Qihoo 360 Reports Fourth Quarter and Fiscal Year 2012 Unaudited Financial Results

  Qihoo 360 Reports Fourth Quarter and Fiscal Year 2012 Unaudited Financial
                                   Results

PR Newswire

BEIJING, March 5, 2013

BEIJING, March 5, 2013 /PRNewswire/ -- Qihoo 360 Technology Co. Ltd.("Qihoo
360" or the "Company") (NYSE: QIHU), a leading Internet company inChina,
today reported its unaudited financial results for the fourth quarter and
fiscal year ended December 31, 2012.

Fourth Quarter Financial Highlights[1]

  oRevenues were $103.0 million, a 65% increase from $62.3 millionin the
    fourth quarter of 2011.
  oNet income attributable to Qihoo 360 was $12.8 million, compared to $15.0
    million in the fourth quarter of 2011.
  oNet income attributable to Qihoo 360 excluding share-based compensation
    (non-GAAP)[1] was $26.7 million, compared to $24.3 million in the fourth
    quarter of 2011.
  oDiluted earnings per ADS[2] ("EPADS") attributable to Qihoo 360 was $0.10,
    compared to $0.13 in the same period last year.
  oDiluted EPADS attributable to Qihoo 360 excluding share-based compensation
    (non-GAAP)[1] was $0.22, compared to $0.20 in the same period last year.

Fourth Quarter Operating Metrics

  oTotal monthly active users of Qihoo 360's products and services reached a
    record 456 million in December 2012, compared to 402 million in December
    2011[3].
  oUser penetration of Qihoo 360's products was 96.5% in December 2012,
    compared to 93.8% in December 2011[3].
  oTotal smartphone users of Qihoo 360's primary mobile security product ^
    [4] reached approximately 207 million in December 2012, compared to 53
    million in December 2011.
  oMonthly active users of Qihoo 360's browsers reached a record 310 million
    in December 2012, compared to 255 million in December 2011[3].
  oUser penetration of Qihoo 360's browsers reached a record 65.6% in
    December 2012, compared to 59.5% in December 2011[3].
  oAverage daily unique visitors to the 360 Personal Start-up Page and its
    sub-pages were 91 million in the fourth quarter of 2012, compared to 65
    million in the fourth quarter of 2011.
  oAverage daily clicks on Qihoo 360's Personal Start-up Page and its
    sub-pages were approximately 450 million in the fourth quarter of 2012,
    compared to 235 million in the fourth quarter of 2011.
  oPaying users of Qihoo 360's web game platform were approximately 238,000
    in December 2012, compared to 109,000 in December 2011.

Fiscal Year 2012 Highlights[1]

  oRevenues were $329.0 million, an increase of 96% from $167.9 millionin
    2011.
  oNet income attributable to Qihoo 360 was $46.8 million, an increase of
    200% from $15.6 millionin 2011.
  oNet income attributable to Qihoo 360 excluding share-based compensation
    ("non-GAAP")[1] was $97.4 million, an increase of 53% from $63.6 million
    in 2011.
  oDiluted EPADS[2] attributable to Qihoo 360 were $0.38, compared to $0.14
    in 2011.
  oDiluted EPADS attributable to Qihoo 360 excluding share-based compensation
    (non-GAAP)[1] were $0.80 compared to $0.55 in 2011.

    Non-GAAP measures and related reconciliations to GAAP measures are
[1] described in the accompanying sections titled "About Non-GAAP Financial
    Measures" and "Reconciliations of Non-GAAP Financial Measures to
    Comparable GAAP Measures" at the end of the press release.
[2] American Depositary Shares, which are traded on the NYSE. Every two ADSs
    represent three Class A ordinary shares of the Company.
[3] User and market penetration data is based on data from iResearch as of
    December 2012.
[4] Referring to 360 Mobile Safe, the Company's primary mobile security
    product.

