Form 6-K

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

Form 6-K

 

 

REPORT OF FOREIGN PRIVATE ISSUER

PURSUANT TO RULE 13a-16 OR 15d-16 OF

THE SECURITIES EXCHANGE ACT OF 1934

For the month of March 2015

 

 

Commission File Number: 001-35145

 

 

NQ Mobile Inc.

 

 

No. 4 Building

11 Heping Li East Street

Dongcheng District

Beijing 100013

The People’s Republic of China

(Address of principal executive offices)

 

 

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.

Form 20-F   x            Form 40-F  ¨

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):  ¨

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):  ¨

 

 

 


SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

NQ MOBILE INC.
By:

/s/ Vincent Wenyong Shi

Name: Vincent Wenyong Shi
Title: Chairman, Chief Operating Officer and Acting Chief Financial Officer

Date: March 19, 2015


EXHIBIT INDEX

Exhibit 99.1 – Press release

Exhibit 99.2 – Press release

EX-99.1

Exhibit 99.1

NQ Mobile Inc. Reports Unaudited Financial Results for the Fourth Quarter and

Fiscal Year 2014

BEIJING and DALLAS, March 18, 2015 /PRNewswire/ - NQ Mobile Inc. (“NQ Mobile” or the “Company”) (NYSE: NQ), a leading global provider of mobile internet services, today announced its unaudited financial results for the fourth quarter and fiscal year ended December 31, 2014.

Highlights For Fourth Quarter 2014

 

    Record Quarterly Net Revenues of $89.7 million, a 32.2% increase year-over-year from $67.9 million in the same period in 2013.

 

    Gross profit for the fourth quarter of 2014 was $26.5 million, a 19.9% decrease from $33.1 million in the same period in 2013.

 

    Gross margin or gross profit as a percentage of net revenues was 29.6%, up sequentially from 27.8% in the previous quarter and indicative of the stabilization of the profitability outlook.

 

    Non-GAAP income from operation for the fourth quarter of 2014 was $2.1 million, a 83.2% decrease from $12.6 million in the same period in 2013.

 

    Non-GAAP operating margin, or non-GAAP income from operations as a percentage of net revenues, was 2.4% in the fourth quarter of 2014, up sequentially from a slightly negative operating margin in the previous quarter and also indicative of the stability of the profitability outlook.

 

    Non-GAAP net income attributable to NQ Mobile for the fourth quarter of 2014, which excludes share-based compensations, expenses incurred for the handling of short seller allegations and interest expenses related to convertible debts, was $3.2 million or $0.03 per ADS, basic.

Highlights For The Fiscal Year 2014

 

    Record Annual Net Revenues of $332.3 million, a 68.9% increase year-over-year from $196.7 million in 2013.

 

    Gross profit for fiscal year 2014 was $105.7 million, a 8.7% decrease from $115.8 million in 2013.

 

    Non-GAAP income from operation for the fiscal year 2014 was $12.4 million, a 76.7% decrease from $53.3 million in 2013.

 

    Non-GAAP net income attributable to NQ Mobile for the fiscal year 2014, which excludes share-based compensations, expenses incurred for the handling of short seller allegations and interest expenses related to convertible debts, was $26.2 million or $0.32 per ADS, basic.

Operating Metrics as of December 31, 2014

As a reminder, beginning in the third quarter of 2014, the Company began presenting the operating metrics of average monthly active user accounts (“MAUs”) as redefined to include many emerging businesses previously not included in the Company’s user account metrics. The MAUs presented herein include the user accounts in NQ Live, Music Radar and more recent investments such as Yipai and Showself, among others. As such, the MAUs presented herein should only be compared to the third quarter of 2014 and not be compared to operating metrics previously reported in historical periods because there is not a way to accurately compare such results. The MAUs for the period presented herein and going forward are expected to be better aligned with the key underlying trends of a mobile internet platform company focused on driving mobile consumer traffic and engagement that can be monetized. The MAU statistics do not include the users addressed by the installation of the Company’s advertising SDK into third-party applications. These indirect users generate impressions and search traffic that the Company can monetize outside of the user accounts generated directly by the Company’s own portfolio of products and applications.

 

1


Average Monthly Active User Accounts as of December 31, 2014: 160.8 million

“We are pleased to report record revenues both for the fourth quarter and the full fiscal year of 2014, as we continued our transition toward the traffic-based mobile entertainment business,” said Dr. Vincent Wenyong Shi, Chairman, Chief Operating Officer and Acting Chief Financial Officer of NQ Mobile. “With the challenging year of 2014 now behind us, our transition is in full swing as we firmly further execute our various strategic initiatives. In addition to our top-line growth, we were also encouraged to see sequential improvement for our margins that indicates stabilization of profitability. We believe we are well-positioned to capture the growth opportunities in the mobile internet landscape.”

