Disclosure: I am long NQ.
NQ Mobile (NQ) is a global mobile security and privacy protection SaaS company for smartphones. NQ's mobile security services protect users from mobile malware, data theft, and privacy intrusion. NQ is the global leader with 242 million customers and is adding 400,000 new customers a day. The Company is a highly levered play on the strong global growth of smartphones and the rapid growth in malware targeting smartphones. Given NQ's massive growth and strong FCF (2012 revenue up 127% y/y, 2013E revenue up 90% y/y, 2013E FCF up over 100% y/y), the stock is silly cheap. Hence, the question is begged. Why is NQ silly cheap? One (unfounded) concern is that mobile security software could become a commodity or is not scalable. This article will explain why NQ produces differentiated technology that has a sustainable competitive advantage. [Read on here]