NQ Mobile Inc. Reports Unaudited Financial Results for the First, Second, and Third Quarters of FY 2017

BEIJING, Dec. 14, 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 first, second, and third quarters ended March 31, 2017, June 30, 2017, and September 30, 2017 respectively.

Beginning with this period for the reported results for the first, second, and third quarters of 2017, FL Mobile Jiutian Technology Co., Ltd ("FL Mobile") and the live social mobile video business of Showself (Beijing) Technology Co., Ltd ("Showself") have been classified as discontinued operations. Therefore, given the significance of FL Mobile and Showself's live social mobile video business in previous periods, to enhance the comparability of these results going forward, the figures reported in this earning release have reflected these changes and the comparable periods presented have also been adjusted retrospectively. However, given the significant effect on operating results and reported financial information related to the divestments of FL Mobile and Showself's businesses, and the classification as discontinued operations, the key financial data is quantified in the discontinued section of each quarter below.

In addition, beginning with these reported results for the first, second, and third quarters of 2017 and going forward, the Company will report its revenue streams in the following two categories: Consumer and Enterprise. Revenues from consumers will consist of revenues from advertising services and revenues from other services (including mobile security revenues, excluding mobile gaming and mobile social network revenues which are part of the FL Mobile and Showself group which has been classified as discontinued operations). Revenues from enterprises will be broken down into product and service revenues. Revenues from products will come from hardware sales to enterprise users. Revenues from services will come from technology and software development services to enterprise users.

Highlights For The Nine Months Period From January 1, 2017 to September 30, 2017

• Net Revenues of $44.2 million for the nine months ended September 30, 2017, up slightly from $43.2 million in the same period a year ago. GAAP Net Loss attributable to NQ Mobile for the nine months ended September 30, 2017 was $116.7 million or $1.16 per fully diluted ADS. This included the one-time, non-cash impairment of goodwill and intangible assets of $97.9 million during the period.
• Non-GAAP Net Income attributable to NQ Mobile for the nine months ended September 30, 2017 was $15.1 million or $0.15 per fully diluted ADS.

"We look forward to moving forward with our future plans in the smart car businesses," said Mr. Zemin Xu, CEO of NQ Mobile Inc. "The Company is financially positioned and strategically positioned to participate in this enormous market."

"With the Divestments closed, we can now move ahead focused on the future business opportunities and growth," said Mr. Roland Wu, CFO of NQ Mobile Inc. "We have taken great strides in readying our organization around these future opportunities and we look forward to sharing our progress in the coming year."

First Quarter 2017 Results

Revenues

Net revenues in the first quarter of 2017 decreased 26.3% year-over-year to $12.0 million from $16.3 million in the same period in 2016.

Consumer Services revenues consist of advertising and other consumer services. Advertising revenues decreased 34.1% year-over-year to $2.3 million from $3.5 million in the same period in 2016. The decrease in advertising revenues was mainly due to lower overall activity within many of the traffic-related businesses as the Company prepares to optimize its operations and focus to the smart car businesses in the future. Other services revenues decreased 48.0% year-over-year to $1.0 million from $1.9 million in the same period in 2016.  The decrease in other services revenues was mainly due to lower premium consumer security revenues as a result of the Company moving away from premium subscription services to an advertising-based model.

Enterprise Product revenues decreased 15.9% year-over-year to $8.5 million from $10.1 million in the same period in 2016. The decrease in enterprise product revenues was mainly due to weakness in customer demand in the first quarter of the year compared to the same period of last year. 

Cost of Revenues

Cost of revenues in the first quarter of 2017 decreased 26.1% year-over-year to $12.9 million from $17.5 million in the same period in 2016. The year-over-year decrease was mainly due to lower hardware sales within the enterprise business and lower preload costs within the consumer services segment. 

Gross Loss and Gross Margin

Gross loss in the first quarter of 2017 narrowed 23.0% to $0.9 million from $1.2 million in the same period in 2016. Negative gross margin, or gross loss as a percentage of net revenues, was 7.5% for the first quarter of 2017 and 7.2% for the first quarter of 2016.  

