qihoo 360 today released the unaudited earnings in the second quarter. Results show that the second quarter qihoo 360 revenue of $152 million, up 108%; Net income was $33 million, up 372% from a year earlier.
after the earnings release, qihoo 360 CEO Zhou Hongyi, joint CFO alex xu took part in the subsequent earnings call, key points of interpretation results and answer questions from analysts.
search business is not emphasized to liquidate
profile, search for a year 360 has been 17%, about 18% of the market, this year’s target is 20%, now the company have the confidence to this goal can be achieved. Learn some Chinese search engines when market share is very small in a hurry to liquidate damage user experience lesson, qihoo 360 is not in a hurry to highlight the search business commercialization, the priority is still want to do everything you can to get a bigger share of the market, and the market first to shorten the distance.
zhou believes that 20% of the market may be a turning point, after this point 360 May be able to produce a great change, the whole search market have a certain market share after 360 search revenue growth, customer confidence enhancement, the growth of the number of customers, improve will become hits.
zhou also spoke about expanding the search traffic to the strategic significance of 360: “expand the impact of search traffic share is very profound, it not just for the benefits of the search revenue itself, can also be a lot of influence on the flow quantity of other business, such as web game business, such as its position in the market for a company, on the impact of partners, etc., so we have to take a bigger share of the market for the company is a strategic consideration, not just revenue considerations.”
innuendo baidu “application” is misleading to the user
in the second quarter, qihoo 360 launched the “thunder” application to search, for the product, to understand read Zhou Hongyi in earnings call, “we put the” lightning “positioning for mobile users to build mobile search, hope to provide users with more ways to find more new applications and other wireless content.”
Zhou Hongyi thinks, two days before a conference (alluding to baidu world conference on “light” (based on the application of web search) is the concept of the misleading of the outside world, “as if to say only web applications (web app) can more easily be searched, actually” lightning “is to solve, for many native applications (native app), we also want to let users easily searchable. To solve in the app store user hard to find a way to “long tail” application, is not necessarily to do web application, but to improve the search for native applications, “lightning” is probably to solve this problem.” “Thunder” search itself can be used in the browser, can also act as a standalone application, also can be integrated in my 360 mobile phone assistant, “that is to say, the future users can find native applications in mobile phone assistant can find web application, so where users will as entrance to use is not important, it is important to search experience.”
the following for the question and answer session, an analyst at the main content:
, an analyst at Morgan Stanley: as tencent WeChat began to add the game center, baidu also bought 91 assistant, for the whole of China mobile game channel distribution have what kind of impact? While qihoo 360 affected in the dominant position?
hong yi zhou: now, in the mobile application distribution platform remains China’s largest 360 products, far ahead, we keep the first in the field of game distribution. Tencent company with profound experience in the area of the game, with micro letter by we have also seen their advantage in this field, but we are the biggest advantage is not 360 r&d game, we are a pure open platform, so the game makers are more willing to cooperate with 360.
best buy 91 assistant from a perspective proves that the advantages of 360 show a long time game by applying the market distribution or mainstream, via the web or application “light” to promote the game I think it is very hard going, at least including micro letter before actually also tried to play games through the way of HTML pages, but was not successful, finally still want to rely on adding native applications (native app). This area is 360 starts, and we will continue to adhere to the principle of open, get more and better games, I think we should be able to maintain this advantage.
in addition, we have in hand swim another advantage: relative to the general mobile application, mobile game relatively large capacity, currently under 2.5 G/3 G mobile phone network, users to download mobile game requires a lot of traffic and time, but we have 360 mobile phone assistant is actually a cross-platform product, the user can, mobile phones connected to the computer by using the PC speed download cell phone to the PC game, and then through the 360 mobile phone assistant synchronization to mobile phones, this is our one of the strengths of the swims in the distribution of a large.
citigroup analyst: can reveal web games business ARPU (average pay per user number)? The change tendency of the current web game ARPU is what? Growing or declining? Zhou always think long term mobile game market size can exceed web game?
Zhou Hongyi: I think mobile games up very fast, mobile game is very important point is that it makes a lot of people who didn’t use to play games begin to use mobile phone or a tablet began to play games, so the whole user base than traditional PC client game even web increased by five to ten times, so I am very bullish on the mobile phone games.
the second point is that people spend on the phone now fragments of time, more and more general than spend time on traditional games more instead. The third point, I don’t know why, but seems only RPG on the traditional game play (role playing games) can make money, social, recreational games ARPU is very low, but in the field of mobile phone games, we found that all kinds of games can set up a certain amount of charging mode, in the mobile terminal, including casual games, such as “lianliankan” will not pay until there are a lot of female users will pay for it, so the kinds of mobile phone games than previously had the very big breakthrough. Comprehensive point we think hand move than at the beginning end and even pages development much faster.
alex xu: starting from the last quarter, we are no longer figures released game ARPU, but I have released game revenues as well as paying subscribers, you can calculate roughly. , by the way, our paying users includes both for this quarter PC game users also includes mobile games, this is because the luck camp in the two interact more and more of the business, the more we think should put two business as a whole. If single PC game, ARPU haven’t changed much.
huaxing capital analyst: my question is about the distribution of the game, shanda games recently distributed through offline channels and PC combination of mobile phone games “millions of king Arthur.” what are the prospects do you think this way, can account for much of the market share proportion?
profile: we are not too convenient to comment on other companies, but I think big this way is basically traditional MMORPG (massively multiplayer online role playing game) used in the traditional way, is an interesting attempt, but our data shows that, by applying the market and the mobile phone assistant is still the most effective way of hand travel distribution, the key which can affect the market or more users, its promotion effect is best, of course, the future may have more companies by searching or via the web to promote hand machine game, I think is more interesting to try it.
