Ladies and gentlemen, thank you for standing by, and good evening. Thank you for joining Sohu's Third Quarter 2023 Earnings Conference Call. [Operator Instructions]. Today's conference call is being recorded. If you have any objections, you may disconnect at this time. I would 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 third quarter 2023 results. On the call are Chairman and Chief Exec Officer, Charles Zhang; CFO, Joanna Lv; and Vice President of Finance, James Deng. Also, with us are Changyou, Dewen Chen; and it's CFO, Yaobin Wang. Before management begins their prepared remarks, I would like to remind you of the company's safe harbor statements 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. For these statements involving 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 potential risks and uncertainties, please refer to the company's 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 Charles Zhang. Charles, please proceed.

Thanks, Huang Pu, and thank you, everyone, for joining our call. In the third quarter of 2023, we continue to improve our product offering and enhance operational efficiency. Thanks to these efforts, we delivered both top and bottom line, bottom-line performance in line with our prior expectations. As Local Media Portal, we further refined our products and upgraded the user experience. As Sohu Video, with our "Twin Engine" strategy, we focused on the generation and distribution of compelling short-form content as well as live broadcast. These efforts helped us further boost user engagement and social interactions. Same time, benefiting from our unique content and marketing campaigns. We continue to explore a diverse range of monetization opportunities that leverage our differentiated competitive advantages. For Online Games, with consistent release of new content updates and operational efforts, game revenues remained stable. Before I go into more detail of our key financial results, please be reminded that the bankruptcy proceeding for Changyou's cinema advertising business concluded during the quarter. This release is related to continuing operations only. So, this includes the disposable -- disposal gain from the cinema's -- Changyou's cinema underlying business. So, for this quarter, for the third quarter of 2023, the total revenues were $145 million, down 22% year-over-year and 4% quarter-over-quarter. Brand advertising revenue was $22 million, down 14% year-over-year and 8% quarter-over-quarter. Online game revenues were down $117 million, 21% year-over-year and 1% quarter-over-quarter. GAAP net loss attributable to Sohu.com Limited was $14 million compared with a net loss of $22 million in the third quarter of 2022 and a net loss of $21 million in the second quarter of 2023. Non-GAAP net loss attributable to Sohu.com Limited was $10 million compared with a net loss of $17 million in the third quarter of 2022 and a net…

Thank you, Charles. I will now walk you through the key financials of our major segments for third quarter of 2023. All the numbers on a 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 $60 million, compared with revenue of $80 million in the same quarter last year. The quarterly operating loss was $33 million compared with an operating loss of $39 million in the same quarter last year. For Sohu Video, quarterly revenues were $11 million compared with revenue of $60 million in the same quarter last year. Quarterly operating loss was $33 million compared with an operating loss of $31 million in the same quarter last year. For Changyou's online game business and 17173, quarterly revenues, $180 million compared with revenues of $150 million in the same quarter last year. Quarterly operating profit was $52 million compared with an operating profit of $58 million in the same quarter last year. For the fourth quarter of 2023, we expect Brand advertising revenues to be between $20 million and $23 million. This impacts annual decrease of 20% to 31% and a sequential decrease of 9% to a sequential increase of 4%. Online game revenues to be between $106 million and $116 million. This impacts annual decrease of 4% to 13% and a sequential decrease of 1% to 9%. Non-GAAP net loss attributable to Sohu.com Limited to be between $10 million and $20 million, and the GAAP debt loss attributable to Sohu.com Limited to be between $30 million and $23 million. This forecast reflects Sohu's management's 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.

[Operator Instructions]. Our first question comes from the line of Thomas Chong from Jefferies.

My first question is relating to the advertising business. I saw our Q4 revenue guidance for brand advertising sequential down 9% to 4% growth at the high end. So, I just want to get some color from Charles. If I may know about the October and so far, the performance in November, under what situation should we expect it to be buying by 9%, or is that conservative guidance? My second question is relating to AIGC. Given that, everyone, I think, talks about how AI can help to drive the conversion, the content creation. Just want to get some color from Sohu perspective, our strategies in coming quarters. And sorry, and finally, may I also ask a quick follow-up, just more relating to 2024 online advertising outlook? Thank you.

