 | % | (44,878 | ) | (22 | )% | 22,903 | 14 | % | ||||||||||||||||||||||||
General and administrative |
54,591 | 11 | % | 57,354 | 12 | % | 81,880 | 16 | % | 2,763 | 5 | % | 24,526 | 43 | % | |||||||||||||||||||||||||
Goodwill impairment and impairment of intangible assets acquired as part of business acquisitions |
7,245 | 1 | % | 0 | 0 | % | 0 | 0 | % | (7,245 | ) | (100 | )% | 0 | 0 | % | ||||||||||||||||||||||||
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Total operating expenses |
$ | 501,353 | 100 | % | $ | 459,082 | 100 | % | $ | 533,433 | 100 | % | $ | (42,271 | ) | (8 | )% | $ | 74,351 | 16 | % | |||||||||||||||||||
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Year Ended December 31, |
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Share-based compensation expense |
2019 |
2020 |
2021 |
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Cost of revenues |
$ | 142 | $ | 720 | $ | 277 | ||||||
Product development expenses |
1,364 | 7,325 | 3,904 | |||||||||
Sales and marketing expenses |
(326 | ) | 460 | 166 | ||||||||
General and administrative expenses |
1,170 | 5,975 | 4,231 | |||||||||
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$ | 2,350 | $ | 14,480 | $ | 8,578 | |||||||
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Year Ended December 31, |
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Share-based compensation expense |
2019 |
2020 |
2021 |
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For Sohu (excluding Sohu Video) share-based awards |
$ | 1,940 | $ | 2,633 | $ | 1,849 | ||||||
For Changyou share-based awards |
1,305 | 12,544 | 7,773 | |||||||||
For Sohu Video share-based awards |
(895 | ) | (697 | ) | (1,044 | ) | ||||||
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$ | 2,350 | $ | 14,480 | $ | 8,578 | |||||||
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Year Ended December 31, |
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2019 |
2020 |
2021 |
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Net cash provided by/(used in) continuing operating activities |
$ | (18,267 | ) | $ | 163,394 | $ | 113,610 | |||||
Net cash provided by/(used in) discontinued operating activities |
228,857 | (68,187 | ) | (175,888 | ) | |||||||
Net cash provided by/(used in) operating activities |
210,590 | 95,207 | (62,278 | ) | ||||||||
Net cash provided by/(used in) continuing investing activities |
(214,814 | ) | 184,393 | (537,419 | ) | |||||||
Net cash provided by/(used in) discontinued investing activities |
(228,406 | ) | 235,374 | 1,054,148 | ||||||||
Net cash provided by/(used in) investing activities |
(443,220 | ) | 419,767 | 516,729 | ||||||||
Net cash provided by/(used in) continuing financing activities |
(479,748 | ) | 101,795 | (424,968 | ) | |||||||
Net cash used in discontinued financing activities |
(33,415 | ) | (8,209 | ) | (9,132 | ) | ||||||
Net cash provided by/(used in) financing activities |
(513,163 | ) | 93,586 | (434,100 | ) | |||||||
Effect of exchange rate change on cash, cash equivalents, restricted cash and restricted time deposits |
(10,047 | ) | 36,984 | 20,997 | ||||||||
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Net increase/(decrease) in cash, cash equivalents, restricted cash and restricted time deposits |
(755,840 | ) | 645,544 | 41,348 | ||||||||
Cash, cash equivalents, restricted cash and restricted time deposits at beginning of period |
1,069,866 | 314,026 | 959,570 | |||||||||
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Cash, cash equivalents, restricted cash and restricted time deposits at end of period |
$ | 314,026 | $ | 959,570 | $ | 1,000,918 | ||||||
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Less: Cash, cash equivalents, restricted cash and restricted time deposits of discontinued operations, end of year |
147,834 | 310,203 | 0 | |||||||||
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Cash, cash equivalents, restricted cash and restricted time deposits of continuing operations, end of year |
166,192 | 649,367 | 1,000,918 | |||||||||
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2022 |
2023 |
2024 |
2025 |
2026 |
Thereafter |
Total |
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Royalties and expenditures for licensed content of games |
$ | 15,976 | 13,512 | 2,746 | 0 | 0 | 0 | 32,234 | ||||||||||||||||||||
Purchase of bandwidth |
14,418 | 1,029 | 455 | 0 | 0 | 0 | 15,902 | |||||||||||||||||||||
Operating lease obligations |
6,208 | 2,900 | 380 | 135 | 0 | 0 | 9,623 | |||||||||||||||||||||
Purchase of content and services - others |
7,530 | 389 | 43 | 0 | 0 | 0 | 7,962 | |||||||||||||||||||||
Purchase of content and services - video |
6,387 | 0 | 0 | 0 | 0 | 0 | 6,387 | |||||||||||||||||||||
Others |
3,796 | 0 | 0 | 0 | 0 | 0 | 3,796 | |||||||||||||||||||||
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Total Payments Required |
$ | 54,315 | 17,830 | 3,624 | 135 | 0 | 0 | 75,904 | ||||||||||||||||||||
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ITEM 6. |
DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES |
Directors and Executive Officers |
Age |
Position | ||||
Charles Zhang |
57 | Chairman of the Board and Chief Executive Officer | ||||
Dewen Chen |
46 | Chief Executive Officer of Changyou | ||||
Joanna Lv |
51 | Chief Financial Officer | ||||
Charles Huang |
52 | Director | ||||
Zhonghan Deng (1) (2) (3) |
54 | Independent Director | ||||
Dave De Yang (1) |
56 | Independent Director | ||||
Dave Qi (1) (2) (3) |
58 | Independent Director | ||||
Shi Wang (3) |
71 | 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. |
Board Diversity Matrix (As of March 11, 2022) | ||||||||
Country of Principal Executive Offices: |
People’s Republic of China | |||||||
Foreign Private Issuer |
Yes | |||||||
Disclosure Prohibited Under Home Country Law |
No | |||||||
Total Number of Directors |
6 | |||||||