Fourth Quarter 2014 Results

Revenues

Net revenues in the fourth quarter of 2014 increased 32.2% year-over-year to $89.7 million from $67.9 million in the same period in 2013.

Mobile value added service revenues decreased 9.9% year-over-year to $24.4 million from $27.1 million in the same period in 2013. The decrease in mobile value added service revenues was due to the decrease in consumer mobile security revenues, which in turn was primarily due to the Company’s moving its focus away from premium security services and focusing more on mobile applications and services. This decrease was offset partially by the growth in mobile gaming revenues and the inclusion of live mobile social video platform revenues. The increase in mobile gaming revenues was primarily the result of the rapid growth of FL Mobile’s game platform and the launch of new games in the fourth quarter of 2014. The inclusion of live mobile social video platform revenues is the result of the consolidation of Showself.

Advertising revenues increased 22.2% year-over-year to $20.4 million from $16.7 million in the same period in 2013. The growth was due to increased monetization through advertising and successful third party application referrals resulting mainly from WAPS and Fanyue, the Company’s online and offline advertising networks.

Enterprise mobility revenues increased 87.2% year-over-year to $44.0 million from $23.5 million in the same period in 2013. This increase is mainly due to the fast growth of the enterprise mobility business as a result of obtaining a premium distributor agreement with Apple Inc. as well as the acquisition of Trustek, which is also a premium distributor for Apple Inc. In addition, the growth of the services and software component of Enterprise Mobility also reached a record level in the fourth quarter and showed sequential improvement throughout 2014.

Other revenues increased 60.4% year-over-year to $0.9 million from $0.5 million in the same period in 2013. Other revenues are generated primarily by providing technical contract services to third parties and fluctuate as such business is driven by individual projects.

Cost of Revenues

Cost of revenues in the fourth quarter of 2014 increased 81.8% year-over-year to $63.1 million from $34.7 million in the same period in 2013. The year-over-year increase was primarily due to higher cost of products for the enterprise mobility business, which totaled $34.4 million in the fourth quarter of 2014 compared to $17.8 million in the same period last year. Customer acquisition costs, including advertising inventory costs, or the cost that the Company pays developers and other partners for advertising space (inventory), increased to $12.3 million in the fourth quarter of 2014 compared to $6.8 million in the same period in 2013. The cost of additional revenue sharing, which is incurred mainly for the Company’s mobile game business increased to $4.6 million in the fourth quarter of 2014 compared to $2.1 million in the same period last year.

 

2


Gross Profit and Gross Margin

Gross profit in the fourth quarter of 2014 decreased 19.9% to $26.5 million from $33.1 million in the same period in 2013. Gross margin, or gross profit as a percentage of net revenues, was 29.6% in the fourth quarter of 2014, compared with 48.8% in the same period in 2013. Excluding the impact from the enterprise mobility business, gross margin was 42.2% in the fourth quarter of 2014, down from 63.6% in the same period in 2013. The primary reason for the decline in gross profit and gross margin is the expansion of the enterprise mobility business which has a lower margin compared with other business of the Company as well as the increase of cost of revenues detailed above.

Operating Expenses

Total operating expenses in the fourth quarter of 2014 increased 22.9% year-over-year to $46.5 million from $37.8 million in the same period in 2013. Non-GAAP operating expenses, which exclude share-based compensation and expenses incurred for the handling of short seller allegations, increased 19.1% year-over-year to $24.5 million from $20.5 million in the same period in 2013.

Selling and marketing expenses in the fourth quarter of 2014 decreased 14.8% year-over-year to $6.6 million from $7.8 million in the same period in 2013. Non-GAAP selling and marketing expenses, which exclude share-based compensation, decreased 14.3% year-over-year to $6.4 million from $7.5 million in the same period in 2013. The year-over-year decrease was mainly due to the decrease in overseas promotional channels associated with the consumer mobile security business.

General and administrative expenses in the fourth quarter of 2014 increased 31.1% year-over-year to $31.4 million from $24.0 million in the same period in 2013. Non-GAAP general and administrative expenses, which excludes share-based compensation and the expenses incurred for the handling of short seller allegations, increased 33.7% year-over-year to $9.8 million, up from $7.3 million in the same period in 2013. The year-over-year increase was mainly due to higher staff costs associated with headcount growth, partially offset by decreased bad debt expenses.

