NQ Mobile Inc. (NYSE: NQ) Investor Presentation. April 2014

Transcription

1 NQ Mobile Inc. (NYSE: NQ) Investor Presentation April 2014

2 Management Dr. Henry Lin Co-Founder, Chairman and Co-CEO Omar Khan Co-CEO Dr. Vincent Shi Co-Founder and COO KB Teo CFO 12 years of experience in mobile industry Ph.D. degree in communication and information systems from Beijing University of Posts and Telecommunications 13 years of experience in mobile technology related industry Previously Global Head of the Mobile Center of Excellence at Citigroup and CTO/CPO and Chief Strategy Officer at Samsung Mobile 12 years of experience in mobile industry Ph.D. degree in geographic information systems from Peking University Over 10 years of investment banking experience with Deutsche Bank, Goldman Sachs and Piper Jaffray; CFA charter holder 2

3 Investor Presentation Focus Area 1. NQ Mobile looking back and who we are today 2. Overview of the Consumer Security, Gaming, Advertising, and Enterprise Segments 2. The Vision Of the Future 3. Financial Overview 3

4 NQ Mobile Looking Back Recognized Global Leader in Mobile Security and Mobile Platform Innovation Founded in 2005, pioneered mobile specific innovation and technologies by identifying the emergence of mobile security risks Innovation Leader: over 100 patents filed or issued in the mobile ecosystem covering security, user experience, content management, mobile device management, image and voice recognition, etc. Adding ~ 40 patents annually Originally funded ($47MM) by 3 prominent US VCs in Sequoia, Fidelity and Mayfield with strategic investments from Qualcomm, Mediatek and HTC. Today, NQ Mobile is a publicly listed on the NYSE since May 2011 Recognized by World Economic Forum as a Technology Pioneer (previously awarded to Google and Twitter), Time called NQ a Top 10 startup that will change your life and NQ s co CEO s honored by Fortune Magazine as Mobilizers under 40 and World s Most Powerful Disruptors 4 4

5 NQ Mobile Today Leading Global Provider of Mobile Internet Services Consumer Mobile Services MVAS Consumer Security Gaming Mobile Advertising ~588MM registered user accounts ~156MM active user accounts ~15.6MM premium users ~ 8 million monthly active user of NQ Live ~20 million downloads of Music Radar ~#1 mobile game publisher on ios platform in China and #3 on all smartphone platforms in China (Sino MR, 1Q 2013) Enterprise Mobility Managed Mobility Services ~1,250 enterprise customers ~Over 80 of fortune 500 companies as customers ~30 MDM enterprise customers 5

6 Wide Range of Collaborations with Key Ecosystem Participants Carrier and Channel partnerships Mobile payment service providers Third party payment processors Device Pre-installation Online download Retail 6

7 Overview of Consumer Security

8 Proliferation of Mobile Technology Rapid Adoption of Smart Phones Worldwide smartphone shipment (MM) 1,405 Increasing Functionalities Application download (MM) CAGR: 18.3% CAGR: 61.4% 62.9% 309,606 Surging Mobile Data Traffic Mobile data traffic / month (Exabyte) CAGR: 69.3% 41.3% 45, Smartphone Penetration Rate (3) Source: IDC (December 2012) Source: Gartner (August 2012) Source: Cisco (February 2013) An average U.S. household will have 9 connected devices by 2015 (1) Sales of mobile devices to business worldwide are expected to reach 272MM units by 2016 (2) 1 Based on IDC estimates as of May Based on Gartner estimate as of February Smartphone shipments as % of total mobile phone shipments 8

9 NQ Mobile Consumer Security SECURITY NQ Mobile Security NQ Mobile Security Protects your mobile voice & data from malicious software (viruses, malware), phishing and call eavesdropping Trust PRIVACY NQ Mobile Vault FAMILY NQ Family Guardian NQ Mobile Vault Ensures your digital privacy through active control & on-device encryption of your content & communications Supporting full carrier branding and service integration including distribution, pre-loads, billing, etc NQ Mobile Family Guardian Augments parenting and child s safety Build awareness, gain visibility, and provide controls about your children s everyday activities. US Cellular America Movil 9

