奇虎360第二季度财报英文版.docx

奇虎360第二季度财报英文版.docx

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奇虎360第二季度财报英文版

【奇虎360】2013年第二季度财报（英文版）

BEIJING,August26,2013/PRNewswire/--Qihoo360TechnologyCo.Ltd.（"Qihoo360"orthe"Company"）（NYSE:

QIHU）,aleadingInternetcompanyinChina,todayreporteditsunauditedfinancialresultsforthequarterendedJune30,2013.

SecondQuarterFinancialHighlights

∙Revenueswere$151.7million,a108%increasefrom$72.8millioninthesecondquarterof2012.

∙NetincomeattributabletoQihoo360was$33.0million,a372%increasefrom$7.0millioninthesecondquarterof2012.

∙Netincomeexcludingshare-basedcompensation（non-GAAP）was$51.0million,a147%increasefrom$20.6millioninthesecondquarterof2012.

∙DilutedearningsperADS（"EPADS"）attributabletoQihoo360was$0.26,comparedto$0.06inthesameperiodlastyear.

∙DilutedEPADSattributabletoQihoo360excludingshare-basedcompensation（non-GAAP）was$0.40,comparedto$0.17inthesameperiodlastyear.

OperatingMetrics

∙TotalmonthlyactiveusersofQihoo360'sPC-basedproductsandservicesreachedarecord461millioninJune2013,comparedto425millioninJune2012.

∙UserpenetrationofQihoo360'sPC-basedproductswas96%inJune2013,comparedto94%inJune2012.

∙TotalsmartphoneusersofQihoo360'sprimarymobilesecurityproductreachedapproximately338millioninJune2013,comparedto120millioninJune2012.

∙MonthlyactiveusersofQihoo360'sbrowserswere330millioninJune2013,comparedto272millioninJune2012.

∙UserpenetrationofQihoo360'sbrowserswas69%inJune2013,comparedwith61%inJune2012.

∙Averagedailyuniquevisitorstothe360PersonalizedStart-upPageanditssub-pageswere114millioninthesecondquarterof2013,comparedto83millioninthesecondquarterof2012.

∙Averagedailyclicksonthe360PersonalizedStart-upPageanditssub-pageswereapproximately590millioninthesecondquarterof2013,comparedto368millioninthesecondquarterof2012.

Non-GAAPmeasuresandrelatedreconciliationstoGAAPmeasuresaredescribedintheaccompanyingsectionstitled"AboutNon-GAAPFinancialMeasures"and"ReconciliationsofNon-GAAPFinancialMeasurestoComparableGAAPMeasures"attheendofthepressrelease.

AmericanDepositaryShares,whicharetradedontheNYSE.EverytwoADSsrepresentthreeClassAordinarysharesoftheCompany.

UserandmarketpenetrationdataisbasedondatafromiResearchasofJune2013.

Referringto360MobileSafe,theCompany'sprimarymobilesecurityproduct.

"Weareextremelypleasedtoreportanotherrecordbreakingquarterofrobustrevenuegrowthandsubstantialmarginimprovement,"saidMr.HongyiZhou,ChairmanandChiefExecutiveOfficerofQihoo360."Wecontinuetostrengthenourleadershippositioninkeyproductcategories,whileestablishingafootholdinnewmarkets.OurPCsecurityproductsalreadycovernearly95%ofChinesePCInternetusers,andourmobilesecuritysolutionscoverapproximately70%ofChinesesmartphoneusers,makingQihootheindisputableleaderinInternetsecurityinChina.Inaddition,monthlyactiveusersofourPCbrowsersreached330million,oralmost70%oftheChinesePCInternetpopulation,whileourAndroidbasedappstore-360MobileAssistant-furtherextendeditsindustry-leadingmarketshareduringthequarter.WearebuildinguponourleadershippositioninthePCInternetmarket,whilemakingsignificantprogressinthefastgrowingmobileInternetmarket,anareathatisparticularlypromising."

"Duringthequarter,wegainednotablesearchtrafficshareandwebelievethatwearewellonourwaytoreachingouryear-endgoals.Throughcontinuedproductimprovementandtechnologyinnovation,webelieveweareinanexcellentpositiontocapturesignificantshareofthesearchmarketandhelpreshapethecompetitivelandscapeofthisvastindustryinChina.Althoughwejuststartedmonetizingoursearchandmobileproductsafewmonthsago,wehavemadeveryencouragingprogress.Aswecontinuetoexecuteourbusinessplanandstrategy,webelievethatsearchandmobilemonetizationwilldrivesubstantiallong-termgrowthforourbusiness,"concludedMr.Zhou.

Mr.XiangdongQi,PresidentofQihoo360,added,"Wecontinuetoseere-acceleratedgrowthinkeyareasofourbusiness.Onlineadvertisinggrew78%year-over-year,supportedbyfurtherdeepeningofourmonetizationprocessandincrementalcontributionfromsearchandmobilemonetization.Internetvalue-addedservicesonceagainoutpacedthemarketwithrevenuegrowthof181%year-over-year,andwesawstrongmomentuminmobilegames.Whilesearchandmobilemonetizationarestillintheirnascentstages,theyhaverampedupfasterthanexpected,andwillbecomekeydriversforourfuturegrowth.Aswecontinuetoleveragethestrengthofourplatform,weexpectthegrowthmomentumfromthefirsthalfof2013willcarryoverintotherestoftheyear.Wewillcontinuetomakeproactiveinvestmentsinproductandtechnologydevelopmentinordertostrengthenourleadershippositionandexpandourfootprint,particularlyinmobileInternetandsearchtechnologywhereweseetremendousopportunityforfutureexpansion.Meanwhile,wearegraduallybuildingoursalesandmarketinginfrastructuretosupportourdeepeningmonetizationefforts.Webelievetheseinvestmentswillfortifyourfoundation,supportsustainablegrowthanddrivelong-termshareholdervalue."

