Changyou.com Limited (NASDAQ:CYOU)

WEB NEWS

Friday, April 17, 2020

Going Private News

BEIJING, April 17, 2020 /PRNewswire/ -- Sohu.com Limited (NASDAQ: SOHU) ("Sohu"), China's leading online media, video, search and gaming business group, today announced that it has completed the acquisition of all of the outstanding shares of Changyou.com Limited ("Changyou") that it did not already beneficially own, through the merger (the "Changyou Merger") of an indirect wholly-owned subsidiary ("Changyou Merger Co.") of Sohu with and into Changyou, with Changyou being the company surviving the Changyou Merger. As a result of the Changyou Merger, Changyou has become a private company wholly owned directly and indirectly by Sohu and the American depositary shares of Changyou (the "Changyou ADSs"), each of which represented two Changyou Class A ordinary shares ("Changyou Class A Ordinary Shares"), are no longer traded on the Nasdaq Global Select Market.

Pursuant to the plan of merger for the Changyou Merger, each Changyou Class A Ordinary Share issued and outstanding immediately prior to the effectiveness of the Changyou Merger, other than Changyou Class A ordinary shares owned beneficially by Sohu, was cancelled in exchange for the right to receive $5.40 in cash without interest, and each outstanding Changyou ADS was cancelled in exchange for the right to receive $10.80 in cash without interest (less $0.05 per ADS cancellation fees and other fees as applicable). Because Changyou Merger Co. owned over 90% of the voting power represented by all issued and outstanding shares of Changyou prior to the effectiveness of the Changyou Merger and the Changyou Merger was in the form of a short-form merger in accordance with section 233(7) of the Companies Law of the Cayman Islands, the Changyou Merger was not subject to a vote of the shareholders of Changyou.

In connection with the Changyou Merger, each outstanding and fully‑vested option (each, a "Vested Option") to purchase Changyou Class A Ordinary Shares under Changyou's share incentive plans was cancelled, and each holder of a Vested Option has the right to receive an amount in cash determined by multiplying (x) the excess, if any, of $5.40 over the applicable exercise price of such Vested Option by (y) the number of Changyou Class A Ordinary Shares underlying such Vested Option; and each outstanding but unvested option (each, an "Unvested Option") to purchase Changyou Class A Ordinary Shares under Changyou's share incentive plans will remain outstanding and continue to vest following the effectiveness of the Changyou Merger in accordance with the applicable Changyou share incentive plan and award agreement governing such Unvested Option in effect immediately prior to the effectiveness of the Changyou Merger.

Changyou has requested that trading of Changyou ADSs on the Nasdaq Global Select Market be suspended, and that the Nasdaq Stock Market LLC ("Nasdaq") file with the Securities and Exchange Commission (the "SEC") a Form 25 notifying the SEC of Nasdaq's withdrawal of the Changyou ADSs from listing on Nasdaq and intention to withdraw the Changyou Class A Ordinary Shares from registration under Section 12(b) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). Changyou has informed Sohu that it intends to file with the SEC, ten days after Nasdaq files the Form 25, a Form 15 suspending Changyou's reporting obligations under the Exchange Act and withdrawing the registration of Changyou Class A Ordinary Shares under the Exchange Act. Changyou's obligations to file with or furnish to the SEC certain reports and forms, including Form 20-F and Form 6-K, will be suspended immediately as of the filing date of the Form 15 and will terminate once the deregistration of Changyou Class A Ordinary Shares becomes effective.

China Renaissance, through its subsidiary CRP-Fanya Investment Consultants (Beijing) Limited, has served as financial advisor to Sohu in connection with the Changyou Merger; Goulston & Storrs PC has served as U.S. legal counsel to Sohu; and Han Kun Law Offices has served as PRC legal counsel to Sohu.

Houlihan Lokey (China) Limited has served as financial advisor to the committee of independent and disinterested directors established by Changyou's board of directors (the "Changyou Special Committee") to review and evaluate the Changyou Merger; and Skadden, Arps, Slate, Meagher & Flom LLP has served as U.S. legal counsel to the Changyou Special Committee.

Conyers Dill & Pearman has advised as to Cayman Islands legal matters with respect to the Changyou Merger.


Tuesday, April 14, 2020

Going Private News

BEIJING, April 14, 2020 /PRNewswire/ -- Sohu.com Limited (NASDAQ: SOHU) ("Sohu"), China's leading online media, video, search and gaming business group, today announced that, as contemplated by the previously-announced Agreement and Plan of Merger (the "Merger Agreement"), dated January 24, 2020, by and among Sohu's indirect wholly-owned subsidiary Sohu.com (Game) Limited ("Sohu Game"), Sohu Game's directly wholly-owned subsidiary Changyou Merger Co. Limited ("Changyou Merger Co."), and Changyou.com Limited ("Changyou") (NASDAQ: CYOU), Changyou Merger Co. and Changyou entered into a definitive Plan of Merger (the "Plan of Merger"), which has been filed with the Registrar of Companies of the Cayman Islands, pursuant to which Sohu will acquire all outstanding shares of Changyou it does not already beneficially own, through a merger (the "Changyou Merger") in which Changyou Merger Co. will merge with and into Changyou effective April 17, 2020 (the "Effective Time") with Changyou being the surviving company. 

Pursuant to the Plan of Merger, at the Effective Time, (i) each Class A ordinary share of Changyou (each, a "Changyou Class A Ordinary Share") issued and outstanding immediately prior to the Effective Time, other than shares held beneficially by Sohu (the "Excluded Shares"), will be cancelled in exchange for the right to receive $5.40 in cash without interest, and (ii) each outstanding American depositary share of Changyou (each, a "Changyou ADS," representing two Changyou Class A Ordinary Shares), other than the ADSs representing the Excluded Shares, will be cancelled in exchange for the right to receive $10.80 in cash without interest (less $0.05 per ADS cancellation fees and other fees as applicable). Pursuant to the Merger Agreement, at the Effective Time, (i) each outstanding and fully‑vested option (each, a "Vested Option") to purchase Changyou Class A Ordinary Shares under Changyou's share incentive plans will be cancelled, and each holder of a Vested Option will have the right to receive an amount in cash determined by multiplying (x) the excess, if any, of $5.40 over the applicable exercise price of such Vested Option by (y)  the number of Class A Ordinary Shares underlying such Vested Option, and (ii) each outstanding but unvested option (each, an "Unvested Option") to purchase Changyou Class A Ordinary Shares under Changyou's share incentive plans will remain outstanding and continue to vest following the Effective Time in accordance with the applicable Changyou share incentive plan and award agreement governing such Unvested Option in effect immediately prior to the Effective Time.

Because Changyou Merger Co. owns over 90% of the voting power represented by all issued and outstanding shares of Changyou, the Changyou Merger will be in the form of a short-form merger of Changyou Merger Co. with and into Changyou in accordance with section 233(7) of the Companies Law of the Cayman Islands, with Changyou being the company surviving the Changyou Merger. Shareholder approval of the Changyou Merger by Changyou's shareholders is not required.

If completed at the Effective Time, the Changyou Merger will result in Changyou becoming a private company wholly owned directly and indirectly by Sohu, Changyou ADSs no longer being listed on the Nasdaq Global Select Market, and Changyou's ADS program being terminated.


Monday, March 9, 2020

Comments & Business Outlook

Fourth Quarter 2019 Financial Results

  • Total revenue was US$135 million , an increase of 35% year-over-year and 22% quarter-over-quarter, in line with the Company's updated guidance.
  • Non-GAAP [4] net income attributable to Changyou.com Limited was US$63 million [2] , compared with net income of US$23 million [3] in the fourth quarter of 2018 and net income of US$34 million in the third quarter of 2019.

Mr. Chen Dewen , CEO, commented: "In 2019, we took a number of steps to build our capacity to create new, high-quality games. We prioritized R&D for mobile game development, including re-organization of roles and responsibilities to improve the R&D process and strengthen teamwork. Looking ahead, we will continue to execute our core strategy of 'Top Games' and our strategic focus will continue to be on MMORPG mobile games. We will also seek to make breakthroughs in developing casual games and strategy games, and we intend to put more effort into the international market for games. We look forward to bringing more quality game products and better game experience to players around the world as well as in China ."

Mr. Wei Qing , Chief Games Development Officer, added: "We are happy to report that Legacy TLBB Mobile performed solidly in 2019. This was mainly due to improvements we made to both the content and gameplay as part of our long-term operational strategy. During the fourth quarter, the combination of a new clan, new gameplay and promotional events strengthened player engagement and willingness to pay. Going forward, we will provide more updates to game content in order to keep the franchise fresh and maximize its longevity."

Mr. Wang Yaobin, CFO of Changyou, added: "In 2019, we worked hard on our existing game portfolio, by introducing new game content and implementing a variety of operational models. The result was satisfactory in terms of player engagement, player retention, and revenues. In the fourth quarter, our online games performed well. Total revenue and non-GAAP net income are both in line with our updated guidance."

Business Outlook

For the first quarter of 2020, Changyou expects:

Total revenue to be between US$123 million and US$133 million , including online game revenue of US$120 million to US$130 million ;
Non-GAAP net income attributable to Changyou.com Limited to be between US$39 million and US$44 million , and non-GAAP net income per fully-diluted ADS to be between US$0.69 and US$0.78 . Share-based compensation expense to be around US$3 million , assuming no new grants of share-based awards. Taking into account the elimination of the impact of these share-based awards, GAAP net income attributable to Changyou.com Limited to be between US$36 million and US$41 million , and GAAP net income per fully-diluted ADS to be between US$0.67 and US$0.76 .






Friday, January 24, 2020

Going Private News

BEIJING, Jan. 24, 2020 /PRNewswire/ -- Changyou.com Limited ("Changyou" or the "Company") (NASDAQ: CYOU), a leading online game developer and operator in China, today announced that it has entered into a definitive Agreement and Plan of Merger (the "Merger Agreement") with Sohu.com (Game) Limited ("Sohu Game"), an indirectly wholly-owned subsidiary of Sohu.com Limited (NASDAQ: SOHU, "Sohu"), and Changyou Merger Co. Limited ("Merger Co.," and together with Sohu and Sohu Game, the "Sohu Group"), a wholly-owned subsidiary of Sohu Game, pursuant to which the Company will be acquired by the Sohu Group in an all-cash transaction implying an equity value of the Company of approximately $579.0 million (the "Merger").

Pursuant to the terms of the Merger Agreement, at the effective time of the Merger (the "Effective Time"), each Class A ordinary share of the Company (each, a "Class A Ordinary Share") issued and outstanding immediately prior to the Effective Time, other than the Excluded Shares (as defined in the Merger Agreement), will be cancelled and cease to exist, in exchange for the right to receive $5.40 in cash without interest, and each outstanding American depositary share of the Company (each, an "ADS," representing two Class A Ordinary Shares), other than the ADSs representing the Excluded Shares, will be cancelled in exchange for the right to receive $10.80 in cash without interest (the "Merger Consideration").

At the Effective Time, each (i) outstanding and fully-vested option (each, a "Vested Option") to purchase Class A Ordinary Shares under the Company's share incentive plans will be cancelled, and each holder of a Vested Option will have the right to receive an amount in cash determined by multiplying (x) the excess, if any, of $5.40 over the applicable exercise price of such Vested Option by (y)  the number of Class A Ordinary Shares underlying such Vested Option; and (ii) each outstanding but unvested option (each, an "Unvested Option") to purchase Class A Ordinary Shares under the Company's share incentive plans will remain outstanding and continue to vest following the Effective Time in accordance with the applicable Company share incentive plan and award agreement governing such Unvested Option in effect immediately prior to the Effective Time.

The Merger Consideration represents a premium of  82.4% to the closing price of the Company's ADSs on September 6, 2019, the last trading day prior to the Company's announcement of its receipt of the "going-private" proposal, and a premium of 70.1% to the average closing price of the Company's ADSs during the 30 trading days prior to its receipt of the "going-private" proposal.

The Sohu Group intends to fund the Merger primarily with debt financing. The Sohu Group has delivered a copy of an executed debt commitment letter to the Company pursuant to which Industrial and Commercial Bank of China Limited, Tokyo Branch will provide, subject to the terms and conditions set forth therein, an amount sufficient to fund in full the consummation of Merger and the other transactions related thereto.

The Company's board of directors (the "Board"), acting upon the unanimous recommendation of a committee of independent and disinterested directors established by the Board (the "Special Committee"), approved the Merger Agreement and the Merger. The Special Committee negotiated the terms of the Merger Agreement with the assistance of its financial and legal advisors. Because the Sohu Group owns over 90% of the voting power represented by all issued and outstanding shares of the Company, the Merger will be in the form of a short-form merger of Merger Co. with and into Changyou in accordance with section 233(7) of the Companies Law of the Cayman Islands, with Changyou being the company surviving the Merger. Shareholder approval of the Merger Agreement and the Merger is not required.

The Merger is currently expected to close in the second quarter of 2020. If completed, the Merger will result in the Company becoming a privately‑owned company wholly owned directly and indirectly by Sohu, its ADSs will no longer be listed on the Nasdaq Global Select Market, and the ADS program will be terminated.

Houlihan Lokey (China) Limited is serving as financial advisor to the Special Committee; Skadden, Arps, Slate, Meagher & Flom LLP is serving as U.S. legal counsel to the Special Committee.

China Renaissance through its subsidiary CRP-Fanya Investment Consultants (Beijing) Limited is serving as financial advisor to the Sohu Group; Goulston & Storrs PC is serving as U.S. legal counsel to the Sohu Group; and Han Kun Law Offices is serving as PRC legal counsel to the Sohu Group.

The validity of the Merger and certain other legal matters with respect to the Cayman Islands law are passed upon and advised by Conyers Dill & Pearman.


Monday, November 4, 2019

Comments & Business Outlook

Third Quarter 2019 Financial Results

  • Total revenue was US$111 million, an increase of 9% year-over-year and 4% quarter-over-quarter, exceeding the Company's guidance.
  • Online game revenue was US$108 million, an increase of 13% year-over-year and 6% quarter-over-quarter, exceeding the Company's guidance.
  • GAAP net income attributable to Changyou.com Limited was US$34 million, compared with net income of US$68 million[2] in the third quarter of 2018 and net income of US$43 million in the second quarter of 2019.
  • Non-GAAP[3] net income attributable to Changyou.com Limited was US$34 million, compared with net income of US$67 million[2] in the third quarter of 2018 and net income of US$41 million in the second quarter of 2019.

Mr. Chen Dewen, CEO, commented, "During the quarter, TLBB PC maintained its solid performance. We introduced new game content and rolled out a promotional event that ranked and rewarded our highest-paying users. We were happy to see that it not only helped to sustain player engagement, but it also effectively stabilized the in-game spending of players. For mobile games, revenue from Legacy TLBB Mobile increased slightly in the third quarter on a sequential basis, mainly thanks to the expansion pack that we launched during the quarter. We also launched a new mobile game, TLBB Honor, during the quarter. Leveraging the influence of the TLBB franchise among active mobile players, the game has performed quite well since its launch. Going forward, MMORPG mobile games will continue to be our strategic focus and we will continue to work on improving the quality of the key games that we are developing so that we can give them the best possible chance to become hits. In the meantime, we're also developing some casual and strategy games to make sure that we maintain a diversified product portfolio."

Mr. Wei Qing, Chief Games Development Officer, added, "During the quarter, we launched an expansion pack for Legacy TLBB Mobile that featured an underwater world map and new challenging dungeons, all of which helped to drive higher player involvement. In addition, we were pleased to see that a newly introduced clan has been well received by players. Overall, we have been able to maintain stable user engagement during the quarter and attract solid player spending. During the fourth quarter of 2019, we will launch more expanded content that includes casual gameplay featuring some additional elements of day-to-day life. In addition, we will do a preliminary review of the skill system of all clans in order to be prepared to further enhance the PvP experience in the future."

Mr. Wang Yaobin, CFO of Changyou, added, "During the quarter, online game revenue was much better than we expected, and our overall financial performance continued to be stable. In addition to the solid results delivered by TLBB PC and Legacy TLBB Mobile, TLBB Honor, a new mobile game launched during the quarter, also performed well. However, since the game content is not particularly extensive, its revenue contribution and profitability are not comparable to Legacy TLBB Mobile."