10 Consumer Security Worldwide Partnerships OEMs Carriers Retail Strategic/Others 10

11 America Móvil América Móvil and NQ Mobile Collaborate to offer Mobile Subscribers Security, Privacy and Family Protection across Mexico, and Latin America Google Play promotion Online promotion 11

12 Retail 3500 US Retail locations this summer From warehouse to point-of-sale Semi-permanent fixtures highlight product offerings, with the opportunity to flex-in new product or promotional literature quickly. Web-based activation tools help sales agents get customers up and running, so they can walk out working. Retail material ready-to-ship Point-of-sale presence Product overview and takeaway material Promotional material In-store, on-device activation 12

13 Offer Wall Monetization of Active Users 13

14 FL Mobile Gaming & Entertainment Platform

15 Large and Growing China Mobile Games and Mobile Advertising Market China Mobile Games Market Size (RMB Bn) (%) China Mobile Advertising Market Size (US$MM) (%) 1, CAGR:43% CAGR: 69% 1, , E 2013E 2014E 2015E E 2013E 2014E 2015E Source iresearch (June 2012) Source IDC (January 2013) 15

16 Mobile Games and Advertising Platform Feiliu Mobile Games and Advertising Platform Founded in 2009, Feiliu is a leading mobile interest based social platform in China Engages user in real-time online group activities, built upon unique interest communities including mobile technology, automobile, health care, games, etc. NQ Mobile invested in Feiliu in Feb and entered definitive agreement with Feiliu to acquire the remaining stake in Nov Mobile Interest-based Social Platform 107M+ registered users 20M+ monthly active users Distribute 400K+ apps/games #1 mobile game publisher on ios platform in China and #3 on all smartphone platforms in China (Sino MR, 1Q 2013) 16

17 FL Mobile Gaming & Entertainment Platform Number ONE ios Gaming Publisher in China FL Mobile net revenues were $14MM in Q4 exceeding our expectations Added Tencent, CMGE, Baidu, and China Mobile as partners more coming Expanded to int l markets starting with North America in the next month #1 The top ios mobile game publisher and operator in China 20 MM monthly active users

18 Products and Services Interest based social graph Sponsored download Gaming monetization platform Developers Mobile Interest Based Community Users Content sharing and download Interest based communities Virtual goods Merchants goods recommendation Promotion Rewards Advertisers Feiliu AD inventory Sponsored recommendation Merchant inventory 18

19 Synergistic Businesses Engage Trusted Platform 133MM Active Users Protect Secure Prevent Users Actively Data Analyze Optimize Customize Interest-based Community 19MM Active Users Socialize Share Play Monetize 1 All user data as of December

20 Expanded Acquisition Methods App Store Downloads Editors or User recommendation Game Coupons News or Info Ads Overlays Banners Rich Info NQ Mobile 20

21 Community Products Self-developed and operated community apps are major user acquisition and retention engine Tech Bible Download Community Game Center NQ Mobile

22 Developer Relationships NQ Mobile 22

23 FL Mobile Most Popular Games 龙 之 召 唤 Gods and Dragons 神 雕 侠 侣 The Return of the Condor Heroes 傲 世 西 游 神 魔 篇 Journey to the West Mythical Chapter QQ 御 剑 飞 流 至 尊 版 QQ Yujian FL Extreme Edition 武 林 盟 主 Wu Lin Meng Zhu 啪 啪 三 国 Snapped Three Kingdoms 23

24 Advertising

25 Advertising Analytics and Operations Platform Feature rich, mobile app data analytics platform Provides deep data tracking, statistics, visualization and analysis that delivers actionable insights to help mobile app developers and advertisers Includes: User Acquisition User Engagement/Behavior User Cohort (Targeting) User Conversion (Funnel) Analytics Campaign Insight 300+ metrics 40+ reports Customized events 25

26 Value to 3 rd Parties Ad Platform Tracking/Analytics/Reporting Revenue Optimization High Conversion Ads 1,000+ Premium Advertisers NQ Mobile