Female | Male | Non-Binary |
Did Not Disclose Gender | |||||
Part I: Gender Identity | ||||||||
Directors |
0 | 6 | 0 | 0 | ||||
Part II: Demographic Background |
||||||||
Underrepresented Individual in Home Country Jurisdiction |
0 | |||||||
LGBTQ+ |
0 | |||||||
Did Not Disclose Demographic Background |
0 |
• | 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 March 11, 2022. |
(2) | Consists of options to purchase our ordinary shares at a nominal exercise price, of which options for the purchase of 35,000 ordinary shares are vested and exercisable as of March 11, 2022. |
(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 March 11, 2022. |
(4) | Consists of options to purchase our ordinary shares at a nominal exercise price, of which options for the purchase of 20,000 ordinary shares are vested and exercisable as of March 11, 2022. |
(5) | Consists of options to purchase our ordinary shares at a nominal exercise price, of which options for the purchase of 2,500 ordinary shares are vested and exercisable as of March 11, 2022. |
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 |
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 |
(1) | Consists of options to purchase Sohu Video 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 March 11, 2022, options for the purchase of 27,500 Sohu Video ordinary shares are fully vested. |
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 |
11,095,133 | (2) |
30.29 | % | ||||
Charles Huang (3) |
76,265 | * | ||||||
Shi Wang (4) |
34,132 | * | ||||||
Dave Qi (5) |
28,940 | * | ||||||
Zhonghan Deng (6) |
5,878 | * | ||||||
Dave De Yang (7) |
— | — | ||||||
Joanna Lv |
33,000 | (8) |
* | |||||
Dewen Chen (9) |
— | — | ||||||
All directors, nominees and executive officers as a group (8 persons) |
11,273,348 | (10) |
30.75 | % | ||||
Photon Group Limited (11) |
10,716,433 | 29.35 | % | |||||
Macquarie Investment Management Business Trust (12) |
3,523,045 | 8.96 | % |
* | 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 March 11, 2022. 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) 110,000 ordinary shares subject to options exercisable within 60 days of March 11, 2022 and (ii) 10,716,433 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 427 Ashbury Drive, Hinsdale, IL 60521, the United States. |
(8) | Includes 30,000 ordinary shares subject to options exercisable within 60 days of March 11, 2022. 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. Dewen Chen’s address is c/o Changyou com Limited, Changyou Creative Industrial Park, No. 65 East Bajiao Road, Shijingshan District, Beijing 100043, People’s Republic of China. |
(10) | Includes 140,000 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 March 11, 2022. |
(11) | 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. |
(12) | Data based on a Schedule 13G/A filed with the SEC on February 14, 2022. The principal business address of Macquarie Investment Management Business Trust is 2005 Market Street, Philadelphia, PA 19103. |
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 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 | |
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, |
||||||||
2020 |
2021 |
|||||||
(in thousands) |
||||||||
Audit fees (1) |
$ |
2,304 |
$ |
1,991 |
||||
Tax fees (2) |
487 |
243 |
||||||
Audit related fees (3) |
67 |
36 |
||||||
All other fees |
2 |
2 |
||||||
|
|
|
|
|||||
Total |
$ |
2,860 |
$ |
2,272 |
(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 |
Total Number of ADSs Purchased Under the Program |
Average Price Paid Per ADS* |
Approximate Dollar Value of ADSs that May Yet Be Purchased Under the Program (in million) |
||||||||||
2021 Month |
||||||||||||
December (from December 1 to December 31) |
1,129,228 |
16.57 |
81.3 |
* |
Cost and average price data exclude trading commissions. There may be some variation in figures due to rounding. |
ITEM 16F. |
CHANGE IN REGISTRANT’S CERTIFYING ACCOUNTANT |
ITEM 16G. |
CORPORATE GOVERNANCE |
ITEM 16H. |
MINE SAFETY DISCLOSURE |
ITEM 16I. |
DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS |
ITEM 17. |
FINANCIAL STATEMENTS |
ITEM 18. |
FINANCIAL STATEMENTS |
ITEM 19. |
EXHIBITS |
Exhibit No. |
Description | |
1.1(1) |
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2.1(18) |
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2.2(18) |
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2.3(18) |
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4.1(2) |
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4.2(3) |
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4.3(4) |
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4.4(4) |
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4.5(5) |
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4.6(6) |
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4.7(6) |
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4.8(6) |
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4.9(7) |
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4.10(7) |
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4.11(7) |
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4.12(8) |
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4.13(8) |
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4.14(8) |
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4.15(9) |
4.16(9) |
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4.17(9) |
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4.18(9) |
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4.19(9) |
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4.20(10) |
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4.21(10) |
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4.22(10) |
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4.23(10) |
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4.24(10) |
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4.25(11) |
