Net revenue of 343.1 million US dollars, NetQin turns to smart cars and wants to be a facilitator

On April 7, 2017, NetQin announced its unaudited financial results for the fourth quarter and full year ended December 31, 2016. Its data showed that NetQin's full-year net revenue in 2016 was US$343.1 million, compared with US$406.7 million for the whole of last year, a year-on-year decrease of 15.6%. Excluding the Guoxin factor, net revenue increased by 19.7% year-on-year. The full-year mobile value-added service net revenue was US$199.8 million, compared with US$139.6 million for the whole of last year, a year-on-year increase of 43.1%. In 2016, the company recognized an impairment loss of US$12.2 million.

From the data it released, it can be seen that after excluding the Guoxin factor, NetQin's net revenue in 2016 increased by nearly 20%.

Xiuse Show and Feiliu have become the mainstays of NetQin

NetQin Mobile's value-added services mainly include entertainment and gaming sections.

The pillar of the entertainment sector is Xiuse Show, a subsidiary of NetQin. As a pioneer in the mobile live broadcast industry, Xiuse Show was a pioneer at a time when real-time video social networking on mobile terminals was relatively rare in the market, and the old video live broadcast platforms were still trying to seize the dividends of the PC terminal. Although video live broadcast platforms are now pouring into the mobile terminal, Xiuse Show still enjoys a position advantage due to its early entry. At the same time, not focusing on the PC terminal but only on the mobile terminal is also an important idea that distinguishes Xiuse Show from other competitors.

Xiuse Show not only provides an online and offline live interactive platform for anchors and fans, but also is committed to exploring and building mechanisms for high-quality content IPs and entering the upstream content industry of entertainment. By introducing anchors such as celebrities and Internet celebrities, the community temperament is cultivated and content is enriched. Xiuse Show encourages anchors to show their talents, which greatly enriches the live content of the platform and provides users with more choices to meet diverse needs.

In 2015, Xiuse’s live broadcast business grew by 951.6%. In 2016, NetQin’s mobile social video live broadcast platform revenue grew by 108.8% compared with the same period last year.

In the gaming sector, Feiliu has created more profit margins. Since 2013, Feiliu has started to focus on mobile games and cooperated with many leading developers. Many games have gained a good reputation under Feiliu's operation.

Feiliu's success is mainly due to its many years of rich operating experience, excellent data analysis and improvement capabilities, providing users with accurate services based on local cultural characteristics, player habits and interests, and accurately grasping the direction of market development. Even in the past two years when the mobile game market was generally not optimistic, NetQin's mobile game revenue increased by 16.7% year-on-year.

Increase also game entertainment decrease also game entertainment

After achieving a 43.1% increase in net income, NetQin resolutely chose to sell its most popular mobile gaming and entertainment sectors.

On March 30, 2017, NetQin Mobile announced that it had signed a final agreement with Tongfang Investment Fund, an affiliate of Tongfang Securities under Tsinghua Tongfang. Tongfang Investment Fund will acquire the controlling stakes of Feiliu Mobile and Xiuse Show for RMB 3.32 billion in cash.

For the full year 2016, NQ recognized an impairment loss of US$12.2 million, which was due to a one-time, non-cash impairment of a long-term equity investment.

NetQin has three reporting units, including mobile games and advertising unit, enterprise mobile business unit and security and other traffic business unit. The enterprise mobile business reporting unit recognized an impairment of $8.1 million. The security and other traffic business reporting unit includes mobile security business, mobile social video live platform business and other traffic-related businesses. This reporting unit recognized an impairment of $90.8 million, all due to other traffic-related businesses.

In addition, NetQin has also taken action on smart cars. It is understood that NetQin had already invested in and controlled Lingdong Technology as early as the summer of 2015. Its third quarter financial report for 2016 showed that NetQin's R&D expenses increased by 16.7% year-on-year, and R&D expenses under non-GAAP increased by 24.2% year-on-year, which was mainly due to NetQin's investment in Lingdong Technology.

With the sale of the two sectors of games and entertainment, as well as the layout of smart cars, NetQin's "N+Q Blueberry New Plan" will undergo major changes.

Seize the opportunity of the industry and invest in smart cars

As the number of cars increases year by year, cars are becoming ubiquitous. In the future, cars will not only be driverless, leaving space and time for passengers to use the car, but also be able to interact with each other and with infrastructure, which are precisely the strengths of Internet companies and very attractive growth points for business models.

The transformation of the traditional automobile industry and the smart car industry have attracted many Internet companies to participate, including industry giants such as Google and Apple. On December 1 last year, NetQin released its third quarter financial report for 2016, which revealed information about its involvement in the field of smart cars. The financial report shows that NetQin invested in Link Motion Technology last year and consolidated the business.

Lingdong Technology has more than ten years of experience in automotive software development, has served more than 200 projects on the market, and has global technical experience. In the past eight years, it has been committed to the research and development and design of intelligent vehicle platforms, providing Internet of Vehicles technology solutions, and has provided successful software development and solutions for many Fortune 500 customers. Now, the smart car section has appeared on the homepage of NetQin's official website, which shows that smart cars have become the core of NetQin's future development.

The sale of the mobile game and entertainment sectors is probably also to make room for smart cars. As a veteran mobile Internet company, NetQin's accumulation of expertise and experience cannot be underestimated. In the fourth quarter 2016 earnings conference call, NetQin CEO Xu Zemin said: "We will work together with some manufacturers in the entire smart car ecosystem to create a more intelligent mobile service experience. We firmly believe that smart cars will have rapid growth space and competitiveness in the future. Precisely because we are the promoters of traditional car companies towards mobile Internet, we are not their competitors. On the contrary, we are their assistants. In the entire smart car field, we will play such a unique role."

NetQin started out as a mobile security company, and is still doing well in mobile games and entertainment. It has to be said that NetQin has a forward-looking vision and strong strength. When it came to the smart car trend, NetQin resolutely jumped into it, fully demonstrating the determination of a veteran Internet company to transform. Let's wait and see how NetQin performs in the smart car field in the future.

As a winner of Toutiao's Qingyun Plan and Baijiahao's Bai+ Plan, the 2019 Baidu Digital Author of the Year, the Baijiahao's Most Popular Author in the Technology Field, the 2019 Sogou Technology and Culture Author, and the 2021 Baijiahao Quarterly Influential Creator, he has won many awards, including the 2013 Sohu Best Industry Media Person, the 2015 China New Media Entrepreneurship Competition Beijing Third Place, the 2015 Guangmang Experience Award, the 2015 China New Media Entrepreneurship Competition Finals Third Place, and the 2018 Baidu Dynamic Annual Powerful Celebrity.