) reported third-quarter 2013 earnings per ADS of 35 cents,
beating the Zacks Consensus Estimate of 26 cents. The company
witnessed year-over-year growth in revenues.
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QIHOO 360 TECH (QIHU): Free Stock Analysis
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Revenues were $187.7 million, representing an increase of 124%
from $84.0 million in the year ago quarter and an increase of 24%
from $151.7 million in the prior quarter. The strong
year-over-year growth in revenues was mainly due to continued
momentum in both online advertising and Internet value-added
Online advertising revenues were $120.7 million, representing an
increase of 107.0% from the year ago quarter and an increase of
33.0% from the prior quarter. The strong year-over-year increase
was primarily driven by increased monetization of user activities
on 360 Search and Personalized Start-up Pages. The strong
sequential growth was also due, in part, to a strong ramp-up in
Internet value-added service revenues were $67.0 million, up
163.0% on a year-over-year basis and 10.0% from the prior
quarter. The strong year-over-year increase was mainly driven by
solid growth in the company's paying game user base and expanded
Total operating expenses were $111.2 million, compared to $63.9
million in the third quarter of 2012 and $97.2 million in the
prior quarter. The year-over-year and sequential increases in
operating expenses were mainly driven by increased sales and
marketing expenses, personnel-related costs, and bandwidth and
equipment depreciation expenses.
Operating income was $50.8 million, compared to $12.2 million in
the year ago quarter and $36.6 million in the prior
Operating margin was 27.0%, up on a year-over-year basis from
14.5% in the year ago quarter and 24.1% in the prior quarter.The
year-over-year increase in operating margin was mainly due to
strong revenue growth.
Non-GAAP net income attributable to Qihoo 360 was $45.6 million
or 35 cents per ADS, compared to $12.9 million or 11 cents in the
year ago quarter and $33.0 million or 26 cents in the prior
Qihoo exited the quarter with cash and cash equivalents of
$1,003.6 million.Net cash generated from operations was $75.0
million, compared to $20.7 million in year ago quarter and $86.4
million in the prior quarter. Cash capital expenditures were
For the fourth quarter of 2013, Qihoo expects revenues to be
between $206 million and $208 million, representing a
year-over-year increase of 100% to 102%.
For the full year 2013, the company expects revenues to be
between $655 million and $657 million, representing a
year-over-year increase of approximately 100%.
We believe that Qihoo posted a robust third quarter result with
revenues registering strong growth, both on a year over year
basis as well as on a sequential basis.
Moreover, the company continues to solidify its position as the
indisputable leader in the Chinese internet market with its PC
security products covering nearly 95% of Chinese PC internet
users and the mobile security solutions covering approximately
70% of Chinese smartphone users.
Qihu expects to make investments in product development and
technology innovation as well as to expand its coverage of PC and
mobile internet, going forward. Its consistent focus on Internet
and product innovation has been the cornerstone of its success to
However, with competition becoming more intense in the near
future, Qihu's prospect might get doomed provided it fails to
expand and innovate its product-line keeping in mind the changing
tastes and preferences of the market.
Currently, Qihu has a Zacks Rank #2 (Buy). Other stocks that can
be considered to be attractive investment options this season are
Digital River Inc
) with a Zacks Rank # 1 (Strong Buy),
), both with a Zacks Rank # 2c (Buy)