Ladies and gentlemen, thank you for standing by and good evening. Thank you for joining SOHO's third quarter 2026 earnings conference call. At this time, all participants are in listen-only mode. After management's prepared remarks, there will be question and answer session. Today's conference call is being recorded. If you have any objections, you may disconnect at this time. And I'd like to turn the conference over to your host for today's conference call, Huang Pu, Investor Relations Director of Sohu. Please go ahead.

Thanks, Super Chef. Thank you for joining us this past Sohu Third Quarter, September 26th results. On the call are Chairman and Chief Executive Officer Dr. Charles Zhang, CFO Joanna Liu, and Vice President of Finance James Dunn. Also with us are Chang Yu, CIO Dewen Chen, and CFO Yao Binghua. Before Martin begins their prepared remarks, I would like to remind you of the Steve Hubbard statement in connection with today's conference call. Except for the historical information contained herein, the matters discussed on this call may contain forelooking statements. These statements are based on current plans, estimates, and projections. Therefore, you should not place any reliance on them. Forelooking statements involve inherent risks and uncertainties. We caution you that A number of important factors could cause X results differently from those containing any following statements. For more information about the potential risks and incentives, please refer to the company's findings with the Securities and Exchange Commission, including the most recent annual report on Form 20F. With that, I will now turn the call over to Dr. Charles Zhang. Charles, please proceed.

Thanks, Huangfu, and thank you to everyone for joining our call. In the third quarter of 2026, our marketing services revenues hit the high end of our guidance. Well, both our online game revenues and our bottom line performance were in line with our expectations. For the social media platform, we continue to strengthen its social features through numerous iconic events, fostering genuine connections among users and boosting We also kept leveraging our integrated product matrix with innovative and customized marketing solutions to unlock monetization potentials for our customers, for our clients. For online games, we continue to introduce fresh content to sustain player interest while offering tailored gameplay experiences to meet evolving player needs. Before going through each business unit in more detail, let me first give you a quick overview of our financial performance. Please be advised that these release relate to continuing operations only. For the third quarter, 2026, total revenues were $133 million. and Lili Cui.com Limited. $15 million compared with the net income of $9 million in the third quarter of 2025 and net income of $20,000 in the second quarter of this year. Non-GAAP and net loss attributable to Seoul Belcom Limited was also $15 million compared with the net income of $9 million in the third quarter of last year and net income of $500,000 in the second quarter of this year. Now I'll go through our key businesses in more detail. First, Sohu social media platform. We continue to refine our products and technologies to enhance user experience across various scenarios, promote the generation and distribution of premium content, and to strengthen the Sohu features of our platform. We hosted diverse online and offline events, which effectively sparked vibrant Interactions among users across multiple verticals and further supported the striving development of the social ecosystem of our platform. Example, in September 2026, Autumn Convention of Social Media Influencers took place in Beijing. With genuine social networking at its core, we invited celebrities and broadcasters in diverse verticals ranging from popular interests to professional fields. We provided them with opportunities to share ideas and build social connections, which greatly enhanced user interaction and engagement in our platform. The convention was well received by broadcasters and users, and it continued to expand our brand influence, further promote and deepen authentic social connections among our users. Also in this quarter, we continue with the 2026 Dancing Festival and 2026 Hanfu Model of Competition with higher professional standards and a broader international outlook. Those competitions to large numbers of NCUSBs worldwide participate and interact both online and offline earning widespread recognition They have become significant events that not only consistently generate premium content, but also stimulate social connections and vitality in our platform. In addition to Dengjing and Hapu, we proactively expanded into other online interest communities and fostered a vibrant and dynamic atmosphere on our platform. Moreover, in October, we launched the so-called video American TV Series Month during which we presented audiences of classic TV dramas, films, and variety shows. At the end of October, we hosted its highlight event, the Halloween American TV series cosplay party, bringing online and offline participants and exclusive carnival that combined in a rich lineup of our premium content covering various topics with lively social interactions. Earlier this November, Charles' physics class marked its fifth anniversary since its launch in 2021. It has broadcast around 300 live sessions and conducted nearly 40 offline seminars featuring in-depth explanations of physics principles and events, discussions with most prominent physicists. Together with Charles' English class, these two IPs have consistently disseminated professional knowledge and news events to the public. bringing them closer to science and cutting-edge developments. We have attracted large numbers of professional broadcasters to encourage them to contribute and connect on our platform, further strengthening our unique competitive advantage in knowledge and science-related live broadcasting. Benefiting from our longstanding brand influence and profound understanding of the market, we were able to precisely identify and meet advertisers' needs with customized marketing solutions. and help them to expand their brand influence. Leveraging our distinctive and differentiated IPs, we gain the higher recognition from advertisers and secure more advertising dollars. Next, turning to our online game business. During the quarter, our online game business performed well, with revenues in line with our prior guidance. In our PC game business, we launched the Qi Xi Festival themed content and gameplay for regular TLBB PC and TLBB Vantage. We also introduced game content for regular TLBB PC designed to deliver a more streamlined, low pressure gameplay experience, which effectively promote improved player engagement. In addition, we rolled out crossover content of TLBB Return, During the excitement among users, players, moving on to our mobile game business, we launched new expansion packs in the festival event for Legacy TLBB Mobile, helping maintain stable player engagement. Next quarter, we will continue to release expansion packs and content updates for the TLBB series and other titles to keep players engaged. Looking ahead, we will remain committed to our top game strategy. On the product development front, we will continue to optimize our R&D processes, implement advanced technologies, and enhance our R&D capabilities through continuous experimentation and validation, striving to bring more high-quality games to players. Regarding our pipeline, We seek to further unlock the potential of our TLBG IP. Meanwhile, as we can maintain our competitive edge in MMORPGs, we will keep diversifying our portfolio with multiple game journals and expanding our product offering with global appeal. Now, I'd like to provide an update on the ongoing share purchase repurchase program as of November 5th, 2026 this year. Soho has repurchased 10 million, 10.1 million, 10 million ADS shares for an aggregate cost of approximately $134 million. With that, I will now turn the call over to, for example, Jenna.

