BEIJING,Sept. 13,2024 -- Cheetah Mobile Inc. (NYSE:CMCM) ("Cheetah Mobile" or the "Company"),a China-based IT company,today announced its unaudited consolidated financial results for the second quarter ended June 30,2024.
Management Commentary
Mr. Sheng Fu,Cheetah Mobile's Chairman and Chief Executive Officer,remarked,"In Q2,Cheetah Mobile achieved solid revenue growth of 12.3% year-over-year,with AI and others contributing around 40% of total revenue. Our service robotics business,both domestically and internationally,continues to drive growth. Customers choose us for our superior product experience,after-sales services,and strong AI capabilities,including far field speech recognition. With a team that brings extensive experience from the PC and mobile eras,we are investing in developing the best products to capture opportunities in the service robotics and LLMs markets. We remain focused on expanding our robotics use cases,advancing product innovation with LLMs,and growing our global presence. Rather than pursuing short-term gains,we are committed to achieving high-quality,long-term growth. We are confident in our ability to capture long-term opportunities ahead."
Mr. Thomas Ren,Chief Financial Officer of Cheetah Mobile,stated,"In this quarter,we were able to reduce our operating loss compared to the previous quarter by strategically focusing on AI and service robots. Our operating margin,excluding share-based compensation expense for our legacy internet business,increased by 6.9 percentage points year over year and 4.5 percentage points quarter over quarter. Although Cheetah Mobile is still incurring losses,we generated more than RMB218 million in cash from operating activities in the second quarter,showcasing strong capabilities in cash generation and management. Moving forward,we are committed to continuing to enhance our operational efficiency and cash generation capabilities."
Second Quarter 2024 Financial Highlight
Total revenuesaccelerated to a year-over-year growth of 12.3%,reaching RMB187.4 million (US$25.8 million) in the second quarter of 2024,driven by an increase in the delivery of the Company's service robots in both domestic and international markets.
Revenues from internet business remained relatively flat year over year at RMB113.7 million (US$15.7 million) in the second quarter of 2024. In the second quarter of 2024,revenues generated from the internet business accounted for 60.7% of total revenues,compared to 69.1% in the same period last year.
Revenues from AI and othersincreased by 42.8% year over year to RMB73.7 million (US$10.1 million) in the second quarter of 2024. The growth was primarily driven by an increase in the delivery of the Company's service robots,following the acquisition of a controlling stake in Beijing OrionStar. In the second quarter of 2024,revenues generated from AI and others accounted for 39.3% of total revenues,compared to 30.9% in the same period last year.
Operating loss was RMB77.5 million (US$10.7 million) in the second quarter of 2024,compared to RMB65.6 million in the same period of last year. Non-GAAP operating loss was RMB62.5 million (US$8.6 million) in the second quarter of 2024,compared to RMB48.3 million in the same period of last year.
The increase in operating losses on a year-over-year basis was due to the Company's investments in AI,which have helped it enhance the product experience of its service robots. As previously mentioned in the past earnings releases,Cheetah Mobile's year-over-year costs and expenses increased,particularly associated with headcount and hardware.
Cost of revenues increased by 15.2% year over year to RMB65.9 million (US$9.1 million) in the second quarter of 2024,primarily resulting from the rise in the hardware-related costs for the Company's service robots. Non-GAAP cost of revenues increased by 14.8% year over year to RMB65.5 million (US$9.0 million) in the second quarter of 2024.
Research and development expenses increased by 14.5% year over year to RMB54.3 million (US$7.5 million) in the second quarter of 2024,primarily due to 1) amortization of intangible assets resulting fromthe acquisition of a controlling stake in Beijing OrionStar,2) higher R&D personnel-related expenses following the acquisition of Beijing OrionStar. Non-GAAP research and development expenses increased by 3.3% year over year to RMB48.0 million (US$6.6 million) in the second quarter of 2024.
Selling and marketing expenses increased by 17.3% year over year to RMB73.4 million (US$10.1 million) in the second quarter of 2024,primarily due to 1) increased marketing and promotion expenses related to our user acquisition for certain products of our internet business; and 2) increased personnel-related expenses as the Company increased its sales personnel following the acquisition of a controlling stake in Beijing OrionStar. Non-GAAP selling and marketing expenses increased by 16.7% year over year to RMB72.8 million (US$10.0 million) in the second quarter of 2024.
General and administrative expenses increased by 8.0% year over year to RMB71.6 million (US$9.9 million) in the second quarter of 2024,primarily due to increased personnel-related expenses as the Company increased the number of its G&A personnel following the acquisition of a controlling stake in Beijing OrionStar. Non-GAAP general and administrative expenses increased by 26.9% year over year to RMB63.8 million (US$8.8 million) in the second quarter of 2024.