Operating Expenses

Selling and marketing expenses in the first quarter of 2017 decreased 25.7% year-over-year to $1.1 million from $1.5 million in the same period in 2016. Non-GAAP selling and marketing expenses, which exclude share-based compensation decreased 18.5% year-over-year to $1.1 million from $1.4 million in the same period in 2016. The year-over-year decrease is primarily driven by a reduction in overall staff costs and lower overall marketing and advertising expenses.

General and administrative expenses in the first quarter of 2017 decreased 48.2% year-over-year to $8.7 million from $16.8 million in the same period in 2016. Non-GAAP general and administrative expenses, which exclude share-based compensation and amortization of intangible assets arising from acquisitions, increased 3.9% year-over-year to $8.7 million from $8.4 million in the same period in 2016.

Research and development expenses in the first quarter of 2017 increased 34.3% year-over-year to $3.5 million from $2.6 million in the same period in 2016. Non-GAAP research and development expenses, which exclude share-based compensation and amortization of intangible assets arising from acquisitions, increased 49.0% to $3.4 million from $2.3 million in the same period in 2016. The increase is mainly due to the Linkmotion business and some pilot projects.

Impairment of goodwill and intangible assets in the first quarter of 2017 was $80.6 million as the result of a one-time, non-cash impairment of goodwill and intangible assets in the remaining portion of the Security and Others reporting unit upon the disposal of Showself which qualifies as held for sale as of March 31, 2017 and triggers to impairment test for the remaining portion of this reporting unit as of March 31, 2017. The goodwill impairment loss for the remaining portion of this reporting unit was $77.8 million.

Total operating expenses in the first quarter of 2017 increased 348.3% year-over-year to $93.9 million from $21.0 million in the same period in 2016 driven mostly from the one-time, non-cash impairment of goodwill and intangible assets recorded in the first quarter of 2017 of $80.6 million. Excluding the impairment of goodwill and intangible assets in the first quarter, total operating expenses decreased 36.4% year-over-year to $13.3 million from $21.0 million in the same period in 2016.

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 first quarter of 2017 increased 9.8% year-over-year to $13.2 million from $12.0 million in the same period in 2016 due to the reasons detailed above in each respective operating expense category.

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 first quarter of 2017, compared to $8.1 million in the corresponding period in 2016, mainly due to a one-time immediately vested awards granted in the first quarter of 2016 and no new grants during the period.

Loss from Operations 

Loss from operations in the first quarter of 2017 was $94.8 million, compared with $22.1 million in the same period in 2016, which was greatly impacted by the one-time, non-cash impairment of goodwill and intangible assets of $80.6 million in the first quarter of 2017. Excluding the impact of the impairment of goodwill and intangible assets in the first quarter of 2017, loss from operations was $14.2 million, compared with $22.1 million in the same period in 2016.

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 $13.6 million compared to $12.4 million in the same period in 2016.

Foreign Exchange gain/ (loss), and Interest Expenses

Foreign exchange gain was $0.2 million in the first quarter of 2017, compared with a loss of $0.02 million in the same quarter of the previous year, which was affected by fluctuations in the foreign exchange rates. Interest expenses were $6.4 million in the first quarter of 2017, compared with $1.8 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 gain on Disposal of a Subsidiary

In the first quarter of 2017, we recorded a gain from the disposal of a subsidiary of $1.0 million, which was primarily driven by one-time non-cash gain related to the disposal of one of our enterprise businesses.

Income Tax

Income tax benefit was $0.5 million in the first quarter of 2017, compared with income tax benefit of $0.4 million in the same period in 2016.

