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Sogou Stock Drops Despite Quarterly Growth

Anna Vodopyanova 2018-11-19 14:52 PM
Sogou Stock Drops Despite Quarterly Growth

Shares of Sogou Inc. (NYSE: SOGO), China's third-largest search engine, closed at $8.25 per American depositary share, down nearly 4 percent, despite the company&`#`39;s better-than-expected growth reported in the first quarter.

A Beijing-based company, Sogou said its revenue for the first three months of 2018 was $248.4 million, a 53-percent increase from the same period last year. Its net income was up 25 percent, reaching $15.3 million, or 4 cents per American depositary share, double the amount per ADS year-over-year.

The growth was attributed to the traffic increase and improved monetization in Sogou's mobile search in its auction-based, pay-for-click services.

The company also noted the expansion of its Internet value-added services on the search platform, the traction of its mobile application, Mobile Keyboard, and the launch of a translator dubbed Smart Travel Translator.

"We remain focused on language-centered AI technologies, including translation, voice, and computer vision, which enable us to continuously optimize our core products," said the company&`#`39;s chief executive officer, Xiaochuan Wang.

The cost of revenue reached $154 million, up 76 percent from the corresponding period in 2017. The company said the main cause of the increase was traffic acquisition, representing 73 percent of the total cost. The increase in traffic acquisition cost year-over-year was 94 percent.

The total operating expenses were $80.1 million, a 28-percent increase year-over-year, and were mostly driven by research and development, and marketing.

Sogou's daily active users reached 362 million, the company said.

Despite good results, the shares of Sogou dropped to $8.25 per share, down 31 cents.

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After falling early from yesterday&`#`39;s trading, Sogou&`#`39;s stock closed at $8.25, down nearly 4 percent. (Source: Thomson Reuters Eikon) 

Sogou has been among the main growth drivers at Sohu.com Inc. (Nasdaq: SOHU), its controlling shareholder, which owns 45 percent of the company. A similar stake at the company was reportedly owned by Chinese tech giant Tencent Holdings Inc. 

Analysts are optimistic about the company&`#`39;s growth and estimate a profit of 7 cents per share in the second quarter, according to Thomson Reuters Eikon.

The company said it expected second-quarter results to show revenue ranging from $295 million to $305 million, an increase of 40 to 45 percent comparable with last year.