KongZhong's (KONG) unaudited first quarter 2006 financial results show total revenues in the first quarter of 2006 grew 64% year-over-year and 26% sequentially to a new record of US$27.91 million.

2.5G wireless value added services (WVAS) revenue increased 31% year-over-year and grew 21% sequentially to US$17.88 million. 2G revenue grew 208% year-over-year and 36% sequentially to approximately US$10.0 million.

US GAAP net income grew 46% year-over-year and 37% sequentially to a new record of US$8.61 million. Diluted earnings per ADS in the first quarter were US$0.24, exceeding the high end of the company's first quarter guidance of US$0.21 to US$0.22 which did not include the share-based compensation cost.

The cost of revenue in the first quarter of 2006 totalled US$11.75 million, an increase of 88% from the first quarter of 2005 and 15% from the fourth quarter of 2005, and represented 42% of total revenues.

Total operating expenses in the first quarter of 2006 were US$9.23 million, an increase of 73% year-over-year and 48% quarter-over-quarter.

The company's headcount increased by 13% from 855 at the end of the fourth quarter of 2005 to 963 as of March 31, 2006, including Sharp Edge's 138 employees.

At the end of the quarter, the company had US$117.04 million in cash and cash equivalents. Cash flow from operating activities totalled US$4.18 million in the first quarter of 2006.

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