SecondQuarter2012Results

Revenues

Revenueswere$151.7million,representinganincreaseof108%from$72.8millioninthesecondquarterof2012andanincreaseof38%from$109.9millioninthefirstquarterof2013.Thesolidyear-over-yearandsequentialincreasesinrevenueswereduetostrongperformanceinbothonlineadvertisingandInternetvalue-addedservices,drivenbycontinuedrobustuserandtrafficgrowthandcontributionfromperformancebasedadvertisingonPersonalStartupPage.Inaddition,betterthanexpectedrampinsearchandmobilemonetizationprovidedincrementalgrowthdrivers.

Onlineadvertisingrevenueswere$90.6million,representinganincreaseof78%fromthesameperiodlastyearand43%fromthepriorquarter.Thesolidyear-over-yearincreasewasprimarilydrivenbyincreasedmonetizationofuseractivitieson360PersonalizedStart-upPages.Therobustquarter-over-quartergrowthwasinpartdrivenbyastrongramp-upinsearchmonetization.

Internetvalue-addedservicerevenues,whicharemainlyderivedfromgameplatformoperations,were$60.9million,representinganincreaseof181%fromthesameperiodlastyearand33%fromthepriorquarter.Therobustyear-over-yeargrowthwasdriveninpartbystrongmomentuminmobilegames,althoughseasonalsoftnessinWebgameoperationslimitedtheupsideinsequentialgrowth.

CostofRevenues

Costofrevenueswas$17.8million,comparedwith$6.6millioninthesecondquarterof2012and$13.9millioninthepriorquarter,representingincreasesof169%and28%,respectively.

OperatingExpenses

Operatingexpenseswere$97.2million,comparedwith$56.4millioninthesecondquarterof2012and$89.2millioninthefirstquarterof2013.Operatingexpensesexcludingshare-basedcompensation（non-GAAP）were$79.3million,comparedwith$42.7millioninthesecondquarterof2012and$77.2millioninthepriorquarter.

Theyear-over-yearincreasesinnon-GAAPoperatingexpensesweremainlydrivenbyincreasedmarketingexpenses,personnel-relatedcosts,andbandwidthandequipmentdepreciationexpenses,astheCompanycontinuedtoenhanceitstechnologyandproductdevelopmentcapabilities,andstrengthenitsbrandinmobileInternetandsearch.Themodestsequentialincreasesinnon-GAAPoperatingexpensesweremainlyduetoincreasesinpersonnel-relatedcosts,partiallyoffsetbylowermarketingexpenses.

OperatingIncome

Operatingincomewas$36.6million,comparedwith$9.9millioninthesecondquarterof2012and$6.8millioninthepriorquarter.

Operatingincomeexcludingshare-basedcompensation（non-GAAP）was$54.5million,comparedwith$23.6millioninthesecondquarter2012and$18.8millioninthepriorquarter.

Operatingmarginwas24.1%,comparedwith13.6%inthesecondquarterof2012and6.2%inthepriorquarter.

Operatingmarginexcludingshare-basedcompensation（non-GAAP）was36.0%,comparedwith32.4%inthesecondquarterof2012and17.1%inthepriorquarter.

Theyear-over-yearandsequentialincreasesinnon-GAAPoperatingmarginweremainlyduetoleveragefromstrongrevenuegrowthwhiletheCompanycontinuestoinvestinnewproductandbusinessinitiatives.

NetIncomeattributabletoQihoo360

NetincomeattributabletoQihoo360was$33.0million,comparedwith$7.0millioninthesecondquarterof2012and$5.6millioninthepriorquarter.

NetincomeattributabletoQihoo360excludingshare-basedcompensation（non-GAAP）was$51.0million,comparedwith$20.6millioninthesecondquarterof2012and$17.5millioninthepriorquarter.

NetMargin

Netmarginwas21.8%,comparedwith9.6%inthesameperiodlastyear,and5.1%inthepriorquarter.

Netmarginexcludingshare-basedcompensation（non-GAAP）was33.6%,comparedwith28.4%inthesameperiodlastyearand15.9%inthepriorquarter.

Theyear-over-yearandsequentialincreasesinnon-GAAPnetmarginwerealsomainlyduetoleveragefromstrongrevenue.

DilutedEarningsperADS（"EPADS"）

DilutedEPADSforthesecondquarterof2013were$0.26,anddilutedEPADSforthesecondquarterof2013excludingshare-basedcompensation（non-GAAP）were$0.40.BothGAAPandnon-GAAPweightedaverageADSsusedincomputingdilutedEPADSwere127.6million.

CashFlowsandCashBalance

Netcashprovidedbyoperationsinthesecondquarterof2013was$86.4million,comparedto$18.1millioninthesameperiodlastyearandnetcashoutflowfrom