"We are very pleased to report our eighth consecutive quarter of substantive
growth. We delivered another full year of strong operating results and
continued to outperform the industry, despite a challenging macro
environment," commented Hongyi Zhou, Chairman and Chief Executive Officer of
Qihoo 360. "We have set several new records in our financial and operating
metrics, exceeding our internal expectations. Monthly active users of our
PC-based products and services, which cover over 96% of the Chinese PC
Internet population, increased to 456 million at the end of 2012. We have also
established substantial leadership in mobile security and the number of
Chinese smartphone users of 360 Mobile Safe, our key mobile security product,
has reached 207 million."

"Our company-wide focus on product development and technology innovation,
attention to customer satisfaction and superior execution results continue to
drive our success. A major milestone during the fourth quarter of 2012 was the
launch of our search engine monetization effort through both an internal
monetization system and external partnership. We believe we are well
positioned to capture a significant portion of the search market and help
shape the competitive landscape in China, which will have a long-lasting
transformative effect on our business model," concluded Mr. Zhou.

Mr. Xiangdong Qi, President of Qihoo 360, added, "We are thrilled to have
surpassed our revenue guidance and internal profitability targets for both the
fourth quarter and the full year. With 80% year-over-year growth, our online
advertising business continued to gain market share in 2012, supported by a
strong increase in our user activities, as well as our successful initiatives
to deepen our monetization process. Our Internet value-added services also
outpaced the market with revenue growth of 137% year-over-year driven by
strong momentum in the number of paying web game users. In 2012, we made
proactive investments in product and technology development to further our
leadership position and expand our footprint, particularly in mobile Internet
and search technology where we see tremendous opportunity for future
expansion. We believe these investments will build on our strong foundation,
support sustainable growth for our company and drive long-term shareholder
value."

Fourth Quarter 2012 Results

Revenues

Revenues were $103.0 million, representing an increase of 65% from$62.3
millionin the fourth quarter of 2011 and an increase of 23% from $84.0
million in the third quarter of 2012. The year-over-year and
quarter-over-quarter increases in revenues were mainly due to continued robust
growth in both online advertising and Internet value-added services.

Online advertising revenues were $66.9 million, up 49% from the same period
last year and 15% from the prior quarter. The healthy year-over-year and
quarter-over-quarter growth was primarily driven by increased monetization of
user activities among the Company's key products, such as the 360 browsers and
Personalized Start-up Pages, despite more modest macro-level growth. Growth in
online advertising revenues were partially offset by the contraction of search
referral revenue from third party search engines due to the launch of Qihoo
360's proprietary search service in August 2012.

Internet value-added service revenues, which are mainly derived from web game
operations, were $35.2 million, up 105% from the same period last year and 38%
from the prior quarter. The strong year-over-year and quarter-over-quarter
increases were mainly driven by solid growth in the Company's paying game user
base and expanded game portfolio. 

Cost of Revenues

Cost of revenues were $10.6 million, compared to $7.1 millionin the fourth
quarter of 2011 and $7.9 million in the third quarter of 2012, representing
increases of 50% and 35%, respectively.

Operating Expenses

Operating expenses were $82.6 million, compared to $40.4 millionin the fourth
quarter of 2011 and $63.9 million in the third quarter of 2012. Operating
expenses excluding share-based compensation (non-GAAP) were $68.6 million,
compared to $31.2 million in the fourth quarter of 2011 and $52.6 million in
the prior quarter.

The year-over-year and sequential increases in non-GAAP operating expenses
were mainly driven by increased personnel-related expenses, bandwidth
expenses, equipment depreciation expenses and marketing expenses, as Qihoo 360
continued to strengthen its technology and product development capabilities,
and expanded its business initiatives.

Operating Income

Operating income was $12.1 million, compared to $14.8 million in the fourth
quarter of 2011 and operating income of $12.2 million in the prior quarter. 

Operating income excluding share-based compensation (non-GAAP) was $26.1
million, compared to $24.1 million in the fourth quarter of 2011 and $23.5
million in the prior quarter.

Operating margin was 11.8%, compared to 23.8% in the fourth quarter of 2011
and 14.5% in the prior quarter.

Operating margin excluding share-based compensation (non-GAAP) was 25.4%,
compared to 38.6% in the fourth quarter of 2011 and 28.0% in the prior
quarter.

