Tip Fleming – Investor Relations, Christensen Charles Zhang – Chairman and CEO Belinda Wang – Co-president and COO Carol Yu – Co-president and CFO

Alicia Yap – Barclays Capital Dick Wei – JPMorgan Philip Wan – Morgan Stanley Jiong Shao – Macquarie Research Mark Marostica – Piper Jaffray Thomas Chong - BOCI Fei Fang – Goldman Sachs Mi Zhou – UBS

Ladies and gentlemen, thank you for standing by, and a very good evening. Thank you for joining Sohu's first quarter 2013 earnings conference call. At this time, all participants are in a listen-only mode. After management’s prepared remarks, there will be a Q&A session. Today's conference call is being recorded. If you have any objections, you may disconnect at this time. I would now like to hand the conference over to your host for today's conference call, Mr. Tip Fleming from Christensen. Thank you, sir. Please go ahead.

Thank you, operator. Thank you all for joining us today to discuss Sohu.com's first quarter 2013 results. On the call are Chairman and CEO, Dr. Charles Zhang; Co-President and Chief Operating Officer, Belinda Wang; Co-President and Chief Financial Officer, Carol Yu. Also with us from Changyou are President, Dewen Chen and Chief Financial Officer, Alex Ho. And we also have CEO of Sogou, Xiaochuan Wang and Vice President of Sohu and CEO of Sohu Video, Ye Deng. 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 current plans, estimates and projections and therefore you should not place any 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 statements. For more information about the potential risks and uncertainties, please refer to the company's filings with the Securities and Exchange Commission, including its registration statement and most recent Annual Report on Form 10-K. Now, let me turn the call over to Dr. Charles Zhang, Chairman and CEO. Charles, please proceed.

Thank you. And thanks to everyone for joining our call. I am pleased to report that Sohu Group’s three key properties, namely online media, in particular video, Sogou and Changyou are all making strong starts into 2013. For the first quarter, the Group revenues were up 36% year-on-year, exceeding our expectations. By business unit, online video delivered double digit sequential revenue growth in a typical slowest quarter of the year. Sogou business was solid as its core products continued to gain user traction. Changyou set new records for both top-line and bottom-line, driven by decent performance of its MMO and web games. According to iResearch, the Sohu Group now has approximately 450 million users on a monthly basis consuming the Group’s news, video, Pinyin, games or our other services. This put us as a solid No.3 in China’s internet industry. Traffic growth for our PC internet services is stable while our mobile products are gaining strong traction as the total user base of two of our popular mobile applications APPs surpassed 100 million mark each. Now I would like to share some first quarter financial highlights with you. Total revenues were US$308 million, up 36% year-over-year and 3% quarter-over-quarter, exceeding the high end of our guidance by $9 million. Net brand advertising revenues were US$80 million, up 32% year-over-year and down 2% quarter-on-quarter. Sogou revenues were US$39 million, up 73% year-over-year and down 4% quarter-over-quarter, exceeding the high end of our guidance by 3 million. Online game revenues were US$167 million, up 33% year-over-year and 6% quarter-over-quarter. Non-GAAP diluted EPS were $0.62, exceeding the high-end of our guidance by $0.07. Now let me discuss our online video business in more detail. In the first quarter, Sohu Video continued to focus on its strategy of providing high quality differentiated content and improving its monetization capabilities. We have been focusing on expanding our user base in metropolitan cities. This group of users with high disposable income is most sought after by major brand advertisers. Our carefully articulated common portfolio such as American Drama and the Japanese animation series is well suited to this demographics group. As the number one online destination for American drama series, in March Sohu Video added Netflix blockbuster series House of Cards exclusively shortly after its U.S. release. Our data shows that about 30% of the viewers live in Beijing and Shanghai. And another classic example in our content library are Japanese animation (inaudible) and a fairy tale (inaudible). Two of the top three most popular animations in China are exclusively available on our platform. Our pipeline in the third quarter, we will air the most anticipated variety shows of 2013, the Voice of China Season 2. I am also delighted to report our progress on the video advertising sales. For the first quarter, a typical soft advertising season, our revenues posted double-digit sequential growth. We already began pre-selling ad slots for the new season of the Voice of China and to date we have received a strong demand. We are confident about continuous strong sales momentum in the second half of 2013. Mobile video has been one of our top priorities with our stepping up investment and are seeing some already successes. Our content technology gained the recognition from the important players such as Samsung and China Unicom which entered into a separate strategic cooperation agreements with Sohu Video. Belinda will discuss more details about Sohu Group’s mobile strategy in her remarks later. Moving on to our Sogou business. Sogou is off to a good start in 2013 supported by a strong performance of our surging web directory businesses. First quarter revenues grew 73% year over year to 39 million, exceeding previous guidance. Despite intensified competition in this space, Sogou added up its search traffic market share compared with the fourth quarter of 2012. Sogou Pinyin, the dominant Chinese language input software continued to gain user traction, benefitting from its unparalleled popularity in the market. In the first quarter, Sogou Pinyin added 11 million new users from previous quarter and boosted its penetration rate to an unprecedented 88%. For the year ahead, Sogou plans to continue to increase the functionality of its core products. For example, Sogou recently launched the Sogou Pinyin Intelligent Version 2.0 with a significant new feature called (inaudible). Based on user title input it proactively offers us corresponding search results, automatically displaying such results beneath the typing input bar. For example, when user type a name of some movie using Sogou Pinyin, this feature will display internet links directing them to such content without going through its search function. This feature essentially converts Pinyin from a pure typing tool to a search tool. We are excited that this new feature has received a very favorable feedback from users. Moving on to Changyou business, for MMO games, our flagship game TLBB continued to be a leading market for MMO game in China. In the first quarter, we continued our player experimentation strategy. We worked on the new content and managed in-game promotions with the need of both advanced level players and casual players in mind. We also added new games to our portfolios. On April 10, we launched Dou Po Cang Qiong, an in-house developed 2.5D fantasy MMO game. For web games, DDTank and Wartune continued to be popular games in China. We launched a new game Android DDTank brand new with a new design and a gameplay that is targeted to players who prefer a single-player screen. For Wartune, we added a new virtual items for the games and its growth continues to pick up overseas. In April, we released an updated version of the Wartune with a new patch system to attract users. In the second quarter, we plan to launch Spanish, Italian and Russian versions. Regarding our game pipeline in the third quarter, we plan to distribute a PC game called Shen Gen 6, the sixth cycle in a popular Shen Gen games series developed by Taiwan Software Softwall (ph). For the second half of 2013, we plan to launch two licensed side scrolling MMO game Grand Chase and Dou Po. We have also secured exclusivity licenses for web games Chong Sen and Shen Zen (ph) which is another Shen Zen name. And now I will pass the call over to Belinda for her overview of our Group’s mobile strategies and achievements as well as the results of our brand advertising business. Belinda?

