BEIJING, March 6, 2014 /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, 2013.
Fourth Quarter Financial Highlights[1]
- Revenues were $221.6 million, a
115.3% increase from $103.0
million in the fourth quarter of 2012.
- Net income attributable to Qihoo 360 was $16.6 million, compared to $12.8 million in the fourth quarter of 2012.
- Non-GAAP net income attributable to Qihoo 360[1] was
$96.3 million, compared to
$26.7 million in the fourth quarter
of 2012.
- Diluted earnings per ADS[2] ("EPADS") attributable to Qihoo 360
was $0.13, compared to $0.10 in the same period last year.
- Non-GAAP diluted EPADS attributable to Qihoo 360[1] was
$0.70, compared to $0.22 in the same period last year.
Fourth Quarter Operating Metrics
- Total monthly active users of Qihoo 360's PC-based products and
services reached a record 475 million in December 2013, compared to 456 million in
December 2012[3].
- User penetration of Qihoo 360's PC-based products was 94.6% in
December 2013, compared to 96.5% in
December 2012[3].
- Total smartphone users of Qihoo 360's primary mobile security
product[4] reached a record 467 million in December 2013, compared to 207 million in
December 2012[5].
- Monthly active users of Qihoo 360's PC browsers reached 354
million in December 2013, compared to
310 million in December 2012[3].
- User penetration of Qihoo 360's PC browsers was 70.4% in
December 2013, compared to 65.6% in
December 2012[3].
- Average daily unique visitors to the 360 Personal Start-up Page
and its sub-pages were 119 million in the fourth quarter of 2013,
compared to 91 million in the fourth quarter of 2012[5].
- Average daily clicks on Qihoo 360's Personal Start-up Page and
its sub-pages were approximately 681 million in the fourth quarter
of 2013, compared to 450 million in the fourth quarter of
2012[5].
Fiscal Year 2013 Highlights[1]
- Revenues were $671.1 million, an
increase of 104.0% from $329.0
million in 2012.
- Net income attributable to Qihoo 360 was $99.7 million, an increase of 113.2% from
$46.8 million in 2012.
- Non-GAAP net income attributable to Qihoo 360[1] was
$226.3 million, an increase of 132.4%
from $97.4 million in 2012.
- Diluted EPADS[2] attributable to Qihoo 360 were $0.77, compared to $0.38 in 2012.
- Non-GAAP diluted EPADS attributable to Qihoo 360[1] were
$1.74 compared to $0.80 in 2012.
[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
2013.
|
[4]
|
360 Mobile Safe is
the Company's primary mobile security product.
|
[5]
|
Company data as of
December 2013.
|
"We are extremely pleased to report our twelfth consecutive
quarter of robust growth and deliver another full year of
substantial progress in operations," said Mr. Hongyi Zhou, Chairman and Chief Executive
Officer of Qihoo 360. "We continue to expand our leadership
position in key product categories, while making significant
inroads in new markets. Monthly active users of our PC-based
products and services, which cover 95% of the Chinese PC Internet
population, increased to 475 million at the end of 2013. The number
of Chinese smartphone users of our key mobile security product, 360
Mobile Safe, reached 467 million, covering approximate 70% of
Chinese smartphone users, making Qihoo the indisputable leader in
Internet security in China. In
addition, monthly active users of our PC browsers reached 354
million, representing over 70% of the Chinese PC Internet
population. Our Android based app store, 360 Mobile Assistant,
further strengthened its industry-leading position during the
quarter. We are allocating significant resources in the fast
growing mobile Internet market, while building upon our leadership
position in the PC Internet market."
"During the quarter, our search traffic share reached
approximately 23% according to third party data, noticeably
exceeding our internal target. Through continued product
improvement and technological innovation, we believe we are in an
excellent position to further capture a significant share of
China's search market and help
reshape the competitive landscape of this vast industry in
China. We started to monetize our
search and mobile products at the beginning of 2013 and have made
significant progress to date. As we continue to execute our
business plan and strategy, we believe that search and mobile
monetization will drive substantial long-term growth for our
business," 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. We continue to see robust growth in key
areas of our business. Online advertising grew 88% in 2013,
supported by further deepening of our monetization process and
incremental contribution from search and mobile monetization.
