BEIJING, April 6, 2017 /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, 2016.
Highlights For Fourth Quarter 2016
- Quarterly Net Revenues of $94.7
million, a 25.7% decrease year-over-year from $127.5 million in the same period in 2015.
Excluding NationSky from the
comparable period, net revenues increased 3.8% year-over-year from
the same period in 2015.
- Mobile Value Added Services (MVAS) Revenues of $53.6 million, a 4.4% increase year-over-year
from $51.4 million in the same period
in 2015.
- GAAP Net Loss attributable to NQ Mobile for the fourth quarter
of 2016 was $124.5 million or
$1.25 per fully diluted ADS.
- Non-GAAP Net Loss attributable to NQ Mobile for the fourth
quarter of 2016 was $3.4 million or
$0.03 per fully diluted ADS.
Highlights For The Fiscal-Year 2016
- Annual Net Revenues of $343.1
million, a 15.6% decrease year-over-year from $406.7 million in 2015. Excluding NationSky from the comparable period, net revenues
increased 19.7% year-over-year from the same period in 2015.
- Annual Mobile Value Added Services (MVAS) Revenues of
$199.8 million, a 43.1% increase
year-over-year from $139.6 million in
the same period in 2015.
- GAAP Net Loss attributable to NQ Mobile for the fiscal year
2016 was $140.8 million or
$1.43 per fully diluted ADS.
- Non-GAAP Net Income attributable to NQ Mobile for the fiscal
year 2016 was $8.5 million or
$0.09 per fully diluted ADS.
Operating Metrics as of December 31,
2016
Average Monthly Active User Accounts as of December 31, 2016: 146.0 million
"Our strategy at the onset of 2016 was to divest and monetize
the FL Mobile business, while reducing our overall cost structure
and preparing our organization for the future," said Mr.
Zemin Xu, Chief Executive Officer of
NQ Mobile. "As we report our financials for 2016, we are now in
position to finalize our divestment plans and look forward to the
next chapter in NQ Mobile's future."
"This year is headlined by very strong performance in our major
business," said Mr. Roland Wu Chief
Financial Officer of NQ Mobile. "After the completion of the
divestments of FL Mobile and Showself's live stream business, we
expect to have a strong financial position to focus on the
future."
Fourth Quarter 2016 Results
Revenues
Net revenues in the fourth quarter of 2016 decreased 25.7%
year-over-year to $94.7 million from
$127.5 million in the same period in
2015. Excluding NationSky from the
comparable period, net revenues increased 3.8% year-over-year from
the same period in 2015.
Mobile value added service revenues increased 4.4%
year-over-year to $53.6 million from
$51.4 million in the same period in
2015. The increase in mobile value added service revenue was
primarily attributable to the growth in live mobile social video
platform revenue growth. The significant increase in live mobile
social video platform revenues was primarily driven by the rapid
growth of Showself's several applications. The overall Showself
business in our live video platforms was up 79.3% compared with the
same period in 2015. This strength was mostly offset by
year-over-year declines in the mobile security business. The
decrease in consumer mobile security revenues was mainly due to the
fact that the Company has been moving its focus away from premium
mobile security services and moving that business to an
advertising-based business model. The mobile game business slightly
declined year-over-year mainly due to the timing of new game
launches in the period.
Advertising revenues increased 24.1% year-over-year to
$27.3 million from $22.0 million in the same period in 2015. The
increase was mainly due to continued expansion of advertising
networks and the consolidation of Launcher, a business we obtained
control of and consolidated at the end of the Q1 2016. Excluding
Launcher, since this was consolidated beginning in 2016,
advertising revenues increased 19.5% year-over-year compared to the
same period in 2015.
Enterprise mobility revenues decreased 73.9% year-over-year to
$13.6 million from $52.1 million in the same period in 2015. This
decrease is mainly due to the divestment of NationSky which no
longer contributed results beginning in the first quarter of 2016.
Excluding NationSky from the comparable period, enterprise mobility
revenues decreased 14.5% year-over-year from the same period in
2015 mainly due to the Company focusing less on hardware
procurement overall.
Other revenues decreased 91.6% year-over-year to $0.2 million from $2.0
million in the same period in 2015. 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 2016 decreased 24.2%
year-over-year to $79.5 million from
$104.9 million in the same period in
2015. Excluding NationSky from the comparable period, cost of
revenues increased 7.3% year-over-year from the same period in
2015. The year-over-year increase was primarily due to higher
revenue sharing costs and user acquisition costs associated with
our live mobile social video platform businesses and mobile gaming
business.
Gross Profit and Gross Margin
Gross profit in the fourth quarter of 2016 decreased 32.7% to
$15.2 million from $22.6 million in the same period in 2015.
Excluding NationSky in the comparable period, gross profit
decreased 11.3% year-over-year from the same period in 2015. Gross
margin, or gross profit as a percentage of net revenues, was 16.0%
in the fourth quarter of 2016, compared with 17.7% in the same
period in 2015 and 18.8% excluding NationSky in the comparable
period.
