Ladies and gentlemen, thank you for standing by, and good evening. Thank you for joining Sohu's Second Quarter 2024 Earnings Conference Call. [Operator Instructions]. Today's conference call is being recorded. 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 second quarter 2024 results. On the call are Chairman and the Chief Executive Officer, Dr. Charles Zhang; CFO, Joanna Lv Joni; and the Vice President of Finance, James Deng. Also, with us are Changyou's CEO, Dewen Chen; and the 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 information contained herein, the matters discussed on the 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 forward-looking statements. For more information about the 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 20-0F. 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 second quarter of 2024, we hit the high end of our prior guidance in brand advertising revenues while our online game revenues came in well above expectations. Our bottom line performance was in line with the prior guidance. For Sohu Video -- Sohu Media and Sohu Video, leveraged by our increasingly integrated and sophisticated product matrix, we further promoted the generation and assumption of premium content and vigorously boosted social interactions among users. Benefiting from our differentiated events and marketing campaigns, we were able to continually strengthen our brand influence and explore a diverse range of monetization opportunities. Online Games performed well with revenues exceeding our expectations. Before going through each business unit in more detail, let me first give you a quick overview of our financial performance. For the second quarter of 2024, total revenues of $172 million, up 13% year-over-year and 24% quarter-over-quarter. Brand advertising revenues, $20 million, down 17% year-over-year and 24% up quarter-over-quarter. Online game revenues, $147 million, up 24% year-over-year and 25% quarter-over-quarter. GAAP net loss attributable to Sohu.com Limited was $38 million compared with a net loss of $21 million in the second quarter of last year and a net loss of $25 million in the last quarter. Non-GAAP net loss attributable to Sohu.com Limited was $34 million, compared with a net loss of $80 million last year -- in the second quarter of last year and a net loss of $22 million in the first quarter of this year. Now let me go through the key businesses in more detail. First, Sohu Media and Sohu Video together. We consistently optimized our products, introduced innovative features and further enhanced user experiences. We have built up a close connection among the platforms…

Thank you, Charles. I will now walk you through the key financials of our major segments for the second quarter of 2024. All the numbers on a non-GAAP basis, you may find the reconciliation of non-GAAP to GAAP measures on our website. So Sohu Media and Sohu Video, quarterly revenues were $24 million, compared with $32 million in the same quarter last year. Quarterly operating loss was $72 million compared with an operating loss $67 million in the same quarter last year. For Changyou's online game business and the 17173.com, quarterly revenues are $148 million compared with $120 million in the same quarter last year. Quarterly operating profit was $32 million compared with operating profit, $49 million in the same quarter last year. For third quarter of 2024, we expect brand advertising revenues to be between $70 million and $90 million. This impacts annual decrease of 14% to 23% and a sequential decrease of 4% to 14%, online game revenues to be between $104 million and $114 million. This implies annual decrease of 3% to 11% and a sequential decrease of 22% to 29%. Non-GAAP net loss attributable to Sohu.com Limited to be between $30 million and $40 million, and the GAAP net loss attributable to Sohu.com Limited to be between $34 million and $40 million. This forecast reflects of management's current and preliminary view, which is subject to substantial uncertainties. This concludes our prepared remarks. Operator, we would now like to open the call to questions.

[Operator Instructions]. The first question comes from Thomas Chong of Jefferies. Please go ahead.

Hi, good evening, and thanks management for taking my question. My first question is about the brand advertising business. Can management comment about how the macro happenings affect the advertising market quarter-to-date. Because if I look at the guidance, we are expecting a sequential decline of 4% to 14%. Just wanted to get some color with regard to sectors like auto, FMCG, Internet service and property sector, how are we seeing the quarter-to-date so far? And my second question is about our gaming business. Given that we are expecting our gaming business to decline by about 22% to 29%, I just want to get some color with regard to the sequential decline. Is it mainly due to Westward Journey? How should we think about TLBB series? And my third question is about our share repurchase program. Given that we have $150 million share repurchase program, how should we think about the share repurchase in the second half, if any color? Thank you.

