Ladies and gentlemen, thank you for standing by and good evening. Thank you for joining Sohu's Third Quarter 2020 Earnings Conference Call. At this time, all participants are in a listen-only mode. After management's prepared remarks, there will be a question-and-answer session. Today's conference call is being recorded. [Operator Instructions] I'd now like to turn the conference over to your host for today's conference call, Huang Pu, Investor Relations Director of Sohu. Please go ahead.

Thanks, operator. Thank you for joining us today to discuss Sohu's third quarter 2020 results. on the call are; Chairman and the Chief Executive Officer, Dr. Charles Zhang; CFO, Joanna Lv; and Vice President of Finance, James Deng. Also with us today are Changyou's CEO, Dewen Chen; and CFO, Yaobin Wang. Before management begins their prepared remarks, I'd like to remind you of the company's Safe Harbor statement in connection with today's conference call. Except for the historical information contained herein, the matters discussed on this conference call may contain forward-looking statements. These statements are based on current plans, estimates and projections, and therefore, you should not place undue reliance on them. Forward-looking statements involve inherent risks and uncertainties. We caution you that a number of important factors could cause actual results to differ materially from those contained in any forward-looking statement. For more information about the potential risks and uncertainties, please refer to the company's filings with the Securities and Exchange Commission, including the most recent Annual Report on Form 20-F. With that, I will now turn the call over to Dr. Charles Zhang. Charles, please proceed.

Thanks, Huang Pu, and thank you to everyone for joining our call. In the third quarter of 2020, to further consolidate our core competitiveness and credibility, we continued to optimize our products, refine our technology, enhance the quality of premium content and improve its distribution. At the same time, we kept exploring creative new and differentiated monetization opportunities. Benefiting from our more mature and sophisticated Sohu Video App, and its advanced live broadcasting technology, we successfully hosted many innovative content marketing campaigns that could leverage the broad reach of our product portfolio. We saw positive feedback in terms of user interaction and from advertisers. So for this quarter, despite the current challenging macroeconomic environment, our brand advertising revenue reached the high end of our prior guidance and achieved the 8% quarter-over-quarter growth. Our game business, Changyou's online games performed well for the third quarter of 2020, with revenue exceeding the high end of our prior guidance. So before I go into more detail about our key financial results, please be reminded that on September 29th, 2020, our controlled subsidiary of Sogou and the subsidiary of Tencent entered into an Agreement and a Plan of Merger, which contemplate that Sogou will become a wholly-owned subsidiary of Tencent, and on the same date, we entered into a Share Purchase Agreement, in which we agreed to sell all of our Sogou Class A and Class B ordinary shares to Tencent shortly before the completion of the merger transaction between Tencent and Sogou. Accordingly, Sogou's results of operations have been excluded from the company's results from our continuing operations. Retrospective adjustments to the historical statements have been made in order to provide a consistent basis of comparison. Unless indicated otherwise, the results that we'll talk about here are related to continuing operations only. So…

Thank you, Charles. I will walk you through the key financials of our major segments for third quarter of 2020. All of the numbers that I will mention are all on the non-GAAP basis. You may find a reconciliation of non-GAAP to GAAP measures on our IR website. For Sohu Media Portal, quarterly revenues were $25 million, down 3% year-over-year and up 9% quarter-over-quarter. The quarterly operating loss was $23 million compared with an operating loss of $31 million in the same quarter last year. For Sohu Video, quarterly revenues were $23 million, up 1% year-over-year and 2% quarter-over-quarter. The quarterly operating loss was $12 million compared with an operating loss of $20 million in the same quarter last year. For Changyou, quarterly revenues, including 17173 were $104 million, down 6% year-over-year and 5% quarter-over-quarter. Changyou posted an operating profit of $33 million compared with $35 million in the same quarter last year. For the fourth quarter of 2020, we expect brand advertising revenues to be between $37 million and $42 million. This implies annual decrease of 11% to an annual increase of 1%, and a sequential decrease of 10% to a sequential increase of 2%. Online game revenues to be between $140 million and $150 million. This implies annual increase of 6% to 14% and a sequential increase of 38% to 48%. Non-GAAP net income from continuing operations attributable to Sohu.com Limited to be between $15 million and $25 million. And GAAP net income from continuing operations attributable to Sohu.com Limited to be between $10 million and $20 million. This forecast reflects Sohu's management's current and preliminary view, which is subject to substantial uncertainty, particularly in view of the potential ongoing impact of COVID-19 virus. Lastly, please be reminded that in the Q&A session, we won't take questions regarding any Sogou business updates or the agreements with Tencent for Sogou's privatization. And this concludes our prepared remarks. Operator, we will now like to open the call to questions.