Macquarie analyst: could you introduce the “thunder” search positioning? This is a mobile application of vertical search engine? Light application platform?
zhou: I think we do “lightning” is more to consider the future demand for users on a mobile phone a search, so we put the “thunder” positioning become mobile phone users of mobile search, because I think the user mobile phone search demand change, is not to say that to carry the PC search box to mobile phones will be able to meet the needs of mobile phone users.
in addition on fire for a long time, the concept of “light application about web applications and native applications our view is that the user does not care about you is what kind of application, with a focus on the application of user experience, by far the most” head “of the application () refers to the popular application, especially the game application, is all some native applications.
we do “thunder”, also is not to say that because it is a web search, so the web application, can only be found in the “thunder”, both web applications and native applications, we need to solve the problem is how to make it easier for users to search, I also know what we heard a meeting two days ago (” refers to the baidu world conference held on August 22, baidu at the conference introduced the concept of “light”), I personally feel that there are some things to be misleading, as if to say only web applications can more easily be searched, I think nature of web application is a web site, of course, is more likely to be searched, but “thunder” to solve for many native applications, we also want to let users easily searchable.
to solve in the app store user hard to find a way to “long tail” application, is not necessarily to do web application, but to improve search for native applications, “lightning” is probably to solve this problem.
T.H. capital analyst: my question is about the search engine business, currently qihoo 360 search traffic and income does not match, your traffic has reached around 20%, but the income is not high, but also for the beginning of the commercial reasons, but I’d like to know your realized within the search business plan, you will in future how to search revenue share of the market share with search traffic?
zhou: we have been search has just done a year 17%, about 18% of the market, this year’s target is 20%, now we have the confidence to this goal can be achieved, we do the search business for only a year, can obtain the result is quite good.
we do search strategy and other search engines, some search engines may get some traffic is in a hurry to liquidate, we see other search engines in the past ten years, got a very small market share, finally didn’t do it, I think that one important reason is because they in only a few traffic realized when I was in a hurry, such cash also earn much money, instead of excessive liquidated damage the user experience and unable to get a bigger share of the market.
I think 20% of the market may be a turning point, if we can get more market share, I think we can have a great change of the search market, get greater market share, growth, customer confidence in our income enhancement as well as the growth of the number of customers, clickthrough rate increase will be very natural, our current priority is to do whatever it takes to get a bigger share of the market, fight for and first to shorten the distance away from the market.
and expand the impact of search traffic share is very profound, it not just for the benefits of the search revenue itself, also can bring a lot of traffic impact on other business, such as web game business, such as its position in the market for a company, on the impact of partners, etc., so we have to take a bigger share of the market is a strategic consideration, let public department rather than just income considerations. You see our results on the whole, at the moment we search advertising system, agent network construction of ascension all indicate that the commercialization of our search business made a good start.
analyst at barclays capital: I’d like to know your perception of China’s overall application store market, in the long run you think android application store market is how to develop? In the future the market will be several big companies control? Application developers and app store between the pricing power in which one party? App store to grab market share will to developers and benefits?
Zhou Hongyi: two years ago, the Chinese do about dozens of app store, but now the future of the real users may remain until two or three. For developers, the present ecological system is good, will not have a app store monopolies, developers have then choose two or three, as long as there is this kind of competition, is a better choice for developers, although we is by far the biggest market, but we are still trying to give developers to provide a better condition, because want to let developers have more power to make money, just can have more developers to come in, can have more and better application, the application market to get the welcome of the user, at present our relations with between developers is very benign.
in the end I want to say is, although there are a lot of data, that our market share fell from first to second, or someone with who is more than us, I think it has a big mistake, because we are only focus on the android market, android is also the Chinese future smartphone users group’s largest market, if only the android market, I think 360 is still far ahead. If you want to plus the iOS application of piracy is also up, some opponents (, alluding to baidu and 91 assistants) may be on the number and close to 360. Our mobile phone assistant doing time is short, there are more potential is far from mining, I think in the future as competition situation more clear, have confidence to our markets the pace more bigger.
bank of America merrill lynch analyst: most users can directly open the application after installation of native applications, rather than continue to market access application, do you think of the long term to the importance of the application market will decline, especially after the new user growth rate began to fall? In addition to the app store, do you have any plans to launch the mobile browser?
Zhou Hongyi: probably in a lot of “head” application (hot), the user after a lot of motivation may decrease, but not for the game, because in fact far the largest is downloaded in mobile applications store some entertainment applications such as games, music, video, and all kinds of bells and wallpaper, users are constantly need to these things, so you mentioned the first worry is unnecessary. nullnullnullnull