Ladies and gentlemen, thank you for standing by, and good afternoon. Thank you for joining Sohu's Fourth Quarter 2024 Earnings Conference Call. At this time, all participants are in a listen-only mode. After management's prepared remarks, there will be a question-and-answer session. 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. Thank you. Please go ahead.

Thanks, Operator. Thank you for joining us to discuss Sohu's fourth quarter 2024 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 the 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. 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 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 Dr. Charles Zhang. Charles, please proceed.

Thanks, Huang Pu, and thank you, everyone, for joining our call. In the fourth quarter of 2024, our brand advertising revenues hit the high end of our previous guidance. Well, both our online game revenues and bottomline performance was much better than expected. Sohu Media platform, including Sohu Media and Video, we continue to refine our products, optimize algorithms and strictly control budgets. By integrating the advantages of the Sohu product matrix with our unique IPs and high energy events, we were able to promote the generation and social distribution of premium content, effectively enhance user experience to attract more users and further unlock monetization potential. The online games business delivered solid performance, thanks to relentless efforts to produce high-quality new games and revitalize legacy games. Before going through each business unit in more detail, let me first give you a quick overview of our financial performance. For the fourth quarter of 2024, total revenues $135 million, down 5% year-over-year and 11% quarter-over-quarter. Brand advertising revenues $19 million, down 7% year-over-year and 1% quarter-over-quarter. Online game revenues $110 million, down 4% year-over-year and 14% quarter-over-quarter. GAAP net loss attributable to Sohu.com Limited $21 million, compared with a net loss of $13 million in the fourth quarter of 2023 and a net loss of $16 million in the third quarter of 2024. Non-GAAP net loss attributable to Sohu.com Limited $15 million, compared with a net loss of $11 million in the fourth quarter of 2023 and a net loss of $12 million in the third quarter of 2024. For the whole year of 2024, total revenues $598 million, flat compared with 2023. Brand advertising revenues $73 million, down 17% compared with 2023. Online game revenues $502 million, up 5% compared with 2023. GAAP net loss attributable to Sohu.com Limited $100 million,…

Thank you, Charles. I will walk you through the key financials of our major segments for the fourth quarter and the full year of 2024. All the numbers are on a non-GAAP basis. You may find the reconciliation of non-GAAP to GAAP measures on our IR website. For Sohu Media platform, quarterly revenues were $24 million, compared with $25 million in the same quarter last year. Quarterly operating loss was $69 million, compared with operating loss $68 million in the same quarter last year. For the full year of 2024, revenues were $91 million, compared with $140 million in 2023. The full year operating loss was $287 million, compared with operating loss $269 million in 2023. For Changyou's online game business and 17173, quarterly revenues were $111 million, compared with $116 million in the same quarter last year. Quarterly operating profit was $48 million, compared with operating profit $47 million in the same quarter last year. For the full year of 2024, revenues were $506 million, compared with revenue $485 million in 2023. The full year operating profit were $196 million, compared with operating profit $203 million in 2023. For the first quarter of 2025, we expect brand advertising revenues to be between $30 million and $40 million. This implies annual decrease of 13% to 19%, and a sequential decrease of 26% to 31%. Online game revenues should be between $105 million and $115 million. This implies annual decrease of 2% to 11% and a sequential decrease of 4% to a sequential increase of 5%. Non-GAAP net loss attributable to Sohu.com Limited should be between $16 million and $26 million. And GAAP net loss attributable to Sohu.com Limited should be between $20 million and $30 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.

Thank you. [Operator Instructions] First question comes from Thomas Chong from Jefferies. Please go ahead.

Hi. Good evening. Thanks, management, for taking my question. My question -- first question is about the brand advertising business. It seems that for the Q1 guidance, the sequential decline is a bit soft versus previous years and the year-on-year decline is a bit was more than Q4. So I just want to get some color with regard to any reason behind the latest advertising sentiment. And on the gaming business, can management comment about how we should think about when we should expect it to have a Q1, Q2 decline or Q1, Q4, because it seems the range is a bit wide and how is the trend so far? And then my last question is about the implication of DeepSeek. Can management comment about how we should think about the integration with Sohu? Thank you.

So your first question is about the advertising, right? The second question is about…

Game.

… game?

Yes. It was game.

All right. The third one is the application of the DeepSeek, right?

Yes.

Okay. The first one, I'm sorry, the third question, for Q1, right, decline, right? It's because of the macroeconomic situation…

Yes.

… so the people are spending less. The advertisers are spending less in marketing because of the overall economy -- economic situation. And so, yeah, it's overall -- yeah, overall economy. So the second question is about the game, right?