Thank you. Ladies and gentlemen, we will now begin the question-and-answer session. [Operator Instructions] Your first question comes from the line of Thomas Chong from Jefferies. Please go ahead.

Hi. Good evening. Thanks, management for taking my questions. My question is about the brand advertising. Can management comment about the trend for different key categories and how we should think about the momentum in 2021?

Well, key sector, right. Auto industry, number one. And then -

Internet -

Internet services, followed by -

Real estate.

Real estate, that's the top three categories. Yeah, we achieved 8% increase quarter-over-quarter, I mean, yeah, with you know the microeconomics, basically a challenging microeconomics situation, by being you know with, well, we are having you know this organic growth or the stabilized user base. So, we are not spending a lot of money on our marketing channels, marketing for our products so, but with this creative marketing events and the content, actually content generation events, and also with live streaming, to you know beaming those events. This is very attractive to brand advertisers. That's the reason why we are able to achieve advertising revenue growth without spending marketing you know sales cost more, yeah.

Thank you.

Thank you. Our next question comes from the line of Alicia Yap from Citigroup. Please ask your question.

Thanks. I'm Austin Pastner on behalf of Alicia Yap. For online games, can you remind us the breakdown of PC versus mobile games in the third quarter? And what are the drivers for the strong sequential growth of online games inside on your 4Q guidance? Thank you.

Well basically the - in Q3, the division between the PC game and mobile game, right?

[Foreign Language] In terms of revenue, PC game accounts for 61% in the third quarter and mobile game, 39%. In terms of gross billing cash receipts, PC game accounts for 45% and the mobile game accounts for 55%. [Foreign Language] In the fourth quarter, the increase mainly due to TLBB PC, actually we launched some special servers like Charles mentioned, that have old version as - for its content, and attracted some -

Nostalgic, nostalgic experience, yeah.

Yeah. Attracted some players that we lost over year. And the other reason is, where we launched a game called the Illusion Connect in Korea - South Korea market. Thank you.

Got it, thank you.

Thank you. [Operator Instructions] Your next question comes from the line of [Chang Cheow from Foreign Tech Research] [ph]. Please ask your question.

Yeah. Good evening, management. Your guidance in online games are very encouraging. I just wonder you said you know we are going into growth mode for the online games going forward?

[Foreign Language] Yeah, thanks. Currently, we can only say the performance of fourth quarter.

Or maybe can you provide us some outlook in terms of your pipeline in games, you know what are you going to do next year?

[Foreign Language] We have couple of games that the development is well underway, but the schedule is, depends on the license approval supplying program, and also the testing and their adjustments program. So it's not very easy to predict the specific launch date. But for those game that we have obtained the license approval, we may have some more specific timing. [Foreign Language] Two of those are projects, the Sea of Dawn, the [New Jedi] [ph] and also Tetris, we have had license approval. We will launch the two games in the next year. [Foreign Language] Next year, we will also put more efforts in the overseas market and we'll launch some other new games in the overseas market. Thank you.

Thanks. That's great.

Thank you. Our next question comes from the line of Alex Ko from Morgan Stanley. Please ask your question.

Hi. Management, thanks for taking my question. So I have a question on Sohu Video. So we know that the industry peers have been stepping up for content investment these days. So just want to get more color like how would the management plan to navigate like this kind of industry trend and like the content investment strategy going forward? Thank you.

Well, we have, as I just said, we have this twin-engine strategy with long-form content and then short-form, basically, UGC. So for the long-form, our spending on basically to produce like [Teen Wolf] [ph] and most of the 15 episodes of drama episodes with reasonable investment, and then make sure that it can - again, you know it become a hit with much less spending compared with our peers. So that was - so our spending on producing the long-form TV dramas remain similar to the previous year. And then so - but for this UGC and also social you know network product of video, it's not much - it doesn't need lobby management and also this live streaming, it's user-generated, only spending on the product development.

Got it, thank you.

Thank you. [Operator Instructions] And there are no further questions. So with that, we conclude our conference for today. Thank you for participating. You may all disconnect.