NQ Mobile Inc. Announces Fourth Quarter and Fiscal Year 2012 Results

     NQ Mobile Inc. Announces Fourth Quarter and Fiscal Year 2012 Results

PR Newswire

BEIJING and DALLAS, March 6, 2013

BEIJING and DALLAS, March 6, 2013 /PRNewswire/ --

Fourth Quarter of 2012:

  oRecord Net Revenues of $30.0 million, Up 134.1% Year-over-Year
  oNet Income Attributable to NQ Mobile was $4.9 million
  oGAAP Fully Diluted Earnings per ADS[1] of $0.09
  oNon-GAAP Net Income Attributable to NQ Mobile[2] was $12.3 million, Up
    88.4% Year-over-Year
  oNon-GAAP Fully Diluted Earnings per ADS[3] of $0.23

Fiscal Year 2012:

  oRecord Net Revenues of $91.8 million, Up 125.6% Year-over-Year
  oNet Income Attributable to NQ Mobile was $9.4 million
  oGAAP Fully Diluted Earnings per ADS of $0.18
  oNon-GAAP Net Income Attributable to NQ Mobile was $34.0 million, Up 62.4%
    Year-over-Year
  oNon-GAAP Fully Diluted Earnings per ADS of $0.66

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, 2012.

(Logo: http://photos.prnewswire.com/prnh/20121224/CN34262LOGO)

Fourth Quarter 2012 Highlights

  oNet revenues increased 134.1% year-over-year to $30.0 million.
  oNet income attributable to NQ Mobile increased 52.7% year-over-year to
    $4.9 million.
  oNon-GAAP net income attributable to NQ Mobile, defined as net income
    attributable to NQ Mobile excluding share-based compensation expenses,
    increased 88.4% year-over-year to $12.3 million.
  oGAAP fully diluted Earnings per ADS was $0.09 and non-GAAP fully diluted
    Earnings per ADS was $0.23 for the fourth quarter of 2012. Diluted
    weighted average number of ADSs outstanding increased to 53.5 million in
    the fourth quarter of 2012 from 51.2 million in the previous quarter.
  oOn November 30, 2012, the Company completed the acquisition of the
    remaining 73.6% equity interest in Beijing Feiliu Jutian Technology Co.
    ("Feiliu"). Feiliu's financials were consolidated in the Company's
    financial statements starting on December 1, 2012.

Fiscal Year 2012 Highlights

  oNet revenues for fiscal year 2012 increased 125.6% year-over-year to $91.8
    million.
  oNet income attributable to NQ Mobile for fiscal year 2012, decreased 8.0%
    year-over-year to $9.4 million, mainly due to the $24.5 million in
    share-based compensation expenses recorded in the fiscal year of 2012,
    compared with $10.7 million in 2011.
  oNon-GAAP net income attributable to NQ Mobile for fiscal year 2012,
    increased 62.4% year-over-year to $34.0 million.
  oGAAP fully diluted Earnings per ADS was $0.18 and non-GAAP fully diluted
    Earnings per ADS was $0.66 for the fiscal year 2012. Diluted weighted
    average number of ADSs outstanding increased to 51.1 million in the fiscal
    year 2012 from 38.7 million in 2011.

The Company's non-GAAP financial measures and related reconciliations to GAAP
financial measures are described in the accompanying sections of "Non-GAAP
Disclosure" and "Reconciliations to Unaudited Condensed Consolidated
Statements of Operations."

Fourth Quarter and Fiscal Year 2012 Operating Metrics

  oCumulative registered user accounts were 283.4 million as of December 31,
    2012, compared with 146.7 million as of December 31, 2011 and 241.6
    million as of September 30, 2012. Including Feiliu's 67.4 million
    registered user accounts, NQ Mobile had total registered user accounts of
    350.8 million as of December 31, 2012.
  oAverage monthly active user accounts for the quarter ended December 31,
    2012 were 97.7 million, compared with 52.4 million for the corresponding
    period of 2011 and 84.5 million for the quarter ended September 30, 2012.
    Including Feiliu's 12.5 million average monthly active user accounts, NQ
    Mobile had total average monthly active user accounts of 110.2 million for
    the quarter ended December 31, 2012.
  oAverage monthly paying user accounts for the quarter ended December 31,
    2012 were 8.9 million, compared with 5.6 million for the corresponding
    period of 2011 and 8.2 million for the quarter ended September 30, 2012.
  oBeijing NationSky Network Technology, Inc. ("NationSky") had over 1,200
    enterprise customers as of December 31, 2012.

(In millions)                   As of Dec. 31, AsofDec.31, AsofSept.30,
                                2012           2011           2012
Cumulative registered user      283.4          146.7          241.6
accounts
China                           164.0          91.6           141.9
Overseas                        119.4          55.1           99.7
Feiliu cumulative registered    67.4           -              -
user accounts
Total cumulative registered     350.8          146.7          241.6
user accounts
                                                            

                                Three months   Three months   Three months
                                ended Dec. 31, ended Dec. 31, ended Sept. 30,
                                               2011           2012
                                2012
Average monthly active user     97.7           52.4           84.5
accounts
China                           56.9           32.9           49.7
Overseas                        40.8           19.5           34.8
Feiliu average monthly active   12.5           -              -
user accounts
Total average monthly active    110.2          52.4           84.5
user accounts
Average monthly paying user     8.9            5.6            8.2
accounts
China                           5.9            4.0            5.6
Overseas                        3.0            1.6            2.6

"We are very pleased to report a strong fourth quarter and an excellent 2012
fiscal year performance with record revenues," commented Dr. Henry Lin,
Chairman and Co-Chief Executive Officer of NQ Mobile. "In our first full year
as a public company, we grew our revenue by 126% from $41 million to over $92
million. Even without taking into account the revenue contribution from the
NationSky and Feiliu acquisitions, we achieved revenue of $79 million for 2012
and an outstanding organic growth rate of 93%. This significant growth is
driven by our consistent execution, as well as the continued rapid growth of
the global smartphone industry and adoption of mobile security and privacy
solutions by consumers worldwide."

