Sohu.com (SOHU)·Q4 2025 Earnings Summary
Sohu Q4 2025: Revenue Up 6%, $285M Tax Windfall Drives Profit Turnaround
February 9, 2026 · by Fintool AI Agent
Sohu.com (NASDAQ: SOHU) delivered Q4 2025 results that exceeded prior guidance on marketing services while gaming came in line with expectations. The headline story: a $285 million one-time tax benefit from reversing Changyou withholding income tax accruals transformed what would have been a quarterly loss into $223M GAAP net income.
Shares rose 2.8% in aftermarket trading to $16.82 following the report.
Did Sohu Beat Earnings?
Revenue: $142M (+6% YoY, -21% QoQ) — exceeded guidance
Critical context: Excluding the $285M tax reversal, non-GAAP net income would have been approximately a $24M loss — still a 40% improvement versus Q4 2024's $15M loss.
Full Year 2025 Performance
Ask Fintool AI AgentWhat Did Management Guide?
Q1 2026 guidance reflects seasonal softness driven by late Chinese New Year timing (February 16, 2026 — two weeks later than 2025).
CEO Charles Zhang on Q1 softness: "The Q1 softness is purely due to the Chinese New Year... It's like more than 2 weeks late than last year. So advertisers don't have much thing, they only after the Chinese New Year... come back to work and start to plan for the year's marketing campaign."
What Changed From Last Quarter?
1. $285M Tax Windfall
The reversal of Changyou withholding income tax accruals fundamentally changed the P&L optics. This was a one-time benefit that should not be extrapolated.
2. Marketing Services Shift
Traditional advertising ("Ningbo" media channels) is declining. Sohu is pivoting to innovative marketing solutions: KOL/influencer partnerships, viral offline events, and live streaming. This aligns with the Sohu Media platform's social media evolution.
Charles Zhang: "We are entering into a new age of marketing in the social media time."
3. Auto Sector Bright Spot
Auto advertising showed improvement in Q4, taking a higher percentage of the revenue mix compared to IT and FMCG.
4. Gaming Pipeline Update
- No new launches in Q1 2026 — revenue depends entirely on expansion packs for existing TLBB titles
- Card-based RPG on Xiaomi IP expected late 2026 or early 2027
- Management taking a "top game strategy" with systematic R&D processes
How Did the Stock React?
The stock has nearly doubled from its 52-week low of $7.79, supported by share repurchases and improving fundamentals.
Share Repurchase Progress
As of February 5, 2026, Sohu has purchased 8.1 million ADS for $106 million — with approximately one-third of the program remaining.
Ask Fintool AI AgentKey Management Quotes
On AI in Gaming:
"We've been pushing the application of AI, especially in terms of the creation of game design plan, which we think is the essential thing for the content production of game industry."
On Q4 Marketing Outperformance:
"We have this innovative marketing solutions, like based on some KOL or influencer or the online viral events, offline events, live streaming... that differentiate us from others."
On Full Year Loss Improvement:
"Excluding the reversal, the 2025 non-GAAP net income is $51 million dollar loss, a 40% improvement over 2024."
Q&A Highlights
Advertising Outlook
Analyst Thomas Chong (Jefferies) pressed on Q1 weakness. Zhang attributed it entirely to Chinese New Year timing, noting the macro environment remains "similar to Q4, not very good with a lot of uncertainties."
Gaming Revenue Drivers
With no new game launches planned for Q1, performance depends on:
- TLBB PC expansion packs and player level cap increases
- TLBB Vintage new character development system
- TLBB Return content updates based on player feedback
- Legacy TLBB Mobile streamlined gameplay driving engagement
AI Disruption in Gaming
Asked if AI could disrupt gaming long-term, management confirmed they believe so and are actively integrating AI into game design processes.
Forward Catalysts
Risks and Concerns
- One-time tax benefit masks underlying losses — Core operations still unprofitable without the $285M windfall
- Marketing services in structural decline — Traditional ad spending shifting away from legacy platforms
- Gaming concentration risk — Heavy reliance on aging TLBB franchise
- China macro uncertainty — Management noted persistent economic headwinds
- No near-term new game launches — Pipeline won't contribute until late 2026 at earliest
Ask Fintool AI AgentBottom Line
Sohu's Q4 2025 results beat guidance on the top line, with online games growing 10% YoY and marketing services exceeding expectations. The $285M tax reversal dominates the headline numbers, but the underlying story is a company making slow progress on cost discipline — with non-GAAP losses improving 40% YoY when stripping out the one-time benefit.
The gaming business remains stable but dependent on TLBB, with no new launches until late 2026. Marketing services face structural headwinds from declining traditional ad spend, though management's pivot to innovative KOL/influencer-based solutions shows promise. The aggressive share repurchase program provides ongoing support.
Key question for investors: Can Sohu return to sustainable profitability through its social media transformation and gaming pipeline, or will the core business continue to require cost cuts to narrow losses?