Sohu.com Inc. Earnings Cheat Sheet: Margins Suffer for Five Quarters Straight, but Net Income Climbs

Sohu.com Inc. (NASDAQ:SOHU) reported higher profit for the second quarter as revenue showed growth. Sohu.com, Inc. is an internet company, which through its subsidiaries, provides online products and services with news, information, entertainment and communication in China.

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Sohu.com Earnings Cheat Sheet for the Second Quarter

Results: Net income for Sohu.com Inc. rose to $61.6 million ($1.10 per share) vs. $45.5 million (82 cents per share) in the same quarter a year earlier. This marks a rise of 36% from the year earlier quarter.

Revenue: Rose 36% to $198.7 million from the year earlier quarter.

Actual vs. Wall St. Expectations: SOHU beat the mean analyst estimate of $1.06 per share. It beat the average revenue estimate of $190.6 million.

Quoting Management: Ms. Carol Yu, Co-President and CFO of Sohu commented, “We are pleased with our strong second quarter results. Our key online game, online video and Sogou business units are all expanding rapidly as a result of years of steady investment and hard work. We have demonstrated a consistent ability to cultivate new businesses from the incubation stage to the point where they can prosper as a separately listed company. We will continue to proactively support all of our underlying businesses as we strive to create value for our shareholders over the long term.”

Key Stats:

The company has enjoyed double-digit year-over-year percentage revenue growth for the past five quarters. Over that span, the company has averaged growth of 26.7%, with the biggest boost coming in the most recent quarter when revenue rose 36% from the year earlier quarter.

Last quarter marked the fifth straight quarter that the company saw shrinking gross margins as gross margin fell 0.1 percentage point to 73.2% from the year earlier quarter. Over that time, margins have contracted on average 1.7 percentage points per quarter on a year-over-year basis.

The company has now seen net income rise in three straight quarters. In the first quarter, net income rose 48.4% and in the fourth quarter of the last fiscal year, the figure rose 35.9%.

The company has now topped analyst estimates for the last four quarters. It beat the mark by 4 cents in the first quarter, by 9 cents in the fourth quarter of the last fiscal year, and by 17 cents in the third quarter of the last fiscal year.

Competitors to Watch: Baidu.com, Inc. (NASDAQ:BIDU), SINA Corporation (NASDAQ:SINA), Google Inc. (NASDAQ:GOOG), NetEase.com, Inc. (NASDAQ:NTES), Yahoo! Inc. (NASDAQ:YHOO), Ku6 Media Co., Ltd. (NASDAQ:KUTV), Shanda Interactive Entertainment Ltd ADR (NASDAQ:SNDA), Youku.com Inc (NYSE:YOKU), and Rediff.com India Ltd. (NASDAQ:REDF).

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(Source: Xignite Financials)

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