"This past year also marked an important strategic year in the evolution of NQ
Mobile as we broadened from a pure mobile security company to a mobile
Internet platform company. Through the acquisitions of NationSky and Feiliu,
we greatly expanded our product and service offerings, extended our customer
base, and diversified our revenue streams. We are well positioned to
capitalize on the significant size and growth of the mobile Internet services
market for both consumers and enterprises. Through continuous technology
innovation and expansion of products and services, we have set in motion our
plan to become an integrated part of our users' daily mobile experiences,"
continued Dr. Lin.

"Another key theme for NQ Mobile in 2012 was the continued global expansion of
our business while maintaining our leadership position in China," added Omar
Khan, Co-Chief Executive Officer of NQ Mobile. "We have made tremendous
achievements in building a top tier global team, establishing our
international corporate headquarters in Dallas, broadening our service
offerings and gaining significant traction with global consumers and business
partners alike. There is no better evidence of that than our latest
announcement with America Movil to offer the entire suite of our flagship
consumer security and privacy offerings: NQ Mobile Security™, NQ Mobile Vault™
and NQ Family Guardian™ to its 262 million subscribers across 18 countries. We
are confident that the strong momentum in our international business will
continue in 2013. We remain committed to our global expansion effort to drive
the long term growth for our company."

Fourth Quarter 2012 Results

Revenues[4]

Net revenues in the fourth quarter of 2012 were $30.0 million, up 134.1%
year-over-year and up 16.4% sequentially.

Consumer Mobile Security revenues increased 69.4% year-over-year and 7.0%
sequentially to $19.6 million in the fourth quarter of 2012. The increases
were primarily due to the growth in the number of paying user accounts, which
reflected growth in the number of registered and active user accounts, as well
as increased use of NQ Mobile's premium services, particularly among its
overseas paying user accounts, which generally pay a higher subscription fee.
Revenue contribution from overseas users accounted for 53.7% of Consumer
Mobile Security revenues in the fourth quarter of 2012, compared with 49.8% in
the same quarter a year ago and 54.1% in the previous quarter.

Enterprise Mobility revenues increased 49.1% sequentially to $6.7 million in
the fourth quarter of 2012 due to the strong growth in the enterprise business
and new customer gains.

Mobile Games and Advertising revenues were $0.7 million for the month of
December in the fourth quarter of 2012. The Feiliu acquisition was closed on
November 30, 2012 when the Company fully controlled Feiliu, thus only the
December month of its financials were consolidated.

Other revenues in the fourth quarter of 2012 were $3.1 million, up 147.5%
year-over-year and 3.0% sequentially, primarily due to the growth in revenues
from secured download and delivery services for mobile applications produced
by third parties.

Cost of Revenues

Cost of revenues in the fourth quarter of 2012 was $9.7 million, up 277.9%
year-over-year and 21.6% sequentially. The year-over-year increase was
primarily due to the impact from NationSky and Feiliu acquisitions, increased
customer acquisition costs to drive user growth, higher staff costs from
increased headcounts and salaries, and higher revenue sharing with mobile
payment service providers consistent with the increase of revenue from mobile
payment service providers. The sequential increase was primarily due to the
impact from NationSky and Feiliu acquisitions, partially offset by lower
customer acquisition costs to meet the annual expenditure budget.

Gross Profit and Gross Margin

Gross profit in the fourth quarter of 2012 was $20.4 million, up 98.2%
year-over-year and 14.1% sequentially. Gross margin, or gross profit as a
percentage of net revenues, was 67.8% in the fourth quarter of 2012, compared
with 80.1% in the same quarter a year ago and 69.2% in the previous quarter.
Excluding the impact from NationSky, gross margin was 79.5% in the fourth
quarter of 2012, compared with 78.5% in the previous quarter. NationSky's
gross margin in the fourth quarter of 2012 was approximately 26.8%, compared
with 24.6% in the previous quarter, and the cost of revenues for NationSky
primarily consists of the hardware device procurement cost.

Operating Expenses

Total operating expenses in the fourth quarter of 2012 were $20.0 million, up
126.6% year-over-year and 6.1% sequentially. Non-GAAP operating expenses were
$12.6 million in the fourth quarter of 2012, up 128.0% year-over-year and
13.2% sequentially.

Selling and marketing expenses were $4.8 million in the fourth quarter of
2012, up 32.5% year-over-year and down 15.7% sequentially. Non-GAAP selling
and marketing expenses were $4.2 million, up 73.9% year-over-year and down
11.8% sequentially. The year-over-year increases were primarily due to higher
marketing and advertising spending and higher staff costs from headcount and
salary increase, partially offset by lower share-based compensation costs. The
sequential decrease was primarily due to lower marketing and advertising
spending and lower share-based compensation costs.