Operating Expenses
Selling and marketing expenses in the fourth quarter of 2016
decreased 36.5% year-over-year to $3.9
million from $6.2 million in
the same period in 2015. Non-GAAP selling and marketing expenses,
which exclude share-based compensation decreased 36.7%
year-over-year to $4.0 million from
$6.3 million in the same period in
2015. The year-over-year decrease is primarily due to the impact of
the NationSky divestment. Excluding NationSky from the comparable
period, selling and marketing expenses decreased 20.4%
year-over-year from the same period in 2015, and non-GAAP selling
and marketing expenses decreased 20.9% year-over-year from the same
period in 2015 primarily driven by reduced staff costs as well as
lower marketing and advertising spend.
General and administrative expenses in the fourth quarter of
2016 decreased 49.4% year-over-year to $13.8
million from $27.2 million in
the same period in 2015. Non-GAAP general and administrative
expenses, which exclude share-based compensation and amortization
of intangible assets arising from acquisitions, decreased 41.9%
year-over-year to $12.9 million from
$22.1 million in the same period in
2015. Excluding NationSky from the comparable period, general and
administrative expenses decreased 49.1% year-over-year from the
same period in 2015 mainly due to a reduction in
performance-related compensation expenses and non-GAAP general and
administrative expenses decreased 41.5% from the same period in
2015 mainly due to similar reasons.
Research and development expenses in the fourth quarter of 2016
decreased 13.0% year-over-year to $6.8
million from $7.8 million in
the same period in 2015. Non-GAAP research and development
expenses, which exclude share-based compensation and amortization
of intangible assets arising from acquisitions, decreased 10.0% to
$6.8 million from $7.6 million in the same period in 2015.
Excluding NationSky from the comparable period, research and
development expenses increased 34.7% year-over-year from the same
period in 2015, and non-GAAP research and development expenses
increased 43.3% year-over-year from the same period in 2015, mainly
due to the Linkmotion business and some pilot projects, as well as
the consolidation of Launcher.
Impairment of goodwill and intangible assets in the fourth
quarter of 2016 was $98.9 million as
the result of a one-time, non-cash impairment of goodwill and
intangible assets. The Company has three reporting units including
Mobile Games and Advertising, Enterprise Mobility, and Security and
Others. There was impairment of $8.1
million from the Enterprise Mobility reporting unit. The
Security and Others reporting unit consists of mobile security,
live mobile social video platforms, and internet traffic related
businesses. There was impairment of $90.8
million from the Security and Others reporting unit from the
internet traffic related businesses within this reporting unit.
Total operating expenses in the fourth quarter of 2016 increased
199.3% year-over-year to $123.4
million from $41.2 million in
the same period in 2015 driven mostly from the one-time, non-cash
impairment of goodwill and intangible assets recorded in the fourth
quarter of $98.9 million. Excluding
the impairment of goodwill and intangible assets in the fourth
quarter, total operating expenses decreased 40.6% year-over-year to
$24.5 million from $41.2 million in the same period in 2015.
Excluding NationSky and the impairment of goodwill and intangible
assets in the fourth quarter from the comparable period, total
operating expenses decreased 33.9% year-over-year from the same
period in 2015.
Non-GAAP operating expenses, which exclude share-based
compensation, the amortization of intangible assets arising from
acquisitions, and impairment of goodwill and intangible assets in
the fourth quarter of 2016 decreased 34.3% year-over-year to
$23.6 million from $36.0 million in the same period in 2015.
Excluding NationSky from the comparable period, total non-GAAP
operating expenses decreased 25.5% year-over-year in the same
period in 2015.
Share-based compensation expenses
Share-based compensation expenses, which were allocated to
related operating cost and expenses line items, amounted to
$0.1 million in the fourth quarter of
2016, compared to $4.4 million in the
corresponding period in 2015.
Loss/Income from Operations and
Operating Margin
Loss from operations in the fourth quarter of 2016 was
$108.2 million, compared with
$18.7 million in the same period in
2015, which was greatly impacted by the one-time, non-cash
impairment of goodwill and intangible assets of $98.9 million in the fourth quarter.
Excluding the impact of the impairment of goodwill and intangible
assets in the fourth quarter of 2016, loss from operations was
$9.3 million, compared with
$18.7 million in the same period in
2015.
Non-GAAP loss from operations, which excludes share-based
compensation, amortization of intangible assets arising from
acquisitions, and impairment of goodwill and intangible assets, was
$5.9 million compared to $10.8 million in the same period in 2015.
Non-GAAP operating margin, or non-GAAP income from operations as a
percentage of net revenues was -6.2%, compared with -8.5% in the
same period in 2015.
Foreign Exchange loss, Interest Expenses and Other
Income
Foreign exchange loss was $0.2
million in the fourth quarter of 2016, compared with a loss
of $0.6 million in the same quarter
of the previous year, which was affected by fluctuations in the
foreign exchange rates. Interest expenses were $6.1 million in the fourth quarter of 2016,
compared with $1.5 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.
Realized Loss on Disposal of a Subsidiary
In the fourth quarter of 2016, we recorded a loss from the
disposal of a subsidiary of $3.0
million, which was primarily driven by one-time non-cash
losses related to the disposal of a subsidiary.
Impairment Loss
In the fourth quarter of 2016, we recognized impairment losses
of $12.2 million, primarily driven by
one-time non-cash write-downs of long-term investments.
Income Tax
Income tax benefit was $1.6
million in the fourth quarter of 2016, compared with income
tax expense of $6.1 million in the
same period in 2015.