Business Outlook

For the fourth quarter of 2019, Changyou expects:

  • Total revenue to be between US$100 million and US$110 million, including online game revenue of US$95 million to US$105 million;
  • Non-GAAP net income attributable to Changyou.com Limited to be between US$27 million and US$32 million, and non-GAAP net income per fully-diluted ADS to be between US$0.50 and US$0.60. Share-based compensation expense to be around US$3 million, reflecting grants to certain key employees of share-based awards approved by the Company's board of directors under a newly-adopted share incentive plan, as well as remaining share-based awards under 2014 Share Incentive Plan, and assuming no other grants of share-based awards in the fourth quarter of 2019. Taking into account the elimination of the impact of these share-based awards, GAAP net income attributable to Changyou.com Limited to be between US$24 million and US$29 million, and GAAP net income per fully-diluted ADS to be between US$0.45 and US$0.54.

Thursday, October 17, 2019

Going Private News
BEIJING, Oct. 17, 2019 /PRNewswire/ -- Changyou.com Limited ("Changyou" or the "Company") (CYOU), a leading online game developer and operator in China, today announced that its board of directors (the "Board") has formed a special committee (the "Special Committee") consisting of Dr. Xiao Chen and Mr. Charles Chan, each an independent director, to review and evaluate a previously-announced non-binding proposal that the Board received on September 9, 2019 from Sohu.com Limited ("Sohu") (SOHU), a Cayman Islands company and the ultimate controlling shareholder of Changyou, to acquire all of the outstanding Class A ordinary shares of Changyou, including Class A ordinary shares represented by American depositary shares ("ADSs"), each representing two Class A ordinary shares, that are not already owned by Sohu for a purchase price of $5.00 per Class A ordinary share, or $10.00 per ADS, in cash (the "Proposal"). The Special Committee has retained Houlihan Lokey (China) Limited as its financial advisor and Skadden, Arps, Slate, Meagher & Flom as its United States legal counsel in connection with its review and evaluation of the Proposal.

Monday, September 9, 2019

Going Private News

BEIJING, Sept. 9, 2019 /PRNewswire/ -- Changyou.com Limited ("Changyou" or the "Company") (NASDAQ: CYOU), a leading online game developer and operator in China, today announced that its board of directors (the "Changyou Board") has received a preliminary non-binding proposal letter (the "Proposal Letter"), dated September 9, 2019, from Sohu.com Limited ("Sohu")(NASDAQ: SOHU), a Cayman Islands company and the ultimate controlling shareholder of Changyou, to acquire all of the outstanding Class A ordinary shares of Changyou, including Class A ordinary shares represented by American depositary shares ("ADSs"), each representing two Class A ordinary shares, that are not already owned by Sohu for a purchase price of $5.00 per Class A ordinary share, or $10.00 per ADS, in cash (the "Proposed Transaction").  As Sohu holds all of the Class B ordinary shares of Changyou that are currently outstanding, the Proposed Transaction, if completed, would result in Changyou becoming a privately-held, indirect wholly-owned subsidiary of Sohu, and Changyou's ADSs would be delisted from the NASDAQ Global Select Market. A copy of the Proposal Letter is attached hereto as Exhibit A.

The Company expects that a special committee of the Changyou Board, composed solely of independent directors, will consider the Proposal Letter and the Proposed Transaction. The Company cautions that the Changyou Board has just received the Proposal Letter and has not made any decisions with respect to the Proposal Letter and the Proposed Transaction. There can be no assurance that Sohu will make any definitive offer to Changyou, that any definitive agreement relating to the Proposal Letter will be entered into between Changyou and Sohu, or that the Proposed Transaction or any other similar transaction will be approved or consummated.

The Company also received formal confirmation today from Dr. Charles Zhang that he is no longer pursuing his 2017 non-binding proposal to acquire Changyou himself.

The Company does not undertake any obligation to provide any updates with respect to this or any other transaction, except as required under applicable law.


Monday, August 5, 2019

Comments & Business Outlook

Second Quarter 2019 Financial Results

  • Total revenue was US$119 million, an increase of 5% year-over-year and a decrease of 4% quarter-over-quarter, in line with the Company's guidance.
  • Non-GAAP[2] net income attributable to Changyou.com Limited was US$14 million[1], compared with net income of US$28 million in the second quarter of 2018 and net income of US$37 million in the first quarter of 2019.

Mr. Dewen Chen, CEO, commented, "During the quarter, our PC game business performed well as revenue increases from several legacy PC games helped to offset a decline in revenues from TLBB PC. The new content that we introduced for TLBB PC's 12-year anniversary that invoked some of the classic cultural themes of the original novel helped to stabilize user engagement. Meanwhile, revenue from Legacy TLBB Mobile remained steady, which was better than we expected. Going forward, for our older games we will continue to manage player engagement through long-term oriented operational strategies. In terms of R&D, MMORPG mobile games will continue to be our strategic focus and we will continue to work on improving the quality of the key games that we are developing. In the meantime, we're also developing some casual and strategy games to make sure that we maintain a diversified product portfolio."

Mr. Qing Wei, Chief Games Development Officer, added, "In the second quarter, revenue from Legacy TLBB Mobile was flat quarter-over-quarter and both user engagement and payments remained stable as well, mostly thanks to the new gameplay and some popular virtual items that we designed for the game's 2nd anniversary. For our upcoming expansion pack in the third quarter, we plan to introduce a new underwater world map and corresponding plots and quests, as well as a new clan that should particularly appeal to female players."

Mr. Yaobin Wang, CFO of Changyou, added, "In the second quarter of 2019, our online game revenue exceeded expectations. Excluding a one-off item, which was an impairment charge that we determined was needed for our cinema advertising business, our non-GAAP net income was US$31 million, which also exceeded the high end of our guidance. Our financial performance this quarter once again demonstrated our stable profitability and strong balance sheet."

Business Outlook

For the third quarter of 2019, Changyou expects:

  • Total revenue to be between US$90 million and US$100 million, including online game revenue of US$80 million to US$90 million;
  • Non-GAAP net income attributable to Chanyou.com Limited to be between US$22 million and US$27 million, and non-GAAP net income per fully-diluted ADS to be between US$0.41 and US$0.50. Share-based compensation expense to be around US$0.01 million, assuming no new grants of share-based awards. Taking into account the elimination of the impact of these share-based awards, GAAP net income attributable to Changyou.com Limited to be between US$22 million and US$27 million, and GAAP net income per fully-diluted ADS to be between US$0.41 and US$0.50.



Friday, May 10, 2019

Special Dividend

BEIJING, May 10, 2019 /PRNewswire/ -- Changyou.com Limited ("Changyou" or the "Company") (CYOU), a leading online game developer and operator in China, today announced that NASDAQ has established June 3, 2019 as the ex-dividend date for Changyou's previously-announced special cash dividend of US$9.40 per American depositary share ("ADS"), based on a payment date of May 31, 2019. Accordingly, in order to be entitled to receive this special dividend, holders of ADSs must hold the ADSs through the end of the payment date. The Company expects The Bank of New York Mellon, the depositary bank for the Company's ADS program, to distribute the dividend on or about the payment date to holders of ADSs as of the end of the payment date. 



Monday, April 29, 2019

Comments & Business Outlook

First Quarter 2019 Financial Results

  • Total revenue was US$123 million, a decrease of 10% year-over-year and an increase of 5% quarter-over-quarter, exceeding the Company's guidance.
  • Non-GAAP[3] net income attributable to Changyou.com Limited was US$37 million, compared with a net loss of US$16 million[1] in the first quarter of 2018 and net income of US$11 million[2] in the fourth quarter of 2018.

Mr. Dewen Chen, CEO, commented, "During the quarter, TLBB PC performed better than our expectations, which demonstrates that players are happy with the current in-game environment and the long-term outlook for the game. Legacy TLBB Mobile also showed its resilience and did better than we expected due to new content and other improvements that we made to the game. In 2019, we will continue to manage player engagement through our long-term oriented operational strategies. With our tireless efforts to improve game quality, we believe we are well prepared to roll out exciting new games in the future."

Mr. Qing Wei, Chief Games Development Officer, added, "During the quarter, Legacy TLBB Mobile's revenue remained relatively stable, mainly due to the various in-game holiday events and promotions that we launched. We also reduced the number of daily quests so that players did not have to commit as much time to repetitive tasks. For the second quarter of 2019, we will launch an expansion pack for Legacy TLBB Mobile's 2-year anniversary with a new clan and various celebratory events to further promote player engagement."

Mr. Yaobin Wang, CFO of Changyou, added, "We got off to a good start in 2019 thanks to the solid performance of our online games. For the first quarter of 2019, both our total revenue and net income came in ahead of our expectations. Given our ongoing profitability and strong operating cash flow, we will continue to invest in the development of high-end games as we look to enhance our leading position in the industry."

Business Outlook

For the second quarter of 2019, Changyou expects:

  • Total revenue to be between US$110 million and US$120 million, including online game revenue of US$90 million to US$100 million;
  • Non-GAAP net income attributable to Changyou.com Limited to be between US$22 million and US$27 million, and non-GAAP net income per fully-diluted ADS to be between US$0.41 and US$0.50. Gain on share-based compensation to be around US$1 million, assuming no new grants of share-based awards, and considering the impact of the payment of special cash dividend. Taking into account the elimination of the impact of these share-based awards, GAAP net income attributable to Changyou.com Limited to be between US$23 million and US$28 million, and GAAP net income per fully-diluted ADS to be between US$0.43 and US$0.52.

For the second quarter of 2019 guidance, the Company has adopted a presumed exchange rate of RMB6.80 = US$1.00, which compares with the actual exchange rate of approximately RMB6.38 = US$1.00 for the second quarter of 2018, and RMB6.74 = US$1.00 for the first quarter of 2019.


Monday, April 29, 2019

Special Dividend

BEIJING, April 29, 2019 /PRNewswire/ -- Sohu.com Limited (NASDAQ: SOHU) ("Sohu"), China's leading online media, video, search and gaming business group, today reported that on April 29, 2019, Changyou.com Limited (NASDAQ: CYOU) ("Changyou"), Sohu's majority-owned online game subsidiary, announced that Changyou's board of directors (the "Changyou Board") has declared a special cash dividend of US$4.70 per Changyou Class A ordinary or Class B ordinary share, or US$9.40 per American depositary share ("Changyou ADS"), each of which represents two Changyou Class A ordinary shares. The aggregate amount of the special cash dividend will be approximately US$503 million.

The Changyou Board has set May 15, 2019 as the date on which holders of record of Changyou Class A ordinary shares and Class B ordinary shares will be entitled to the dividend. In view of the amount of the dividend per Changyou ADS in relation to recent trading prices of the Changyou ADSs on NASDAQ, however, Changyou expects that applicable NASDAQ rules will require holders of Changyou ADSs to hold their Changyou ADSs as of no later than the end of the trading day before the ex-dividend date in order to be entitled to receive the dividend. Changyou expects the ex-dividend date to be no later than June 30, 2019. Once the ex-dividend date for the special cash dividend has been determined, Changyou will issue an additional press release announcing the ex-dividend date.

The amount of the dividend payable to Sohu is expected to be approximately $337 million. Sohu does not expect to pay any of such dividend to its shareholders or holders of Sohu American depositary shares, as the proceeds will be used to support Sohu's operations.

For more information about the special Changyou dividend, please refer to Changyou's separate announcement.


Monday, November 5, 2018

Comments & Business Outlook

Third Quarter 2018 Financial Results

  • Total revenue[1] was US$118 million, a decrease of 29% year-over-year and an increase of 5% quarter-over-quarter, exceeding the Company's guidance.
  • Non-GAAP net income was US$54 million[2], compared with a non-GAAP net loss of US$32 million in the third quarter of 2017 and non-GAAP net income of US$28 million in the second quarter of 2018.

Mr. Dewen Chen, CEO, commented, "The performance of our flagship game, TLBB PC, again exceeded our expectations thanks to the continuous improvements that we made to the in-game environment and the launch of promotional events in the summer expansion pack. Meanwhile, we were able to steady the pace of decline of Legacy TLBB Mobile's revenue from the previous quarter by introducing new gameplay and effectively improving our operation of the game. On the game development side, we will continue to work on making breakthroughs in key areas such as graphics and gameplay in an effort to roll out blockbuster games as we look to adapt to the continuing changes in the gaming market."

Mr. Qing Wei, Chief Games Development Officer, added, "During the quarter, we launched a new expansion pack for Legacy TLBB Mobile that added a new simulated home system and organized a series of other events that effectively increased user engagement. In the fourth quarter, we will introduce a new clan and more original gameplay that we believe users will surely love, host a number of new events, and keep optimizing the game based on careful review of ongoing user feedback."

Mr. Yaobin Wang, CFO of Changyou, added, "Our total revenue and net income exceeded our guidance due to the solid performance of our online games. For cinema advertising, we saw a significant rebound in revenue following the weak performance last quarter, which was due to a strategy adjustment related to the acquisition and sale of advertising resources."

Business Outlook

For the fourth quarter of 2018, Changyou expects:

Total revenue to be between US$110 million and US$120 million, including online game revenue of US$85 million to US$95 million;
Non-GAAP net income attributable to Chanyou.com Limited to be between US$23 million and US$28 million, and non-GAAP net income per fully-diluted ADS to be between US$0.43 and US$0.52. Share-based compensation expense to be around US$1 million, assuming no new grants of share-based awards. Taking into account the elimination of the impact of these share-based awards, GAAP net income attributable to Changyou.com Limited to be between US$22 million and US$27 million, and GAAP net income per fully-diluted ADS to be between US$0.41 and US$0.50.
For the fourth quarter 2018 guidance, the Company has adopted a presumed exchange rate of RMB7.00 = US$1.00, as compared with the actual exchange rate of approximately RMB6.61 = US$1.00 for the fourth quarter of 2017, and RMB6.80 = US$1.00 for the third quarter of 2018.


Monday, July 30, 2018

Comments & Business Outlook

Second Quarter 2018 Financial Results

  • Total revenue[1] was US$113 million, representing a decrease of 25% year-over-year and 18% quarter-over-quarter, in line with the Company's guidance.
  • Non-GAAP net income attributable to Changyou.com Limited was US$28 million, compared with net income of US$61 million in the second quarter of 2017 and a net loss of US$16 million in the first quarter of 2018. Non-GAAP fully-diluted net income attributable to Changyou.com Limited per ADS was US$0.52, compared with net income of US$1.14 in the second quarter of 2017 and a net loss of US$0.30 in the first quarter of 2018.

Mr. Dewen Chen, CEO, commented, "Thanks to the launch of the annual expansion pack and further updates, the performance of TLBB PC again exceeded our expectation. At the same time, we were able to slow the revenue decline of Legacy TLBB Mobile as a result of a number of proactive improvements that we made to the in-game content. In the future, we will remain focused on producing top quality games, and MMORPGs will continue to be the core of our strategy. We are also exploring the development of advanced casual games and SLG games. Our team will seek to make innovative breakthroughs in graphics, game design and gameplay as we look to adapt to the continuous changes in the gaming market, and meet the ever-increasing needs of users."

Mr. Qing Wei, Chief Games Development Officer, added, "During the quarter, we launched our first annual expansion pack for Legacy TLBB Mobile. The new content and in-game elements helped to slow the revenue decline of the game. In the third quarter, we will launch another new clan, introduce more interesting gameplay, and further fine tune the game to address in-game issues and increase user engagement."

Mr. Yaobin Wang, CFO of Changyou, added, "For the second quarter of 2018, we met our total revenue guidance and exceeded our non-GAAP net income guidance. Cinema advertising revenue saw a large decline because we adjusted our strategy related to the acquisition and sale of advertising resources during the quarter. We expect cinema advertising revenue to improve significantly in the third quarter following the strategy adjustment."

Business Outlook

For the third quarter of 2018, Changyou expects:

Total revenue to be between US$100 million and US$110 million, including online game revenue of US$80 million to US$90 million;
Non-GAAP net income attributable to Chanyou.com Limited to be between US$20 million and US$25 million, and non-GAAP income per fully-diluted ADS to be between US$0.37 and US$0.47. Share based compensation to be around US$1 million, assuming no new grants of share-based awards. Taking into account the elimination of the impact of these share-based awards, GAAP net income attributable to Changyou.com Limited to be between US$19 million and US$24 million, and GAAP income per fully-diluted ADS to be between US$0.35 and US$0.45.
For the third quarter 2018 guidance, the Company has adopted a presumed exchange rate of RMB6.80 = US$1.00, as compared with the actual exchange rate of approximately RMB6.67 = US$1.00 for the third quarter 2017, and RMB6.38 = US$1.00 for the second quarter 2018.


