Sogou Inc. (SOGO) Reports In-Line Q1 EPS, Revenues Beat; Offers 2Q Revenue Guidance Below Consensus

Sogou Inc. (NYSE: SOGO) reported Q1 EPS of ($0.08), in-line with the analyst estimate of ($0.08). Revenue for the quarter came in at $257.3 million versus the consensus estimate of $243.61 million.

First Quarter 2020 Highlights

• Total revenues[1] were $257.3 million, a 2% increase year-over-year, or a 5% increase in RMB terms.
• Net loss attributable to Sogou Inc. was $31.6 million. Non-GAAP[2] net loss attributable to Sogou Inc. was $31.1 million.
• Sogou Mobile Keyboard had 482 million DAUs (daily average users), up 9% year-over-year. As China's largest voice recognition app, it processed up to 1.4 billion daily voice requests.

"We started 2020 with smooth operations across our core businesses despite the challenging environment during COVID-19," said Xiaochuan Wang, CEO of Sogou. "In particular, our core Search business continued to outperform the industry in the first quarter. Thanks to the surge of user demand for reliable information and high efficiency during the pandemic, our Search and Mobile Keyboard recorded new highs in terms of traffic and user base, respectively."

Mr. Wang added, "On top of that, we carried out a comprehensive AI-driven upgrade across our core businesses to capture the opportunities that emerged during COVID-19. In particular, our voice AI has equipped Mobile Keyboard with industry-leading voice recognition functions and further evolves it into an AI communication assistant, while also facilitated sales growth of our AI recorders despite the dampening market. With steady implementation of our strategy, we believe we will effectively navigate through the pandemic, and our long-term growth prospects remain intact."

Joe Zhou, CFO of Sogou, said, "In the first quarter of 2020, we continued to deliver steady top-line growth despite challenges during the pandemic, while our profitability was impacted by the situation as a result of increased traffic acquisition cost. Going forward, we foresee ongoing pressure on our overall results in the second quarter as the impact of the pandemic lingers. We expect our business to resume healthy growth when the external environment normalizes post the pandemic."

GUIDANCE:

Sogou Inc. sees Q2 2020 revenue of $260-280 million, versus the consensus of $300.1 million.

For the second quarter of 2020, Sogou expects total revenues to be in the range of $260 million to $280 million, representing a decrease of 8% to 14% year-over-year, or a decrease of 4% to 11% year-over-year in RMB terms. In developing this guidance, the Company has considered the expected continued impact of the COVID-19 outbreak and resulting contraction of the Chinese economy, as well as other challenges in the macro environment and the online advertising industry. The guidance represents the Company's current and preliminary view, which is subject to substantial uncertainty, particularly as to the status and impact of the COVID-19 pandemic in China and worldwide.

For the second quarter 2020 guidance, the Company has adopted a presumed exchange rate of RMB7.07 = $1.00, as compared with the actual exchange rate of approximately RMB6.82 = $1.00 for the second quarter of 2019, and RMB6.98 = $1.00 for the first quarter of 2020.

For earnings history and earnings-related data on Sogou Inc. (SOGO) click here.

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