Net Income/Loss
Net Loss attributable to NQ Mobile was $124.5 million in the fourth quarter of 2016,
compared with net income of $19.9
million in the same period in 2015. Non-GAAP net loss
attributable to NQ Mobile, which excludes share-based compensation,
interest expenses related to convertible debts, amortization of
intangible assets arising from acquisitions, impairment losses from
goodwill, intangible assets and investment, and income tax
provision related to the amortization of intangible assets arising
from acquisitions and impairment loss from goodwill, intangible
assets and investment, was $3.4
million in the fourth quarter of 2016, compared with
non-GAAP net income attributable to NQ Mobile of $42.5 million in the same period in 2015.
Cash and Cash Equivalents,
Term Deposits and
Restricted Cash
Cash and cash equivalents, term deposits and restricted cash
together amounted to $318.2 million
as of December 31, 2016.
Cash Flow
Net cash flow used in operations for the fourth quarter of 2016
was $4.0 million.
Fiscal Year 2016 Results
Revenues
Net revenues for the fiscal year 2016 decreased 15.6%
year-over-year to $343.1 million from
$406.7 million in 2015. Excluding
Nationsky from the comparable period, net revenues increased 19.7%
year-over-year from the same period in 2015.
Mobile value added service revenues for the fiscal year 2016
increased 43.1% year-over-year to $199.8
million from $139.6 million in
2015. The increase in mobile value added service revenues was
primarily attributable to the growth in live mobile social video
platform revenue growth and mobile gaming revenue growth which
represented 108.8% and 16.7% of the total year-over-year growth
respectively. The strong growth in live mobile social video
revenues and mobile gaming revenues was partially offset by a
year-over-year decrease in consumer mobile security revenues, which
offset 25.4% of the total year-over-year growth. The significant
increase in live mobile social video platform revenues was
primarily driven by the rapid growth of Showself's several
applications. The overall Showself business in our live video
platforms was up 145.0% compared to the same period in 2015. The
increase in mobile gaming revenues was primarily the result of the
growth of FL Mobile's new games as well as the consolidation of
Hetu, a subsidiary. Mobile gaming revenues grew 13.6% compared with
the same period in 2015.
Advertising revenues for the fiscal year 2016 increased 44.0%
year-over-year to $103.3 million from
$71.7 million in 2015. The increase
was mainly due to the continued expansion of advertising networks
and the consolidation of Launcher, a business we obtained control
of and consolidated at the end of Q1 2016. Excluding Launcher,
since this was consolidated beginning in 2016, advertising revenues
increased 35.0% year-over-year compared to the same period in
2015.
Enterprise mobility revenues for the fiscal year 2016 decreased
79.4% year-over-year to $39.2 million
from $190.0 million in 2015. The
decrease was mainly due to the divestment of NationSky which no
longer contributed to the results beginning in the first quarter of
2016. Excluding NationSky from the comparable period,
enterprise mobility revenues decreased 44.0% year-over-year from
the same period in 2015 as the Company focuses less on hardware
procurement overall.
Other revenues for the fiscal year 2016 decreased 86.1%
year-over-year to $0.7 million from
$5.4 million in 2015. 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 2016 decreased 18.3%
year-over-year to $261.1 million from
$319.4 million in the same period in
2015. Excluding NationSky from the comparable period, cost of
revenues increased 20.1% year-over-year from the same period in
2015. The year-over-year increase was primarily due to higher
revenue sharing and user acquisition costs corresponding to higher
revenue growth in the live social video platform businesses as well
as mobile gaming.
Gross Profit and Gross Margin
Gross profit for the fiscal year 2016 decreased 6.1% to
$82.0 million from $87.3 million in 2015. Excluding NationSky from
the comparable period, gross profit increased 18.5% year-over-year
from the same period in 2015. Gross margin, or gross profit
as a percentage of net revenues, was 23.9% for the fiscal year
2016, compared with 21.5% in 2015 and 24.1% excluding NationSky in
the comparable period.
Operating Expenses
Selling and marketing expenses for the fiscal year 2016
decreased 25.3% year-over-year to $20.0
million from $26.8 million in
2015. Non-GAAP selling and marketing expenses for the fiscal year
2016, which exclude share-based compensation, decreased 25.0%
year-over-year to $19.6 million from
$26.1 million in 2015. The
year-over-year decrease was primarily due to the impact of the
NationSky Divestment. Excluding NationSky from the comparable
period, selling and marketing expenses decreased 7.7%
year-over-year from the same period in 2015, and non-GAAP selling
and marketing expenses decreased 6.7% year-over-year from the same
period in 2015.
General and administrative expenses for the fiscal year 2016
decreased 19.7% year-over-year to $52.6
million from $65.5 million in
2015. Non-GAAP general and administrative expenses for the fiscal
year 2015, which exclude share-based compensation and the
amortization of intangible assets arising from acquisitions,
decreased 18.1% year-over-year to $37.9
million from $46.3 million in
2015. Excluding NationSky from the comparable period, general and
administrative expenses decreased 17.5% year-over-year from the
same period in 2015, and non-GAAP general and administrative
expenses decreased 14.8% year-over-year from the same period in
2015 mainly due to a reduction in compensation costs as well as a
reduction in the allowance for bad debt expense compared to the
comparable period.
