Zhang Chaoyang: Sohu Is Recovering, And I Will Not Retire From "Battle Joy"

"Sohu is alive." On the afternoon of May 18, Zhang Chaoyang, chairman and CEO of Sohu's board of directors, repeatedly stressed in an interview with reporters from the 21st Century Economic Report on the 18th floor of Sohu Media Building.

Before the interview, Sohu just released the first quarter of 2020 financial report. The financial report shows that Sohu's revenue in the first quarter was $436 million, up 6% year on year. Under non US general accounting standards, Sohu's net loss was $18 million, while after deducting Sogou's performance, Sohu's net loss was $8 million.

"This is a very critical quarter," said Zhang Chaoyang. Through this quarter's performance, we can say that Sohu has gone from a very dangerous loss state to a safe place.

The change of this state originates from the change of Sohu's profitability. In the fourth quarter of 2019, Sohu once achieved a net profit of 7 million dollars under non US GAAP, but Zhang Chaoyang admitted that at that time, Sohu's profits were said to be "watered down", and he felt that it was all based on Changyou and Sogou's achievements.

Indeed, last quarter, Sohu actually suffered a net loss of 46 million dollars after deducting the performance of Sogou and Changyou. But by this quarter, Sohu's losses had narrowed significantly, and we can see the dawn of profits.

According to the performance guidance given in the financial report, Sohu expects that the net profit under non US GAAP will be between 0 and 10 million dollars in the second quarter of this year after deducting Sogou's performance.

In 2016, Zhang Chaoyang once said that Sohu would return to the center of the Internet stage within three years, but when the three-year contract expired, Sohu did not fulfill its promise. On the contrary, Zhang Chaoyang believes that Sohu is returning to the "central" state, especially after a year of respite in 2019, Sohu has solved the risk of cash flow, and will begin to seek development next.

Focus on Sohu Group

In the first quarter, Sohu's brand advertising revenue was $26 million, down 40% from the same period in 2019; The revenue from search and search related advertising business was $238 million, up 1% year on year; Online game revenue was $133 million, up 35% year on year.

Zhang Chaoyang told reporters that the first quarter was actually an atypical quarter. Because of the impact of the epidemic, the performance of many businesses could not represent normalization. From the perspective of Sohu, the advertising business was hit hard in the first quarter, but at the same time, many costs were also controlled. In addition to the growth of the game business, the results of the first quarter were still much better than the same period last year.

For the next quarter, Zhang Chaoyang believes that Sohu's advertising business will recover, mainly because Sohu can provide some creative marketing solutions through the layout of the live broadcast field, which will make advertisers, especially some car companies, willing to increase their advertising.

In the past, Sohu's revenue mainly came from three listed entities, Sohu Group, Changyou and Sogou. But from next quarter, Sohu Group and Sogou will become the main revenue players.

On April 18, Changyou completed its privatization and delisted from the US stock market, becoming a wholly-owned subsidiary of Sohu. Zhang Chaoyang told the 21st Century Business Herald that there are many reasons for the decision to privatize Changyou, including the undervalued market value, and Sohu also hopes to merge Changyou back into the group to help the whole group achieve a virtuous circle in finance.

In fact, whether Changyou will choose other capital markets to be listed again after privatization is also the focus of the outside world. In response, Zhang Chaoyang did not deny this possibility when he was interviewed by reporters. At the same time, he said, "He is still considering whether to let Sohu re list in the domestic or Asian market."

In March this year, when talking about Sohu's overall plan for 2020, Zhang Chaoyang said that the biggest expectation of this year is that the user scale of the product will grow, and that it will be profitable every quarter, making 2020 a profitable year.

At present, the goal of profitability is expected to be achieved. As for the growth of user scale, Zhang Chaoyang said, "User scale is the foundation of Sohu's survival, which is very important. We are also very eager and full of ambition to rely on product innovation to build several products."

