Qihoo 360 to step up mobile internet push as smartphone user number hits record

Qihoo 360 Technology, the mainland's largest internet security company and No2 online search service, plans to step up investments in the domestic mobile internet market after the company's smartphone user base reached a record 641 million at the end of June.

Chairman and chief executive Zhou Hongyi said yesterday that Beijing-based Qihoo 360's performance in the second quarter showed "further strengthening of our indisputable leadership position in internet security in China", as well as in Android game application distribution.

While Qihoo 360 has not been as active in big-ticket acquisitions as industry peers Tencent Holdings, Alibaba Group Holding or Baidu, Zhou said: "We intend to allocate significantly more resources to support product development and market penetration of our mobile search."

The New York-traded company posted an 18 per cent increase in net profit to US$39.1 million in the second quarter from a year earlier. That beat the US$33.9 million consensus estimate from a Bloomberg survey of analysts' forecasts.

Alicia Yap, the head of China internet research at Barclays, said in a report that Qihoo 360's earnings were solid, driven by strong growth in mobile and personal computer-based games, as well as desktop search and mobile advertising.

Revenue surged 110 per cent to US$317.9 million from the previous year. Last quarter's turnover was ahead of Barclays' US$304.1 million forecast and the consensus estimate of US$309.5 million.

So-called internet value-added service revenue, which was largely from desktop computer and mobile games, grew 140 per cent year on year to US$146.2 million in the quarter to June. Zhou said 360 Mobile Assistant, the company's Android apps store, had the largest market share as it attracted more mobile-game developers and users.