Research and development expenses for the fiscal year 2016
decreased 23.0% year-over-year to $22.4
million from $29.0 million in
2015. Non-GAAP research and development expenses for the fiscal
year 2016, which exclude share-based compensation and the
amortization of intangible assets arising from acquisitions,
decreased 25.4% to $21.6 million from
$29.0 million in 2015. This
year-over-year decrease is mainly due to the divestment of
NationSky. Excluding NationSky from the comparable period, research
and development expenses increased 16.9% year-over-year from the
same period in 2015, and non-GAAP research and development expenses
increased 14.5% year-over-year from the same period in 2015, mainly
due to the Linkmotion business and some pilot projects, as well as
the consolidation of Launcher.
Impairment of goodwill and intangible assets for the fiscal year
2016 was $98.9 million as the result
of a one-time, non-cash impairment of goodwill and intangible
assets mostly from traffic related consumer businesses. The Company
has three reporting units including Mobile Games and Advertising,
Enterprise Mobility, and Security and Others. There was impairment
of $8.1 million from the Enterprise
Mobility reporting unit. The Security and Others reporting
unit consists of mobile security, live mobile social video
platforms, and internet traffic related businesses. There was
impairment of $90.8 million from the
Security and Others reporting unit from the internet traffic
related businesses within this reporting unit.
Total operating expenses for the fiscal year 2016 increased
59.9% year-over-year to $193.8
million from $121.2 million in
2015 driven mostly from the one-time, non-cash impairment of
goodwill and intangible assets recorded during the year of
$98.9 million. Excluding the
impairment of goodwill and intangible assets, total operating
expenses decreased 21.7% year-over-year to $94.9 million from $121.2
million in the same period in 2015. Excluding
NationSky and impairment of goodwill and intangible assets from the
comparable period, total operating expenses for the fiscal year
2016 decreased 9.1% year-over-year from the comparable period.
Non-GAAP operating expenses, which exclude share-based
compensation expenses, the amortization of intangible assets
arising from acquisitions, and impairment of goodwill and
intangible assets decreased 21.9% year-over year to $79.1 million from $101.3
million in 2015. Excluding NationSky from the comparable
period, non-GAAP operating expenses decreased 6.2% year-over-year
from the comparable period.
Share-based compensation expenses
Share-based compensation expenses, which were allocated to
related operating cost and expenses line items, decreased 23.9%
year-over-year to $12.6 million from
$16.6 million in 2015. The decrease
in share-based compensation expenses was mainly due to less
performance-based share options and equity granted in relation to
acquisitions and performance in comparable periods.
Loss/Income from Operations and
Operating Margin
Loss from operations for the fiscal year 2016 was $111.8 million, compared with $33.9 million in fiscal year 2015, which was
greatly impacted by the one-time, non-cash impairment of goodwill
and intangible assets of $98.9
million for the fiscal year 2016. Excluding the impact
of the impairment of goodwill and intangible assets for the fiscal
year 2016, loss from operations was $12.9
million, compared with $33.9
million in the same period in 2015.
Non-GAAP income from operations for the fiscal year 2016, which
excludes share-based compensation, intangible assets arising
from acquisitions, and impairment of goodwill and intangible
assets, was $13.4 million compared to
a Non-GAAP loss from operations of $6.0
million in 2015. Non-GAAP operating margin, or non-GAAP
income from operations as a percentage of net revenues for the
fiscal year 2016 was 3.9% compared to -1.5% in 2015.
Foreign Exchange Loss, Interest Expenses/Income
Foreign exchange loss was $0.01
million for the fiscal year 2016, compared with $1.7 million in 2015. The loss in foreign
exchange was primarily attributable to the fluctuation in foreign
exchange rates. Interest expenses were $11.0
million for the fiscal year 2016, compared with $4.7 million in 2015. Interest expenses were
primarily derived from interest expense related to convertible
debts, offset by the interest income from certain term
deposits.
Realized Loss on Disposal of a Subsidiary
For the fiscal year 2016, we recorded a loss from the disposal
of a subsidiary of $3.0 million,
which was primarily driven by one-time non-cash losses related to
the disposal of a subsidiary.
Impairment Loss
In the fiscal year 2016, we recognized impairment losses of
$12.2 million, primarily driven by
one-time non-cash write-downs of long-term investments.
Income Tax
Income tax benefit was $0.4
million for the fiscal year 2016, compared with income tax
expense of $9.2 million in 2015.
Net Loss/Income
Net Loss attributable to NQ Mobile was $140.8 million for the fiscal year 2016, compared
with $1.3 million in 2015.
Non-GAAP net income attributable to NQ Mobile, which excludes
share-based compensation, interest expenses related to convertible
debts, amortization of intangible assets arising from acquisition,
impairment losses from goodwill, intangible assets and investments
and income tax provision related to the amortization of intangible
assets arising from acquisitions and impairment loss from goodwill,
intangible assets and investment was $8.5
million for the fiscal year 2016, compared with $49.3 million in 2015.
Cash Flow
Net cash used in operating activities for the fiscal year 2016
was $40.6 million.
