Article/Hong Ruoxin, columnist of Sina Financial Opinion Leader (WeChat public account kopleader)
Even if there is a painful lesson from the failure of cash loan business, Sogou is still enthusiastic about finance.
1
Before November 5, US Eastern Time, the Chinese Internet company Sogou released its third quarter financial report.
The financial report shows that Sogou's total revenue in the third quarter was 276.6 million dollars, up 7% year on year; The net profit attributable to Sogou was US $23.9 million, down 23% year on year.
Although the net profit was positive, Sogou's main profit in the third quarter came from "other income", with a total amount of up to 24 million dollars, mainly from the recognition of an equity investment income under the new accounting standards; However, the operating profit was actually negative, with a loss of 6.8 million dollars, which is the first time Sogou has encountered a negative operating profit since its listing.
There are many reasons for poor performance. The substantial investment in AI technology and intelligent hardware products has led to a substantial increase in R&D expenditure, human costs, and the surge in traffic costs.
However, Xin Financial noticed that Sogou mentioned in its financial report that its general and administrative expenses in the third quarter were $15.5 million, an increase of 149% over the same period last year, The main reason is the increase of provision caused by the platform issuing consumer loans, And the increase of inventory impairment losses related to intelligent hardware products.
Many people's impression of Sogou's consumer finance business remained a year ago. In September 2017, Sogou submitted a prospectus that exposed its layout of "cash loan" business. However, three months later, Sogou's cash loan platform "Yidian Borrowing" has been hard to find in the APP store. It is widely believed in the industry that Sogou's financial business "died before it got started" because of the tightening of supervision and the lack of license plates.
But in fact, judging from the third quarter financial report and public information, Sogou's financial dream has never stopped.
So far, Sogou's lending business has been back online for nearly half a year, The main business is to cooperate with Xinnet Bank to provide lending services for credit card users; In addition, in addition to the approval of an Internet small loan license by Sogou in Shantou at the end of 2017, Sogou also recently set up an insurance brokerage company, but no public information shows that it has been approved.
two Sogou's online lending business has not been suspended for too long.
After searching the APP store again, Xin Financial found that the "Yidian Loan" that had been offline had changed its name to "Yidian Installment" and was back online. The platform party is still Chengdu Jiyifu Technology Co., Ltd., while Sogou is the shareholder of the former.
It is worth noting that, according to the update time of the APP store version, the client was launched five months ago. In other words, the app has been re promoted on the C side shortly after the launch of "borrowing money at one point".
Yidian defines itself as a credit loan product by stages, and provides loan services for borrowers by relying on the risk control system independently built.
According to the official introduction of Yidian Installment Platform, the platform mainly provides credit card users with borrowing services, with a limit of 3000-20000 yuan and a period of 3-12 months.
Different from the credit card compensation business we talked about in the past, This product does not specify the purpose of borrowing for credit card repayment, so in many forums, this product is still regarded as a cash loan product, Or "mouth".
However, obviously, with the tightening of the entire regulatory policy, even the deformed cash loan products have different business models from the past. In the user privacy agreement, Sichuan Xinnet Bank's personal credit authorization appeared.
In other words, even if the so-called risk control system has been set up by stages, the main risk control and funding sources still belong to licensed institutions.
However, with the approval of the online small loan license applied by Sogou in Shantou at the end of 2017, the identity of the license may be more conducive to the cooperation between Sogou and the licensed institutions, and provide some free funds during the exhibition process.
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In fact, the impact of financial business on Internet companies has always been mixed, and even most of the time, the negative impact is far greater than the positive.
For Sogou, the previous cash loan business also brought many negative voices to the company due to compliance and other issues, but it seems that it is still difficult to resist the temptation of financial business.
Because other businesses are more difficult to do.
The financial report shows that Sogou's revenue growth in the third quarter was 43% lower than that in the previous quarter, and much lower than 55% in the same period last year.
The reason is that Sogou's search and search related revenue accounted for 92.3% of the total revenue in this quarter, but this Core business suffered heavy losses in the third quarter 。 Under the influence of regulation, Sogou suspended part of its advertising business for ten days in July this year, which directly led to a sharp reduction in the company's revenue.
meanwhile, Sogou's AI card, which has always been the main one before, is still that the input is far more than the output 。 According to the financial report, because of the decline in sales of intelligent hardware products, the revenue of this business dropped sharply from 11.3% at the beginning of this year to 7.7%.
Under the difficulties of transformation and sluggish growth, Traffic costs are still rising 。
According to the financial report, Sogou's revenue cost in the third quarter was 173.6 million dollars, up 33% over the same period last year. Among them, the cost of flow acquisition was 135.2 million dollars, an increase of 58% over the same period of last year, accounting for 48.9% of the company's total revenue, while the proportion of the same period of last year was 33.3%.
This is also a problem facing the entire Internet industry. With the passing of the dividend period, even if there is traffic support from Tencent behind it, it is hard to escape the cost dilemma. Internet companies must find ways to obtain more profits from users to break the problem of revenue growth failing to catch up with cost growth.
Although getting traffic is becoming more and more expensive, the only advantage for Sogou and many Internet companies is traffic.
In the case that other businesses are difficult to realize quickly, finance has become the only and final choice.
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If we carefully observe the development history of Sogou's financial business, we will find that there is no clear development idea and layout, and it has always been flow liquidity oriented.
From the earliest loan navigation business, to the later online cash loan business, to the return to the online lending market, and to the application for insurance broker license, almost all businesses will do whatever they want in the air, and will be arranged whatever can realize the flow realization as soon as possible.
However, compared with Baidu, its older predecessor in search business, it will be found that search business, as a weak account system and Internet business lacking transaction scenarios, also has insufficient advantages in expanding to the financial field.
Even if Baidu is strong enough to enter the offline market with high profile, win large and small licenses, and use almost all the traffic inlets in the ecosystem, its financial business still stepped on many thunders and walked through many detours. For example, Baidu was downgraded by Fitch and other rating agencies for its financial business.
No one knows how far the Sogou, with its head stuck in the air inlet, can run on the financial road.
(The author of this article introduces: Hong Ruoxin, a senior financial reporter and host, and the founder of We Media "Xin Finance".)
