BEIJING, March 5, 2013 /PRNewswire/ -- Qihoo 360
Technology Co. Ltd. ("Qihoo 360" or the "Company") (NYSE:
QIHU), a leading Internet company in China, today reported its
unaudited financial results for the fourth quarter and fiscal year
ended December 31, 2012.
Fourth Quarter Financial Highlights[1]
- Revenues were $103.0 million, a
65% increase from $62.3
million in the fourth quarter of 2011.
- Net income attributable to Qihoo 360 was $12.8 million, compared to $15.0 million in the fourth quarter of 2011.
- Net income attributable to Qihoo 360 excluding share-based
compensation (non-GAAP)[1] was $26.7
million, compared to $24.3
million in the fourth quarter of 2011.
- Diluted earnings per ADS[2] ("EPADS") attributable to Qihoo 360
was $0.10, compared to $0.13 in the same period last year.
- Diluted EPADS attributable to Qihoo 360 excluding share-based
compensation (non-GAAP)[1] was $0.22,
compared to $0.20 in the same period
last year.
Fourth Quarter Operating Metrics
- Total monthly active users of Qihoo 360's products and services
reached a record 456 million in December
2012, compared to 402 million in December 2011[3].
- User penetration of Qihoo 360's products was 96.5% in
December 2012, compared to 93.8% in
December 2011[3].
- Total smartphone users of Qihoo 360's primary mobile security
product [4] reached approximately 207 million in December 2012, compared to 53 million in
December 2011.
- Monthly active users of Qihoo 360's browsers reached a record
310 million in December 2012,
compared to 255 million in December 2011[3].
- User penetration of Qihoo 360's browsers reached a record 65.6%
in December 2012, compared to 59.5%
in December 2011[3].
- Average daily unique visitors to the 360 Personal Start-up Page
and its sub-pages were 91 million in the fourth quarter of 2012,
compared to 65 million in the fourth quarter of 2011.
- Average daily clicks on Qihoo 360's Personal Start-up Page and
its sub-pages were approximately 450 million in the fourth quarter
of 2012, compared to 235 million in the fourth quarter of
2011.
- Paying users of Qihoo 360's web game platform were
approximately 238,000 in December
2012, compared to 109,000 in December
2011.
Fiscal Year 2012 Highlights[1]
- Revenues were $329.0 million, an
increase of 96% from $167.9
million in 2011.
- Net income attributable to Qihoo 360 was $46.8 million, an increase of 200% from
$15.6 million in 2011.
- Net income attributable to Qihoo 360 excluding share-based
compensation ("non-GAAP")[1] was $97.4
million, an increase of 53% from $63.6 million in 2011.
- Diluted EPADS[2] attributable to Qihoo 360 were $0.38, compared to $0.14 in 2011.
- Diluted EPADS attributable to Qihoo 360 excluding share-based
compensation (non-GAAP)[1] were $0.80
compared to $0.55 in 2011.
[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 2012.
|
[4]
|
Referring
to 360 Mobile Safe, the Company's primary mobile security
product.
|
"We are very pleased to report our eighth consecutive quarter of
substantive growth. We delivered another full year of strong
operating results and continued to outperform the industry, despite
a challenging macro environment," commented Hongyi Zhou, Chairman and Chief Executive
Officer of Qihoo 360. "We have set several new records in our
financial and operating metrics, exceeding our internal
expectations. Monthly active users of our PC-based products and
services, which cover over 96% of the Chinese PC Internet
population, increased to 456 million at the end of 2012. We have
also established substantial leadership in mobile security and the
number of Chinese smartphone users of 360 Mobile Safe, our key
mobile security product, has reached 207 million."
"Our company-wide focus on product development and technology
innovation, attention to customer satisfaction and superior
execution results continue to drive our success. A major milestone
during the fourth quarter of 2012 was the launch of our search
engine monetization effort through both an internal monetization
system and external partnership. We believe we are well positioned
to capture a significant portion of the search market and help
shape the competitive landscape in China, which will have a long-lasting
transformative effect on our business model," concluded Mr.
