Ladies and gentlemen, thank you for standing by, and good evening. Thank you for joining Sohu's fourth quarter 2019 earnings conference call. At this time, all participants are in a listen-only mode. After management's prepared remarks, there will be a question-and-answer session. Today's conference is being recorded. If you have any objections, you may disconnect at this time. I would now like to turn the conference over to your host for today's conference call, Huang Pu, Investor Relations Director of Sohu. Please go ahead.
Hello. Thank you for joining us today to discuss Sohu's fourth quarter 2019 results. On the call are Chairman and Chief Executive Officer, Charles Zhang, CFO, Joanna Lv, and Vice President of Finance, James Deng. Also with us today are ChangYou CEO, Dewen Chen, and CFO, Yaobin Wang, and Sogou CEO, Xiaochuan Wang, and CFO, Joe Zhou. 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 most recent annual report on Form 20-F. With that, I will now turn the call over to Charles Zhang. Charles, please proceed.
Thank you, Huang Pu. Thank you to everyone for joining our call. During 2019, China's economy continued to slow down and competition intensified. However, these challenges did not stop us from exploring new opportunities and improving operating efficiency. As a result, our operating results further improved due to the solid performance of our business and effective cost-saving initiatives. For the fourth quarter 2019, excluding an impairment charge recognized for an investment unrelated to our core businesses, non-GAAP net income attributable to Sohu.com Limited was $7 million. Separately for Sohu Media Portal, we strengthened our position as a mainstream media platform with high-quality original content diversity, and also various events. For Sohu Video, with the unique and high-quality dramas and other shows, we actively searched for diversified monetization sources. With improved monetization capabilities and strict budget control, Sohu Video was able to further trim its losses in 2019.
For Sogou, search revenue grew faster than the industry average, and the revenues from Sogou's recommendation services that leverage its mobile keyboard continued to experience robust growth. In 2019, ChangYou's online games performed well and took a number of steps to enhance its capacity to create new high-quality games. Before I go into more details about key financial results, please be reminded that since ChangYou Cinema Advertising business ceased operations, the results that we will discuss today only cover continuing operations and exclude the Cinema Advertising business. Let me go through the fourth quarter 2019 financial results. Total revenues, $490 million, up 5% year-over-year, and 2% quarter-over-quarter. On a non-GAAP constant currency basis, total revenues would have been $8 million higher than our reported revenues, which instead of 5%, it would be 7% improvement year-over-year.
Brand advertising revenues, $42 million for the quarter, down 27% year-over-year and 10% quarter-over-quarter. Search and search-related advertising revenues, $275 million, down 1% year-over-year and 5% quarter-over-quarter. Online game revenues, $132 million, up 40% year-over-year and 22% quarter-over-quarter. Including an impairment charge of approximately $23 million that we recognized this quarter for an investment unrelated to the company's core businesses, non-GAAP net income attributable to Sohu.com Limited was $7 million, positive, which compares with a net loss of $51 million a year ago, Q4 2018.
Compared with the third quarter 2019, which is a loss of $17 million in the third quarter 2019. If we don't consider the profit and loss contribution from Sogou and ChangYou, and also further excluding the impairment charges, our non-GAAP net loss attributable to Sohu.com Limited was $46 million in Q4, compared with a net loss of $75 million a year ago in the fourth quarter of 2018. An improvement of $29 million. In Q3, the loss was $53 million, so t hat is an improvement of $7 million. Let's look at the full year 2019. Total revenues are $1.85 billion, up 2% compared with 2018. Brand advertising was $175 million, down 25% compared with 2018. Search and search-related advertising revenues, $1.07 billion, up 5% compared with 2018. Online game revenue, $441 million, up 13% compared with 2018.
Non-GAAP net loss attributable to Sohu Limited was a loss of $93 million. Compared with a net loss of $207 million in 2018, cut by more than half. Excluding the profit loss generated by Sogou and ChangYou, the non-GAAP net loss attributable to Sohu.com Limited was $246 million compared with a net loss of $326 million in 2018, an $80 million improvement. Now let me go through some of the key businesses. First of all, the Media Portal and Video businesses. The 2019 for our Media Portal business, we committed to strengthening our brand influence by generating, integrating, and distributing news and premium content. While continuing with tracking the focus on hot events, we also proactively produced high-quality original content through a series of large events. For the fourth quarter 2019, we successfully hosted 2019 Finance Annual Conference, AI Conference, Sohu Fashion Awards, and others.
