Ladies and gentlemen, thank you for standing by, and good evening. Thank you for joining Sohu's First Quarter 2023 Earnings Conference Call. At this time, all participants are in a listen-only mode. [Operator Instructions] Today's conference call is being recorded. If you have any objections, you may disconnect at this time. I'd now like to turn the conference over to your host for today's conference call, Huang Pu, Investor Relations Director of Sohu. Please go ahead.

Thanks, operator. Thank you for joining us to discuss Sohu's first quarter 2023 results. On the call are Chairman and Chief Executive Officer, Dr. Charles Zhang; CFO, Joanna Lv; and Vice President of Finance, James Deng. Also with us are Changyou's CEO Dewen Chen; and CFO Yaobin Wang. Before management begins their prepared remarks, I would like to remind you of the company's Safe Harbor statement in connection with today's conference call. Except for the historical information contained herein, the matters discussed on this call may contain forward-looking statements. These statements are based on current plans, estimates, and projections, and therefore you should not place undue reliance on them. Forward-looking statements involve inherent risks and uncertainties. We caution you that a number of important factors could cause actual results to differ materially from those contained in any forward-looking statements. For more information about the potential risks and uncertainties, please refer to the conference filings with the Securities and Exchange Commission, including the most recent annual report on Form 20-F. With that, I will now turn the call over to Dr. Charles Zhang. Charles, please proceed.

Thanks, Huang Pu, and thank you, everyone, for joining our call. In the first quarter of 2023, we hit the high-end of our prior guidance for brand advertising revenue, while our bottom line performance came in well above expectations despite the impact of seasonality. At Sohu Media, we further improved operating -- operational efficiency and focused on enhancing user experience through product and algorithm refinements. We closely monitored market trends and provided innovative marketing solutions to our advertisers. At Sohu Video, we continued to develop both long-form and short-form original content under our Twin Engine strategy. Leveraging the advantages of our product mix -- matrix, we were able to consolidate our resources and proactively explore a diverse range of monetization opportunities. Online games remained stable during the quarter, with revenues in line with the prior guidance. Now let me go into detail about each of our business. I'll go into each of business in a moment. But first, a quick overview of the overall financial performance. For the first quarter of 2023, total revenue $162 million, down 16% year-over-year, up 1% quarter-over-quarter. Brand advertising revenue $23 million, down 5% year-over-year and 22% quarter-over-quarter. Online game revenues $129 million, down 18% year-over-year and up 7% quarter-over-quarter. GAAP net loss attributable to Sohu.com Limited was $80 million, compared with a net income of $3 million -- net income of $3 million in the first quarter of 2022 and net loss of $7 million in the fourth quarter of 2022. Non-GAAP net loss attributable to Sohu.com Limited was $13 million compared with net income of $9 million in the first quarter of last year, and a net loss of $2 million in the fourth quarter of 2022. Now we'll go through our key businesses in more detail. First Media Portal and Sohu Video.…

Thank you, Charles. I will now walk you through the key financials of our major segments. For the first quarter of 2023, all the numbers on the non-GAAP basis you may find a reconciliation of non-GAAP to GAAP measures on our IR website. For Sohu Media Portal, quarterly revenues were $18 million, compared with revenues of $18 million in the same quarter last year. The quarterly operating loss was $35 million compared with an operating loss of $45 million in the same quarter last year. For Sohu Video, quarterly revenues were $30 million compared with revenue of $50 million in the same quarter last year. Quarterly operating loss was $32 million, compared with an operating loss of $21 million in the same quarter last year. For Changyou's online game business and 17173, quarterly revenues, $131 million compared with revenue of $160 million in the same quarter last year. Quarterly operating profit was $55 million compared with an operating profit of $85 million in the same quarter last year. For the second quarter of 2023, we expect brand advertising revenues to be between $23 million and $26 million. This implies an annual decrease of 8% to an annual increase of 4% and a sequential increase of 2% to 15%. Online game revenues to be between $112 million and $122 million. This impacts an annual decrease of 22% to 29% and a sequential decrease of 6% to 13%. Non-GAAP net loss attributable to Sohu.com Limited to be between $15 million and $25 million, and GAAP net loss attributable to Sohu.com Limited to be between $80 million and $28 million. Our guidance reflects our current and preliminary view, which is subject to substantial uncertainty. This concludes our prepared remarks. Operator, we would now like to open the call to questions.

Thank you [Operator Instructions] Our first question comes from Thomas Chong of Jefferies. Please proceed.

Thanks, management, for taking my question. I have two questions. The first one is about advertising industry in 2023 outlook. And also advising spending budget among auto, FMCG, Internet service and property service advertisers. And my second question is about online game outlook and our game pipelines in 2023. Thanks.

