of 2018 would have been $282.6 million, or $6.0 million more than GAAP total revenues, and up 10% year-over-year. 2 Non-GAAP results exclude share-based compensation expense. Explanation of the Company's non- GAAP financial measures and related reconciliations to GAAP financial measures are included in the accompanying Non-GAAP Disclosure and Reconciliations of Non-GAAP Results of OperationMeasures to the Nearest Comparable GAAP Measures. 3 The Company has adopted ASU No. 2014-09, ''Revenue from Contracts with Customers beginningJanuary 1, 2018. The only major impact of the standard is that revenues and expenses related to advertising barter transactions are recognized beginning January 1, 2018. The impact for this quarteris approximately $5.3 million for both revenues, and cost of revenues and expenses. Non-GAAP Disclosure To supplement the unaudited consolidated financial information prepared in accordance with generally accepted accounting principles in the United States of America (GAAP),Sogou's management uses non-GAAP measures of gross profit, gross margin, and net income that are adjusted from results based on GAAP to exclude the impact of share-based awards. These measures should be considered in addition to results prepared in accordance with GAAP, but should not be considered a substitute for, or superior to, GAAPresults. Sogou's management believes that excluding share-based compensation expense is useful for management's internal operating purposes and for investors. The amount ofshare-based compensation expense cannot be anticipated by management, and this is not built into the Company's annual budgets and quarterly forecasts, which generally will be the basis for information Sogou provides to analysts and investors as guidance for future operating performance. As share-based compensation expense does not involvesubsequent cash outflow, Sogou does not factor in this expense when evaluating and approving expenditures or when determining the allocation of its resources to its business operations. As a result, in general, the Company's monthly financial results for internal reporting and any performance measures for commissions and bonuses are based onthese non-GAAP financial measures that exclude share-based compensation expense. The non-GAAP financial measures are provided to enhance investors' overall understanding of Sogou's current financial performance and prospects for the future. A limitation ofusing non-GAAP gross profit, gross margin, and net income measures that exclude share-based compensation expense is that share-based compensation expense has been and is likely to continue to be a significant recurring expense in the Company's business. In order to mitigate these limitations, the Company has provided specific informationregarding the GAAP amounts excluded from each non-GAAP measure. The accompanying tables include details on the reconciliation between GAAP financial measures that are most directly comparable to the non-GAAP financial measures the Company has presented. Safe Harbor Statement This announcement contains forward-looking statements. It is currently expected that the Business Outlook will not be updated until release of Sogou's next quarterly earningsannouncement. However, Sogou reserves the right to update its Business Outlook at any time for any reason. Statements that are not historical facts, including statements about Sogou's and Sogou management's beliefs and expectations, are forward-looking statements. These statements are based on current plans, estimates, and projections, whichinvolve 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 statement. Potential risks and uncertainties include, but are not limited to, intense competition in the market for search and search-related services; our need tocontinually innovate and adapt in order to grow our business; our reliance on Tencent platforms for a significant portion of our user traffic; and uncertainty regarding the extent and reach of PRC governmental regulation of sponsored search. Further information regarding these and other risks is included in Amendment No. 2 to Sogou's RegistrationStatement on Form F1 (Registration No. 333-220928) filed with the Securities and Exchange Commission on November 6, 2017, and other documents Sogou files with or submits to the Securities and Exchange Commission. Conference Call and WebcastSogou's management team will host a conference call at 7:30 am U.S. Eastern Time, (8:30 pm Beijing/Hong Kong time) on November 5, 2018, following the quarterly resultsannouncement. The dial-in details for the live conference call are: U.S. Toll Free:+1-888-317-6003 Mainland China:4001-206115 (Toll Free) Hong Kong:800-963976 (Toll Free); +852-580-81995 (Local Toll) International:+1-412-317-6061 Passcode:7311232 Please dial in 10 minutes before the call is scheduled to begin. When prompted, ask to be connected to the Sogou Inc. call and provide the passcode. A replay of the conference call may be accessed by phone at the following number until November 12, 2018: International:+1-412-317-0088 Passcode:10125635 