27 Ad Inventory Banner Ads Brand, Apps, Games, ecommerce Daily Impressions: 150m+ Daily Downloads: 800k Ad Wall / Offer Wall Apps, Games Daily Impressions: 10m+ Daily Downloads: 1m NQ Mobile

28 Ad Inventory Interstitials / Overlays Brand, Apps, Games, ecommerce Daily Impressions: 20m+ Daily Downloads: 1m+ Notifications Brands, Apps, Games, SMB Daily Impressions: 20m+ Daily Downloads: 1m NQ Mobile

29 Proven Track Record Sword King Ad: Offer Wall Campaign: August 13 User Acquisition Result: Over new register users Conversion: 1.23% New User ARPU: RMB 9.3 Time Hunter Ad: Offer Wall Campaign: 2H September 13 User Acquisition Result: Over 8632 new register users Conversion: 1.10% New User ARPU: RMB 8.4 Mercedes Benz Ad: Banner, Interstitials Campaign: 2H September 13 Impressions: Over 9.4M Clicks: Over 150k NQ Mobile

30 Advertising Increasing monetization of users Traffic Monetization Works! YoY revenue acceleration driven through: Advertising (traffic monetization) + ~100% 2Q Q Q 2013 Advertising Revenues (US million) QoQ growth rate 68% 100% 52% YoY growth rate 149% 363% 532% Non-security premium customers millions thousands April 2013 April

31 NationSky Enterprise Mobility Solutions

32 Enterprise Mobility: NationSky Founded in 2005 by Charlie Hou N ation NQ Mobile acquired majority stake (55%) in May 2012 subsequently the company acquired the remaining (45%) in July of 2013 Leader in China enterprise mobility services Over 1,250 large and medium enterprise customers Strong industry alliance and partnerships Partners include Apple, RIM, China Mobile, Mobile Iron, GEMA etc. Cross platform proprietary expertise and IP in mobile enterprise services and software Solutions for ios, Android, BlackBerry Mobile device/application Management Enterprise app/content distribution 32

33 NationSky - Products and Services Manageability Services Security Industry Solutions Platform Integration Services Mobile data strategy consulting Architecture design and deployment Asset management Training Mobile device management Mobile content management Mobile application management Insurance solution Banking solution Public service solution Logistic solution Enterprise app store Enterprise content distribution Push integration Cross platform middleware Devices Mobility Application Enablement and Deployment N ation Consulting and Management Services Legacy Enterprise IT Integration Framework Mobility Security Framework N ation Mobility Infrastructure N ation N ation 33

34 Selected Customers of NationSky Banking Brokerage Insurance Pharmaceutical Manufacturing Energy 34

35 NQ Sky Enterprise Mobility Management Needs NQ Sky Enterprise Mobility Management Platform (EMM) Enterprise Analytics Secure Enterprise Messaging 3. Content (Documents, s, Messaging) Mobile Content Mgmt. (MCM) Mobile Mgmt. (MEM) 2. Apps (Enterprise Apps, 3 rd Party Apps) 1. Device (Settings, Config., Security, Inventory) Mobile Application Mgmt. (MAM) Mobile Device Mgmt. (MDM) Mobile Security Mgmt. (MSM) ios, Android, Windows NQ Mobile 35

36 NQ Sky On Device NQ Mobile 36

37 NQ Sky Management Console NQ Mobile 37

38 MDM Example 1: Anbang Insurance Customer Profile: Anbang Insurance Group Inc. is a leading insurance company in China, providing property insurance, life insurance, health insurance, asset management, insurance sales agents and insurance brokers. All Anbang sales representatives as part of the business development process. NQ Sky MDM is used for asset management, data security management, mobile app updates and push, and IT policy management. Competition: Mobile Iron and AirWatch Key Criteria: Highest technical score on proofof-concept Deployed Seats: 5, NQ Mobile Total Seats: 15,000 38

39 MDM Example 2: Hai Di Lao Customer Profile: 80 franchised restaurants in China. Every restaurants utilizes over 100 tablets for diner menu display and customer orders. NQ Sky MDM is implemented to manage all tablets including, device provisioning, tablet configuration and management, security management, application provisioning, asset management. Competition: Neusoft, Huawei, Mobile Iron Key Criteria: Feature set and performance Deployed Seats: 5,200 Total Seats: 10, NQ Mobile 39