Okay. Thank you for the question. And let me -- first of all, on advertising, the overall macroeconomic situation is not that good, a downward trend. So, there's -- advertising is still a challenge in a big country because advertisers are very cautious in spending and some advertisers tend to -- the effect driven, right? You want to -- the brand side is spending less. So overall, it's not good. But because of -- as I just said, I just said that script report that we've been using innovative marketing campaigns and this platform, innovative platform to -- was able to attract some brand advertising spending so that we achieved a 24% quarter-to-quarter increase over Q1. And of course, in Q1, the -- in Q2, the auto industry spending is more -- is going to spend more compared with Q1. And in the long run, auto industry is still, it's hopeful. It looks promising, but it's still very competitive. And there's the electric car, BEV, I think, is upcoming an increase, but the luxury cars are really phasing out of the -- probably because of price wars and everything. So Q2, auto now have 25% of our overall advertising and then also Internet services. So Q2, the auto spend more. And also, Q2 is an e-commerce quarter, especially like the [indiscernible]. And in the summer, the FMCG is coming out of the weather had and the drink companies, beverage companies are spending. So that's the overall. And yes, we -- yes, that's a [indiscernible] situation. About Changyou. So Gandera?

[Foreign Language].

The sequential decrease of the third quarter gaming revenue guidance is mainly because Westward Journey, which accounts about half of the decrease, and the natural decline of other older games account the other half.

And then about the share repurchase will be -- we spent $26 million all of the -- we have a program of $150 million per rig. So, we'll keep the same pace in Q3 because of the limitation of the volume, the total volume percentage volume, right, each day. That's why we're not able to purchase faster or the same pace in Q3.

Got it. Thank you, Charles.

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

Good evening, Charles and management. Thanks for taking my questions. A few questions here. One -- number one, I wanted to follow up on the gaming question. So 3Q guidance obviously implying there is a sequential reversal or decline, mainly as you mentioned, half of it is driven by Westward Journey. Just wondering, will this game actually have a chance to rebound in the later quarters? Or you actually would expect after the decline, there's probably less hope for that to recover back to the 2Q level? And then second question is on your sales and marketing spend. Obviously, 2Q, due to the game promotion, you spent a very big number, which I think is if you guided. But then for 3Q, the loss guidance, it also seems to be implying the expense side seems to be remain quite high. So, can you maybe elaborate a little bit among the expense in terms of the gross margin trend and also the sales and marketing trend. And then just related to that, on the last question is that any planning or initiatives for you to think about to narrow your operating loss in the coming quarter. Thank you.

[Foreign Language].

We think there's possibility for new Westward Journey to rebound because it's a licensed game. And before we have some -- we were kind of divided out the game’s improvement and its development direction with a third-party developer. And regionally, we have agreed upon it and the center will be around the user's experience. And we do -- we did a lot of user research. If those measures are effective, we think it should have a chance to recover. Thank you.

[Foreign Language].

The retention rate before 30 days are excellent, and the main problem on realizing the content after 30 days. So, we -- actually, we have postponed our overseas plan for overseas release plan. And we hope we can improve the game, modify the game solve the problem. And after that, we will release the game in the overseas market.

[Foreign Language].

The gross margin for online game will recover in the third quarter because the marketing expenditure and as well as the revenue sharing payments will decrease as well.

Sorry. I wanted to follow up. Any plans or initiatives to narrow the operating loss in the coming quarters?

In terms of game or the overall Sohu?

Overall business. I mean for the...

A lot depend on the gaming, right, spending because that's the large part, right? So, if the game does not rebound in Q3, then our spending will not -- has been that much. So gross margin definitely will improve for the gaming part. Sohu, I think we are at -- people often ask us about the -- with our cash, how are we going to spend our cash besides repurchasing of the shares, we are actually still in the battlefield, right? So, we need to build the user base. And the only one we have a sizable user base that we can turn the Sohu part, the media pie to be turning profitable turn profitable. So, we need to invest in the building products, developing the products and also acquire new users, and that's where we're going to spend. So, I think the -- on the Sohu part, the gross margin will be similar, right, or we'll spend, keep spending.

I see. I see. Maybe just slip in one last one regarding the cash decision. I mean, given there is this 20% daily limit restriction, any other thinking about other shareholder return policy in your mind?

No, not now. Yes, buyback. Buyback is one of -- is the main one. And then the best one is we are very confident, we are hopeful that we are going to be successful in building up the user base and then to turn Sohu into a profitable currently, yes, highly profitable company. That's the best reward for our shareholders.

Thank you, Charles.

[Operator Instructions]. There are no more questions on the line. I would like to conclude today's conference call. Thank you for your participation. You may now disconnect your lines.

Thank you. Bye-bye.