NQ Mobile discloses in its Q4 report it "identified an accounting overstatement relating to share based compensation expense" for its Q3 2013 results. The company is changing its G&A expense, net loss, and balance sheet figures to account for the revision.
The company also says it has bought a 58% stake in Tianjin HuaYong Wireless, developer of live wallpaper app vLife (used by the NQ Live homescreen wallpaper) for "total cash payment of RMB 15.2 million, $34.4 million, and restricted shares of the Company at the market value of $ 45.5 million."
Guidance is strong: NQ expects Q1 revenue of $75M-$76M (above a $65.5M consensus) and 2014 revenue of $320M-$325M (above a $293.9M consensus).
Contributing to NQ's Q4 EPS miss: Gross margin fell to 48.8% from 59.5% in Q3 and 67.8% a year earlier, and opex rose 8.1% Q/Q and 89.4% Y/Y to $37.8M. The GM decline is blamed on a mix shift towards mobile games/ads. NationSky's low gross margin of 20.6% (caused by hardware procurement) also didn't help.
Ad sales rose 532% Y/Y and made up nearly 1/4 of revenue. Mobile value-added services (security/games) rose 35% and totaled 40% of revenue, and enterprise mobility (NationSky) rose 53% Q/Q and totaled 35% of revenue.
Total registered user accounts rose 12% Q/Q to 587.7M. Average monthly premium accounts rose 5% to 15.6M.
Q4 results, PR