China's Qihoo Ad Revenue Rises On Search Advertising, Mobile Services

Online advertising continues to grow in China. Qihoo, a company known for its mobile app store, Web browser and search engine, reported revenue grew 94.6% to $431.2 million in Q4 2014, compared with the year-ago quarter. The company attributes the growth to online advertising and Internet services, driven by an increase in connecting search across the PC and mobile Web, as well as mobile apps. The 20.4% sequential growth was driven by seasonal strength in online advertising.

Qihoo provides Internet search, online games and mobile security products, but it also launched a search engine in 2012, which competes with Baidu, China's largest search engine, which has seen earnings slow. Qihoo's search traffic on the PC rose more than 250% year-over-year in 2014 compared with the prior year. The company also provides search advertising.



Hongyi Zhou, Qihoo chairman, CEO and co-founder, expects the move toward the mobile Web will help the company establish a much more solid position in mobile search. During an earnings call, he said that early in 2015, the company launched an independent search brand as part of its strategy to push into mobile search.

In 2014, the company's mobile app store grew through advertising and mobile game. Revenue more than tripled year-over-year, but fully integrating services across the PC and the mobile Web should address higher incremental growth in 2015, Zhou said.

Search and mobile monetization will become revenue drivers for Qihoo during the next few years as consumers become more familiar with the Internet of Things. A fully integrated monetization solution to span across PC and mobile, Web and apps should enable the company to narrow the gap between its search revenue share and the search traffic share faster.

Overall, no single customer contributed 10% or more to the total amount of revenue during the quarter, Zhou said during an earnings call.

Online advertising revenue rose 70.8% to $243.3 million in the quarter compared with the year-ago quarter and 20.4%, sequentially. By the end of 2014, Qihoo had established a sustainable agency networks and advertising customer base. 

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