Internet value-added services once again outpaced the market with
revenue growth of 145% in 2013, driven by healthy growth in PC
games and strong ramp-up in mobile games. While search and mobile
monetization are still in their nascent stages, they have ramped up
faster than expected, and will become key drivers for our future
growth. As we continue to leverage the strength of our platform, we
expect our growth momentum to continue. We are making
proactive investments in product and technology development in
order to strengthen our leadership position and expand our
footprint, particularly in mobile Internet and search technology
where we see tremendous opportunities for future expansion.
Meanwhile, we will continue to build our sales and marketing
infrastructure to support our enhanced monetization efforts. We
believe these investments will further strengthen our foundation,
support sustainable growth and drive long-term shareholder
value."
Fourth Quarter 2013 Results
Revenues
Revenues were $221.6 million,
representing an increase of 115.3% from $103.0 million in
the fourth quarter of 2012 and an increase of 17.9% from
$187.9 million in the third quarter
of 2013. The solid year-over-year and sequential increases in
revenues were due to strong performance in both online advertising
and Internet value-added services, driven by strong user traffic
growth and further penetration of performance based advertising on
360 Personal Startup Page. In addition, better than expected ramp
in search and mobile monetization provided incremental growth
drivers.
Online advertising revenues were $142.4
million, up 112.9% from the same period last year and 18.0%
from the prior quarter. The strong year-over-year and sequential
increases were primarily driven by increased monetization of user
activities on 360 Personalized Start-up Pages and incremental
contribution from search and mobile advertising.
Internet value-added service revenues, which are mainly derived
from game platform operations, were $78.9
million, up 124.4% from the same period last year and 17.7%
from the prior quarter. The solid year-over-year and sequential
growth was driven in part by the strong ramp-up in mobile games,
and healthy performance in PC game operations.
Cost of Revenues
Cost of revenues were $30.2
million, compared to $10.6
million in the fourth quarter of 2012 and $25.9 million in the third quarter of 2013,
representing increases of 183.4% and 16.5%, respectively.
Operating Expenses
Operating expenses were $184.9
million, compared to $82.6
million in the fourth quarter of 2012 and $111.2 million in the third quarter of 2013.
Non-GAAP operating expenses were $109.6 million, compared to $68.6 million in the fourth quarter of 2012 and
$95.3 million in the prior
quarter.
The year-over-year and sequential increases in non-GAAP
operating expenses were mainly driven by increased marketing
expenses, personnel-related costs, and bandwidth and equipment
depreciation expenses, as the Company continued to enhance its
technology and product development capabilities, and strengthen its
brand and market position.
Operating Income
Operating income was $8.9 million,
compared to $12.1 million in the
fourth quarter of 2012 and operating income of $50.8 million in the prior quarter.
Non-GAAP operating income was $84.2
million, compared to $26.1
million in the fourth quarter of 2012 and $66.7 million in the prior quarter.
Operating margin was 4.0%, compared to 11.8% in the fourth
quarter of 2012 and 27.0% in the prior quarter.
Non-GAAP operating margin was 38.0%, compared to 25.4% in the
fourth quarter of 2012 and 35.5% in the prior quarter.
The year-over-year and sequential increases in non-GAAP
operating margin was mainly due to leverage from strong revenue
growth while the Company continues to invest in new product and
business initiatives.
During the quarter, the Company also recognized a one-off
$57.0 million share based
compensation expenses in relation to share incentive grant to its
senior management at the end of 2013. The Board of Director of the
Company approved the grant to reward the senior management for the
outstanding performance of the Company in the past few years.
