Ladies and gentlemen, thank you for standing by, and good evening. Thank you for joining Sohu.com Limited's Third Quarter 2025 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'd now like to turn the conference over to your host for today's conference call, Huang Pu, Investor Relations Director of Sohu.com Limited. Please go ahead.

Thanks, Rebecca. Thank you for joining us to discuss Sohu.com Limited's third quarter 2025 results. On the call are Chairman and the Chief Executive Officer, Dr. Charles Zhang, CFO, and invest president of finance, Gemstone. Also, us, Chang will see with the Win Chen and the CFO Bin Wang. Before management begins their prepared remarks, I would like to remind you of the common safe harbor statement connection with today's conference call. Except for the information contained here, the matters discussed on this call may contain forward-looking statements. These statements are based on current plans, estimates, and projections, and therefore, should not place undue reliance on them. All risky 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. The 2025 marketing services revenues were in line with our guidance. Well, both our online game revenues and the bottom-line performance are benefiting from our continuous efforts in the gaming business and were well above our prior expectations. We recorded positive net income this quarter. For the social media platform, we continue to refine our products, integrate resources to better meet users' needs, and enhance their experiences. Meanwhile, leveraging our product metrics and distinctive events, we remain committed to generating and distributing diversified premium content and continuously energizing our platform. Our differentiated advantages and unique IP enabled us to further unlock monetization potential. For online games, both new and established titles delivered outstanding performance driven by our deep understanding of our needs and proven operational expertise. Before going through each business unit in more detail, let me first give you a quick overview of our financial performance. The 2025 total revenue is $180 million, up 19% year-over-year, and 43% quarter over quarter. Marketing services revenues are $14 million, down 27% year over year and 13% quarter over quarter. Online game revenues are $162 million, up 27% year-over-year and 53% quarter over quarter. GAAP net income attributable to Sohu.com Limited is $9 million, compared with a net loss of $60 million in 2024 and a net loss of $20 million in the second quarter of this year. Non-GAAP net income attributable to Sohu.com Limited was $9 million, compared to a net loss of $12 million in the third quarter of last year and a net loss of $20 million in the second quarter of this year. Now I'll go through our key businesses in more detail. For the Sohu platform, we continue to leverage cutting-edge technologies to optimize our products…

Thank you, Charles. I will now walk you through the key financials of our major segments for 2025. All numbers are on a non-GAAP basis. You may find a reconciliation of non-GAAP to GAAP measures on our website. For the social media platform, quarterly revenues were $70 million, compared with $73 million in the same quarter last year. Quarterly operating loss was $71 million, compared with an operating loss of $72 million in the same quarter last year. For Changyou, quarterly revenue was $163 million, compared with $129 million in the same quarter last year. Quarterly operating profit was $88 million compared with operating profit of $62 million in the same quarter last year. For 2025, we expect marketing service revenues to be between $50 million and $60 million. This implies an annual decrease of 15% to 20% and a sequential increase of 10% to 18%. Online game revenue is expected to be between $130 million and $123 million. This implies an annual increase of 3% to 12% and a sequential decrease of 24% to 30%. Both non-GAAP and GAAP net loss attributable to Sohu.com Limited are expected to be between $25 million and $35 million. This reflects 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. We will now begin the question and answer session. To ask a question, please press 11 on your telephone and wait for your name to be announced. To withdraw your question, please press 11 again. We will now take our first question from the line of Thomas Chong at Jefferies. Please go ahead.

Hi. Good evening. Thanks, management, for taking my question. My first question is about the online game business. Given our online games performed very strongly in Q3, I'm just wondering how the quarter-to-date performance is so far? In particular, when I look into the guidance, it basically implies a sequential decline. So I'm not sure if we are a bit conservative in giving out Q4 gaming guidance. And on the other hand, when I look into our portal business, when I look into the advertising side, we are actually seeing quite a sequential rebound in terms of the advertising revenue. Can Charles, may I ask about how you think about the macro sentiment coming into Q4, as well as the trend for different categories? And based on the current visibility, how should we think about the brand advertising outlook in 2026? If there's any color on that? Thank you.

