SOHU.com Reports First Quarter 2001 Financial Results

Industry Leadership Fuels Record Q1 Revenues & Outstanding Reduction in Burn

Rate



Apr 18, 2001, 01:00 ET from SOHU.com

    BEIJING, April 18 /PRNewswire/ -- SOHU.COM (Nasdaq:   SOHU), China's leading
 Internet portal and online media services provider, today reported results for
 the first quarter ended March 31, 2001.
 
     Business Highlights
 
     * Record quarterly revenues of US$2.5 million, climbing 13% sequentially
       and 191% year-on-year
 
     * Non-advertising revenue grows from 5% to 15% of total revenues in Q1
 
     * All-time quarterly high of 6.3 million new registered users; 18.7
       million in total
 
     * Continued industry leadership; No.1 China Web Property (iamasia)
 
     * Further monetization of large & expanding User Base, Brand and
       Technology assets
 
     * Outstanding 21% reduction in quarterly burn rate, driven by further cost
       containment, cost scalability & enhanced monetization
 
     * Top-line and bottom-line growth continues to beat market consensus
 
     In addition, SOHU expects second quarter revenues to increase by 14% and
 the burn rate to decline by a further 7%.
     "The record results for the first quarter of 2001 demonstrate the ability
 of SOHU to capture the benefits of a growing market.  We have scaled our costs
 and increased margins across a diversified and sustainable revenue base while
 in a challenging economic environment," said Charles Zhang, CEO and president
 of SOHU.com.
     SOHU reported record total revenues of US$2.5 million for its first fiscal
 quarter ended March 31, 2001.  Gross margins increased from 4.8% in the fourth
 quarter 2000 to 12.4% in the first quarter 2001.  Pro forma net loss was
 US$4.2 million or US$0.12 per share for the first quarter 2001, a 14%
 improvement from the previous quarter.*
 
     * Pro forma net loss excludes non-cash charges for amortization of
 intangibles, accretion on mandatorily redeemable convertible preferred stock
 and stock-based compensation.  Taking into account non-cash charges, net loss
 attributable to common stockholders for the first quarter of 2001 was
 $8.5 million or $0.24 loss per share.  This compares to the net loss
 attributable to common stockholders of $4.1 million or $0.43 per share for the
 first quarter of 2000 and the net loss attributable to common stockholders of
 $8.3 million or $0.24 per share for the last quarter of 2000.
 