Research and development expenses in the fourth quarter of 2014 increased 39.0% year-over-year to $8.4 million from $6.0 million in the same period in 2013. Non-GAAP research and development expenses, which exclude share-based compensation, increased 44.1% to $8.3 million from $5.7 million in the same period in 2013. The year-over-year increase was primarily due to higher product development expenses associated with higher staff costs associated with headcount growth.

Share-based compensation expenses

Share-based compensation expenses, which were allocated to related operating cost and expenses line items, amounted to $19.3 million in the fourth quarter of 2014, compared to $14.9 million in the corresponding period in 2013. The increase in share-based compensation expenses was mainly due to performance-based share options granted in relation to the Company’s acquisitions.

 

3


Loss/Income from Operations and Operating Margin

Loss from operations in the fourth quarter of 2014 was $19.9 million, compared with an operating loss of $4.7 million in the same period in 2013.

Non-GAAP income from operations, which excludes share-based compensation and expenses incurred for the handling of short seller allegations, decreased 83.2% year-over-year to $2.1 million from $12.6 million in the same period in 2013. Non-GAAP operating margin, or non-GAAP income from operations as a percentage of net revenues, was 2.4% in the fourth quarter of 2014, compared with 18.6% in the same quarter in 2013. Excluding the impact from the enterprise mobility business, non-GAAP operating margin was 3.9% in the fourth quarter of 2014, compared to 22.0% in the same period in 2013.

Foreign Exchange Gain, Interest Expenses and Other Income

Foreign exchange gain was $0.5 million in the fourth quarter of 2014, compared with a gain of $0.6 million in the same quarter a year ago. The gain in foreign exchange was primarily attributable to the revaluation of the net monetary assets denominated in functional currency other than US$ and the fluctuation is in line with the fluctuation of the trend of the foreign exchange rates. Interest expenses were $1.1 million in the fourth quarter of 2014, compared with $2.2 million in the same quarter a year ago. Interest expenses were primarily derived from interest expense related to convertible debts, offset by the interest income from certain term deposits.

Income Tax

Income tax expense was $3.4 million in the fourth quarter of 2014, compared with an income tax benefit of $0.2 million in the same period in 2013.

Net Loss

Net loss attributable to NQ Mobile was $21.2 million in the fourth quarter of 2014, compared with net loss of $4.3 million in the same period in 2013. Non-GAAP net income attributable to NQ Mobile, which excludes share-based compensation, expenses incurred for the handling of short sellers and interest expenses related to convertible debts, was $3.2 million in the fourth quarter of 2014, compared with $14.9 million in the same period in 2013.

Cash and Cash Equivalents, Term Deposits and Restricted Cash

Cash and cash equivalents, term deposits and restricted cash together amounted to $273.0 million as of December 31, 2014.

Cash Flow

Net cash flow used in operations for the fourth quarter of 2014 was $8.5 million.

Fiscal Year 2014 Results

Revenues

Net revenues for the fiscal year 2014 increased 68.9% year-over-year to $332.3 million from $196.7 million in 2013.

Mobile value added service revenues for the fiscal year 2014 increased 2.5% year-over-year to $106.1 million from $103.5 million in 2013. The increase in mobile value added service revenues was primarily due to the increase in mobile game revenues and the inclusion of live mobile social video platform revenues, partially offset by the decrease in consumer mobile security revenues. The increase in mobile game revenues was primarily due to the rapid growth of FL Mobile’s game platform and the launch of new games in the fiscal year of 2014. The inclusion of live mobile social video platform revenues is the result of the consolidation of Showself. The decrease in consumer mobile security revenues was primarily due to the Company’s moving its focus away from premium security subscription-based revenues and focusing more on mobile applications and services that can be monetized.

 

4


Advertising revenues for the fiscal year 2014 increased 99.1% year-over-year to $72.9 million from $36.6 million in 2013. Such robust growth was due to increased monetization through advertising and successful third party application referrals resulting mainly from the acquisitions of WAPS and Fanyue, the Company’s online and offline advertising networks.

Enterprise mobility revenues for the fiscal year 2014 increased 180.5% year-over-year to $148.7 million from $53.0 million in 2013. This increase is mainly due to the fast growth of the enterprise mobility business as a result of obtaining a premium distributor agreement with Apple Inc. as well as the acquisition of Trustek, which is also a premium distributor for Apple Inc. In addition, the growth of the services and software component of Enterprise Mobility also reached a record level during the fiscal year.