Thanks Charles. Recognizing Internet sector’s profound shift from PC to mobile, Sohu Group has made mobile one of the most important parts of our strategy. And thanks to our early investments, the Group now owns a number of leading mobile applications across our business lines, including Sohu News Mobile App and Sohu Video App for our online media businesses, as well as Sogou Pinyin and Sogou Voice Assistant for Sogou. Our range of products are becoming indispensable for tens of millions of China’s mobile Internet users. I will discuss each of these in more detail. For our online media business, Sonu News Mobile app is undisputedly the number one mobile news application in China. Its total user base just surpassed 100 million in April, compelled other news apps (inaudible) besides providing Sohu’s own content, it also serves as our open platform. We partner with hundreds of traditional news media and each with their content in our app. As such, users can customize content for themselves. Going forward, we will strive to build our news app into a one-stop mobile news portal. And for online video, Sohu Video’s mobile traffic is growing rapidly. In the first quarter, the average daily active users and video views both grew by 40% from the previous quarter, accounting about 30% of our total video traffic. Accumulatively installation of the Sohu Video app is close to 100 million. Recently we entered into a three-year exclusive partnership with Samsung. Starting with Galaxy S4, we designed a customized Sohu Video app which will be pre-installed in Samsung China mobile products. Over the next three years, we expect that over 100 million Samsung devices, including phones and tablets, will have this app pre-embedded. We also had a strategic deal with China Unicom. The 90 million 3G subscribers of the operator can now sign up for 15 RMB fixed monthly data plan and watch our massive video content. For Sogou, we focus on developing different popular apps, including Pinyin map, voice-based research and the yellow page like number of past products. Now reaching a strong brand on PC markets, Sogou Pinyin mobile version has become one of the top mobile apps. In March, its monthly active users rose 34% from last December to 123 million. Lastly, for Changyou we are seeing strong growth in the mobile games market in China, particularly in free-to-play mobile games. For the past few months, our team of over 200 game engineers made up of both internal employees and outside mobile industry professionals have been working hard on developing free-to-play mobile games. We expect to launch two mobile games this year. Now let me turn to our brand advertising business. In the first quarter, our brand advertising revenues reached the high end of our prior guidance thanks to solid demand from FMCG advertisers and a strong pickup in real estate sector. From second quarter, based on the current information we expect for Sohu Group, including 17173, brand ads revenues before tax should be between $108 million and $110 million, net brand ad revenues to be between $98 million and $100 million. This implies a sequential increase of 22% to 25%, an annual increase of 41% to 44%. Now, I will turn the call over to our Co-President and CFO, Carol Yu, who will walk you through the quarter's financials. Carol?