Other Significant Events
Updates to the completion of FL Mobile Divestment and the
Sale of Showself's Live Social Video Business
As announced on May 6, 2016 and
August 9, 2016, Beijing Jinxin
Hengrui Investment Center (Limited Partnership), Nantong Jinxin
Haoyue Investment Center (Limited Partnership), Nantong Jinxin
Huatong Equity Investment Center (Limited Partnership) and Tibet
Zhuohua Capital Management Co., Ltd. (collectively, the "Jinxin
Buyers") purchased a total of 20.66% equity interests in FL Mobile
from the Company at a purchase price valuing FL Mobile at
RMB5 billion. The Company and the
Jinxin Buyers have reached an agreement to adjust the valuation of
FL Mobile to RMB4 billion, and as a
result the aggregate cash consideration from Jinxin Buyers is
changed from RMB1,033 million to RMB826.4
million.
In a press release issued on March 30,
2017, the Company announced that it had entered into
definitive agreements (the "Agreements") with Tongfang
Investment Fund Series SPC (the "Investor"), an affiliate
of Tsinghua Tongfang. Pursuant to the terms of the Agreements,
the Investor will acquire (i) 63% equity interests in FL
Mobile Jiutian Technology Co., Ltd. ("FL Mobile"),
being all of the equity interests beneficially owned by the
Company, for a cash consideration of RMB2,520 million, valuing
the entire FL Mobile business at RMB4 billion and (ii)
65% equity interests in Beijing Showself Technology Co.,
Ltd ("Beijing Showself"), a live social video
business, being all of the equity interests beneficially
owned by the Company, for a cash consideration of RMB800
million, valuing the entire Beijing Showself live social video
business at RMB1,230 million (together, the
"Transactions").
The Investor has paid RMB150
million in cash as the non-refundable earnest money which will
be counted towards the payment of the purchase price. The Investor
will pay the remaining amount of the total consideration on or
before May 31, 2017 after the Company delivers all of its
equity interests in FL Mobile and Beijing Showself.
In addition to purchasing FL Mobile and Beijing Showself, within
three months after the date of the full payment of the purchase
price for the 63% equity interests in FL Mobile, the Investor has
an option to subscribe for US$100 million value of class
A common shares of the Company at the price
of US$1.05 per share, or US$5.25 per ADS.
The Company also announced that, the proposed investment
of US$101 million from management as announced in a press
release on March 29, 2016 is now expected to take place
within 3 months following the consummation of the sale of FL Mobile
under the Transactions.
Dr. Vincent Wenyong Shi, the chairman and chief operating
officer of the Company, has equity interest in FL Mobile and will
continue to participate with the Investor in the future. The
Transactions and the execution of the Agreements have been approved
by the board of directors of the Company and its audit committee.
The consummation of the Transactions are subject to customary
closing conditions.
Quantifying the Impact from the Divestment of FL Mobile and
Showself
Given the execution of the definitive agreements as announced in
the press release issued on March 30,
2017 and the expectation that the complete divestment of FL
Mobile and the sale of Showself's live social video business will
be fully consummated during the second quarter of 2017, we are
providing the following information about FL Mobile and Showself's
live social video business to help quantify the potential impact on
the future operating results. Total net revenues and net income for
the FL Mobile group for the fiscal year 2016 was $175.5 million and $44.9
million respectively. Total net revenues and net income for
Showself's live social video business for the fiscal year 2016 was
$110.7 million and $14.1 million respectively.
NQ Mobile Announces Appointment of New Director in a Press
Release on January 20, 2017
In a press release issued on January 20,
2017, the Company announced the appointment of Mr.
Jian Qi as an independent director
on the board of directors and a member of the audit committee of
the Board, effective as of January 19,
2017. Mr. William Tiewei Li
stepped down as a member of the audit committee to the Board while
continuing to serve as an independent director of the Board as well
as a member of the compensation committee and corporate governance
and nominating committee of the Board effective as of January 19, 2017.
Mr. Jian Qi served as a director
of LeadSec Technology (Beijing)
Co., Ltd. since 2006 and as the vice chairman and director of
Beijing Venustech Inc. since 2012. Prior to that, Mr. Qi was the
vice president of system integration division of AsiaInfo
Technologies (China), Inc. from 1995 to 2004, and participated in
the development of the backbone internet networks for major
internet operators in China and
the development of CDMA network and video conference systems for
China Unicom. Mr. Qi received a bachelor's degree from PLA
University of Science and Technology in 1979.
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 Thursday, April 6, 2017, (8:00 AM Beijing/Hong Kong Time on Friday,
April 7, 2017).
The dial-in details for the conference call are:
U.S. Toll Free: 1-866-519-4004
International: +1-845-675-0437
United Kingdom: +44 203-621-4779
China Mainland: 4006208038 or
8008190121
Conference ID: 98762849
Please dial in 10 minutes before the call is scheduled to begin
and provide the conference ID to join the call.
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
April6 through April 13, 2017. The
dial-in details for the replay are:
U.S. Toll Free: +1-855-452-5696
International: +1-646-254-3697
Conference ID: 98762849
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 mobile Internet services. NQ Mobile's
portfolio of offerings includes mobile game publishing platforms,
mobile advertising platforms, mobile entertainment applications and
platforms, mobile security and productivity applications and other
mobile applications. 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,
interest expenses related to convertible debts, amortization of
intangible assets arising from acquisitions, impairment losses from
goodwill, intangible assets and investments, and income tax
provision related to the amortization of intangible assets arising
from acquisitions and impairment loss from goodwill, intangible
assets and investment. 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, interest expenses related to
convertible debts, amortization of intangible assets arising from
acquisitions, impairment losses from goodwill, intangible assets
and investments, and income tax provision related to the
amortization of intangible assets arising from acquisitions and
impairment loss from goodwill, intangible assets and investment 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.
