Qihoo shares rallied 5.84% to $50.40 in after-hours trading Monday after the company reported fourth-quarter results that topped consensus estimates. The Chinese Internet security and search company’s Q4 revenues jumped 94.6% YoY to $431.2 million, beating Qihoo’s own guidance of $410-$415 million. Qihoo reported earnings of 58 cents a share.
Search and mobile drive revenue growth
Analysts polled by Thomson Reuters were expecting $416.3 million in revenue and 55 cents in EPS. Excluding one-time charges, Qihoo earned 75 cents per share, up 7% YoY. Strong growth in search and mobile revenue more than offset skyrocketing expenses. Search revenue rose 189% YoY to $109 million, now accounting for a quarter of Qihoo’s total revenue.
Qihoo reported an impressive 211% growth in mobile gaming revenue to $59 million. Online advertising revenue jumped 71% to $243.2 million. However, the cost of revenues also rose 241% to $103 million during the fourth quarter. Operating expenses inched up 22%, while non-GAAP operating expenses leapt 84%. Qihoo has been investing heavily to add and monetize mobile users.
The Beijing-based company’s operating margins improved as its sales grew. Non-GAAP operating margin increased from 25% in Q3 to 31% in the latest quarter. The number of monthly active users of Qihoo’s PC-based products and services increased from 475 million in Q4, 2013 to 509 million at the end of December 2014. The number of smartphone users of Qihoo’s mobile security product rose from 467 million to 744 million.
Qihoo issues strong Q1 guidance
For full-year 2014, the Internet security firm generated $1.39 billion in revenue, a growth of 107.2% from the previous year. Net income for the full-year rose 123.5% to $222.8 million. Full-year diluted earnings were $1.69 per share, up from 77 cents in 2013. Qihoo also issued strong guidance for the current quarter. For Q1, 2015, the company expects revenue between $375 million and $380 million, above the consensus estimate of $374 million.
Qihoo CEO Hongyi Zhou said it was the company’s 16th consecutive quarter of strong growth as a public company. During the latest quarter, Qihoo made significant progress with new product initiatives while maintaining its dominant position in key product categories such as Internet security, PC browser, and mobile app store.