Thomas [Foreign Language]

[Foreign Language]

The performance of the first quarter is expected to be flat quarter-over-quarter.

Okay. So about the DeepSeek application, we've been actually, in the last two years, we've been applying the language model to our social or media and social network products. For example, the organized content, the better the generation content, and especially knowledge-based content and the text-based abstract writing and internal editing with the applied AI technologies really increase the efficiency. And in the future, we're going to also to -- for example, in our live streaming, our AI technology can help us to summarize different, basically to summarize the video content into text form and to automatically mark the different sections of the streaming video content. And in terms of social network people interaction will be -- our product in the future will have the AI-aided interaction or -- and also is voice-to-text and also sometimes in the future probably help with Deep – or DeepSeek or in large model -- language model to help users to generate content with the voice and word text to turn them into some big pictures and videos and to have really generated some quality, really ease the production process and make it really very, actually some of the content would not be able to produce, but now we'll be able to do it. So there is a wide range of application of AI technology and Deep -- probably DeepSeek. We haven't got DeepSeek funding yet, but we're looking at that possibility. So basically help us with our media and social network user experience and content generation, content organization and editing. And –yeah, and also I think it's also with our gaming, right? Also apply language model, right? The AI technology, right? [Foreign Language]

[Foreign Language]

The AI technology application in terms of gaming development is mainly in the area of video production and second – and the two-dimension art design.

Yeah.

Okay. I hope we answered your question, Thomas.

Got it. Thank you, Charles.

Okay.

Thank you for the questions. One moment for the next question. The next question comes from Alicia Yap from Citi. Please go ahead.

Hello. Good afternoon. Good evening, Charles and management. Thanks for taking my question. I have a few follow-up. Number one, can management maybe comment a little bit on the overall macro sentiment as related to the advertising budget sentiment? I'm just curious, given there's a lot of hype and talks about the technology breakthrough from China, so I'm not sure will some of these positive technology sentiment, will that -- have you seen any of these actually translate to slightly better advertiser budget spend on certain category? And also have you seen any change of the consumer behavior in terms of the consumption as related to some of these positive development? So that's the first question. And then second question is, can you remind us with your $52 million buyback amount, what's the outstanding amount on the buyback currently? Thank you.

Well, the buyback, we bought 4.2, right?

4.2 million.

4.2 million ADS.

Yes.

So we spend one-third of the $150 million, right? One-third of $52 million, yeah, already, so there's another $100 million to go, right? Approved by the Board. So that's 4.2 million ADS, okay? In terms of…

Okay.

…as to the macroeconomic situation, I think, it's just the consumption. Just people that have less money to consume, to spend. That's why companies or products, companies that accordingly spend less in marketing. In terms, for example, the most of our auto companies, their advertising budget, I can see in the year 2024, I can see a trend of almost like a cut by half. A lot of companies just, if they want to spend RMB6 million, now they spend RMB3 million, so -- instead. So it seems that because the consumption is weak, that's why marketing -- companies are spending less money in marketing. That's why we can feel that, right? As an advertising marketing platform, we can feel the decline, right? So as to the DeepSeek -- I mean, not only DeepSeek, but the overall AI technology bring -- has brought quite an enthusiasm, right, and excitement. But I don't think I can now translate into any immediate benefit of marketing or companies, because it’s really -- the problem is really people are spending less. People have less money because people bought houses and they have much less money left to spend, right? So, especially to pay the mortgage, that's why companies don't have the product and sales volume drops, I think. And I don't think AI technology can help that in the short run. And sometimes the AI technology actually destroys drops, right? Not creating drops. That's what I can see.

I see. I see. So maybe can I follow-up a little bit, Charles? So any other kind of sub-sector that is holding up in terms of the ad budget? For example, let's say the FMCG or even have you seen, let's say, electronics like the cell phones given the trade-in and all that? Have you seen any increase in terms of the ad spending on any of the categories?

Yeah. I think FMCG become -- has risen to the top sector among our advertisers. I mean, the sectors. Previously, before, I remember, auto, although, is number one, right? Number one sector. But now FMCG is number one, and auto and IT services are becoming number three and number four. Yes, people are actually spending more on some smaller items, like, food, alcohol, liquor and electronics. So, yeah. There -- and also -- I think the trade-in policy also stimulated that to some extent.

I see. I see. Okay. Very helpful. Thank you. Thanks, Charles. Thanks, management.

Thanks.

Thank you for the questions. With that, we now conclude the conference for today. Thank you for your participation. You may now disconnect your lines.