Qihoo Q2 Profit Soars, Guides Q3 Revenues Above View

(RTTNews) - Qihoo 360 Technology Co. Ltd. (QIHU), a China-based provider of Internet and mobile security products, reported Sunday a profit for the second quarter that soared from last year, reflecting improved margins and strong revenue growth. Quarterly revenues topped analysts' expectations. The company also provided revenue guidance for the third quarter, well above Street view.

"We are extremely pleased to report another record breaking quarter of robust revenue growth and substantial margin improvement. We continue to strengthen our leadership position in key product categories, while establishing a foothold in new markets," Chairman and CEO Hongyi Zhou said in a statement.

Beijing, China-based Qihoo reported net income of $33.0 million or $0.26 per ADS for the second quarter, higher then $7.0 million or $0.06 per ADS in the prior-year quarter.

Excluding share-based compensation, adjusted net income was $51.0 million or $0.40 per ADS, compared to $20.6 million or $0.17 ADS in the year-ago quarter.

On average, eight analysts polled by Thomson Reuters expected the company to report earnings of $0.26 per share for the quarter. Analysts' estimates typically exclude special items.

Total revenues for the quarter more than doubled to a quarterly record of $151.67 million from $72.75 million in the same quarter last year, and topped eleven analysts' consensus estimate of $144.19 million.

The company attributed the growth to sharply improved performance at online advertising and Internet value-added services as well as better-than-expected ramp in search and mobile monetization.

Online advertising revenues climbed 78 percent, while Internet value-added service revenues surged 181 percent from last year.

"Our PC security products already cover nearly 95% of Chinese PC Internet users, and our mobile security solutions cover approximately 70% of Chinese smartphone users, making Qihoo the indisputable leader in Internet security in China," Zhou added.

Total monthly active users of Qihoo's products and services reached a record 461 million in June 2013, compared to 425 million in the same period last year. Average daily unique visitors to the 360 Personal Start-up Page and its sub-pages were 114 million in the quarter, compared to 83 million in the prior-year period.

Operating margin for the quarter improved 10.5 percentage points to 24.1 percent from last year's 13.6 percent.

Looking ahead to the third quarter, the company expects revenues between $181 million and $183 million, while Street is currently looking revenues of $162.88 million.

"Although we just started monetizing our search and mobile products a few months ago, we have made very encouraging progress. 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," Zhou stated.

QIHU closed Friday's regular trading at $73.13, up $0.27 or 0.37% on a volume of 2.55 million shares.