General and administrative expenses were $11.8 million in the fourth quarter
of 2012, up 235.7% year-over-year and 14.0% sequentially. The year-over-year
increase was mainly due to higher share-based compensation expenses as a
result of additional option and restricted shares issuance to executives and
non-employee consultants, higher staff costs from salary and headcount
increases, and higher legal and professional fees resulted from acquisition
and investment activities. The sequential increase was primarily due to higher
legal and professional fees and higher staff costs. Non-GAAP general and
administrative expenses were $5.5 million, up 240.1% year-over-year and 37.2%
sequentially. The year-over-year and sequential increases were primarily due
to higher staff cost, higher legal and professional fees expenses and costs
associated with the Feiliu acquisition.

Research and development expenses were $3.4 million in the fourth quarter of
2012, up 101.5% year-over-year and 21.0% sequentially. The year-over-year
increase was primarily due to higher staff cost from salary and headcount
increases and higher share-based compensation expenses while the sequential
increase was primarily due to higher staff cost from salary increase and
higher office-related expenses. Non-GAAP research and development expenses
were $2.8 million, up 92.3% year-over-year and 22.7% sequentially. The
year-over-year and sequential increases were primarily due to higher staff
costs from salary and headcount increases.

Operating Income / (Loss) and Operating Margin

Operating income in the fourth quarter of 2012 was $0.4 million, compared with
the operating income of $1.5 million in the same quarter a year ago and an
operating loss of $1.0 million in the previous quarter. Operating margin was
1.3% in the fourth quarter of 2012, compared with 11.4% in the same quarter a
year ago. The decline in operating income and operating margin was mainly due
to the significant increase in share-based compensation expenses.

Non-GAAP operating income was $7.9 million in the fourth quarter of 2012, up
63.1% year-over-year and 15.2% sequentially. Non-GAAP operating margin was
26.2% in the fourth quarter of 2012, compared with 37.5% in the same quarter a
year ago and 26.4% in the previous quarter. Excluding the impact from
NationSky, non-GAAP operating margin was 30.7% in the fourth quarter of 2012,
compared with 29.8% in the previous quarter. Operating margin for NationSky
was about 10.3% in the fourth quarter of 2012, compared with 10.3% in the
previous quarter.

Foreign Exchange Gain / (Loss), Interest Income and Other Income
Foreign exchange gain was $0.7 million in the fourth quarter of 2012, compared
with a gain of $0.9 million in the same quarter a year ago and a loss of $0.2
million in the previous quarter. Foreign exchange gain was primarily
attributable to the appreciation of RMB against US$. Interest income was $0.9
million in the fourth quarter of 2012, compared with $0.6 million in the same
quarter a year ago and $0.8 million in the previous quarter. Interest income
was primarily due to the term deposit position. The Company also recorded a
gain of $2.9 million in other income in the fourth quarter of 2012 from step
acquisition of Feiliu's remaining equity interest on November 30, 2012.
Subsequently, Feiliu became the wholly owned subsidiary of NQ Mobile. As a
result, the Company re-measured the fair value of the previously owned 26.4%
equity interest at the acquisition date and recognized a gain of $2.9 million
accordingly.

Income Tax

Income tax benefit was $0.07 million in the fourth quarter of 2012, compared
with an income tax expense of $0.05 million in the same quarter a year ago and
$0.3 million in previous quarter. The low effective tax rate was primarily
due to the preferential tax treatment enjoyed by certain subsidiaries of the
Company.

Net Income

Net income attributable to NQ Mobile was $4.9 million in the fourth quarter of
2012, compared with $3.2 million in the same quarter a year ago and $0.3
million in the previous quarter. Non-GAAP net income attributable to NQ Mobile
was $12.3 million in the fourth quarter of 2012, up 88.4% year-over-year and
51.5% sequentially. Excluding the net income contribution of $0.4 million from
Nationsky, the non-GAAP net income for NQ Mobile increased 82.1%
year-over-year and 49.9% sequentially to $11.9 million.

Cash Flows and Deferred Revenue

Net cash flow generated from operations for the fourth quarter of 2012 was
$3.9 million, compared with $4.2 million in the same quarter a year ago and
$6.9 million in the previous quarter. As of December 31, 2012, the Company had
total cash position of $120.4 million ($18.9 million in cash and cash
equivalents and $101.5 million in term deposits) and deferred revenue of $12.2
million.

Fiscal Year 2012 Results

Revenues

Net revenues for fiscal year 2012 were $91.8 million, up 125.6% from $40.7
million in 2011. Excluding revenue contribution in fiscal year 2012 of $12.6
million from NationSky acquired in the second quarter of 2012 and $0.7 million
from Feiliu acquired in the fourth quarter of 2012, net revenues were $78.5
million, up 93.1%. The significant increase was mainly due to the strong
growth in Consumer Mobile Security revenue.

Consumer Mobile Security revenues were $67.9 million in fiscal year 2012, up
87.7% from $36.2 million in 2011. Revenue contribution from overseas users
accounted for 52.6% of Consumer Mobile Security revenues in fiscal year 2012,
compared with 48.9% in 2011.

Other revenues in fiscal year 2012 were $10.6 million, up 137.5% from $4.5
million in 2011. Other revenues as a percentage of total net revenues
excluding NationSky and Feiliu was 13.5% in fiscal year 2012, compared with
11.0% in 2011.

Cost of Revenues

Cost of revenues in fiscal year 2012 was $25.7 million, up 219.5% from $8.1
million in 2011. The increase was primarily due to the impact from NationSky
and Feiliu acquisitions, increased customer acquisition cost, higher staff
costs from salary and headcount increases, and higher revenue sharing with
mobile payment service providers.

