Sohu.com Reports Third Quarter 2026 Unaudited Financial Results

Sohu posted a $15 million net loss as revenue and gaming metrics declined sharply.

What the company is saying

Sohu.com Limited, led by Chairman and CEO Dr. Charles Zhang, reports a third quarter marked by a $15 million GAAP net loss and a 26% year-over-year revenue decline to $133 million. The company highlights that marketing services revenue reached the high end of guidance at $15 million, up 10% year-over-year, but online game revenues fell 30% to $114 million. Management frames the quarter as in line with expectations for gaming and bottom-line performance, emphasizing efforts to enhance social features and user engagement on its platform, and to sustain player interest through new game content. The company notes cost controls, with operating expenses down 9% year-over-year to $120 million, but does not downplay the severity of revenue and user declines. Sohu also references its ongoing $150 million share repurchase program, having bought back 10.1 million ADSs for $134 million by November 5, 2026. Forward-looking guidance projects further losses and continued revenue pressure in Q4.

What the data suggests

The numbers show a deteriorating financial trajectory: total revenues fell 26% year-over-year and 2% quarter-over-quarter, with online game revenues dropping 30% year-over-year to $114 million. Marketing services revenue grew 10% year-over-year but remains a small contributor at $15 million. The company swung from a $9 million net profit in Q3 2025 and a $0.2 million profit in Q2 2026 to a $15 million net loss this quarter. Cost of revenues decreased 9% year-over-year to $32 million, but operating losses persisted at $18 million. Gaming operational metrics are weak: PC game monthly active users dropped 4% year-over-year to 2.6 million, and mobile game MAUs fell 24% to 1.4 million. Active paying accounts for both PC and mobile games also declined sharply. Changyou’s segment operating profit dropped to $58 million from $87 million a year ago. Liquidity remains strong with $1.2 billion in cash and equivalents, but the company is burning capital and repurchasing shares amid declining fundamentals. Q4 guidance anticipates further net losses ($17–27 million) and flat to declining revenues.

Analysis

The announcement is factual and measured, with no evidence of exaggerated or promotional language. The majority of claims are realised, with detailed disclosure of revenues, costs, operating losses, and cash balances for the reported quarter. Forward-looking statements are limited to Q4 2026 guidance, which itself projects continued losses and further revenue declines, and is presented with appropriate caution regarding uncertainty. There is no attempt to frame negative results positively or to overstate future prospects. The share repurchase program is disclosed as a completed action, not as a future benefit. The data supports a weak_negative signal due to the clear deterioration in financial performance, but the tone and content are strictly factual.

Risk flags

• ●Sohu faces sustained revenue and user declines in its core online game segment, with a 30% year-over-year drop in online game revenues and double-digit declines in active users and payers, indicating structural demand weakness.
• ●The company reported a $15 million net loss for the quarter, reversing prior profitability, and projects continued losses in Q4, raising concerns about the sustainability of its business model if these trends persist.
• ●Despite strong liquidity of $1.2 billion, Sohu is deploying capital for share repurchases ($134 million spent to date) while core operations deteriorate, which may not create long-term value if fundamentals do not stabilize.
• ●Management’s guidance for Q4 2026 projects further revenue declines and net losses, with no clear plan disclosed to reverse the negative trajectory, increasing execution and turnaround risk.

Bottom line

Sohu’s Q3 results show a sharp deterioration in both revenue and profitability, with a $15 million net loss and a 26% drop in total revenues. The core online game business is shrinking rapidly, as evidenced by a 30% revenue decline and falling user metrics, while marketing services growth is not enough to offset these losses. The company’s $1.2 billion cash position and ongoing share buybacks provide some financial cushion, but capital is being returned to shareholders as fundamentals weaken. Management offers no evidence of an imminent turnaround, and Q4 guidance signals more losses ahead. Investors should focus on whether Sohu can stabilize its gaming business or develop new revenue streams; until then, the main takeaway is that the company is in a period of contraction with no clear recovery in sight.