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4.26(11) |
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4.27(12) |
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4.28(12) |
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4.29(12) |
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4.30(12) |
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4.31(12) |
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4.32(12) |
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4.33(13) |
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4.34(13) |
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4.35(14) |
4.36(14) |
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4.37(14) |
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4.38(14) |
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4.39(14) |
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4.40(14) |
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4.41(14) |
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4.42(14) |
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4.43(14) |
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4.44(14) |
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4.45(15) |
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4.46(15) |
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4.47(15) |
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4.48(15) |
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4.49(15) |
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4.50(16) |
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4.51(16) |
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4.52(16) |
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4.53(16) |
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4.54(17) |
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4.55(19) |
4.56(19) |
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4.57(19) |
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4.58(19) |
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4.59(20) |
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4.60(20) |
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4.61(21) |
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4.62(21) |
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4.63(21) |
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4.64(21) |
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4.65(21) |
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4.66(21) |
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4.67(21) |
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4.68(21) |
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4.69(21) |
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4.70(21) |
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4.71(21) |
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4.72(21) |
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4.73(21) |
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4.74(21) |
4.75(21) |
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8.1(21) |
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11.1(18) |
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12.1(21) |
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12.2(21) |
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13.1(21) |
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13.2(21) |
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15.1(21) |
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15.2(21) |
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101.INS(21) |
Inline XBRL Instance Document - this instance document does not appear in the Interactive Data File because its XBRL tags embedded within the Inline XBRL document. | |
101.SCH(21) |
Inline XBRL Taxonomy Extension Schema Document. | |
101.CAL(21) |
Inline XBRL Taxonomy Extension Calculation Linkbase Document. | |
101.DEF(21) |
Inline XBRL Taxonomy Extension Definition Linkbase Document. | |
101.LAB(21) |
Inline XBRL Taxonomy Extension Label Linkbase Document. | |
101.PRE(21) |
Inline XBRL Taxonomy Extension Presentation Linkbase Document. | |
104(21) |
Cover Page Interactive Data File (embedded within the Inline XBRL document). |
(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 March 2, 2015. |
(10) |
Incorporated herein by reference to Sohu.com Inc.’s Quarterly Report on Form 10-Q filed on August 7, 2015. |
(11) |
Incorporated herein by reference to Sohu.com Inc.’s Quarterly Report on Form 10-Q filed on November 6, 2015. |
(12) |
Incorporated herein by reference to Sohu.com Inc.’s Annual Report on Form 10-K filed on February 26, 2016. |
(13) |
Incorporated herein by reference to Sohu.com Inc.’s Annual Report on Form 10-K filed on February 27, 2017. |
(14) |
Incorporated herein by reference to Sohu.com Inc.’s Current Report on Form 8-K filed on May 19, 2017. |
(15) |
Incorporated herein by reference to Sohu.com Inc.’s Current Report on Form 8-K filed on September 7, 2017. |
(16) |
Incorporated herein by reference to Sohu.com Inc.’s Current Report on Form 8-K filed on April 16, 2018. |
(17) |
Incorporated herein by reference to Sohu.com Limited’s Registration Statement on Form S-8 POS filed on June 1, 2018. |
(18) |
Incorporated herein by reference to Sohu.com Limited’s Annual Report on Form 20-F filed on March 28, 2019. |
(19) |
Incorporated herein by reference to Sohu.com Limited’s Annual Report on Form 20-F filed on April 21, 2020. |
(20) |
Incorporated herein by reference to Sohu.com Limited’s Annual Report on Form 20-F filed on March 18, 2021. |
(21) |
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 |
Page |
||||
CONSOLIDATED FINANCIAL STATEMENTS: |
||||
Report of Independent Registered Public Accounting Firm (PCAOB ID: |
F-2 | |||
F-5 | ||||
F-6 | ||||
F-7 | ||||
F-8 | ||||
F-11 |
As of December 31, |
||||||||