Thank you, Charles. I will now walk you through the key financials of our major segments for third quarter of 2026. All numbers on a non-GAAP basis. You may find a reconciliation of non-GAAP to GAAP matters on our website. For social media platform, quarterly revenues were $19 million compared with $17 million in the same quarter last year. Quarterly operating loss was $74 million. compared with operating loss $71 million in the same quarter last year. For Changyou, quarterly revenue $150 million compared with $163 million in the same quarter last year. Quarterly operating profit was $59 million compared with the operating profit $88 million in the same quarter last year. For the fourth quarter of 2026, We expect marketing service revenues to be between $30 million and $40 million. This implies annual decrease of 18% to 24% and a sequential decrease of 6% to 13%. Online game revenues should be between $111 million and $121 million. This implies annual decrease of 8% to an annual increase of 1% and a sequential decrease of 3% to a sequential increase of 6%. Both line gaps and gap net loss attributable to Soho.com Limited to be between $70 million and $27 million. This forecast reflects Soho's management current and the preliminary review. which is subject to substantial uncertainty. This concludes our prepared remarks. Operator, we would now like to open the call to questions.

Thank you. We will now begin the question and answer session. To ask a question now, please press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again. A moment for our first question. And our first question comes from the line of Thomas Chong at Jefferies. Please go ahead, Thomas. Your line is open.

Hi. Good evening. Thanks, management, for taking my questions. I have three questions. The first question is about the marketing services. We are actually seeing brand advertising revenue in Q3 is in line with guidance. When we look into the Q4 brand advertising methanil guidance, it represents a softness on sequential and also softness on a year-on-year basis. Are we actually seeing the advertising sentiment getting worse so far according to date? And how should we think about the 2027 outlook? So that's on the advertising side. And then my other question is on the gaming side. How should we think about the impact coming from AI, short drama to gaming sector and Changyong? And my final question is about the share buyback. How should we think about the share buyback going forward? If I remember correctly, the buyback program will be ended very soon. So we have any new plans on that front. Thank you.

Okay, Thomas. So your three questions, I will answer the first one and the third one, and then tell those people to know and we'll answer the second one. So the first one is about the advertising, right? So in Q3, the advertising and marketing services are in line, while in Q4, it seems kind of soft, right? It doesn't, it does not mean that there's any trend of the marketing, you know, the end partners. It remains the same or stable, it's just that the, some of these Projects just happened to concentrate in Q3 instead of Q4. So in Q4, some of the projects were less, less projects in Q4. You know, as we are, you know, we have this , marketing services that depend on the kind of events and the projects. So it's just, and also in Q4 there's, This year, the W11 event seems not as robust as the previous year, the e-commerce side. So in Q4, everything is kind of soft or weak. and then about 2027. So since we have a relatively small base of the item packing or the market service numbers, you know, it's not that insignificant. So whether in 2027 we'll gain growth or really depend on whether, you know, you know the depend on the success of you know of our social network that we have been which has been recently announced that we are really working on this social network so if we have a you know rapid growth of our social network database we will expect at all time and the market services to grow faster The third question about buyback, we finished with that $150 million buyback program, we finished with about $134 million, and still $60 million left. We'll continue to finish that, and until when we finish, soon we'll have our new, we'll think more, now we still don't have a plan to I don't have the new program to buy back yet. All right. Okay, technology, I'm giving questions to Nolan.

Okay. 首先AI短距和遊戲確實存在競爭關係, 因為本質上他們都在爭奪用戶的休閒時間。

There is some level of competition between short dramas and the gaming because by nature they are all aiming at the entertainment of users' time.