Wednesday, April 25, 2018

Comments & Business Outlook

First Quarter 2018 Financial Results

  • Total revenue[1] was US$137 million[2], representing an increase of 14% year-over-year and a decrease of 5% quarter-over-quarter, exceeding the Company's guidance.
  • Non-GAAP net loss attributable to Changyou.com Limited was US$16 million, compared with net income of US$35 million in the first quarter of 2017 and net income of US$34 million in the fourth quarter of 2017. Non-GAAP fully-diluted net loss attributable to Changyou.com Limited per ADS was US$0.30, compared with net income of US$0.66 in the first quarter of 2017 and net income of US$0.64 in the fourth quarter of 2017.

Mr. Dewen Chen, CEO, commented, "Both our top line and bottom line results exceeded our expectations in the first quarter, largely as a result of better-than-expected performance of our flagship game, TLBB PC, despite the seasonal impact of the Chinese New Year holidays, and a moderation of the declines in Legacy TLBB Mobile. We will continue to focus on maximizing the longevity of our legacy games with ongoing improvements to the in-game content and functionality as we look to sustain user interest and engagement. We also remain laser-focused on producing top quality games. While MMORPG games will continue to be our primary focus, we are also exploring the development of other advanced casual and SLG games that meet our high standards for innovation and quality."

Mr. Qing Wei, Chief Games Development Officer, added, "We were able to further slow the declines in Legacy TLBB Mobile during the first quarter with the launch of several new expansion packs featuring new content and enhanced functionality and features. In the second quarter, we plan to launch a new expansion pack to celebrate the first anniversary of Legacy TLBB Mobile. Between the new content and the celebratory events to mark the milestone, we believe we can continue to maintain user engagement and further slow the declines in the game."

Mr. Yaobin Wang, CFO of Changyou added, "Based on our healthy balance sheet and continued strong cash-generating capabilities, we announced a US$500 million special cash dividend on April 5, 2018. After the dividend distribution on April 26th, we will still have over US$500 million of cash on hand that can be invested across our business to strengthen our R&D and marketing capabilities, and help us maintain our leading position in the online game market. "

Business Outlook

For the second quarter of 2018, Changyou expects:

Total revenue to be between US$110 million and US$120 million, including online game revenue of US$85 million to US$95 million;
Non-GAAP net income attributable to Chanyou.com Limited to be between US$20 million and US$25 million, and non-GAAP income per fully-diluted ADS to be between US$0.38 and US$0.47. Gain on share based compensation to be around US$2 million, assuming no new grants of share-based awards, and considering the impact of the payment of special cash dividend. Taking into account the elimination of the impact of these share-based awards, GAAP net income attributable to Changyou.com to be between US$22 million and US$27 million, and GAAP income per fully-diluted ADS to be between US$0.42 and US$0.51.
For the second quarter 2018 guidance, the Company has adopted a presumed exchange rate of RMB6.40 = US$1.00, as compared with the actual exchange rate of approximately RMB6.86 = US$1.00 for the second quarter 2017, and RMB6.36=US$1.00 for the first quarter 2018.


Friday, April 13, 2018

Special Dividend

BEIJING, April 12, 2018 /PRNewswire/ -- Changyou.com Limited ("Changyou") (NASDAQ: CYOU), a leading online game developer and operator in China, today announced that, based on the payment date of April 26, 2018 set for Changyou's previously-announced special cash dividend of US$9.40 per ADS,  NASDAQ has established April 27, 2018 as the ex-dividend date for the dividend.  Accordingly, in order to be entitled to receive the dividend, holders of ADSs must hold the ADSs as of no later than the end of the day on April 26, 2018, the day before the ex-dividend date.

Under NASDAQ rules, the "ex-dividend" date applicable to a dividend to be paid by a NASDAQ -listed company is the date on and after which purchasers of the company's shares will not be entitled to receive the dividend. NASDAQ has established April 27, 2018 as the ex-dividend date for Changyou's special cash dividend pursuant to a special NASDAQ rule providing that when a dividend is in a per share amount that equals or exceeds 25% of a company's share price, the ex-dividend date will be the first trading day following the payment date.  Changyou's special cash dividend of US$9.40 per ADS is more than 25% of the closing price of US$29.97 for Changyou's ADSs reported by NASDAQ for April 5, 2018, the date on which Changyou's board of directors declared the dividend.


Thursday, April 5, 2018

Special Dividend

BEIJING, April 5, 2018 /PRNewswire/ -- Sohu.com Inc. (NASDAQ: SOHU), China's leading online media, video, search and gaming business group, today reported that on April 5, 2018, Changyou.com Limited (NASDAQ: CYOU), Sohu's majority-owned online game subsidiary, announced that Changyou's board of directors has declared a special cash dividend of US$4.70 per Class A ordinary or Class B ordinary share, or US$9.40 per American depositary share ("ADS"), each of which represents two Class A ordinary shares. The aggregate amount of the special cash dividend will be approximately US$500 million.

Record holders of Changyou's ordinary shares at the close of business U.S. Eastern Time on April 20, 2018 (the "Record Date") will be entitled to receive the special cash dividend. Changyou expects The Bank of New York Mellon, the depositary bank for Changyou's ADS program, to distribute dividends to holders of ADSs as of the Record Date on or about April 26, 2018.

The amount of the dividend payable to Sohu is expected to be approximately $340 million. Sohu does not expect to pay any of such dividend to its stockholders, as the proceeds will be used to support Sohu's operations.

In order to facilitate the distribution of this special dividend, Changyou has revised its policy for its PRC subsidiaries with respect to their distribution of cash dividends. Under the revised policy, all PRC subsidiaries in the Changyou Group will be able to distribute their cumulative available and undistributed earnings to their direct overseas parent companies in the Changyou Group. The change will result in Changyou's accrual of additional withholding income taxes of approximately $47 million for the period before December 31, 2017. As the parent company of Changyou, Sohu will also recognize incremental tax expenses in its financial statements for the quarter ended March 31, 2018.

For more information about the special Changyou dividend, please refer to Changyou's separate announcement.


Thursday, February 1, 2018

Going Private News

BEIJING, Feb. 1, 2018 /PRNewswire/ -- Changyou.com Limited ("Changyou" or the "Company") (NASDAQ: CYOU), a leading online game developer and operator in China, today announced that on January 30, 2018 its board of directors (the "Board") received a letter from Dr. Charles Zhang, the Chairman of the Board of the Company, regarding the previously-announced non-binding proposal (the "Proposal") that the Board received on May 22, 2017 from Dr. Zhang for the acquisition of all outstanding shares in the registrant, including shares represented by American depositary shares (the "Proposed Transaction"), by an acquisition vehicle to be formed by Dr. Zhang. Dr. Zhang stated in the letter that he was submitting the letter to reaffirm his commitment to the Proposed Transaction and to advise the Board that he is reviewing the purchase price he originally proposed. A copy of Dr. Zhang's letter is attached hereto as Exhibit A.

The Proposal remains non-binding. Dr. Zhang has not indicated what his review of the purchase price might entail or what further steps, if any, he might take in that regard.

As previously announced, the Board has formed a special committee (the "Special Committee") to consider and evaluate the Proposal. The Special Committee cautions the Company's shareholders and others considering trading in the Company's securities that no decision has been made by the Special Committee or the Board with respect to the Proposal or the Proposed Transaction, and there can be no assurance that any definitive offer will be made, any agreement will be executed or that this or any other transaction will be approved or consummated.


Monday, January 29, 2018

Comments & Business Outlook

Fourth Quarter 2017 Financial Results

  • Total revenue was US$144 million, representing an increase of 11% year-over-year and a decrease of 13% quarter-over-quarter, slightly below the Company's guidance.
  • Non-GAAP fully-diluted net income attributable to Changyou.com Limited per ADS was US$0.64, compared with net income of US$0.75 in the fourth quarter of 2016 and a net loss of US$0.09 in the third quarter of 2017.

Mr. Dewen Chen, CEO, commented, "After two years of continued experimentation, development and adjustments, our strategy of 'Top games, Big IP and Mass marketing' began to bear fruit in 2017. In May we launched Legacy TLBB Mobile, which set a new record for MMORPG games in its first month in terms of monthly gross billings. In 2018, we will remain focused on game quality and further invest in visual graphics, technologies and talent development. While we continue to focus on MMORPG development, we also aim to improve our R&D and product innovation capabilities in advanced casual and SLG games."

Mr. Qing Wei, Chief Games Development Officer added, "Since the launch of Legacy TLBB mobile, we have issued several new expansion packs, offering users brand new content each time to maintain engagement. At the same time, we have adjusted our payment structure to suit different types of users within the game, and further enhanced social functionality to improve user experience."

Mr. Yaobin Wang, CFO of Changyou added, "Total revenue and non-GAAP net income for the fourth quarter of 2017 were both slightly lower than our expectations, This was mainly because Legacy TLBB Mobile underperformed slightly in the fourth quarter and we experienced a small delay in the launch of our new mobile game 'Dao Jian Dou Shen Zhuan'. For the first quarter of 2018, we expect a seasonal downturn for TLBB PC game due to the Chinese New Year holidays. We also expect revenue from Legacy TLBB Mobile to decline, but at a slower rate than occurred during the fourth quarter of 2017."

Business Outlook

For the first quarter of 2018, Changyou expects:

Total revenue to be between US$120 million and US$130 million, including online game revenue of US$90 million to US$100 million;
Non-GAAP net income attributable to Chanyou.com Limited to be between US$25 million and US$30 million, and non-GAAP income per fully-diluted ADS to be between US$0.47 and US$0.56. Share based compensation to be around US$2 million, assuming no new grants of share-based awards and that the market price of Changyou's ADSs is unchanged. Taking into account the elimination of the impact of these share-based awards, GAAP net income attributable to Changyou.com to be between US$23 million and US$28 million, and GAAP income per fully-diluted ADS to be between US$0.43 and US$0.52.
For the first quarter 2018 guidance, the Company has adopted a presumed exchange rate of RMB6.60 = US$1.00, as compared with the actual exchange rate of approximately RMB6.88 = US$1.00 for the first quarter 2017, and RMB6.61=US$1.00 for the fourth quarter 2017.


Friday, September 29, 2017

CFO Trail

BEIJING, Sept. 29, 2017 /PRNewswire/ -- Changyou.com Limited ("Changyou" or the "Company") (CYOU), a leading online game developer and operator in China, today announced the appointment of Yaobin Wang as its chief financial officer.

Mr. Wang brings with him extensive experience in financial management, having held many senior management positions previously in a number of internet companies, including Sohu, Changyou and Kaixin001, where he oversaw finance, legal and M&A functions. Prior to that, he worked at Deloitte for many years. Mr. Wang holds a master's degree in Business Administration from Renmin University of China. He is a certified public accountant, a certified tax agent and a certified internal auditor.

Mr. Dewen Chen, CEO, commented, "We are pleased to have Yaobin back. Yaobin will be a significant asset to Changyou with his proven experience in finance and his deep understanding of China's internet industry. Yaobin served as our financial director before and is already very familiar with our business model and corporate culture. I'm sure that Yaobin will hit the ground running immediately and contribute to our continued progress."

"I am happy to be back and I look forward to working with Changyou's management team and financial team again to help the company achieve its next set of strategic goals." Mr. Wang said.


Monday, July 31, 2017

Comments & Business Outlook

Second Quarter 2017 Financial Results

  • Total revenue was US$150 million1, representing an increase of 16% year-over-year and 25% quarter-over-quarter, meeting the top end of the Company's updated guidance.
  • Diluted net income attributable to Changyou.com Limited per ADS $0.96 vs. last years $.062.

Mr. Dewen Chen, CEO, commented, "I'm pleased with the solid growth this quarter in both revenue and non-GAAP net income, which was mainly driven by the recent success of Legacy TLBB. In terms of our new games, we continue to direct our strategic focus on MMORPG games, advanced casual games and SLG games. We remain committed to delivering the highest quality games possible as we work hard to develop our next blockbuster."

Mr. Qing Wei, Chief Games Development Officer added, "Our Legacy TLBB mobile game has consistently ranked among the top three grossing games in the Apple App Store since its launch in May. The success of Legacy TLBB was built on the enormous user base of our TLBB PC game and is a testament to our commitment to producing high quality games. The game took us a year and half to develop, and the team was given the Company's full support and the best available resources. We made sure that we delivered the highest possible quality for the game through continuous testing and modification."

Ms. Jasmine Zhou, CFO of Changyou added, "After the last couple of years' hard work, a few more new titles are scheduled for launch at the end of this year or early next year. Until these games are officially launched, we will continue our testing and adjustments on them, and start the marketing process for them from the third quarter."

Business Outlook

For the third quarter of 2017, Changyou expects:

Total revenue to be between US$160 million and US$170 million, including online game revenue of US$120 million to US$130 million;
Non-GAAP net income attributable to Chanyou.com Limited to be between US$55 million and US$60 million, and non-GAAP income per fully-diluted ADS to be between US$1.02 and US$1.12.  Share based compensation to be around US$2 million, assuming no new grants of share-based awards and that the market price of Changyou's ADSs is unchanged. Taking into account the elimination of the impact of these share-based awards, GAAP net income attributable to Changyou.com to be between US$53 million and US$58 million, and GAAP income per fully-diluted ADS to be between US$0.99 and US$1.08.
For the third quarter 2017 guidance, the Company has adopted a presumed exchange rate of RMB7.00 = US$1.00, as compared with the actual exchange rate of approximately RMB6.66 = US$1.00 for the third quarter 2016, and RMB6.86=US$ 1.00 for the second quarter 2017.


Monday, June 5, 2017

Comments & Business Outlook

BEIJING, June 5, 2017 /PRNewswire/ -- Changyou.com Limited ("Changyou" or the "Company") (CYOU), a leading online game developer and operator in China, today announced that it has updated its previously-announced outlook for the second quarter of 2017.

Due to the launch of Changyou's Legacy TLBB mobile game on May 16, 17 and 18, 2017 and the game's preliminary performance in the market, the Company now expects:

  • Total revenue to be between US$140 million and US$150 million, compared with the previous guidance of US$110 million and US$120 million  
  • Online game revenue to be between US$110 million to US$120 million, compared with the previous guidance of US$75 million and US$85 million
  • Non-GAAP[1] net income attributable to Chanyou.com Limited to be between US$60 million and US$65 million, or between US$1.12 and US$1.21 per fully-diluted ADS[2]. This compares with our previous guidance of non-GAAP net income attributable to Chanyou.com Limited between US$25 million and US$30 million, or between US$0.46 and US$0.56 per fully-diluted ADS. Assuming no new grants of share-based awards, we estimate that compensation expense relating to share-based awards will be around US$9 million[3]. Taking into account the elimination of the impact of these share-based awards, we expect GAAP net income attributable to Changyou.com to be between US$51 million and US$56 million, and GAAP income per fully-diluted ADS to be between US$0.95 and US$1.05.This compares with our previous guidance of GAAP net income attributable to Changyou.com between US$23 million and US$28 million, and GAAP income per fully-diluted ADS between US$0.43 and US$0.52.

Mr. Dewen Chen, CEO, commented, "We are pleased with the performance so far of our Legacy TLBB mobile game. The game has been widely embraced by both new players and returning PC game players, and has consistently ranked among the top three grossing games in the Apple App Store since its launch. Our Legacy TLBB mobile game incorporated many classic features from our flagship PC version, including various social and community functions, which re-created the PC game experience on mobile and encouraged a return of former PC game players. In addition, we simplified some of the game play, which makes it easier for brand new players to operate within the game, and extends the user base to a younger generation.

We believe that the launch of Legacy TLBB is likely to have some adverse impact on TLBB 3D, particularly on the number of new players and the number of former players coming back to the game. Consequently, we expect that the number of active players and revenue of TLBB 3D to decrease compared with our previous expectations.