Zhou.
Mr. Xiangdong Qi, President of
Qihoo 360, added, "We are thrilled to have surpassed our revenue
guidance and internal profitability targets for both the fourth
quarter and the full year. With 80% year-over-year growth, our
online advertising business continued to gain market share in 2012,
supported by a strong increase in our user activities, as well as
our successful initiatives to deepen our monetization process. Our
Internet value-added services also outpaced the market with revenue
growth of 137% year-over-year driven by strong momentum in the
number of paying web game users. In 2012, we made proactive
investments in product and technology development to further our
leadership position and expand our footprint, particularly in
mobile Internet and search technology where we see tremendous
opportunity for future expansion. We believe these investments will
build on our strong foundation, support sustainable growth for our
company and drive long-term shareholder value."
Fourth Quarter 2012 Results
Revenues
Revenues were $103.0 million,
representing an increase of 65% from $62.3 million in the
fourth quarter of 2011 and an increase of 23% from $84.0 million in the third quarter of 2012. The
year-over-year and quarter-over-quarter increases in revenues were
mainly due to continued robust growth in both online advertising
and Internet value-added services.
Online advertising revenues were $66.9
million, up 49% from the same period last year and 15% from
the prior quarter. The healthy year-over-year and
quarter-over-quarter growth was primarily driven by increased
monetization of user activities among the Company's key products,
such as the 360 browsers and Personalized Start-up Pages, despite
more modest macro-level growth. Growth in online advertising
revenues were partially offset by the contraction of search
referral revenue from third party search engines due to the launch
of Qihoo 360's proprietary search service in August 2012.
Internet value-added service revenues, which are mainly derived
from web game operations, were $35.2
million, up 105% from the same period last year and 38% from
the prior quarter. The strong year-over-year and
quarter-over-quarter increases were mainly driven by solid growth
in the Company's paying game user base and expanded game portfolio.
Cost of Revenues
Cost of revenues were $10.6
million, compared to $7.1
million in the fourth quarter of 2011 and $7.9 million in the third quarter of 2012,
representing increases of 50% and 35%, respectively.
Operating Expenses
Operating expenses were $82.6
million, compared to $40.4
million in the fourth quarter of 2011 and $63.9 million in the third quarter of 2012.
Operating expenses excluding share-based compensation (non-GAAP)
were $68.6 million, compared to
$31.2 million in the fourth quarter
of 2011 and $52.6 million in the
prior quarter.
The year-over-year and sequential increases in non-GAAP
operating expenses were mainly driven by increased
personnel-related expenses, bandwidth expenses, equipment
depreciation expenses and marketing expenses, as Qihoo 360
continued to strengthen its technology and product development
capabilities, and expanded its business initiatives.
Operating Income
Operating income was $12.1
million, compared to $14.8
million in the fourth quarter of 2011 and operating income
of $12.2 million in the prior
quarter.
Operating income excluding share-based compensation (non-GAAP)
was $26.1 million, compared to
$24.1 million in the fourth quarter
of 2011 and $23.5 million in the
prior quarter.
Operating margin was 11.8%, compared to 23.8% in the fourth
quarter of 2011 and 14.5% in the prior quarter.
Operating margin excluding share-based compensation (non-GAAP)
was 25.4%, compared to 38.6% in the fourth quarter of 2011 and
28.0% in the prior quarter.
The year-over-year and sequential decline in non-GAAP operating
margin was due to increased expenses in abovementioned areas
related to new business initiatives in search and mobile
Internet.
Net Income
Net income attributable to Qihoo 360 was $12.8 million,
compared to $15.0 million in the
fourth quarter of 2011 and $12.9
million in the prior quarter.
Net income attributable to Qihoo 360 excluding share-based
compensation (non-GAAP) was $26.7
million, compared to $24.3
million in the fourth quarter of 2011 and $24.2 million in the prior quarter.