The year-over-year and sequential decline in non-GAAP operating margin was due
to increased expenses in abovementioned areas related to new business
initiatives in search and mobile Internet.

Net Income

Net income attributable to Qihoo 360 was$12.8 million, compared to $15.0
millionin the fourth quarter of 2011 and $12.9 million in the prior quarter.

Net income attributable to Qihoo 360 excluding share-based compensation
(non-GAAP) was $26.7 million, compared to $24.3 million in the fourth quarter
of 2011 and $24.2 million in the prior quarter.

Net Margin

Net margin was 12.4%, compared to 24.1% in the same period last year, and
15.4% in the prior quarter.

Net margin excluding share-based compensation (non-GAAP) was 26.0%, compared
to 38.9% in the same period last year and 28.8% in the prior quarter. The
year-over-year and sequential decline in non-GAAP net margin was also due to
increased expenses in abovementioned areas related to new business initiatives
in search and mobile Internet.

Diluted Earnings per ADS

Diluted EPADS for the fourth quarter of 2012 was $0.10, and diluted EPADS for
the fourth quarter of 2012 excluding share-based compensation (non-GAAP) was
$0.22. Both GAAP and non-GAAP weighted average ADS used in computing diluted
EPADS was 123.6 million.

Cash Flows and Balance Sheet

Net cash generated from operations in the fourth quarter of 2012 was $53.1
million, compared to $40.2 million in the same period last year and $20.7
million in the prior quarter. Cash capital expenditures were $21.4 million.
As of December 31, 2012, the Company had cash and cash equivalents of $380.7
million.

Fiscal Year 2012 Results

Revenues

Revenues were $329.0 million, representing an increase of 96% from$167.9
millionin 2011. The significant year-over-year increase in revenues was
mainly due to continued robust growth in both online advertising and Internet
value-added services.

Online advertising revenues were $221.5 million, representing an increase of
80% from $123.0 million in 2011. The strong growth was primarily driven by
further market penetration of the Company's key products, such as the 360
browsers and the 360 Personalized Start-up Pages, increased user activity, as
well as increased monetization efforts, despite the relatively challenging
macro environment.

Internet value-added service revenues, which are mainly derived from web game
operations, were $103.3 million, representing an increase of 137% from $43.6
million in 2011. The strong growth was mainly driven by continued expansion
of the Company's game platform and solid growth of game paying user base.

Cost of Revenues

Cost of revenues was $32.8 million, compared with $18.9 millionin 2011,
representing an increase of 73%.

Operating Expenses

Operating expenses were $250.1 million, compared with $130.9 millionin 2011.
Operating expenses excluding share-based compensation (non-GAAP) were $199.5
million, compared with $83.0 million in 2011.

Operating Income

Operating income was $48.7 million, compared with $18.1 million in 2011. 

Operating income excluding share-based compensation (non-GAAP) was $99.3
million, representing an increase of 50% from $66.1 million in 2011.

Operating margin was 14.8%, compared with 10.8% in 2011.

Operating margin excluding share-based compensation (non-GAAP) was 30.2%,
compared with 39.4% in 2011. The year-over-year decline in non-GAAP operating
margin was primarily due to increased expenses related to new business
initiatives in search and mobile Internet.

Net Income

Net income attributable to Qihoo 360 was$46.8 million, compared with $15.6
millionin 2011.

Net income attributable to Qihoo 360 excluding share-based compensation
(non-GAAP) was $97.4 million, representing an increase of 53% from $63.6
million in 2011.

Net Margin

Net margin was 14.2%, compared with 9.3% in 2011.

Net margin excluding share-based compensation (non-GAAP) was 29.6%, compared
with 37.9% in 2011. The year-over-year decline in non-GAAP net margin was also
due to increased expenses related to new business initiatives in search and
mobile Internet.

Diluted Earnings per ADS

Diluted EPADS were $0.38, and diluted EPADS excluding share-based compensation
(non-GAAP) were $0.80, compared to $0.55 in 2011. Weighted average ADS used in
computing diluted EPADS in 2012 was 122.4 million.