40 Managed Mobility Services Outlook Forecast of Managed Mobility Services Market, Worldwide, (MM) 3, CAGR: 54% 2, ,100 1, Source : Gartner 40

41 Financial Highlights

42 Strong Underlying Operating Metrics Registered User Accounts (1) Registered User Account Additions (1) (M) (M) CAGR (2) : China: 76% Overseas: 124% Total: 102% China Overseas Feiliu China Overseas Feiliu 1 The registered user accounts are as of year / quarter end 2 Excluding Feiliu 42

43 Strong Underlying Operating Metrics (cont d) Active User Accounts (1) Paying User Accounts (1) & Premium User Accounts (2) (M) Q Q CAGR (2) : Total: 108% Q Q Q 2013 China Overseas Feiliu 2Q Q Q 2013 (M) Premium user accounts Q Q Q Q Q Q Q Q The active user accounts and paying user accounts are average monthly numbers for the specified quarter 2 Premium user accounts are any user account that generates revenues either through direct payment or indirect payments from third party developers and advertisers via the offer wall or other form of advertising. 43

44 Rapidly Growing Revenues Revenue (1) ($MM) % Up 114 % YoY % 3% % % CAGR: 178% % % 35% 51% % 45% % 14% 10% 0% 74% % 10% 42% China Consumer Overseas Consumer Other Enterprise Service Revenue Mobile Security Subscription Revenue Mobile Game Revenue Advertising Revenue Other Revenues revenues include full year results for Enterprise (Nationsky) and Feiliu even though they were acquired in 2Q and 4Q, respectively 44

45 Rapidly Growing Revenues (cont d) Quarterly Revenue ($MM) % % % % % % % 10% % % % % % 8.9 9% % % 41% % % 43% 45% 45% % % 44% 46% 45% 43% 39% 33% 30% % % Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 3% 18% 10% 5% 63% 2% 19% 13% 52% 28% 20% 39% % 12% 28% China Consumer Overseas Consumer Other Enterprise Service Revenue Feiliu Mobile Security Subscription Revenue Mobile Game Revenue Advertising Revenue Other Revenues 45

46 Healthy Gross and Operating Margins Total Gross Profit (1) ($MM) 32,273 33,132 (%) 80.3% 79.6% 80.7% 80.1% 78.6% 12,555 9,162 10,270 6,118 7,062 15, % 17, % 20,358 22, % 68.5% 27, % 59.5% 48.8% 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 NQ Enterprise Total % of Revenue NQ ex. NationSky Gross Profit (1) Enterprise (NationSky) Gross Profit (1) ($MM) (%) ($MM) (%) 80.4% 79.8% 81.2% 80.5% 78.9% 80.8% 78.5% 76.3% 74.6% 73.3% 79.5% 20,703 18,572 16,749 14,988 12,607 10,324 9,215 6,125 7,079 24,869 28,461 28, % 19.9% 24.6% 1, % 1, % 2, % 2,724 4,823 3, % 20.6% 280 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1 GAAP figures, which include share based compensation 46

47 Healthy Gross and Operating Margins (cont d) Total Operating Profit (1) ($MM) 39.1% 41.6% 41.6% 37.5% 35.0% 32.8% 26.4% 26.2% 29.2% 33.0% 13,651 17,051 (%) 31.5% 18.6% 12,636 2,982 3,689 4,722 4,817 5,597 6,548 6,817 7,855 9,701 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 NQ Enterprise NQ ex. NationSky Operating Profit (1) Enterprise (NationSky) Operating Profit (1) ($MM) (%) ($MM) (%) 39.1% 41.6% 41.6% 37.5% 34.5% 32.1% 39.0% 30.7% 38.3% 15, % 29.8% 12,779 9,048 7,166 6,401 6,354 5,597 4,722 4,817 3,689 2, % 9, % % % 16.3% 2, % 12.3% 12.1% 1, Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1 Non-GAAP figures, which excludes share based compensation and expenses related to handling short seller allegations. The percentage represents the non-gaap operating margin. 47