     Business Results
     For the first quarter of 2001, online advertising, at US$2.1 million,
 represented 85% of total revenues, compared to 95% in the previous quarter.
 Advertising revenue from domestic companies grew to 49% of total advertising
 revenues from 39% in the previous quarter, in line with SOHU's desire to
 capture more of the steady growth and long term contracts of domestic online
 advertisers over the more variable spending patterns of multi nationals and
 dotcoms.  Consequently, revenues from dotcoms as a percentage of total
 advertising revenues decreased for the second consecutive quarter from 19% to
 13%, while multi nationals contributed 38% in the first quarter, relative to
 42% in the preceding quarter.  Advertisers included Chinese blue chips Kejian
 and TCL, as well as Compaq, Intel and Nestle.
     At March 31, 2001, SOHU enjoyed an advertising revenue backlog of US
 $2.5 million of which US$1.2 million is billable in the second quarter 2001.
 This backlog represents a 25% increase from December 31, 2000.  In addition,
 average advertising contract length more than doubled from the previous
 quarter's 38 days to 80 days in Q1.
     Non-advertising revenue (including e-business solutions and e-commerce)
 reached US$366,000 or 15% of total revenues, on track with SOHU's target for
 diversified revenues to reach 20% of total revenues by the end of 2001.
 E-business solutions constituted over 50% of non-advertising revenues as SOHU
 leveraged its technical competencies to provide corporate portal and related
 services.  New clients included Tricon's China Pizza Hut operations, Beijing
 Transportation and Sinopec.
     Pro forma operating expenses decreased from US$6 million in fourth quarter
 2000 to US$5.3 million in first quarter 2001.  This 12% reduction reflects
 SOHU's continued re-engineering of its cost structure, confirming its
 commitment to scalability and improved operating efficiencies all during a
 quarter of strong revenue growth.  These improvements were due in part to a
 30% headcount reduction since December 2000 to 446 employees and a 50%
 decrease in Q1 promotional spending.  SOHU's valuable brand equity further
 permitted it to reduce sales & marketing expenses by 29% while growing
 revenues by 13%.  SOHU's ability to monetize its brand is yet another key
 advantage over its competitors.
     SOHU continued its drive to profitability by reducing its pro forma net
 loss by US$0.5 million from Q4 of 2000.  In addition, SOHU's monthly burn rate
 in Q1 dropped 21% from the previous quarter to US$1.5 million, on par with its
 third quarter 2000 pre-ChinaRen acquisition burn rate.
     "SOHU's path to profitability is more visible and predictable as a result
 of its proven ability to deliver on its strategy through outstanding user
 acceptance, cost reductions, increased scalability and consistent revenue
 growth backed by a substantial backlog," said Derek Palaschuk, Vice President
 Finance.
     As of March 31, 2001, SOHU's cash balance was US$58 million.
     During the first quarter of 2001, SOHU continued to widen its competitive
 lead over other China portals.  SOHU was ranked the No. 1 China Web Property
 for the last three consecutive months by iamasia, the Hong-Kong based Internet
 measurement company.  In February, SOHU's page view lead over the No.2 China
 web property exceeded 44%, compared to a gap of 22% in December 2000.  Also in
 February, SOHU's reach was 7.6% higher than its nearest competitor, compared
 to a 2.2% lead in December 2000.
     SOHU's registered users totaled 18.7 million at the end of the first
 quarter 2001, up an impressive 51% from 12.4 million at December 31, 2000.
 Average daily page views for SOHU.com properties increased by 35%, from
 79.2 million in December 2000 to 107 million average daily page views for the
 month of March 2001.
 
     Business Outlook
     SOHU is confident that it can reach profitability in 2003 through
 continued revenue growth and intelligent spending controls.  As such, SOHU
 provides the following guidance for the upcoming second quarter 2001:
     SOHU expects total revenues for the second quarter 2001 to be between
 US$2.8 million and US$3.1 million.  Advertising revenue for the second quarter
 2001 is expected to be between US$2.3 million and US$2.4 million on improving
 pro forma gross margins of 16%.  Non-advertising revenue for the same period
 is expected to be between US$500,000 and US$700,000 on pro forma gross margins
 of 15%.  Total pro forma operating expenses are expected to be not more than
 US$5.2 million.  Second quarter pro forma net loss is estimated to be not more
 than US$4.0 million ($0.11 per share); the monthly cash burn rate to be not
 more than US$1.4 million.  The 2001 capital budget has been reduced from
 US$6.0 million to US$5.3 million, of which US$1.25 million was spent in Q1.
     "SOHU finished the first quarter in a strong financial position," Charles
 Zhang reiterated.  "Solid underlying improvement in margins enabled the
 Company to improve financial results while maintaining a clear lead over its
 competitors."
 
     First Quarter 2001 Conference Call
     Live web cast of conference call on April 19, 2001 at 08:00 AM Hong Kong
 time (or 8:00 PM EDT on April 18) will be broadcast at
 http://www.videonewswire.com/SOHU/041801/ or at
 http://www.sohu.com/about/English/earnings/index.htm.   Dial-in details:
 TELEPHONE: (852) 2258-4002, PASSCODE: China, LEADER: Caroline Straathof.
 