Cash Flows and Balance Sheet

Net cash flow generated from operations in 2012 was $117.8 million, compared
to $82.3 million in 2011. Cash capital expenditures were $73.9 million. As of
December 31, 2012, the Company had cash and cash equivalents of $380.7
million, compared with $343.7 million as of December 31, 2011.

Business Outlook

For the first quarter of 2013, the Company expects revenues to be between
$104.5 million and $106.5 million, representing a year-over-year increase of
50.8% - 53.7% and quarter-over-quarter increase of 1.5% - 3.4%. These
estimates reflect the Company's current and preliminary view, which is subject
to possible material changes.

Conference Call

Qihoo 360's management will host a conference call to discuss the results at
7:30 p.m. Eastern Time on March 5, 2013 (8:30 a.m. Beijing time on March 6,
2013).

The dial-in details for the live conference call are:

US Toll Free Dial In:            +1 866-519-4004
US Toll / International Dial In: +1 718-354-1231
Hong Kong Dial In:               +852-2475-0994
Passcode:                        QIHU

A telephone replay of the call will be available after the conclusion of the
conference call at 10:30 p.m. Eastern Time on March 5, 2013 through 08:30 a.m.
Eastern Time on March 13, 2013. The dial-in details for the replay are:

International Dial In: +1 855-452-5696
US Dial In:            +1 646-254-3697
Passcode:              14036100

A live webcast of the conference call will be available on the investor
relations section of Qihoo 360's website at: http://corp.360.cn.

About Qihoo 360

Qihoo 360 Technology Co. Ltd. (NYSE: QIHU) is a leading Internet company in
China. The Company is also the number one provider of Internet and mobile
security products in China as measured by its user base, according to
iResearch. Qihoo 360 also provides users with secure access points to the
Internet via its market leading web browsers and application stores. The
Company has built one of the largest open Internet platforms in China and
monetizes its massive user base primarily through online advertising and
through Internet value-added services on its open platform.

Forward-looking Statements

This press release contains statements of a forward-looking nature. These
statements are made under the "safe harbor" provisions of the U.S. Private
Securities Litigation Reform Act of 1995. You can identify these forward-
looking statements by terminology such as "will," "expects," "believes,"
"anticipates," "intends," "estimates" and similar statements. Among other
things, the management's quotations and the "Business Outlook" section contain
forward-looking statements. These forward-looking statements involve known and
unknown risks and uncertainties and are based on current expectations,
assumptions, estimates and projections about Qihoo 360 and the industry.
Potential risks and uncertainties include, but are not limited to: the
Company's ability to continue to innovate and provide attractive products and
services to attract and retain users; the Company's ability to keep up with
rapid changes in technologies and Internet-enabled devices; the Company's
ability to leverage its user base to attract customers for our
revenue-generating services; and the Company's dependence on online
advertising for a substantial portion of our revenues; and the Company's
ability to compete effectively. All information provided in this press release
is as of the date of the press release, and Qihoo 360 undertakes no obligation
to update any forward-looking statements to reflect subsequent occurring
events or circumstances, or changes in its expectations, except as may be
required by law. Although Qihoo 360 believes that the expectations expressed
in these forward-looking statements are reasonable, it cannot assure you that
its expectations will turn out to be correct, and investors are cautioned that
actual results may differ materially from the anticipated results. Further
information regarding risks and uncertainties faced by Qihoo 360 is included
in Qihoo 360's filings with the U.S. Securities and Exchange Commission,
including its annual report on Form 20-F dated April 19, 2012.

About Non-GAAP Financial Measures

To supplement our financial results presented in accordance with U.S. GAAP, we
use non-GAAP financial measure, which is adjusted from results based on U.S.
GAAP to exclude share-based compensation expenses. Reconciliations of our
non-GAAP financial measures to our U.S. GAAP financial measures are set forth
in tables at the end of this earnings release, which provide more details on
the non-GAAP financial measures.