Thank you, Belinda. Hello everyone. I will now take you through our financials for the first quarter. One, revenues; total revenues were $308 million, up 36% year-over-year and 3% quarter-over-quarter. Brand advertising revenues were $80 million, up 32% year-over-year and down 2% quarter-over-quarter. Sogou revenues were $39 million, up 73% year-over-year and down 4% quarter-over-quarter. Of this, Search related revenues were $36 million, up 67% year-over-year and down 7% quarter-over-quarter. The number of Search customers and the average spend per customer increased by 24% and 35% on a year-over-year basis. Online game revenues were $167 million, up 33% year-over-year and 6% quarter-over-quarter. Wireless revenues were $14 million, a year-over-year increase of 3% and quarter-over-quarter increase of 9%. Now, let me provide some more details about our other financials. From now on, most of the figures discussed will be on non-GAAP. As a reminder, you can find a reconciliation of these non-GAAP measures in our official earnings release. Two, gross margins; non-GAAP gross margin for the first quarter was 66%, compared with 69% in the previous quarter and 65% in the same period last year. Three, operating expenses; non-GAAP operating expenses for the first quarter of 2013 totaled $132 million, a decrease of 4% from the previous quarter and an increase of 43% from the same period last year. The year-over-year increase was primarily due to an increase in the number of employees, average compensation and higher expenses associated with marketing and promotion activities. Four, operating margins; non-GAAP operating margin was 23%, compared with 23% in the previous quarter and 24% for the same period last year. Five; income tax expense. For the first quarter both GAAP and non-GAAP income tax expenses were $20 million. Six, net income. Before deducting the share of net income pertaining to the non-controlling interest, non-GAAP net income was $59 million. Non-GAAP net income attributable to Sohu.com Inc. was $24 million, or US$0.62 per fully diluted share. Seven, net margin. Non-GAAP net margin before deducting the share of net income pertaining to the non-controlling interest was 19% compared with 19% in the previous quarter and 20% in the same period of 2012. Eight, moving on to the balance sheet and cash flow statement. For the first quarter we generated about $47 million in operating cash flow. Changyou generated $82 million while operating cash flow for the other business units were the net outflow of $35 million. As of Mach 31, 2013, the net accounts receivable was $116 million compared with $98 million as of the end of the fourth quarter. Brand advertising DSO for the first quarter was 58 days compared to 53 days in the previous quarter and 76 days in the first quarter of 2012. Nine, our outlook for the second quarter of 2013 is as follows: we are expecting total revenues to be between $233 million to $342 million. This implies an annual increase of 30% to 34%; brand advertising revenues to be between $98 million to $100 million, this implies a sequential increase of 22% to 25% and an annual increase of 41% to 44%. Sogou revenues to be between $48 million to $50 million, this implies a sequential increase of 22% to 27% and an annual growth of 58% to 65%. Online games revenues to be between $165 million to $170 million, this implies an annual increase of 20% to 24%. Before deducting the share of non-GAAP net income pertaining to the non-controlling interest, non-GAAP net income to be between $53 million and $56 million. Non-GAAP net income attributable to Sohu.com Inc. to be between $19 million and $21 million, and non-GAAP fully diluted earnings per share to be between $0.50 to $0.55. Assuming no new grants of share-based awards, we estimate that the compensation expenses relating to share-based awards to be between $2 million to $3 million. The estimated impact of this expense is expected to reduce Sohu's fully diluted earnings per share by $0.05 to $0.07. While many of our key initiatives are at investment phase, all of our key properties are progressing well on both PC and mobile fronts. Management is confident that our investment will create long-term returns for our shareholders. This concludes our prepared remarks. Thank you for joining the call today. Operator, we would now like to open the call to questions.

(Operator Instructions) Your first question comes from the line of Alicia Yap from Barclays. Alicia Yap – Barclays Capital: My question is related to your online video business. So can management share with us the overall demand for the online video and also the outlook for the rest of this year? And are we continuing to see the budgets shifting from the offline to online? And also can you kind of provide us the update on the latest competitive landscape and how are we performing relative to the peers?

