Sogou Inc. (NYSE:SOGO) Q3 2019 Earnings Conference Call Transcript

Nov 04, 2019 • 07:30 am ET

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Sogou Inc. (NYSE:SOGO) Q3 2019 Earnings Conference Call Transcript

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Presentation
Operator
Operator

Ladies and gentlemen, thank you for standing by and welcome to Sogou's Third Quarter 2019 Earnings Conference Call. [Operator Instructions]

I would now like to turn the call over to your host today, Jessie Zheng, Investor Relations Director of Sogou. Please go ahead.

Executive
Jessie Zheng

Hello, everyone, and thank you for joining Sogou's third quarter 2019 earnings conference call. On the call, are our CEO, Xiaochuan Wang; and our CFO, Joe Zhou will give an overview of the operations and financial results. In line with our practice on the previous earnings conference calls, Xiaochuan prepared remarks will be made in Xiaochuan's voice using personalized speech synthesis and style transfer learning technology which was developed by the Sogou Voice Interaction Technology Center. Xiaochuan will join the Q&A portion of the call in person.

Before management begins their prepared remarks, I would 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 in this conference call are forward-looking statements. These statements are based on the 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 containing any forward-looking statements. For more information about the potential risks and uncertainties, please refer to the Company's filings with the Securities and Exchange Commission.

With that, I will now turn the call over to our CEO, Xiaochuan Wang.

Executive
Xiaochuan Wang

Thank you, Jessie and hello, everyone. Despite continued headwinds in the macro environment and the online advertising industry, we experienced healthy growth in the third quarter with steady top line increase and significant improvement on profitability. This was primarily driven by our constant efforts to drive organic traffic growth and unlock the monetization potential of our existing assets. In the quarter, our total revenue increased 17% year-over-year to over RMB2.2 billion. Excluding the impact of the one-time Douyin incident in the third quarter of 2018, when we suspended 10 days of online advertising business, on an apple to apple basis, total revenues increased 12% year-over-year in RMB.

In regards to our bottom line as we well manage traffic acquisition costs and continue to improve operational efficiency in the quarter. Our non-GAAP net income increased 47% year-over-year to RMB283 million. In third, Sogou maintained its position as China's second largest search engine, and our search revenue continued to grow faster than the industry average. In Mobile Keyboard, we recorded 464 million DAUs in the quarter up 14% year-over-year, reinforcing this position as the third largest Chinese mobile app in terms of DAUs. According to iResearch, with respect to our recommendation service that leverages our Mobile Keyboard. We are glad, these revenues ramp up quickly in the quarter. And this is on track to become our second growth engine following search. In addition, our Smart Hardware business returns to its growth trajectory in the quarter. Thanks to