Overall, with the launch of Legacy TLBB, we expect the total revenue for the second quarter of 2017 to be between US$140 million and US$150 million, an increase of 17% to 25% quarter-over-quarter and 8% to 16% year-over-year."

As previously reported, for guidance for the second quarter 2017, the Company adopted a presumed exchange rate of RMB7.00 = US$1.00, as compared with the actual exchange rate of approximately RMB6.53 = US$1.00 for the second quarter 2016, and RMB6.88=US$ 1.00 for the first quarter 2017.


Monday, May 29, 2017

Going Private News

BEIJING, May 27, 2017 /PRNewswire/ -- Changyou.com Limited ("Changyou" or the "Company") (NASDAQ: CYOU), a leading online game developer and operator in China, today announced that its board of directors (the "Board") has formed a special committee (the "Special Committee") consisting of three independent and disinterested directors, Mr. Dave De Yang, Mr. Charles Chan and Dr. Xiao Chen, to review and evaluate a previously-announced non-binding proposal (the "Proposal") that the Board received on May 22, 2017 from Dr. Charles Zhang, the Chairman of the Board of the Company, for the acquisition of all outstanding shares in the Company, including shares represented by American depositary shares, by an acquisition vehicle to be formed by Dr. Zhang. The Special Committee intends to retain independent financial and legal advisors in due course to assist it in the review and evaluation process.

The Company cautions its shareholders and others that the Proposal is non-binding and incomplete, and that neither the Board nor the Special Committee has made any decision with respect to the Company's response to the Proposal.


Monday, May 22, 2017

Going Private News

BEIJING, May 22, 2017 /PRNewswire/ -- Changyou.com Limited ("Changyou" or the "Company") (NASDAQ: CYOU), a leading online game developer and operator in China, today announced that its board of directors (the "Board") has received a preliminary nonbinding proposal letter, dated May 22, 2017, from Mr. Charles Zhang (the "Buyer"), chairman of the Board of the Company, to acquire all of the outstanding Class A and Class B ordinary shares of the Company, including Class A ordinary shares represented by American depositary shares of the Company (the "ADSs", each representing two Class A ordinary shares), for $21.05 in cash per Class A or Class B ordinary share, or $42.10 in cash per ADS, which represents a premium of 50% to the average closing price of the Company's ADSs during the last 90 trading days, and a premium of 9% to the closing price of the Company's ADSs on May 19, 2017. A copy of the proposal letter is attached hereto as Exhibit A.

The Board intends to form a special committee consisting of independent directors to consider the proposal. The Board expects that the special committee will retain separate advisors, including financial and legal advisors, to assist it in this process.

The Board cautions the Company's shareholders and others considering trading the Company's securities that the Board has just received the proposal letter and has not had an opportunity to carefully review and evaluate the proposal or make any decision with respect to the Company's response to the proposal. There can be no assurance that any definitive offer will be made, that any definitive agreement will be executed relating to the proposed transaction or that this or any other transaction will be approved or consummated. The Company does not undertake any obligation to provide any updates with respect to this or any other transaction, except as required under applicable lawcyou


Monday, April 24, 2017

Comments & Business Outlook

First Quarter 2017 Financial Results

  • Total revenue was US$120 million1, representing a decrease of 8% both year-over-year and quarter-over-quarter, meeting the top end of the Company's guidance.
  • GAAP net income attributable to Changyou.com to be between US$23 million and US$28 million, and GAAP income per fully-diluted share to be between US$0.43 and US$0.52.

Mr. Dewen Chen, CEO, commented, "We got off to a good start in 2017 as we recorded total revenue of US$120 million and non-GAAP net income of US$35 million for the first quarter, both meeting the top end of our guidance. Revenue from TLBB PC and TLBB 3D for the first quarter both exceeded our previous expectations. We will continue to launch new expansion packs in order to maintain user stability and extend the life spans of both games. In terms of new games, we are more determined than ever to develop popular games that resonate with users by producing content with innovative game play, premium graphics, cutting-edge technology, and other high quality features."

Mr. Qing Wei, Chief Games Development Officer added, "We conducted a second round of tests on Legacy TLBB mobile game in March. The results were in line with our expectations and improved greatly over the first round of tests in many aspects. Our team will continue to modify the game and make incremental improvements based on the latest test results as we get ready for the open beta test in mid-May. We hope to give this game the greatest possible chance of becoming a hit."

Ms. Jasmine Zhou, CFO of Changyou added, "Before we officially launch Legacy TLBB mobile game, our revenue projections for the game remain uncertain. Given the significance of this game to Changyou and the uncertainty inherent at this time, we believe that it is best to take a conservative approach and not include any projections for the game in our second quarter guidance. In the mid to long term, with new game launches such as Legacy TLBB mobile game in 2017, we expect our revenue to pick up in the second half of the year."


Tuesday, February 21, 2017

Comments & Business Outlook

Fourth Quarter 2016 Financial Results

  • Total revenues were US$131 million[1], representing a decrease of 19% year-over-year and 4% quarter-over-quarter, exceeding guidance by $1 million.
  • Non-GAAP net income attributable to Changyou.com Limited per fully-diluted ADS was US$0.75. This compares with US$0.85 in the fourth quarter of 2015 and US$0.85 in the third quarter of 2016.

Mr. Dewen Chen, CEO, commented, "2016 was a year of building on our strengths and committing to developing high grossing games. At the beginning of 2016, we announced our 'Top games, Big IP and Mass marketing' strategy, and strictly executed it. After a year of hard work, we have now prepared a solid pipeline with a focus on MMORPG games, and supplemented by a number of advanced casual games. We are confident that our efforts will start to pay off in 2017 with many new exciting products in the pipeline. We will continue to focus on producing high quality games that will resonate with players. "

Mr. Qing Wei, Chief Games Development Officer added, "Our development of Legacy TLBB mobile is more or less complete. The testing results so far meet our standards for high quality games. As our team has higher expectations for the game, we will continue to make incremental improvements on the game. We plan to conduct a large-scale beta test in the first quarter and if the results meet our expectation, the game will be officially launched in the second quarter."

Ms. Jasmine Zhou, CFO of Changyou added, "We are pleased that we exceeded both our revenue guidance and non-GAAP net income guidance, and our online game revenues remained stable.  We started to focus on producing high quality games at the beginning of 2016. This approach and higher testing standards have set the bar high for new games in pipeline, which had an impact on 2016 revenue. Nevertheless, we believe that focusing on the best is the only way to make a high quality and high grossing games possible."

Business Outlook

For the first quarter of 2017, Changyou expects:

  • Total revenues to be between US$110 million and US$120 million, including online game revenues of US$80 million to US$90 million;
  • Non-GAAP net income attributable to Chanyou.com Inc. to be between US$30 million and US$35 million, and non-GAAP income per fully-diluted share to be between US$0.56 and US$0.65. Assuming no new grants of share-based awards and that the market price of our shares is unchanged; we estimate that compensation expense relating to share-based awards will be between US$1 million and US$2 million. Considering eliminating the impact of these share-based awards, GAAP net income attributable to Changyou.com to be between US$28 million and US$34 million, and GAAP income per fully-diluted share to be between US$0.52 and US$0.64.

For the first quarter 2017 guidance, the Company has adopted a presumed exchange rate of RMB7.00 = US$1.00, as compared with the actual exchange rate of approximately RMB6.53 = US$1.00 for the first quarter 2016, and RMB6.83=US$ 1.00 for the fourth quarter 2016.


Monday, October 24, 2016

Comments & Business Outlook

Third Quarter 2016 Unaudited Financial Results

  • Total revenues were US$136 million1, representing a decrease of 28% year-over-year and an increase of 5% quarter-over-quarter, exceeding guidance by $1 million.
  • Non-GAAP net income attributable to Changyou.com Limited per fully-diluted ADS was US$0.85. This compares with US$1.43 in the third quarter of 2015 and US$0.68 in the second quarter of 2016.

Mr. Dewen Chen, CEO, commented, "In the year since we repositioned ourselves as game-centric company, we adopted the strategy, 'Top games, Big IP, and Mass marketing'. We have been working to diversify our portfolio of games and we have set higher criteria for assessing games in order to maintain the user base and draw new players to our various online and mobile worlds. We have full confidence in this process, and believe we have set ourselves up well for the coming year."

Mr. Qing Wei, Chief Games Development Officer added, "During the third quarter, we conducted a test on Legacy TLBB with Tencent and the results essentially matched both of our expectations. Progress on the game's development has been in line with our schedule, and we are now entering the final stages of fine-tuning. We expect to be able to launch the game at the beginning of 2017."

Ms. Jasmine Zhou, CFO of Changyou added, "We are pleased that we exceeded our revenue guidance and non-GAAP net income guidance. Online game revenues remained stable at around $100 million compared with the second quarter, and we were able to keep fairly tight control of our costs. Total revenues and online game revenues are expected to decline slightly in the fourth quarter. Overall, we believe that we are well positioned for a rebound in 2017 as we get closer to releasing a diverse collection of new and exciting games that are currently under development."

Business Outlook

For the fourth quarter of 2016, Changyou expects:

  • Total revenues to be between US$120 million and US$130 million, including online game revenues of US$85 million to US$95 million;
  • Non-GAAP net income attributable to Chanyou.com Inc. to be between US$30 million and US$35 million, and non-GAAP income per fully-diluted share to be between US$0.56 and US$0.65. Assuming no new grants of share-based awards and that the market price of our shares is unchanged; we estimate that compensation expense relating to share-based awards will be around US$2.0 million and US$3.0 million. Considering eliminating the impact of these share-based awards, GAAP net income attributable to Changyou.com to be between US$27 million and US$33 million, and GAAP income per fully-diluted share to be between US$0.51 and US$0.62.

For the fourth quarter 2016 guidance, the Company has adopted a presumed exchange rate of RMB6.7 = US$1.00, as compared with the actual exchange rate of approximately RMB6.39 = US$1.00 for the fourth quarter 2015, and RMB6.66=US$ 1.00 for the third quarter 2016.


Monday, August 1, 2016

Comments & Business Outlook

Second Quarter 2016 Financial Results

  • Total revenues were US$129 million[1], representing a decrease of 36% year-over-year and 1% quarter-over-quarter, in line with the Company's guidance.
  • Non-GAAP net income attributable to Changyou.com Limited per fully-diluted ADS[3] was US$0.68. This compares with US$0.95 in the second quarter of 2015 and US$0.58 in the first quarter of 2016.

Mr. Dewen Chen, CEO, commented, "Since we set forth our strategy of 'Top Games, Big IP and Mass Marketing' at the beginning of the year, we have worked hard to fortify a strong mobile game pipeline. Starting in the third quarter, we will be releasing more high quality titles to the market. To adapt to the emerging market trends, we are now moving towards a more diversified strategy with a focus on MMORPG, e-sports and card combat games. TLBB PC game and TLBB 3D mobile game are both stable and we will continue to launch new expansion packs to extend the longevity of these games."

Mr. Qing Wei, Chief Games Development Officer added, "The development of our new Legacy TLBB mobile game is on track. The feedback that we have received is that the game has recreated TLBB's PC experience on mobile and meets the expectation of game players. We will continue to make improvements to the game based on testing results and user feedback."

Ms. Jasmine Zhou, CFO of Changyou added, "We are pleased that we arrived at the top end of our revenue guidance and exceeded our non-GAAP net income guidance. Online game revenues remained stable at around $100 million compared to the first quarter. Excluding the impact of foreign exchange, online game revenues are expected to be sequentially stable in the third quarter. With more games coming to the market in the next two to three quarters, we expect online game revenues to gradually recover."

Business Outlook

For the third quarter of 2016, Changyou expects:

Total revenues to be between US$125 million and US$135 million, including online game revenues of US$90 million to US$100 million;
Non-GAAP net income attributable to Changyou.com Limited to be between US$25 million and US$30 million;
Non-GAAP fully diluted net income attributable to Changyou.com Limited per ADS to be between US$0.47 and US$0.56;
A tax expense adjustment to be made in the third quarter, which may lead to increases in Non-GAAP net income attributable to Changyou.com and Non-GAAP fully diluted net income per ADS attributable to Changyou.com from our current projections;
Assuming no new grants of share-based awards and at constant share price, share-based compensation expense to be between US$2.0 million and US$2.4 million.
For the third quarter 2016 guidance, the Company has adopted a presumed exchange rate of RMB6.7 = US$1.00, as compared with the actual exchange rate of approximately RMB6.26 = US$1.00 for the third quarter 2015, and RMB6.53=US$ 1.00 for the second quarter 2016.


Monday, October 26, 2015

Comments & Business Outlook

Third Quarter 2015  Financial Results

Total revenues were US$189 million (1), representing an increase of 4% year-over-year and a decrease of 7% quarter-over-quarter, exceeding guidance by $7 million.(2)

Non-GAAP net income attributable to Changyou.com Limited per fully-diluted ADS (4) was US$1.43. This compares with US$0.95 in the second quarter of 2015 and US$0.07 in the third quarter of 2014.

Mr. Dewen Chen, Co-CEO, commented "During the past year, after reviewing each of our businesses, our senior management has re-positioned us once again as a gaming-centric company and focused on enhancing our competitive edge in R&D. Our industry-proven R&D team with extensive experience in MMO PC games is now realigning to the development of hard-core mobile games. In addition, our strong portfolio of valuable IP will significantly increase the likelihood of a successful game and provide additional possibilities to expand our revenue streams."

Ms. Jasmine Zhou, CFO of Changyou added, "I'm pleased to report that we achieved further improvements in operating efficiencies in the quarter based on strict cost controls. We will continue our strategy of lean operation and focus on our mission of delivering the best possible online game titles to our users."

Business Outlook

For the fourth quarter of 2015, Changyou expects:

Total revenues to be between US$145 million and US$155 million, including online game revenues of US$115 million to US$125 million;

Non-GAAP net income attributable to Changyou.com Limited to be between US$30 million and US$35 million;

Non-GAAP fully diluted income attributable to Changyou.com Limited per ADS to be between US$0.56 and US$0.65;

Assuming no new grants of share-based awards, share-based compensation expense to be between US$3.4 million and US$3.8 million.


Monday, July 27, 2015

Comments & Business Outlook

Second Quarter 2015 Financial Results

Total revenues were US$202 million, representing an increase of 14% year-over-year and a decrease of 3% quarter-over-quarter, exceeding guidance by $12 million.(1) 

  • Non-GAAP net income attributable to Changyou.com Limited per fully-diluted ADS (3) was US$0.95. This compares with US$0.97 in the first quarter of 2015 and US$0.04 in the second quarter of 2014.

Mr. Dewen Chen, Co-CEO, commented "TLBB PC once again delivered to our expectations and we continue to ensure in-game balance and user stability. TLBB 3D mobile game is in its ninth month of operation and we endeavor to extend its lifespan through regular issuances of expansion packs. We are pleased with the success that our flagship games TLBB PC and TLBB 3D have achieved in their respective markets and we remain committed to introducing more high quality games to the market."

"We have achieved further margin improvements in our mobile platform business and we will continue to explore and experiment with new possibilities under effective cost controls," added Mr. Chen.

Ms. Jasmine Zhou, CFO of Changyou concluded, "We are pleased to announce that our top line and bottom line exceeded our guidance by $12 million and $17 million respectively. The results include those of 7Road, as its divestment has not yet been completed. The management team remains focused on cultivating the best R&D environment under an efficient operation model."

Business Outlook

For the third quarter of 2015, Changyou expects:

Total revenues to be between US$172 million and US$182 million, including online game revenues of US$135 million to US$145 million;

Non-GAAP net income attributable to Changyou.com Limited to be between US$35 million and US$40 million;

Non-GAAP fully diluted income attributable to Changyou.com Limited per ADS to be between US$0.64 and US$0.73;

Assuming no new grants of share-based awards, share-based compensation expense to be between US$8.5 million and US$9.0 million, reducing the fully diluted income attributable to Changyou.com Limited per ADS by US$0.15 to US$0.16.


Thursday, May 7, 2015

Joint Venture

KUALA LUMPUR, Malaysia, May 7, 2015 (GLOBE NEWSWIRE) -- MOL Global, Inc. (MOLG) ("MOL" or the "Company"), a leading e-payment enabler for online goods and services in emerging and developed markets, today announced a strategic partnership with Beijing-based, Changyou.com Limited (CYOU) ("Changyou"), owner and operator of the mobile application store Mobogenie.

