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NQ Mobile Inc. (NQ)
Q3 2012 Earnings Call
November 12, 2012, 08:00 pm ET
Michele Merrell - Senior Director, Global Marketing & Communications, Brightstar Corporation
Henry Lin - Co-Founder, Chairman & Co-CEO
Omar Khan - Co-CEO
Suhai Ji - CFO
Will Jiang - VP, Strategy
Gavin Kim - Chief Product Officer
Mark Murphy - Piper Jaffray
Andy Yeung - Oppenheimer
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I would now like to hand the conference over to your first speaker today, Ms. Michele Merrell. Thank you. Please go ahead.
Hello everyone and welcome to NQ Mobile’s third quarter 2012 earnings conference call. The company’s earning results were released earlier today and available on company's IR website at, ir.nq.com as well as on Newswire Services.
Today, you will hear opening remarks from NQ Mobile’s Co-CEOs, Henry Lin and Omar Khan followed by our Chief Financial Officer, Suhai Ji, who will take you through the company's operational and financial results for the third quarter 2012 and give guidance for the fourth quarter 2012 and full year of 2013. After their prepared remarks, Dr. Lin, Mr. Khan, Mr. Ji and our Chief Strategy Officer, Will Jiang and our Chief Product Officer, Gavin Kim will be available to answer your questions.
Before we continue, please note that discussion today will contain certain forward-looking statements made under the Safe Harbor provision of the US Private Securities Litigation Reform Act of 1995. These forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from our current expectation. NQ Mobile does not assume any obligation to update any forward-looking statements except as required under applicable law.
Also please note that some of the information to be discussed include non-GAAP financial measures as defined in Regulation G. The most directly comparable US GAAP financial measures and the information reconciling those non-GAAP financial measures to NQ Mobile’s financial results prepared in accordance with US GAAP are included in NQ Mobile’s earning release which has been posted on the company's IR website at, ir.nq.com.
Finally, as a reminder this conference is being recorded. In addition, a webcast of this conference call will be available on NQ Mobile’s Investor Relations website.
I will now turn the call over to NQ Mobile’s Founder, Chairman and Co-CEO, Dr. Lin.
Thank you, Michele and welcome to everyone on the call. I am pleased to report that we achieved a strong third quarter with record revenues. Our revenues of $25.8 million again exhibit the high end of previously issued guidance. We continue to benefit from record increase in global smartphone shipments and consumer awareness and demand for mobile security and privacy solutions. Both our registered and active user base recorded the highest sequential growth for 2012, and reaching $242 million and $85 million, respectively. Some growth in our user base is also clear presentation of our business strategy and execution capabilities.
Additionally, we are starting to see significant revenue contribution from the NationSky acquisition for our enterprise business, which accounted for more than 70% of the total revenue in the third quarter. We are confident about our enterprise business and expect continuous strong growth in the foreseeable future.
Today, we also announced our intention to acquire 20% of Feiliu, which is a very important strategic step that we undertake to well broaden our mobile internet service offerings and to transfer NQ Mobile to become a leading mobile internet service platform company.
With that, I like to hand the call over to my partner and NQ Mobile’s Co-CEO Omar Khan, who will give you more details on some of the key departments in our business.
Thank you, Henry and hello to everyone on the call. It’s been almost a year since I came on board as NQ Mobile’s Co-CEO and I must say I can’t be more pleased with the growth of our company year-to-date. Currently, already at an annualized run rate of $100 million in revenue. Furthermore, we have continued to globalize our business, we have built the best team in the industry, 54% of our consumer revenues now come from outside of Greater China, up from 51% last quarter.
In the third quarter, we continued our product expansion strategy that I shared with you earlier. We are excited to bring more innovative products to the global markets such as NQ Family Guardian. We are going to be launching this in our US channels. It’s a comprehensive suite-of-services targeted at parents and their smartphone enabled teens-and-tweens and even sometimes younger. 58% of teens now own smartphones in the US; the fastest growing segment of the smartphone industry. Our product allows parents to stay as responsible cyber citizens. Parents can monitor, manage and secure their kids by monitoring their contacts, text messages and photos. Additionally, you can manage their mobile internet usage on an age appropriate basis as well as their mobile application permission.
Finally, we are able to time fence their phone usage meaning, when they can be texting, when they can use their phones etcetera, when they can be browsing. And finally, you can track their geo-location for the fence in terms of an area that’s safe for them and you would be alerted when they were outside of that zone. In fact, I use this product for my 10 year old son, who is a smartphone owner today.