     About SOHU
     SOHU.com (Nasdaq:   SOHU) is one of mainland China's most recognized and
 established Internet brands and indispensable to the daily life of millions of
 Chinese who use the portal for their e-mail, home page, chat, messaging, news,
 search, browsing and shopping.  Apart from continuous product and services
 development, SOHU also concentrates its efforts on making the Internet
 ubiquitously available, whether in the office, at home or on the road.
 SOHU.com, established by Dr. Charles Zhang, one of China's Internet pioneers,
 is in its fifth year of operation.
 
     Safe Harbor Statement
     This company's announcement contains forward-looking statements.  It is
 currently expected the Business Outlook will not be updated until the release
 of SOHU's next quarterly earnings announcement; however, SOHU reserves the
 right to update its Business Outlook at any time for any reason.  We may also
 make written or oral forward-looking statements in our periodic reports to the
 Securities and Exchange commission on forms 10-K, 10-Q, 8-K, etc., in our
 annual report to shareholders, in our proxy statements, in our offering
 circulars and prospectuses, in press releases and other written materials and
 in oral statements made by our officers, directors or employees to third
 parties.  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.  We
 caution 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, SOHU's
 historical and future losses, limited operating history, uncertain regulatory
 landscape in the People's Republic of China, fluctuations in quarterly
 operating results and the company's reliance on online advertising sales for
 substantially all of its revenues.   Further information regarding these and
 other risks is included in SOHU's prospectus, 10K, 10Q and in its other
 filings with the Securities and Exchange Commission.
 
 
                                 SOHU.com INC.
           Pro Forma Condensed Consolidated Statements Of Operations
               (Unaudited, In Thousands Except Per Share Amounts)
 
                                                  Three Months Ended
                                      March 31,    December 31,    March 31,
                                        2001          2000            2000
 
     Revenues:
      Advertising                     $2,087         $2,070           $842
      Non-advertising                    366            109        --
       Total revenues                  2,453          2,179            842
 
     Pro forma cost of revenues:
       Advertising                     1,851          1,994            811
       Non-advertising                   297             81             --
        Total pro forma cost
         of revenues                   2,148          2,075            811
 
     Pro forma gross profit              305            104             31
 
     Pro forma operating expenses:
      Product development              1,639            948            348
      Sales and marketing              2,470          3,479          1,533
      General and administrative       1,239          1,579            516
     Total pro forma
      operating expenses               5,348          6,006          2,397
 
     Pro forma operating loss         (5,043)        (5,902)        (2,366)
      Interest income                    799          1,152             31
     Pro forma net loss              $(4,244)       $(4,750)       $(2,335)
 
     Shares used in computing
      pro forma basic and diluted
      net loss per share              35,626         34,765         25,950
 
     Pro forma basic and
      diluted net loss per share     $(0.12)        $(0.14)        $(0.09)
 
     Note: The above unaudited pro forma condensed consolidated statements of
 operations are not a presentation in accordance with generally accepted
 accounting principles as they give effect to the conversion of all preference
 shares into common shares and exclude the effects of the following:
 
     -- Stock-based compensation of $20, $183, and $201 for the three months
 ended March 31, 2001, December 31, 2000, and March 31, 2000, respectively;
 
     -- Amortization of intangible assets of $4,202, $3,335, and $0 for the
 three months ended December 31, 1999, December 31, 2000, and March 31, 2000,
 respectively;
 
     -- Accretion on mandatorily redeemable convertible preferred stock of $0,
 $0, and $1,559 for the three months ended March 31, 2001, December 31, 2000
 and March 31, 2000, respectively.
 