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:
+1 469 310 5281
+86 10 6452 2017
Twitter : @NQMobileIR
NQ MOBILE INC.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
|
|
|
As
of
|
|
|
December
31,
2016
|
|
December
31,
2015
|
|
|
US$
|
|
US$
|
ASSETS
|
|
|
|
|
Current
assets:
|
|
|
|
|
Cash and cash
equivalents
|
|
91,397
|
|
118,572
|
Term
deposits
|
|
226,755
|
|
134,055
|
Restricted
cash
|
|
-
|
|
1,640
|
Notes
receivable
|
|
-
|
|
46
|
Accounts receivable,
net of allowance of US$17,555 and US$11,487 as of Dec 31, 2016 and
December 31, 2015, respectively
|
|
127,248
|
|
87,471
|
Inventory
|
|
1,922
|
|
1,831
|
Deferred tax
assets, current portion
|
|
396
|
|
946
|
Prepaid expenses and
other current assets, net of allowance of US$7,144 and US$5,612 as
of Dec 31, 2016 and December 31, 2015, respectively
|
|
47,980
|
|
41,739
|
Total current
assets
|
|
495,698
|
|
386,300
|
Non-current
assets:
|
|
|
|
|
Equity
investments, net
|
|
79,760
|
|
41,134
|
Property and
equipment, net
|
|
3,729
|
|
5,308
|
Intangible
assets, net
|
|
16,468
|
|
29,518
|
Goodwill
|
|
226,056
|
|
319,280
|
Deferred tax
assets, non-current portion
|
|
1,488
|
|
968
|
Investment
prepayment
|
|
4,081
|
|
3,080
|
Other
non-current assets
|
|
26,348
|
|
16,554
|
|
|
|
|
|
Total
Assets
|
|
853,628
|
|
802,142
|
|
|
|
|
|
LIABILITIES
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
Advance from
customers
|
|
1,470
|
|
1,493
|
Accounts
payable
|
|
58,470
|
|
41,613
|
Deferred
revenue
|
|
9,010
|
|
10,188
|
Consideration
payable of acquiring an investee
|
|
4,176
|
|
9,616
|
Accrued expenses
and other current liabilities
|
|
29,231
|
|
24,661
|
Tax
payable
|
|
7,915
|
|
13,875
|
Short term
borrowing
|
|
2,850
|
|
2,575
|
Convertible
debt
|
|
-
|
|
172,500
|
Consideration
received from shareholder
|
|
46,521
|
|
-
|
Total current
liabilities
|
|
159,643
|
|
276,521
|
Non-current
liabilities:
|
|
|
|
|
Derivative
liability
|
|
7,205
|
|
-
|
Convertible
debt
|
|
207,040
|
|
-
|
Deferred tax
liabilities
|
|
3,976
|
|
6,979
|
Total
Liabilities
|
|
377,864
|
|
283,500
|
MEZZANINE
EQUITY
|
|
|
|
|
Total
Mezzanine Equity
|
|
-
|
|
4,211
|
EQUITY
|
|
|
|
|
NQ Mobile Inc.'s
shareholders' equity
|
|
385,843
|
|
459,502
|
Non-controlling
interest
|
|
89,921
|
|
54,929
|
Total
equity
|
|
475,764
|
|
514,431
|
Total
Liabilities, Mezzanine Equity and
Equity
|
|
853,628
|
|
802,142
|
NQ MOBILE
INC.
|
UNAUDITED CONDENSED
CONSOLIDATED STATEMENTS OF COMPREHENSIVE
INCOME
|
(In thousands, except for share
and per share data)
|
|
Three months ended
|
|
Twelve months
ended
|
|
December
31,
|
|
September
30,
|
|
December
31,
|
|
December
31,
|
December
31,
|
|
2016
|
|
2016
|
|
2015
|
|
2016
|
2015
|
|
US$
|
|
US$
|
|
US$
|
|
US$
|
US$
|
|
|
|
|
|
|
|
|
|
Net
Revenues
|
|
|
|
|
|
|
|
|
Mobile value
added services
|
53,642
|
|
54,909
|
|
51,377
|
|
199,816
|
139,588
|
Advertising
services
|
27,295
|
|
27,503
|
|
21,994
|
|
103,295
|
71,721
|
Enterprise
mobility
|
13,616
|
|
8,503
|
|
52,127
|
|
39,197
|
190,030
|
Other
services
|
166
|
|
187
|
|
1,977
|
|
742
|
5,352
|
|
|
|
|
|
|
|
|
|
Total net
revenues
|
94,719
|
|
91,102
|
|
127,475
|
|
343,050
|
406,691
|
|
|
|
|
|
|
|
|
|
Cost of
revenues*
|
(79,536)
|
|
(70,266)
|
|
(104,924)
|
|
(261,069)
|
(319,352)
|
|
|
|
|
|
|
|
|
|
Gross
profit
|
15,183
|
|
20,836
|
|
22,551
|
|
81,981
|
87,339
|
|
|
|
|
|
|
|
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
|
Selling and
marketing expenses*
|
(3,932)
|
|
(4,955)
|
|
(6,194)
|
|
(19,980)
|