Discontinued Operations

The Company presents FL Mobile and Showself's live social mobile video business as assets/liabilities held for sale on the balance sheets and as discontinued operation on the statements of operations for the quarter ended March 31, 2017 and also applied to all comparative periods presented. The total net revenues, net income attributable to us, and net income attributable to our non-controlling interests from FL Mobile for the three months ended March 31, 2017 was $35.9 million, $3.9 million, and $2.3 million, respectively. The total net revenues, net income attributable to us, and net income attributable to our non-controlling interests from Showself for the three months ended March 31, 2017 was $27.7 million, $3.0 million, and $1.5 million, respectively. Income from discontinued operations, net of income tax, was $10.7 million in the first quarter of 2017 compared to $14.5 million in the same period in 2016, the decrease in income from discontinued operations was due to the increase of customer acquisition cost.

Net Loss

Net loss attributable to NQ Mobile was $71.4 million in the first quarter of 2017, compared with net loss of $7.8 million in the same period in 2016. Non-GAAP net income attributable to NQ Mobile, which excludes share-based compensation, interest expenses related to convertible debts and fair value change of derivative liability, 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 $15.7 million in the first quarter of 2017, compared with non-GAAP net income attributable to NQ Mobile of $5.4 million in the same period in 2016. 

Cash and Cash Equivalents and Term Deposits

Cash and cash equivalents and term deposits amounted to $270.4 million as of March 31, 2017.

Cash Flow

Net cash flow used in operations for the first quarter of 2017 was $13.8 million.

Second Quarter 2017 Results

Revenues

Net revenues in the second quarter of 2017 increased 15.3% year-over-year to $14.7 million from $12.7 million in the same period in 2016.

Consumer Services revenues consist of advertising and other consumer services. Advertising revenues decreased 48.6% year-over-year to $2.6 million from $5.0 million in the same period in 2016. The decrease in advertising revenues was mainly due to lower overall activity within many of the traffic-related businesses as the Company prepares to optimize its operations and focus to the smart car businesses in the future. Other services revenues decreased 38.8% year-over-year to $0.9 million from $1.5 million in the same period in 2016. The decrease in other services revenues was mainly due to lower premium consumer security revenues as a result of the Company moving away from premium subscription services to an advertising based model.

Enterprise Product revenues increased 96.4% year-over-year to $11.1 million from $5.6 million in the same period in 2016. The increase in enterprise product revenues was mainly due to stronger overall hardware sales at Trustek.

Cost of Revenues

Cost of revenues in the second quarter of 2017 increased 31.6% year-over-year to $15.4 million from $11.7 million in the same period in 2016. The year-over-year increase was mainly due to higher hardware sales within the enterprise business and higher customer acquisition costs within the consumer services segment.

Gross Loss and Gross Margin

Gross loss in the second quarter of 2017 was $0.7 million compared with a gross profit of $1.1 million in the same period in 2016. Negative gross margin, or gross loss as a percentage of net revenues, was 4.5% for the second quarter of 2017.

Operating Expenses

Selling and marketing expenses in the second quarter of 2017 decreased 45.2% year-over-year to $1.3 million from $2.3 million in the same period in 2016. Non-GAAP selling and marketing expenses, which exclude share-based compensation decreased 33.3% year-over-year to $1.3 million from $2.0 million in the same period in 2016. The year-over-year decrease is primarily driven by a reduction in overall staff costs and lower overall marketing and advertising expenses.

General and administrative expenses in the second quarter of 2017 increased 90.8% year-over-year to $13.6 million from $7.1 million in the same period in 2016. The increase in G&A expenses came mostly from the increase in share-based compensation expenses in the period. Non-GAAP general and administrative expenses, which exclude share-based compensation and amortization of intangible assets arising from acquisitions, increased 42.5% year-over-year to $8.3 million from $5.9 million in the same period in 2016. The increase in Non-GAAP G&A expenses mainly due to increase in legal, professional and consulting fees in the period.

Research and development expenses in the second quarter of 2017 increased 3.1% year-over-year to $3.5 million from $3.4 million in the same period in 2016. Non-GAAP research and development expenses, which exclude share-based compensation and amortization of intangible assets arising from acquisitions, increased 12.7% to $3.5 million from $3.1 million in the same period in 2016. The increase is mainly due to the Linkmotion business and some pilot projects.