Our non-GAAP financial information is provided as additional information to
help our investors compare business trends among different reporting periods
on a consistent basis and to enhance investors' overall understanding of the
historical and current financial performance of our continuing operations and
our prospects for the future. Our non-GAAP financial information should be
considered in addition to results prepared in accordance with U.S. GAAP, but
should not be considered a substitute for or superior to U.S. GAAP results. In
addition, our calculation of this non-GAAP financial information may be
different from the calculation used by other companies, and therefore
comparability may be limited.

For investor and media inquiries, please contact:

Qihoo 360 Technology Co. Ltd.
In China:
Tel: +86 10-5878-1574
E-mail: ir@360.cn

In the U.S.:
The Piacente Group, Inc.
Brandi Floberg or Lee Roth
Tel: (212) 481-2050
E-mail: qihu@tpg-ir.com



Qihoo 360 Technology Co. Ltd.
Condensed Consolidated Balance Sheets
(U.S. dollars in thousands, except for shares and per share data)
(Unaudited)
                                                    December 31,  December 31,
                                                    2011          2012
ASSETS
Current assets:
 Cash and cash equivalents                         343,731       380,664
 Restricted Cash                                   -             1,905
 Trading securities                                231           179
 Accounts receivable (net of allowance for
doubtful accounts of $68 and                        16,741        23,591
 $213 as of December 31, 2011 and December
31, 2012, respectively)
 Prepaid expenses and other current assets         12,808        26,802
 Deferred tax assets - current                     858           2,131
Total current assets                                374,369       435,272
Property and equipment, net                         16,665        126,035
Land use rights, net                                -             73,645
Acquired intangible assets, net                     7,854         12,310
Goodwill                                            4,580         4,628
Long-term investments                               15,561        27,559
Other noncurrent assets                             4,415         9,335
Deferred tax assets - noncurrent                    514           745
TOTAL ASSETS                                        423,958       689,529
LIABILITIES
Current liabilities:
 Accounts payable (including accounts payable of
the consolidated
VIEs without recourse to Qihoo 360 Technology Co.
Ltd. of
 $5,872 and $7,109 as of December 31, 2011
and December 31, 2012,                              5,872         7,109
 respectively)
 Accrued expenses and other current liabilities
(including accrued
expenses and other current liabilities of the
consolidated VIEs
 without recourse to Qihoo 360 Technology
Co. Ltd. of
 $9,469 and $41,636 as of December 31, 2011
and December 31, 2012,                             21,287        168,694
respectively)
 Deferred revenue-current (including deferred
revenue-current of the
 consolidated VIEs without recourse to Qihoo
360 Technology Co. Ltd.
 of $9,831 and $17,520 as of December 31,    12,089        21,049
2011 and December 31,
 2012, respectively)
Income tax payable (including income tax
payable of the consolidated
 VIEs without recourse to Qihoo 360
Technology Co. Ltd. of $3,635                       7,312         6,862
 and $2,710 as of December 31, 2011 and
December 31, 2012,
 respectively)
Total current liabilities                           46,560        203,714
Deferred tax liabilities - noncurrent               507           790
 Other noncurrent liabilities (including other
noncurrent liabilities of the
 consolidated VIEs without recourse to Qihoo
360 Technology Co. Ltd.                             286           -
 of $286 and $nil as of December 31, 2011 and
December 31, 2012,
respectively)
Deferred revenue-noncurrent (including deferred
revenue-noncurrent of
 the consolidated VIEs without recourse to
Qihoo 360 Technology Co.                            5,113         6,762
 Ltd.of $1,589 and $3,242 as of December 31,
2011 and December 31
 2012, respectively)
TOTAL LIABILITIES                                   52,466        211,266
EQUITY
Total Qihoo 360 Technology Co. Ltd. Shareholders'   370,853       478,096
equity
Noncontrolling interest                             639           167
Total equity                                        371,492       478,263
TOTAL LIABILITIES AND EQUITY                        423,958       689,529