A live webcast and archive of the conference call will be available on the Investor Relations section of Sogou's website at http://ir.sogou. About Sogou Sogou Inc. (NYSE: SOGO) is an innovator in search and a leader in China's internet industry. With a mission to make it easy to communicate and get information, Sogou hasgrown to become the second largest search engine by mobile queries and the fourth largest internet company by MAU in China. Sogou has a wide range of innovative products and services including the Sogou Input Method, which is the largest Chinese language input software for both mobile and PC. Sogou is also at the forefront of AI development andhas made significant breakthroughs in voice and image technologies, machine translation, and Q&A, which have been successfully integrated into our products and services. For investor enquiries, please contact: Jessie ZhengSogou Investor Relations Tel: +86 10 5689 8068Email: ir@sogou-inc For media enquiries, please contact: Rachael LayfieldBrunswick Group Tel: +86 10 5960-8600Email: sogou@brunswickgroup SOGOU INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED, IN THOUSANDS EXCEPT PER SHARE AMOUNTS) Three Months EndedSep. 30, 2018Jun. 30, 2018Sep. 30, 2017Revenues:Search and searchrelated advertising revenues$255,312$270,622$225,590 Other revenues21,25530,79431,755 Total revenues 276,567301,416257,345 Cost of revenues (1) 173,622179,749130,299 Gross profit 102,945121,667127,046 Operating expenses: Research and development (1)50,59856,22340,309 Sales and marketing (1) 43,59233,86544,798 General and administrative (1)15,5486,7486,246 Total operating expenses 109,73896,83691,353 Operating (loss)/income(6,793)24,83135,693 Interest income 1,7321,7632,390 Foreign currency exchange gain/(loss)(2)4,5216,136(2,475) Other income/(expenses), net24,0493,427(42) Income before income tax expenses 23,50936,15735,566 Income tax (benefit)/expenses(409)2,9974,593 Net income 23,91833,16030,973 Net income attributable to Sogou Inc. $23,918$33,160$30,973 Less: Dividends attributable to preferred shareholders --7,023 Net income attributable to ordinary shareholders $23,918$33,160$23,950 Weighted average number of ordinary shares outstanding—basic389,566388,409238,691 Weighted average number of ordinary shares outstanding—diluted396,354395,163271,540 Net income per ordinary share—basic$0.06$0.09$0.10 Net income per ordinary share—diluted$0.06$0.08$0.09 Net income per ADS—basic$0.06$0.09$0.10 Net income per ADS—diluted$0.06$0.08$0.09 (1)Sharebased compensation expenseincluded in:Cost of revenues $234$263$-Research and development 3,0083,637309Sales and marketing 3734277General and administrative 514720- $4,129$5,047$316 (2)Foreign currency exchange gain/(loss), mainly arising from our cross-border RMB-denominated intragroup loans, is a result of depreciation or appreciation of RMB, respectively SOGOU INC. CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED, IN THOUSANDS) As ofSep. 30, 2018As ofDec. 31, 2017 ASSETS Current assets: Cash and cash equivalents $229,704$694,207 Short-term investments846,743339,006 Accounts receivable, net 96,86269,967 Loans receivables, net33,930- Prepaid and other current assets 38,10615,091 Due from related parties 2,2732,971 Total current assets 1,247,6181,121,242 Longterm investments 60,83130,152 Fixed assets, net 139,368139,209 Goodwill 5,6125,908 Intangible assets, net 7361,328 Deferred tax assets, net 11,28515,006 Other assets8,9678,191 Total assets $1,474,417$1,321,036 LIABILITIES Current liabilities: Accounts payable$116,523$73,018 Accrued and other short term liabilities154,362164,269 Receipts in advance81,16166,199 Accrued salary and benefits27,38729,719 Taxes payable52,50756,481 Due to related parties65,00023,109 Total current liabilities 496,940412,795 Total liabilities $496,940$412,795 SHAREHOLDERS' EQUITY Sogou Inc. shareholders' equity977,477908,241 Total shareholders' equity977,477908,241 Total liabilities and shareholders' equity $1,474,417$1,321,036 SOGOU INC. RECONCILIATIONS OF NON-GAAP RESULTS OF OPERATION MEASURES TO THE NEAREST COMPARABLE GAAP MEASURES (UNAUDITED, IN THOUSANDS EXCEPT PER SHARE AMOUNTS) Three Months Ended Sep. 30, 2018Three Months Ended Jun. 30, 2018Three Months Ended Sep. 30, 2017 GAAP Non-GAAP Non-GAAPGAAP Non-GAAP Non-GAAPGAAP Non-GAAP Non-GAAPAdjustments (1)Adjustments (1)Adjustments (1) Gross profit$102,945$234$103,179$121,667$263$121,930$127,046$-$127,046 Gross margin37%37%40%40%49%49% Operating expenses$109,738$(3,895)$105,843$96,836$(4,784)$92,052$91,353$(316)$91,037 Operating Profit$(6,793)$4,129$(2,664)$24,831$5,047$29,878$35,693$316$36,009 Operating margin-2%-1%8%10%14%14% Income tax (benefit)/expenses$(409)$$(409)$2,997$$2,997$4,593$$4,593 Net income $23,918$4,129$28,047$33,160$5,047$38,207$30,973$316$31,289 Net income attributable to Sogou Inc. $23,918$4,129$28,047$33,160$5,047$38,207$30,973$316$31,289 Net margin attributable to Sogou Inc. 9%10%11%13%12%12% (1) To exclude share-based compensation expense. This non-GAAP adjustment does not have an impact on income tax expense. SOURCE Sogou Inc. 。。。。。。