The performance of the fourth quarter so far is in line with our expectation. The strong third quarter results are primarily driven by the successful launch of a new game, TLBB Return. Meanwhile, the new servers of TLBB Vantage also performed very well, achieving historic highs. So the actual revenue of the third quarter exceeded our expectation a lot. The performance of the fourth quarter depends mainly on the performance of new TLBB Return and the content and activities that we will launch during the first quarter for TLBB PC, Legacy TLBB Mobile, etc.

Okay. So I think the Q4 rebound... Thomas, you... Is the same? Yes? Above the Q4? Yeah. Yeah. I think since the user... The whole ad base is not that big. Right? So it kind of oscillates a little bit. It depends on some, like, some, you know, a pact signed late and allocated to this quarter but went to the next quarter. Right? So it's... But we do have some... First of all, the macroeconomic situation is not that good, you know, under pressure. And different sectors like auto and IT services continue to deteriorate. But as our new innovative marketing campaigns or services are unique, we are still able to attract some advertising. So we are going against the trend and basically stabilizing the advertising revenue on a small basis. Because in Q4, we have some good events creating opportunities to advertise.

I see. Thank you, Charles. May I ask a follow-up question about AI? Like, can you comment on how AI is integrated within Sohu.com right now? And are we seeing better productivity, cost savings, or enhanced advertising monetization so far? Thank you.

I think AI has more impact and usefulness or improvement in productivity on the gaming business. Right? For Sohu.com, we are not developing a large language model. Instead, we are using AI to improve the user experience. Like for our social media platform, AI can summarize video content and provide subtitles. Also, in our news app, there are AI-enhanced search and question-answering features. So we are basically using AI and different models to improve our existing media and social network services, rather than investing heavily in the hardcore large language model.

The application of AI is mainly applied in art design, code generation, and game planning creation.

Thank you.

Thank you. We will now take our next question from Alicia Yap at Citi. Please go ahead, Alicia.

Hi. Yeah. Thank you. Good evening, management. Thanks for taking my questions. I have a couple of follow-ups. First, on the gaming, can management share with us what are the biggest surprises you learned from the TLBB Return version? And which one is the bigger driver in terms of the outperformance for this quarter? Is it the TLBB Vintage new server or the new game TLBB Return? And I understand you gave out the Q4 guidance. You mentioned this reflects the current situation. I wanted to know, is the Vintage server seeing a drop-off in users, or are the new titles TLBB Returns seeing a sequential decline in users and revenue? Any color on that for Q3 and Q4 would be helpful. And then, a second question for Charles on the macro situation. I think you mentioned auto, IT services, and the ad sentiment seems to be deteriorating. Are there any industry verticals or subsectors you see either improving sentiment or it being about the same as the last few quarters? Thank you.

The first surprise from TLBB Return is that the user spending is beyond our expectation. Because it was positioned as a gameplay that's more relaxing and requires less time. And demand for spending is also less. So, originally, we thought the users' paying wouldn't be very good.

Yeah.

Second, the retention is very stable, better than our expectations. As for the contribution to revenue increase of the quarter, we do not disclose the specific numbers for individual games. So far, the user base for both TLBB Return and TLBB Vintage are very steady, but their revenues are trending down. That's because TLBB Vintage performed very well in the third quarter. In the fourth quarter, we plan to roll out fewer promotional activities. For TLBB Return, as it was newly launched in the third quarter, it will experience natural decline compared to the initial launch period because users tend to have a stronger willingness to pay when the game was initially launched.

Okay. So your second question is about the macro situation, the sectors? Yeah. Overall, the ad market is under pressure. For example, in the auto industry, there's fierce competition as there are too many car companies. They need to promote their brands and sales to stand out. However, the profit margins are very low for them, so the ad budgets are thinning. With this situation, we have unique campaigns like a physics class and social network distribution, allowing us to get ad budgets. The auto industry is flat but still declining. We are also looking at consumer electronics. China's manufacturing base is strong with many new products, but these need marketing for the domestic market. Our innovative offerings, such as live streaming and social media distribution, allow us to get consumer electronics advertisers. So, despite the deteriorating market situation, we can get some advertising.

Okay. Thank you, Charles.

Thank you. I am showing no further questions. And with that, we conclude our conference call today. Thank you for your participation. You may now disconnect your lines.