(26,752)
|
General
and administrative expenses*
|
(13,783)
|
|
(13,786)
|
|
(27,236)
|
|
(52,553)
|
(65,458)
|
Research and
development expenses*
|
(6,788)
|
|
(5,432)
|
|
(7,803)
|
|
(22,359)
|
(29,020)
|
Impairment of
goodwill and intangible assets*
|
(98,902)
|
|
-
|
|
-
|
|
(98,902)
|
-
|
|
|
|
|
|
|
|
|
|
Total operating
expenses
|
(123,405)
|
|
(24,173)
|
|
(41,233)
|
|
(193,794)
|
(121,230)
|
|
|
|
|
|
|
|
|
|
Loss from
operations
|
(108,222)
|
|
(3,337)
|
|
(18,682)
|
|
(111,813)
|
(33,891)
|
|
|
|
|
|
|
|
|
|
Interest
expense
|
(6,100)
|
|
(1,743)
|
|
(1,460)
|
|
(11,017)
|
(4,662)
|
Foreign
exchange gain/(loss), net
|
(241)
|
|
300
|
|
(585)
|
|
(12)
|
(1,693)
|
Realized
(loss)/gain on disposal of a subsidiary
|
(2,963)
|
|
-
|
|
56,211
|
|
(2,963)
|
56,211
|
Investment
income/(loss)
|
105
|
|
(156)
|
|
667
|
|
2,383
|
2,185
|
Impairment
loss
|
(12,203)
|
|
-
|
|
(12,913)
|
|
(12,203)
|
(15,452)
|
FV change of
derivative liability
|
(1,157)
|
|
-
|
|
-
|
|
(1,157)
|
-
|
Other income,
net
|
707
|
|
820
|
|
1,931
|
|
2,736
|
6,028
|
(Loss)/Income
before income taxes
|
(130,074)
|
|
(4,116)
|
|
25,169
|
|
(134,046)
|
8,726
|
|
|
|
|
|
|
|
|
|
Income tax
benefit/(expense)
|
1,644
|
|
1,366
|
|
(6,075)
|
|
443
|
(9,243)
|
Net
(loss)/income
|
(128,430)
|
|
(2,750)
|
|
19,094
|
|
(133,603)
|
(517)
|
Net
loss/(income) attributable to the non-controlling
interest
|
3,952
|
|
(6,272)
|
|
1,180
|
|
(7,219)
|
911
|
Net income
attributable to the mezzanine classified non-controlling
interest
|
-
|
|
-
|
|
(401)
|
|
-
|
(1,697)
|
Net (loss)/income
attributable to NQ Mobile Inc.
|
(124,478)
|
|
(9,022)
|
|
19,873
|
|
(140,822)
|
(1,303)
|
|
|
|
|
|
|
|
|
|
Net
(loss)/income
|
(128,430)
|
|
(2,750)
|
|
19,094
|
|
(133,603)
|
(517)
|
Other
comprehensive loss: Foreign currency translation
adjustment
|
(4,426)
|
|
(4,658)
|
|
(13,013)
|
|
(23,469)
|
(38,191)
|
Comprehensive
(loss)/income
|
(132,856)
|
|
(7,408)
|
|
6,081
|
|
(157,072)
|
(38,708)
|
Comprehensive
loss/(income) attributable to non-controlling
interest
|
6,689
|
|
(5,765)
|
|
5,141
|
|
(2,650)
|
4,869
|
Comprehensive
income attributable to the mezzanine classified non-controlling
interest
|
-
|
|
-
|
|
(401)
|
|
-
|
(1,697)
|
Comprehensive
(loss)/income attributable to NQ Mobile Inc.
|
(126,167)
|
|
(13,173)
|
|
10,821
|
|
(159,722)
|
(35,536)
|
|
|
|
|
|
|
|
|
|
Net
(loss)/earnings per Class A and Class B common share,
basic
|
(0.2504)
|
|
(0.0182)
|
|
0.0421
|
|
(0.2857)
|
(0.0028)
|
Net
(loss)/earnings per Class A and Class B common shares,
Diluted
|
(0.2504)
|
|
(0.0182)
|
|
0.0413
|
|
(0.2857)
|
(0.0028)
|
Net
(loss)/earnings per ADS, basic
|
(1.2520)
|
|
(0.0910)
|
|
0.2105
|
|
(1.4285)
|
(0.0140)
|
Net
(loss)/earnings per ADS, Diluted
|
(1.2520)
|
|
(0.0910)
|
|
0.2065
|
|
(1.4285)
|
(0.0140)
|
|
|
|
|
|
|
|
|
|
Weighted average
number of common shares outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
497,129,411
|
|
495,837,463
|
|
472,008,418
|
|
492,939,265
|
466,691,632
|
Diluted
|
497,129,411
|
|
495,837,463
|
|
480,856,846
|
|
492,939,265
|
466,691,632
|
*Share-based
compensation expenses included in:
|
|
|
|
|
|
|
|
|
Cost of
revenues
|
(62)
|
|
(10)
|
|
17
|
|
(53)
|
164
|
Selling and
marketing expenses
|
(39)
|
|
(33)
|
|
(79)
|
|
416
|
683
|
General and
administrative expenses
|
369
|
|
3,424
|
|
4,509
|
|
12,350
|
16,077
|
Research and
development expenses
|
(145)
|
|
(16)
|
|
(24)
|
|
(106)
|
(366)
|
Total
|
123
|
|
3,365
|
|
4,423
|
|
12,607
|
16,558
|
NQ MOBILE
INC.