Net Margin
Net margin was 12.4%, compared to 24.1% in the same period last
year, and 15.4% in the prior quarter.
Net margin excluding share-based compensation (non-GAAP) was
26.0%, compared to 38.9% in the same period last year and 28.8% in
the prior quarter. The year-over-year and sequential decline in
non-GAAP net margin was also due to increased expenses in
abovementioned areas related to new business initiatives in search
and mobile Internet.
Diluted Earnings per ADS
Diluted EPADS for the fourth quarter of 2012 was $0.10, and diluted EPADS for the fourth quarter
of 2012 excluding share-based compensation (non-GAAP) was
$0.22. Both GAAP and non-GAAP
weighted average ADS used in computing diluted EPADS was 123.6
million.
Cash Flows and Balance Sheet
Net cash generated from operations in the fourth quarter of 2012
was $53.1 million, compared to
$40.2 million in the same period last
year and $20.7 million in the prior
quarter. Cash capital expenditures were $21.4 million. As of December 31, 2012, the Company had cash and cash
equivalents of $380.7 million.
Fiscal Year 2012 Results
Revenues
Revenues were $329.0 million,
representing an increase of 96% from $167.9 million in
2011. The significant year-over-year increase in revenues was
mainly due to continued robust growth in both online advertising
and Internet value-added services.
Online advertising revenues were $221.5
million, representing an increase of 80% from $123.0 million in 2011. The strong 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 increased
monetization efforts, despite the relatively challenging macro
environment.
Internet value-added service revenues, which are mainly derived
from web game operations, were $103.3
million, representing an increase of 137% from $43.6 million in 2011. The strong growth
was mainly driven by continued expansion of the Company's game
platform and solid growth of game paying user base.
Cost of Revenues
Cost of revenues was $32.8
million, compared with $18.9
million in 2011, representing an increase of 73%.
Operating Expenses
Operating expenses were $250.1
million, compared with $130.9
million in 2011. Operating expenses excluding share-based
compensation (non-GAAP) were $199.5
million, compared with $83.0
million in 2011.
Operating Income
Operating income was $48.7
million, compared with $18.1
million in 2011.
Operating income excluding share-based compensation (non-GAAP)
was $99.3 million, representing an
increase of 50% from $66.1 million in
2011.
Operating margin was 14.8%, compared with 10.8% in 2011.
Operating margin excluding share-based compensation (non-GAAP)
was 30.2%, compared with 39.4% in 2011. The year-over-year decline
in non-GAAP operating margin was primarily due to increased
expenses related to new business initiatives in search and mobile
Internet.
Net Income
Net income attributable to Qihoo 360 was $46.8 million,
compared with $15.6 million in
2011.
Net income attributable to Qihoo 360 excluding share-based
compensation (non-GAAP) was $97.4
million, representing an increase of 53% from $63.6 million in 2011.
Net Margin
Net margin was 14.2%, compared with 9.3% in 2011.
Net margin excluding share-based compensation (non-GAAP) was
29.6%, compared with 37.9% in 2011. The year-over-year decline in
non-GAAP net margin was also due to increased expenses related to
new business initiatives in search and mobile Internet.
Diluted Earnings per ADS
Diluted EPADS were $0.38, and
diluted EPADS excluding share-based compensation (non-GAAP) were
$0.80, compared to $0.55 in 2011. Weighted average ADS used in
computing diluted EPADS in 2012 was 122.4 million.
Cash Flows and Balance Sheet
Net cash flow generated from operations in 2012 was $117.8 million, compared to $82.3 million in 2011. Cash capital expenditures
were $73.9 million. As of
December 31, 2012, the Company had
cash and cash equivalents of $380.7
million, compared with $343.7
million as of December 31,
2011.
Business Outlook
For the first quarter of 2013, the Company expects revenues to
be between $104.5 million and $106.5
million, representing a year-over-year increase of 50.8% -
53.7% and quarter-over-quarter increase of 1.5% - 3.4%. These
estimates reflect the Company's current and preliminary view, which
is subject to possible material changes.
