BEIJING, Feb. 22, 2012 /PRNewswire-Asia/ -- Qihoo 360
Technology Co. Ltd. ("Qihoo 360" or the "Company") (NYSE:
QIHU), a leading Internet company in China as measured by
active user base, today reported its unaudited financial results
for the fourth quarter and fiscal year ended December 31, 2011.
Fourth Quarter 2011 Highlights(1)
- Revenues were $62.3million, an
increase of 214.5% from $19.8
million in the fourth quarter of 2010.
- Net income attributable to Qihoo 360 was $15.0 million, an increase of 274.1% from
$4.0 million in the fourth
quarter of 2010.
- Net income attributable to Qihoo 360 excluding share-based
compensation ("non-GAAP")(1) was $24.3
million, an increase of 365.9% from $5.2 million in the fourth quarter of 2010.
- Diluted earnings per ADS(2) (EPADS) attributable to Qihoo 360
were $0.13.
- Diluted EPADS attributable to Qihoo 360 excluding share-based
compensation (non-GAAP)(1) were $0.20.
- Total monthly active users of Qihoo 360's products and services
surpassed 400 million for the first time ever and user penetration
of Qihoo 360's products reached a record 93.8% in December 2011(3)
- User penetration of Qihoo 360's browsers reached a record 59.5%
in December 2011(3).
- Average daily clicks on Qihoo 360's Personalized Start-up Page
and its sub-pages were approximately 235 million in the fourth
quarter of 2011.
Fiscal Year 2011 Highlights(1)
- Revenues were $167.9 million, an
increase of 191.1% from $57.7
million in 2010.
- Net income attributable to Qihoo 360 was $15.6 million, an increase of 83.4% from
$8.5 million in 2010.
- Net income attributable to Qihoo 360 excluding share-based
compensation ("non-GAAP")(1) was $63.6
million, an increase of 408.2% from $12.5 million in 2010.
- Diluted EPADS(2) attributable to Qihoo 360 were $0.14.
- Diluted EPADS attributable to Qihoo 360 excluding share-based
compensation (non-GAAP)(1) were $0.55.
"We are very pleased to report robust growth and expanding
margins in our first full year operating results since becoming a
public company," commented Hongyi
Zhou, Chairman and Chief Executive Officer of Qihoo 360.
"We have set a number of new records in financial and
operating metrics, significantly exceeding our expectations. Our
success was driven by our continued focus on product and technology
innovation and customer satisfaction. Despite global economic
uncertainty and capital markets volatility, growth in China's Internet sector remains healthy and we
continue to outgrow the market by a wide margin."
"Our business fundamentals are strong as ever. We continue to
experience robust growth in all major areas throughout 2011,
particularly in the second half. As we maintain our dominant market
position in China's Internet
security industry, we continued to expand our market share in other
key product areas. Our browsers' user penetration hit another
record high of 59.5% at the end of 2011, compared to 41% at the end
of 2010, further strengthening our leading market position. Total
monthly active users of Qihoo 360's products and services surpassed
400 million for the first time ever in our company's history, a
significant leap from 290 million at the end of 2010. This is
particularly encouraging as it demonstrates the level of trust that
our users have in us and the strong brand recognition we carry in
the market. We are well positioned for the many opportunities ahead
of us as we effectively execute our open platform strategy to drive
long-term sustainable growth," Mr. Zhou concluded.
Xiangdong Qi, President of Qihoo 360, added, "With a relatively
healthy market environment in China and our history of solid execution, we
achieved stronger than expected revenue growth and profitability in
the fourth quarter and the full year. Our online advertising
business is clearly gaining market share. The 217% year-over-year
growth in online advertising in 2011 was supported by robust user
activity growth on our Personal Start-up Page and new customer
contributions. Although web game operations is still relatively
small at Qihoo 360, it is gaining momentum as we see accelerated
user growth in the second half of 2011 that eventually drove an
over 170% year-over-year revenue growth. As we continue to execute
our business plan, we are confident that we can consistently
deliver strong operating results in the near term. We also believe
our proactive investments in product innovation and technology on
both PC and mobile platforms will support long-term sustainable
growth for our company."