Gross Profit and Gross Margin

Gross profit in fiscal year 2012 was $66.0 million, up 102.5% from $32.6
million in 2011. Gross margin was 72.0% in fiscal year 2012, compared with
80.2% in 2011. Excluding the impact from Nationsky, gross profit for NQ Mobile
in 2012 was $62.9 million, up 92.8%, and the gross margin was 79.4%.

Operating Expenses

Total operating expenses in fiscal year 2012 were $63.8million, up 135.5% from
$27.1 million in 2011. Non-GAAP operating expenses were $39.4 million in
fiscal year 2012, up 138.5% from $16.5 million in 2011.

Selling and marketing expenses were $17.4 million in fiscal year 2012, up
118.7% from $8.0 million in 2011. Non-GAAP selling and marketing expenses were
$15.1 million in fiscal year 2012, up 149.6% from $6.0 million in 2011. The
increase was primarily due to increased marketing and advertising spending,
higher staff costs from salary and headcount increases and higher travelling
and entertainment expenses.

General and administrative expenses were $36.8 million in fiscal year 2012, up
162.2% from $14.0 million in 2011. The increase was primarily due to higher
share-based compensation expenses, higher staff cost from salary and headcount
increases, higher legal and professional fees and higher consulting fees.
Non-GAAP general and administrative expenses were $16.2million in fiscal year
2012, up 165.0% from $6.1 million in 2011. The increase was primarily due to
higher staff cost from salary and headcount increases, higher legal and
professional fees, higher consulting fees and higher travelling and
entertainment expenses.

Research and development expenses were $9.6 million in fiscal year 2012, up
88.1% from $5.1 million in 2011. The increase was primarily due to higher
staff costs from salary and headcount increases, higher share-based
compensation expenses and higher traveling and entertainment expenses.
Non-GAAP research and development expenses were $8.1 million in fiscal year
2012, up 86.0% from $4.4 million in 2011. The increase was primarily due to
higher staff costs from salary and headcount increases and higher traveling
and entertainment expenses.

Operating Income / (Loss) and Operating Margin

Income from operations, or operating income, for fiscal year 2012, decreased
59.0% year-over-year to $2.3 million from $5.5 million in 2011, mainly due to
the significant increase in share-based compensation expenses in the fiscal
year of 2012. Non-GAAP operating income for fiscal year 2012, increased 65.4%
year-over-year to $26.8 million from $16.2 million in 2011. Excluding
operating income contribution of $1.3 million from NationSky, non-GAAP
operating income increased 57.4% year-over-year to $25.5 million.

Foreign Exchange Gain, Interest Income, Gain on Change of Interest in an
Associate and Other Income

Foreign exchange gain was $0.07 million in fiscal year 2012, compared with a
gain of $3.0 million in 2011. Foreign exchange gain was primarily attributable
to the appreciation of RMB against US$. Interest income was $3.2 million in
fiscal year 2012, compared with $1.3 million in 2011. The increase was
primarily due to the higher deposit position resulting from the May 2011 IPO
proceeds. The company recorded a gain on change of interest in an associate of
$0.9 million in the third quarter of 2012, because the Company and all other
then shareholders of Feiliu transferred 20% of the equity interest in Feiliu
to a new shareholder, which was accounted for by equity method in the third
quarter of 2012, in exchange for the transfer of certain intangible assets.
The fair value of the intangible assets being valued were higher than the
carrying amount of the equity interest which the Company transferred, which
resulted a gain of $0.9 million recorded by the Company in the third quarter
of 2012. The Company also recorded a gain of $2.9 million in other income in
the fourth quarter of 2012 from step acquisition of Feiliu's remaining equity
interest on November 30, 2012. Subsequently, Feiliu became the wholly owned
subsidiary of NQ Mobile. As a result, the Company re-measured the fair value
of the previously owned 26.4% equity interest at the acquisition date and
recognized a gain of $2.9 million accordingly.

Income Tax

Income tax expense was $0.4 million and the effective tax rate was 4.3% in
fiscal year 2012, compared with an income tax expense of $0.1 million in
2011. The low effective tax rate was primarily due to the preferential tax
treatment enjoyed by certain subsidiaries of the Company.

Net Income/(Loss)

Net income attributable to NQ Mobile for fiscal year 2012, decreased 8.0%
year-over-year to $9.4 million from $10.3 million in 2011, mainly due to the
significant increase in share-based compensation expense recorded in the
fiscal year of 2012. Non-GAAP net income attributable to NQ Mobile for fiscal
year 2012, increased 62.4% year-over-year to $34.0 million from $20.9 million
in 2011. Excluding net income contribution in fiscal year 2012 of $0.7 million
from NationSky, non-GAAP net income increased 59.3% year-over-year to $33.3
million.

Other Business Updates and Significant Events

NQ Mobile Share Repurchase Plan

On November 26, 2012, NQ Mobile announced that its board of directors has
authorized a share repurchase plan under which the Company may repurchase up
to US$20 millionof its American Depository Shares ("ADSs") over the next 12
months. As of February 28, 2013, the Company has purchased a total of 523,269
ADSs amounting to approximately $3.2 million. The Company may continue to buy
ADSs subject to applicable legal restrictions and other factors and in a
manner consistent with applicable securities laws.

America Movil and NQ Mobile™ Collaborate to offer Mobile Subscribers Security,
Privacy and Family Protection across Mexico, and Latin America

On March 4, 2012, NQ Mobile announced that America Movil (NYSE: AMX), Latin
America's leading telecom group in terms of equity subscribers, will offer NQ
Mobile's flagship products: NQ Mobile Security™, NQ Mobile Vault™ and NQ
Family Guardian™ to its 262 million subscribers located in 18 countries,
including Mexico and Latin America.