Changyou's Mobogenie Android Store hosts over 12 million entertainment resources including apps, games, music and e-books, among others, catering to both mainstream and niche user preferences in a variety of local markets. The application has been installed over 500 million times globally, and has over 40 million downloads in Southeast Asia alone.

Pursuant to the agreement, Mobogenie will leverage MOL's payments platform, including its vast distribution network which includes more than 970,000 physical locations in 11 countries across 4 continents. MOL will gain access to Mobogenie's mobile user base, which includes a daily distribution figure of 59 million. Both parties will share net revenues associated with all content purchases.

Mr. Preecha Praipattarakul, co-CEO of MOL, commented, "We are extremely excited to cooperate with Changyou's all-in-one Android Store, Mobogenie, and offer our payment solutions on their market leading platform and servicing its massive user base throughout Southeast Asia. Through this partnership, Mobogenie will significantly improve its mobile entertainment experience for users by offering premium content from MOL, as well as the convenience of our payment solutions. This collaboration is a win-win for both users and developers, especially those in Southeast Asia. Mobogenie will be able to deepen its localized content and gain access to MOL's tremendous gaming and streaming resources, while MOL will be able to expand its product offerings and gain access to Mobogenie's user base. This is just the beginning of our strategic cooperation with Changyou and we aim to further deepen our relationship going forward."


Monday, April 27, 2015

Comments & Business Outlook

First Quarter 2015 financial Results

  • Total revenues were US$209 million, representing an increase of 15% year-over-year and a decrease of 3% quarter-over-quarter, exceeding guidance by US$9 million.
  • Non-GAAP net income attributable to Changyou.com Limited per fully-diluted ADS[2] was US$0.97. This compares with non-GAAP net income attributable to Changyou.com Limited per fully-diluted ADS of US$0.25 in the fourth quarter of 2014 and a non-GAAP net loss attributable to Changyou.com Limited per fully-diluted ADS of US$0.36 in the first quarter of 2014.

Mr. Dewen Chen, Co-CEO, commented "We are pleased that our TLBB PC game has delivered another quarter of solid revenue and profitability, and we expect to see more PC game launches in the second half of the year, replacing some of our older games. Our focus now for mobile games is to bring out an abundant and diversified pipeline of new games, through in-house development and co-development."

"On mobile Internet platforms, user engagement in our key markets remained stable, while we kept our marketing dollars at a minimum. We are convinced that the potential in mobile Internet products is yet to be unlocked and we will continue to explore new possibilities with a cost-conscious approach," added Mr. Chen.

Ms. Jasmine Zhou, CFO of Changyou, concluded "We are pleased to report a good quarter with both top line and bottom line exceeding our guidance. Our revenue was $209 million, a 15% increase year-over-year, and exceeded our guidance by $9 million due to better than expected performance of each of our main business lines. Our non-GAAP net income attributable to Changyou was $52 million, compared with $14 million in the fourth quarter, and exceeded our guidance by $17 million. The margin improvements were a result of a clearer focus in our business plans and increased efficiency in execution. Our second quarter guidance is relatively softer due to the divestment of 7Road and seasonal slowdown from the TLBB PC game, as well as new games that will have been in operation for less than a quarter."

Business Outlook

For the second quarter of 2015, Changyou expects:

Total revenues to be between US$180 million and US$190 million, including online game revenues of US$155 million to US$165 million;

Non-GAAP net income attributable to Changyou.com Limited to be between US$30 million and US$35 million;

Non-GAAP fully diluted income attributable to Changyou.com Limited per ADS to be between US$0.56 and US$0.65;

Assuming no new grants of share-based awards, share-based compensation expense to be between US$4.1million and US$4.6 million, reducing the fully diluted income attributable to Changyou.com Limited per ADS by US$0.08 to US$0.09.


Tuesday, March 3, 2015

Comments & Business Outlook

Fourth Quarter 2014 Financial Results

  • Total revenues were a record US$215.9 million, an increase of 19% quarter-over-quarter and 11% year-over-year, and exceeded guidance by US$17.9 million.
  •  Non-GAAP net income attributable to Changyou.com Limited per fully-diluted ADS2 was US$0.25. This compares with US$0.07 in the third quarter of 2014 and US$0.82 in the fourth quarter of 2013.

�Since Dewen and I took office three months ago, Changyou�s senior management team is united and has worked diligently together. Our common goal is to take the Company to new heights built upon the strong foundation that Tao Wang, our former CEO, created. I am pleased to report a quarter of solid performance, as demonstrated by a sustainable revenue stream from TLBB PC, a successful launch of the mobile game TLBB 3D, as well as a more cost conscious approach to our mobile internet business.� commented Ms. Carol Yu, Co-CEO of Changyou.

Mr. Dewen Chen, Co-CEO, commented, �We are pleased with the progress in our games business. Our flagship title TLBB marched forward into the eighth year of outstanding and profitable performance. With its achieved sustainability, TLBB has become one of the most enviable games in the industry, expected to generate significant revenue and profitability for years to come. On mobile games, we are excited about the initial success of TLBB 3D, which generated gross billing of over US$65 million in the first two months of operation. This reflected firstly the current demand for hardcore MMO mobile games matched well with our core expertise, secondly our strong operation and publishing capabilities, and on top of that, TLBB�s strong game IP. We have worked diligently and prepared a strong pipeline of both self-developed and licensed mobile games, which will be launched in the coming quarters.

�For our mobile internet business, our focus now is to optimize our operations and take a more targeted approach in key markets with the largest potential. We will work more closely with local partners and look to elevate our products by offering more localized services and functions tailored for the local needs,� added Mr. Dewen Chen.

Ms. Jasmine Zhou, CFO of Changyou concluded, �We are pleased to see the above efforts combined has brought Changyou a new record revenue of US$216 million this quarter, exceeding our guidance by a wide margin. The enhanced revenue coupled with our rigorous cost control measures, streamlined operational structures and reduced headcount have brought Changyou back to profitability. We expect to see a bigger impact of these cost-control measures and further margin improvements in the first quarter of 2015�.

Business Outlook

For the first quarter of 2015, Changyou expects:

Total revenues to be between US$195.0 million and US$200.0 million, including online game revenues of US$175.0 million to US$180.0 million and online advertising revenues of US$9 million to US$10 million;

Non-GAAP net income attributable to Changyou.com Limited to be between US$32 million and US$35 million;

Non-GAAP fully diluted income attributable to Changyou.com Limited per ADS to be between US$0.64 and US$0.68;

Assuming no new grants of share-based awards, share-based compensation expense to be between US$4.0 million and US$4.5 million, reducing the fully diluted income attributable to Changyou.com Limited per ADS by US$0.08 to US$0.09.


Monday, February 9, 2015

Comments & Business Outlook

Fourth Quarter 2014 Unaudited Financial Results

  • Total revenues were a record US$215.9 million, an increase of 19% quarter-over-quarter and 11% year-over-year, and exceeded guidance by US$17.9 million.
  • Non-GAAP net income attributable to Changyou.com Limited per fully-diluted ADS[2] was US$0.25. This compares with US$0.07 in the third quarter of 2014 and US$0.82 in the fourth quarter of 2013.

"Since Dewen and I took office three months ago, Changyou's senior management team is united and has worked diligently together. Our common goal is to take the Company to new heights built upon the strong foundation that Tao Wang, our former CEO, created. I am pleased to report a quarter of solid performance, as demonstrated by a sustainable revenue stream from TLBB PC, a successful launch of the mobile game TLBB 3D, as well as a more cost-conscious approach to our mobile internet business," commented Ms. Carol Yu, Co-CEO of Changyou.

Mr. Dewen Chen, Co-CEO, commented, "We are pleased with the progress in our games business. Our flagship title TLBB marched forward into the eighth year of outstanding and profitable performance. With its achieved sustainability, TLBB has become one of the most enviable games in the industry, expected to generate significant revenue and profitability for years to come. On mobile games, we are excited about the initial success of TLBB 3D, which generated gross billing of over US$65 million in the first two months of operation. This reflected firstly the current demand for hardcore MMO mobile games matched well with our core expertise, secondly our strong operation and publishing capabilities, and on top of that, TLBB's strong game IP. We have worked diligently and prepared a strong pipeline of both self-developed and licensed mobile games, which will be launched in the coming quarters."

"For our mobile internet business, our focus now is to optimize our operations and take a more targeted approach in key markets with the largest potential. We will work more closely with local partners and look to elevate our products by offering more localized services and functions tailored for the local needs," added Mr. Dewen Chen.

Ms. Jasmine Zhou, CFO of Changyou concluded, "We are pleased to see the above efforts combined has brought Changyou a new record revenue of US$216 million this quarter, exceeding our guidance by a wide margin. The enhanced revenue coupled with our rigorous cost control measures, streamlined operational structures and reduced headcount have brought Changyou back to profitability. We expect to see a bigger impact of these cost-control measures and further margin improvements in the first quarter of 2015."

Business Outlook

For the first quarter of 2015, Changyou expects:

Total revenues to be between US$195.0 million and US$200.0 million, including online game revenues of US$175.0 million to US$180.0 million and online advertising revenues of US$9 million to US$10 million;

Non-GAAP net income attributable to Changyou.com Limited to be between US$32 million and US$35 million;

Non-GAAP fully diluted income attributable to Changyou.com Limited per ADS to be between US$0.64 and US$0.68;

Assuming no new grants of share-based awards, share-based compensation expense to be between US$4.0 million and US$4.5 million, reducing the fully diluted income attributable to Changyou.com Limited per ADS by US$0.08 to US$0.09.


CFO Trail

Appointment of Chief Financial Officer

The Company is also pleased to announce the appointment of Ms. Jasmine Zhou as Chief Financial Officer. Ms. Zhou has being with Sohu since August 2003 and has extensive experience in capital markets and participated in all mergers, acquisitions and other capital related transactions of the Sohu Group, including the Changyou's carve-out from Sohu and our initial public offering in 2009, as well as Tencent's strategic investment in and business collaboration with Sohu's subsidiary Sogou Inc. Ms. Zhou received her bachelor's degree in law from Renmin University of China, LL.M. degree from University of Sydney, and Dual Executive MBA degree from Tsinghua University and INSEAD.


Monday, November 3, 2014

Comments & Business Outlook

Third Quarter 2014 Unaudited Financial Results

  • Total revenues were US$180.8 million, an increase of 2% quarter-over-quarter and a decrease of 1% year-over-year, and were below the Company's guidance by US$5.2 million.
  •  Non-GAAP net income attributable to Changyou.com Limited per fully-diluted ADS was US$0.07. This compares with non-GAAP net income attributable to Changyou.com Limited per fully-diluted ADS of US$0.04 in the second quarter of 2014 and non-GAAP net income per fully-diluted ADS of US$1.37 in the third quarter of 2013.

Mr. Dewen Chen, Changyou's Co-CEO, commented, "We are pleased with the strong user traction on two of our newly-launched mobile games, TLBB 3D and Qin Shi Ming Yue 2.  We believe this demonstrates our capabilities in mobile game publishing as well as the creative talents of our mobile R&D team. For our MMO business, user engagement remained resilient during the quarter, as we introduced new innovative game play and added social interactions and reduced the level of difficulty in our flagship TLBB game."

"We have built our business around a user-first philosophy, which enabled us to become one of China's leading game companies, and pushed us to look ahead to see what our users want next. We will continue to seize the opportunities we see on mobile internet and continue our focus on building an integrated platform with games and applications that meet the needs of a broad spectrum of users.  We believe this is the right strategy to maximize our long-term growth and remain competitive in the internet sector for years to come."

Ms. Rucia Ren, Changyou's acting CFO, said, "We are pleased with the increase from the previous quarter in the average monthly active accounts for our online game business, driven by a more engaging and balanced in-game environment will attract all levels of players in the long run and effectively extend TLBB's lifespan, despite having a short-term impact on revenues. We are encouraged by the recent performance of our newly launched mobile games, and we will keep focusing on perfecting our games to meet the evolving demands of users.

Business Outlook

For the fourth quarter of 2014, Changyou expects total revenues to be between US$188.0 million and US$198.0 million, including online game revenues of US$155.0 million to US$165.0 million and online advertising revenues of US$20.0 million to US$21.0 million.

Guidance on Non-GAAP net income, Non-GAAP fully diluted earnings per ADS, and share-based -compensation expense for the fourth quarter of 2014 will not be provided at this time, as there are uncertainties as to the expected costs and expenses associated with mobile games launched, to be launched, and currently in development.


CFO Trail

Management Changes

The Company announced that Mr. Tao Wang has resigned as its Chief Executive Officer for personal reasons. Changyou's Board of Directors has appointed Ms. Carol Yu, President and CFO of Sohu.com Inc., and Mr. Dewen Chen, President, to be Co-CEOs of the Company. Ms Yu will remain in her position as President and CFO of Sohu in addition to her new role with the Company. Mr. Wang will continue to serve as a Director of the Company.

Ms. Yu stated, "On behalf of the Board and Sohu, I would like to thank Tao for his extraordinary contribution in leading Changyou to become one of the most premier online game companies in China. Tao has played a vital role in creating the legendary Tian Long Ba Bu and other popular games which gained remarkable success. In his continued capacity as a member of the Board, Tao will continue to serve Changyou with his industry insights and inspirations. In my new capacity, I will work closely with Dewen to build on the strong foundations Tao has built over his 10-year tenure".


Monday, July 28, 2014

Comments & Business Outlook

Second Quarter 2014 Unaudited Financial Results

  • Total revenues were US$177.8 million, a decrease of 2% quarter-over-quarter and 3% year-over-year, and were below the Company's guidance by US$4.2 million.
  • Non-GAAP net income attributable to Changyou.com Limited per fully-diluted ADS was US$0.04. This compares with non-GAAP net loss attributable to Changyou.com Limited per fully-diluted ADS of US$0.36 in the first quarter of 2014 and non-GAAP net income per fully-diluted ADS of US$1.41 in the second quarter of 2013.

Mr. Tao Wang, Changyou's chief executive officer, commented, "Changyou's overarching strategy is to continue to launch new expansion packs and new games while supporting our emerging platform business. In the platform business, we are promoting and launching new content for 17173 media and mobile apps and investing in a mobile technology company. Ultimately, our goal is to combine our online games business with a central user platform for distributing and promoting games. We believe the two together will form a winning business model that can make Changyou into an even more valuable and successful company than it is today."

Changyou's president, Mr. Dewen Chen, added, "As always, we carry out development of new expansion packs and new games based on user feedback and focusing on gamers' needs. We believe this benefits our players because their experience of a game improves over time with the release of each expansion pack, whereas the company takes higher profits from the game over its lifespan. This is the reason for the long-running success of TLBB, which is currently one of the most popular online games in China and one of the most profitable online games globally. Fantasy Frontier Online, a new MMO game we launched on July 18, is showing promise, and we have an exciting pipeline of web and mobile games planned for the rest of the year to grow our online games business."

Ms. Rucia Ren, Changyou's acting chief financial officer, said, "We operate games with the aim of increasing total returns over a game's lifespan. At times, the updates we implement causes revenues to fall in the near term, such as in the case of the second quarter, where revenues from the online game business came in below our expectations as a result of updates to TLBB. Given TLBB's user growth in the second quarter and expected revenues from the successful launch of new games in the latter half of the year, our outlook for the online games business is positive. We expect to use the profit from online games to support new product development and sales and marketing for the platform we are building. We believe that this will impact the margins and profitability of the overall company in the near term."

Business Outlook

For the third quarter of 2014, Changyou expects:

  • Total revenues to be between US$186.0 million and US$192.0 million, including online game revenues of US$158.0 million to US$163.0 million and online advertising revenues of US$16.0 million to US$17.0 million.
  • Non-GAAP net loss attributable to Changyou.com Limited to be between US$0 million and US$6.0 million. The expected non-GAAP net loss attributable to Changyou.com Limited is because the Company plans to continue its marketing and promotion of its PC-based and mobile-based software mobile applications in China and overseas, and because of the anticipated consolidation of MoboTap, a loss-making business, into the Company's financials.
  • Non-GAAP fully diluted loss per ADS attributable to Changyou.com Limited to be between US$0 and US$0.11.
  • Assuming no new grants of share-based awards, share-based compensation expense to be between US$0.5 million and US$1.0 million, increasing fully diluted loss per ADS attributable to Changyou.com Limited by US$0.01 to US$0.02.