Fourth Quarter 2011 Operating Metrics
- Monthly active users of Qihoo 360's products reached 402
million in December 2011, compared to
290 million in December 2010(3).
- Qihoo 360's product penetration rate among all Chinese Internet
users reached 93.8% in December 2011,
compared to 75.0% in December
2010(3).
- Monthly active users of Qihoo 360's browsers were 255 million
in December 2011, compared to 159
million in December 2010(3).
- User penetration rate of Qihoo 360's browsers was 59.5% in
December 2011, compared to 41.2% in
December 2010(3).
- Average daily unique visitors to the 360 Personalized Start-up
Page and its sub-pages were 65 million in the fourth quarter of
2011, compared to 28 million in the fourth quarter of 2010.
- Average daily clicks on the 360 Personalized Start-up Page and
its sub-pages were 235 million in the fourth quarter of 2011,
compared to 85 million in the fourth quarter of 2010.
(1) Non-GAAP
measures and related reconciliations to GAAP measures are described
in the accompanying sections titled "About Non-GAAP Financial
Measures" and "Reconciliations of Non-GAAP Financial Measures to
Comparable GAAP Measures" at the end of the press
release.
|
|
(2) American
Depositary Shares, which are traded on the NYSE. Every two ADSs
represent three Class A ordinary shares of the Company.
|
|
(3) User and
market penetration data is based on data from iResearch as of
December 2011.
|
|
|
Fourth Quarter 2011 Results
Revenues
Revenues were $62.3 million,
representing an increase of 214.5% from $19.8 million in
the fourth quarter of 2010 and an increase of 31.2% from
$47.5 million the third quarter of
2011. The significant year-over-year and sequential increases in
revenues were mainly due to continued robust growth in both online
advertising and Internet value-added services.
Online advertising revenues were $44.8
million, up 217.2% from the same period last year and 27.8%
from the prior quarter. The robust growth was primarily driven by
further market penetration of the Company's key products, such as
the 360 browsers and the 360 Personalized Start-up Pages and
increased user activity.
Internet value-added service revenues, which are mainly derived
from web game operations, were $17.2
million, up 227.7% from the same period last year and 41.8%
from the prior quarter. The year-over-year and sequential
growth was mainly driven by solid growth of the game user base.
Cost of Revenues
Cost of revenues was $7.1 million,
compared with $2.2 million in
the fourth quarter of 2010 and $5.3
million in the third quarter of 2011, representing increases
of 215.2% and 32.4%, respectively.
Operating Expenses
Operating expenses were $40.4
million, compared with $13.3
million in the fourth quarter of 2010 and $31.4 million in the third quarter of 2011.
Operating expenses excluding share-based compensation (non-GAAP)
were $31.2 million, compared with
$12.1 million in the fourth quarter
of 2010 and $22.7 million in the
prior quarter.
Operating Income
Operating income was $14.8
million, compared with $4.4
million in the fourth quarter of 2010 and $10.8 million in the prior quarter.
Operating income excluding share-based compensation (non-GAAP)
was $24.1 million, compared with
$5.6 million in the fourth quarter
2010 and $19.4 million in the prior
quarter.
Operating margin was 23.8%, compared with 22.2% in the fourth
quarter of 2010 and 22.7% in the prior quarter.
Operating margin excluding share-based compensation (non-GAAP)
was 38.6%, compared with 28.2% in the fourth quarter of 2010 and
40.9% in the prior quarter. The significant year-over-year
improvements in non-GAAP operating margin were primarily driven by
leverage from robust revenue growth.
Net Income
Net income attributable to Qihoo 360 was $15.0 million,
compared with $4.0million in the
fourth quarter of 2010 and $10.9
million in the prior quarter.
Net income attributable to Qihoo 360 excluding share-based
compensation (non-GAAP) was $24.3
million, compared with $5.2
million in the fourth quarter of 2010 and $19.5 million in the prior quarter, representing
increases of 365.9% and 24.1%, respectively.