Conference Call
Qihoo 360's management will host a conference call to discuss
the results at 7:30 p.m. Eastern Time
on March 5, 2013 (8:30 a.m. Beijing time on March
6, 2013).
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
|
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 10:30
p.m. Eastern Time on March 5,
2013 through 08:30 a.m. Eastern
Time on March 13, 2013. The
dial-in details for the replay are:
International Dial In:
|
+1
855-452-5696
|
US Dial
In:
|
+1
646-254-3697
|
Passcode:
|
14036100
|
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. The Company is
also the number one provider of Internet and mobile security
products in China as measured by
its 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 and monetizes its massive user base
primarily through online advertising and through Internet
value-added services on its open platform.
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 and the "Business Outlook" section
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 annual report on Form 20-F dated
April 19, 2012.
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.
In China:
Tel: +86 10-5878-1574
E-mail: ir@360.cn
In the U.S.:
The Piacente Group, Inc.
Brandi Floberg or Lee Roth
Tel: (212) 481-2050
E-mail: qihu@tpg-ir.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,
2011
|
|
December 31,
2012
|
ASSETS
|
|
|
|
Current assets:
|
|
|
|
Cash and cash equivalents
|
343,731
|
|
380,664
|
Restricted Cash
|
-
|
|
1,905
|
Trading securities
|
231
|
|
179
|
Accounts receivable (net of
allowance for doubtful accounts of $68 and
$213 as of December 31,
2011 and December 31, 2012, respectively)
|
16,741
|
|
23,591
|
Prepaid expenses and other current
assets
|
12,808
|
|
26,802
|
Deferred tax assets - current
|
858
|
|
2,131
|
Total current assets
|
374,369
|
|
435,272
|
Property and equipment, net
|
16,665
|
|
126,035
|
Land use rights, net
|
-
|
|
73,645
|
Acquired intangible assets, net
|
7,854
|
|
12,310
|
Goodwill
|
4,580
|
|
4,628
|
Long-term investments
|
15,561
|
|
27,559
|
Other noncurrent assets
|
4,415
|
|
9,335
|
Deferred tax assets - noncurrent
|
514
|
|
745
|
TOTAL
ASSETS
|
423,958
|
|
689,529
|
LIABILITIES
|
|
|
|
Current liabilities:
|
|
|
|
Accounts payable (including accounts payable
of the consolidated
|
|
|
|
VIEs without recourse to Qihoo 360 Technology Co.
Ltd. of
|
|
|
|
$5,872 and
$7,109 as of December 31, 2011 and December 31, 2012,
respectively)
|
5,872
|
|
7,109
|
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
|
|
|
|
$9,469 and
$41,636 as of December 31, 2011 and December 31, 2012,
respectively)
|
21,287
|
|
168,694
|
Deferred revenue-current (including deferred
revenue-current of the
|
|
|
|
consolidated VIEs without recourse to Qihoo 360 Technology Co.
Ltd.
of $9,831 and $17,520 as
of December 31, 2011 and December 31,
2012,
respectively)
|
12,089
|
|
21,049
|
Income tax payable
(including income tax payable of the consolidated
VIEs without recourse to
Qihoo 360 Technology Co. Ltd. of $3,635
and $2,710 as of
December 31, 2011 and December 31, 2012,
respectively)
|
7,312
|
|
6,862
|
|
|
|
|
Total current liabilities
|
46,560
|
|
203,714
|
Deferred tax liabilities - noncurrent
|
507
|
|
790
|
Other noncurrent liabilities (including
other noncurrent liabilities of the
consolidated VIEs without recourse
to Qihoo 360 Technology Co. Ltd.
of $286 and $nil as of
December 31, 2011 and December 31, 2012,
respectively)
|
286
|
|
-
|
|
|
|
|
Deferred revenue-noncurrent
(including deferred revenue-noncurrent of
the consolidated VIEs without
recourse to Qihoo 360 Technology Co.