Total operating expenses in the second quarter of 2017 increased 43.1% year-over-year to $18.3 million from $12.8 million in the same period in 2016.

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 second quarter of 2017 increased 20.4% year-over-year to $13.1 million from $10.9 million in the same period in 2016.

Share-based compensation expenses

Share-based compensation expenses, which were allocated to related operating cost and expenses line items, amounted to $5.1 million in the second quarter of 2017, compared to $1.1 million in the corresponding period in 2016. The increase was mainly due to the issuance of new restricted shares pursuant to incentives and employment contracts.

Loss from Operations 

Loss from operations in the second quarter of 2017 was $19.0 million, compared with $11.7 million in the same period in 2016.

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 $13.5 million compared to $8.7 million in the same period in 2016.

Foreign Exchange gain/ (loss), and Interest Expenses

Foreign exchange gain was $0.2 million in the second quarter of 2017, compared with a loss of $0.3 million in the same quarter of the previous year, which was affected by fluctuations in the foreign exchange rates. Interest expenses were $6.4 million in the second quarter of 2017, compared with $1.8 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 benefit was $0.2 million in the second quarter of 2017, compared with income tax benefit of $0.3 million in the same period in 2016.

Discontinued Operations

The Company presents FL Mobile and Showself's live social mobile video business as assets/liabilities held for sale on the balance sheets and as discontinued operation on the statements of operations for the quarter ended June 30, 2017 and also applied to all comparative periods presented. The total net revenues, net income attributable to us, and net income attributable to our non-controlling interests from FL Mobile for the three months ended June 30, 2017 was $42.2 million, $2.3 million, and $1.3 million, respectively. The total net revenues, net income attributable to us, and net income attributable to our non-controlling interests from Showself for the three months ended June 30, 2017 was $29.3 million, $3.3 million, and $1.7 million, respectively. Income from discontinued operations, net of income tax, was $8.6 million in the second quarter of 2017 compared to $18.4 million in the same period in 2016, mainly due to the increase of customer acquisition cost.

Net (Loss)/Income

Net Loss attributable to NQ Mobile was $20.9 million in the second quarter of 2017, compared with a net income of $0.5 million in the same period in 2016. Non-GAAP net loss attributable to NQ Mobile, which excludes share-based compensation, interest expenses related to convertible debts and fair value change of derivative liability, 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 $4.9 million in the second quarter of 2017, compared with non-GAAP net income attributable to NQ Mobile of $6.8 million in the same period in 2016.

Cash and Cash Equivalents and Term Deposits

Cash and cash equivalents and term deposits amounted to $243.6 million as of June 30, 2017.

Cash Flow

Net cash used in operations for the second quarter of 2017 was 27.1million.

Third Quarter 2017 Results

Revenues

Net revenues in the third quarter of 2017 increased 23.7% year-over-year to $17.5 million from $14.1 million in the same period in 2016.

Consumer Services revenues consist of advertising and other consumer services. Advertising revenues decreased 45.2% year-over-year to $2.3 million from $4.2 million in the same period in 2016.  The decrease in advertising revenues was mainly due to lower overall activity within many of the traffic-related businesses as the Company prepares to optimize its operations and focus to the smart car businesses in the future.  Other services revenues decreased 15.5% year-over-year to $1.2 million from $1.4 million in the same period in 2016.  The decrease in other services revenues was mainly due to lower premium consumer security revenues as a result of the Company moving away from premium subscription services to an advertising based model.

Enterprise Product revenues increased 71.4% year-over-year to $13.8 million from $8.0 million in the same period in 2016. The increase in enterprise product revenues was mainly due to stronger overall hardware sales at Trustek.

Cost of Revenues

Cost of revenues in the third quarter of 2017 increased 17.5% year-over-year to $16.9 million from $14.4 million in the same period in 2016. The year-over-year increase was mainly due to higher hardware sales within the enterprise business and higher customer acquisition costs within the consumer services segment. 