Other revenues for the fiscal year 2014 increased 30.4% year-over-year to $4.6 million from $3.6 million in 2013. Other revenues are generated primarily by providing technical contract services to third parties and fluctuate as such business is driven by individual projects.

Cost of Revenues

Cost of revenues for the fiscal year 2014 increased 180.1% year-over-year to $226.7 million from $80.9 million in 2013. The year-over-year increase was primarily due to higher cost of products for the enterprise mobility business, which totaled $128.5 million for the fiscal year 2014 compared to $37.4 million in 2013. Customer acquisition costs, including advertising inventory costs, or the cost that the Company pays developers and other partners for advertising space (inventory) increased to an aggregate of $40.8 million for the fiscal year 2014 compared to $13.0 million in 2013. The cost of revenue sharing, which is incurred mainly in relation to the Company’s mobile game business increased to $18.1 million for the fiscal year 2014 compared to $3.4 million in 2013.

Gross Profit and Gross Margin

Gross profit for the fiscal year 2014 decreased 8.7% to $105.7 million from $115.8 million in 2013. Gross margin, or gross profit as a percentage of net revenues, was 31.8% for the fiscal year 2014, compared with 58.9% in 2013. Excluding the impact from the enterprise mobility business, gross margin was 49.9% for the fiscal year 2014, down from 71.2% in 2013. The primary reasons for the decline in gross profit and gross margin are the expansion of enterprise mobility business which has a lower margin compared with other business of the Company as well as the increase of cost of revenues.

Operating Expenses

Total operating expenses for the fiscal year 2014 increased 55.2% year-over-year to $186.6 million from $120.3 million in 2013. Non-GAAP operating expenses, which exclude share-based compensation expenses and expenses incurred for the handling of short seller allegations, increased 48.8% year-over year to $93.5 million from $62.9 million in 2013.

Selling and marketing expenses for the fiscal year 2014 increased 16.1% year-over-year to $30.0 million from $25.8 million in 2013. Non-GAAP selling and marketing expenses for the fiscal year 2014, which exclude share-based compensation, increased 21.4% year-over-year to $28.5 million from $23.5 million in 2013. The year-over-year increase was mainly due to higher staff costs associated with headcount growth, partially offset by the decrease in overseas promotional channels associated with the consumer mobile security business.

 

5


General and administrative expenses for the fiscal year 2014 increased 70.1% year-over-year to $131.0 million from $77.0 million in 2013. Non-GAAP general and administrative expenses for the fiscal year 2014, which exclude share-based compensation and the expenses incurred for the handling of short seller allegations, increased 68.5% year-over-year to $40.3 million from $23.9 million in 2013. The year-over-year increase was mainly due to higher staff costs associated with headcount growth and increased intangible assets amortization expenses in relation to business acquisitions.

Research and development expenses for the fiscal year 2014 increased 47.2% year-over-year to $25.7 million from $17.4 million in 2013. Non-GAAP research and development expenses for the fiscal year 2014, which exclude share-based compensation, increased 59.8% to $24.6 million from $15.4 million in 2013. The year-over-year increase was primarily due to higher product development expenses and higher staff costs associated with headcount growth.

Share-based compensation expenses

Share-based compensation expenses, which were allocated to related operating cost and expenses line items, amounted to $83.8 million for the fiscal year 2014, compared to $55.4 million in 2013. The increase in share-based compensation expenses was mainly due to performance-based share options granted in relation to the Company’s acquisitions.

Loss/Income from Operations and Operating Margin

Loss from operations for the fiscal year 2014 was $81.0 million, compared with an operating loss of $4.5 million in fiscal year 2013

Non-GAAP income from operation for the fiscal year 2014, which excludes share-based compensation and expenses incurred for the handling of short seller allegations, decreased 76.7% year-over-year to $12.4 million from $53.3 million in 2013. Non-GAAP operating margin, or non-GAAP income from operations a percentage of net revenues, was 3.7% for the fiscal year 2014, compared with 27.1% in 2013. Excluding the impact from the enterprise mobility business, non-GAAP operating margin was 8.2% for the fiscal year 2014, compared with 32.5% in 2013.

Foreign Exchange Loss, Interest Expenses/Income

Foreign exchange loss was $0.4 million for the fiscal year 2014, compared with a gain of $1.8 million in 2013. The loss in foreign exchange was primarily attributable to the revaluation of the net monetary assets denominated in functional currency other than US$ and the fluctuation is in line with the fluctuation of the trend of the foreign exchange rates. Interest expenses were $5.4 million for the fiscal year 2014, compared with interest income of $0.4 million in 2013. Interest expenses were primarily derived from interest expense related to convertible debts, offset by the interest income from certain term deposits.