|
NON-GAAP MEASURE
RECONCILIATIONS
|
(In thousands, except for share
and per share data)
|
|
Three months
ended
|
|
Twelve months
ended
|
|
Dec
31, 2016
|
Sep
30,
2016
|
Dec
31, 2015
|
|
Dec
31,
2016
|
Dec
31,
2015
|
|
US$
|
US$
|
US$
|
|
US$
|
US$
|
Selling and
marketing expenses under GAAP
|
(3,932)
|
(4,955)
|
(6,194)
|
|
(19,980)
|
(26,752)
|
Adjustment
(a)
|
(39)
|
(33)
|
(79)
|
|
416
|
683
|
Non-GAAP selling
and marketing expenses
|
(3,971)
|
(4,988)
|
(6,273)
|
|
(19,564)
|
(26,069)
|
|
|
|
|
|
|
|
General and
administrative expenses under GAAP
|
(13,783)
|
(13,786)
|
(27,236)
|
|
(52,553)
|
(65,458)
|
Adjustment
(a)
|
369
|
3,424
|
4,509
|
|
12,350
|
16,077
|
Adjustment
(c)
|
558
|
571
|
596
|
|
2,295
|
3,111
|
Non-GAAP general
and administrative expenses
|
(12,856)
|
(9,791)
|
(22,131)
|
|
(37,908)
|
(46,270)
|
|
|
|
|
|
|
|
Research and
development expenses under GAAP
|
(6,788)
|
(5,432)
|
(7,803)
|
|
(22,359)
|
(29,020)
|
Adjustment
(a)
|
(145)
|
(16)
|
(24)
|
|
(106)
|
(366)
|
Adjustment
(c)
|
114
|
114
|
249
|
|
838
|
381
|
Non-GAAP research
and development expenses
|
(6,819)
|
(5,334)
|
(7,578)
|
|
(21,627)
|
(29,005)
|
|
|
|
|
|
|
|
Loss from
operations under
GAAP
|
(108,222)
|
(3,337)
|
(18,682)
|
|
(111,813)
|
(33,891)
|
Adjustment
(a)
|
123
|
3,365
|
4,423
|
|
12,607
|
16,558
|
Adjustment
(c)
|
3,316
|
3,325
|
3,429
|
|
13,722
|
11,364
|
Adjustment (d)
|
98,902
|
-
|
-
|
|
98,902
|
-
|
Non-GAAP
(loss)/income from operations
|
(5,881)
|
3,353
|
(10,830)
|
|
13,418
|
(5,969)
|
|
|
|
|
|
|
|
Net (loss)/income
attributable to NQ Mobile Inc. under GAAP
|
(124,478)
|
(9,022)
|
19,873
|
|
(140,822)
|
(1,303)
|
Adjustment
(a)
|
123
|
3,365
|
4,423
|
|
12,607
|
16,558
|
Adjustment
(b)
|
8,325
|
2,653
|
2,322
|
|
15,646
|
9,239
|
Adjustment
(c)
|
3,316
|
3,325
|
3,429
|
|
13,722
|
11,364
|
Adjustment
(d)
|
111,105
|
-
|
12,913
|
|
111,105
|
15,452
|
Adjustment
(e)
|
(1,814)
|
(502)
|
(441)
|
|
(3,727)
|
(2,029)
|
Non-GAAP net
(loss)/income attributable to NQ Mobile Inc.
|
(3,423)
|
(181)
|
42,519
|
|
8,531
|
49,281
|
|
|
|
|
|
|
|
Non-GAAP weighted
average number of diluted ADS outstanding:
|
|
|
|
|
|
|
Basic
|
99,425,882
|
99,167,493
|
94,401,684
|
|
98,587,853
|
93,338,326
|
Diluted
|
99,425,882
|
99,167,493
|
96,171,369
|
|
99,725,773
|
95,203,347
|
Non-GAAP
(loss)/earnings per ADS, basic
|
(0.0344)
|
(0.0018)
|
0.4504
|
|
0.0865
|
0.5280
|
Non-GAAP
(loss)/earnings per ADS, diluted
|
(0.0344)
|
(0.0018)
|
0.4421
|
|
0.0855
|
0.5176
|
|
|
|
|
|
|
|
|
(a) Adjustment
to exclude the share-based compensation expenses for each
period
(b) Adjustment to exclude the interest expenses related to
convertible debt
(c) Adjustment to exclude the amortization of intangible
assets arising from acquisitions
(d) Adjustment to exclude impairment loss from goodwill,
intangible assets arising from acquisitions and investment
(e) To adjust income tax provision related to item (c) and
(d). Deferred tax liabilities was recognized along with intangible
assets recognized related to acquisitions. The amortization and
impairment of such intangible assets resulted in reversal of
corresponding deferred tax liabilities that impact deferred income
tax expense. Other non-GAAP to GAAP reconciling items have no
income tax effect *
*The reconciliation items (a) and (b) were recorded in entities in
tax free jurisdictions hence no income tax implications.
|
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/nq-mobile-inc-reports-unaudited-financial-results-for-the-fourth-quarter-and-fiscal-year-2016-300436310.html
SOURCE NQ Mobile Inc.