2020 |
2021 |
|||||||
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 |
||||||||
Long-term time deposits |
|
|
|
|
|
|
|
|
Restricted time deposits |
||||||||
Prepaid non-current assets |
||||||||
Other assets |
||||||||
|
|
|
|
|||||
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 other payable (including long-term s other p of consolidated VIEs without recourse to the Company of a yables |
||||||||
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 $ |
||||||||
|
|
|
|
|||||
Total long-term liabilities |
||||||||
|
|
|
|
|||||
Total liabilities |
$ | $ | ||||||
|
|
|
|
|||||
Commitments and contingencies |
|
|
|
|
|
|
|
|
SHAREHOLDERS’ EQUITY |
||||||||
Sohu.com Limited shareholders’ equity: |
||||||||
Ordinary Shares: $ |
$ | $ | ||||||
Additional paid-in capital |
||||||||
Treasury Stock: $ , as of December 31, |
( |
) | ||||||
Accumulated other comprehensive income |
||||||||
Accumulated earnings/(deficit) |
( |
) |
||||||
|
|
|
|
|||||
Total Sohu.com Limited shareholders’ equity |
||||||||
Noncontrolling interest |
||||||||
|
|
|
|
|||||
Total shareholders’ equity |
||||||||
|
|
|
|
|||||
Total liabilities and shareholders’ equity |
$ | $ |
||||||
|
|
|
|
Year Ended December 31, |
||||||||||||
2019 |
2020 |
2021 |
||||||||||
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 $ , respectively, for 2019, 2020 and 2021) |
||||||||||||
|
|
|
|
|
|
|||||||
Total cost of revenues |
||||||||||||
|
|
|
|
|
|
|||||||
Gross profit |
||||||||||||
|
|
|
|
|
|
|||||||
Operating expenses: |
||||||||||||
Product development |
||||||||||||
Sales and marketing |
||||||||||||
General and administrative (including expenses generated from a related party of |
||||||||||||
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 |
( |
) | ||||||||||
Income tax expense |
||||||||||||
Net income/(loss) from continuing operations |
( |
) | ( |
) | ||||||||
Net income/(loss) from discontinued operations, net of tax |
( |
) | ||||||||||
|
|
|
|
|
|
|||||||
Net income/(loss) |
( |
) | ( |
) | ||||||||
Less: Net income/(loss) from continuing operations attributable to the noncontrolling interest shareholders |
( |
) | ||||||||||
Less: Net income/(loss) from discontinued operations attributable to the noncontrolling interest shareholders |
( |
) | ||||||||||
Net income/(loss) from continuing operations attributable to Sohu.com Limited |
( |
) | ( |
) | ||||||||
Net income/(loss) from discontinued operations attributable to Sohu.com Limited |
( |
) | ||||||||||
|
|
|
|
|
|
|||||||
Net income/(loss) attributable to Sohu.com Limited |
$ | ( |
) | $ | ( |
) | $ | |||||
|
|
|
|
|
|
|||||||
Net income/(loss) |
$ | ( |
) | $ | ( |
) | $ | |||||
Foreign currency translation adjustments |
( |
) | ||||||||||
|
|
|
|
|
|
|||||||
Other comprehensive income/(loss) |
( |
) | ||||||||||
|
|
|
|
|
|
|||||||
Comprehensive income/(loss) |
( |
) | ( |
) | ||||||||
Less: Comprehensive income/(loss) attributable to noncontrolling interest shareholders |
( |
) | ||||||||||
|
|
|
|
|
|
|||||||
Comprehensive income/(loss) attributable to Sohu.com Limited |
( |
) | ( |
) | ||||||||
|
|
|
|
|
|
|||||||
Basic net income/(loss) per share attributable to Sohu.com Limited |
||||||||||||
Continuing operations |
$ | ( |
) | $ | ( |
) | $ | |||||
Discontinued operations |
( |
) | ||||||||||
|
|
|
|
|
|
|||||||
Net income/(loss) per share |
( |
) | ( |
) | ||||||||
|
|
|
|
|
|
|||||||
Shares used in computing basic net income per share attributable to Sohu.com Limited |
||||||||||||
|
|
|
|
|
|
|||||||
Diluted net income/(loss) per share attributable to Sohu.com Limited |
||||||||||||
Continuing operations |
$ | ( |
) | $ | ( |
) | $ | |||||
Discontinued operations |
( |
) | ||||||||||
|
|
|
|
|
|
|||||||
Net loss per share |
( |
) | ( |
) | ||||||||
|
|
|
|
|
|
|||||||
Shares used in computing diluted net income per share attributable to Sohu.com Limited |
||||||||||||
|
|
|
|
|
|
Year Ended December 31, |
||||||||||||
2019 |
2020 |
2021 |
||||||||||
Cash flows from operating activities: |
||||||||||||
Net income/(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 |
||||||||||||
Investment loss/(gain) from equity investments |
( |
) | ( |
) | ||||||||
Allowance for credit losses |
||||||||||||
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/(used in) operating activities |
( |
) | ||||||||||
Cash flows from investing activities: |
||||||||||||
Purchase of fixed assets |
( |
) | ( |
) | ( |
) | ||||||
Purchase of intangible and other assets |
( |
) | ( |
) | ( |
) | ||||||
Purchase of long-term investments |
( |
) | ( |
) | ( |
) | ||||||
Purchase of time deposits |
( |
) | ||||||||||
Proceeds from financial instruments |
||||||||||||
Purchase of financial instruments |
( |
) | ( |
) | ( |
) | ||||||
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 |
||||||||||||
Repurchase of Sohu Ordinary Shares, represented by ADSs |
( |
) | ||||||||||
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 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 |
$ | ( |
) | |||||||||||||||||||||||||
Share-based compensation expense |
||||||||||||||||||||||||||||
Settlement/adjustment of share-based awards in subsidiary |
( |
) | ||||||||||||||||||||||||||
Distribution shareholders |
( |
) | ( |
) | ||||||||||||||||||||||||
Net income/(loss) attributable to Sohu.com Limited 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 - based |
( |
) | ( |
) | ||||||||||||||||||||||||
Net loss attributable to Sohu.com Limited and noncontrolling interest shareholders |
( |
) | ( |
) | ( |
) | ||||||||||||||||||||||
Repurchase noncontrolling shareholders |
( |
) | ( |
) | ( |
) | ||||||||||||||||||||||
Acquisition of a partially-held subsidiary |
||||||||||||||||||||||||||||
Impact of adoption of new accounting standards* |
( |
) | ( |
) | ( |
) | ||||||||||||||||||||||
Acquisition Merger |
( |
) | ( |
) | ( |
) | ||||||||||||||||||||||