Qihoo 360 Technology Co. Ltd.
Condensed Consolidated Statements of operations
(U.S. dollars in thousands, except for shares and per share data)
(Unaudited)
                    Three Months Ended             TwelveMonths TwelveMonths
                                                   Ended         Ended
                    December  September  December  December 31,  December 31,
                    31,       30,        31,       2011          2012
                    2011      2012       2012
Revenues:
 Internet services 62,169    84,028     102,951   166,961       328,882
 Sales of third
party anti-virus    152       7          -         890           150
software
Total revenues      62,321    84,035     102,951   167,851       329,032
Cost of revenues:
 Internet services 7,042     7,901      10,649    18,680        32,762
 Sales of third
party anti-virus    38        3          -         238           40
software
Total cost of       7,080     7,904      10,649    18,918        32,802
revenues
Subsidy income      8         -          2,428     151           2,570
Operating expenses:
 Selling and       10,251    13,909     18,616    46,836        58,178
marketing
 General and       6,772     8,535      10,450    19,054        34,295
administrative
 Product           23,392    41,475     52,169    65,049        156,269
development^(a)
Impairment loss on  -         -          1,348     -             1,348
intangible assets
Total operating     40,415    63,919     82,583    130,939       250,090
expenses
Income from         14,834    12,212     12,147    18,145        48,710
operations
Interest income,    1,185     1,699      1,658     2,541         6,715
net
Other income       -         54         773       (3)           1,243
(expense)
Exchange gain       2,719     1,102      966       6,294         49
Impairment loss on
long-term           (902)     (157)      (2,145)   (902)         (2,302)
investment
Change on fair
value of trading    (63)      (44)       6         (220)         (52)
securities
Gain on disposal of
subsidiaries and   -         1,282      2,024     -             8,332
 long-term
investments
Income before
income tax expense
and                 17,773    16,148     15,429    25,855        62,695
 loss from equity
method investments
Income tax expense  (3,028)   (1,497)    (1,439)   (10,874)      (11,379)
Loss from equity    (392)     (1,932)    (1,355)   (437)         (4,845)
method investments
Net income          14,353    12,719     12,635    14,544        46,471
Less: Net loss
attributable to     681       212        117       1,059         275
noncontrolling
interest
Net income
attributable to
 Qihoo 360         15,034    12,931     12,752    15,603        46,746
Technology Co. Ltd.
Accretion of Series
A convertible
participating       -         -          -         203           -
 redeemable
preferred shares
Accretion of Series
B convertible
participating       -         -          -         313           -
 redeemable
preferred shares
Accretion of Series
C convertible
participating      -         -          -         255           -
 redeemable
preferred shares
Net income
attributable to     15,034    12,931     12,752    14,832        46,746
ordinary
shareholders
Net income per
ordinary            0.09      0.07       0.07      0.10          0.26
share-basic
Net income per
ordinary            0.08      0.07       0.07      0.09          0.25
share-diluted
Weighted average
shares used in
calculating
 net income per   176       176        177       149           176
ordinary share-
basic (in
millions)^(b)
Weighted average
shares used in
calculating
 net income per   180       183        185       173           184
ordinary
share-diluted (in
millions)^(b)


(a): From Q3 2011, the Company changed the "Research and development expenses"
to "Product development expenses" in the statements of operations.
This is mainly because the business has been growing rapidly and along with
the development of new products, the Company has devoted more resources
in enhancing its existing products, by which the Company believes using
"Product development expenses" will better reflect the nature of such
expenses.

The Product development expenses include costs associated with new product
development and enhancement for existing products, such as salaries and
benefits, including share-based compensation expenses, costs of bandwidth and
utilities, license and technical service fees, and depreciation of equipment
and amortization of acquired intangible assets.

(b): 3 Ordinary Shares = 2 ADSs

Qihoo 360 Technology Co. Ltd.
Condensed Consolidated Statements of Cash Flows
(U.S. dollars in thousands)
(Unaudited)
                         