Net Income
attributable to Qihoo 360
Net income attributable to Qihoo 360 was $16.7 million,
compared to $12.8 million in the
fourth quarter of 2012 and $44.5
million in the prior quarter.
Non-GAAP net income attributable to Qihoo 360 was $96.3 million, compared to $26.7 million in the fourth quarter of 2012 and
$61.5 million in the prior
quarter.
Net Margin
Net margin was 7.5%, compared to12.4% in the same period last
year, and 23.7% in the prior quarter.
Non-GAAP net margin was 43.5%, compared to 26.0% in the same
period last year and 32.7% in the prior quarter. The year-over-year
increase in non-GAAP net margin was also mainly due to leverage
from strong revenue.
Diluted Earnings per ADS
Diluted EPADS for the fourth quarter of 2013 was $0.13, and weighted average ADS used in computing
diluted EPADS was 131.2 million. Non-GAAP diluted EPADS for the
fourth quarter of 2013 was $0.70, and
weighted average ADS used in computing non-GAAP diluted EPADS was
136.6 million.
Cash Flows and Balance Sheet
Net cash generated from operations in the fourth quarter of 2013
was $76.8 million, compared to
$53.1 million in the same period last
year and $75.0 million in the prior
quarter. Cash capital expenditures were $18.8 million. As of December 31, 2013, the Company had cash and cash
equivalents of $1,013.5 million.
Fiscal Year 2013 Results
Revenues
Revenues were $671.1 million,
representing an increase of 104.0% from $329.0 million in
2012. The solid growth was mainly due to strong performance in both
online advertising and Internet value-added services, driven by
strong user traffic growth and further penetration of performance
based advertising on 360 Personal Startup Page and ramp in search
and mobile monetization.
Online advertising revenues were $417.1
million, representing an increase of 88.3% from $221.5 million in 2012. The solid growth was
primarily driven by increased monetization of user activities on
360 Personalized Start-up Pages and incremental contribution from
search and mobile advertising.
Internet value-added service revenues, which are mainly derived
from game platform operations, were $252.7
million, representing an increase of 144.6% from
$103.3 million in 2012. The robust
growth was mainly driven by strong ramp in mobile games and
continued strength in PC game operations.
Cost of Revenues
Cost of revenues was $87.8
million, compared with $32.8
million in 2012, representing an increase of 167.8%.
Operating Expenses
Operating expenses were $482.5
million, compared with $250.1
million in 2012. Non-GAAP operating expenses were $361.4 million, compared with $199.5 million in 2012.
Operating Income
Operating income was $103.1
million, compared with $48.7
million in 2012.
Non-GAAP operating income was $224.2
million, representing an increase of 125.7% from
$99.3 million in 2012.
Operating margin was 15.4%, compared with 14.8% in 2012.
Non-GAAP operating margin was 33.4%, compared with 30.2% in
2012. The improvement in non-GAAP operating margin was mainly due
to leverage from strong revenue growth while the Company continues
to invest in new product and business initiatives.
Net Income
attributable to Qihoo 360
Net income attributable to Qihoo 360 was $99.7 million,
compared with $46.8 million in
2012.
Non-GAAP net income attributable to Qihoo 360 was $226.3 million, representing an increase of
132.4% from $97.4 million in
2012.
Net Margin
Net margin was 14.8%, compared with 14.2% in 2012.
Non-GAAP net margin was 33.7%, compared with 29.6% in 2012. The
increase in non-GAAP net margin was also mainly due to leverage
from strong revenue.
Diluted Earnings per ADS
Diluted EPADS were $0.77, compared
with $0.38 in 2012. Weighted average
ADS used in computing diluted EPADS was 128.7 million.
Non-GAAP diluted EPADS were $1.74,
compared to $0.80 in 2012. Weighted
average ADS used in computing non-GAAP diluted EPADS in 2013 was
130.4 million.