So for 2023 advertising, we see the top three categories, auto, 25%, FMCG, 15%, internet service, 15%. We see some opportunities for auto industry, probably later -- in Q2 or Q3 later this year. For Q1, it's -- because there is a new policy for the July 1 policy for a stricter emission standard. So some auto companies trying to lower the price and try to get rid of their stockpiles. So there's some advertising on Q1, it's kind of soft. There is a negative impact on that. But for the whole year, it seems there are some opportunities, there's more competition in the auto industry, especially for electrical -- electric car -- new energy for electric car industries. And for FMCG, we see some -- people have less money in spending on larger item spending, but for small items, seems there's a kind of recovery because Q1 and this year is the first quarter and first year after the 2019 -- basically after the lifting of the lockup or the -- lockdown or the zero COVID policy. So everything in Q1 and Q2 will be very indicative of the -- a normal economy, what the economy should be. It seems its less. It's bouncing back not as much as we expected. But we do see some -- I would say, the lipstick economy -- lipstick economy effects, right, because people have less money. So this not spending on large items. But then they left with more -- they are not buying real estate, means they are not buying houses. They're not spending on large items, but we have -- that's why -- let's leave them with more -- some cash to spend -- small spending, including the spend some -- pay some monthly subscription to pay for our video long-form, the video drama subscription. So this is what I see for the end of the time of this year.

[Foreign Language]

In terms of game pipeline, we will release new TLBB Mobile in the third quarter this year. It has got the license approval in February and the other one is new Western Journey mobile project. It is applying for the license. And we plan to launch it in the Chinese, Hong Kong, Macau and Taiwan regions in the third quarter this year. And if we can get the license this year, we will release this in Chinese Mainland probably before year-end or the first quarter next year. For the overseas market, we licensed a game -- a Japanese manga game called [indiscernible], and we'll release it Korean -- South Korea and Japan in fourth quarter this year. And also self-developed game, [indiscernible], we plan to launch it in South Korea and also American and Europe overseas market in the third quarter this year. For overall gaming business this year, we -- our goal is to maintain the stability of our older games and also it depends on the new game performance. Thank you.

Thank you.

Thank you for the questions. [Operator Instructions] Next up, we have the line from Alicia Yap from Citigroup. Please proceed.

Hi. Good evening, Charles, Joanna and management team. Thanks for taking my questions. I do have a follow-up on both the advertising and gaming. So first of all, on advertising, Charles, I think you mentioned during the first quarter, it was recovering moderately. And then you did also explain some of the big ticket items, small ticket items. But then what about in general, in terms of the overall at sentiment. So for advertisers that are in the industry that is still kind of lacking, are they also preparing maybe they wanted to spend more? Or are they actually still cautious on the spending. Do you expect second half some of these big-ticket item spending could be improving and hence, will be driving the advertising growth? So this is the first question. And then second question is on the gaming with the second quarter guidance. So it does looks like the guidance was relatively weaker compared to what we have delivered for the first quarter. Is it because the lack of new games and also the seasonality? And then given we are going to launch the TLBB in third quarter, should we expect a pretty meaningful sequential bounce in the third quarter and then fourth quarter? Thank you.

All right. So the first question basically answering -- continuing with the previous question about advertising. I want to draw the attention -- your attention that actually, in Q1 and also the Q2 forecast, our advertising in terms of RMB is actually -- represent a growth of 2%, both 2% in Q1 and 2% in Q2, 3% in Q2 in growth in terms of guidance because of the -- after the currency exchange, I mean, adjustments, that's what I want to point it out. I think real estate is just basically no hope, okay. So advertising on real estate is just not a -- not possible any growth or -- and those -- this is one of the big ticket, right item. And in terms of auto industry, yes, we do see some opportunities. And I hope that in Q3, there will be some pick up of advertising recovery because competition is actually is the electric car comp -- industry, intense competition, drive the marketing, especially if we can provide some unique differentiated marketing package, unique that can really have their brand exposed across the whole social network. The industry that represents [foreign language] will spend money on our platform. And I have more hope for this small ticket item, FMCG and -- so the good thing about our advertising platform is that any businesses, any products, they need market, they need to have a brand building, they will -- they need our platform. So if one industry just went down, there's other industries emerging. And people spending, as I’ve mentioned, the lip [indiscernible] lipstick. In fact people in some small item areas, FMCG or even some luxury goods -- I mean some -- yes, the cosmetics and all those places and actually, represent some opportunity, yes, because people have the money now. Just like our people -- as people during the May holiday, people go to the board to have Carol, that's the kind of really low-cost spending, right? People don't have much large items to go to the [indiscernible] hotels and/or to have the sports clubs to -- health clubs to spend, but people do have some -- less with money to spend on other small items things. And that's the FMCG side that we see some opportunity in the later half of the year. So we look at growth. Yes. Gaming. [Indiscernible] The decline of the second quarter guidance is we expect fewer promotions in Q2 than in July. And some of our other teams, including TLBB will have some natural decline. It is still too far to forecast the performance in third quarter.

Thank you.

[Operator Instructions]. We have no further questions at this time. Thank you, everyone. That concludes today's conference call. You may now disconnect your lines.