Net Margin
Net margin was 24.1%, compared with 20.3% in the same period
last year, and 23.0% in the prior quarter.
Net margin excluding share-based compensation (non-GAAP) was
38.9%, compared with 26.3% in the same period last year and 41.2%
in the prior quarter. The substantial year-over-year improvements
in non-GAAP net margin were driven by leverage from robust revenue
growth, as well as foreign currency exchange gains.
Diluted Earnings per ADS
Diluted EPADS for the fourth quarter of 2011 were $0.13, and diluted EPADS for the fourth quarter
of 2011 excluding share-based compensation (non-GAAP) were
$0.20. Weighted average ADS used in
computing diluted EPADS were 120.1 million.
Cash Flows and Balance Sheet
Net cash flow generated from operations in the fourth quarter of
2011 was $40.2 million. Capital
expenditures were $7.8 million during
the quarter. As of December 31, 2011,
the Company had cash and cash equivalents of $343.7 million.
Fiscal Year 2011 Results
Revenues
Revenues were $167.9 million,
representing an increase of 191.1% from $57.7 million in
2010. The significant year-over-year increases in revenues were
mainly due to accelerated growth in both online advertising and
Internet value-added services.
Online advertising revenues were $123.0
million, representing an increase of 216.9% from
$38.8 million in 2010. The robust
growth was primarily driven by further market penetration of the
Company's key products, such as the 360 browsers and the 360
Personalized Start-up Pages, increased user activity, as well as
the support of a healthy market environment.
Internet value-added service revenues, which are mainly derived
from web game operations, were $43.6
million, representing an increase of 194.9% from
$14.8 million in 2010. The
strong growth was mainly driven by expanding of the Company's game
platform and the accelerated growth of the game user base.
Cost of Revenues
Cost of revenues was $18.9
million, compared with $6.8
million in 2010, representing an increase of 180.2%.
Operating Expenses
Operating expenses were $130.9
million, compared with $42.2
million in 2010. Operating expenses excluding share-based
compensation (non-GAAP) were $83.0
million, compared with $38.2
million in 2010.
Operating Income
Operating income was $18.1
million, compared with $9.0
million in 2010.
Operating income excluding share-based compensation (non-GAAP)
was $66.1 million, representing an
increase of 407.7% from $13.0 million
in 2010.
Operating margin was 10.8%, compared with 15.6% in 2010.
Operating margin excluding share-based compensation (non-GAAP)
was 39.4%, compared with 22.6% in 2010. The significant
year-over-year improvements in non-GAAP operating margin were
primarily driven by leverage from robust revenue growth.
Net Income
Net income attributable to Qihoo 360 was $15.6 million,
compared with $8.5 million in
2010.
Net income attributable to Qihoo 360 excluding share-based
compensation (non-GAAP) was $63.6
million, representing an increase of 408.2% from
$12.5 million in 2010.
Net Margin
Net margin was 9.3%, compared with 14.8% in 2010.
Net margin excluding share-based compensation (non-GAAP) was at
a record high of 37.9%, compared with 21.7% in 2010. The
substantial year-over-year improvements in non-GAAP net margin were
attributable to leverage from robust revenue growth, as well as
foreign currency exchange gains.
Diluted Earnings per ADS
Diluted EPADS for the year 2011 were $0.14, and diluted EPADS for the year 2011
excluding share-based compensation (non-GAAP) were $0.55. Weighted average ADS used in computing
diluted EPADS was 115.3 million.
Cash Flows and Balance Sheet
Net cash flow generated from operations in 2011 was $82.3 million, compared to $20.1 million in 2010. Capital expenditures were
$17.8 million. As of December 31, 2011, the Company had cash and cash
equivalents of $343.7 million.
Business Outlook
For the first quarter of 2012, the Company expects revenues to
be between $63 million and $65
million, representing a year-over-year increase of 175% -
183% and a sequential increase of 1% - 5%. These estimates reflect
the Company's current and preliminary view, which is subject to
possible material changes.