Accumulated other comprehensive loss |
||||||||||||||||||||||||||||
Ending balance |
$ | ( |
) | |||||||||||||||||||||||||
* |
For details see Note 2 - Summary of Significant Accounting Policies - Accounts Receivable, Net - Allowance of credit losses. |
Sohu.com Limited Shareholders’ Equity |
||||||||||||||||||||||||||||
Total |
Ordinary Shares |
Additional Paid-in Capital |
Treasury Stock |
Accumulated Other Comprehensive Income |
Accumulated Earnings/(Deficit) |
Noncontrolling Interest |
||||||||||||||||||||||
Beginning balance |
$ | ( |
) |
|||||||||||||||||||||||||
Share-based compensation expense |
||||||||||||||||||||||||||||
Settlement/adjustment of share-based awards in subsidiary |
( |
) | ||||||||||||||||||||||||||
Net income attributable to Sohu.com Limited and |
||||||||||||||||||||||||||||
Repurchase of Sohu Ordinary Shares, represented by ADSs |
( |
) | ( |
) |
||||||||||||||||||||||||
Disposal of noncontrolling interests in Tencent/Sohu Sogou Share Purchase |
( |
) |
( |
) | ||||||||||||||||||||||||
Write-down of transaction costs related to business acquisitions |
||||||||||||||||||||||||||||
Accumulated other comprehensive income |
||||||||||||||||||||||||||||
Ending balance |
$ | ( |
) | |||||||||||||||||||||||||
Name of Entity |
Date of Incorporation/Acquisition |
Place of Incorporation/ Acquisition |
Effective Interest held through equity ownership/contractual arrangements |
|||||
Subsidiaries: |
||||||||
For Sohu: |
||||||||
Sohu.com (Hong Kong) Limited |
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 |
Incorporated on |
% | ||||||
Sohu Focus (HK) Limited (“Focus HK”) |
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 | Incorporated on |
% | ||||||
Beijing Changyou Chuangxiang Software Technology Co., Ltd. (“Changyou Chuangxiang”) |
Incorporated on |
% |
VIEs: |
|
| ||||||
For Sohu: |
|
| ||||||
Beijing Century High-Tech Investment Co., Ltd. (“High Century”) |
Incorporated on |
|
% | |||||
Beijing 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 |
|
% | |||||
Guangzhou Qianjun Network Technology Co., Ltd. (“Guangzhou Qianjun”) |
Acquired 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 |
|
% |
• |
Sohu Media Portal. content services provider in China. It provides users with access to comprehensive content through the mobile phone application Sohu News APP, the mobile portal m.sohu.com and www.sohu.com for PCs; |
• |
Sohu Video. |
• |
Focus. |
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 |
||||||||||||
Others |
||||||||||||
Total |
$ | |||||||||||
Year Ended December 31, 2021 (in thousands) |
||||||||||||
Sohu |
Changyou |
Total |
||||||||||
Brand advertising: |
||||||||||||
Sohu Media Portal |
$ | |||||||||||
Sohu Video |
||||||||||||
Focus |
||||||||||||
17173.com Website |
||||||||||||
Online games: |
||||||||||||
PC games |
||||||||||||
Mobile games |
||||||||||||
Others |
||||||||||||
Total |
$ | |||||||||||
As of December 31, |
||||||||
2020 |
2021 |
|||||||
Accounts receivable, net |
||||||||
Accounts receivable |
$ |
$ |
||||||
Less: Allowance for credit losses |
( |
) |
( |
) | ||||
$ |
$ |
As of December 31, |
||||||||
2020 |
2021 |
|||||||
Less than 179 days |
$ |
$ |
||||||
180-359 days |
||||||||
360 days and greater |
||||||||
Total |
For the year ended December 31, |
||||||||||||
2019 |
2020 |
2021 |
||||||||||
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 |
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, 2020 |
||||
ASSETS |
||||
Cash and cash equivalents |
$ | |||
Restricted cash |
||||
Short-term investments |
||||
Account and financing receivables, net |
||||
Prepaid and other current assets |
||||
Long-term investments, net |
||||
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, |
||||||||||||
2019 |
2020 |
2021 (1) |
||||||||||
Revenues |
$ | $ | $ | |||||||||
Cost of revenues |
||||||||||||
Gross profit |
||||||||||||
Operating expenses: |
||||||||||||
Research and development (2) |
||||||||||||
Sales and marketing (2) |
||||||||||||
General and administrative (2) |
||||||||||||
Total operating expenses |
||||||||||||
Operating profit/(loss) |
( |
) | ( |
) | ||||||||
Interest income |
||||||||||||
Interest expense |
( |
) | ||||||||||
Foreign currency exchange gain/(loss) |
( |
) | ( |
) | ||||||||
Other income, net |
||||||||||||
Income/(loss) from discontinued operations before income tax expense |
( |
) | ||||||||||
Income tax expense/(benefit) |
( |
) | ||||||||||
Results of operations from discontinued operations, net of tax |
( |
) |
||||||||||
Gain on disposal of discontinued operations |
||||||||||||
Net income/(loss) from discontinued operations, net of tax |
( |
) |
||||||||||
Year Ended December 31, |
||||||||||||
2019 |
2020 |
2021 (1)(3) |
||||||||||
Statutory Rate: |
% |
% |
% | |||||||||
Effect of tax holidays applicable to subsidiaries and consolidated VIEs |
( |
%) |
( |
%) |
% | |||||||
Tax differential from statutory rate applicable to subsidiaries and consolidated VIEs |
% |
( |
%) |
( |
%) | |||||||
Changes in valuation allowance for deferred tax assets |
% |
( |
%) |
% | ||||||||
Research and development super-deduction and other permanent book-tax differences |
( |
%) |
% |
( |
%) | |||||||
Capital gains from equity investments |
( |
%) |
% |
( |
%) | |||||||
% |
( |
%) |
( |
%) | ||||||||
Year Ended December 31, |
||||||||||||
2019 |
2020 |
2021 (1) |
||||||||||
Net cash provided by/(used in) discontinued operating activities |
$ | $ | ( |
) | $ | ( |
) | |||||
Net cash provided by/(used in) discontinued investing activities |
( |
) | ||||||||||
Net cash used in discontinued financing activities |
( |
) | ( |
) | ( |
) |
Note |
(1): Includes the financial results of the discontinued operations from January 1, 2021 to September 23, 2021. |
Year Ended December 31, |
||||
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 from discontinued operations before income tax expense |
( |
) | ||
