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This excerpt taken from the SOHU 10-Q filed May 11, 2009. Cost of Revenues Total cost of revenues was $27.6 million and $20.3 million for the three months ended March 31, 2009 and 2008, respectively. These excerpts taken from the SOHU 10-K filed Feb 26, 2009. Cost of Revenues Total cost of revenues was $107.3 million and $64.8 million for the years ended December 31, 2008 and 2007, respectively. Cost of Revenues Cost of advertising revenues increased SIZE="2">Brand advertising. Cost of brand advertising revenues includes personnel cost and personnel overhead relating to our editorial center, content purchases, payments to our business partners, relevant depreciation of servers and payments to our Website Alliance, personnel costs and data collection costs. Cost of sponsored search revenues was $6.8 million for the year ended December 31, 2008 as compared to $5.6 million for the year ended December 31, 2007. The increase in cost of sponsored search revenues resulted from an increase of $1.2 million in relevant depreciation and bandwidth leasing costs and an increase of $0.3 million in payment to Website alliances, which is offset by a decrease of $0.3 million in other costs. Our sponsored search gross margin for the years ended December 31, 2008 and 2007 was a negative 2% and 21%, respectively. The decrease was mainly due to lower revenue and higher server depreciation and bandwidth leasing costs in relation to the traffic growth of Sogou in 2008. Cost of Revenues Total cost of revenues was $64.8 million and $48.4 million for the years ended December 31, 2007 and 2006, respectively. Cost of Revenues SIZE="2">Cost of Advertising Revenues Cost of advertising revenues increased by $15.9 million to $44.4 million for the year ended December 31, Brand advertising. Cost of brand advertising revenues includes Sponsored search. Cost of sponsored search revenues consists primarily of relevant depreciation of servers and computer equipment, bandwidth leasing costs,
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Cost of non-advertising revenues Online game. Cost of online game revenues Wireless. Cost of wireless revenues mainly consists of collection and wireless other services mainly consists of personnel and other expenses in connection with sales of software, provision of ASP services and construction of websites. SIZE="2">Product Development Expenses Product development expenses increased by $7.7 million to $25.4 million for the year ended December 31, SIZE="2">Sales and Marketing Expenses Sales and marketing expenses increased by $19.0 million to $47.5 million for the year ended December 31, (o) Cost of revenues SIZE="2">i) Advertising Cost of advertising revenues consists of compensation and related overhead costs for employees, depreciation expenses, fees This excerpt taken from the SOHU 10-Q filed Nov 7, 2008. Cost of Revenues Total cost of revenues was $31.9 million and $77.1 million for the three and nine months ended September 30, 2008, respectively, as compared with $17.2 million and $45.8 million for the corresponding three and nine month periods in 2007. This excerpt taken from the SOHU 10-Q filed Aug 8, 2008. Cost of Revenues Total cost of revenues was $24.9 million and $45.2 million for the three and six months ended June 30, 2008, respectively, as compared to $15.4 million and $28.7 million for the corresponding three and six month periods in 2007. This excerpt taken from the SOHU 10-Q filed May 9, 2008. Cost of Revenues Total cost of revenues was $20.3 million and $13.3 million for the three months ended March 31, 2008 and 2007, respectively. These excerpts taken from the SOHU 10-K filed Feb 28, 2008. Cost of Revenues Total cost of revenues was $48.4 million and $33.3 million for the years ended December 31, 2006 and 2005, respectively.
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Table of Contents(o) Cost of revenues Cost of advertising revenues consists This excerpt taken from the SOHU 10-Q filed Nov 7, 2007. Cost of Revenues Total cost of revenues were $17.2 million and $45.8 million for the three and nine months ended September 30, 2007, respectively, as compared to $12.7 million and $35.5 million for the corresponding three and nine month periods in 2006. This excerpt taken from the SOHU 10-Q filed Aug 6, 2007. Cost of Revenues Total cost of revenues were $15.4 million and $28.7 million for the three and six months ended June 30, 2007, respectively, as compared to $12.5 million and $22.8 million for the corresponding three and six month periods in 2006. This excerpt taken from the SOHU 10-Q filed May 8, 2007. Cost of Revenues Total cost of revenues was $13.0 million and $10.0 million for the three months ended March 31, 2007 and 2006, respectively. This excerpt taken from the SOHU 10-K filed Mar 8, 2007. Cost of Revenues Total cost of revenues was $32.4 million and $27.9 million for the years ended December 31, 2005 and 2004, respectively. In previous years, we had included all of our Website operating costs in cost of brand advertising revenues. In 2005, in order to improve the measurement of performance of each segment, we began allocating Website operating cost to the cost of revenues of each segment based on actual usage. Accordingly, we reclassified the cost of revenues amongst each segment for previous years presented to conform with current year classification. In general, the impact of this re-allocation has not materially affected the trend of gross profit of each segment. This excerpt taken from the SOHU 10-Q filed Nov 6, 2006. Cost of Revenues Total cost of revenues were $12.4 million and $34.6 million for the three and nine months ended September 30, 2006, respectively, as compared to $8.9 million and $22.9 million for the corresponding three and nine month periods in 2005. This excerpt taken from the SOHU 10-Q filed Aug 8, 2006. Cost of Revenues Total cost of revenues were $12.1 million and $22.2 million for the three and six months ended June 30, 2006, respectively, as compared to $7.7 million and $13.9 million for the corresponding three and six month periods in 2005. This excerpt taken from the SOHU 10-Q filed May 2, 2006. Cost of Revenues Total cost of revenues was $10.9 million and $7.5 million for the three months ended March 31, 2006 and 2005, respectively. This excerpt taken from the SOHU 10-K filed Feb 28, 2006. Cost of Revenues Total cost of revenues was $34.0 million and $25.2 million for the years ended December 31, 2004 and 2003, respectively.