Cash Flows and Balance Sheet
Net cash flow generated from operations in 2013 was $210.2 million, compared to $117.8 million in 2012. Cash capital expenditures
were $121.4 million. As of
December 31, 2013, the Company had
cash and cash equivalents of $1,013.5
million, compared with $380.7
million as of December 31,
2012.
Business Outlook
For the first quarter of 2014, the Company expects revenues to
be between $226 million and $228
million, representing a year-over-year increase of 106% to
107% and quarter-over-quarter increase of 2% to 3%. 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 6, 2014 (8:30 a.m. Beijing time on March
7, 2014).
The dial-in details for the live conference call are:
US Toll Free Dial
In:
|
+1
866-519-4004
|
International Dial
In:
|
+65 6723
9381
|
Hong Kong Dial
In:
|
+852-2475-0994
|
Passcode:
|
3909280
|
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 6,
2014 through 11:30 a.m. Eastern
Time on March 14, 2014. The
dial-in details for the replay are:
International Dial
In:
|
+61 2 8199
0299
|
US Dial
In:
|
+1
646-254-3697
|
Passcode:
|
3909280
|
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, 2013.
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 and interest expense of Convertible Senior Notes.
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.
Kathy Price
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,
|
|
December
31,
|
|
2012
|
|
2013
|
ASSETS
|
|
|
|
Current assets:
|
|
|
|
Cash and cash equivalents
|
380,664
|
|
1,013,465
|
Restricted
Cash
|
1,905
|
|
2,368
|
Short-term Investments
|
179
|
|
748
|
Accounts receivable
(net of allowance for doubtful accounts of $213 and
$145 as of December 31,
2012 and December 31, 2013, respectively)
|
23,591
|
|
54,598
|
Prepaid expenses and other current
assets
|
26,802
|
|
83,409
|
Deferred tax assets – current
|
2,131
|
|
3,129
|
Total current assets
|
435,272
|
|
1,157,717
|
Property and equipment, net
|
126,035
|
|
163,864
|
Land use rights, net
|
73,645
|
|
75,698
|
Acquired intangible assets, net
|
12,310
|
|
17,248
|
Goodwill
|
4,628
|
|
29,509
|
Long-term investments
|
27,559
|
|
84,293
|
Other noncurrent assets
|
9,335
|
|
39,621
|
Deferred tax assets – noncurrent
|
745
|
|
946
|
TOTAL
ASSETS
|
689,529
|
|
1,568,896
|
LIABILITIES
|
|
|
|
Current liabilities:
|
|
|
|
Short-term
loan (including accounts payable of the consolidated
|
|
|
|
VIEs without recourse to Qihoo Technology Company Limited
of
|
|
|
|
$nil and $1,322 as of December 31, 2012 and Dec 31, 2013,
respectively)
|
-
|
|
1,322
|
Accounts payable (including accounts
payable of the consolidated
|
|
|
|
VIEs without recourse to Qihoo 360 Technology Co. Ltd.
of
|
|
|
|
$7,109 and $22,856 as of December 31, 2012 and December 31,
2013,
respectively)
|
7,109
|
|
25,030
|
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
|
|
|
|
$41,636 and $77,170 as of December 31, 2012 and
December 31, 2013,
respectively)
|
168,694
|
|
120,935
|
Deferred
revenue-current (including deferred revenue-current of
the
|
|
|
|
consolidated VIEs without recourse to Qihoo 360 Technology Co.
Ltd.
of $17,520
and $30,717 as of December 31, 2012 and December 31,
2013,
respectively)
|
21,049
|
|
46,632
|
Income tax
payable (including income tax payable of the consolidated
VIEs
without recourse to Qihoo 360 Technology Co. Ltd. of $2,710
and $5,546
as of December 31, 2012 and December 31, 2013,
respectively)
|
6,862
|
|
14,679
|
Total
current liabilities
|
203,714
|
|
208,598
|
Deferred
tax liabilities – noncurrent
|
790
|
|
2,676
|
Deferred
revenue-noncurrent (including deferred revenue-noncurrent of
the
consolidated VIEs without recourse to Qihoo 360 Technology
Co.