 
                                 SOHU.com INC.
                Condensed Consolidated Statements Of Operations
               (Unaudited, In Thousands Except Per Share Amounts)
 
 
                                            Three Months Ended
                                      March 31,    December 31,    March 31,
                                        2001          2000          2000
 
    Revenues:
     Advertising                      $2,087         $2,070          $842
     Non-advertising                     366            109            --
      Total revenues                   2,453          2,179           842
 
    Cost of revenues:
     Advertising                       1,851          1,981           817
     Non-advertising                     297             81            --
      Total cost of revenue            2,148          2,062           817
 
    Gross profit                         305            117            25
 
    Operating expenses:
     Product development               1,639            942           352
     Sales and marketing               2,476          3,503         1,550
     General and administrative        1,253          1,757           690
     Amortization of intangibles       4,202          3,335            --
     Total operating expenses          9,570          9,537         2,592
 
    Operating loss                    (9,265)        (9,420)       (2,567)
    Interest income                      799          1,152            31
    Net loss                          (8,466)        (8,268)       (2,536)
    Accretion on mandatorily
     redeemable convertible
     preferred stock                      --             --        (1,559)
 
    Net loss attributable to
     common stockholders             $(8,466)       $(8,268)      $(4,095)
 
    Basic and diluted net loss
     per share attributable to
     common stockholders              $(0.24)        $(0.24)       $(0.43)
 
    Shares used in computing
     basic and diluted
     net loss per share               35,626         34,765         9,416
 
 
                                 SOHU.com INC.
                     Condensed Consolidated Balance Sheets
                           (Unaudited, In Thousands)
 
                                        March 31, 2001       December 31, 2000
    ASSETS
     Current assets:
      Cash and cash equivalents              $57,582             $62,593
      Accounts receivable, net                 2,014               2,092
      Prepaid and other current assets         1,402               1,688
       Total current assets                   60,998              66,373
    Fixed assets, net                          7,542               7,404
    Intangible assets, net                    26,080              30,283
    Other assets, net                          1,963               1,780
                                             $96,583            $105,840
 
    LIABILITIES AND SHAREHOLERS' EQUITY
     Current liabilities:
       Accounts payable                         $572              $1,459
       Accrued liabilities and
       deferred revenue                        3,387               3,312
         Total current liabilities             3,959               4,771
 
    Shareholders' equity:
      Common Stock                                36                  36
      Additional paid-in capital             129,759             129,759
      Deferred compensation and other           (140)               (161)
      Accumulated deficit                    (37,031)            (28,565)
       Total shareholders' equity
                                              92,624             101,069
                                             $96,583            $105,840
 
 

SOURCE SOHU.com
    BEIJING, April 18 /PRNewswire/ -- SOHU.COM (Nasdaq:   SOHU), China's leading
 Internet portal and online media services provider, today reported results for
 the first quarter ended March 31, 2001.
 
     Business Highlights
 
     * Record quarterly revenues of US$2.5 million, climbing 13% sequentially
       and 191% year-on-year
 
     * Non-advertising revenue grows from 5% to 15% of total revenues in Q1
 
     * All-time quarterly high of 6.3 million new registered users; 18.7
       million in total
 
     * Continued industry leadership; No.1 China Web Property (iamasia)
 
     * Further monetization of large & expanding User Base, Brand and
       Technology assets
 
     * Outstanding 21% reduction in quarterly burn rate, driven by further cost
       containment, cost scalability & enhanced monetization
 
     * Top-line and bottom-line growth continues to beat market consensus
 
     In addition, SOHU expects second quarter revenues to increase by 14% and
 the burn rate to decline by a further 7%.
     "The record results for the first quarter of 2001 demonstrate the ability
 of SOHU to capture the benefits of a growing market.  We have scaled our costs
 and increased margins across a diversified and sustainable revenue base while
 in a challenging economic environment," said Charles Zhang, CEO and president
 of SOHU.com.
     SOHU reported record total revenues of US$2.5 million for its first fiscal
 quarter ended March 31, 2001.  Gross margins increased from 4.8% in the fourth
 quarter 2000 to 12.4% in the first quarter 2001.  Pro forma net loss was
 US$4.2 million or US$0.12 per share for the first quarter 2001, a 14%
 improvement from the previous quarter.*
 
     * Pro forma net loss excludes non-cash charges for amortization of
 intangibles, accretion on mandatorily redeemable convertible preferred stock
 and stock-based compensation.  Taking into account non-cash charges, net loss
 attributable to common stockholders for the first quarter of 2001 was
 $8.5 million or $0.24 loss per share.  This compares to the net loss
 attributable to common stockholders of $4.1 million or $0.43 per share for the
 first quarter of 2000 and the net loss attributable to common stockholders of
 $8.3 million or $0.24 per share for the last quarter of 2000.
 