Ltd. of $1,589 and $3,242
as of December 31, 2011 and December 31
2012, respectively)
|
5,113
|
|
6,762
|
|
|
|
|
TOTAL
LIABILITIES
|
52,466
|
|
211,266
|
EQUITY
|
|
|
|
Total Qihoo 360 Technology Co. Ltd. Shareholders'
equity
|
370,853
|
|
478,096
|
Noncontrolling interest
|
639
|
|
167
|
Total equity
|
371,492
|
|
478,263
|
TOTAL
LIABILITIES AND EQUITY
|
423,958
|
|
689,529
|
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
|
Twelve Months
Ended
|
|
December
31,
2011
|
September
30,
2012
|
December
31,
2012
|
|
December
31,
2011
|
December
31,
2012
|
Revenues:
|
|
|
|
|
|
|
Internet services
|
62,169
|
84,028
|
102,951
|
|
166,961
|
328,882
|
Sales of third party anti-virus software
|
152
|
7
|
-
|
|
890
|
150
|
Total
revenues
|
62,321
|
84,035
|
102,951
|
|
167,851
|
329,032
|
Cost of
revenues:
|
|
|
|
|
|
|
Internet services
|
7,042
|
7,901
|
10,649
|
|
18,680
|
32,762
|
Sales of third party anti-virus software
|
38
|
3
|
-
|
|
238
|
40
|
Total cost
of revenues
|
7,080
|
7,904
|
10,649
|
|
18,918
|
32,802
|
Subsidy
income
|
8
|
-
|
2,428
|
|
151
|
2,570
|
Operating
expenses:
|
|
|
|
|
|
|
Selling and marketing
|
10,251
|
13,909
|
18,616
|
|
46,836
|
58,178
|
General and administrative
|
6,772
|
8,535
|
10,450
|
|
19,054
|
34,295
|
Product development(a)
|
23,392
|
41,475
|
52,169
|
|
65,049
|
156,269
|
Impairment
loss on intangible assets
|
-
|
-
|
1,348
|
|
-
|
1,348
|
Total
operating expenses
|
40,415
|
63,919
|
82,583
|
|
130,939
|
250,090
|
|
|
|
|
|
|
|
Income
from operations
|
14,834
|
12,212
|
12,147
|
|
18,145
|
48,710
|
Interest
income, net
|
1,185
|
1,699
|
1,658
|
|
2,541
|
6,715
|
Other
income (expense)
|
-
|
54
|
773
|
|
(3)
|
1,243
|
Exchange
gain
|
2,719
|
1,102
|
966
|
|
6,294
|
49
|
Impairment loss on long-term
investment
|
(902)
|
(157)
|
(2,145)
|
|
(902)
|
(2,302)
|
Change on
fair value of trading securities
|
(63)
|
(44)
|
6
|
|
(220)
|
(52)
|
Gain on
disposal of subsidiaries and
long-term investments
|
-
|
1,282
|
2,024
|
|
-
|
8,332
|
Income
before income tax expense and
loss from equity method investments
|
17,773
|
16,148
|
15,429
|
|
25,855
|
62,695
|
|
|
|
|
|
|
|
Income tax
expense
|
(3,028)
|
(1,497)
|
(1,439)
|
|
(10,874)
|
(11,379)
|
Loss from
equity method investments
|
(392)
|
(1,932)
|
(1,355)
|
|
(437)
|
(4,845)
|
|
|
|
|
|
|
|
Net
income
|
14,353
|
12,719
|
12,635
|
|
14,544
|
46,471
|
|
|
|
|
|
|
|
Less: Net
loss attributable to noncontrolling interest
|
681
|
212
|
117
|
|
1,059
|
275
|
Net income
attributable to
|
|
|
|
|
|
|
Qihoo 360 Technology Co. Ltd.
