SOHU.COM INC. (NASDAQ:SOHU) Files An 8-K Results of Operations and Financial Condition

SOHU.COM INC. (NASDAQ:SOHU) Files An 8-K Results of Operations and Financial Condition
Item 2.02 Results of Operations and Financial Condition.

Sogou’s net income for the three months ended September30, 2017 was $31.0million, compared to net income of $20.1million for the three months ended September30, 2016 and $23.5million for the three months ended June30, 2017, or up 54.2% year-over-year and 31.7% quarter-over-quarter.

In addition, Sogou’s share-based compensation expense for the three months ended September30, 2017 was $0.3million, compared to share-based compensation expense of $0.2million for the three months ended September30, 2016 and $0.7million for the three months ended June30, 2017, or up 63.7% year-over-year and down 52.0% quarter-over-quarter. Sogou’s depreciation and amortization expense for the three months ended September30, 2017 was $13.3million, compared to depreciation and amortization expense of $9.5million for the three months ended September30, 2016 and $11.6million for the three months ended June30, 2017, or up 39.7% year-over-year and 14.3% quarter-over-quarter.

Sogou’s results for the three months ended September30, 2017 should not be viewed as an indicator of Sogou’s financial results for the full year ending December31, 2017 or for any future interim periods.

Sogou Filing of Registration Statement on Form F-1 Including Estimated Offering Size and Price Range

On October27, 2017, the registrant’s online search and search-related services subsidiary Sogou filed with the SEC Amendment No.1 to a registration statement on Form F-1relating to an IPO of 45,000,000 American depositary shares (“ADSs”), with each ADS representing one ClassA Ordinary Share of Sogou at an estimated price range of US$11.00 to US$13.00. Sogou has applied to have the ADSs listed on the New York Stock Exchange under the symbol “SOGO.” The registration statement has not yet become effective. The ADSs may not be sold, nor may any offers to buy be accepted, prior to the time the registration statement becomes effective.

All of the 45,000,000 ADSs of Sogou proposed to be offered will represent newly-issued ClassA Ordinary Shares. The net proceeds to Sogou from ADSs sold in the proposed IPO are expected to be approximately $501 million, assuming an initial public offering price per ADS of US$12.00, which is the midpoint of the estimated public offering price range, after deducting underwriting discounts and commissions and estimated offering expenses payable by Sogou. In addition, up to 15% of the ADSs being offered initially, or up to 6,750,000 additional ADSs, will be available for purchase by the underwriters from Sogou to cover over-allotments, at any time within 30 days after the effectiveness of the registration statement.

Effective upon the completion of the proposed IPO, all of the Sogou shares held by Sohu will be redesignated as ClassB Ordinary Shares. Each ClassB Ordinary Share will be entitled to ten votes per share on any matter brought to a vote of Sogou shareholders, whereas ClassA Ordinary Shares (which the ADSs represent) will be entitled to one vote per share. Assuming that the underwriters do not exercise their over-allotment option, after the proposed IPO is completed Sohu will beneficially own approximately 33.4% of the total of Sogou’s outstanding ClassA and ClassB Ordinary Shares and control approximately 44.0% of the total voting power of the combined total of Sogou’s outstanding ClassA and ClassB Ordinary Shares. Tencent Holdings Limited (“Tencent”) will beneficially own approximately 38.7% of the total of Sogou’s outstanding ClassA and ClassB Ordinary Shares and control approximately 52.3% of the total voting power of the combined total of Sogou’s outstanding ClassA and ClassB Ordinary Shares. Under a voting agreement among Sohu, Tencent, and Sogou that will take effect upon the completion of the proposed IPO, Sohu will have the right to appoint a majority of Sogou’s Board of Directors. Following the IPO, Sohu will continue to consolidate Sogou’s revenues and expenses in its financial statements, and will provide for non-controlling interests reflecting ordinary shares in Sogou held by shareholders other than Sohu.

In addition, following the completion of the proposed IPO, Photon Group Limited, the investment vehicle of Dr.Charles Zhang, Sohu’s Chairman and Chief Executive Officer and the Chairman of Sogou, will beneficially own Sogou ClassA Ordinary Shares representing approximately 8.2% of the total of Sogou’s outstanding ClassA and ClassB Ordinary Shares; Xiaochuan Wang, Sogou’s Chief Executive Officer, will beneficially own Sogou ClassA Ordinary Shares representing approximately 4.9% of the total of Sogou’s outstanding ClassA and ClassB Ordinary Shares; and other members of Sogou management will beneficially own Sogou ClassA Ordinary Shares representing approximately 1.5% of the total of Sogou’s outstanding ClassA and ClassB Ordinary Shares.

The proposed offering will only be made by means of a prospectus. The information provided above does not constitute an offer to sell, or the solicitation of any offer to buy, in any state or jurisdiction in which such offer or solicitation would be unlawful prior the registration or qualification under the securities laws of any such state or jurisdiction.

Safe Harbor Statement

This report on Form 8-K includes forward-looking statements. Statements that are not historical facts, including statements about our beliefs and expectations, are 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. The registrant cautions you that a number of important factors could cause actual results to differ materially from those contained in any forward-looking statement. Potential risks and uncertainties include, but are not limited to, instability in global financial and credit markets and its potential impact on the Chinese economy; exchange rate fluctuations, including their potential impact on the Chinese economy and on the registrant’s and Sogou’s reported US dollar results; recent slow-downs in the growth of the Chinese economy; the uncertain regulatory landscape in the People’s Republic of China; fluctuations in the registrant’s and Sogou’s quarterly operating results; and the possibility that market conditions, adverse changes in Sogou’s business or prospects, or other factors could prevent Sogou from conducting and completing its proposed IPO. Further information regarding these and other risks is included in the registrant’s annual report on Form 10-K for the year ended December31, 2016 and quarterly report on Form 10-Q for the quarter ended June30, 2017, and other filings with the Securities and Exchange Commission, including Amendment No.1 to Sogou’s registration statement on Form F-1 filed on October27, 2017.


About SOHU.COM INC. (NASDAQ:SOHU)

Sohu.com Inc. (Sohu) is an online media, search and game service company providing online products and services on personal computers (PCs) and mobile devices in the People’s Republic of China (the PRC). The Company operates through three segments: the Sohu segment; the Sogou segment, and the Changyou segment. Sogou is an online search, client software and mobile Internet product provider in China. Changyou is an online game developer and operator in China as measured by its MMOG Tian Long Ba Bu (TLBB) and its mobile game TLBB three-dimensional (TLBB 3D), and engages primarily in the development, operation and licensing of online games for PCs and mobile devices. The Sohu segment’s main business is the brand advertising business, which offers to users, over its matrices of Chinese language online media, various content, products and services across multiple Internet-enabled devices.

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