Hi Alicia, this is Carol. Let me take your question one by one. Our video is just doing very well. We feel that while some of our competitors have not announced their earnings, the video sales have been outperforming our peers. Alicia, this is what we believe. And the competitive landscape remains very, very competitive but our premier content like what Charles has said, in terms of Voice of China, American Drama series as well as our Japanese animation series are all very, very sticky and have been attracting users to our platform. Alicia Yap – Barclays Capital: And then can you just roughly on the outlook, the overall outlook for the rest of this year just roughly (ph)?

We saw a close of – north of 70% for Q1 and we expect that to at least continue for the rest of the year.

Our next question comes from the line of Dick Wei from JPMorgan. Dick Wei – JPMorgan: Just want to (inaudible) give some guidance or shed some light in terms of their margins for the company on both – on the Sohu side, for the rest of the year, that will be great.

We expect the margin will remain stable – stabilized at the Q2 level for the entire group for the rest of the year. Dick Wei – JPMorgan: Just want to make sure, if some of the investment on the Sohu side, is that mainly related to the video related investment?

Sorry, state it again. Dick Wei – JPMorgan: So most of the major investment for Sohu side, is that mainly from video investment, any other new avenues of investment?

Two are our very important strategy, video being one of them and the other is overall mobile strategy. As you probably know that the mobile right now we haven’t been massively monetizing it, neither do our competitors. But we have been investing heavily on the mobile side. Dick Wei – JPMorgan: Just want to, you can share how much revenues from video are last quarter?

From video, we are not disclosing that.

Your next question comes from the line of Philip Wan from Morgan Stanley. Philip Wan – Morgan Stanley: My question is related to the mobile internet. I wonder how much brand – among the brand advertising sales, how you generated for mobile and also, for your Sogou business, how is the increase in mobile traffic impacting your paid search traffic --

So on the mobile side, the monetization hasn’t started yet on the advertising. On the search – mobile search side, it’s also similar. But (Chinese Language)….

We haven’t – for search we have not separately selling our – monetizing our mobile search and the traffic accounts for about 5% of the total market share. And for the video side, we plan to see -- officially monetize our video mobile traffic starting from Q3 with the compelling content such as the Voice of China Season 2. Philip Wan – Morgan Stanley: Just very quickly, have you seen any further deterioration in terms of PC traffic because of the mobile traffic?

We haven’t seen any decline in our PC traffic. Actually our traffic on our PC platform, the portal side, actually has increased more than 20% over the last year. Actually because of the popularity of the Sohu News clients software on the mobile site, general public actually – they used to like Sohu content, so actually helped PC traffic. On the monetization front, I think video will be probably the first one to start to monetize on the mobile side, with all the general text-based content and picture and text-based content. The monetization probably will take – or the whole industry to take one year or two years to develop its business model, how to advertise on the mobile platform.

Your next question comes from the line of Jiong Shao from Macquarie. Jiong Shao – Macquarie Research: On traffic, I understand that the overall health of the Chinese advertising business. Here you exclude the video revenue this year and last year, I know also exclude the real estate advertising this year and last year, because last year I think the change went through the cash accounting for your real estate business. What was the growth rate for the rest of the advertising business and to the broader sense, if you can comment on the general advertising business industry in China now and for the rest of the year, that will be great?

You are asking the growth rate for advertising sales, excluding real estate and video? Is that what your question is, sorry? Jiong Shao – Macquarie Research: That’s correct, yes.

I think it’s around mid-20s to 30%.

Also, we see our overall traffic across the industry, the overall economy has been recovering. And also I think the growth was driven by the growing trends of online video for FMCG, very strong industry category (inaudible) or total online brand advertising revenue. So financial sectors and the telecom sectors we see a steady growth. Jiong Shao – Macquarie Research: For your video business, I just have a one quick follow-up. Could you talk about the sales production, I think some of your peers are making a big push in the self-produced content. I was hoping you can talk a bit on that, if you have a strategy in place.

I think we are one of the very successful pioneers in terms of our self-produced content. We have kind of taken for granted, so we didn’t say much on that. For example, Mr. Beowulf is an overwhelming successful self-produced content which hits 100 million PV in a very relatively short period of time, a change-after for advertisers and the like. We intend to have a very strong pipeline regarding the self-produced content. And we are doing the content very tailored made to the internet users which are very different from the some of the drama series demographics. So with our self-produced content we will be able to cover a even bigger group of users.