All these events helped to consolidate our competitiveness and enhance the credibility of Sohu Media by reflecting the attitude and values of Sohu. Further, we constantly upgraded our products, optimizing the algorithm, and improved the overall quality of the content, some of which continue to help draw users to our platform and keep them engaged. For Sohu Video, we continue to push Twin Engine strategy with long-form and short-form content, both original content and short-form user-generated content, UGC. On the one hand, for the long-form, we actively enhanced our production strategy, which differentiated content especially related to idol romance and criminal-themed dramas and culturally themed reality shows. On the other hand, we continued to improve our features and social interactions around short-form videos within the [Sohu network] of short video clips and live broadcasting by encouraging users to post videos and share comments in communities and share their interests.
Sohu Video is consistently upgrading products and recommendation algorithms, basically recommending those recommendation algorithm for short videos and also the social network sharing short videos and communities, vlogs, and live broadcasting. These initiatives have successfully increased our user base and overall user loyalty. Based on the Twin Engine strategy, we successfully carried out the diversified marketing and the monetization initiatives and provided advertisers those new advertising solutions embedded in various online or offline events. For example, the original drama Well-Intended Love , [Foreign language], Season 2, worked with advertisers to host an offline event to further boost advertising efficiency and embedded advertising in that popular drama. Overall in 2019, with our consistent effort and strict budget controls, Sohu Video was able to further narrow its losses.
In the fourth quarter 2019, the operating loss was $18 million, which is 40% improvement compared with the same quarter 2018. The full-year operating loss for Video was $94 million, which is a 33% improvement compared with 2018. Now if we look at the current quarter of 2020, as we all know that the novel coronavirus broke out, and it has inevitably influenced the entire country and the world. Our Media Portal and Video businesses were no exception. As a leading mainstream media platform, we try to live up to the responsibility by releasing real-time special events and launching live broadcasts across our core products, including the Sohu News and Sohu Video apps. These reports and broadcasts distributed the latest news information about the epidemic in real time.
We also invited many well-known medical experts to express their views and advice on prevention and encourage our viewers to come interactively. Today, we have completed around 200 live broadcasts and press conferences related to the epidemic. With the outbreak of COVID-19, the overall economic environment and the advertising business in particular, are experiencing extremely difficult times. At the same time, we noticed some advertisers are actively adjusting their marketing promotion strategies. We are closely collaborating together with advertisers to go through these challenging times and minimize the negative impact. Basically, our user base actually grow for our Sohu Media Portal, but definitely, their advertising business is hit negatively. Next, turning to Sogou. Sogou maintained a steady progress in 2019, driven by the dedication to continuously drive organic traffic growth and unlock the monetization potential.
During 2019, Sogou search remained China's second-largest search engine, and its search revenue continued to grow faster than industry average. Sogou consistently improved its core search services, strengthened their content, and service ecosystem. Sogou's mobile keyboard increased its user base to 464 million AUs. With 54% more daily voice requests on average year-over-year. Revenue from Sogou recommendation service that leverage the mobile keyboard continue to experience robust growth. Further in 2019, Sogou made great advances across its core language sense AI technology and the smart hardware business maintained healthy momentum. Lastly, for ChangYou. In 2019, ChangYou took a number of steps to enhance its capacity to create new, high-quality games, focusing on its goal of developing top games, prioritize research and R&D for mobile game development, and continue to work hard on strengthening their existing game portfolio.
For PC games, the new expansion pack for TLBB PC launched during the fourth quarter performed well, its revenue grew slightly on a sequential basis, which is better than previously expected. The fourth quarter of 2019 revenue from [Legacy] TLBB Mobile increased significantly on a sequential basis. This was mainly attributable to newly introduced content and promotional events during the fourth quarter. Looking ahead, ChangYou will continue to execute its core strategy of developing top games and strategic focus will continue to be MMORPG mobile games. They will also seek to make breakthroughs in developing casual and strategy games. Now let me turn to Joanna, who will walk through our financial results. Joanna?
