Sohu.com Earnings: Exceeds Profit Estimate, But Off the Revenue Mark

Sohu.com Inc. (NASDAQ:SOHU) delivered a profit and beat Wall Street’s expectations, BUT came up short on beating the revenue expectation. The revenue miss is a negative sign to shareholders seeking high growth out of the company. Shares are down 0.59%.

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Sohu.com Inc. Earnings Cheat Sheet

Results: Net income decreased -14.37% to $23 million (60 cents per diluted share) in the quarter versus a net gain of $26.86 million in the year-earlier quarter.

Revenue: Decreased 6.97% to $229 million from the year-earlier quarter.

Actual vs. Wall St. Expectations: Sohu.com Inc. reported adjusted net income of 60 cents per share. By that measure, the company beat the mean analyst estimate of $0.53. It missed the average revenue estimate of $292.46 million.

Quoting Management: Dr. Charles Zhang, Chairman and CEO of Sohu.com Inc. commented, “We ended 2012 with an encouraging fourth quarter. Looking at 2012, despite the slowdown in China’s economic growth, I’m pleased that the Sohu Group’s total annual revenues rose 25% year-on-year and surpassed the $1 billion mark for the first time in our history, setting an important milestone for the Sohu Group…

…By business units, for online video, we achieved initial success of our newly established dedicated sales team as the business returned to growth in the fourth quarter, and we expect the performance to further accelerate in 2013. Sogou once again achieved triple-digit year-on-year revenue growth in 2012, and we were thrilled with some notable breakthrough products on the mobile side that have been well received by users. For Changyou, strong performance from both MMO and web games helped post a new record for revenues.”

Key Stats:

Revenue decreased 19.76% from $285.38 million in the previous quarter. Net income decreased 11.13% from $25.88 million in the previous quarter.

Looking Forward: Analysts have a more negative outlook for the company’s next-quarter performance. Over the past three months, the average estimate for next quarter’s earnings has fallen from a profit of $0.69 to a profit $0.58. For the current year, the average estimate has moved up from a profit of $1.94 to a profit of $2.09 over the last ninety days.

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(Company fundamentals provided by Xignite Financials.)