NQ Mobile Offers Unique Enterprise Mobile Device Management and Security
Solution, NQSky™, through Its Subsidiary, NationSky

OnFebruary 21, 2013, NQ Mobileannounced that it has started offering the new
NQSky Enterprise Mobile Device Management (MDM) solution through its
subsidiary NationSky. Offering a suite of customized services under the NQSky
brand, NationSky provides its customers end-to-end solutions from mobile data
strategy consulting, architecture design and deployment, to mobile device,
content and application management. NationSky also provides industry-specific
solutions as well as complete platform integration services.

NQ Mobile Announces that U.S. Cellular® Will Begin Offering NQ Family
Guardian™ Product Under the Name U.S. Cellular Family Protector to its 5.9
million Customers

On February 19, 2013, NQ Mobile announced that U.S. Cellular will offer NQ
Mobile's Family Guardian product under the name U.S. Cellular Family
Protector™ powered by NQ Mobile™ to its 5.9 million customers.

4G Wireless to Offer NQ Mobile Security™, NQ Mobile Vault™ for Android and NQ
Family Guardian™ in More Than 120 Verizon Premium Wireless Retail Locations in
the Southwest US

On February 7, 2013, NQ Mobile announced that 4G Wireless will offer NQ Mobile
Security, NQ Mobile Vault for Android and NQ Family Guardian at 120 retail
locations across California and Nevada.

Diamond Mobile to Offer NQ Mobile™ Privacy, Security and Family Protection
Solutions at more than 210 Verizon Premium Wireless Retail Locations Across
Western and Southern US

On February 1, 2013, NQ Mobile announced that Diamond Wireless, an authorized
Verizon retailer, will offer NQ Mobile Security, NQ Mobile Vault for Android
and NQ Family Guardian at more than 210 retail locations across the U.S.
beginning March 2013.

I-Mobile and NQ Mobile Collaborate to Offer Southeast Asian Mobile Subscribers
Privacy, Security and Peace of Mind

On January 7, 2013, NQ Mobile and I-Mobile Corporation, a leading mobile
handset provider in Thailand and Southeast Asia, announced an agreement to
bring consumers easy access to one of the most powerful mobile security and
safety apps on the market to help ensure safe mobile experiences for its
users. I-Mobile will pre-install NQ Mobile Security on its Android mobile
devices beginning in January 2013.

NQ Mobile Announces Completion of Senior Management Share Purchase Plan

On December 6, 2012, NQ Mobile announced that members of its senior
management, including Co-CEOs Dr. Henry Lin and Mr. Omar Khan, and COO Mr.
Vincent Shi, among others, have completed their previously announced share
purchase plan to use their personal funds to purchase up to an aggregate of $2
million worth of the Company's ADSs in open market transactions within six
months from June 6, 2012.

Vox Mobile Collaborates with NQ Mobile to Provide Enterprise Mobile Security

On November 13, 2012, NQ Mobile and Vox Mobile, a leading provider of managed
mobility solutions for enterprises, announced their collaboration to integrate
and offer enterprise endpoint mobile security solutions to Vox Mobile's
customers globally. NQ Mobile's security features provide enterprise customers
and their employees with the privacy and security features they need to
protect their businesses by securing sensitive device data from mobile threats
and unsecure mobile environments.

Business Outlook

The Company expects net revenues to be in the range of $32.8 million and $33.3
million for the first quarter of 2013 and raises the full year 2013 net
revenue guidance from the previously issued range of $150 million to $155
million to a range of $178 million to 183 million.

The above forecast reflects the Company's current and preliminary view, which
is subject to possible material changes.

Conference Call Information

NQ Mobile's management team will hold an earnings conference call to discuss
its results and outlook at 8:00PM U.S. Eastern Time on Wednesday, March 6,
2013, (9:00AM Beijing/Hong Kong Time on Thursday, March 7, 2013).

The dial-in details for the conference call are:

U.S. Toll Free: 1 866 519 4004
International: +1 718 354 1231
Hong Kong: +852 2475 0994
United Kingdom: +44 2030598139
China Mainland: 400 620 8038 or 800 819 0121
Conference ID: 13418261

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 March 6 through April 6, 2013. The
dial-in details for the replay are:

U.S. Toll Free: 1 855 452 5696
International: +1 646 254 3697
Conference ID: 13418261

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

About NQ Mobile

NQ Mobile Inc. (NYSE:NQ) is a leading global provider of mobile Internet
services. NQ Mobile is a mobile security pioneer with proven competency to
acquire, engage, and monetize customers globally. NQ Mobile's portfolio
includes mobile security and mobile games & advertising for the consumer
market and consulting, mobile platforms and mobility services for the
enterprise market. As of December 31, 2012, NQ Mobile maintains a large,
global user base of 283 million registered user accounts and 98 million
monthly active user accounts through its consumer mobile security business, 65
million registered user accounts and 13 million monthly active user accounts
through its mobile games & advertising business and over 1,200 enterprise
customers. NQ Mobile maintains dual headquarters in Dallas, Texas, USA and
Beijing, China. For more information on NQ Mobile, please
visithttp://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,
operating income and net income attributable to NQ Mobile, which are adjusted
from results based on GAAP to exclude the share-based compensation expenses.
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, operating income and net income attributable to NQ Mobile, excluding
share-based compensation expenses, is that the share-based compensation charge
has been and will continue to be a significant recurring 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.