According to its introduction, Sohu's key products are still Sohu Video, Sohu News Client and Huyou. "According to the allocation of energy, in the first quarter of this year, the three products, Fox Friends, Sohu Video and Sohu News Client, accounted for more than half of my time."

Zhang Chaoyang revealed that the loss of Sohu Video is continuing to decrease. As for the future of Sohu Video, Zhang Chaoyang also has a clear direction. "Sohu Video can no longer be regarded as a long video camp like Youaiteng (Youku, iQiyi, Tencent Video). Now Sohu Video is going to take the strategy of" short video+live broadcast "."

Zhang Chaoyang is changing

On May 17, Zhang Chaoyang announced that he would start live delivery of goods on Sohu Video on June 8. He said that the live video tape he was going to do was different from the pure selling form of Li Jiaqi, Luo Yonghao and others. It was mainly about sharing the way of life and introducing some things he really liked in life to everyone.

"So what I really like may be shared after several live broadcasts, and some stars will be invited to come. They are not selling goods for the purpose, but sharing their lifestyle like me," said Zhang Chaoyang.

In fact, Zhang Chaoyang is not a newcomer to live broadcasting. At 12 o'clock on May 18, he showed up in the live broadcast room on time to teach netizens English for an hour. Zhang Chaoyang has been doing this for nearly four years.

Since 2016, Zhang Chaoyang has been broadcasting live on the Qianfan Live broadcast of Sohu. The main content is to teach netizens to learn English. He told reporters that at the beginning of the live broadcast, in addition to the platform for his own products, he also wanted to communicate more with the outside world and talk more through this way.

Later, Zhang Chaoyang began to learn English in the form of live broadcast, and also taught English. "Later, I found that doing this thing also has a little public welfare nature, because I told the netizens in the live broadcast room exactly what happened in the world, which is also helpful to them, and I did this thing, and Sohu has nothing to do with it." Zhang Chaoyang said.

However, a year and a half ago, Zhang Chaoyang also began to broadcast live on Sohu Video. At this time, he began to make calculations for the development of his own products. Zhang Chaoyang said that Qianfan is now equivalent to a development team to develop plug-ins for Sohu Video. At the beginning, Qianfan followed the live show mode, but after several years of trying, he found that he still wanted to return to the value live broadcast of mainstream people, which is also the live broadcast concept of Sohu Video.

Zhang Chaoyang has been teaching English live for nearly 4 years. He said that the English level in recent years has improved more than that in the United States for so many years, and through this persistence, Zhang Chaoyang felt that his pattern and view of the world have changed greatly.

More importantly, "adhering to live broadcasting also enhances learning ability, especially in this process, which makes me feel the power of adhering to one thing. I believe that if I can adhere to one thing, then anything can be achieved." Zhang Chaoyang said.

When the reporter asked him what force drove him to persist, Zhang Chaoyang said, "I want to reshape my life".

Sohu, 22, is one of the oldest Internet companies in China. In the early days of Internet development, Sohu had its own glory, but then it was gradually marginalized. At the same time, Zhang Chaoyang also experienced ups and downs personally. He once fell into depression, but finally came out.

Faced with entrepreneurs of the same age starting to think about retirement succession, Zhang Chaoyang told reporters, "I didn't think about retirement. Now Sohu is returning to the center, and I am also in a state of battle and joy."

In Zhang Chaoyang's view, the past 2019 is not only a key turning point for Sohu, but also a key turning point for him personally. "In the past year, I have been working for a long time, which can be said to be 777, and I have also been more careful in the management of the company. Now the company has completely abandoned the culture of good people. From the perspective of financial reports, the results of this adjustment have begun to appear."

As of May 15, Sohu's share price was $7.98 per share, with a market capitalization of $313 million. According to the financial report, Sohu's cash reserves have exceeded its market value, but Zhang Chaoyang said that Sohu has no intention of privatization, and he believes that investors can also reflect the stock price of Sohu when Sohu can maintain a positive cash flow.

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