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Table of ContentsIn 2005, in order to improve the measurement of performance of each segment, we began allocating Website operating costs to the cost of revenues of each segment based on actual usage. Accordingly, we reclassified the cost of revenues amongst each segment for previous years presented to conform with current year classification. In general, the impact of this re-allocation has not materially affected the trend of gross profit of each segment. Advertising Cost of Revenues Advertising cost of revenues increased by $4.9 million to $12.1 million for the year ended December 31, 2004 as compared to $7.2 million for the year ended December 31, 2003. Brand advertising. Brand advertising cost of revenues mainly includes personnel costs and personnel overhead relating to our editorial center, content purchases, payments to our business partners, relevant depreciation of servers and computer equipment and bandwidth leasing costs. Brand advertising cost of revenues was $10.8 million and $6.7 million for the year ended December 31, 2004 and 2003. The increase of $4.1 million consisted of a $1.4 million increase in personnel expense, a $162,000 increase in payments to our business partners, a $151,000 increase in bandwidth leasing costs, a $1.2 million increase in office and depreciation expense, and a $1.2 million increase in content purchases and traveling and entertainment expense. Our brand advertising gross margin for the year ended December 31, 2004 and 2003 was 77% and 72%, respectively. Our brand advertising gross margin improved for the year ended December 31, 2004 because of the fixed nature of some of the brand advertising cost components, which had not increased at the same rate as revenue. Sponsored search. Sponsored search cost of revenues consisted primarily of payments to our Website alliances, relevant depreciation of servers and computer equipment and bandwidth leasing costs. Sponsored search cost of revenues was $1.3 million for year ended December 31, 2004 as compared to $0.5 million for the year ended December 31, 2003. The increase in sponsored search cost of revenues resulted from an increase of $0.6 million in payments to our Website alliances. Non-advertising Cost of Revenues Non-advertising cost of revenues increased by $3.9 million to $21.9 million for the year ended December 31, 2004 as compared to $18.0 million for the year ended December 31, 2003. Wireless. Wireless cost of revenues increased by $0.7 million to $13.8 million for the year ended December 31, 2004, as compared to $13.1 million for the year ended December 31, 2003. Wireless cost of revenues consists mainly of collection and wireless transmission charges paid to third party network operators, expenses related to notices of penalties and complaints from CMCC subsidiaries based on allegations of the breach of certain provisions of agreements with the mobile network operators, fees or royalties paid to third party content providers for services and content associated with our wireless services, relevant depreciation of servers and computer equipment and bandwidth leasing costs. The collection and transmission charges vary between third party operators and include a gateway fee of $0.006 to $0.0151 per message, depending on the volume of the monthly total wireless messages, and a collection fee of 10% to 30% of total fees collected by the third party operators from mobile phone users and paid to us. Content costs were immaterial as compared to collection and transmission charges. Our wireless gross margins were 62% and 70% for the years ended December 31, 2004 and 2003, respectively. Wireless gross margin decreased primarily because revenues from high gross margin products decreased. E-commerce. E-commerce cost of revenues was $6.1 million for the year ended December 31, 2004, as compared to $3.4 million for the year ended December 31, 2003. E-commerce cost of revenues consists mainly of the purchase price of consumer products sold and inbound and outbound shipping charges. The change in e-commerce cost of revenues from the comparative period in 2003 was attributable to the change in sales volume. Our e-commerce gross margin was 1% for the year ended December 31, 2004, as compared to 9% for the year ended December 31, 2003. For the year ended December 31, 2004, approximately 3 percentage points of the reduction in gross margin were attributable to our providing free delivery for orders greater than $6 and approximately 5 percentage points of the reduction were attributable to our lowering sales prices of our products. Others. Cost of revenues for other services, consisting mainly of fees paid to third parties for design services and related overhead, was $2.1 million and $1.5 million for the years ended December 31, 2004 and 2003, respectively. This excerpt taken from the SOHU 10-Q filed Nov 9, 2005. Cost of Revenues
Total cost of revenues were $9.9 million and $25.9 million for the three and nine months ended September 30, 2005, respectively, as compared to $8.4 million and $26.2 million for the corresponding periods in 2004.