Notes to Financial Information

Financial information in this press release other than the information
indicated as being non-GAAP is derived from NQ Mobile's unaudited financial
information prepared in accordance with GAAP.

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.

[1] "ADS" is American Depositary Share. Each ADS represents five Class A
    common shares of NQ Mobile.
    Non-GAAP net income attributable to NQ Mobile is a non-GAAP financial
[2] measure, defined as net income attributable to NQ Mobile excluding
    share-based compensation expenses.
    Non-GAAP fully diluted earnings per ADS is a non-GAAP financial measure,
[3] defined as non-GAAP net income attributable to common shareholders divided
    by the weighted average number of diluted ADSs.
    Due to the expansion of its business and diversification of its revenue
    streams, beginning in the fourth quarter 2012, NQ Mobile classifies its
[4] revenues into below categories: Consumer Mobile Security (formerly termed
    as Premium Mobile Internet Services), Enterprise Mobility (NationSky
    business), Mobile Games and Advertising (Feiliu business), and Other.

For investor and media inquiries please contact:

Investor Relations
NQ Mobile Inc.
Email: investors@nq.com
Phone: +852 3975 2853



NQ MOBILE INC.
UNAUDITED CONDENSED CONSOLIDATED
BALANCE SHEETS
(In thousands)


                                                    As of
                                                    December 31,  December 31,

                                                    2012          2011
                                                    US$           US$
ASSETS
Current assets:
Cash and cash equivalents                           18,862        69,510
Term deposits                                       101,503       58,563
Short-term investments                              7,573         -
Accounts receivable, net of allowance of US$1,095
and
                                                    54,475        21,379
 US$636 as of December 31, 2012 and 2011,
respectively
Inventory                                           429           -
Prepaid expenses and other current assets           17,014        6,806
Total current assets                                199,856       156,258
Equity investments                                 13,978        1,182
Property and equipment, net                         2,434         1,078
Intangible assets, net                              13,213        1,590
Goodwill                                            17,958        -
Other non-current assets                            279           374
Total Assets                                        247,718       160,482
LIABILITIES
Current liabilities:
Receipt in advance                                  322           -
Accounts payable                                    7,399         1,014
Deferred revenue                                    12,234        7,090
Accrued expenses and other current liabilities      11,798        3,656
Tax payable                                         533           368
Deferred tax liabilities, current                   -             103
Total current liabilities                           32,286        12,231
Noncurrent liabilities:
Deferred tax liabilities, non-current               1,910         -
Other Non-current Liabilities                       173           -
Total Liabilities                                   34,369        12,231
Commitments and contingencies
SHAREHOLDERS' EQUITY
Common shares                                       24            22
Additional paid-in capital                          208,426       157,064
Statutory reserve                                   2,938         -
Treasury Stock                                      (1,346)       -
Accumulated deficit                                 (5,251)       (11,743)
Accumulated other comprehensive income              3,231         2,841
Total NQ Mobile Inc.'s shareholders' equity         208,022       148,184
Non-controlling interest                            5,327         67
Total shareholders' equity                          213,349       148,251
Total Liabilities  and Shareholders' Equity         247,718       160,482



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
                                                                 December31,  September30,  December31,  December31,  December31,

                                                                 2012          2012           2011          2012          2011
                                                                 US$           US$            US$           US$           US$
NetRevenues
Consumer Mobile Security                                         19,630        18,354         11,591        67,938        36,202
Enterprise Mobility                                              6,671         4,474          -             12,552        -
Mobile Games and Advertising                                     664           -              -             664           -
Other services                                                   3,064         2,974          1,238         10,614        4,469
Totalnetrevenues                                               30,029        25,802         12,829        91,768        40,671
Cost of revenues*                                                (9,671)       (7,954)        (2,559)       (25,739)      (8,057)
Gross profit                                                     20,358        17,848         10,270        66,029        32,614
Operating expenses:
Selling and marketing expenses*                                  (4,789)       (5,680)        (3,614)       (17,396)      (7,955)
General and administrative expenses*                             (11,775)      (10,332)       (3,508)       (36,776)      (14,024)
Research and development expenses*                               (3,395)       (2,805)        (1,685)       (9,585)       (5,095)
Total operating expenses                                         (19,959)      (18,817)       (8,807)       (63,757)      (27,074)
Income / (Loss) from operations                                  399           (969)          1,463         2,272         5,540
Interest income                                                  897           797            629           3,193         1,342
Realized gain on available-for-sale
                                                                 -             -              14            -             29
 investments
Foreign exchange gain/(loss), net                                669           (203)          892           67            3,011
Gain on change of interest in an associate                       -             943            -             943           -
Other income, net                                                3,029         115            115           3,364         306
Income before income taxes                                       4,994         683            3,113         9,839         10,228
Income tax benefit /(expense)                                    72            (308)          (47)          (420)         (97)
Share of profit from an associate                                140           125            122           543           119
Net income                                                       5,206         500            3,188         9,962         10,250
Net (loss)/income attributable to the non-
                                                                 (337)         (152)          1             (532)         1
 controlling interest
Net income attributable to NQ Mobile Inc.                       4,869         348            3,189         9,430         10,251
Accretion of redeemable convertible
                                                                 -             -              -             -             (535)
 preferred shares
Allocation of net income to participating
                                                                 -             -              -             -             (1,595)
 preferred shareholders
Net income attributable to common
                                                                 4,869         348            3,189         9,430         8,121
 shareholders (Note 1)
Net income                                                       5,206         500            3,188         9,962         10,250
Other comprehensive income /(loss):                                                                                   

 foreign currency translation adjustment                       725           (173)          233           390           1,249
Comprehensive income                                             5,931         327            3,421         10,352        11,499
Comprehensive (income) / loss attributable
                                                                 (337)         (152)          1             (532)         1
 to non-controlling interest
Comprehensive income attributable to                                                                                  

