China’s second-largest search engine Sogou announced total revenues of $314.9 million in the third quarter, a 14% increase year-over-year, or a 17% increase in RMB terms.
Search and search-related revenues were $288.2 million, a 13% increase year-over-year and accounting for 91.5% of total revenues in Q3 2019.
The increase was primarily due to growth in auction-based pay-for-click services. Auction-based pay-for-click services accounted for 88.7% of search and search-related revenues, compared to 82.7% in Q3 2018.
Other revenues were $26.7 million, a 25% increase year-over-year. The increase was primarily due to increased revenues from sales of smart hardware products.
Net income attributable to Sogou was $36.6 million, a 53% increase year-over-year. Non-GAAP net income attributable to Sogou was $40.9 million, a 46% increase year-over-year.
Cost of revenues was $189.3 million, a 9% increase year-over-year. Traffic acquisition cost was $143.7 million, a 6% increase year-over-year, representing 45.6% of total revenues, compared to 48.9% in Q3 2018.
Gross profit was $125.6 million, a 22% increase year-over-year. Non-GAAP gross profit was $125.7 million, a 22% increase year-over-year.
Total operating expenses were $98.2 million, a 10% decrease year-over-year.
- Research and development expenses were $50.0 million, relatively stable year-over-year, representing 15.9% of total revenues, compared to 18.3% in Q3 2018.
- Sales and marketing expenses were $37.5 million, a 14% decrease year-over-year, representing 11.9% of total revenues, compared to 15.8% in Q3 2018. The decrease was primarily attributable to a decrease in marketing and promotional spending.
- General and administrative expenses were $10.7 million, a 31% decrease year-over-year, representing 3.4% of total revenues, compared to 5.6% in Q3 2018. The decrease was primarily due to a decrease in expenses related to non-core business initiatives.
Sogou’s operating income was $27.4 million, compared to an operating loss of $6.8 million in Q3 2018. Non-GAAP operating income was $31.6 million, compared to non-GAAP operating loss of $2.7 million.
Income tax expense was $2.4 million, compared to an income tax benefit of $0.4 million in the corresponding period of 2018.
Net income attributable to Sogou was $36.6 million, a 53% increase year-over-year, compared to net income of $23.9 million in Q3 2018. Non-GAAP net income attributable to Sogou was $40.9 million, a 46% increase year-over-year, compared to net income of $28.0 million in Q3 2018.
Basic and diluted earnings per ADS were $0.09. Non-GAAP basic and diluted earnings per ADS were $0.10.
As of September 30, 2019, ogouS had cash and cash equivalents and short-term investments of $1.1 billion, compared with $1.0 billion as of December 31, 2018. Net operating cash inflow for Q3 2019 was $19.6 million. Capital expenditures for Q3 2019 were $0.7 million.
Sogou Mobile Keyboard had 464 million daily average users, up 14% year-over-year. Claiming to be China’s largest voice app, it processed up to 830 million daily voice requests.