Other Events
To help investors better understand Qihoo 360's operations, the
Company will provide quarterly Cash Flow Statement in its earnings
release from the fourth quarter 2011 onwards.
Conference Call
Qihoo 360's management will host a conference call to discuss
the results at 8:00 p.m. Eastern Standard
Time on February 22, 2012
(9:00 a.m. Beijing time on February 23, 2012).
The dial-in details for the live conference call are:
US Toll Free Dial In:
|
+1 866-519-4004
|
|
US Toll / International Dial
In:
|
+1 718-354-1231
|
|
UK Toll Free Dial In:
|
+44 (0)808-234-6646
|
|
Hong Kong Dial In:
|
+852-2475-0994
|
|
Passcode:
|
QIHU
|
|
|
|
A telephone replay of the call will be available after the
conclusion of the conference call at 11:00
p.m. Eastern Standard Time on February 22, 2012 through 11:00 p.m. Eastern Standard Time on February 29, 2012. The dial-in details for the
replay are:
US Toll Free Dial In:
|
+1 718-354-1232
|
|
International Dial
In:
|
+1 866-214-5335
|
|
Passcode:
|
50482084
|
|
|
|
A live webcast of the conference call will be available on the
investor relations section of Qihoo 360's website at:
http://corp.360.cn.
About Qihoo 360
Qihoo 360 Technology Co. Ltd. (NYSE: QIHU) is a leading internet
company in China as measured by
its active user base. The Company is also the number one provider
of internet and mobile security solutions in China as measured by its active smartphone
user base, according to iResearch. Qihoo 360 also provides users
with secure access points to the internet via its market leading
web browsers and application stores. The Company has built one of
the largest open internet platforms in China. Qihoo 360 monetizes its massive user
base primarily through online advertising and through internet
value-added services on its open platforms.
Forward-looking Statements
This press release contains statements of a forward-looking
nature. These statements are made under the "safe harbor"
provisions of the U.S. Private Securities Litigation Reform Act of
1995. You can identify these forward- looking statements by
terminology such as "will," "expects," "believes," "anticipates,"
"intends," "estimates" and similar statements. Among other things,
the management's quotations contain forward-looking statements.
These forward-looking statements involve known and unknown risks
and uncertainties and are based on current expectations,
assumptions, estimates and projections about Qihoo 360 and the
industry. Potential risks and uncertainties include, but are not
limited to: the Company's ability to continue to innovate and
provide attractive products and services to attract and retain
users; the Company's ability to keep up with rapid changes in
technologies and Internet-enabled devices; the Company's ability to
leverage its user base to attract customers for our
revenue-generating services; and the Company's dependence on online
advertising for a substantial portion of our revenues; and the
Company's ability to compete effectively. All information provided
in this press release is as of the date of the press release, and
Qihoo 360 undertakes no obligation to update any forward-looking
statements to reflect subsequent occurring events or circumstances,
or changes in its expectations, except as may be required by law.
Although Qihoo 360 believes that the expectations expressed in
these forward-looking statements are reasonable, it cannot assure
you that its expectations will turn out to be correct, and
investors are cautioned that actual results may differ materially
from the anticipated results. Further information regarding risks
and uncertainties faced by Qihoo 360 is included in Qihoo 360's
filings with the U.S. Securities and Exchange Commission, including
its final prospectus dated March 29,
2011.
About Non-GAAP Financial Measures
To supplement our financial results presented in accordance with
U.S. GAAP, we use non-GAAP financial measure, which is adjusted
from results based on U.S. GAAP to exclude share-based compensation
expenses. Reconciliations of our non-GAAP financial measures to our
U.S. GAAP financial measures are set forth in tables at the end of
this earnings release, which provide more details on the non-GAAP
financial measures.
Our non-GAAP financial information is provided as additional
information to help our investors compare business trends among
different reporting periods on a consistent basis and to enhance
investors' overall understanding of the historical and current
financial performance of our continuing operations and our
prospects for the future. Our non-GAAP financial information should
be considered in addition to results prepared in accordance with
U.S. GAAP, but should not be considered a substitute for or
superior to U.S. GAAP results. In addition, our calculation of this
non-GAAP financial information may be different from the
calculation used by other companies, and therefore comparability
may be limited.
