KongZhong's (KONG) unaudited fourth quarter 2005 and fiscal year 2005 financial results show the company's quarterly total revenues grew 34% year-over-year and 9% sequentially to a new record of US$22.14 million.

2.5G revenue declined slightly year-over-year and grew by 3% sequentially to US$14.75 million. Multimedia messaging service (MMS) revenue continued its strong growth momentum and increased by 32% from the previous quarter.

Total revenues in 2005 increased 62% from 2004 to reach a new record of US$77.75 million.

The cost of revenue in the fourth quarter of 2005 totaled US$10.22 million, an increase of 81% from the fourth quarter of 2004 and 26% from the third quarter of 2005. The year-over-year increase was driven by significantly higher business activities and was primarily due to higher payments to mobile operators, handset manufacturers, and content partners.

Total operating expenses in the fourth quarter of 2005 were US$6.23 million, a decrease of 33% over the previous quarter. The company says the significant decrease in operating expenses is largely due to the US$3.5 million one-time non-recurring provision related to the pending settlement of the class action lawsuit that was made during the third quarter of 2005.

The company's headcount increased by 13% from 754 at the end of the third quarter of 2005 to 855 as of December 31, 2005.

At the end of the quarter, the company had US$117.14 million in cash and cash equivalents. Cash flow from operating activities totaled US$5.95 million in the fourth quarter 2005. For the fiscal year 2005, the Company generated US$29.46 million in operating cash flow.

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