Ltd. of $3,242 and $664 as of December 31, 2012 and December
31
2013, respectively)
|
6,762
|
|
3,544
|
Long-term
debt
|
-
|
|
600,000
|
|
|
|
|
TOTAL
LIABILITIES
|
211,266
|
|
814,818
|
EQUITY
|
|
|
|
Total Qihoo 360
Technology Co. Ltd. Shareholders' equity
|
478,096
|
|
736,893
|
Noncontrolling
interest
|
167
|
|
17,185
|
Total
equity
|
478,263
|
|
754,078
|
TOTAL LIABILITIES AND
EQUITY
|
689,529
|
|
1,568,896
|
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,
2012
|
September 30,
2013
|
December 31,
2013
|
|
December 31,
2012
|
December 31,
2013
|
Revenues:
|
|
|
|
|
|
|
Internet
services
|
102,951
|
187,928
|
221,617
|
|
328,882
|
671,088
|
Sales of third
party anti-virus software
|
-
|
-
|
-
|
|
150
|
-
|
Total
revenues
|
102,951
|
187,928
|
221,617
|
|
329,032
|
671,088
|
Cost of
revenues:
|
|
|
|
|
|
|
Internet
services
|
10,649
|
25,906
|
30,180
|
|
32,762
|
87,838
|
Sales of third
party anti-virus software
|
-
|
-
|
-
|
|
40
|
-
|
Total cost of
revenues
|
10,649
|
25,906
|
30,180
|
|
32,802
|
87,838
|
Subsidy
income
|
2,428
|
2
|
2,344
|
|
2,570
|
2,349
|
Operating
expenses:
|
|
|
|
|
|
|
Selling and
marketing
|
18,616
|
28,057
|
30,988
|
|
58,178
|
110,104
|
General and
administrative
|
10,450
|
14,707
|
76,680
|
|
34,295
|
116,200
|
Product
development
|
52,169
|
68,458
|
76,248
|
|
156,269
|
255,248
|
Impairment loss on
intangible assets
|
1,348
|
-
|
948
|
|
1,348
|
948
|
Total operating
expenses
|
82,583
|
111,222
|
184,864
|
|
250,090
|
482,500
|
|
|
|
|
|
|
|
Income from
operations
|
12,147
|
50,802
|
8,917
|
|
48,710
|
103,099
|
Interest income,
net
|
1,658
|
2,155
|
5,028
|
|
6,715
|
10,398
|
Interest
expenses
|
-
|
(1,186)
|
(4,386)
|
|
-
|
(5,572)
|
Other
income
|
1,745
|
752
|
3,781
|
|
1,240
|
6,435
|
Impairment loss
on long-term investment
|
(2,145)
|
-
|
(3,703)
|
|
(2,302)
|
(5,004)
|
Gain on disposal
of long-term investments
|
2,024
|
999
|
14,808
|
|
4,766
|
15,807
|
(Loss) Gain on
disposal of a subsidiary
|
|
(1,144)
|
-
|
|
3,566
|
(1,144)
|
Income before income
tax expense and
loss from equity method investments
|
15,429
|
52,378
|
24,445
|
|
62,695
|
124,019
|
|
|
|
|
|
|
|
Income tax
expense
|
(1,439)
|
(7,798)
|
(9,130)
|
|
(11,379)
|
(23,423)
|
Loss from equity
method investments
|
(1,355)
|
(656)
|
(165)
|
|
(4,845)
|
(2,747)
|
|
|
|
|
|
|
|
Net income
|
12,635
|
43,924
|
15,150
|
|
46,471
|
97,849
|
|
|
|
|
|
|
|
Less: Net loss
attributable to
noncontrolling interest
|
117
|
532
|
1,498
|
|
275
|
1,803
|
Net income
attributable to
|
|
|
|
|
|
|
Qihoo 360
Technology Co. Ltd.