So, the Q4 forecast is, I think we are providing a range and Q4 is quite similar to Q3. And there is nothing, it's still the macroeconomic situation is really kind of bad and we're trying to have some innovative marketing campaigns and events that attract advertisers, so that in Q4 we have about the equal number of events or content activities like the Sohu fashion ceremony and also the finance conference and also, we have a few others, like the keep up the national contest and all these things. So, I think that Q4 is similar to Q3. We're just providing a range. The AIGC, I think it's only had some incremental improve with the application of AIGC to our content generation and it's only have kind of incremental improvement of efficiency of content creation, but so far, it's not getting any major impact on our business side, positive impact on business side yet. With basically like the video content, AI technology we have better, the titles, words and translations, and the voice words, and also for articles we have using AIGC to summarize, to write, to summarize abstracts of the articles, so it's not a big deal yet.

May I also ask a very quick follow-up question is relating to? How we should think about the advertising market in 2024? Any preliminary discussion, yes, 2024, do we have any preliminary discussion with the advertisers yet about next year spending? Thank you.

Yes, I think overall the microeconomy is doing not that good. And so especially, for example, there is, the auto industry which consists of 25% of our advertising base, the marketers are more cautious now in spending, because across all the businesses people are spending less because people have consumers have limited disposal of income to spend. So, in this situation, the advertisers then tend to center their budgets, around some top-tier user base, top-tier platform. So, with Sohu's current user base, not in a top tier, so that we have to have this kind of innovative events and the campaigns and others to attract the brand advertisers. So, unless, we have, so I think the next year '24, things will be similar and unless we have our Sohu News and Sohu Portal and Sohu Portal and Sohu News and Sohu Video have really the uptake or the social media platform, social video, social media platform have a major rise or explosive growth of user base. I think 2024 will be similar to '23. But we definitely have some hope that in 2024 our social media strategy will have some positive hope to expand rapidly.

Our next question comes from the line of Alicia Yap from Citigroup. Please go ahead.

Hello, and thank you. Good evening, Charles, Johanna, and team, thanks for taking my questions. I have three questions. First, I wanted to follow-up on the comment, Charles, you just mentioned for the 4Q advertising outlook. Would you say the macro situation is improving from what you are seeing in 3Q or about similar or is it no improvement and is it not getting worse in 4Q? So just any color as you compare to what you saw in 3Q would be great. So that's the first question.

Well, the, I think in Q4, the internet service will have some improvement, right. Because the Q3 is a kind of, it's slow season for internet services. Like Q4, that will happen to double, right, and e-commerce. But overall, the auto industry has been contracting. I mean, people are not spending because the competition and less budget, because the car sales is not as robust. So, they becoming more cautious in promoting their products themselves. Some industries like fast moving consumer goods industry, FMSG industry seems to have -- they are spending more. It is typical of economic downturn. People are drinking more. Drinking wines, consuming leisure time, and spending smaller -- small items. So that's a FMCG only has some bright spots.

I see. That's very helpful. So, second question is related to the gain’s guidance for 4Q. I thought you mentioned there will be some expansion pack content update for TLBB series. So just wondering, what's the reasons for the game's guidance to also experience sequential decline?

Due to most of our older games, we will have a natural decline in the fourth quarter. The content updates in the fourth quarter are not major ones, so they cannot offset the natural declines from the game revenues.

Can I follow-up on that one, is that -- so when you have new games launched in action, then you would we should assume to see some sequential growth, right, in the coming quarters beyond 4Q?

Typically, yes. But it also depends on the performance of the new game launched.

Okay. Thank you. My last question is on your share buyback. So, it is great that, we are seeing this $80 million buyback that newly authorized. Just assuming if we are using -- finish up, all the $80 million. Just wondering what's the next plan that management may have. Would that be, more buyback down the road if we finish that $80 million, or is that will be some other things that you are thinking? Thank you.

First to execute this $80 million buyback, right? And then we will think to start next. I think our focus is still on really -- to really make sure our business grows and our social network, strategy works. So, there will be actually, we haven't, we've been refining our products, both the Sohu Video and Sohu News. And the battle to really grow, so user base has not started. We've been refining our products and spending. So, we definitely need which has to continue to launch, to the major product. I mean, we expand to grow our products, the user base. And we are confident actually, so that's why, and also, gaming. So once the Sohu Media and Sohu Video user base grow, I would say, I hope exponentially, because social network, that's the way it grows. It stays flat and then suddenly you got the product right and explode or grow exponentially and we hope that day will come. And then our advertising dollar will grow because it's all tied with user base scale. And also, we hope that our game will even better in the future.

[Operator Instructions]. As there are no further questions at this time, this concludes today's conference call. Thank you for participating. You may now disconnect.