Income tax expense |
||||
Net loss from discontinued operations, net of tax |
( |
) | ||
Year Ended December 31, |
||||
2019 (1) |
||||
Net cash provided by discontinued operating activities |
$ | |||
Net cash used in discontinued investing activities |
( |
) | ||
Net cash provided by discontinued financing activities |
Year Ended December 31, 2019 |
||||||||||||||||
Sohu |
Changyou |
Eliminations |
Consolidated |
|||||||||||||
Revenues |
$ | $ | $ | ( |
) | $ | ||||||||||
Segment cost of revenues (1) |
( |
) | ( |
) | ( |
) | ||||||||||
Segment gross profit |
||||||||||||||||
SBC in cost of revenues (2) |
( |
) | ( |
) | ( |
) | ||||||||||
Gross profit |
||||||||||||||||
Operating expenses: |
||||||||||||||||
Product development (1) |
( |
) | ( |
) | ( |
) | ||||||||||
Sales and marketing (1) |
( |
) | ( |
) | ( |
) | ||||||||||
General and administrative (1) |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
Goodwill impairment and impairment of intangible assets acquired as part of business acquisitions |
( |
) | ( |
) | ||||||||||||
SBC in operating expenses (2) |
( |
) | ( |
) | ( |
) | ||||||||||
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, 2020 |
||||||||||||||||
Sohu |
Changyou |
Eliminations |
Consolidated |
|||||||||||||
Revenues |
$ |
$ |
$ |
$ |
||||||||||||
Segment cost of revenues (1) |
( |
) |
( |
) |
( |
) | ||||||||||
|
|
|
|
|
|
|
|
|||||||||
Segment gross profit |
||||||||||||||||
SBC in cost of revenues (2) |
( |
) |
( |
) |
( |
) | ||||||||||
|
|
|
|
|
|
|
|
|||||||||
Gross profit |
||||||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Operating expenses: |
||||||||||||||||
Product development (1) |
( |
) |
( |
) |
( |
) | ||||||||||
Sales and marketing (1) |
( |
) |
( |
) |
( |
) | ||||||||||
General and administrative (1) |
( |
) |
( |
) |
( |
) | ||||||||||
SBC in operating expenses (2) |
( |
) |
( |
) |
( |
) | ||||||||||
|
|
|
|
|
|
|
|
|||||||||
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, 2021 |
||||||||||||||||
Sohu |
Changyou |
Eliminations |
Consolidated |
|||||||||||||
Revenues |
$ | $ | $ | $ | ||||||||||||
Segment cost of revenues (1) |
( |
) | ( |
) | ( |
) | ||||||||||
|
|
|
|
|
|
|
|
|||||||||
Segment gross profit |
||||||||||||||||
SBC in cost of revenues (2) |
( |
) | ( |
) | ( |
) | ||||||||||
|
|
|
|
|
|
|
|
|||||||||
Gross profit |
||||||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Operating expenses: |
||||||||||||||||
Product development (1) |
( |
) | ( |
) | ( |
) | ||||||||||
Sales and marketing (1) |
( |
) | ( |
) | ( |
) | ||||||||||
General and administrative (1) |
( |
) | ( |
) | ( |
) | ||||||||||
SBC in operating expenses (2) |
( |
) | ( |
) | ( |
) | ||||||||||
|
|
|
|
|
|
|
|
|||||||||
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, 2020 |
||||||||||||||||
Sohu |
Changyou |
Eliminations |
Consolidated |
|||||||||||||
Cash and cash equivalents |
$ | $ | $ | $ | ||||||||||||
Accounts receivable, net |
||||||||||||||||
Fixed assets, net |
( |
) | ||||||||||||||
Total assets (1) |
$ | $ | $ | ( |
) | $ |
As of December 31, 202 1 |
||||||||||||||||
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 |
2019 |
2020 |
2021 |
|||||||||
Cost of revenues |
$ | $ | $ | |||||||||
Product development expenses |
||||||||||||
Sales and marketing expenses |
( |
) | ||||||||||
General and administrative expenses |
||||||||||||
|
|
|
|
|
|
|||||||
$ | $ | $ | ||||||||||
|
|
|
|
|
|
Year Ended December 31, |
||||||||||||
Share-based compensation expense |
2019 |
2020 |
2021 |
|||||||||
For Sohu (excluding Sohu Video) share-based awards |
$ |
$ |
$ |
|||||||||
For Changyou share-based awards |
||||||||||||
For Sohu Video share-based awards |
( |
) |
( |
) |
( |
) | ||||||
$ |
$ |
$ |
||||||||||
Year Ended December 31, |
||||||||||||
2019 |
2020 |
2021 |
||||||||||
Rental income from Sogou (1) |
||||||||||||
Investment income |
||||||||||||
Income from investments in financial instruments (2) |
||||||||||||
Individual tax refund and additional deduction of PRC value-added tax |
||||||||||||
Write-down of unpaid long-term accounts payable |
||||||||||||
Gover nment grant |
||||||||||||
Impairment loss on equity investments ( 3 ) |
( |
) | ( |
) | ( |
) | ||||||
Donations |
( |
) | ( |
) | ( |
) | ||||||
Others |
||||||||||||
$ |
$ |
$ |
||||||||||
As of December 31, |
||||||||
2020 |
2021 |
|||||||
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 |
|||||||||||||||||||
2019 |
( |
) | ( |
) | ||||||||||||||||||||
2020 |
( |
) | ||||||||||||||||||||||
2021 |
( |
) |
As of December 31, |
||||||||
2020 |
2021 |
|||||||
Prepaid and other current assets |
||||||||
Matching loan due from a related party (See Note 9) |
$ | $ | ||||||
Prepaid taxes |
||||||||
Prepaid revenue-sharing cost |
||||||||
Prepaid content and license costs |
||||||||
Prepaid advertising and promotion fee |
||||||||
Interest receivable from bank deposits with original maturities of three months or less |
||||||||
Receivables from third party payment platforms |
||||||||
Prepaid professional fees |
||||||||
Prepaid rental deposit s |
||||||||
Emplo yee advances |
||||||||
Prepaid office rent and facilities expenses |
||||||||
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 |
||||||||
Other payables related to Shanghai Jingmao liquidation (2) |
||||||||
Contract deposits from advertisers |
||||||||
Consideration payable for equity investment |
||||||||
Others |
||||||||
$ | $ | |||||||
Receipts in advance and deferred revenue |
||||||||
Receipts in advance relating to: |
||||||||
brand advertising business |
$ |
$ |
||||||
online game business |
||||||||
other business |
||||||||
|
|
|
|
|||||
Total receipts in advance |
||||||||
Deferred revenue |
||||||||
|
|
|
|
|||||
$ |
$ |
|||||||
|
|
|
|
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 |
Fair value measurements at reporting date using |
||||||||||||||||
Items |
As of December 31, 2021 |
