Qihoo 360 Technology Co., Ltd. December 2013

Transcription

1 Qihoo 360 Technology Co., Ltd. December 2013

2 Disclaimer This presentation has been prepared by Qihoo 360 Technology Co. Ltd. (the Company ) solely for your information and has not been independently verified. No representations, warranties or undertaking, express or implied, are made by the Company or any of its affiliates, advisers or representatives or the underwriters as to, and no reliance should be placed on, the accuracy, fairness, completeness or correctness of the information or opinions presented or contained in this presentation. By attending the presentation, participants acknowledge and agree that neither the Company nor any of its affiliates, advisers, representatives or the underwriters accept any responsibility whatsoever (in negligence or otherwise) for any loss howsoever arising from any information presented or contained in this presentation or otherwise arising in connection with this presentation. The information presented or contained in this presentation is subject to change without notice and its accuracy is not guaranteed. This presentation contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended and the regulations enacted thereunder (the Securities Act ) and Section 21E of the Securities Exchange Act of 1934, as amended, which reflect the Company s intent, beliefs or current expectations about the future. These forward-looking statements can be recognized by the use of words such as expects, plans, will, estimates, projects, intends, or words of similar meaning. These forward-looking statements are not guarantees of future performance and are based on a number of assumptions about the Company s operations and other factors, many of which are beyond the Company s control, and accordingly, actual results may differ materially from these forward-looking statements. The Company or any of its affiliates, advisers or representatives or the underwriters has no obligation and does not undertake to revise forward-looking statements to reflect future events or circumstances. This presentation does not constitute an offer to sell or issue or invitation to purchase or subscribe for any securities of the Company for sale in the United States or anywhere else. No part of this presentation shall form the basis of or be relied upon in connection with any contract or commitment whatsoever. Specifically, this presentation does not constitute a prospectus within the meaning of the Securities Act. This presentation does not contain all relevant information relating to the Company or its securities, particularly with respect to the risks and special considerations involved with an investment in the securities of the Company. No securities of the Company may be sold in the United States without registration with the United States Securities and Exchange Commission (the SEC ) or an exemption from such registration pursuant to the Securities Act. Any public offering of the Company's securities to be made in the United States will be made solely by means of a statutory prospectus as specified under the Securities Act. The prospectus will contain detailed information about the Company and its management as well as the financial statements of the Company. Any decision to purchase the Company's securities in the offering for sale in the United States or anywhere else should be made solely on the basis of the information contained in the prospectus. The prospectus will be made publicly available in due course and can be obtained free of charge from the SEC s website at THESE MATERIALS AND ALL INFORMATION CONTAINED HEREIN ARE HIGHLY CONFIDENTIAL AND ARE BEING GIVEN SOLELY FOR YOUR INFORMATION AND FOR YOUR USE ONLY IN CONNECTION WITH THIS PRESENTATION. THE INFORMATION CONTAINED HEREIN MAY NOT BE COPIED, REPRODUCED, REDISTRIBUTED, OR OTHERWISE DISCLOSED, IN WHOLE OR IN PART, TO ANY OTHER PERSON IN ANY MANNER. Any forwarding, distribution or reproduction of these materials in whole or in part is unauthorized. By attending this presentation, participants agree not to remove these materials, or any documents provided in connection herewith, from the conference room where such documents are provided. Participants agree further not to photograph, reproduce, redistribute or otherwise disclose, in whole or in part, directly or indirectly, these materials in any form or pass on these materials to any other person (whether within or outside your organization/firm) for any purpose. Participants must return these materials and all other documents provided in connection herewith to the Company at the completion of the presentation 1

3 Corporate Overview 2

4 Corporate Snapshot Founded: Total Headcount: Date of IPO: NYSE Ticker: Shares Outstanding: Share Price: Market Cap: 3-mo. Average Daily Volume: 52-Week Range: June 2005 ~4,000 March 30, 2011 QIHU ~131 million ADSs (Fully Diluted) $82.78 (As of 11/26/2013) ~$10.5 billion (As of 11/26/2013) 3,150,000 $22.95 ~ $

5 Qihoo 360 s Management Team Pioneers in the Internet Industry Hongyi Zhou Chairman & CEO Co-founder Over 15 years of experience in China s Internet industry Former CEO of Yahoo! China Founded 3721.com in 1998 and served as its Chairman and CEO, led 3721.com to become the largest search engine in China at the time (3721.com was later acquired by Yahoo!) Xiangdong Qi President Co-founder Over 10 years of experience in China s Internet industry Former Vice President of Yahoo! China Former General Manager of 3721.com Alex Xu Co-Chief Financial Officer Former Chief Strategy Officer of China Finance Online and CFO of YeeCare Holdings Former Managing Director at Cowen and research analyst at UBS, BofA and Brean Murray MBA from Cornell University; CFA charter holder Jue Yao Co-Chief Financial Officer Former Finance Director of Sohu.com Former Senior Auditor at KPMG Xiaohong Shi Vice President of Technology Former CTO of Yahoo! China Co-founder and former CTO of 3721.com Premium VC Investors 4