Friday, July 18, 2014

CFO Trail

BEIJING, July 18, 2014 /PRNewswire/ -- Changyou.com Limited ("Changyou" or "the Company") (NASDAQ: CYOU), a leading online game developer and operator in China, today announced that Ms. Rucia Ren has joined Changyou as finance director and acting chief financial officer.

Ms. Ren has 13 years of experience in the financial field. Prior to joining Changyou, Ms. Ren was Senior Finance Manager at Baidu Inc., where she managed the overall financial operations, financial reporting, tax and other finance functions. She also led and participated in various capital raising and acquisition initiatives and has solid experience leading teams and managing projects. Prior to joining Baidu, she was a Manager at PricewaterhouseCoopers, and subsequently at Ernst & Young. Ms. Ren has a Masters degree in Economics from Renmin University of China. She is a certified public accountant in China and a certified management accountant in the U.S.

"I am pleased to have Rucia join us," said Mr. Tao Wang, chief executive officer of Changyou. "With her extensive experience in the financial field and many years of experience working at a large Internet company, Rucia will hit the ground running and I expect her to contribute immediately to our continued progress."


Wednesday, July 16, 2014

Comments & Business Outlook

BEIJING, July 16, 2014 /PRNewswire/ -- Changyou.com Limited ("Changyou" or the "Company") (NASDAQ: CYOU), a leading online game developer and operator in China, and MoboTap Inc. ("MoboTap"), a Cayman Islands company that is the mobile technology developer behind the Dolphin Browser, today jointly announced that they have entered into a definitive investment agreement (the "Investment Agreement") pursuant to which Changyou will purchase 51% of the equity interests in MoboTap on a fully-diluted basis, for cash consideration of US$91 million. In addition, Changyou will provide US$30 million in funding to MoboTap by purchasing a zero-coupon convertible bond due in five years. Changyou will have the option, exercisable at any time when the bond is outstanding, to convert all or any part of the unpaid principal into shares of MoboTap at a conversion price that would result in Changyou's equity interest in MoboTap increasing to 60% on a fully-diluted basis, measured as of the closing under the Investment Agreement, if the option is exercised in full. The transaction is expected to close in August 2014, subject to regulatory approvals and customary closing conditions.

MoboTap is the creator of Dolphin Browser, a free mobile browser for Android and iOS devices and is one of the most popular third-party mobile browsers in terms of the total number of downloads in the month of March 2014 according to App Annie. Over 100 million users globally have used Dolphin Brower, with the vast majority of its users based in the U.S. and Europe.

Mr. Tao Wang, Changyou's chief executive officer, said, "The success of Dolphin Browser clearly reflects the MoboTap team's ability to translate their solid understanding of mobile users' needs and strong technical expertise into successful products and a global business. I am excited to work with MoboTap and we will support Dolphin Browser to grow its market share even further."

Mr. Yongzhi Yang, chief executive officer of MoboTap, said, "MoboTap went from a small startup to now a company with 100 million users worldwide. The mobile browser is the gateway to the Internet on mobile devices and our passion for creating the best mobile user experience has never changed. I am happy that Changyou also shares our vision for the future of mobile Internet and will be our strong supporter of our global expansion."


Monday, April 28, 2014

Comments & Business Outlook

First Quarter 2014 Unaudited Financial Results

  • Total revenues were US$180.8 million, a decrease of 7% quarter-over-quarter and an increase of 2% year-over-year, and exceeded the Company's guidance by US$0.8 million.
  • Non-GAAP net loss attributable to Changyou.com Limited per fully-diluted ADS was US$0.36. This compares with non-GAAP net income attributable to Changyou.com Limited per fully-diluted ADS of US$0.82 in the fourth quarter of 2013 and US$1.45 in the first quarter of 2013.

Mr. Tao Wang, Changyou's chief executive officer, commented, "We follow a 'users first' philosophy in running our online games business, constantly looking for ways to enhance our flagship games and releasing updates with novel and entertaining content. We always want our games to excite players, and we believe this is why we have been able to deliver games, such as TLBB, Wartune and DDTank, that continue to be popular for an extended period of time. We will continue to maintain these games and launch more high quality games in major segments - MMO, web and mobile games to build out our portfolio, capture market share and deepen our position in the online games market in China."

Changyou's president, Mr. Dewen Chen, added, "We are making good progress in building an integrated platform for gamers around the content and offerings of the 17173 business. Already a leading source of news, tips and social networking for gamers, the 17173 website attracted significantly higher viewership in the first quarter after more video content and live broadcasting of e-sport events were introduced to the website. The 17173 website is expanding across multiple platforms as more users download and install our software applications, including 17173 Browser on PCs and 17173 Mobile on mobile and other applications that we have been promoting heavily. We will maintain the intensity of our advertising campaign for software applications and platform initiatives throughout the year in order to advance the platform business."

Ms. Erin Sheng, Changyou's interim chief financial officer, said: "Our online games and online advertising businesses delivered solid results in line with our expectations. A stable cash flow from these businesses is providing the financial support for investing in new games, software applications, and platform initiatives for the future. We look forward to when these investments bear fruit and in turn increase shareholders value over the long term."

Business Outlook

For the second quarter of 2014, Changyou expects:

  • Total revenues to be between US$182.0 million and US$188.0 million, including online game revenues ofUS$161.0 million to US$166.0 million and online advertising revenues of US$14.0 million to US$15.0 million.
  • Non-GAAP net loss attributable to Changyou.com Limited to be between US$14.0 million and US$20.0 million. The expected non-GAAP net loss attributable to Changyou.com Limited is because the Company plans to continue with its marketing and promotions of its software applications for PCs and mobile devices in China and overseas, and to increase its investment in human capital.
  • Non-GAAP fully diluted loss per ADS attributable to Changyou.com Limited to be between US$0.26 and US$0.38.
  • Assuming no new grants of share-based awards, share-based compensation expense to be between US$0.5 million and US$1.0 million, increasing fully diluted loss per ADS attributable to Changyou.com Limited byUS$0.01 to US$0.02.

Monday, February 10, 2014

Comments & Business Outlook

Fourth quarter 2013 Unaudited Financial Results

  • Total revenues reached a record US$194.9 million, an increase of 6% quarter-over-quarter and 12% year-over-year, and were in line with the Company's guidance
  • Net income attributable to Changyou.com Limited was US$43.0 million, a decrease of 41% quarter-over-quarter and 43% year-over-year. Net income attributable to Changyou.com Limited per fully-diluted ADS was US$0.81
  • Non-GAAP net income attributable to Changyou.com Limited was US$43.3 million, a decrease of 41% quarter-over-quarter and 43% year-over-year, and exceeded the Company's guidance by US$21.3 million. Non-GAAP net income attributable to Changyou.com Limited per fully-diluted ADS was US$0.82

Mr. Tao Wang, Changyou's Chief Executive Officer, commented, "Our online games business continues to grow and be supported by our flagship titles TLBB, Wartune and DDTank. The latest game updates for TLBB (New TLBB) and Wartune (Wartune II) spurred growth in both games after their respective releases. In order to increase our chance of success in mobile games, aside from in-house development, we are reaching outwards to capitalize on the pool of game development talent outside the company. We will carry out co-development of mobile games as well as license third-party mobile games through the Win Plan, a new licensing program, to help us identify the best new products from independent developers. We are also deepening the spirit of innovation and entrepreneurship within the Company. We are announcing new employee incentive plans, aimed at giving our employees a sense of ownership by allowing them to participate in the success of the company and in specific projects. We believe our investments in such areas will make it possible for us to capture great products to further grow our business and enhance our position as a leading online games company." 

Changyou's President, Mr. Dewen Chen, added, "The solid performance of the 17173 business and newly-launched software applications over the past quarter is encouraging. The 17173 website has become the most important single source of news, tips, and social networking for gamers – a resource that gamers know puts them first. It is now expanding across multiple platforms, with the introduction of multiple software applications that include the 17173 Browser on PCs, and 17173 Mobile and Game Jewel on mobile and others. We are continuing to hire engineers and content managers for mobile as we build new software applications and improve on existing ones. We will be continuing our advertising campaign for our software applications in 2014 to accelerate the development of a platform business." 

Mr. Alex Ho, Changyou's chief financial officer, said: "We ended fiscal year 2013 with revenues across each of our businesses reaching new highs in the fourth quarter, and solid growth in our top-line results for the full year. With the consistent rich cash inflows from our existing businesses, we are in a good position to continue investments in mobile games and new software applications of our platform initiative, which we believe can enhance the competitiveness and industry position of the Company and increase shareholders' value over the long term." 

 Business Outlook

For the first quarter of 2014, Changyou expects: 

  • Total revenues to be between US$174 million and US$180 million, including online game revenues of US$160 million to US$165 million and online advertising revenues of US$8 million to US$9 million. The expected decline in online game revenues from the fourth quarter is mainly because of lower projected revenues from TLBB, as the Company will not launch an expansion pack for the game in the first quarter. The expected decline in online advertising revenues from the fourth quarter is mainly because the first quarter is typically a seasonally slow quarter for the online advertising business. 
  • Non-GAAP net loss attributable to Changyou.com Limited to be between US$16 million and US$22 million. The expected non-GAAP net loss attributable to Changyou.com Limited is because total revenues are expected to decrease as described in the preceding paragraph, and the Company plans to increase expenditures on marketing of software applications for PCs and mobile devices in China and overseas, and to increase its investment in human capital. 
  • Non-GAAP fully diluted loss per ADS attributable to Changyou.com Limited to be between US$0.30 and US$0.42.
  • • Assuming no new grants of share-based awards, share-based compensation expense to be between US$0.5 million and US$1.0 million, increasing fully diluted loss per ADS attributable to Changyou.com Limited by US$0.01 to US$0.02.

Thursday, November 21, 2013

Acquisition Activity

NEW YORK, November 21, 2013 /PRNewswire/ -- Changyou.com Limited ("Changyou" or the "Company") (NASDAQ: CYOU), a leading online game developer and operator in China, and Kalends Inc. ("Kalends"), a provider of comprehensive Internet products and services for the global market, today jointly announced that they have entered into a definitive investment agreement (the "Investment Agreement") pursuant to which Changyou will acquire 62.5% of the equity interests, on a fully-diluted basis, of a company of Kalends outside of Chinathat will hold all of the assets associated with Raidcall ("Raidcall"), a free social communication platform (such assets, the "Raidcall Business"), for US$50 million in cash. The transaction is expected to close in December 2013, subject to customary closing conditions. This acquisition accelerates Changyou's progress toward creating a global gamer platform.

Mr. Dewen Chen, Changyou's president, said, "With over 20 million registered users globally, Raidcall is a popular, high-quality communication software used by gamers for real-time audio group chat while they play online games. With this transaction, Changyou offers gamers a more comprehensive selection of products and moves forward in its plan to develop a platform business. In addition, we will add a proven team of top engineers, and we are confident in their capabilities to continue to make Raidcall a popular product in new countries that we market to."

Mr. Yahui Zhou, chairman and chief executive officer of Kalends, said, "Kalends and Changyou share the same passion in providing the best-in-class products and services to gamers. With Changyou's investment in the Raidcall Business and their expertise and capabilities in marketing, we see greater chance for success and an even larger potential to grow Raidcall's presence globally."

Raidcall is a free social communication software that facilitates real-time online group activities via voice, text and video, allowing users to create and organize groups of varying size to participate in a wide range of online group activities such as online games, music, karaoke and other live performance dynamics. Raidcall has provided group communication services to over 20 million registered users to-date, including world-class professional gaming teams such as Fnatic and Evil Geniuses. Available in 14 different languages, Raidcall currently operates overseas in multiple regions, such as Taiwan, Hong Kong, Macau, Brazil, Russia, and others.


Monday, October 28, 2013

Comments & Business Outlook

Third quarter 2013 Unaudited Financial Results

  • Total revenues for the third quarter of 2013 were flat quarter-over-quarter and increased 10% year-over-year to US$183.1 million, and were in line with the Company's guidance.
  • Diluted net income per ADS attributable to Changyou.com Limited was $1.36 vs. last years quarter of $1.37

Mr. Tao Wang, Changyou's Chief Executive Officer, commented, "Our users continue to be our top priority in our decisions on product and service offerings. On October 25, we released a much-anticipated annual major expansion pack for TLBB called "New TLBB" that our team of developers has been working on for over a year. In preparation for its release, we adjusted the content of the regular expansion pack released in the third quarter and tweaked parameters in the game to fine-tune the in-game economics. The release of "New TLBB" was met with a positive response. We believe this is the result of a carefully planned and well-executed product and marketing strategy, and is a great example of how we act out our philosophy of placing users first. We also apply this mindset with positive results in operating our web games. We released updates for DDTank and Wartune in the third quarter and revenues from both games grew. Looking ahead to the next few quarters, we have ready a line-up of new games planned for the PC, Web and mobile platforms and various mobile applications. By continuing to execute our business philosophy, we believe we are positioned to succeed over the long-term."

Changyou's President Mr. Dewen Chen said, "Aside from expanding our portfolio of games, another key goal for Changyou is to develop online and mobile destinations that people go to for the best, most creative products and services that support their passion for online games. The 17173 website is already the go-to site for news about the online gaming world in China, and in the third quarter, we saw visitor numbers and viewership surge on the website as a number of anticipated games were launched and students were on holidays over the summer. We also saw an increase in visitors to our games website overseas where we have launched a number of web games. In the fourth quarter, we plan to test a number of mobile apps for 17173 that will allow users to access their favorite parts of the website on the go. All of these are exciting developments that bring us a step closer to our goal of becoming a global platform for the online games sector."

Mr. Alex Ho, Changyou's Chief Financial Officer, said, "We achieved our financial targets across each of our business lines in the third quarter. These businesses generate rich cash inflows to us and provide capital needed for ongoing business expansion. In particular, in the fourth quarter, we will significantly ramp up our marketing investment to promote our line-up of new games, mobile applications and other Internet products in both China and overseas, so as to further expand our user base and aggressively capture the market potential. We believe these investments will increase shareholders' value over the long term."

Business Outlook

For the fourth quarter of 2013, Changyou expects:

  • Total revenues to be between US$193.0 million and US$199.0 million, including online game revenues of US$171.0 million to US$176.0 million and online advertising revenues of US$16.0 million to US$17.0 million.
  • Non-GAAP net income attributable to Changyou.com Limited to be between US$18.0 million and US$22.0 million.
  • Non-GAAP fully diluted earnings per ADS attributable to Changyou.com Limited to be between US$0.34 and US$0.41.
  • Assuming no new grants of share-based awards, share-based compensation expense to be between US$0.5 million and US$1.0 million, reducing fully diluted earnings per ADS attributable to Changyou.com Limited by US$0.01 to US$0.02.

Monday, July 29, 2013

Comments & Business Outlook

Second Quarter 2013 Financial Results

  • Total revenues reached a record US$182.4 million, an increase of 3% quarter-over-quarter and 24% year-over-year, and were in line with the Company's guidance.
  • Online game revenues reached a record US$168.3 million, an increase of 1% quarter-over-quarter and 24% year-over-year, and were in line with the Company's guidance.
  • Net income attributable to Changyou.com Limited decreased 3% quarter-over-quarter and increased 9% year-over-year toUS$75.2 million.
  • Non-GAAP[1] net income attributable to Changyou.com Limited decreased 3% quarter-over-quarter and increased 4% year-over-year to US$75.6 million, and exceeded the Company's guidance by $1.6 million.
  • Diluted net income per ADS attributable to Changyou.com Limited was $1.41 vs. last years quarter of $1.29

Mr. Tao Wang, Changyou's Chief Executive Officer, commented, "Our philosophy is based on giving gamers what they want, when they want it and where they want it. Today, that means creating products and services for the rapidly expanding market of mobile and Web games, while building on our success in the PC-rooted world of massively multiplayer online games ("MMO games"). TLBB remains one of the drivers for growth and our latest self-developed MMO game, Dou Pou Cang Qiong, added to our top-line results in the second quarter, while the performance of our two flagship Web games, DDTank and Wartune, was solid. With 7Road becoming a wholly-owned subsidiary of Changyou, we are refining our product strategy and product line-up for Web games. We also expect to launch a number of mobile games by the end of the year, roughly half of which will come from our own innovation lab. With an array of new games planned for the PC, Web and mobile and the capabilities we have built over the years in game development, operation, marketing and distribution, we believe we are positioned to succeed over the long-term."