|
12,752
|
44,456
|
16,648
|
|
46,746
|
99,652
|
|
|
|
|
|
|
|
Net
income per ordinary share-basic
|
0.07
|
0.25
|
0.09
|
|
0.26
|
0.55
|
Net income per
ordinary share-diluted
|
0.07
|
0.23
|
0.08
|
|
0.25
|
0.52
|
|
|
|
|
|
|
|
Weighted average
shares used in
calculating net income per ordinary
share- basic (in millions)(a)
|
177
|
181
|
183
|
|
176
|
180
|
Weighted average
shares used in
calculating net income per ordinary
share-diluted (in millions)(a)
|
185
|
197
|
197
|
|
184
|
193
|
|
|
|
|
|
|
|
(a): 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,
2012
|
December 31,
2013
|
December 31,
2012
|
December 31,
2013
|
Cash flows from
operating activities:
|
|
|
|
|
Net income
|
12,635
|
15,150
|
46,471
|
97,849
|
Share-based
compensation
|
13,976
|
75,284
|
50,605
|
121,087
|
Depreciation and
amortization
|
6,934
|
12,739
|
16,457
|
42,629
|
Amortization of land
use right
|
140
|
437
|
140
|
1,714
|
(Gain) Loss on
disposal of fixed assets
|
(838)
|
-
|
(838)
|
213
|
Loss on equity method
investments
|
1,354
|
165
|
4,845
|
2,747
|
(Gain) Loss on
disposal of subsidiaries
|
-
|
-
|
(3,566)
|
1,144
|
Gain on disposal of
long-term investments
|
(2,024)
|
(14,808)
|
(4,766)
|
(15,807)
|
Loss from impairment
of intangible assets
|
1,348
|
948
|
1,348
|
948
|
Impairment on
long-term investments
|
2,145
|
3,703
|
2,302
|
5,004
|
Provision of
allowance for doubtful accounts
|
172
|
121
|
454
|
157
|
Others
|
(6)
|
(444)
|
52
|
(740)
|
Changes in operating
assets and liabilities
|
17,291
|
(16,477)
|
4,284
|
(46,719)
|
Net cash provided
by operating activities
|
53,127
|
76,818
|
117,788
|
210,226
|
Cash flows from
investing activities:
|
|
|
|
|
Purchase of property
and equipment and intangible assets
|
(21,357)
|
(18,750)
|
(73,869)
|
(121,402)
|
Payment for the
purchase of other assets
|
-
|
-
|
(459)
|
-
|
Net cash acquired
(paid) in connection with business acquisition
|
-
|
168
|
258
|
(9,827)
|
Payment for
short-term investment and long-term investments
|
(3,354)
|
(72,537)
|
(24,241)
|
(81,454)
|
Cash collected from
sale of long-term investments and a subsidiary
|
4,004
|
16,515
|
13,847
|
18,880
|
Proceeds from sale of
trading securities
|
-
|
252
|
-
|
252
|
Proceeds from
disposal of property and equipment and
intangible assets
|
1,103
|
-
|
2,126
|
1
|
Increase in
restricted cash
|
(1,902)
|
(2,056)
|
(1,902)
|
(431)
|
Dividend Proceeds
received by company
|
-
|
239
|
313
|
413
|
Deconsolidation of a
subsidiary
|
-
|
-
|
-
|
(3,306)
|
Net cash used in
investing activities
|
(21,506)
|
(76,169)
|
(83,927)
|
(196,874)
|
|
|
|
|
|
Cash flows from
financing activities:
|
|
|
|
|
Capital contribution
from noncontrolling interest
|
1
|
-
|
36
|
656
|
Payment for share
repurchase
|
-
|
-
|
(139)
|
-
|
Proceeds from
exercise of share option
|
-
|
4,887
|