For investor and media
inquiries, please contact:
|
|
|
|
Qihoo 360 Technology Co.
Ltd.
|
|
Tel: +86 10-5878-1574
|
|
E-mail: ir@360.cn
|
|
|
|
Christensen
|
|
Mr. Tip Fleming
|
|
Tel: +852 9212 0684
|
|
E-mail:
tfleming@ChristensenIR.com
|
|
|
|
|
Qihoo 360
Technology Co. Ltd.
|
|
Condensed
Consolidated Balance Sheets
|
|
(U.S.
dollars in thousands, except for shares and per share
data)
|
|
(Unaudited)
|
|
|
December 31,
|
December 31,
|
|
|
2010
|
2011
|
|
ASSETS
|
|
|
|
Current assets:
|
|
|
|
Cash and cash
equivalents
|
60,505
|
343,731
|
|
Trading
securities
|
-
|
231
|
|
Accounts receivable
(net of allowance for doubtful accounts of
|
|
|
|
$14 and $68
as of December 31, 2010 and December 31, 2011,
respectively)
|
8,160
|
16,741
|
|
Prepaid expenses and
other current assets
|
3,140
|
12,806
|
|
Inventory
|
3
|
2
|
|
Deferred tax assets
– current
|
796
|
858
|
|
Total current
assets
|
72,604
|
374,369
|
|
Property and equipment,
net
|
3,306
|
16,665
|
|
Acquired intangible
assets, net
|
5,546
|
7,854
|
|
Goodwill
|
3,918
|
4,580
|
|
Long-term
investments
|
1,981
|
15,561
|
|
Other noncurrent
assets
|
200
|
4,415
|
|
Deferred tax assets –
noncurrent
|
253
|
514
|
|
TOTAL ASSETS
|
87,808
|
423,958
|
|
LIABILITIES
|
|
|
|
Current
liabilities:
|
|
|
|
Accounts payable
(including accounts payable of the consolidated
|
|
|
|
VIEs without
recourse to Qihoo 360 Technology Co. Ltd. of
|
|
|
|
$1,383 and $5,872
as of December 31, 2010 and December 31, 2011,
respectively)
|
1,387
|
5,872
|
|
Accrued expenses and
other current liabilities (including accrued
|
|
|
|
expenses and
other current liabilities of the consolidated VIEs
|
|
|
|
without
recourse to Qihoo 360 Technology Co. Ltd. of
|
|
|
|
$8,048 and $17,815
as of December 31, 2010 and December 31, 2011,
respectively)
|
10,885
|
31,891
|
|
Amount due to related
parties (including amount due to related parties of the
consolidated VIEs without
recourse to Qihoo 360 Technology Co. Ltd of nil
|
|
|
|
and $1,025 as of December
31, 2010 and December 31, 2011, respectively
|
-
|
1,025
|
|
Income tax payable
(including income tax payable of the consolidated VIEs
|
|
|
|
without
recourse to Qihoo 360 Technology Co. Ltd. of $92 and
$3,635
|
|
|
|
as of
December 31, 2010 and December 31, 2011, respectively)
|
127
|
7,312
|
|
Current portion of
long-term payable (including current portion of
|
|
|
|
long-term
payable of the consolidated VIEs without recourse to
|
|
|
|
Qihoo 360
Technology Co. Ltd. of $1,525 and $460 as
|
|
|
|
of December
31, 2010 and December 31, 2011, respectively)
|
1,525
|
460
|
|
Total current
liabilities
|
13,924
|
46,560
|
|
Deferred tax liabilities –
noncurrent
|
512
|
507
|
|
Long-term payable
(including long-term payable of the consolidated
|
|
|
|
VIEs without
recourse to Qihoo 360 Technology Co. Ltd. of
|
|
|
|
$450 and $286 as of
December 31, 2010 and December 31, 2011, respectively)
|
450
|
