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Sohu.com's CEO Discusses Q2 2012 Results - Earnings Call Transcript

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 historical information contained herein, the matters discussed in this conference call 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. We caution you that a number of important factors could cause actual results to differ materially from those contained in any forward-looking statement. For more information about the potential risks and uncertainties, please refer to the Company's filings with the Securities and Exchange Commission, including its registration statement and most recent Annual Report on Form 10-K.

Now, let me turn the call over to Dr. Charles Zhang, Chairman and CEO. Charles, please proceed.

Charles Zhang

Thank you. Thanks to everyone for joining our call. We had a solid second quarter with total revenues rising nearly 30% from last year, despite challenges faced in our brand advertising business. As China’s economic growth continued to decelerate and we initiated some operational transitions in our online video business, revenue from brand advertising recorded only a low single-digit year-on-year increase.

But overall, we are pleased with our performance at the group level as our search and online game segments both remained on a solid upward path. For Search, Sogou again posted triple-digit revenue growth on a year-on-year basis. Our online game subsidiary Changyou achieved a record result at both the top and the bottom-line, supported by strong performance with its MMO and web-based game franchises.

We believe the blended results help demonstrate the resilience of our business mix and the benefit of having diversified operations.

Now I would like to share some second quarter financial highlights with you. Total revenues were US$256 million, up 29% year-on-year and 13% quarter-on-quarter exceeding the high end of our guidance by US$6 million. Net brand advertising revenues were US$69 million, up 2% year-on-year and 14% quarter-on-quarter. Sogou revenues were US$30 million, up 123% year-over-year and 34% quarter-over-quarter. Online games revenue reached a quarterly record of US$137 million, up 35% year-on-year and 8% quarter-over-quarter. Non-GAAP diluted EPS were US$0.42.

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