48 Healthy Gross and Operating Margins (cont d) Selling & Marketing Costs (1) General & Administrative Costs (1) Research & Development Costs (1) ($MM) (%) ($MM) (%) ($MM) (%) 18.2% 18.7% 16.9% 18.4% 7, % 13.9% 17.3% 11.0% 11.9% 13.9% 11.2% 10.1% 6,083 5, % 18.6% 18.6% 18.5% 18.3% 18.5% 15.7% 10.8% 12.7% 11.5% 12.5% 10.4% 7, % 11.0% 9.1% 11.5% 9.4% 8.5% 9.0% 8.0% 5, % 8.5% 7.6% 6.7% 2,764 2,403 3,375 4,736 4,178 4,165 2,964 4,042 3,691 6,083 5,544 5,630 5,156 1,474 1,706 2,834 2,934 3,133 2,310 3,606 1, ,347 2,110 1,514 1, , ,282 1Q 11 2Q 11 3Q 11 4Q 11 1Q 12 2Q 12 3Q 12 4Q 12 1Q 13 2Q 13 3Q 13 4Q 13 1Q 11 2Q 11 3Q 11 4Q 11 1Q 12 2Q 12 3Q 12 4Q 12 1Q 13 2Q 13 3Q 13 4Q 13 1Q 11 2Q 11 3Q 11 4Q 11 1Q 12 2Q 12 3Q 12 4Q 12 1Q 13 2Q 13 3Q 13 4Q 13 1 Non-GAAP figures, which excludes share based compensation and expenses related to handling short seller allegations, The percentage represents the non-gaap operating margin. 48

49 Healthy Profitability Non-GAAP Net Income (1) ($MM) (%) 61.7% 17, % 51.0% 12,325 15,043 14, % 6,996 6,542 6, % 7, % 31.5% 8, % 10, % 36.3% 32.1% 3,101 4, % 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1 Non-GAAP figures, which excludes share based compensation, expenses related to handling short seller allegations, and interest expenses and fair value changes of the embedded call options in connection with convertible debt. The percentage represents the non-gaap operating margin. 49

50 High Visibility and Strong Cash Flow Deferred Revenue ($MM) 21,072 17,437 19,170 14,439 3,389 4,595 6,024 7,090 8,660 9,473 10,861 12,234 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 50

51 Account Receivable Days Total Receivable Days Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 51

52 Appendix: Consumer Security Suite (Android) NQ Mobile NQ Care NQ Family Guardian NQ Mobile Security NQ Vault NQ Easy Finder 52

53 Appendix NQ Premium Features NQ Mobile Security 53

54 Appendix NQ Premium Features NQ Mobile Vault 54

55 Appendix NQ Live Organize Aggregate all of your music Rich, dynamic homescreen experience Discover Learn about new music, with one touch access to purchase from partner music stores Search Integrated music recognition search with NQ MUSIC RADAR #1 Technology RANKING in MIREX 2012 music search competition Over 3M music searches DAILY 55

56 Appendix NQ Live All your music, comfortable at home. Appendix NQ Live

57 Appendix NQ Live Brand Performance Ads Rich Media Premium conversion Traffic redirect/referral Advertising App-promotion / Cross-promotion Placement Bidding

58 Appendix NQ Live Storefront Curated Live desktop storefront Curated Integrated Live into the desktop Live storefront desktop container Access to a diverse, broad Integrated set of content into and the brand Live desktop experiences. container Access to a diverse, broad set of content and brand experiences.

59 Appendix NQ Live Business Model 1. Premium Content 2. Direct traffic monetization 3. Platform licensing 4. Advertising

60 Appendix Music Radar The world s leading music search technology, currently providing over 3.2M music searches DAILY (08/13). Music Radar" is an music search technology that enables search for music through ambient sound or direct playback recognition. It is the first of its kind that allows users to find the track being played not only from a direct recording, but also by allowing a person to sing & hum the tune. Search song by: Direct music playback (ambient or direct playback) Singing/humming World s BEST: Proven and tested as the world s best melody recognition engine Extremely fast and efficient recognition. Personalized music recommendations based on user behavior. Enables integration with 3rd party music services.

61 Appendix Hissage NQ Mobile 61