286
|
|
Deferred income-noncurrent
(including deferred income-noncurrent of the
|
|
|
|
consolidated VIEs without
recourse to Qihoo Technology Co., Ltd of
|
|
|
|
$nil and $1,589 as of
December 31, 2010 and December 31, respectively
|
-
|
5,113
|
|
TOTAL LIABILITIES
|
14,886
|
52,466
|
|
Series A convertible
participating redeemable preferred shares
|
|
|
|
($0.001 par value;
32,603,760 shares authorized; 32,603,760
|
|
|
|
shares issued and
outstanding as of December 31, 2010 ;
|
|
|
|
liquidations value $16,300
as of December 31, 2010)
|
20,107
|
-
|
|
Series B convertible
participating redeemable preferred shares
|
|
|
|
($0.001 par value;
37,878,789 shares authorized; 37,878,789
|
|
|
|
shares issued and
outstanding as of December 31, 2010;
|
|
|
|
liquidations value $25,000
as of December 31, 2010)
|
29,193
|
-
|
|
Series C convertible
participating redeemable preferred shares
|
|
|
|
($0.001 par value;
7,831,467 shares authorized, 7,831,467
|
|
|
|
issued and outstanding as
of December 31, 2010 ;
|
|
|
|
liquidation value $20,000
as of December 31, 2010)
|
20,900
|
-
|
|
EQUITY
|
|
|
|
Total Qihoo 360 Technology
Co. Ltd. Shareholders' equity
|
2,215
|
370,853
|
|
Noncontrolling
interest
|
507
|
639
|
|
Total equity
|
2,722
|
371,492
|
|
TOTAL LIABILITIES, CONVERTIBLE
PARTICIPATING
|
|
|
|
REDEEMABLE PREFERRED
SHARES AND EQUITY
|
87,808
|
423,958
|
|
|
|
|
|
|
|
|
Qihoo 360
Technology Co. Ltd.
|
|
Condensed
Consolidated Statements of operations
|
|
(U.S.
dollars in thousands, except for shares and per share
data)
|
|
(Unaudited)
|
|
|
Three Months
Ended
|
|
Twelve
Months Ended
|
|
|
December 31,
2010
|
September 30,
2011
|
December 31,
2011
|
|
December 31,
2010
|
December 31,
2011
|
|
Revenues:
|
|
|
|
|
|
|
|
Internet
services
|
19,398
|
47,289
|
62,169
|
|
53,790
|
166,961
|
|
Sales of third party
anti-virus software
|
420
|
201
|
152
|
|
3,875
|
890
|
|
Total revenues
|
19,818
|
47,490
|
62,321
|
|
57,665
|
167,851
|
|
Cost of revenues:
|
|
|
|
|
|
|
|
Internet
services
|
2,117
|
5,296
|
7,042
|
|
5,566
|
18,680
|
|
Sales of third party
anti-virus software
|
129
|
53
|
38
|
|
1,185
|
238
|
|
Total cost of
revenues
|
2,246
|
5,349
|
7,080
|
|
6,751
|
18,918
|
|
Subsidy income
|
89
|
9
|
8
|
|
266
|
151
|
|
Operating expenses:
|
|
|
|
|
|
|
|
Selling and
marketing
|
2,803
|
8,943
|
10,251
|
|
12,603
|
46,836
|
|
General and
administrative
|
2,246
|
5,551
|
6,772
|
|
5,051
|
19,054
|
|
Product
development(a)
|
8,208
|
16,888
|
23,392
|
|
24,505
|
65,049
|
|
Total operating
expenses
|
13,257
|
31,382
|
40,415
|
|
42,159
|
130,939
|
|
|
|
|
|
|
|
|
|
Income from
operations
|
4,404
|
10,768
|
14,834
|
|
9,021
|
18,145
|
|
Interest income
|
107
|
846
|
1,194
|
|
415
|
2,594
|
|
Interest expense
|
(22)
|
(12)
|
(9)
|
|
(98)
|
(53)
|
|
Other income
(expense)
|
(8)
|
(62)
|
-
|
|
(60)
|
(3)
|
|
Exchange gain (loss)
|
(107)
|
2,946
|
2,719
|
|
(267)
|
6,294
|
|
