The stock price of Qihoo 360 Technology Co Ltd (NYSE:QIHU) surged more than 9% to $76.18 per share around 12:56 in the afternoon in New York driven by its better-than-expected financial results for the third quarter.

Qihoo 360

Qihoo 360 financial performance

Qihoo 360 Technology Co Ltd (NYSE:QIHU) reported $376.4 million in revenue for the third quarter, a 100% increase from $187.9 million in the same period last year. Its revenue was higher than $366.7 million consensus estimate of Wall Street analysts.

The Chinese internet service provider posted $57.7 million in net income, up from $44.5 million last year. Its non-GAAP net income was $89.5 million, an increase of 48% from $61.5 million in the year-ago quarter.

Qihoo 360 Technology Co Ltd (NYSE:QIHU) said its diluted earnings were $0.44 per share compared with $0.40 per share consensus estimate.

The financial performance of the company was primarily boosted by its solid search and mobile monetization during the quarter.  Qihoo 360 Technology Co Ltd (NYSE:QIHU) generated $201 million in revenue from online advertising and $172.8 million in revenue from internet VAS.

Morgan Stanley analyst Philip Wan and his team noted that Qihoo 360’s margin recovery is on track even if its gross margin dropped 1.7 ppts sequentially and 8.9 ppts year-over-year to 77.3%. Its non-GAAP operating margin was up 2.9 ppts sequentially.

The analysts noted that the company’s sequential rebound in non-GAAP operating margin was mainly due to its operating leverage from sales & marketing and product development. They expected its operating margin to recover further in the fourth quarter.

Qihoo 360 operating metrics

Qihoo 360 Technology Co Ltd (NYSE:QIHU) said its total monthly active users for its PC-based products and services increased to 495 million and user penetration was 94% as of September 2014.

The company said the total smartphone users for its mobile security product went up to 673 million. Its monthly active users for PC browsers were 357 million and the user penetration was 68%.

The average daily unique visitors to the 360 Personal Start-up Page and its sub-page were 129 million during the third quarter.

In a statement,  Hongyi Zhou, Chairman and CEO of Qihoo 360 Technology Co Ltd (NYSE:QIHU ) said, “Not only did we maintain our leadership position in key PC-related product categories during the quarter, but we continued to make a significant transition to the important mobile Internet market…Our goal is to maintain our leadership position in this market in the future.”

Business outlook

Qihoo 360 Technology Co Ltd (NYSE:QIHU) estimated that it will be able to generate revenue in the range of $410 million to $415 million in the fourth quarter compared with $407.8 million consensus estimate.