Changyou's President Mr. Dewen Chen said, "We have been working towards a business model based not only on blockbuster games, but also on developing a user community that turns to us for the best, most creative products and services supporting their passion for online games. Over the last few quarters, since the acquisition of the 17173 news site in December 2011, we have made steady progress towards this goal, as we continue to deliver a wide array of exciting new games, while building 17173 asChina's go-to online social destination for gamers. We have a mobile program underway for 17173 that will create apps so that users can access their favorite parts of the website on the go. We are also working on initiatives to extend the reach of the 17173 website, such as the hosting and live broadcasting of e-sport competitions. This represents the kind of excitement and community that we aim to build into the 17173 brand in the future."

Mr. Alex Ho, Changyou's chief financial officer, said: "We achieved our financial targets for the second quarter, while carrying out our planned investments in talent acquisition, games and mobile application development and product marketing. We plan to continue with this investment plan for the rest of the year. While this is expected to put near-term pressure on our margin, we are confident that our rich cash reserves and our consistent operating cash inflow are sufficient to support our multiple growth objectives and our share repurchase program of up to $100 million that we are announcing today."


Thursday, May 2, 2013

Acquisition Activity

BEIJING, May 2, 2013 /PRNewswire/ -- Changyou.com Limited ("Changyou") (NASDAQ: CYOU), a leading online game developer and operator in China, and its majority shareholder, Sohu.com Inc. ("Sohu") (NASDAQ: SOHU), China's leading online media, search, gaming, community and mobile service group, today jointly announced that on May 1, 2013, Changyou entered into a definitive agreement to acquire all of the ordinary shares of its majority-owned Web games subsidiary 7Road.com Limited ("7Road") held by the minority shareholders, representing 28.074% of the outstanding share capital of 7Road, for aggregate fixed cash consideration of approximately US$78 million. Following the closing of the acquisition, 7Road will be a wholly-owned subsidiary of Changyou.

Effective with Changyou's entering into the acquisition agreement, Mr. Dewen Chen, Changyou's president, has been appointed as the Chairman and acting chief executive officer of 7Road. Mr. Kai Cao has resigned as a director and as chief executive officer of 7Road.

Mr. Dewen Chen, Changyou's president, commented, "With this acquisition, Changyou is deepening our investment in Web games, and we look forward to creating even more higha??quality Web games for our players to enjoy."

The acquisition is expected to be completed by May 31, 2013, subject to regulatory approvals and other customary conditions specified in the agreement.


Monday, April 29, 2013

Comments & Business Outlook

First quarter 2013 Financial Results

  • Total revenues reached a record US$177.6 million, an increase of 2% quarter-over-quarter and 30% year-over-year, exceeding the high end of the Company's guidance by US$3.6 million.
  • Non-GAAP[2] net income attributable to Changyou.com Limited was US$77.9 million, or US$1.45 per fully diluted ADS. Non-GAAP net income attributable to Changyou.com Limited increased 3% quarter-over-quarter and 17% year-over-year, exceeding the high end of the Company's guidance by US$0.9 million.

Mr. Tao Wang, Changyou's chief executive officer, commented, "We are committed to building sustainable gaming communities around our core MMO games and Web games through regular game updates, while actively exploring the fast-growing mobile games sector. In the first quarter, we continued to deepen our player segmentation strategy, rolling out game features for different levels of players in our flagship MMO game TLBB, which led to growth. For our popular web games, DDTank and Wartune, we continued to develop new audiences, launching a brand-new customized version of DDTank for players who prefer single player modes and releasing more language versions for Wartune. These games once again helped us to deliver solid financial results that topped our expectations for the quarter. With the steady growth of existing games, and the launch of new games in the latter half of the year, we are in a solid position to take advantage of growth opportunities inChina, one of the world's largest online gaming markets."

Mr. Dewen Chen, Changyou's president, continued, "We are seeing solid demand for our online advertising business in 2013 as leading game companies and web game companies continue to make the 17173 website their top choice for online game advertising. First quarter online advertising revenues met our expectations and we made solid progress on our initiative to develop the 17173 website into a popular community for gamers. We have made a number of technological upgrades to the website to support its news content and allow for better functionality, interactivity and user experience. Over the next few quarters, we expect to develop more Internet value-added services for gamers on the 17173 website."

Mr. Alex Ho, Changyou's chief financial officer, added, "During the first quarter, we set new records for both top-line and bottom-line performance. Our strong cash flows from operations provides us with the financial flexibility to invest in product development and in human resources when needed, as we work towards increasing shareholder value over the long term."

Business Outlook

For the second quarter of 2013, Changyou expects:

  • Total revenues to be between US$179.0 million and US$185.0 million, including online game revenues of US$165.0 million to US$170.0 million and online advertising revenues of US$10.0 million to US$11.0 million.
  • Non-GAAP net income attributable to Changyou.com Limited to be between US$71.0 million and US$74.0 million.
  • Non-GAAP fully diluted earnings per ADS attributable to Changyou.com Limited to be between US$1.33 and US$1.38.
  • Assuming no new grants of share-based awards, share-based compensation expense to be between US$0.5 million and US$1.0 million, reducing fully diluted earnings per ADS attributable to Changyou.com Limited by US$0.01 to US$0.02.

Monday, November 5, 2012

Comments & Business Outlook

Third quarter 2012 Highlights 

  • Total revenues reached a record US$165.8 million, an increase of 13% quarter-over-quarter and 29% year-over-year, exceeding the high end of the Company's guidance by US$8.8 million.
  • Net income attributable to Changyou.com Limited reached a record US$72.9 million, or US$1.37 per fully diluted ADS[1]. Net income attributable to Changyou.com Limited increased 6% quarter-over-quarter and 18% year-over-year.
  • Non-GAAP[2] net income attributable to Changyou.com Limited reached a record US$75.9 million, or US$1.42 per fully diluted ADS. Non-GAAP net income attributable to Changyou.com Limited increased 5% quarter-over-quarter and 20% year-over-year, exceeding the high end of the Company's guidance by US$3.9 million.
  • On August 6, 2012, the Company's board of directors declared a special one-time cash dividend of US$1.9 per Class A or Class B ordinary share, or US$3.8 per American Depositary Share ("ADS"). The total amount of this dividend was approximately US$201 million. The dividend was paid to shareholders on September 21, 2012.

Mr. Tao Wang, Changyou's chief executive officer, commented, "The third quarter is a testimony to our corporate philosophy of putting our customers first. Our key operational metrics and financial results demonstrate that we have a solid base of players who are engaged and willing to spend in our games as we continue to invest the resources to keep them fresh and exciting. In our flagship MMO game, Tian Long Ba Bu, or TLBB, we saw higher player engagement levels and spending from our core players after the release of the July 12th expansion pack and the October 25th major expansion pack. Meanwhile, our new web game Wartune continued to build momentum as it was launched on more platforms and in more countries during the quarter. Changyou is one of the few online game companies in China with a leading presence in all three key markets of the online games industry, MMO games, web games and online game media. With the talents, customer base and marketing networks accumulated in each of these three areas, we believe we can take our businesses further, both in China and globally, and build the company into an even greater success."

Mr. Dewen Chen, president and chief operating officer, continued, "Our online advertising business benefited from the traditionally strong summer season for online games advertising in the third quarter. 17173.com is the portal of choice for online game advertisers and we achieved higher utilization rates of our advertising resources due to strong demand. We are building 17173.com into an even better portal for game-related news. We launched two brand-new news channels in the third quarter, one dedicated to web games and the other to mobile games, and have plans to deliver news for international gamers as well."

Mr. Alex Ho, Changyou's chief financial officer, added, "In the third quarter, we once again topped past quarters' financial performance, in both GAAP and non-GAAP terms, on our top-line and bottom-line results. Both our online games business and online advertising business grew in terms of revenues and are highly profitable and cash-generative. With the strong and stable cash flows from our operations, we plan to keep investing in people and products to take advantage of the many growth opportunities we see in the market and create greater shareholder value over the long term."

Business Outlook

For the fourth quarter of 2012, Changyou expects:

  • Total revenues to be between US$166.0 million and US$170.0 million, including online game revenues of US$152.0 million to US$155.0 million and online advertising revenues of US$12.0 million to US$13.0 million.
  • Non-GAAP net income attributable to Changyou.com Limited to be between US$69.0 million and US$71.0 million.
  • Non-GAAP fully diluted earnings per ADS attributable to Changyou.com Limited to be between US$1.29 and US$1.33.
  • Assuming no new grants of share-based awards, share-based compensation expense to be between US$0.5 million and US$1.0 million, reducing fully diluted earnings per ADS attributable to Changyou.com Limited by US$0.01 to US$0.02.

Monday, August 6, 2012

Special Dividend

BEIJING, August 6, 2012 /PRNewswire-Asia/ -- Changyou.com Limited ("Changyou" or the "Company") (NASDAQ: CYOU), a leading online game developer and operator in China, today announced that its board of directors declared a special one-time cash dividend of US$1.9 per Class A or Class B ordinary share, or US$3.8 per American Depositary Share ("ADS"). The total amount of the special cash dividend is approximately US$201 million.

Record holders of the Company's Class A and Class B ordinary shares at the close of business U.S. Eastern Time on August 17, 2012 (the "Record Date") will be entitled to receive the special cash dividend. Holders of the Company's ADSs, each representing two Class A ordinary shares, as of the Record Date will be entitled to the special cash dividend. Changyou expects, Bank of New York Mellon, depositary bank for Changyou's ADR program, to pay out dividends to ADS holders on or before September 30, 2012. The actual distribution date may change. The Company will issue another press release in the event that there is any significant change in the scheduled distribution date.

Mr. Tao Wang, chief executive officer of Changyou commented, "Our business is growing as our online games continue its popularity in China and we continue to generate strong free cash flows from operations each quarter. As we have accumulated a sizable cash reserve since our initial public offering, we are happy to announce this special cash dividend in an effort to return value to shareholders. Our strong balance sheet and robust free cash flows will allow us to keep investing in our businesses to strengthen our position as a leading game developer and operator in China and capture arising opportunities in the global online games market. We are confident in our long-term growth potential and ongoing ability to further increase shareholder value."

In order to expedite the payment of the special cash dividend, Changyou is expected to finance the payment through offshore bridging bank loans, which would be secured by an equivalent amount of Renminbi-denominated onshore bank deposits of our subsidiaries in China.

As of June 30, 2012, the Company had US$464.9 million in cash and cash equivalents and short-term investments. The Company generated US$276.6 million in cash inflows from operations for the year ended December 31, 2011, the most recent year for which financial results have been reported.


Comments & Business Outlook

Second Quarter 2012 Results

  • Total revenues reached a record US$147.3 million, an increase of 8% quarter-over-quarter and an increase of 30% year-over-year, exceeding the high end of the Company's guidance by US$3.8 million.
  • Online game revenues reached a record US$137.2 million, an increase of 8% quarter-over-quarter and 35% year-over-year, exceeding the high end of the Company's guidance by US$4.2 million.
  • Net income attributable to Changyou.com Limited was US$69.1 million, or US$1.29 per fully diluted ADS[1]. Net income attributable to Changyou.com Limited increased 6% quarter-over-quarter and 14% year-over-year.
  • Non-GAAP[2] net income attributable to Changyou.com Limited reached a record US$72.3 million, or US$1.35 per fully diluted ADS. Non-GAAP net income attributable to Changyou.com Limited increased 9% quarter-over-quarter and 16% year-over-year, exceeding the high end of the Company's guidance by US$12.3 million.

Mr. Tao Wang, Changyou's chief executive officer, commented, "The second quarter has underscored once again the staying power of Tian Long Ba Bu and the early strong reception of our new web game, Wartune (also known as Shen Qu). Our strong financial performance demonstrates the resilience of the online games business to business cycles and the current economic slowdown. Looking ahead, the outlook for online games is strong, particularly as gamers globally increasingly demand quick access to games online and as new game formats, like web games, gain popularity. With the launch of several MMO and web games in the second half of the year, we look to acquire more users and capture market share to further strengthen our position as a leading game developer and operator in China."

Mr. Dewen Chen, president and chief operating officer, continued, "We have been working behind the scenes to turn our online games portal, 17173.com, into an even more important resource for the online games industry. In addition to MMO games, we will be covering the fast-evolving web game and mobile game markets. It takes time to build up the resources, including star quality journalists, to do this, but we are making solid progress. Meanwhile, we continue to see strong demand for advertising on 17173.com. As we work on enhancing the website and expanding news coverage, we look to further enhance the leading position of 17173.com within the game portals and online game communities in China."

Mr. Alex Ho, Changyou's chief financial officer, added, "We set new records for both top-line and bottom-line performance during the quarter. Our ongoing MMO games business and acquired web game and online advertising business generated higher returns and rich cash flows, while we implemented cost control measures that led to cost savings. With a strong cash position and a proven cash generative business, we have capacity to continue investing in the development and marketing of games and in emerging growth opportunities that can further increase shareholder value."


Monday, April 30, 2012

Comments & Business Outlook

First Quarter 2012 Highlights

  • Total revenues were US$136.8 million, a decrease of 1% quarter-over-quarter and an increase of 30% year-over-year, exceeding the high end of the Company's guidance by US$2.8 million.
  • Online game revenues reached a record US$127.4 million, an increase of 3% quarter-over-quarter and 34% year-over-year, exceeding the high end of the Company's guidance by US$3.4 million.
  • Net income attributable to Changyou.com Limited was US$65.3 million, or US$1.22 per fully diluted ADS[1]. Net income attributable to Changyou.com Limited increased 1% quarter-over-quarter and 12% year-over-year.
  • Non-GAAP[2] net income attributable to Changyou.com Limited was US$66.5 million, or US$1.24 per fully diluted ADS. Non-GAAP net income attributable to Changyou.com Limited decreased 7% quarter-over-quarter and increased 10% year-over-year and exceeded the high end of the Company's guidance byUS$6.5 million.

Mr. Tao Wang, Changyou's chief executive officer, commented, "We've started the year with progress in both MMO games and Web-based games, reflecting the solid execution of our "users first" strategy. During the quarter, we integrated the 17173 Business, which includes the assets and business operations associated with the popular game information portal based in China that is operated through the 17173.com Website. The 17173 Business will be the platform around which we will introduce new services and products targeted for gamers over the coming year. We believe that the 17173 Business has the potential to become China's key online games platform and is an integral part of our commitment to meeting the ever-evolving needs of the world's largest online game-playing community."

Business Outlook

For the second quarter of 2012, Changyou expects:

  • Total revenues to be between US$139.5 million and US$143.5 million, including online game revenues ofUS$130.0 million to US$133.0 million and online advertising revenues of US$8.5 million to US$9.5 million.
  • Non-GAAP net income attributable to Changyou.com Limited to be between US$58.0 million and US$60.0 million.
  • Non-GAAP fully diluted earnings per ADS attributable to Changyou.com Limited to be between US$1.08 and US$1.12.
  • Assuming no new grants of share-based awards, share-based compensation expense to be betweenUS$1.0 million and US$1.5 million, reducing fully diluted earnings per ADS attributable to Changyou.com Limited by US$0.02 to US$0.03.

Monday, February 6, 2012

Comments & Business Outlook

Fourth Quarter 2011 Results

  • Total revenues reached a record US$137.7 million and increased 7% quarter-over-quarter and 39% year-over-year. Excluding revenues from the recently acquired game information portal operated through the 17173.com Website (the "17173 Business"), total revenues increased 5% quarter-over-quarter and 37% year-over-year to US$125.2 million and exceeded the high end of the Company's guidance by US$0.2 million.
  • Net income attributable to Changyou.com Limited was US$64.3 million, or US$1.21 per fully diluted ADS(2). Net income attributable to Changyou.com Limited increased 4% quarter-over-quarter and 20% year-over-year. Excluding net income from the 17173 Business, net income attributable to Changyou.com Limited increased 3% quarter-over-quarter and 14% year-over-year to US$54.3 million, or US$1.02 per fully diluted ADS.
  • Non-GAAP(3) net income attributable to Changyou.com Limited was US$71.2 million, or US$1.33 per fully diluted ADS. Non-GAAP net income attributable to Changyou.com Limited increased 13% quarter-over-quarter and 28% year-over-year. Excluding non-GAAP net income from the 17173 Business, non-GAAP net income attributable to Changyou.com Limited increased 13% quarter-over-quarter and 23% year-over-year to US$61.0 million, and exceeded the high end of the Company's guidance by US$1.0 million. Excluding non-GAAP net income from the 17173 Business, non-GAAP fully diluted earnings per ADS attributable to Changyou.com Limited were US$1.14.