Impairment ( loss) on long-term
investment
|
-
|
-
|
(902)
|
|
-
|
(902)
|
|
Change on fair value of trading
securities
|
-
|
(218)
|
(63)
|
|
-
|
(220)
|
|
Income before income tax
expense
|
|
|
|
|
|
|
|
and income (loss)
from equity method investment
|
4,374
|
14,268
|
17,773
|
|
9,011
|
25,855
|
|
Income tax expense
|
(315)
|
(3,460)
|
(3,028)
|
|
(463)
|
(10,874)
|
|
Income (loss) from equity method
investment
|
(57)
|
(271)
|
(392)
|
|
(57)
|
(437)
|
|
|
|
|
|
|
|
|
|
Net income
|
4,002
|
10,537
|
14,353
|
|
8,491
|
14,544
|
|
|
|
|
|
|
|
|
|
Less: Net loss attributable to
noncontrolling interest
|
17
|
367
|
681
|
|
17
|
1,059
|
|
|
|
|
|
|
|
|
|
Net income attributable
to
|
|
|
|
|
|
|
|
Qihoo 360 Technology Co.
Ltd.
|
4,019
|
10,904
|
15,034
|
|
8,508
|
15,603
|
|
|
|
|
|
|
|
|
|
(a): From Q3 2011, the Company
changed the "Research and development expenses" to "Product
development expenses" in the statements of operations. This is
mainly because the business has been growing rapidly and along with
the development of new products, the Company has devoted more
resources in enhancing its existing products, by which the Company
believes using "Product development expenses" will better reflect
the nature of such expenses.
The Product development expenses
include costs associated with new product development and
enhancement for existing products, such as salaries and benefits,
including share-based compensation expenses, costs of bandwidth and
utilities, license and technical service fees, and depreciation of
equipment and amortization of acquired intangible
assets.
|
|
|
|
|
|
|
|
|
Qihoo 360
Technology Co. Ltd.
|
|
Condensed
Consolidated Statements of Cash Flows
|
|
(U.S.
dollars in thousands)
|
|
(Unaudited)
|
|
|
Three-months
period ended
|
Twelve-month
periods ended
|
|
|
December 31,
2010
|
December 31,
2011
|
December 31,
2010
|
December 31,
2011
|
|
Cash flows from operating
activities:
|
|
|
|
|
|
Net income
|
4,002
|
14,353
|
8,491
|
14,544
|
|
Share-based
compensation
|
1,188
|
9,226
|
4,006
|
47,989
|
|
Depreciation and
amortization
|
490
|
1,635
|
1,344
|
4,227
|
|
Loss on equity method
investment
|
57
|
392
|
57
|
437
|
|
Loss from impairment of
intangible assets
|
-
|
87
|
-
|
87
|
|
Impairment on long-term
investment
|
-
|
902
|
-
|
902
|
|
Loss from short-term
investment
|
-
|
63
|
-
|
220
|
|
Provision of allowance for
doubtful accounts
|
-
|
-
|
(32)
|
51
|
|
Changes in operating assets and
liabilities
|
3,969
|
13,504
|
6,259
|
13,846
|
|
Net cash provided by operating
activities
|
9,706
|
40,162
|
20,125
|
82,303
|
|
Cash flows from investing
activities:
|
-
|
-
|
-
|
-
|
|
Purchase of property and
equipment and intangible assets
|
(1,467)
|
(7,770)
|
(4,029)
|
(17,777)
|
|
Payment for the purchase of
other assets
|
(352)
|
(463)
|
(1,039)
|
(1,571)
|
|
Consideration paid in connection
with business acquisition
|
(23)
|
(815)
|
(2,619)
|
(487)