这个从最近几年我们在对用户进行调研的过程中也 We can feel the trend.

from the user research that we have done in recent years. And to deal with that, we've made a lot of adjustments and new versions of our games. The main focus is to make them lighter weight and to reduce the time burden of the users, which turned out to be effective.

There's still difference between AI drama and gaming because they offer users different experiences. AI dramas offers the users passive and

The experience within only a single person.

但是游戏给用户提供的是互动的和多人的体验。 While gaming offers players interactive and multiplayer experiences. 所以我们认为AI短期和游戏存在经营关系,但是没有办法取代。

So we believe there is some level of competition, but AI drama will not take place gaming. Thank you.

Thank you. All right.

All right. Thank you. We will move to our next question. And our next question comes from the line of Alicia Yap at Citigroup. Please go ahead, Alicia. Your line is open. Hi.

Good evening. Thanks for taking my questions. I have a couple of the follow-up. First is that can you elaborate a little bit in terms of the impact of the short drama to the beginning? Do you think this is just the beginning of potentially more impact that could be coming? And second is that how do you, you know, describe in terms of You know, the competitions or the impact, the negative impact that you are seeing from the gamers. Is it more as the time spent or is it more that The gamers now becoming less interest on playing games, but they're just more attracted to because the content on the short dramas are more interested or it's just more the casual users are being attracted away. So if any more details about how you have been observing on this impact would be helpful. And then second, you said wanted to follow up on the advertising. Can you remind us a little bit why, you know, doing 4Q when the single stays, but so who is not a beneficiary? And also, if you could also give us the breakdowns on the third quarter in terms of the vertical that contributes to your advertising. I think just now management mentioned short drama has some impact.

So we just wanted to know a little bit more detail.

about what you have observed for your gamers.

Is that what you're asking? Is what Charles just mentioned is the question you're asking, Alicia?

No, so I think both. Both. 兩個就是短期跟長期吧。 譬如說現在我們看到的具體影響到主要是比較 casual 的用戶呢, and many more. I don't know. But from my point of view, it should have an impact.

I think this impact is very long-term. But I think its severity should be almost the same. Because the average market for AI short-term users per day is already a little more than two hours. I don't think it's possible to go any further. The other point is that the short-term user experience is still different from that of games. So I'll translate the answers.

As for whether it impacts the casual or the hardcore games, well, to be honest, we are not sure. But intuitively, I think the AI dramas impact them both. And it will be a long-term impact. But we believe the impact won't be much harder. Because for now, the average daily time that users for AI drama spend is almost two hours a day.

More than two.

More than two hours a day. So we don't think there's still much space for that to grow. Meanwhile, we believe, as we just said before, AI drama and gaming provide with users different experiences. They impact each other and AI dramas will take the time of a user's gaming time, but they cannot take place of each other. So in the longer term, we believe they will co-exist. Yeah.

Alisha, let me ask you a question. In China, is AI a mainstream technology? What about in the U.S.? Do you know that the U.S. has not yet become mainstream? I think the U.S. has not yet become mainstream, but there are many...

Actually, people who don't play games are watching short films. People who have a lot of time.

It's not as mainstream as it is in China.

Actually, increasingly, it will become mainstream. It's just that the penetration rate is not very high. But I think people who watch it spend a lot of time on it.

All right, your question about the category, right? Yes. Actually, we see an increase of the auto industry. Now in Q3, we have 42%. of the total. And FMCG decreased to 17% and IT 12%. And as I explained earlier, that the Q4 is soft because the basic model, you see the kind of swing, right? Up and down, it depends on the number of projects. You have some projects. marketing projects move from Q4 to Q3 across the you know the deadline then then you have a better Q3 than Q4 right so it's so it's happened to be that there's a lot of projects that happen in Q3 and then that's why you know Q3 is doing better and Q4 is soft but also it also It's saying that demonstrate that actually we changed the name for advertising to so-called the marketing services revenue because the country with the self-media and the social media and the landscape of Chinese Internet, the traditional advertising, yin guang, advertising, you know, campaign is becoming less and less while people with this You know, slow economy and people are, you know, advertising are very cautious. They always want to maximize their dollars and maximize the marketing effect of their dollars a month. So they actually favor our, this involvement of our advertising marketing solutions, you know, from a more comprehensive, multidimensional, I would call each of these solutions like projects with offline events, with live streaming, with the KOL, with discussion forum, and also the viral spread or, you know, circulation on the internet. So it's kind of more creative marketing than the previous hard-core advertising. So that's actually, that's what we're doing the better or best. That's why we can maintain, basically, still a small base, but still stable, or sometimes even some growth of advertising. And I hope, I think, as our social network, if we are successful, or we will continue to be successful to build up our social media network and Again, with the rapid growth of user base, we expect this kind of marketing services will be more popular, trending higher.

Okay. All right. Thank you. Thanks, Charles. All right.

Thank you. I am showing no further questions and with that we conclude our conference call for today. Thank you for your participation. You may now disconnect your lines.