Mr. Tao Wang, Changyou's chief executive officer, commented, "Tian Long Ba Bu, or TLBB, continues to be a winner for us, based on its loyal fan base and our ability to deliver high-quality innovations that keep the game attractive. For TLBB, our latest major expansion pack, TLBB3, was a big factor in our record-breaking results for the fourth quarter and for the full year. DDTank, the flagship game of our new subsidiary 7Road, continues to be one of the top-ranked Web-based games on game portals and social networking sites in China. During the year, we completed a strategic review and implemented a number of changes reflecting the diversity of our business going forward, with separate teams and roadmaps for MMO games, Web-based games, mobile and social games, user platforms, and the international market. We expect these expanded strategies to carry us into the next phase as we evolve reflecting new story lines, new technology and changing user preferences for online games in China and the world."

Mr. Dewen Chen, president and chief operating officer, continued, "Late in the year, we jumpstarted our platform-based strategy with the acquisition of 17173.com, one of China's leading portals for news and information about online games. We plan to invest in 17173 to make it even more user friendly by adding services and access to a variety of games designed for different platforms and user communities. We regard 17173 as both a brand builder and a building block to developing our platform business, offering a one-stop-shop for gamers of all types, which will help to deepen and expand the Changyou community online."

Mr. Alex Ho, Changyou's chief financial officer, added, "A strong fourth quarter helped to make 2011 a record-breaking year, in terms of total revenues and full year non-GAAP net income. We were able to exceed our expectations for the quarter. We owe this to the continuing strong performance of our MMORPG business, which we expect will give us the cash flows and financial leverage to execute our strategic plans. With a rich cash reserve and a debt-free balance sheet, we are well-positioned to invest in emerging opportunities in other fast-growing segments of the industry and to enhance shareholder value over the long term."

Business Outlook

For the first quarter of 2012, Changyou expects:

  • Total revenues to be between US$130.0 million and US$134.0 million, including online game revenues of US$121.0 million to US$124.0 million and online advertising revenues of US$7.0 million to US$8.0 million.
  • Non-GAAP net income attributable to Changyou.com Limited to be between US$58.0 million and US$60.0 million.
  • Non-GAAP fully diluted earnings per ADS attributable to Changyou.com Limited to be between US$1.08 and US$1.12.
  • Assuming no new grants of share-based awards, share-based compensation expense to be between US$1.0 million and US$1.5 million, reducing fully diluted earnings per ADS attributable to Changyou.com Limited by US$0.02 to US$0.03.

Monday, October 31, 2011

Comments & Business Outlook

Third Quarter 2011 Results

  • Total revenues reached a record US$119.0 million and exceeded the high end of the Company's guidance by US$1.0 million. Total revenues increased 13% quarter-over-quarter and 39% year-over-year.
  • Net income attributable to Changyou.com Limited was US$52.8 million, or US$0.99 per fully diluted ADS(1). Net income attributable to Changyou.com Limited decreased 3% quarter-over-quarter and increased 17% year-over-year.
  • Non-GAAP(2) net income attributable to Changyou.com Limited (i.e., excluding share-based compensation expenses) was US$53.8 million, or US$1.01 per fully diluted ADS, and exceeded the high end of the Company's guidance by US$1.3 million. Non-GAAP net income attributable to Changyou.com Limited decreased 3% quarter-over-quarter and increased 14% year-over-year.

Mr. Tao Wang, Changyou's Chief Executive Officer, commented, "Our blockbuster Tian Long Ba Bu, or TLBB, continues to expand player numbers with the release of each new expansion pack that adds sought-after new game play that is requested by our players. After the release of the major expansion pack TLBB3 on October 20th, the number of users and the number of active paying accounts increased. Meanwhile, our new self-developed 3D MMO game, Duke of Mount Deer, or DMD, which launched on July 22nd, appeals to hard-core game players with its new technologies and advanced cross-server game play. We believe these results once again demonstrate our ability to understand and fulfill gamers' needs and showcase our content development and game operation strengths. We anticipate bringing a greater variety of games to market in the following quarter and next year to further advance our leading position in the online game industry."

Mr. Dewen Chen, president and chief operating officer, continued, "During the quarter, we completed the integration of Shenzhen 7Road Technologies Co., Ltd., or 7Road, one of the leading players in the rapidly expanding Web-based game market in China. 7Road's hit game, DDTank, continues to top the charts on different social platforms and game portals in China, and is attracting interest from players overseas. In the next few quarters, we will be working closely with 7Road's management team on new products and initiatives to develop the Web-based game business."

Mr. Alex Ho, Changyou's chief financial officer, added, "Our business was strong and resilient in the third quarter. Once again, we exceeded our top-line and bottom-line financial goals for the quarter, while making planned investments in the marketing and promotion of DMD. In addition, both our existing and acquired businesses generated solid cash flows in the third quarter. With solid cash reserves and a debt-free balance sheet, we are well-positioned to capture new opportunities in the industry as they arise and to increase returns to shareholders over the long term."

Business Outlook

For the fourth quarter of 2011, Changyou expects:

  • Total revenues to be between US$122.0 million and US$125.0 million, including online game revenues of US$119.0 million to US$122.0 million.
  • Non-GAAP net income attributable to Changyou.com Limited to be between US$58.0 million and US$60.0 million.
  • Non-GAAP fully diluted earnings per ADS attributable to Changyou.com Limited to be between US$1.09 and US$1.12.
  • Assuming no new grants of share-based awards, share-based compensation expense to be between US$1.5 million and US$2.0 million, reducing fully diluted earnings per ADS attributable to Changyou.com Limited by US$0.03 to US$0.04.

Monday, August 1, 2011

Comments & Business Outlook

BEIJING, Aug. 1, 2011 /PRNewswire-Asia/ -- Changyou.com Limited ("Changyou" or the "Company") (NASDAQ: CYOU), a leading online game developer and operator in China, today announced its unaudited financial results for the second quarter ended June 30, 2011.

Second Quarter 2011 Highlights

  • Total revenues reached a record US$105.0 million, an increase of 8% quarter-over-quarter and 35% year-over-year, and exceeded the high end of the Company's guidance by US$5.0 million.
  • GAAP net income attributable to Changyou.com Limited reached a record US$54.2 million, up 3% quarter-over-quarter and 29% year-over-year, or US$1.02 per fully diluted ADS(1).
  • Non-GAAP(2) net income attributable to Changyou.com Limited (i.e., excluding share-based compensation expenses) reached a record US$55.6 million, or US$1.04 per fully diluted ADS, exceeding the high end of the Company's guidance by US$5.1 million. Non-GAAP net income attributable to Changyou.com Limited was up 2% quarter-over-quarter and 26% year-over-year.
  • On May 11, 2011, the Company completed the acquisition of 68.258% of the equity in Shenzhen 7Road Technology Co., Ltd. ("7Road"), a Web-based game company in China. 7Road's financial statements were consolidated in the Company's financial statements starting on June 1, 2011

(1) Each American depositary share ("ADS") represents two Class A ordinary shares.

 

(2) Explanation of the Company's non-GAAP financial measures and related reconciliations to GAAP financial measures are included in the accompanying "Non-GAAP Disclosure" and "Reconciliations to Unaudited Condensed Consolidated Statements of Operations."

 
 


Mr. Tao Wang, Changyou's Chief Executive Officer, commented, "We posted record performance in the second quarter as total revenues exceeded $100 million. The continued success of our blockbuster Tian Long Ba Bu, or TLBB, has been supported by and carefully nurtured with the release of new content in mid-March and in early July that incorporates user feedback. A major expansion pack, TLBB3, is scheduled to be released in the latter half of this year as we aim to further extend its popularity and life cycle. On July 22nd, after four years of meticulous planning and development, we launched Duke of Mount Deer, or DMD, our second inhouse-developed game. The extensive work that we put into the game has led to its good reception, and its user base has continued to increase after its open beta. Cutting-edge graphic design, groundbreaking server technology and innovative new gameplay were made possible by the tight collaboration between the various teams within our business and we believe will further escalate our leading position in the online game industry."

Mr. Dewen Chen, president and chief operating officer, continued, "The addition of 7Road immediately diversifies our business and establishes us as one of the leading players in the rapidly expanding Web-based game market in China. 7Road's hit game, DDTank, continues to be one of China's most popular web-based games and attracts user interest. We share a philosophy with 7Road's management team that it is vital to create games that users want to play, and it is this mutual belief that gives us great confidence in our long-term outlook together."

Mr. Alex Ho, Changyou's chief financial officer, added, "Our track record of delivering record top-line and bottom-line results continued in the second quarter. DMD and Web-based games add new sources of revenues to an already highly profitable and cash-rich business, and leave us well positioned to accelerate growth and increase shareholder value over the long term."


Monday, April 25, 2011

Comments & Business Outlook

First Quarter 2011 Results:

  • Total revenues reached a record US$97.1 million, an increase of 6% quarter-over-quarter and 35% year-over-year, and exceeded the high end of the Company's guidance by US$2.1 million.
  • Net income reached a record US$52.8 million, or US$0.99 per fully diluted ADS(1). Net income increased by 11% quarter-over-quarter and 33% year-over-year.
  • Non-GAAP(2) net income (i.e., excluding share-based compensation expenses) reached a record US$54.6 million, or US$1.02 per fully diluted ADS, exceeding the high end of the Company's guidance by US$3.6 million.  Non-GAAP net income increased by 10% quarter-over-quarter and 28% year-over-year.

Mr. Tao Wang, Changyou's Chief Executive Officer, commented, "2011 is an exciting year for Changyou as we prepare for the launch of new games, such as Duke of Mount Deer, or DMD, while our current games continue to generate solid returns.  Our leading game franchise, Tian Long Ba Bu, or TLBB, has continued to attract new, existing and returning players to its thriving community as we constantly update the game with new content. Similarly, we are seeing growing interest from players for our upcoming game. DMD, which entered a new round of closed beta testing today, is slated for a launch this summer. In this round of testing, game testers will also be able to carry over user accounts through the full launch period. With the updated version, we have unveiled a new, self-developed server technology and a host of unique gameplay not found in any other existing massively multiplayer online games. With the continued strength of the online games industry in China, the imminent launch of DMD, and the ongoing success of our TLBB franchise, we look to accelerate our position as a leading online game company in China."

For the second quarter of 2011, Changyou estimates:

  • Total revenues to be between US$97.0 million and US$100.0 million, including online games revenues of US$95.0 million to US$97.0 million.  
  • Non-GAAP net income to be between US$49.0 million and US$50.5 million.  
  • Non-GAAP fully diluted earnings per ADS to be between US$0.92 and US$0.95.  
  • Assuming no new grants of share-based awards, share-based compensation expense to be between US$1.0 million and US$1.5 million, reducing fully diluted earnings per ADS by US$0.02 to US$0.03.

Liquidity Requirements
We believe that our existing cash is sufficient to sustain our operations for at least the next twelve months. We have financed our operations primarily through cash flows from equity contributions by Sohu and cash flows from operations. We also received loans in the amount of $5.0 million and $3.5 million, respectively, from Sohu.com Limited in September 2007 and December 2008. Such loans were repaid to Sohu in April 2009.

Monday, January 31, 2011

Comments & Business Outlook

Fourth Quarter 2010 Highlights

  • Total revenues reached a record US$91.7 million, an increase of 7% quarter-over-quarter and 30% year-over-year, and exceeded the high end of the Company's guidance by US$2.7 million.
  • Net income reached a record US$47.8 million, or US$0.90 per fully diluted ADS(1). Net income increased by 6% quarter-over-quarter and 23% year-over-year.
  • Non-GAAP(2) net income (i.e. excluding share-based compensation expenses) reached a record US$49.7 million, orUS$0.93 per fully diluted ADS, exceeding the high end of the Company's guidance by US$1.7 million. Non-GAAP net income increased by 5% quarter-over-quarter and 18% year-over-year.
  • Aggregate registered accounts for the Company's games(3) grew 6% quarter-over-quarter and 38% year-over-year to 111.4 million.
  • Aggregate peak concurrent users ("PCU") for the Company's games grew 5% quarter-over-quarter and 7% year-over-year to 1,030,000.
  • Aggregate active paying accounts ("APA") for the Company's games grew 3% quarter-over-quarter and 13% year-over-year to 2.7 million.
  • Average revenue per active paying account ("ARPU") for the Company's games increased 2% quarter-over-quarter and 12% year-over-year to RMB219.

Fiscal Year 2010 Highlights

  • Total revenues reached a record US$327.1 million, up 22% year-over-year.
  • Net income reached a record US$174.9 million, or US$3.29 per fully diluted ADS. Net income increased 21% year-over-year.
  • Non-GAAP net income (i.e. excluding share-based compensation expenses) reached a record US$183.5 million, orUS$3.43 per fully diluted ADS. Non-GAAP net income increased 16% year-over-year.

Mr. Tao Wang, Changyou's chief executive officer, commented, "2010 was another year of growth and progress.  Our ongoing focus on content creation and meeting the needs of our customers paid off and enabled us to end the quarter and the year with record financial and operational results. After three years and the release of a series of expansion packs, TLBB's community remains vibrant and growing, and the game continues to be one of the most popular online game titles in China today.  We have also finalized the marketing plan for Duke of Mount Deer, our next in-house developed game, and target to officially start a nationwide marketing campaign for the game in March 2011. With the marketing campaign, the full version of DMD will, for the first time, be available to players to try out. The full version contains many times the amount of content found in the existing version and features technical innovations within the global online games industry. Through these efforts, we aim to capture new growth opportunities for our business and reaffirm our position as one of the leading online game companies in China."

 

For the first quarter of 2011, Changyou expects:

  • Total revenues to be between US$92.0 million and US$95.0 million, of which revenues from online games, which are revenues exclusive of revenues from Jing Mao, are expected to be between US$91.0 million and US$93.0 million.
  • Non-GAAP net income to be between US$49.5 million and US$51.0 million.
  • Non-GAAP fully diluted earnings per ADS to be between US$0.93 and US$0.96.

Assuming no new grants of share-based awards, share-based compensation expense to be between US$1.5 million and US$2.0 million, reducing fully diluted earnings per ADS by US$0.03 to US$0.04.


Monday, October 25, 2010

Comments & Business Outlook

Third Quarter 2010 Highlights

  • Total revenues reached a record US$85.6 million, an increase of 10% quarter-over-quarter and 25% year-over-year, exceeding the high end of the Company's guidance.
  • Net income reached a record US$45.3 million, or US$0.85 per fully diluted ADS. Net income increased by 8% quarter-over-quarter and 20% year-over-year.
  • Non-GAAP net income (i.e. excluding share-based compensation expenses) reached a record US$47.1 million, or US$0.88 per fully diluted ADS, exceeding the high end of the Company's guidance vs. $0.77.  Non-GAAP net income increased 7% quarter-over-quarter and 14% year-over-year.

Mr. Alex Ho, Changyou's chief financial officer, added, "Our record third quarter financial performance demonstrates our continued ability to attract new users to our core games. With a debt-free balance sheet and strong cash flows, we have sufficient capital to sustain investments in our R&D teams and physical facilities as we push the development of our existing and pipeline games and position ourselves for future growth."

Business Outlook

For the fourth quarter of 2010, Changyou expects:

  • Total revenues to be between US$86.0 million and US$89.0 million.
  • Non-GAAP net income to be between US$46.5 million and US$48.0 million.
  • Non-GAAP fully diluted earnings per ADS to be between US$0.87 and US$0.90.
  • Assuming no new grants of share-based awards, share-based compensation expense to be between US$1.5 million and US$2.0 million, reducing fully diluted earnings per ADS by US$0.03 to US$0.04.