 NQ Mobile Inc.                                                5,594         175            3,422         9,820         11,500
Net income per common share:
Basic                                                            0.0201        0.0015         0.0139        0.0401        0.0468
Diluted                                                          0.0182        0.0014         0.0136        0.0369        0.0429
Weighted average number of common

 shares outstanding:
Basic                                                            242,426,466   235,248,711    230,126,544   235,257,651   173,373,462
Diluted                                                          267,613,335   256,143,907    234,238,664   255,722,551   193,537,974
Net income per ADS (Note 2):
Basic                                                            0.1005        0.0075         0.0695        0.2005        0.2340
Diluted                                                          0.0910        0.0070         0.0680        0.1845        0.2145
Weighted average number of ADS

 outstanding (Note 2):
Basic                                                            48,485,293    47,049,742     46,025,309    47,051,530    34,674,692
Diluted                                                          53,522,667    51,228,781     46,847,733    51,144,510    38,707,594
*Share-based compensation expense

 included in:
Cost of revenues                                                 53            57             53            214           130
Selling and marketing expenses                                   611           944            1,212         2,342         1,923
General and administrative expenses                              6,231         6,290          1,878         20,534        7,895
Research and development expenses                                561           495            211           1,453         724


Note 1: The net income attributable to common shareholders reflected the impact of non-cash accounting charges relating to the
preferred shares. All outstanding preferred shares were automatically converted into common shares upon the completion of the
Company's IPO on May 5, 2011. Thereafter, there was no accretion and allocation of net income to the preferred shares and all net
income was attributable to the common shareholders subsequent to IPO.



Note 2: The Company was listed in May 2011, the net earnings per ADS for the three months ended March 31, 2011 is calculated using the
same conversion ratio assuming the ADS was existed during such period. Each ADS represents five Class A common shares.







NETQIN MOBILE INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS
OF CASH FLOWS
(In thousands)


                                                                   Three months ended                         Twelve months ended
                                                                   December31,  September30,  December31,  December31,  December31,

                                                                   2012          2012           2011          2012          2011
                                                                   US$           US$            US$           US$           US$
Cashflowsfromoperatingactivities:
Net income                                                         5,206         500            3,188         9,962         10,250
Adjustments to reconcile net income to net cash

 provided by operating activities:
Depreciation and amortization                                      719           475            219           1,627         597
Allowance / (Reversal of) for doubtful accounts                    448           7              (284)         459           321
Share-based compensation                                           7,456         7,786          3,354         24,543        10,672
Deferred income tax                                                (90)          (43)           (26)          (182)         (84)
Foreign exchange (gain) / loss, net                                (669)         203            (892)         (67)          (3,011)
Share of profit from an associate                                 (140)         (125)          (122)         (543)         (119)
Gain on change of interest in an associate                         -             (943)          -             (943)         -
Realized gain on disposal of available-for-sale                                  
                                                                                                (14)                        (14)
 investments                                                                   -
Other income                                                       (2,962)       (80)           (80)          (3,202)       (214)
Changes in operating assets and liabilities:
Accounts receivable                                                (11,307)      (7,664)        (3,055)       (28,102)      (11,628)
Inventory                                                          204           (446)          -             (35)          -
Prepaid expenses and other current assets                          (1,066)       2,279          (614)         43            (1,911)
Other non-current assets               116           112            -             228           269
Accounts payable                                                   1,533         2,492          204           5,339         396
Deferred revenue                                                   1,175         1,388          1,066         4,946         4,400
Receipt in advance                                                 -             -              -             322           -
Accrued expenses and other current liabilities                     3,570         692            1,203         4,539         1,844
Other non-current liabilities                                      -             -              -             414           -
Tax payable                                                        (255)         301            44            165           72
Net cash provided by operating activities                          3,938         6,934          4,191         19,513        11,840
Cash flows from investing activities:
Placement of term deposits                                         (22,273)      (27,882)       (12,697)      (93,761)      (51,463)
Maturities of term deposits                                        12,728        29,806         4,331         51,626        4,331
Proceeds from the repayment of the advance to

 Tianjin Yidatong Technology Development Co.,                    -             -              -             -             2,196

 Ltd.
Disbursement from the lending of the housing loan
                                                                   (64)          (79)           (79)          (302)         (79)
 to an employee
Proceeds from the repayment of the housing loans
                                                                   38            37             30            110           180
 to employees
Purchase of available-for-sale
                                                                   (10,755)      -              -             (10,755)      -
 investments
Proceeds from disposal of available-for-sale investments           3,182         -              14            3,182         14
Investment in equity investees                                     -             (2,794)        -             (6,272)       -
Bridge loans and prepayments made in connection
                                                                   (1,321)       (4,796)        -             (11,288)      -
 with potential investments
Cash acquired from the business acquisition                        490           -              -             1,225         -
Purchase of property and equipment and intangible                                
                                                                   (559)                        (250)         (2,334)       (2,270)
 assets                                                                        (1,321)
                                                                                 
