Qihoo 360 Technology Co Ltd (NYSE:QIHU) beat expectations in its latest earnings report, but investors remain reserved on the stock, at least in the U.S. Shares fell more than 2% at the New York Stock Exchange in midday trading. Analysts continue to have mixed view on the company.
Qihoo 360 posts strong Q3 results
Qihoo 360 reported third-quarter revenue of $188 million, which is a 124% increase year over year and between 3% and 4% above analyst consensus. The company managed to beat the high end of its guidance as well. Non0GAAP EPADS was 47 cents, a 136% increase year over year and 10 to 12 cents over consensus. Qihoo 360 Technology Co Ltd (NYSE:QIHU) guided for fourth-quarter revenues of between $206 million and $208 million, which would be a 101% increase year over year at the midpoint.
Analysts at Goldman Sachs and Citi have differing views on the company, with Goldman rating it as Neutral and Citi rating it as a Buy.
Big takeaways from Qihoo’s results
Goldman Sachs analysts Fei Fang and Piyush Mubayi note that Qihoo 360 Technology Co Ltd (NYSE:QIHU)’s 22% search traffic share will increase, while its revenue share stayed in the single digits. They expect the company to expand its commercial infrastructure further so that it can reduce the monetization gap between itself and competitors Baidu Inc (NASDAQ:BIDU) and Sogou.
Analysts also noted improvements in margins. Citi analyst Bin Liu and the rest of the team noted that the company recovered margins very quickly, pushing them up to 35.5%, which was flat quarter over quarter for the most part. The company cut marketing costs and consolidated revenue from its JV with UUU9 during the quarter. However, the revenue source ends after the fourth quarter when Qihoo 360 becomes the JV’s minority shareholder. Citi analysts believe the company’s revenue guidance received a negative impact from this one-off item.
Big names investing in Qihoo
The Chinese company has attracted some big name U.S. investors recently, including John Burbank and Passport Capital. Passport in particular holds especially big positions in Internet stocks, not just in China but also in the U.S. and in Japan.