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 |
||||||||||||||||
Short-term investments |
||||||||||||||||
Equity investments with readily determinable fair values |
||||||||||||||||
Long-term time deposits |
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 |
Fair value measurements at reporting date using |
||||||||||||||||
Items |
As of December 31, 2021 |
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 |
• | 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”) |
Year ended December 31, |
||||||||
2020 |
2021 |
|||||||
Operating lease expense |
$ | $ | ||||||
Short-term lease expense |
||||||||
Total operating lease expense |
$ | $ |
Year ended December 31, |
||||||||
2020 |
2021 |
|||||||
Cash paid for amounts included in the measurement of lease liabilities |
||||||||
Operating cash flows from operating leases |
$ | $ |
Year ended December 31, |
||||||||
2020 |
2021 |
|||||||
Right-of-use |
||||||||
Operating leases |
$ | $ |
Year ended December 31, |
||||||||
2020 |
2021 |
|||||||
Assets: |
||||||||
$ | $ | |||||||
Liabilities: |
||||||||
$ | $ | |||||||
2022 |
$ |
|||
2023 |
||||
2024 |
||||
2025 |
||||
202 6 |
||||
Thereafter |
||||
Total future lease payments |
||||
Less: imputed interest |
||||
$ | ||||
As of December 31, |
||||||||
2020 |
2021 |
|||||||
Office buildings |
$ | $ | |
|||||
Computer equipment and hardware |
||||||||
Leasehold and building improvements |
||||||||
Office furniture |
||||||||
Vehicles |
||||||||
Fixed assets, gross |
||||||||
Accumulated depreciation |
( |
) |
( |
) | ||||
Fixed assets, net |
$ | $ | ||||||
Sohu |
Changyou |
Total |
||||||||||
Balance as of December 31, 2019 |
||||||||||||
Goodwill |
||||||||||||
Accumulated impairment losses |
( |
) | ( |
) | ( |
) | ||||||
|
|
|
|
|
|
|||||||
$ | $ | $ | ||||||||||
|
|
|
|
|
|
|||||||
Transactions in 2020 |
||||||||||||
Foreign currency translation adjustment |
||||||||||||
|
|
|
|
|
|
|||||||
Balance as of December 31, 2020 |
$ | $ | $ | |||||||||
|
|
|
|
|
|
|||||||
Balance as of December 31, 2020 |
||||||||||||
Goodwill |
||||||||||||
Accumulated impairment losses |
( |
) | ( |
) | ( |
) | ||||||
|
|
|
|
|
|
|||||||
$ | $ | $ | ||||||||||
|
|
|
|
|
|
|||||||
Transactions in 2021 |
||||||||||||
Foreign currency translation adjustment |
||||||||||||
|
|
|
|
|
|
|||||||
Balance as of December 31, 2021 |
$ | $ | $ | |||||||||
|
|
|
|
|
|
|||||||
Balance as of December 31, 2021 |
||||||||||||
Goodwill |
||||||||||||
Accumulated impairment losses |
( |
) | ( |
) | ( |
) | ||||||
|
|
|
|
|
|
|||||||
$ | $ | $ | ||||||||||
|
|
|
|
|
|
As of December 31, 2020 |
||||||||||||||||
Items |
Gross Carrying Amount |
Accumulated Amortization |
Accumulated 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, 2021 |
||||||||||||||||
Items |
Gross Carrying Amount |
Accumulated Amortization |
Accumulated 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) |
|||
2022 |
||||
2023 |
||||
2024 |
||||
2025 |
||||
2026 |
||||
Thereafter |
||||
|
|
|||
Total expected amortization expense |
$ | |||
|
|
• |
Video Tianjin and Sohu Internet. Video Tianjin and Sohu Internet re-applied for HNTE qualification and received approval in October 2021 and December 2021, respectively. Video Tianjin and Sohu Internet are entitled to continue to enjoy the beneficial tax rate qualified as HNTEs for the years 2021 through 2023, and will need to re-apply for HNTE qualification in 2024. |
• |
Sohu Media and Guangzhou Qianjun. Sohu Media and Guangzhou Qianjun qualified as HNTEs for the years 2020 through 2022, and will need to re-apply for HNTE qualification in 2023. |
• |
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. |
• |
Gamease and AmazGame. Gamease and AmazGame qualified as HNTEs 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. |
• |
Changyou Chuangxiang. In 2021, Changyou Chuangxiang completed a self-assessment and filed required supporting documents for Software Enterprise status for 2020. Also in 2021, Changyou Chuangxiang qualified as a Software Enterprise after the relevant government authorities’ assessment and became entitled to a preferential income tax rate of |
Year ended December 31, |
||||||||||||
2019 |
2020 |
2021 |
||||||||||
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 |
||||||||||||
Non-China withholding tax expense |
||||||||||||
Total income tax expense from continuing operations |
$ | $ | $ | |||||||||
Year Ended December 31, |
||||||||||||
2019 |
2020 |
2021 |
||||||||||
Tax holiday effect |
$ | $ | $ | |||||||||
Basic net income per share effect |
Year Ended December 31, |
||||||||||||
2019 |
2020 |
2021 |
||||||||||
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, |
||||||||
2020 |
2021 |
|||||||
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 assets |
$ | $ | ||||||
Deferred tax liabilities |
||||||||
Withholding tax for dividend |
$ | ( |
) | $ | ( |
) | ||
Others |
( |
) | ( |
) | ||||
Total deferred tax liabilities |
$ | ( |
) | $ | ( |
) | ||
For the Year Ended December 31, |
||||||||||||
2019 |
2020 |
2021 |
||||||||||
Beginning balance |
$ | |||||||||||
Provision for the year |
||||||||||||
Reversal for the year |
( |
) | ( |
) | ( |
) | ||||||
Foreign currency translation adjustment |
( |
) | ||||||||||
Ending balance |
$ | |||||||||||
As of December 31, |
||||||||||||
2019 |
2020 |
2021 |
||||||||||
Beginning balance |
$ | $ | $ | |||||||||
Increases/(decreases) related to prior year tax positions |
||||||||||||
Increases related to current year tax positions |
||||||||||||
Ending balance |
$ | $ | $ | |||||||||
2022 |
2023 |
2024 |
2025 |
2026 |
Thereafter |
Total Payments Required |
||||||||||||||||||||||
Royalties and expenditures for licensed content of games |
$ | |||||||||||||||||||||||||||
Purchase of bandwidth |
||||||||||||||||||||||||||||
Purchase of content and services - others |
||||||||||||||||||||||||||||