Thank you, Charles. I will walk you through the key financials of our four major segments for the fourth quarter and the full year of 2019. All of the numbers that I will mention are all on a non-GAAP basis. You may find the reconciliation of non-GAAP to GAAP measures on our IR website. For Sohu Media Portal, quarterly revenues were $23 million. Quarterly loss was $25 million. For Sohu Video, quarterly revenues were $22 million, and quarterly loss was $18 million. Excluding Sogou and ChangYou, non-GAAP net loss was $46 million, compared with a net loss of $75 million in the fourth quarter of 2018, and a net loss of $53 million in the fourth quarter of 2019. For full year 2019, Sohu Media Portal revenues were $95 million, and a full-year net loss of $130 million.
Sohu Video revenues were $91 million, and a full-year net loss was $94 million. Excluding Sogou and ChangYou, non-GAAP net loss was $246 million, compared with net loss of $326 million in 2018. For Sogou, quarterly revenues were $301 million, up 1% year-over-year and down 4% quarter-over-quarter. Net income was $39 million, compared with net income of $27 million in the same quarter last year. For full year 2019, its total revenues were $1.17 billion, up 4% compared with 2018. Net income was $105 million, compared with net income of $113 million in 2018. For ChangYou, quarterly revenues were $135 million, up 35% year-over-year and 22% quarter-over-quarter. ChangYou posted net income of $63 million, compared with net income of $23 million in the same quarter last year. For full year 2019, total revenues were $455 million, up 9% compared with 2018.
ChangYou produced net income of $179 million, compared with net income of $123 million in 2018. For the first quarter of 2020, we expect total revenues to be between $400 million and $435 million. Brand advertising revenues to be between $25 million and $30 million. This implies annual decrease of 30% to 42%, and a sequential decrease of 28% to 40%. Sogou revenues to be between $240 million and $260 million. This implies annual decrease 5% to annual increase of 3%, and a sequential decrease of 14% to 20%. Online game revenues to be between $120 million and $130 million. This implies annual increase of 21% to 31%, and a sequential decrease of 1% to 9%. non-GAAP net loss attributable to Sohu.com Limited to be between $25 million and $35 million. GAAP loss per fully diluted ADS to be between $0.65 and $0.90.
GAAP net loss attributable to Sohu.com Limited to be between $28 million and $38 million. GAAP loss per fully diluted ADS to be between $0.70 and $0.95. Excluding Sogou and ChangYou, non-GAAP net loss attributable to Sohu.com Limited to be between $43 million and $48 million. GAAP net loss attributable to Sohu.com Limited to be between $45 million and $50 million. For the first quarter 2020 guidance, we used a presumed exchange rate of RMB 7 to $1, which compares with the actual exchange rate of RMB 6.74 to $1 for the first quarter of 2019, and [RMB 7.03] to $1 for the fourth quarter of 2019. This forecast reflects Sohu management's current and preliminary view, which at present is subject to substantial uncertainty, particularly in view of the potential impact of the COVID-19 virus, the effects of which are difficult to analyze and predict.
Lastly, please be reminded that we won't take questions regarding ChangYou's privatization proposal in the Q&A session. This concludes our prepared remarks. Operator, we would now like to open the floor to questions.
Certainly. Ladies and gentlemen, we will now begin the question-and-answer session. If you want to ask a question on the phone, please press star one and wait for your name to be announced. If you'd like to cancel your request, please press the pound or hash key. There will be a short silence while questions are being collected. Thank you. The first questions will come from Eddie Leung from Bank of America. Please go ahead.
Good evening, guys. Thank you for taking my questions. Could you talk a little bit about the top advertising industries for your News Media business in the fourth quarter? In the first quarter, which advertising industries are seeing a bigger negative impact from the coronavirus outbreak than the others? Secondly, about the Video business. We are not able to see the detailed breakdown of the balance sheet of different business units. Just wondering if the Video business would need capital raising? And how's the cash flow of that Video business doing, especially given the continuous need for production in 2020? Thank you.
In Q4, the top advertising industry is still the auto, right, Joanna?
Yeah, yeah.
Auto, let's say, real estate, or what's the ranking, Joanna, in Q4, before the coronavirus outbreak?
Internet service.
Internet services and IT, right? Internet services.
Yeah.
