QIHOO 360 Technology’s CEO Discusses Q2 2012 Results – Earnings Call Transcript

QIHOO 360 Technology Co. Ltd. (QIHU) Q2 2012 Earnings Call August 21, 2012 8:30 PM ET


Ladies and gentlemen, thank you for standing by, and welcome to the Qihoo 360 Second Quarter 2012 Earnings Conference Call.

[Operator Instructions]. I must advise you that this conference is being recorded today, Wednesday, the 22nd of August, 2012.

I would now like to hand the conference over to your first speaker today, Ms. Helen Wu, Director of Investor Relations. Thank you. Please go ahead, ma’am.

Helen Wu– Director of IRThank you, operator. Welcome, everyone, to our second quarter 2012 earnings conference call. I’m Helen Wu, Director of Investor Relations at Qihoo 360.

Joining me on the call today are Mr. Hongyi Zhou, Chairman and CEO; Mr. Alex Xu, co-CFO of the company. For today’s call, management will first discuss operational and financial highlights for the second quarter of 2012, and then we’ll open up the call for your questions.

Before we continue, I would like to refer you to our Safe Harbor Statements in our earnings press release, which applies to this call as we may make forward-looking statements. This call also includes discussions of certain non-GAAP financial measures. Please refer to our earnings press release which contains a reconciliation of non-GAAP measures to the most directly comparable GAAP measures. Finally, please note that, unless otherwise stated, all figures mentioned during the call are in US dollars.

Now I would like to turn the call over Hongyi Zhou, Chairman and CEO of Qihoo 360.

Hongyi Zhou– Chairman and CEOThanks, Helen. Good morning and good evening, everyone. Thank you all for joining us today.

I’m pleased to report another quarter of strong financial and operational achievement, including growing our PC active user base to a record 425 million and our smartphone user base to about 120 million. We not only maintained our leadership in PC internet but also established Qihoo as one of the leading mobile internet players in China. We have once again outpaced the industry, delivering another solid quarter of triple-digit year-over-year growth, which was accomplished despite macroeconomic concerns.

We continue to grow our business in the face of industry headwinds through solid execution of our growth strategy and commitment to technology innovation and best-in-class user experience. As a leading internet company in China, we continue to enhance our — we enhance our —

Alex Xu– Co-CFOCompetitive.

Hongyi Zhou– Chairman and CEO– competitive position in the second quarter, as I mentioned earlier, as the users of our PC-based products and service reached 425 million in June, according to data from iResearch, and our user base represent 94% of the China active PC internet users.

In the past few months, we leveraged our strong market position in web browser to gradually introduce some personalized features to our personal data page. We have seen a very positive reaction from our users and advertising customers. These features along with other [inaudible] page will gradually add significant levels of CPC and CPS-based advertising to our service, which will meaningfully enhance the efficiency of our traffic monetization over time.

A few days ago, we launched our general search product. While it is still in its early stage, we are seeing very encouraging results in terms of user traffic and reaction. In our view, it is a game-changing product that will give Qihoo a meaningful share of the market billion-dollar search advertising market in China. We’re certainly looking forward to becoming a major player in this market in the long run.