The IPO was led by JP Morgan, Credit Suisse, Goldman Sachs, and CICC. Shares are set to open for trading later this morning on the NYSE.
As noted above, SOGO is the second largest online search engine in China (Baidu is #1). It is the fourth largest Internet company in China based on MAU. Sogou Search had a 17.8% market share in China based on mobile queries in September 2017, as compared to 15.2% in March 2017 and 16.9% in June 2017.
Meanwhile, its mobile search MAU increased from 473 million in March 2017, to 483 million in June 2017, and further to 511 million in September 2017. Sogou has grown significantly, with total search page views having grown by 28% and mobile search page views having grown by 71.9% on an annualized basis from September 2014 to September 2017.
Powered by AI (artificial intelligence), Sogou Search offers innovative products and services. For example, its cross-language search service eliminates the Chinese-English language barrier, enabling users to discover English content on the Internet by querying in Chinese and reading content that Sogou has translated into Chinese. Focusing on natural interaction and knowledge computing, it has made significant breakthroughs in voice and image technologies, machine translation, and Q&A, which have been successfully integrated into its search engine.
Sogou Search is the default general search engine in Tencent's Mobile QQ Browser and qq.com. Sogou is considering other possible collaborations with Tencent. For example, in October 2017, Tencent began testing on a trial basis the integration of Sogou Search into Weixin/WeChat, whereby its users can use Sogou Search as a general search function from within Weixin/WeChat to access information outside Weixin/WeChat.
Taking a look at the numbers, the company is profitable. Revenue in 2015 jumped 53% to US$591.8 mln and then it rose 12% in 2016 to $660.4 million. Sogou says its 2016 revenue was affected by tightened China government regulation of the online advertising industry during 2016. This had an adverse impact on the search market in China in general.
In 1H17 revenue rose 16% YoY to $373.2 mln. Revenue as reported in US dollars for 2016 and 1H17 was negatively affected by the depreciation of the RMB.
In terms of margins, gross margin has consistently stayed in the 54-58% range although it did dip in 1H17 to 48.3% mainly due to traffic acquisition costs being higher as a percentage of revenue. Operating margin has mostly been in the 10-17% range.