E-commerce. Well, it's basically the traditional order, you would say. After the outbreak of the coronavirus, I think, I think real estate and auto are all impacted. The luxury goods. Basically, nearly all the industry across the board are affected because there is not a consumption. The delivery logistics and all these, everything. That's why we see across the board a decline of advertising. We do see more consumption of video content, long-form dramas. You see our Video Subscription revenue grow. Online game, it's a mix. Online gaming, people are spending more time at home and playing PC games.
There is a positive contribution to the game consuming MMORPG. For the mobile games, because of our employees are staying home, that's kind of delayed some development work. That contribute negatively. For online gaming, it's a mix. Probably a positive impact. For brand advertising, it's really bad. For online video, it's good. Its revenue grow nicely. Yeah, Eddie?
Hey, Charles, how is the long Video business use of cash and the cash balance for 2020? Thanks.
We're having this low budget strategy, basically, for each video. Each drama, we spend RMB 15 million or at most RMB 20 million a piece, as a drama. Through embedded advertising and also subscription, and effective marketing on different social network platforms. We try to make it breakeven, so basically. We have limited number of productions actually, in 2019. A lot of the revenues are from, basically our previous past productions. We have a whole library of in-house produced video, I mean, dramas that are continuing in generating revenue. We launched in Q4, or actually Q1 the season 2 of this [Foreign language] . We still have another two more dramas already, basically, done, filmed and edited, ready to release.
For any further new drama to be filmed, it needs to wait for the coronavirus to subside and to people , you know, basically you can't have actors or actress to wear facial mask to play their role, right?
Got it.
Yeah.
Thank you, Charles.
Because we are consuming the past production libraries, we're not investing or spending a lot of money on producing new shows. That's why you see our Subscription business continue to grow, and actually, the cost is down.
Thank you.
Thank you for the questions. Next question comes from the line of Alicia Yap from Citigroup. Please go ahead.
Hi. Good evening, Charles and Joanna. Thanks for taking my questions. I have questions on the guidance for the brand advertising. Unfortunately, this outbreak has causing a lot of the negative impact. With your 30%-40% year-over-year decline, how much of that should we expect for the Video to decline and then versus the Portal? In your view, when do you expect the ad sentiment to really recover? Do you expect the full year 2020 to experience negative growth for brand ads revenue? Thank you.
I think both the brand advertising on the Portal and on the Video side are hit, I think, equally. Basically, both are affected proportionally, similarly. We expect that if people get back to work and the economy starts turning again, then we expect an uptick, basically, a strong rebound. Because a lot of our advertisers are ready to spend money because they have new products they really need to market. They are ready. Actually, in 2019, you can see that we cut our loss, right? If you compare Q4 with 2018 Q4, excluding Sogou and ChangYou, the Media business and Video business, we cut loss by, how much? That was $29 million, right? $75 million to, yeah, $46 million, right? $29 million cut. Actually, by the cost-saving initiatives, like we're spending less money on channels, on all these, and also on the content.
At the same time, we are improving our Sohu Hao and other original content. So actually our user base are holding steady, and we're spending less money on marketing, but our user base actually grow. The whole economy is slowing down, but we are holding our advertising in 2019. Actually, already created some momentum. If without the coronavirus, we would have expected that our advertising continue to go down and even to rebound. Our costs continue to go down. We expect that in the later part of Q2, I think, we want to regain the momentum that we accumulated in 2019 for the advertising top line. Also to consolidate, to take the user base growth that we observed in the last two months during the coronavirus. People staying home have more time, and people are watching.
People need to consume not only video games and dramas, but people need to get information and reliable information. That's why they turn to Sohu. The Sohu News actually is more trustworthy brand because it's such a historical, it's a brand that people trust because of the years. Actually we see the news consumption is higher than industry average compared with some of the other news portals.
Thank you, Charles. Can I ask one quick follow-up on the Olympics? Given the Summer Olympics is not far away, have you actually got some discussions or the budget commitment from some of the advertisers for the sponsorship that will actually help on the Media Portal business, or perhaps maybe a bit onto the Video business as well? Thank you.