     Business Results
     For the first quarter of 2001, online advertising, at US$2.1 million,
 represented 85% of total revenues, compared to 95% in the previous quarter.
 Advertising revenue from domestic companies grew to 49% of total advertising
 revenues from 39% in the previous quarter, in line with SOHU's desire to
 capture more of the steady growth and long term contracts of domestic online
 advertisers over the more variable spending patterns of multi nationals and
 dotcoms.  Consequently, revenues from dotcoms as a percentage of total
 advertising revenues decreased for the second consecutive quarter from 19% to
 13%, while multi nationals contributed 38% in the first quarter, relative to
 42% in the preceding quarter.  Advertisers included Chinese blue chips Kejian
 and TCL, as well as Compaq, Intel and Nestle.
     At March 31, 2001, SOHU enjoyed an advertising revenue backlog of US
 $2.5 million of which US$1.2 million is billable in the second quarter 2001.
 This backlog represents a 25% increase from December 31, 2000.  In addition,
 average advertising contract length more than doubled from the previous
 quarter's 38 days to 80 days in Q1.
     Non-advertising revenue (including e-business solutions and e-commerce)
 reached US$366,000 or 15% of total revenues, on track with SOHU's target for
 diversified revenues to reach 20% of total revenues by the end of 2001.
 E-business solutions constituted over 50% of non-advertising revenues as SOHU
 leveraged its technical competencies to provide corporate portal and related
 services.  New clients included Tricon's China Pizza Hut operations, Beijing
 Transportation and Sinopec.
     Pro forma operating expenses decreased from US$6 million in fourth quarter
 2000 to US$5.3 million in first quarter 2001.  This 12% reduction reflects
 SOHU's continued re-engineering of its cost structure, confirming its
 commitment to scalability and improved operating efficiencies all during a
 quarter of strong revenue growth.  These improvements were due in part to a
 30% headcount reduction since December 2000 to 446 employees and a 50%
 decrease in Q1 promotional spending.  SOHU's valuable brand equity further
 permitted it to reduce sales & marketing expenses by 29% while growing
 revenues by 13%.  SOHU's ability to monetize its brand is yet another key
 advantage over its competitors.
     SOHU continued its drive to profitability by reducing its pro forma net
 loss by US$0.5 million from Q4 of 2000.  In addition, SOHU's monthly burn rate
 in Q1 dropped 21% from the previous quarter to US$1.5 million, on par with its
 third quarter 2000 pre-ChinaRen acquisition burn rate.
     "SOHU's path to profitability is more visible and predictable as a result
 of its proven ability to deliver on its strategy through outstanding user
 acceptance, cost reductions, increased scalability and consistent revenue
 growth backed by a substantial backlog," said Derek Palaschuk, Vice President
 Finance.
     As of March 31, 2001, SOHU's cash balance was US$58 million.
     During the first quarter of 2001, SOHU continued to widen its competitive
 lead over other China portals.  SOHU was ranked the No. 1 China Web Property
 for the last three consecutive months by iamasia, the Hong-Kong based Internet
 measurement company.  In February, SOHU's page view lead over the No.2 China
 web property exceeded 44%, compared to a gap of 22% in December 2000.  Also in
 February, SOHU's reach was 7.6% higher than its nearest competitor, compared
 to a 2.2% lead in December 2000.
     SOHU's registered users totaled 18.7 million at the end of the first
 quarter 2001, up an impressive 51% from 12.4 million at December 31, 2000.
 Average daily page views for SOHU.com properties increased by 35%, from
 79.2 million in December 2000 to 107 million average daily page views for the
 month of March 2001.
 