Income Tax

Income tax expense was $5.5 million for the fiscal year 2014, compared with $1.1 million in 2013.

Net Loss/Income

Net loss attributable to NQ Mobile was $76.7 million for the fiscal year 2014, compared with net loss of $1.9 million in 2013. Non-GAAP net income attributable to NQ Mobile, which excludes share-based compensation, expenses incurred for the handling of short seller allegations and interest expenses related to convertible debts, was $26.2 million for the fiscal year 2014, compared with $57.8 million in 2013.

 

6


Cash Flow

Net cash provided by operating activities for the fiscal year 2014 was $6.2 million.

Other Significant Events

Other than previously announced events, below please find certain significant events that took place during the fourth quarter of 2014.

NQ Mobile Share Repurchase

On December 23, 2014, the Board authorized the Company to repurchase up to $80 million of its shares on the open market, in privately negotiated transactions, in block trades and/or through other legally permissible means, depending on market conditions and in accordance with applicable rules and regulation, over the next 12 months. To date, NQ Mobile has repurchased 11.3 million worth of shares on the open market, or a total of approximately 2.6 million ADSs. As of March 18, 2015, $68.7 million remains available for further repurchases under the $80 million authorized share repurchase program.

Business Outlook

The Company expects net revenues to be in the range of $450.0 million to $455.0 million for the full year 2015, representing a 36% to 37% year-over-year increase. Net revenues for the first quarter of 2015 are expected to be in the range of $85.0 million to 86.0 million, representing a 7% to 8% year-over-year increase.

Conference Call Information

NQ Mobile’s management team will hold an earnings conference call to discuss its results and outlook at 8:00 PM U.S. Eastern Time on Wednesday, March 18, 2015, (8:00 AM Beijing/Hong Kong Time on Thursday, March 19, 2015).

The dial-in details for the conference call are:

U.S. Toll Free: +1-866-519-4004

International: +1-845-675-0437

Hong Kong: +852-3018-6771

United Kingdom: +44 203-059-8139

China Mainland: 4006208038 or 8008190121

Conference ID: 2628562

Please dial in 10 minutes before the call is scheduled to begin and provide the conference ID to join the call.

 

7


A replay of the call will be available after the conclusion of the conference call at 11:00 p.m. U.S. Eastern Time on March 18 through April 1, 2015. The dial-in details for the replay are:

U.S. Toll Free: 1-855-452-5696

International: +1-646-254-3697

Conference ID: 2628562

Additionally, a live and archived webcast of this call will be available on the Investor Relations section of NQ Mobile’s website at http://ir.nq.com.

Follow us on Twitter @NQMobileIR.

About NQ Mobile

NQ Mobile Inc. (NYSE: NQ) is a leading global provider of consumer and enterprise mobile internet services. NQ Mobile’s portfolio of offerings includes mobile security and productivity, mobile search, mobile games & advertising applications for the consumer market and consulting, mobile platforms, and mobility management services for the enterprise market. NQ Mobile maintains dual headquarters in Dallas, Texas, USA and Beijing, China. For more information on NQ Mobile, please visit http://www.nq.com

Non-GAAP Financial Measures

To supplement the Company’s financial results prepared in accordance with United States Generally Accepted Accounting Principles (“GAAP”), NQ Mobile’s management uses non-GAAP measures of cost of revenues, operating expenses, income from operations and net income attributable to NQ Mobile, which are adjusted from results based on GAAP to exclude share-based compensation expenses, expenses related to the handling of short seller allegations and interest expenses related to convertible debts. The Company also uses non-GAAP fully diluted earnings per ADS, which is the non-GAAP net income attributable to common shareholders divided by weighted average number of diluted ADS.

The Company’s non-GAAP financial information is provided as additional information to help the Company’s investors compare business trends among different reporting periods on a consistent basis and to enhance investors’ overall understanding of the historical and current financial performance of the Company’s continuing operations and its prospects for the future. The Company’s non-GAAP financial information should be considered in addition to results prepared in accordance with GAAP, but should not be considered a substitute for, or superior to, GAAP results. In addition, the Company’s calculation of this non-GAAP financial information may be different from the calculation used by other companies, and therefore comparability may be limited.