Purchase of content and services - video |
||||||||||||||||||||||||||||
Operating lease obligations |
||||||||||||||||||||||||||||
Others |
||||||||||||||||||||||||||||
Total Payments Required |
$ | |||||||||||||||||||||||||||
• | High Century |
• | Heng Da Yi Tong |
• | Sohu Internet |
• | Donglin |
• | Tianjin Jinhu |
• | Focus Interactive |
• |
Guangzhou Qianjun |
• | Gamease |
• | Shanghai ICE |
• | Guanyou Gamespace |
As of December 31, |
||||||||
2020 |
2021 |
|||||||
ASSETS: |
||||||||
Cash and cash equivalents |
$ |
$ |
||||||
Restricted cash |
||||||||
Short-term investments |
||||||||
Accounts receivable, net |
||||||||
Prepaid and other current assets |
||||||||
Intra-Group receivables due from the Company’s subsidiaries |
||||||||
Assets held for sale (current) |
||||||||
Total current assets |
||||||||
Fixed assets, net |
||||||||
Other non-current assets |
||||||||
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 |
||||||||
Other non-current liabilities |
||||||||
Total liabilities |
$ |
$ |
||||||
Year Ended December 31, |
||||||||||||
2019 |
2020 |
2021 |
||||||||||
Revenues: |
||||||||||||
Third-party revenues |
$ |
$ |
$ |
|||||||||
Intra-Group revenues |
||||||||||||
Total revenues |
||||||||||||
Cost of revenues: |
||||||||||||
Third-party cost of revenues |
||||||||||||
Intra-Group cost of revenues |
||||||||||||
Total cost of revenues |
||||||||||||
Operating expenses: |
||||||||||||
Third-party operating expenses |
||||||||||||
Intra-Group operating expenses |
||||||||||||
Total operating expenses |
||||||||||||
Net income from continuing operations |
||||||||||||
Net loss from discontinued operations |
( |
) |
( |
) |
( |
) |
Year ended December 31, |
||||||||||||
2019 |
2020 |
2021 |
||||||||||
Cash flows from operating activities: |
||||||||||||
Net cash provided by transactions with external parties |
$ |
$ |
$ |
|||||||||
Net cash used in transactions with intra-Group entities |
( |
) |
( |
) |
( |
) | ||||||
Net cash provided by continuing operating activities |
||||||||||||
Net cash used in discontinued operating activities |
( |
) |
( |
) |
( |
) | ||||||
Net cash provided by operating activities |
||||||||||||
Cash flows from investing activities: |
||||||||||||
Net cash used in transactions with external parties |
( |
) |
( |
) |
( |
) | ||||||
Net cash used in transactions with intra-Group entities |
( |
) |
( |
) |
( |
) | ||||||
Net cash used in continuing investing activities |
( |
) |
( |
) |
( |
) | ||||||
Net cash provided by/(used in) discontinued investing activities |
( |
) |
||||||||||
Net cash used in investing activities |
( |
) |
( |
) |
( |
) | ||||||
Cash flows from financing activities: |
||||||||||||
Net cash provided by transactions with intra-Group entities |
||||||||||||
Net cash provided by continuing financing activities |
||||||||||||
Net cash provided by/(used in) discontinued financing activities |
( |
) | ||||||||||
Net cash provided by financing activities |
||||||||||||
Number of Outstanding Shares As of December 31, |
||||||||||||
2019 |
2020 |
2021 |
||||||||||
Balance, beginning of year |
||||||||||||
Issuances: |
||||||||||||
Repurchases: |
( |
) | ||||||||||
Balance, end of year |
||||||||||||
Weighted |
||||||||||||||||
Number |
Weighted |
Average |
Aggregate |
|||||||||||||
Of |
Average |
Remaining |
Intrinsic |
|||||||||||||
Shares |
Exercise |
Contractual |
Value (1) |
|||||||||||||
Options |
(in thousands) |
Price |
Life (Years) |
(in thousands) |
||||||||||||
Outstanding as of January 1, 2021 |
$ | $ | ||||||||||||||
Granted |
||||||||||||||||
Exercised |
( |
) | ||||||||||||||
Forfeited or expired |
||||||||||||||||
Outstanding as of December 31, 2021 |
||||||||||||||||
Vested as of December 31, 2021 |
||||||||||||||||
Exercisable as of December 31, 2021 |
||||||||||||||||
Assumptions Adopted |
2020 |
2021 |
||||||
Average risk-free interest rate |
% | % | ||||||
Exercise multiple |
||||||||
Expected forfeiture rate (post-vesting) |
% | % | ||||||
Weighted average expected option life |
||||||||
Volatility rate |
% | % | ||||||
Dividend yield |
||||||||
Fair value |
As of December 31, |
||||||||
2020 |
2021 |
|||||||
Changyou |
$ | $ | ||||||
Sogou |
||||||||
Total |
$ | $ | ||||||
Year Ended December 31, |
||||||||||||
2019 |
2020 |
2021 |
||||||||||
Changyou |
$ | $ | $ | ( |
) | |||||||
Sogou |
( |
) | ||||||||||
Total |
$ | $ | ( |
) | $ | |||||||
Year Ended December 31, |
||||||||||||
2019 |
2020 |
2021 |
||||||||||
Net income /(loss) 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 |
$ | $ | ( |
) | $ | |||||||
Year Ended December 31, |
||||||||||||
2019 |
2020 |
2021 |
||||||||||
Numerator: |
||||||||||||
Net income/(loss) from continuing operations attributable to Sohu.com Limited, basic |
$ | ( |
) | $ | ( |
) | $ | |||||
Net income/(loss) from discontinued operations attributable to Sohu.com Limited, basic |
( |
) | ||||||||||
Net income/(loss) attributable to Sohu.com Limited, basic |
( |
) | ( |
) | ||||||||
Effect of dilutive securities: |
||||||||||||
Incremental dilution from Changyou |
( |
) | ( |
) | ||||||||
Incremental dilution from Sogou |
( |
) | ( |
) | ||||||||
Net income/(loss) from continuing operations attributable to Sohu.com Limited, diluted |
( |
) | ( |
) | ||||||||
Net income/(loss) from discontinued operations attributable to Sohu.com Limited, diluted |
( |
) | ||||||||||
Net income/(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 income/(loss) per share attributable to Sohu.com Limited |
||||||||||||
Continuing operations |
$ | ( |
) | $ | ( |
) | $ | |||||
Discontinued operations |
( |
) | ||||||||||
Net income/(loss) per share |
( |
) | ( |
) | ||||||||
Diluted net income/(loss) per share attributable to Sohu.com Limited |
||||||||||||
Continuing operations |
$ | ( |
) | $ | ( |
) | $ | |||||
Discontinued operations |
( |
) | ||||||||||
Net income/(loss) per share |
( |
) | ( |
) | ||||||||