|
15,034
|
12,931
|
12,752
|
|
15,603
|
46,746
|
Accretion
of Series A convertible participating
redeemable preferred shares
|
-
|
-
|
-
|
|
203
|
-
|
Accretion
of Series B convertible participating
redeemable preferred shares
|
-
|
-
|
-
|
|
313
|
-
|
Accretion
of Series C convertible participating
redeemable preferred shares
|
-
|
-
|
-
|
|
255
|
-
|
Net income
attributable to ordinary shareholders
|
15,034
|
12,931
|
12,752
|
|
14,832
|
46,746
|
Net income
per ordinary share-basic
|
0.09
|
0.07
|
0.07
|
|
0.10
|
0.26
|
Net income
per ordinary share-diluted
|
0.08
|
0.07
|
0.07
|
|
0.09
|
0.25
|
|
|
|
|
|
|
|
Weighted
average shares used in calculating
net income per ordinary share- basic (in
millions)(b)
|
176
|
176
|
177
|
|
149
|
176
|
Weighted
average shares used in calculating
net income per ordinary share-diluted (in
millions)(b)
|
180
|
183
|
185
|
|
173
|
184
|
(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.
(b): 3 Ordinary Shares = 2 ADSs
|
Qihoo
360 Technology Co. Ltd.
|
Condensed Consolidated Statements of Cash
Flows
|
(U.S.
dollars in thousands)
|
(Unaudited)
|
|
|
Three-months period ended
|
|
Twelve
months period ended
|
|
|
December 31,
2011
|
December 31,
2012
|
|
December 31,
2011
|
December 31,
2012
|
Cash flows
from operating activities:
|
|
|
|
|
|
Net
income
|
14,353
|
12,635
|
|
14,544
|
46,471
|
Share-based compensation
|
9,226
|
13,976
|
|
47,989
|
50,605
|
Depreciation and amortization
|
1,635
|
7,074
|
|
4,227
|
16,597
|
Gain on
disposal of fixed assets
|
-
|
(838)
|
|
-
|
(838)
|
Loss on
equity method investment
|
392
|
1,354
|
|
437
|
4,844
|
Gain on
disposal of subsidiaries and long-term investments
|
-
|
(2,024)
|
|
-
|
(8,332)
|
Loss from
impairment of intangible assets
|
87
|
1,348
|
|
87
|
1,348
|
Impairment
on long-term investment
|
902
|
2,145
|
|
902
|
2,302
|
Unrealized
holding loss (gain) on trading securities
|
63
|
(6)
|
|
220
|
52
|
Provision
of allowance for doubtful accounts
|
-
|
172
|
|
51
|
454
|
Changes in
operating assets and liabilities
|
13,504
|
17,291
|
|
13,846
|
4,285
|
Net
cash provided by operating activities
|
40,162
|
53,127
|
|
82,303
|
117,788
|
Cash flows
from investing activities:
|
|
|
|
|
|
Purchase
of property and equipment and intangible assets
|
(7,770)
|
(21,357)
|
|
(17,777)
|
(73,869)
|
Payment
for the purchase of other assets
|
(463)
|
-
|
|
(1,571)
|
(459)
|
Consideration paid in connection with business
acquisition
|
(815)
|
-
|
|
(487)
|
258
|
Payment
for investment
|
(5,971)
|
(3,354)
|
|
(14,976)
|
(24,241)
|
Cash
collected from sale of a subsidiary
|
-
|
4,004
|
|
-
|
13,847
|
Proceeds
from disposal of property and equipment and intangible
assets
|
-
|
1,103
|
|
-
|
2,126
|
Increase
in restricted cash
|
-
|
(1,902)
|
|
-
|
(1,902)
|
Dividends