     Business Outlook
     SOHU is confident that it can reach profitability in 2003 through
 continued revenue growth and intelligent spending controls.  As such, SOHU
 provides the following guidance for the upcoming second quarter 2001:
     SOHU expects total revenues for the second quarter 2001 to be between
 US$2.8 million and US$3.1 million.  Advertising revenue for the second quarter
 2001 is expected to be between US$2.3 million and US$2.4 million on improving
 pro forma gross margins of 16%.  Non-advertising revenue for the same period
 is expected to be between US$500,000 and US$700,000 on pro forma gross margins
 of 15%.  Total pro forma operating expenses are expected to be not more than
 US$5.2 million.  Second quarter pro forma net loss is estimated to be not more
 than US$4.0 million ($0.11 per share); the monthly cash burn rate to be not
 more than US$1.4 million.  The 2001 capital budget has been reduced from
 US$6.0 million to US$5.3 million, of which US$1.25 million was spent in Q1.
     "SOHU finished the first quarter in a strong financial position," Charles
 Zhang reiterated.  "Solid underlying improvement in margins enabled the
 Company to improve financial results while maintaining a clear lead over its
 competitors."
 
     First Quarter 2001 Conference Call
     Live web cast of conference call on April 19, 2001 at 08:00 AM Hong Kong
 time (or 8:00 PM EDT on April 18) will be broadcast at
 http://www.videonewswire.com/SOHU/041801/ or at
 http://www.sohu.com/about/English/earnings/index.htm.   Dial-in details:
 TELEPHONE: (852) 2258-4002, PASSCODE: China, LEADER: Caroline Straathof.
 
     About SOHU
     SOHU.com (Nasdaq:   SOHU) is one of mainland China's most recognized and
 established Internet brands and indispensable to the daily life of millions of
 Chinese who use the portal for their e-mail, home page, chat, messaging, news,
 search, browsing and shopping.  Apart from continuous product and services
 development, SOHU also concentrates its efforts on making the Internet
 ubiquitously available, whether in the office, at home or on the road.
 SOHU.com, established by Dr. Charles Zhang, one of China's Internet pioneers,
 is in its fifth year of operation.
 
     Safe Harbor Statement
     This company's announcement contains forward-looking statements.  It is
 currently expected the Business Outlook will not be updated until the release
 of SOHU's next quarterly earnings announcement; however, SOHU reserves the
 right to update its Business Outlook at any time for any reason.  We may also
 make written or oral forward-looking statements in our periodic reports to the
 Securities and Exchange commission on forms 10-K, 10-Q, 8-K, etc., in our
 annual report to shareholders, in our proxy statements, in our offering
 circulars and prospectuses, in press releases and other written materials and
 in oral statements made by our officers, directors or employees to third
 parties.  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.  We
 caution 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, SOHU's
 historical and future losses, limited operating history, uncertain regulatory
 landscape in the People's Republic of China, fluctuations in quarterly
 operating results and the company's reliance on online advertising sales for
 substantially all of its revenues.   Further information regarding these and
 other risks is included in SOHU's prospectus, 10K, 10Q and in its other
 filings with the Securities and Exchange Commission.
 
 
                                 SOHU.com INC.
           Pro Forma Condensed Consolidated Statements Of Operations
               (Unaudited, In Thousands Except Per Share Amounts)
 
                                                  Three Months Ended
                                      March 31,    December 31,    March 31,
                                        2001          2000            2000
 
     Revenues:
      Advertising                     $2,087         $2,070           $842
      Non-advertising                    366            109        --
       Total revenues                  2,453          2,179            842
 
     Pro forma cost of revenues:
       Advertising                     1,851          1,994            811
       Non-advertising                   297             81             --
        Total pro forma cost
         of revenues                   2,148          2,075            811
 
     Pro forma gross profit              305            104             31
 
     Pro forma operating expenses:
      Product development              1,639            948            348
      Sales and marketing              2,470          3,479          1,533
      General and administrative       1,239          1,579            516
     Total pro forma
      operating expenses               5,348          6,006          2,397
 