Yeah, it was all planned before the COVID-19 because actually, as I said, we have some momentum created for advertising, and that include a lot of events we did in Q4 and the Q3. We planned all those events for 2020 because with these events and then people sponsor, advertise sponsor, that include the Olympic, the Tokyo Olympic. Also, we have this Sohu News Marathon. We have this talent show for this. All these events are all in a halt, basically in a still. Everything is standing still, basically. We don't know. We don't know when the Olympic will be held. Obviously, Japan is, and also obviously internationally, there are different opinions. They say that probably end of the year. We'll plan accordingly. We definitely have advertisers committed to those events.
All these events we had in 2019 was very successful, and people were willing to pay to advertise. All these events are with a lot of uncertainties whether we can do that or because it's offline events, need a lot of people gathering, and that creates risk of exposure to the virus.
No problem. Thank you, Charles. Hope the virus event go over very, very soon. Thank you.
Many events are like the Sohu's companies, some real estate companies or auto companies, they now aggressively are exploring these live broadcast marketing. That's why we are actually still getting some advertising in Q1 because some of the car companies and the real estate companies use our live broadcast platform to launch their new products. That will be 2020, you see a lot more things like that happening. People will move all things online.
Okay, great. Thank you. All the best.
Thank you for the questions. Our next question comes from the line of Thomas Chong from Jefferies. Please go ahead.
Hi, good evening. Thanks, management for taking my questions. I have a question regarding our revenue mix in our portal advertising. What's the contribution for SME? On that regard, how should we think about the competition from short-form video? Thank you.
You mean the competition from short-form video? What do you mean?
We are seeing short-form video companies grabbing a lot of advertising budget from SME. Just wondering how we should think about our SME advertising trend going forward in light of competition. Thank you, Charles.
Yeah. I think maybe Sogou, probably Xiaochuan can answer your question about the SME impact due to, you are talking about Douyin, right? All those. Right? For Sohu—
Because our Sohu News app also has a SME revenue contribution. Just wondering whether our Sohu Media apps or our Sohu Video SME spending affected.
First of all, the SME income represent a small part of our advertising revenue. That part, since it's so small and it basically remains steady in 2019, and our focus in 2019 was really on the brand advertising. Brand advertising, that is very hard to take it away from us. Because the brand trust and also the unique events that we have, and the reporting, the original content, all these things. We actually consolidate the brand advertising, basically that territory that we are consolidating in 2019. If you look at the whole picture of 2019, why we can have such a cost saving? Because we cut the channel and marketing cost, and same time maintain the user base steady, stabilize the user base. Even for the H5 Sohu portal, we actually grow.
Also really focus on the brand advertising and original reporting, quality content, also all these events like 5G conference, AI conference, all those conference forum that created content, also those Sohu Marathon, Sohu Fashion Show, all these events. Those events, we are just in a different category. The large brand they advertise. We are not affected by the uprising on, I mean, the Douyin and those. No.
Got it. Thank you, Charles.
Thank you for the questions. Once again, just a reminder, if you'd like to ask question, please press star one.
I think you asked your kind of question, but I want to, in the talk that I don't think it's getting these elements really about this quarter. The key is that after many, many quarters in 2019, we were able to stabilize our advertising revenue and grow our Video Subscription and consolidate, stabilize our user base, and even grow in H5 category. Then dramatically cut the cost so that we achieved, together with Sogou and ChangYou's contribution, we achieved a profitable quarter, non-GAAP. That's the key of this quarter. If the coronavirus outbreak didn't happen, we'll continue that trend to be non-GAAP Sohu, non-GAAP profitable into 2020. That's the key of this quarter results. The strategy will continue to execute that strategy, basically, to grow our user base, which has grown nicely during the last two months.
Also continue the momentum of brand advertising, and same time to develop the Video Subscription business. Same time we developed our social network product that we hope that it will explode. That's the strategy. With this coronavirus in the first quarter, our advertising definitely, especially this brand advertising that need a lot of discussion offline to design the kind of events for our advertisers that people cannot meet in person. Our brand advertising definitely impacted. People still have faith or the goodwill in us. After, if this coronavirus fade or actually in China, it seems under control. It's kind of turning in a good sign, so that in Q2, if the whole business rebounded, I think we'll regain our momentum in our brand advertising and also continue this trend of getting profitable. That's the key of this quarter.
Thank you. Ladies and gentlemen, that does conclude the conference for today. Thank you for your participation. You may now disconnect your lines.