received by company
|
-
|
-
|
|
-
|
313
|
Net
cash used in investing activities
|
(15,019)
|
(21,506)
|
|
(34,811)
|
(83,927)
|
|
|
|
|
|
|
Cash flows
from financing activities:
|
|
|
|
|
|
Proceeds
from initial public offering ("IPO")
|
-
|
-
|
|
234,312
|
-
|
Capital
contribution from noncontrolling interest
|
-
|
1
|
|
1,559
|
36
|
Payment
for IPO cost
|
(1,320)
|
-
|
|
(2,611)
|
-
|
Prepayment
for share repurchase
|
-
|
-
|
|
-
|
(139)
|
Proceeds
from exercise of stock option
|
20
|
-
|
|
20
|
2,089
|
Net
cash (used in)/provided by financing activities
|
(1,300)
|
1
|
|
233,280
|
1,986
|
|
|
|
|
|
|
Effect of
exchange rate changes
|
871
|
1,019
|
|
2,454
|
1,086
|
INCREASE
IN CASH
|
24,714
|
32,641
|
|
283,226
|
36,933
|
CASH,
BEGINNING OF PERIOD
|
319,017
|
348,023
|
|
60,505
|
343,731
|
CASH, END
OF PERIOD
|
343,731
|
380,664
|
|
343,731
|
380,664
|
Reconciliations of Non-GAAP Financial Measures to
Comparable GAAP Measures
|
|
Three
Months Ended December 31, 2011
|
|
Three
Months Ended September 30, 2012
|
|
Three
Months Ended December 31, 2012
|
|
GAAP
|
Adjustment(c)
|
Non-GAAP
|
|
GAAP
|
Adjustment(c)
|
Non-GAAP
|
|
GAAP
|
Adjustment(c)
|
Non-GAAP
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses
|
$40,415
|
($9,219)
|
$31,196
|
|
$63,919
|
($11,299)
|
$52,620
|
|
$82,583
|
($13,976)
|
$68,607
|
|
|
|
|
|
|
|
|
|
|
|
|
Income
from operations
|
$14,834
|
$9,226
|
$24,060
|
|
$12,212
|
$11,299
|
$23,511
|
|
$12,147
|
$13,976
|
$26,123
|
Operating
margin
|
23.8%
|
|
38.6%
|
|
14.5%
|
|
28.0%
|
|
11.8%
|
|
25.4%
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
income attributable
to Qihoo 360 Technology
Co. Ltd.
|
$15,034
|
$9,226
|
$24,260
|
|
$12,931
|
$11,299
|
$24,230
|
|
$12,752
|
$13,976
|
$26,728
|
Net
margin
|
24.1%
|
|
38.9%
|
|
15.4%
|
|
28.8%
|
|
12.4%
|
|
26.0%
|
Diluted
earnings per ADS
|
$0.13
|
|
$0.20
|
|
$0.11
|
|
$0.20
|
|
$0.10
|
|
$0.22
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Twelve
Months Ended December 31, 2011
|
|
Twelve
Months Ended December 31, 2012
|
|
|
GAAP
|
Adjustment(c)
|
Non-GAAP
|
|
GAAP
|
Adjustment(c)
|
Non-GAAP
|
|
|
|
|
|
|
|
|
|
|
Operating expenses
|
$130,939
|
($47,973)
|
$82,966
|
|
$250,090
|
($50,601)
|
$199,489
|
|
|
|
|
|
|
|
|
|
|
Income
from operations
|
$18,145
|
$47,989
|
$66,134
|
|
$48,710
|
$50,605
|
$99,315
|
|
Operating
margin
|
10.8%
|
|
39.4%
|
|
14.8%
|
|
30.2%
|
|
|
|
|
|
|
|
|
|
|
Net
income attributable to
Qihoo 360 Technology Co.
Ltd.
|
$15,603
|
$47,989
|
$63,592
|
|
$46,746
|
$50,605
|
$97,351
|
|
Net
margin
|
9.3%
|
|
37.9%
|
|
14.2%
|
|
29.6%
|
|
Diluted
earnings per ADS
|
$0.14
|
|
$0.55
|
|
$0.38
|
|
$0.80
|
|
(c): Adjustment to exclude the share-based compensation expense of
each period.
|
|
SOURCE Qihoo 360 Technology Co. Ltd.