Announcement summary

(NASDAQ:SOHU) Sohu.com Limited reported unaudited financial results for the third quarter ended September 30, 2026. Total revenues for the quarter were US$133 million, representing a decrease of 26% year-over-year and 2% quarter-over-quarter. Marketing services revenues were US$15 million, up 10% year-over-year and down 2% quarter-over-quarter. Online game revenues were US$114 million, down 30% year-over-year and 2% quarter-over-quarter. Both GAAP and non-GAAP total cost of revenues were US$32 million, down 9% year-over-year and up 9% quarter-over-quarter. Cost of marketing services revenues was US$15 million, up 23% year-over-year and 11% quarter-over-quarter. Cost of online game revenues was US$14 million, down 33% year-over-year and up 2% quarter-over-quarter. Both GAAP and non-GAAP operating expenses were US$120 million, down 9% year-over-year and 4% quarter-over-quarter. Both GAAP and non-GAAP operating losses were US$18 million, compared with operating profit of US$14 million in Q3 2025 and an operating loss of US$18 million in Q2 2026. Both GAAP and non-GAAP income tax expenses were US$4 million, compared with income tax expense of US$17 million in Q3 2025 and income tax benefit of US$7 million in Q2 2026. For Q2 2026, income tax benefit included reversal of a tax expense of approximately US$13 million due to reversal of uncertain tax positions. GAAP net loss attributable to Sohu.com Limited was US$15 million, or a net loss of US$0.60 per fully-diluted ADS, compared with net income of US$9 million in Q3 2025 and net income of US$0.2 million in Q2 2026. Non-GAAP net loss attributable to Sohu.com Limited was US$15 million, or a net loss of US$0.59 per fully-diluted ADS, compared with net income of US$9 million in Q3 2025 and net income of US$0.5 million in Q2 2026. As of September 30, 2026, cash and cash equivalents, short-term investments and long-term time deposits totaled approximately US$1.2 billion. For Changyou's PC games, total average monthly active user accounts were 2.6 million, down 4% year-over-year and flat quarter-over-quarter; total quarterly aggregate active paying accounts were 1.0 million, down 8% year-over-year and up 4% quarter-over-quarter. For mobile games, total average MAU were 1.4 million, down 24% year-over-year and 16% quarter-over-quarter; total quarterly APA were 0.2 million, down 25% year-over-year and 4% quarter-over-quarter. Changyou's total revenues were US$115 million, down 30% year-over-year and 2% quarter-over-quarter; online game revenues were US$114 million, down 30% year-over-year and 2% quarter-over-quarter. Both GAAP and non-GAAP total cost of revenues for Changyou were US$14 million, down 33% year-over-year and up 2% quarter-over-quarter. Both GAAP and non-GAAP operating expenses for Changyou were US$42 million, down 23% year-over-year and 12% quarter-over-quarter. GAAP operating profit for Changyou was US$58 million, compared with US$87 million in Q3 2025 and US$55 million in Q2 2026. Non-GAAP operating profit for Changyou was US$59 million, compared with US$88 million in Q3 2025 and US$56 million in Q2 2026. Under the previously-announced share repurchase program of up to US$150 million, Sohu had repurchased 10.1 million ADSs for an aggregate cost of approximately US$134 million as of November 5, 2026. For the fourth quarter of 2026, Sohu estimates marketing services revenues to be between US$13 million and US$14 million, online game revenues to be between US$111 million and US$121 million, and both non-GAAP and GAAP net loss attributable to Sohu.com Limited to be between US$17 million and US$27 million. The company adopted a presumed exchange rate of RMB6.73=US$1.00 for Q4 2026 guidance, compared with RMB7.08=US$1.00 for Q4 2025 and RMB6.78=US$1.00 for Q3 2026. Dr. Charles Zhang is Chairman and CEO of Sohu.com Limited.

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