In previous periods, we had included all of our website operating cost in cost of revenues of brand advertising. Beginning July 1, 2005, in order to improve the measurement of performance of each segment, we began allocating website operating cost to the cost of revenues of each segment based on actual usage. Accordingly, we reclassified the cost of revenues amongst each segment for previous periods presented to conform with current period classification. In general, the impact of this re-allocation has not materially affected the trend of gross profit of each segment.
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Table of ContentsThis excerpt taken from the SOHU 10-Q filed Aug 8, 2005. Cost of Revenues
Total cost of revenues were $8.4 million and $16.0 million for the three and six months ended June 30, 2005, respectively, as compared to $9.2 million and $17.9 million for the corresponding periods in 2004.
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Table of ContentsThis excerpt taken from the SOHU 10-Q filed May 2, 2005. Cost of Revenues
Total cost of revenues was $7.5 million and $8.6 million for the three months ended March 31, 2005 and 2004, respectively.
This excerpt taken from the SOHU 10-K filed Mar 25, 2005. Cost of Revenues
Total cost of revenues was $25.2 million and $13.4 million for the years ended December 31, 2003 and 2002, respectively.
Advertising cost of revenues
Advertising cost of revenues includes personnel costs and personnel overhead, content purchases, depreciation and bandwidth, which are fairly fixed in nature and accordingly did not tend to increase or decrease proportionately with revenue. Our advertising gross margin for the year ended December 31, 2003 was 75% as compared to 57% for the year ended December 31, 2002. Our gross margins improved because of the fixed nature of the advertising costs of revenues, which did not increase at the same rate as revenue.
Advertising cost of revenues was $7.5 million and $5.9 million for the years ended December 31, 2003 and 2002 respectively. The increase of $1.6 million was primarily due to the increase in personnel costs of $900,000 as a result of growth in headcounts and an increase in spending for content of $600,000, as we expanded our channel offerings.
Non-advertising cost of revenues
Non-advertising cost of revenues was $17.7 million and $7.5 million for the years ended December 31, 2003 and 2002, respectively. The increases were consistent with revenue growth. Prior to our adoption of FIN 46 on July 1, 2003, which resulted in the consolidation of our variable interest entities, substantially all non-advertising cost of revenues was from related parties.
Wireless. Our wireless gross margin for the year ended December 31, 2003 was 70% as compared to 63% for the year ended December 31, 2002. Wireless cost of revenues was $13.0 million and $3.7 million for the years ended December 31, 2003 and 2002, respectively, which consists mainly of subscription collection and wireless transmission charges paid to third party network operators. The fees varied between third party operators and included a gateway fee of $0.006 to $0.012 per message, depending on the volume of the monthly total wireless messages, and a collection fee of 12% to 15%, based on the total fees collected by the third party operators from mobile phone users and paid to us. As the operator fees were charged on a per message basis and as a percentage of revenue, the increase in wireless cost of revenues is consistent with our increase in wireless revenues. Content costs are also included in wireless cost of revenues but are immaterial as compared to collection and transmission charges. Wireless cost of revenues does not include allocations for Website operating costs. Subsequent to the adoption of FIN 46, wireless cost of revenues also includes the business tax paid when VIEs remit to our subsidiaries wireless fees which have been collected by the VIEs. The increase in gross margins was mainly due to a higher mix of monthly subscriptions, which have higher gross margins. There were no significant changes in third party network operator fees in 2003.
E-commerce. Our e-commerce gross margin for the year ended December 31, 2003 was 10% as compared to 16% for the year ended December 31, 2002. Our 2003 gross margin decreased from 2002 due to market price competition and the fact that we started providing free shipping in 2003, which increased our e-commerce cost of revenues. For the years ended December 31, 2003 and 2002, our e-commerce cost of revenues was $3.4 million and $3.5 million, respectively, consisting of the purchase price of consumer products, and inbound and outbound shipping charges. E-commerce cost of revenues did not include allocations for Website operating costs.
Others. Cost of revenues for other services, consisting of employee compensation costs and related overhead, fees paid to third party for design services and, where applicable, the cost of hardware and software, was $1.3 million and $280,000 for the years ended December 31, 2003 and 2002, respectively.
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