On the evening of August 30, Qihoo 360 (601360.SH) released its semi-annual report for 2024. During the reporting period, the company achieved a total revenue of 3.692 billion yuan, a year-on-year decrease of 18.02%, mainly due to strategic adjustments in smart hardware business products and a reduction in the acceptance of security business projects; the gross profit margin of the main business was 62.96%, an increase of 3.86% year-on-year; the net profit attributable to shareholders of the listed company was -341 million yuan, mainly due to the decline in the gross profit margin of the main business.

In terms of main business, Qihoo 360's business segments consist of three parts: Internet business, digital security business, and smart hardware business.

The Internet value-added business, represented by AI Internet products and game distribution, saw revenue of 2.625 billion yuan, a year-on-year decrease of 2.09%. As of the end of the reporting period, the DAU (Daily Average Users) of Qihoo 360's PC security products exceeded 210 million, and the DAU of PC browsers and navigation was nearly 200 million.

Advertisement

Secondly, the digital security business achieved revenue of 464 million yuan during the reporting period, a year-on-year decrease of 48.95%, mainly due to the reduction in the acceptance of security projects in the first half of the year. As a key carrier of artificial intelligence technology, the smart hardware business achieved a total revenue of 554 million yuan during the reporting period, a year-on-year decrease of 35.95%. Currently, Qihoo 360 has implemented AI large models in smart camera, visible doorbell, driving recorder, and large model children's watches, focusing on security smart hardware products with visual cloud and large models. The company has strategically reduced the proportion of non-cloud business and is committed to transforming its business model from hardware sales to a combination of hardware and cloud service sales.

Previously, at an investor's briefing, Zhao Luming, a director and the secretary of the board of Qihoo 360, explained the decline in performance, stating that the decrease in revenue was mainly due to the impact of the delivery cycle on the security business, with some major projects not being confirmed during the reporting period, and a reduction in the proportion of long-cycle construction projects. At the same time, the company streamlined the SKUs for smart hardware and IoT businesses, leading to a decrease in revenue scale. The overall gross profit margin of the company is relatively stable, but due to the decrease in revenue scale, the total gross profit has decreased.

During the reporting period, the company's R&D expenses were 1.515 billion yuan, accounting for 41.05% of the total revenue.

Accompanying the development of technology is the immaturity in the implementation process. Previously, the 360 smartwatch gave an absurd answer to the question "Are Chinese people the smartest in the world?" by saying, "Because Chinese people have small eyes, small noses, small mouths, small eyebrows, and big faces, which makes their heads appear the largest among all races."

At that time, Zhou Hongyi, the founder and chairman of Qihoo 360 Group, responded that the smartwatch was an old version from May 2022, which did not include the 360 large model. The mechanism for answering questions was not through artificial intelligence but by grabbing information from publicly available websites on the Internet.

A network security industry insider told the reporter that no matter what kind of telephone watch, whether it is a new or old model, as long as it is connected to the Internet, it will access the big data of the cooperating browser behind it. The continued emergence of incorrect information indicates that the development of large model technology is still in a very early stage, and issues such as information security and technological illusions still exist.

The holding situation of the top shareholders is also a focus of this financial report. Previously, Qihoo 360 held an investor's briefing on the dissolution and liquidation of the controlling shareholders and the change of shareholders' rights. The financial report shows that among the top ten circulating shareholders, Tianjin Qixin Zhicheng Technology Co., Ltd. holds 46.14% of the shares, but due to dissolution and liquidation, 41.346 million shares are in a frozen state; Zhou Hongyi's ex-wife Hu Huan holds 6.25% of the shares; Zhou Hongyi holds 5.24% of the shares.Additionally, there have been changes in the holdings of the top ten shareholders. Industrial and Commercial Bank of China Limited - Huatai-PineBridge CSI 300 Exchange Traded Fund and China Construction Bank Corporation - E Fund CSI 300 Exchange Traded Fund have increased their holdings by 4.5434 million shares and 156.8 thousand shares, respectively, bringing their total holdings to 41.7982 million shares and 22.9241 million shares after the increase. Hong Kong Central Clearing Limited (Stock Connect) and Wu Hong have reduced their holdings by 9.8013 million shares and 88.53 thousand shares, respectively, leaving their total holdings at 146.2127 million shares and 21.1147 million shares after the reduction. Li Gang has newly entered the list of top ten shareholders, with a holding of 29.01 million shares.