2,089
|
23,678
|
Proceeds from
short-term loan
|
-
|
1,314
|
-
|
1,314
|
Proceeds from
issuance of Convertible Bonds (net of
issuance cost of $12,150)
|
-
|
-
|
-
|
587,850
|
Net cash provided
by financing activities
|
1
|
6,201
|
1,986
|
613,498
|
|
|
|
|
|
Effect of exchange
rate changes
|
1,019
|
3,032
|
1,086
|
5,951
|
INCREASE IN
CASH
|
32,641
|
9,882
|
36,933
|
632,801
|
CASH, BEGINNING OF
PERIOD
|
348,023
|
1,003,583
|
343,731
|
380,664
|
CASH, END OF
PERIOD
|
380,664
|
1,013,465
|
380,664
|
1,013,465
|
Reconciliations of
Non-GAAP Financial Measures to Comparable GAAP
Measures
|
|
Three Months Ended
December 31, 2012
|
|
Three Months Ended
September 30, 2013
|
|
Three Months Ended
December 31, 2013
|
|
GAAP
|
Adjustment(b)
|
Non-GAAP
|
|
GAAP
|
Adjustment(b)
|
Adjustment
(c)
|
Non-GAAP
|
|
GAAP
|
Adjustment(b)
|
Adjustment
(c)
|
Non-GAAP
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses
|
$82,583
|
($13,976)
|
$68,607
|
|
$111,222
|
($15,874)
|
-
|
$95,348
|
|
$184,864
|
($75,284)
|
-
|
$109,580
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income
from
operations
|
$12,147
|
$13,976
|
$26,123
|
|
$50,802
|
$15,874
|
-
|
$66,676
|
|
$8,917
|
$75,284
|
-
|
$84,201
|
Operating
margin
|
11.8%
|
|
25.4%
|
|
27.0%
|
|
|
35.5%
|
|
4.0%
|
|
|
38.0%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
attributable
to Qihoo 360
Technology
Co. Ltd.
|
$12,752
|
$13,976
|
$26,728
|
|
$44,456
|
$15,874
|
$1,186
|
$61,516
|
|
$16,648
|
$75,284
|
$4,365
|
$96,297
|
Net margin
|
12.4%
|
|
26.0%
|
|
23.7%
|
|
|
32.7%
|
|
7.5%
|
|
|
43.5%
|
Diluted
earnings
per ADS
|
$0.10
|
|
$0.22
|
|
$0.35
|
|
|
$0.47
|
|
$0.13
|
|
|
$0.70
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Twelve Months Ended
December 31, 2012
|
|
Twelve Months Ended
December 31, 2013
|
|
|
|
|
|
|
GAAP
|
Adjustment(b)
|
Non-GAAP
|
|
GAAP
|
Adjustment(b)
|
Adjustment
(c)
|
Non-GAAP
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses
|
$250,090
|
($50,601)
|
$199,489
|
|
$482,500
|
($121,087)
|
-
|
$361,413
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income
from
operations
|
$48,710
|
$50,605
|
$99,315
|
|
$103,099
|
$121,087
|
-
|
$224,186
|
|
|
|
|
|
Operating
margin
|
14.8%
|
|
30.2%
|
|
15.4%
|
|
|
33.4%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
attributable
to Qihoo 360
Technology
Co. Ltd.
|
$46,746
|
$50,605
|
$97,351
|
|
$99,652
|
$121,087
|
$5,551
|
$226,290
|
|
|
|
|
|
Net margin
|
14.2%
|
|
29.6%
|
|
14.8%
|
|
|
33.7%
|
|
|
|
|
|
Diluted
earnings
per ADS
|
$0.38
|
|
$0.80
|
|
$0.77
|
|
|
$1.74
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(b): Adjustment to
exclude the share-based compensation expense of each
period.
|
(c): Adjustment to
exclude the interest expense of Convertible Senior Notes of each
period.
|
SOURCE Qihoo 360 Technology Co. Ltd.