Gross Profit/Loss and Gross Margin

Gross Profit in the third quarter of 2017 was $0.6 million compared with a gross loss of $0.3 million in the same period in 2016.  Gross margin, or gross profit as a percentage of net revenues, was 3.3% for the third quarter of 2017.

Operating Expenses

Selling and marketing expenses in the third quarter of 2017 decreased 32.7% year-over-year to $1.2 million from $1.8 million in the same period in 2016. Non-GAAP selling and marketing expenses, which exclude share-based compensation decreased 34.3% year-over-year to $1.2 million from $1.8 million in the same period in 2016. The year-over-year decrease is primarily driven by a reduction in overall staff costs and lower overall marketing and advertising expenses.

General and administrative expenses in the third quarter of 2017 decreased 46.6% year-over-year to $6.7 million from $12.6 million in the same period in 2016. Non-GAAP general and administrative expenses, which exclude share-based compensation and amortization of intangible assets arising from acquisitions, decreased 23.7% year-over-year to $6.6 million from $8.6 million in the same period in 2016. 

Research and development expenses in the third quarter of 2017 decreased 19.4% year-over-year to $2.6 million from $3.2 million in the same period in 2016. Non-GAAP research and development expenses, which exclude share-based compensation and amortization of intangible assets arising from acquisitions, decreased 20.6% year-over-year to $2.5 million from $3.1 million in the same period in 2016. The decrease is mainly due to lower overall spend associated with consumer and traffic related businesses as the Company shifts its focus to the smart car businesses in the future.

Impairment of goodwill and intangible assets in the third quarter of 2017 was $17.3 million as the result of a one-time, non-cash impairment of goodwill and intangible assets in the remaining portion of the Security and Others reporting unit.

Total operating expenses in the third quarter of 2017 increased 58.1% year-over-year to $27.7 million from $17.5 million in the same period in 2016. The increase was due to the impairment of goodwill and intangible assets from the remaining portion of the Security and Others reporting unit. 

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 third quarter of 2017 decreased 24.4% year-over-year to $10.2 million from $13.5 million in the same period in 2016.

Share-based Compensation Expenses

Share-based compensation expenses, which were allocated to related operating cost and expense line times, amounted to $0.2 million in the third quarter of 2017, compared to $3.4 million in the corresponding period in 2016. 

Loss from Operations

Loss from operations in the third quarter of 2017 was $27.2 million, compared to $17.8 million in the same period in 2016.

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 $9.4 million compared to $12.8 million in the same period in 2016.

Foreign Exchange gain/(loss), and Interest Expenses

Foreign exchange gain was $0.3 million in the third quarter of 2017, compared with a loss of $0.3 million in the same quarter of the previous year, which was affected by fluctuations in the foreign exchange rates. Interest expenses were $6.4 million in the third quarter of 2017, compared to $1.9 million in the same quarter a year ago.  Interest expenses were primarily derived from interest expenses related to convertible debts, offset by the interest income from certain term deposits.

Income Tax

Income tax benefit was $0.6 million in the third quarter of 2017, compared with income tax benefit of $1.0 million in the same period in 2016. 

Discontinued Operations

The Company presents FL Mobile and Showself's live social mobile video business as assets/liabilities held for sale on the balance sheets and as discontinued operation on the statements of operations for the quarter ended September 30, 2017 and also applied to all comparative periods presented. The total net revenues, net income attributable to us, and net income attributable to our non-controlling interests from FL Mobile for the three months ended September 30, 2017 was $43.5 million, $2.0 million, and $1.8 million, respectively. The total net revenues, net income attributable to us, and net income attributable to our non-controlling interests from Showself for the three months ended September 30, 2017 was $32.8 million, $4.6 million, and $2.2 million, respectively. Income from discontinued operations, net of income tax, was $10.6 million in the third quarter of 2017 compared to $14.7 million in the same period in 2016, mainly due to the increase of customer acquisition cost.