Net cash used in investing activities                              (18,534)                     (8,651)       (68,569)      (47,091)
                                                                                 (7,029)
Cash flows from financing activities:
Repayment of bank loans                                            (710)         -              -             (710)         -
Cash distributed by non-controlling shareholder
                                                                   -             -              -             (67)          -
 upon disposal
Proceeds from issuance of Series C-1convertible

 redeemable preferred shares (net of issuance costs              -             -              -             -             2,200

 of US$5)
Proceeds from initial public offering (net of
                                                                   -             -              -             -             82,886
 underwriters' commission)
Proceeds from exercising of share options                          -             -              1,551         920           1,551
Payment of listing expenses                                        -             -              -             -             (3,926)
Repurchase common stock                                            (1,346)       -              -             (1,346)       -
Net cash (used in) / provided by financing
                                                                   (2,056)       -              1,551         (1,203)       82,711
 activities
Effect of exchange rate changes on cash and cash                                 
                                                                   461                          1,109         (389)         4,084
 equivalents                                                                   (353)
Net (decrease)/increase in cash and cash equivalents               (16,191)      (448)          (1,800)       (50,648)      51,544
Cash and cash equivalents at the beginning of the
                                                                   35,053        35,501         71,310        69,510        17,966
 period / year
Cash and cash equivalents at the end of the period /
                                                                   18,862        35,053         69,510        18,862        69,510
 year



NQ MOBILE INC.
SUPPLEMENTARY NOTES - UNAUDITED CONDENSED CONSOLIDATED
STATEMENT OF OPERATION
(In thousands)
                                                                             Three months ended December 31,
                                                                             2012
                                                                             NQMobileInc.

                                                                             Group
                                                                                             NationSky  Consolidated
                                                                             excluding

                                                                             NationSky
                                                                             US$             US$        US$
NetRevenues
Consumer Mobile Security                                                     19,630          -          19,630
Enterprise Mobility                                                          -               6,671      6,671
Mobile Games and Advertising                                                 664             -          664
Other Services                                                               3,064           -          3,064
Total net revenues                                                           23,358          6,671      30,029
Cost of revenues                                                             (4,786)         (4,885)    (9,671)
Gross profit                                                                 18,572          1,786      20,358
Operating expenses:
Selling and marketing expenses                                               (4,564)         (225)      (4,789)
General and administrative expenses                                          (11,226)        (549)      (11,775)
Research and development expenses                                            (3,072)         (323)      (3,395)
Total operating expenses                                                     (18,862)        (1,097)    (19,959)
(Loss)/ Income from operations                                               (290)           689        399
Interest income/(expense)                                                    898             (1)        897
Foreign exchange loss, net                                                   669             -          669
Gain on change of interest in an associate                                   -               -          -
Other income, net                                                            3,029           -          3,029
Income before income taxes                                                   4,306           688        4,994
Income tax benefit                                                           11              61         72
Share of profit from an associate                                            140             -          140
Net income                                                                   4,457           749        5,206
Net income attributable to the non-controlling interest                      -               (337)      (337)
Net  income  attributable to NQ Mobile Inc.                                 4,457           412        4,869
Net income attributable to common shareholders                               4,457           412        4,869



NQ MOBILE INC.
NON-GAAP MEASURE RECONCILIATIONS
(In thousands)


                                                         Three months ended                         Twelve months ended
                                                         December31,  September30,  December31,  December31,  December31,

                                                         2012          2012           2011          2012          2011
                                                         US$           US$            US$           US$           US$
SellingandmarketingexpensesunderGAAP  (4,789)       (5,680 )       (3,614)       (17,396)      (7,955)
Share-based compensation expense*                        611           944            1,212         2,342         1,923
Non-GAAP selling and marketing expenses                  (4,178)       (4,736)        (2,402)       (15,054)      (6,032)
General and administrative expenses under GAAP           (11,775)      (10,332)       (3,508)       (36,776)      (14,024)
Share-based compensation expense*                        6,231         6,290          1,878         20,534        7,895
Non-GAAP general and administrative expenses             (5,544)       (4,042)        (1,630)       (16,242)      (6,129)
Research and development expenses under GAAP             (3,395)       (2,805)        (1,685)       (9,585)       (5,095)
Share-based compensation expense*                        561           495            211           1,453         724
Non-GAAP research and development expenses               (2,834)       (2,310)        (1,474)       (8,132)       (4,371)
(Loss)/Income from operations under GAAP                 399           (969)          1,463         2,272         5,540
Share-based compensation expense*                        7,456         7,786          3,354         24,543        10,672
Non-GAAP income from operations                          7,855         6,817          4,817         26,815        16,212
Net income attributable to NQ Mobile Inc.under
                                                         4,869         348            3,189         9,430         10,251
 GAAP
Share-based compensation expense*                        7,456         7,786          3,354         24,543        10,672
Non-GAAP net income attributable to NQ Mobile                                                     
                                                                                      6,543                       20,923
 Inc.                                                  12,325        8,134                        33,973
Weighted average number of diluted ADS                                                                       

 outstanding:                                          53,522,667    51,228,781     46,847,733    51,144,510    38,707,594
GAAP fully diluted earnings per ADS                      0.0910        0.0070         0.0680        0.1845        0.2145
Non-GAAP fully diluted earnings per ADS                  0.2303        0.1588         0.1397        0.6643        0.5405


* It represented elimination of share-based compensation expenses resulting from granting of options and restricted shares to
qualified employees and consultants by the Company during the prior and current periods.

SOURCE NQ Mobile Inc.

Website: http://www.netqin.com
 
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