TechWeb

Qihoo 360 Reports Fourth Quarter and Fiscal Year 2011 Unaudited Financial Results

Feb 22, 2012 (04:02 PM EST)
URL: http://www.techweb.com/show-press-release/X890118/qihoo-360-reports-fourth-quarter-and-fiscal-year-2011-unaudited-financial-results.html

- Record Quarterly Revenues of $62.3 million, up 214.5% Year-over-Year

- Record Quarterly GAAP Net Income of $15.0 million, up 274.1% Year-over-Year

- Record Quarterly Non-GAAP Net Income of $24.3 million, up 365.9% Year-over-Year

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.