                                                    Twelve months period ended
                         Three-months period ended
                         December   December31,  December31,  December31,
                         31,       2012            2011          2012
                         2011
Cash flows from
operating activities:
Net income               14,353     12,635          14,544        46,471
Share-based compensation 9,226      13,976          47,989        50,605
Depreciation and         1,635      7,074           4,227         16,597
amortization
Gain on disposal of      -          (838)           -             (838)
fixed assets
Loss on equity method    392        1,354           437           4,844
investment
Gain on disposal of
subsidiaries and         -          (2,024)         -             (8,332)
long-term investments
Loss from impairment of  87         1,348           87            1,348
intangible assets
Impairment on long-term  902        2,145           902           2,302
investment
Unrealized holding loss
(gain) on trading        63         (6)             220           52
securities
Provision of allowance   -          172             51            454
for doubtful accounts
Changes in operating     13,504     17,291          13,846        4,285
assets and liabilities
Net cash provided by     40,162     53,127          82,303        117,788
operating activities
Cash flows from
investing activities:
Purchase of property and
equipment and intangible (7,770)    (21,357)        (17,777)      (73,869)
assets
Payment for the purchase (463)      -               (1,571)       (459)
of other assets
Consideration paid in
connection with business (815)      -               (487)         258
acquisition
Payment for investment   (5,971)    (3,354)         (14,976)      (24,241)
Cash collected from sale -          4,004           -             13,847
of a subsidiary
Proceeds from disposal
of property and          -          1,103           -             2,126
equipment and intangible
assets
Increase in restricted   -          (1,902)         -             (1,902)
cash
Dividends received by    -          -               -             313
company
Net cash used in         (15,019)   (21,506)        (34,811)      (83,927)
investing activities
Cash flows from
financing activities:
Proceeds from initial    -          -               234,312       -
public offering ("IPO")
Capital contribution
from noncontrolling      -          1               1,559         36
interest
Payment for IPO cost     (1,320)    -               (2,611)       -
Prepayment for share     -          -               -             (139)
repurchase
Proceeds from exercise   20         -               20            2,089
of stock option
Net cash (used
in)/provided by          (1,300)    1               233,280       1,986
financing activities
Effect of exchange rate  871        1,019           2,454         1,086
changes
INCREASE IN CASH        24,714     32,641          283,226       36,933
CASH, BEGINNING OF       319,017    348,023         60,505        343,731
PERIOD
CASH, END OF PERIOD      343,731    380,664         343,731       380,664

Reconciliations of Non-GAAP Financial Measures to Comparable GAAP Measures
                                                                             

             Three Months Ended December 31,  Three Months Ended September     Three Months Ended December
             2011                             30, 2012                         31, 2012
             GAAP     Adjustment(c) Non-GAAP  GAAP     Adjustment(c) Non-GAAP  GAAP    Adjustment(c) Non-GAAP
Operating    $40,415  ($9,219)      $31,196   $63,919  ($11,299)     $52,620   $82,583 ($13,976)     $68,607
expenses
Income from  $14,834  $9,226        $24,060   $12,212  $11,299       $23,511   $12,147 $13,976       $26,123
operations
Operating    23.8%                  38.6%     14.5%                  28.0%     11.8%                 25.4%
margin
Net income
attributable
 to Qihoo  $15,034  $9,226        $24,260   $12,931  $11,299       $24,230   $12,752 $13,976       $26,728
360
Technology
 Co. Ltd.
Net margin   24.1%                  38.9%     15.4%                  28.8%     12.4%                 26.0%
Diluted
earnings per $0.13                  $0.20     $0.11                  $0.20     $0.10                 $0.22
ADS
             Twelve Months Ended December     Twelve Months Ended December
             31, 2011                         31, 2012
             GAAP     Adjustment(c) Non-GAAP  GAAP     Adjustment(c) Non-GAAP
Operating    $130,939 ($47,973)     $82,966   $250,090 ($50,601)     $199,489
expenses
Income from  $18,145  $47,989       $66,134   $48,710  $50,605       $99,315
operations
Operating    10.8%                  39.4%     14.8%                  30.2%
margin
Net income
attributable
to
 Qihoo 360 $15,603  $47,989       $63,592   $46,746  $50,605       $97,351
Technology
Co.
 Ltd.
Net margin   9.3%                   37.9%     14.2%                  29.6%
Diluted
earnings per $0.14                  $0.55     $0.38                  $0.80
ADS
(c): Adjustment to exclude the share-based compensation expense of each
period.



SOURCE Qihoo 360 Technology Co. Ltd.

Website: http://corp.360.cn