The non-GAAP financial measures are provided to enhance investors’ overall understanding of NQ Mobile’s current financial performance and prospects for the future. A limitation of using non-GAAP cost of revenues, operating expenses, income from operations and net income attributable to NQ Mobile, excluding share-based compensation expenses, expenses related to the handling short seller allegations and interest expenses related to convertible debts, are that these items has been and may continue to be a significant expense in the Company’s business for the foreseeable future. In order to mitigate these limitations the Company has provided specific information regarding the GAAP amounts excluded from each non-GAAP measure. The accompanying tables include details on the reconciliation between GAAP financial measures that are most directly comparable to the non-GAAP financial measures the Company has presented.

 

8


Forward Looking Statements

This news release contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and as defined in the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as “will,” “expects,” “anticipates,” “future,” “intends,” “plans,” “believes,” “estimates” and similar statements. All statements other than statements of historical fact in this press release are forward-looking statements and involve certain risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. These forward-looking statements are based on management’s current expectations, assumptions, estimates and projections about the Company and the industry in which the Company operates, but involve a number of unknown risks and uncertainties, Further information regarding these and other risks is included in the Company’s filings with the U.S. Securities and Exchange Commission. The Company undertakes no obligation to update forward-looking statements to reflect subsequent occurring events or circumstances, or changes in its expectations, except as may be required by law. Although the Company believes that the expectations expressed in these forward looking statements are reasonable, it cannot assure you that such expectations will turn out to be correct, and actual results may differ materially from the anticipated results. You are urged to consider these factors carefully in evaluating the forward-looking statements contained herein and are cautioned not to place undue reliance on such forward-looking statements, which are qualified in their entirety by these cautionary statements.

INVESTOR RELATIONS:

NQ Mobile Inc.

Email: investors@nq.com

Phone: +852 3975 2853

+1 469 310 5281

Twitter: @NQMobileIR

 

9


NQ MOBILE INC.

UNAUDITED CONDENSED CONSOLIDATED

BALANCE SHEETS

(In thousands)

 

     As of  
     December 31,
2014
     December 31,
2013
 
     US$      US$  

ASSETS

     

Current assets:

     

Cash and cash equivalents

     152,984         179,718   

Term deposits

     116,284         103,331   

Restricted cash

     3,767         —    

Accounts receivable, net of allowance of US$8,892 and US$3,918 as of December 31, 2014 and December 31, 2013, respectively

     88,691         81,908   

Inventory

     13,135         8,443   

Deferred tax assets, current portion

     1,288         1,131   

Prepaid expenses and other current assets

     44,136         42,761   
  

 

 

    

 

 

 

Total current assets

  420,285      417,292   
  

 

 

    

 

 

 

Non-current assets:

Equity investments, net

  35,249      81,972   

Property and equipment, net

  5,984      3,615   

Intangible assets, net

  33,890      18,533   

Goodwill

  320,424      76,020   

Deferred tax assets, non-current portion

  167      278   

Other non-current assets

  17,809      11,652   
  

 

 

    

 

 

 

Total Assets

  833,808      609,362   
  

 

 

    

 

 

 

LIABILITIES

Current liabilities:

Receipt in advance

  12,552      5,383   

Accounts payable

  24,050      11,726   

Deferred revenue

  14,922      21,072   

Consideration payable of acquiring an investee/associate

  817      25,217   

Accrued expenses and other current liabilities

  35,239      26,401   

Tax payable

  5,658      4,084   
  

 

 

    

 

 

 

Total current liabilities

  93,238      93,883   
  

 

 

    

 

 

 

Non-current liabilities:

Convertible debts

  172,500      172,500   

Deferred tax liabilities and other liabilities

  9,159      2,823   
  

 

 

    

 

 

 

Total Liabilities

  274,897      269,206   
  

 

 

    

 

 

 

MEZZANINE EQUITY

Total Mezzanine Equity

  21,854      —     
  

 

 

    

 

 

 

SHAREHOLDERS’ EQUITY

NQ Mobile Inc.’s shareholders’ equity

  479,929      333,752   

Non-controlling interest

  57,128      6,404   
  

 

 

    

 

 

 

Total shareholders’ equity

  537,057      340,156   
  

 

 

    

 

 

 

Total Liabilities, Mezzanine Equity and Shareholders’ Equity

  833,808      609,362   
  

 

 

    

 

 

 

 

10


NQ MOBILE INC.