     Pro forma operating loss         (5,043)        (5,902)        (2,366)
      Interest income                    799          1,152             31
     Pro forma net loss              $(4,244)       $(4,750)       $(2,335)
 
     Shares used in computing
      pro forma basic and diluted
      net loss per share              35,626         34,765         25,950
 
     Pro forma basic and
      diluted net loss per share     $(0.12)        $(0.14)        $(0.09)
 
     Note: The above unaudited pro forma condensed consolidated statements of
 operations are not a presentation in accordance with generally accepted
 accounting principles as they give effect to the conversion of all preference
 shares into common shares and exclude the effects of the following:
 
     -- Stock-based compensation of $20, $183, and $201 for the three months
 ended March 31, 2001, December 31, 2000, and March 31, 2000, respectively;
 
     -- Amortization of intangible assets of $4,202, $3,335, and $0 for the
 three months ended December 31, 1999, December 31, 2000, and March 31, 2000,
 respectively;
 
     -- Accretion on mandatorily redeemable convertible preferred stock of $0,
 $0, and $1,559 for the three months ended March 31, 2001, December 31, 2000
 and March 31, 2000, respectively.
 
 
                                 SOHU.com INC.
                Condensed Consolidated Statements Of Operations
               (Unaudited, In Thousands Except Per Share Amounts)
 
 
                                            Three Months Ended
                                      March 31,    December 31,    March 31,
                                        2001          2000          2000
 
    Revenues:
     Advertising                      $2,087         $2,070          $842
     Non-advertising                     366            109            --
      Total revenues                   2,453          2,179           842
 
    Cost of revenues:
     Advertising                       1,851          1,981           817
     Non-advertising                     297             81            --
      Total cost of revenue            2,148          2,062           817
 
    Gross profit                         305            117            25
 
    Operating expenses:
     Product development               1,639            942           352
     Sales and marketing               2,476          3,503         1,550
     General and administrative        1,253          1,757           690
     Amortization of intangibles       4,202          3,335            --
     Total operating expenses          9,570          9,537         2,592
 
    Operating loss                    (9,265)        (9,420)       (2,567)
    Interest income                      799          1,152            31
    Net loss                          (8,466)        (8,268)       (2,536)
    Accretion on mandatorily
     redeemable convertible
     preferred stock                      --             --        (1,559)
 
    Net loss attributable to
     common stockholders             $(8,466)       $(8,268)      $(4,095)
 
    Basic and diluted net loss
     per share attributable to
     common stockholders              $(0.24)        $(0.24)       $(0.43)
 
    Shares used in computing
     basic and diluted
     net loss per share               35,626         34,765         9,416
 
 
                                 SOHU.com INC.
                     Condensed Consolidated Balance Sheets
                           (Unaudited, In Thousands)
 
                                        March 31, 2001       December 31, 2000
    ASSETS
     Current assets:
      Cash and cash equivalents              $57,582             $62,593
      Accounts receivable, net                 2,014               2,092
      Prepaid and other current assets         1,402               1,688
       Total current assets                   60,998              66,373
    Fixed assets, net                          7,542               7,404
    Intangible assets, net                    26,080              30,283
    Other assets, net                          1,963               1,780
                                             $96,583            $105,840
 
    LIABILITIES AND SHAREHOLERS' EQUITY
     Current liabilities:
       Accounts payable                         $572              $1,459
       Accrued liabilities and
       deferred revenue                        3,387               3,312
         Total current liabilities             3,959               4,771
 
    Shareholders' equity:
      Common Stock                                36                  36
      Additional paid-in capital             129,759             129,759
      Deferred compensation and other           (140)               (161)
      Accumulated deficit                    (37,031)            (28,565)
       Total shareholders' equity
                                              92,624             101,069
                                             $96,583            $105,840
 
 SOURCE  SOHU.com