NQ Mobile Inc. (NQ)

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NQ Mobile, Inc. (NQ)

Q4 2012 Earnings Conference

March 6, 2013 8:00 p.m. EST

Executives

Michelle Ma – IR Director

Henry Lin – Founder and Co-CEO

Omar Khan – Co-CEO

Suhai Ji – CFO

Gavin Kim – Chief Product Officer

Analysts

Mark Murphy – Piper Jaffray

Mike Walkley – Canaccord Genuity

Andy Yeung – Oppenheimer

Fred Ziegel – Topeka Capital Markets

Presentation

Operator

Ladies and gentlemen, thank you for standing by, and welcome to the NQ Mobile's Fourth Quarter and Full year 2012 Earnings Call.

[Operator Instructions]. I must advise you that this conference is being recorded today, Thursday, the 7th of March, 2013.

I would now like to hand the conference over to your first speaker today Michelle Ma, NQ Mobile's Director of Investor Relations. Please go ahead.

Michelle Ma

Hello, everyone, and welcome to NQ Mobile's fourth quarter and fiscal year 2012 earnings conference call. The company's earnings results were released earlier today and available on the company's IR website at ir.nq.com, as well as earnings wire services.

Today you will hear opening remarks from NQ Mobile's co-CEOs, Dr. Henry Lin and Omar Khan, following by our Chief Financial Officer, Suhai Ji, who will take you through the company's operational and financial results for the fourth quarter and fiscal year 2012, and give guidance for the first quarter and full year of 2013. After their prepared remarks, Dr. Lin, Mr. Khan, Mr. Ji, our Chief Strategy Officer, Will Jiang, and 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 these non-GAAP financial measures to NQ Mobile’s financial results prepared in accordance with US GAAP are included in NQ Mobile’s earning release.

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.

Henry Lin

Okay. Thank you, Michelle, and welcome to everyone on the call. The end of this quarter marks our first full year as a public company, and I'm pleased to report that NQ Mobile once again delivered an outstanding quarter with record revenues.

For the full year of 2012 we grew revenues by 126% from $41 million last year to over $92 million this year, exceeding the high end of our previously issued guidance. This outstanding performance demonstrates our relentless focus on execution to take advantage of the rapid growth of the smartphone industry and rising awareness and important mobile security and privacy solutions globally.

Throughout the process, NQ Mobile had continued to execute our stated strategy of expanding our core business from a consumer mobile security company into a mobile internet service company through the complete integration of NationSky and Feiliu. Through our NationSky business, NQ Mobile now delivers mobile device management and managed mobility services to over 1,200 companies in China. Feiliu also continues to deliver outstanding results, now responsible for operating five of the top 100 [inaudible] mobile games, iOS in China.

As a whole, NQ Mobile's portfolio now improves NQ Mobile Security and mobile games and advertising for consumer markets. And NQ Mobile Security, mobile device management and managed mobility services, as well as enterprise market.

Looking forward, the future for NQ Mobile now shines even brighter. The depth and breadth of our full mobile internet services portfolio positions us to effectively monetize the growth of the mobile internet for both consumers and enterprises worldwide.

2012 will be characterized as a year of business expansion, [challenge] and business process maturation and outstanding financial performance. And it is with confidence that we look forward to the year 2013.

I'd 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 investments in our business.

Omar Khan

Thank you, Henry. Hello to everyone on the call.

It was quite an amazing first year as co-CEO of NQ Mobile. Henry and I set out with a very ambitious set of targets and plans for 2012. I'm very proud of the record-setting results that we achieved in 2012, exceeding the initial targets we set for the year.

As Henry stated, we achieved $92 million in net revenue in 2012, again exceeding the high end of our latest guidance. Even without taking into account the revenue contribution of Feiliu and NationSky, we achieved outstanding organic growth rates in our consumer security business of 93% year over year to a total of $79 million. Growth remained strong both in China and the international markets. The international market once again accounted for 54% of the consumer security business in the fourth quarter.

A year ago, enterprise was an insignificant part of our business. I'm proud to report that in the third and fourth quarters enterprise accounted for 17% and 22% of our business, respectively. Our NationSky subsidiary now serves over 1,200 enterprise customers in China. In the fourth quarter we added Citibank, GBS Bank, COSCO, which is a shipping company out of China, as well as Generali China Life Insurance as customers in China. In addition, we continued to execute on synergies between our core NQ business and NationSky. We've added enterprise mobile security to the solution framework that NationSky offers its customers.

Read the rest of this transcript for free on seekingalpha.com