|
|
Capital contribution for
investment
|
(448)
|
(5,971)
|
(1,366)
|
(14,976)
|
|
Net cash used in investing
activities
|
(2,290)
|
(15,019)
|
(9,053)
|
(34,811)
|
|
|
|
|
|
|
|
Proceeds from issuance of Series
C convertible participating
redeemable preferred
shares
|
-
|
-
|
20,000
|
-
|
|
Payment of issuance costs of
Series C convertible participating
redeemable preferred
shares
|
-
|
-
|
(78)
|
-
|
|
Proceeds from initial public
offering (net of cost)
|
(44)
|
(1,320)
|
(44)
|
231,701
|
|
Proceeds from exercise of stock
option
|
-
|
20
|
375
|
20
|
|
Capital contribution from
noncontrolling interest
|
-
|
-
|
-
|
1,559
|
|
Net cash (used in)/provided by
financing activities
|
(44)
|
(1,300)
|
20,253
|
233,280
|
|
|
|
|
|
|
|
Effect of exchange rate
changes
|
546
|
871
|
1,036
|
2,454
|
|
INCREASE IN CASH
|
7,918
|
24,714
|
32,361
|
283,226
|
|
CASH, BEGINNING OF
PERIOD
|
52,587
|
319,017
|
28,144
|
60,505
|
|
CASH, END OF PERIOD
|
60,505
|
343,731
|
60,505
|
343,731
|
|
|
|
|
|
|
|
|
Reconciliations of Non-GAAP
Financial Measures to Comparable GAAP
Measures
|
|
|
Three Months
Ended December 31, 2010
|
|
Three Months
Ended September 30, 2011
|
|
Three Months
Ended December 31, 2011
|
|
|
GAAP
|
Adjustment(b)
|
Non-GAAP
|
|
GAAP
|
Adjustment(b)
|
Non-GAAP
|
|
GAAP
|
Adjustment(b)
|
Non-GAAP
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses
|
$13,257
|
($1,188)
|
$12,069
|
|
$31,382
|
($8,641)
|
$22,741
|
|
$40,415
|
($9,219)
|
$31,196
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from
operations
|
$4,404
|
$1,188
|
$5,592
|
|
$10,768
|
$8,645
|
$19,413
|
|
$14,834
|
$9,226
|
$24,060
|
|
Operating margin
|
22.2%
|
|
28.2%
|
|
22.7%
|
|
40.9%
|
|
23.8%
|
|
38.6%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income attributable to Qihoo
360 Technology Co. Ltd.
|
$4,019
|
$1,188
|
$5,207
|
|
$10,904
|
$8,645
|
$19,549
|
|
$15,034
|
$9,226
|
$24,260
|
|
Net margin
|
20.3%
|
|
26.3%
|
|
23.0%
|
|
41.2%
|
|
24.1%
|
|
38.9%
|
|
Diluted earnings per
ADS
|
N/A
|
|
N/A
|
|
$0.09
|
|
$0.16
|
|
$0.13
|
|
$0.20
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Twelve-month
periods ended December 31, 2010
|
|
Twelve-month
periods ended December 31, 2011
|
|
|
GAAP
|
Adjustment(b)
|
Non-GAAP
|
|
GAAP
|
Adjustment(b)
|
Non-GAAP
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses
|
$42,159
|
($4,006)
|
$38,153
|
|
$130,939
|
($47,973)
|
$82,966
|
|
|
|
|
|
|
|
|
|
|
Income from
operations
|
$9,021
|
$4,006
|
$13,027
|
|
$18,145
|
$47,989
|
$66,134
|
|
Operation margin
|
15.6%
|
|
22.6%
|
|
10.8%
|
|
39.4%
|
|
|
|
|
|
|
|
|
|
|
Net income attributable to Qihoo
360 Technology Co. Ltd.
|
$8,508
|
$4,006
|
$12,514
|
|
$15,603
|
$47,989
|
$63,592
|
|
Net margin
|
14.8%
|
|
21.7%
|
|
9.3%
|
|
37.9%
|
|
|
|
|
|
|
|
|
|
|
(b): Adjustment to exclude the
share-based compensation expense of each
period.
|
|
|
|
|
|
|
|
|
|
SOURCE Qihoo 360 Technology Co. Ltd.