In terms of sequential performance,the Company was able to reduce its operating loss from RMB80.6 million in the first quarter of 2024 to RMB77.5 million in this quarter,and its non-GAAP operating loss from RMB66.4 million in the first quarter of 2024 to RMB62.5 million in this quarter. Notably,operating margin,excluding share-based compensation expense for the internet business,was 12.4% in the second quarter of 2024,an improvement from 7.9% in the first quarter of 2024 and 5.5% in the same period of last year.
As of June 30,2024,the Company had cash and cash equivalents and short-term investments of RMB1,973.0 million (US$271.5 million).
As of June 30,the Company has long-term investments of RMB866.9 million (US$119.3 million).
Conference Call Information
The Company will hold a conference call on September 13th,at 7:00 a.m. Eastern Time (or 7:00 p.m. Beijing Time) to discuss its financial results. Listeners may access the call by dialing the following numbers:
Main Line:
International: 1-412-317-6061
United States Toll Free: 1-888-317-6003
Mainland China Toll Free: 4001-206115
Hong Kong Toll Free: 800-963976
Conference ID: 3980144
English Translation:
International: 1-412-317-6061
United States Toll Free: 1-888-317-6003
Mainland China Toll Free: 4001-206115
Hong Kong Toll Free: 800-963976
Conference ID: 7908950
A live and archived webcast of the conference call will also be available at the Company's investor relations website at http://ir.cmcm.com.
Exchange Rate
This press release contains translations of certain Renminbi amounts into U.S. dollars at specified rates solely for the convenience of readers. Unless otherwise noted,all translations from Renminbi to U.S. dollars in this press release were made at a rate of RMB7.2672 to US$1.00,the exchange rate in effect as of June 28,as set forth in the H.10 statistical release of the Federal Reserve Board. Such translations should not be construed as representations that RMB amounts could be converted into U.S. dollars at that rate or any other rate,or to be the amounts that would have been reported under accounting principles generally accepted in the United States of America ("U.S. GAAP").
About Cheetah Mobile Inc.
Cheetah Mobile is a China-based IT company with a commitment to AI innovation. It has attracted hundreds of millions of users through an array of internet products and services on PCs and mobile devices. At the same time,it actively engages in the independent research and development of AI technologies,including LLM technologies. Cheetah Mobile provides advertising services to advertisers worldwide,value-added services including the sale of premium membership to its users,multi-cloud management platform to companies globally,as well as service robots to international clients. Cheetah Mobile is also committed to leveraging its cutting-edge AI technologies,including LLM technologies,to empower its products and make the world smarter. It has been listed on the New York Stock Exchange since May 2014.
Safe Harbor Statement
This press release contains forward-looking statements. These statements,including management quotes and business outlook,constitute forward-looking statements under the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as "will," "expects," "anticipates," "future," "intends," "plans," "believes," "estimates" and similar statements. Such statements involve inherent risks and uncertainties. A number of factors could cause actual results to differ materially from those contained in the forward-looking statements,including but are not limited to the following: Cheetah Mobile's growth strategies; Cheetah Mobile's ability to retain and increase its user base and expand its product and service offerings; Cheetah Mobile's ability to monetize its platform; Cheetah Mobile's future business development,financial condition and results of operations; competition with companies in a number of industries including internet companies that provide online marketing services and internet value-added services; expected changes in Cheetah Mobile's revenues and certain cost or expense items; and general economic and business condition globally and in China. Further information regarding these and other risks is included in Cheetah Mobile's filings with the U.S. Securities and Exchange Commission. Cheetah Mobile does not undertake any obligation to update any forward-looking statement as a result of new information,future events or otherwise,except as required under applicable law.
Use of Non-GAAP Financial Measures
This release contains non-GAAP financial measures,including but not limited to:
Non-GAAP cost of revenues excludes share-based compensation expenses;
Non-GAAP gross profit excludes share-based compensation expenses;
Non-GAAP gross margin excludes share-based compensation expenses;
Total non-GAAP operating expenses exclude share-based compensation expenses and amortization of intangible assets resulting from business acquisitions;
Non-GAAP research and development expenses exclude share-based compensation expenses and amortization of intangible assets resulting from business acquisitions;
Non-GAAP selling and marketing expenses exclude share-based compensation expenses and amortization of intangible assets resulting from business acquisitions;
Non-GAAP general and administrative expenses exclude share-based compensation expenses;
Non-GAAP operating profit/loss excludes share-based compensation expenses and amortization of intangible assets resulting from business acquisitions;
Non-GAAP net income/loss attributable to Cheetah Mobile shareholders excludes share-based compensation expenses and amortization of intangible assets resulting from business acquisitions;
Non-GAAP diluted earnings/losses per ADS excludes share-based compensation expenses and amortization of intangible assets resulting from business acquisitions; and
Non-GAAP adjusted EBITDA represents net income/loss attributable to Cheetah Mobile shareholders excluding share-based compensation,interest income,depreciation and amortization,net income attributable to noncontrolling interests,other income,net and income tax expenses.