6 Building an Internet Platform Company 360 PSP 360 Search 360 Games 360 Video 360 Travel 360 Shopping Service Layer Access Layer Core Security Layer hao.360.cn wan.360.cn v.360.cn go.360.cn mall.360.cn Open Platform Introduces 3 rd Party Products and Services to Achieve Monetization 360 Browsers 360 Desktop 360 Safeguard 360 Mobile Assistant 360 Anti-Virus 360 Mobile Desktop 360 MobileSafe Core Security Products Trusted Brand, Sticky User Base 460m+ Active PC Users, 400m+ Smartphone Users 360 Mobile Browsers Key Internet Access Points Influence User Behavior; Redirect Traffic 340m+ Active PC Users, 300m+ Smartphone Users Qihoo Cloud and Qihoo ID Interconnect Products & Services Note: Company Data, iresearch as of September

7 Innovative Products

8 Proven Track Record of Disruptive Innovation Internet Security Overtook Leadership Position in Just 3 Years after Product Launch Indisputable Leader in Internet Security with Overwhelming Market Share 100% 90% 80% 70% 360 Safeguard Launched in 2H Anti-Virus Launched in 2H % 50% 40% 30% 20% 10% 0% -10% Kingsoft Rising Kaspersky Other Note: Monthly Internet Security Product Time Usage Share in China at the End of Each Period, iresearch. 7

9 Proven Track Record of Disruptive Innovation Web Browsers Surpassed Market Leader in Just 3 Years after Product Launch Reshaped Industry Landscape with Innovative Products 70% 60% 360 Safe Browser Launched in 2H Browsers Surpassed Internet Explorer in 2H % 40% 30% 20% 10% 0% Microsoft Sogou Google Maxthon Firefox Tencent Other Note: Monthly Browser Time Usage Share in China at the End of Each Period, iresearch. 8

10 Proven Track Record of Disruptive Innovation Personal Startup Page Defeated Incumbent Leader in Just 2 Years after Product Launch Innovative Design Sets New Industry Standard 60% 360 s hao.360.cn Launched in 4Q s hao.360.cn Surpassed Baidu s hao123.com in 2H % 40% 30% 20% 10% 0% Baidu Sogou 2345.com Kingsoft Other Note: Monthly Navigation Site PV Share in China at the End of Each Period, iresearch. 9

11 360 Browsers Trusted Gateway to Popular Internet Activities #1 time usage market share with ~70% user penetration rate in China PSP one-stop launch-pad for popular online activities: gaming, shopping, video Sep 2013 Dec 2012 Dec 2011 Dec 2010 MAU 340m+ 310m+ 260m+ 170m+ User-friendly design enables quick and convenient online experiences Dec m+ Enhanced security protects users online activities Dec m+ Note: iresearch data as of the end of each period. 10

12 360 Search Changing the Landscape One Step at A Time 11 Launched Ctrl+Ctrl enabling user access 360 search whenever wherever they want. Offered full damage repay to victims of online fraud perpetrated by advertisers. Launched Good Doctor search to provide authentic medical service information Gradually added search verticals: news, video, music, picture, map, etc. Launched independent search domain Launched 360 search by resetting default search boxes in 360 browsers and PSP. is 360 search s official domain. SO stands for Safe and Open. Note: Traffic share data from CNZZ as of the end of each period Oct 2013 Jun 2013 Apr 2013 Mar 2013 Dec 2012 Nov 2012 Sep 2012 Aug 2012 Traffic Share 20.9% 15.8% 14.4% 13.9% 10.4% 9.8% 9.4% 9.5%

13 360 Mobile Safe Leading Mobile Security Solution Device Optimization 360 Mobile Safe Spam Blocker Total Users #1 mobile security brand in China with 70% market share Sep 2013 Jun m+ 340m+ Convenient entrance point to mobile app store Build trust with mobile users Dec 2012 Jun 2012 Dec m+ 100m+ 50m+ Comprehensive solution beyond anti-virus & anti-malware Mobile Anti-Virus Entrance to App Store Dec m+ Note: Company data as of the end of each period, iresearch, and Horizon 12

14 360 Mobile Assistant The #1 Android App Store in China PC users access app store via an itunes-like Interface on PC Easily search, browse, and recommend apps Save time, battery life, and traffic costs Jun 2013 Mar 2013 Dec 2012 Jun 2012 Total Users Oct m+ 250m+ 200m+ 150m+ 70m+ Mobile users directly access app store via 3G network Dec m+ 13 Note: Company data as of the end of each period