UNAUDITED CONDENSED CONSOLIDATED

STATEMENTS OF COMPREHENSIVE INCOME/(LOSS)

(In thousands, except for share and per share data)

 

     Three months ended     Twelve months ended  
     December 31,
2014
    September 30,
2014
    December 31,
2013
    December 31,
2014
    December 31,
2013
 
     US$     US$     US$     US$     US$  

Net Revenues

          

Mobile valued added services

     24,412        25,074        27,107        106,103        103,519   

Advertising services

     20,442        20,376        16,733        72,903        36,623   

Enterprise mobility

     43,987        34,642        23,492        148,677        53,001   

Other services

     855        1,103        533        4,641        3,559   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total net revenues

     89,696        81,195        67,865        332,324        196,702   

Cost of revenues*

     (63,148     (58,656     (34,733     (226,651     (80,928
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Gross profit

     26,548        22,539        33,132        105,673        115,774   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Operating expenses:

          

Selling and marketing expenses*

     (6,626     (7,786     (7,781     (29,962     (25,810

General and administrative expenses*

     (31,432     (26,955     (23,970     (131,001     (77,026

Research and development expenses*

     (8,403     (6,115     (6,046     (25,665     (17,437
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total operating expenses

     (46,461     (40,856     (37,797     (186,628     (120,273
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Loss from operations

     (19,913     (18,317     (4,665     (80,955     (4,499
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Interest (expense)/income

     (1,102     (1,547     (2,204     (5,360     411   

Foreign exchange gain/(loss), net

     462        (33     575        (391     1,784   

Investment (loss)/income

     (794     2,538        942        12,192        947   

Investment impairment

     (600     (2,112     —         (5,967     —    

Other income, net

     4,050        2,686        749        7,387        1,141   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Loss before income taxes

     (17,897     (16,785     (4,603     (73,094     (216
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Income tax (expense)/benefit

     (3,448     (856     173        (5,518     (1,117
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net loss

     (21,345     (17,641     (4,430     (78,612     (1,333
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net loss/(income) attributable to the non-controlling interest

     364        605        154        2,125       (523
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income attributable to the mezzanine classified non-controlling interest

     (251     —         —         (251 )     —    
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net loss attributable to NQ Mobile Inc.

     (21,232     (17,036     (4,276     (76,738     (1,856
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net loss

     (21,345     (17,641     (4,430     (78,612     (1,333

Other comprehensive income: foreign currency translation adjustment

     2,740        20       1,733        362       4,808   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Comprehensive income (loss)

     (18,605     (17,621 )     (2,697     (78,250     3,475   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Comprehensive loss/(income) attributable to non-controlling interest

     342        605        154        2,103        (523

Comprehensive income attributable to the mezzanine classified non-controlling interest

     (251     —          —          (251     —     
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Comprehensive (loss)/income attributable to NQ Mobile Inc.

     (18,514     (17,016     (2,543     (76,398     2,952   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net loss per Class A and Class B common share, basic

     (0.0466     (0.0377     (0.0142     (0.1902     (0.0068

Net loss per Class A and Class B common share, diluted

     (0.0466     (0.0377     (0.0142     (0.1902     (0.0068

Net loss per ADS, basic

     (0.2330     (0.1885     (0.0710     (0.9510     (0.0340

Net loss per ADS, diluted

     (0.2330     (0.1885     (0.0710     (0.9510     (0.0340

Weighted average number of common shares outstanding:

          

Basic

     455,920,270        451,839,042        301,640,907        403,443,828        273,981,547   

Diluted

     455,920,270        451,839,042        301,640,907        403,443,828        273,981,547   

Weighted average number of ADS outstanding:

          

Basic

     91,184,054        90,367,808        60,328,181        80,688,766        54,796,309   

Diluted

     91,184,054        90,367,808        60,328,181        80,688,766        54,796,309   

Share-based compensation expense included in:

          

Cost of revenues

     52        94        50        263        370   

Selling and marketing expenses

     209        481        296        1,430        2,310   

General and administrative expenses

     18,933        14,895        14,272        81,129        50,708   

Research and development expenses

     120        230        298        1,022        2,016   

Total

     19,314        15,700        14,916        83,844        55,404   

 

11


NQ MOBILE INC.

NON-GAAP MEASURE RECONCILIATIONS

(In thousands, except for share and per share data)

 

     Three months ended     Twelve months ended  
     December 31,
2014
    September 30,
2014
    December 31,
2013
    December 31,
2014
    December 31,
2013
 
     US$     US$     US$     US$     US$  

Selling and marketing expenses under GAAP

     (6,626     (7,786     (7,781     (29,962 )     (25,810 )

Adjustment (a)

     209        481        296        1,430       2,310  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP selling and marketing expenses

  (6,417   (7,305   (7,485   (28,532   (23,500
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

General and administrative expenses under GAAP

  (31,432   (26,955   (23,970   (131,001   (77,026 )

Adjustment (a)

