recently reported results for the third quarter ending September 30, 2003.

Highlights for the third quarter 2003 were as follows:

– Revenues rose 194% year-on-year to US$22.1 million

– 13th consecutive quarter of double-digit quarterly sequential revenue growth

– Advertising revenues rose a record-high 138% year-on-year to US$8.7 million

– Non-advertising revenues grew 248% year-on-year to US$13.3 million through sustained conversion of Sohu's user base into consumers

– Gross margins reached 69%

– Operating profit reached US$9.2 million with operating profit margins of 42%

– Strong Q4 03 momentum with expected net income of US$9.5 million to

US$11.2 million and earnings per diluted share of US$0.24 to US$0.28

"Sohu is very pleased to report these strong results in the third quarter. We have added yet another quarter to our longstanding track record of strong, diverse and balanced growth as we tap the revenue potential of various business lines. Among the key drivers of our success in this quarter were the growth in brand advertising and search/paid listing as well as our ongoing ability to have our users adopt a broadening variety of fee-based products and services into their daily lifestyle," said Charles Zhang, Chairman and CEO of Sohu.

Sohu estimates total revenues for the fourth quarter 2003 to be between US$24.3 million and US$25.7 million, with advertising revenues of US$9.4 million to US$9.6 million and non-advertising revenues of US$14.9 million to US$16.1 million. Fourth quarter net income is expected to be between US$9.5 million and US$11.2 million or US$0.24 to US$0.28 per diluted share.

"We are confident of our well-balanced, diversified business model's sustainable growth prospects as well as Sohu's ability to capture the benefits of the growing market in China," concluded Charles Zhang.


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