We have a number of the popular programs (inaudible). The other one is (inaudible). It’s a weekly program. And then also we have launched a new program called Sohu entertainment commentaries. And also we have the Sohu Video report broadcasting. Sohu basically becomes the leading reporter or broadcaster about the entertainment industry of China. (Multiple Speakers) VOD or TV dramas on our platform.

The next question comes from the line of Mark Marostica from Piper Jaffray. Mark Marostica – Piper Jaffray: My question is related to your plans to monetize mobile video beginning in Q3. Can you walk us through the incremental costs we should be considering as you plan to turn on monetization for mobile video?

We do not expect any incremental costs whether or not we monetize the video content, because all the system has been in place, we’re just waiting for very compelling content to be broadcasted before we actually solicit advertisers’ demand. Mark Marostica – Piper Jaffray: Will you be launching any new content or buying new content specific to mobile or is it such –

It will be the Voice of China Season 2 with the pilot monetization plan. Mark Marostica – Piper Jaffray: For mobile?

Yes.

Your next question comes from the line of Thomas Chong from BOCI. Thomas Chong - BOCI: I just have one question. Does management have any change in terms of the prime line (inaudible) to your online video business? I remember the last time you guys had mentioned you’d pick a team to trend demands at the start of the year. Given the monetization of mobile video, any change in the timeline?

We will remain the same plan. I think right now it’s still in the land grab mode. So we do not expect to cut down on our investments.

Your next question comes from the line of Fei Fang from Goldman Sachs. Fei Fang – Goldman Sachs: Can you talk a little bit about strategy for Sogou? So given the intensified competition of search and your competitors greater traffic acquisition efforts, how do you think about the competitive positioning of Sogou in the long term?

We are very confident about the long term future of Sogou because we believe that the team has very strong capabilities in terms of coming up with innovative products, suiting the needs of the hundreds of millions of internet users across the broad. We believe, for example, the new feature brought about by the Sogou team would be unprecedented and would be quite a bit of a killers app in terms of bringing us to the search destination that we want to be. Fei Fang – Goldman Sachs: Can I have a follow-up question if I may? So regarding mobile, across your mobile product portfolio, which services or product offerings do you see the most potential for monetization in the future and is there any cannibalization mostly on the traffic side both on your mobile apps and PC offerings?

Definitely I think -- the first monetization definitely we will start with mobile -- video side. But in the long run I think the Sohu News application will be the most important – our application. Of course, casually with the Sogou Pinyin, are the two most promising application that has – both on a major – with a massive scale. And from our past year experience instead of any kind of relation, there is actually enhancement of both the PC usage because in the mobile content, we are becoming the leading news provider of China on the mobile and then that helps us Sohu’s PC based portal to continue to gain momentum.

Your next question comes from the line of Mi Zhou from UBS. Mi Zhou – UBS: I have a question about your basically – for your video business, do you see a upward connect for (inaudible) or is it coming down? I also wonder how much of your video traffic is from mobile devices?

Let me answer your second question first. The mobile traffic now accounts for about 30% of our total video traffic. Although we basically – I think we are very much at par with the industry comparing to our peers, it would be very much similar to what they are paying for last year.

Your next question comes from the line of Chi Tsang from HSBC. Chi Tsang – HSBC: I just have a couple of questions on the video side. You folks have done a great job of really ramping that business for content and also for sales people. I am wondering if you are thinking about it for the balance of the year and going forward and how much of your increased monetization would be coming from pricing versus adding advertising inventory on video?

Just to start with pricing side, Sohu Video has always been setting our prices closer to the industry number one. So we do not believe that while we are expanding – grabbing our market share in terms of advertising revenues, we would have – we do not have plans in terms of bringing in significant rate hikes other than going hand in hand with the industry. The only exception would be, again what we call the compelling content – portfolio of content such as American drama series and in particular the Voice of China for -- that we will be launching in Q3. So this is on the pricing side. What’s the other question? Chi Tsang – HSBC: I am wondering in addition to pricing, if you have any intention to actually increase the amount of advertisements that you will roll out with your video products, whether increasing pre-roll, or mid-roll or –

I think right now we are again – at industry, we have up to a max of four pre-roll with 15 seconds each. So we do not expect to increase that say to six or eight. So we are coming up with innovative advertising products such as mid-rolls and post and so on and so forth. So we are adding inventory other than pre-roll.

If there are no further questions at this time, I would now like to hand the conference back to your host today Mr. Tip Fleming from Christensen. Thank you sir.

Thank you everyone for joining our call today. If you have any further questions, please don't hesitate to contact us or the company directly. Thank you very much.

Thank you. Ladies and gentlemen, that does conclude our conference for today. Thank you for participating. You may all disconnect.