  18,933      14,895      14,272      81,129     50,708  

Adjustment (b)

  2,724      2,570      2,385      9,549     2,385  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP general and administrative expenses

  (9,775   (9,490   (7,313   (40,323   (23,933
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Research and development expenses under GAAP

  (8,403   (6,115   (6,046   (25,665   (17,437

Adjustment (a)

  120      230      298      1,022     2,016  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP research and development expenses

  (8,283   (5,885   (5,748   (24,643   (15,421
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Loss from operations under GAAP

  (19,913   (18,317   (4,665   (80,955 )   (4,499 )

Adjustment (a)

  19,314      15,700      14,916      83,844     55,404  

Adjustment (b)

  2,724      2,570      2,385      9,549     2,385  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP income/(loss) from operations

  2,125      (47   12,636      12,438      53,290   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net loss attributable to NQ Mobile Inc. under GAAP

  (21,232   (17,036   (4,276   (76,738 )   (1,856 )

Adjustment (a)

  19,314      15,700      14,916      83,844     55,404  

Adjustment (b)

  2,724      2,570      2,385      9,549     2,385  

Adjustment (c)

  2,355      2,497      1,859      9,502     1,859  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP net income attributable to NQ Mobile Inc.

  3,161      3,731      14,884      26,157      57,792   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP weighted average number of diluted ADS outstanding:

Basic

  91,184,054      90,367,808      60,328,181      80,688,766      54,796,309  

Diluted

  95,592,633      93,608,747      66,875,584      86,227,583      61,162,286  

Non-GAAP earnings per ADS, basic

  0.0347      0.0413      0.2467      0.3242      1.0547  

Non-GAAP earnings per ADS, diluted

  0.0331      0.0399      0.2226      0.3033      0.9449  

 

(a) Adjustment to exclude the share-based compensation expense of each period
(b) Adjustment to exclude the expense incurred for the handling short seller allegation
(c) Adjustment to exclude the interest expense of convertible debts

 

12

EX-99.2

Exhibit 99.2

NQ Mobile Inc. Announces Appointment of New Independent Director

BEIJING and DALLAS, March 19, 2015—NQ Mobile Inc. (“NQ Mobile” or the “Company”)(NYSE: NQ), a leading global provider of mobile Internet services, today announced the appointment of Mr. Chun Ding as an independent director to the Company’s board of directors, effective as of March 18, 2015.

Mr. Chun Ding, a US citizen, is the Managing Member of CRCM LLC, the general partner of CRCM L.P., an asset management firm he founded in 2006. He graduated, as valedictorian, from Middlebury College in 1993 with a B.A. in Economics. He received his Masters of Business Administration from Harvard Business School in 1997, as a Baker Scholar. Before founding CRCM, Mr. Ding had extensive work experience in investment banking and institutional asset management through his previous jobs with large U.S. financial institutions in New York and San Francisco.

About NQ Mobile

NQ Mobile Inc. (NYSE: NQ) is a leading global provider of consumer and enterprise mobile Internet services. NQ Mobile’s portfolio of offerings includes mobile security and productivity, mobile search, mobile games & advertising applications for the consumer market and consulting, mobile platforms, and mobility management services for the enterprise market. NQ Mobile maintains dual headquarters in Dallas, Texas, USA and Beijing, China. For more information on NQ Mobile, please visit http://www.nq.com.

Forward Looking Statements

This news release contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and as defined in the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as “will,” “expects,” “anticipates,” “future,” “intends,” “plans,” “believes,” “estimates” and similar statements. All statements other than statements of historical fact in this press release are forward-looking statements and involve certain risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. These forward-looking statements are based on management’s current expectations, assumptions, estimates and projections about the Company and the industry in which the Company operates, but involve a number of unknown risks and uncertainties, Further information regarding these and other risks is included in the Company’s filings with the U.S. Securities and Exchange Commission. The Company undertakes no obligation to update forward-looking statements to reflect subsequent occurring events or circumstances, or changes in its expectations, except as may be required by law. Although the Company believes that the expectations expressed in these forward looking statements are reasonable, it cannot assure you that such expectations will turn out to be correct, and actual results may differ materially from the anticipated results. You are urged to consider these factors carefully in evaluating the forward-looking statements contained herein and are cautioned not to place undue reliance on such forward-looking statements, which are qualified in their entirety by these cautionary statements.

 

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INVESTOR RELATIONS:

NQ Mobile Inc.

Email: investors@nq.com

Phone: +852 3975 2853

+1 469 310 5281

Twitter: @NQMobileIR

 

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