15 Monetization

16 Online Advertising Link based Advertising 360 Personal Start-up Page and Sub-pages Time-based advertising links continue to deliver best in class ROI to customers. Re-designed PSP pages boost user activities and generate extra growth in clicks. Performance based advertising utilizes idled links on sub-pages and drive incremental business. Online Ad Revenue ($m) Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 15 Note: Company data as of Q

17 Traffic Infrastructure Online Advertising Search Advertising Browser and PSP search boxes Keywords/Brand Advertising Internally developed keywords bidding system went online in December 2012 The system is ramping nicely and generates vast majority of search revenue In January 2013, started to connect with Google s monetization system Address bar & search home Google s system is running as expected Internal Conversion: search traffic generated from massive user base External Acquisition (NOT YET): search traffic generated from TA partners Search Results Keywords Advertising Existing sales team crossselling to current customers Gradually expand selling structure to target long-tail customers Proactively expand relationship with Ad agencies to cover broader base 16 Note: The search result page is for illustration purpose only and may not resemble 360 Search s current result page.

18 Online Game Monetizing Diversified Portfolio Multiple Access Points to Games Platform through Browser & PSP web games Game Revenue ($m) chess & card games Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 17 Note: Company data as of Q

19 Mobile Monetization A Good Start with Greater Potential Mobile IVAS Sharing in-app purchase revenue with app developers Mobile Advertising Delivered through Thunder & Lightening mobile search platform and 360 Mobile Assistant Flexible pricing options: CPT, CPC, CPD, etc. Large banners promote featured apps Daily recommendation introduces hot new releases Ranking order presents the most popular apps Category league table showcases the best apps 18

20 Financials

21 3Q 2013 Operational Highlights 3Q revenue was $187.9m, up 124% Y-on-Y and 24% Q-on-Q. 3Q non-gaap net income was $61.5m, compared to $24.2m in 3Q Monthly active users of Qihoo 360 s PC products were 465 million. Qihoo 360 s product penetration rate among all Chinese PC internet users was 94%. Smartphone users of 360 Mobile Safe reached 408 million, vs. 149 million a year ago. Monthly active users for 360 s Browsers were 342 million, vs. 303 million a year ago. 360 s Browsers user penetration rate was 69%, vs. 65% a year ago. Average daily UVs to 360 PSP were 126 million, vs. 89 million a year ago. Average daily clicks on 360 PSP were 681 million, vs. 451 million a year ago. 20 Note: Data as of September 2013, Company, iresearch, Non-GAAP Measurements for Reference Only.

22 Re-accelerated Growth Revenue (USD in Million) Gross Profit (USD in Million) Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 Non-GAAP Operating Profit (USD in Million) Non-GAAP Net Profit (USD in Million) Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 21 Note: Company Data as of September 2013; Non-GAAP Measurements for Reference Only.

23 Continued Momentum Revenue (USD in Million) E Gross Profit & Margin E Gross Profit Gross Margin 100% 85% 70% 55% 40% 25% 10% Non-GAAP Net Income & Margin E Non-Gaap Net Income($m) Non-GAAP Net Margin 40% 30% 20% 10% 0% -10% Cash Flows from Operations (USD in Million) E 22 Note: Company Data as of September 2013; Non-GAAP Measurements for Reference Only. 2013E is based on Analyst Consensus.

24 Revenue Breakdown Online Advertising Revenue (USD in Million) Internet Value-added Services Revenue (USD in Million) E E E Revenue Breakdown 73.3% 67.3% 50.4% 43.1% 25.7% 26.0% 67.3% 31.4% 62.0% 37.8% 6.4% 6.7% 0.1% 0.3% 0.5% 0.2% 1.3% 0.2% E Online Ad. IVAS 3rd Party AV Other 23 Note: Company Data as of September E is Based on Analyst Consensus.

25 Cost Structure Non-GAAP Operating Expenses Breakdown 80% 125 Non-GAAP Selling and Marketing Expense % 60% 40% 20% 0% 8.1% 8.9% 7.9% 7.4% 8.5% 14.8% 21.0% 8.6% 11.2% 18.0% 17.0% 9.2% 37.9% 37.6% 41.1% 29.1% 31.6% 32.0% E Non GAAP R&D Non-GAAP S&M Non GAAP G&A E Non-GAAP Sales & Marketing % of Revenue 20% 15% 10% 5% 0% Non-GAAP Product Development Expense E Non-GAAP Product Development % of Revenue Non-GAAP General and Administrative Expense Note: Company Data as of September 2013; Non-GAAP Measurements is for Reference Only. 2013E is Based on Analyst Consensus. 50% 40% 30% 20% 10% 0% E Non-GAAP G&A % of Revenue 10% 8% 6% 4% 2% 0%

26 A Game Changer with Proven Track Record