Net (Loss)/Income

Net Loss attributable to NQ Mobile was $24.4 million in the third quarter of 2017, compared with $9.0 million in the same period in 2016. Non-GAAP net income attributable to NQ Mobile, which excludes share-based compensation, interest expenses related to convertible debts and fair value change of derivative liability, 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 $4.3 million in the third quarter of 2017, compared with non-GAAP net loss attributable to NQ Mobile of $0.2 million in the same period in 2016.

Cash, Cash Equivalents, Term Deposits and Restricted Cash

Cash, cash equivalents, term deposits, and restricted cash amounted to $248.8 million as of September 30, 2017.

Cash Flow

Net cash used in operations for the third quarter of 2017 was $11.7 million.

Other Significant Events

Completion of the FL Mobile Divestment and the Sale of Showself's Live Social Video Business

The Company announced in a press release on December 14, 2017 that it had completed the divestment of FL Mobile and sale of Showself's Live Social Video Business. The Company received in aggregate a total of approximately RMB3,320 million, consisting of approximately RMB1,550 million in cash and RMB1,770 million in a senior note, which together totals 100% of the agreed upon price pursuant to the definitive agreements with Tongfang Investment Fund Series SPC (the "Investor"), an affiliate of Tongfang Securities Limited, a part of Tsinghua Tongfang. The key terms of the senior note include an interest payment of 8% per annum for 12 months, and may be extended for another 12 months at the Company's option, and can be redeemed early by the Investor for principle plus accrued interest in cash payments to the Company at any time.

Buyback Program

The Company announced on November 13, 2017 that its board of directors has authorized a buyback program under which the Company may repurchase up to $150 million of its shares or early partial redemption of the convertible notes over the next 12 months. The repurchases may be made from time to time 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 all applicable rules and regulations.  The Company plans to fund the repurchases made under this plan from existing cash on hand. 

Subsequent to the announcement on November 13, 2017, the Company provided an update to its buyback program. On November 20, 2017, the Company announced it had negotiated with Zhongzhi Hi-Tech Overseas Investment Limited ("Zhongzhi") for an early partial redemption of the convertible note and reached an agreement to redeem $88 million of the principal amount of the convertible notes issued to Zhongzhi in October 2016. In addition, the Company and Zhongzhi agreed that if Zhongzhi converts the remaining $132 million of convertible notes to the Company's American Depository Shares ("ADS") on or before March 31, 2018, the conversion price will be revised to $5.00 per ADS.  If Zhongzhi converts the remaining $132 million of convertible notes after March 31, 2018 to the note's maturity the conversion price will remain $6.00 per ADS.    

NQ Mobile Files Form 20-F for the year 2016

As announced on April 26, 2017, the Company filed its annual report for the year ended December 31, 2016 on Form 20-F with the Securities and Exchange Commission. The annual report, which contains the unqualified audited financial statements for the three years ended December 31, 2016, can be accessed and downloaded through the investor relations section of the Company's website at http://ir.nq.com.

Conference Call Information

NQ Mobile's management team will hold an earnings conference call to discuss its results and outlook at 7:30 PM U.S. Eastern Time on Thursday, December 14, 2017 (8:30 AM Beijing/Hong Kong Time on Friday, December 15, 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: 5391237

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 Thursday, December 14, 2017 through December 21, 2017. The dial-in details for the replay are:

U.S. Toll Free: +1-855-452-5696
International: +1-646-254-3697
Conference ID: 32786286

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 loss attributable to NQ Mobile, which are adjusted from results based on GAAP to exclude share-based compensation expenses, interest expenses related to convertible debts and fair value change of derivative liability, amortization of intangible assets arising from acquisitions, and impairment losses and taxes impact. The Company also uses non-GAAP fully diluted earnings per ADS, which is the non-GAAP net (loss)/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 loss attributable to NQ Mobile, excluding share-based compensation expenses, interest expenses related to convertible debts and fair value change of derivative liability, amortization of intangible assets arising from acquisitions, and impairment losses and taxes impact 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