The Company reviews these non-GAAP financial measures together with GAAP financial measures to obtain a better understanding of its operating performance. It uses the non-GAAP financial measures for planning,forecasting and measuring results against the forecast. The Company believes that non-GAAP financial measures are useful supplemental information for investors and analysts to assess its operating performance without the effect of share-based compensation expenses and amortization of intangible assets resulting from business acquisitions,which have been and will continue to be significant recurring expenses in its business. However,the use of non-GAAP financial measures has material limitations as an analytical tool. One of the limitations of using non-GAAP financial measures is that they do not include all items that impact the Company's net income for the period. In addition,because non-GAAP financial measures are not measured in the same manner by all companies,they may not be comparable to other similarly titled measures used by other companies. In light of the foregoing limitations,you should not consider non-GAAP financial measure in isolation from or as an alternative to the financial measure prepared in accordance with U.S. GAAP. For more information on these non-GAAP financial measures,please see the tables captioned "Cheetah Mobile Inc. Reconciliation of GAAP and Non-GAAP Results".
Investor Relations Contact
Helen Jing Zhu
Cheetah Mobile Inc.
Tel: +86 10 6292 7779
Email: ir@cmcm.com
CHEETAH MOBILE INC.
Condensed Consolidated Balance Sheets
(Unaudited,amounts in thousands ofRenminbi("RMB") and US dollars ("US$"))
As of
December31,2023
June 30,2024
RMB
RMB
USD
ASSETS
Current assets:
Cash and cash equivalents
2,020,191
1,972,676
271,449
Short-term investments
1,023
331
46
Accounts receivable,net
401,064
445,091
61,247
Prepayments and other current assets,net
973,127
1,334,395
183,619
Due from related parties,net
71,505
110,234
15,169
Total current assets
3,466,910
3,862,727
531,530
Non-current assets:
Property and equipment,net
53,884
54,962
7,563
Operating lease right-of-use assets
30,451
31,337
4,312
Intangible assets,net
218,559
204,476
28,137
Goodwill
576,989
576,989
79,396
Long-term investments
937,460
866,860
119,284
Due from related parties,net
-
25,287
3,480
Deferred tax assets
188,503
194,226
26,726
Other non-current assets
160,428
80,819
11,121
Total non-current assets
2,166,274
2,034,956
280,019
Total assets
5,633,184
5,897,683
811,549
LIABILITIES,MEZZANINE EQUITY AND SHAREHOLDERS' EQUITY
Current liabilities:
Bank loans
5,000
-
-
Accounts payable
170,185
159,787
21,987
Accrued expenses and other current liabilities
2,437,210
2,811,054
386,814
Due to related parties
84,147
83,311
11,464
Income tax payable
31,603
33,351
4,589
Total current liabilities
2,728,145
3,087,503
424,854
Non-current liabilities:
Deferred tax liabilities
54,540
51,870
7,138
Other non-current liabilities
189,943
182,178
25,069
Total non-current liabilities
244,483
234,048
32,207
Total liabilities
2,628
3,321,551
457,061
Mezzanine equity:
Redeemable noncontrolling interests
105,978
185,676
25,550
Shareholders' equity:
Ordinary shares
244
246
34
Additional paid-in capital
2,711,875
2,716,472
373,799
Accumulated deficit
(613,102)
(816,978)
(112,420)
Accumulated other comprehensive income
356,854
381,288
52,467
Total Cheetah Mobile shareholders' equity
2,455,871
2,281,028
313,880
Noncontrolling interests
98,707
109,428
15,058
Total shareholders' equity
2,554,578
2,390,456
328,938
Total liabilities,mezzanine equity and shareholders' equity
5,549
CHEETAH MOBILE INC.
Condensed Consolidated Statements of Comprehensive Income (Loss)
(Unaudited,amounts in thousands ofRenminbi("RMB") and US dollars ("US$"),except for number of shares and per share(or ADS) data)
For The Three Months Ended
For The Six Months Ended
June 30,2024
June 30,2024
RMB
RMB
USD
RMB
RMB
USD
Revenues
166,951
187,417
25,790
337,385
377,705
51,974
Internet business
115,336
113,729
15,650
235,645
222,749
30,651
AI and others
51,615
73,688
10,140
101,740
154,956
21,323
Cost of revenues (a)
(57,186)
(65,895)
(9,067)
(113,349)
(135,651)
(18,666)
Gross profit
109,765
121,522
16,723
224,036
242,054
33,308
Operating income and expenses:
Research and development (a)
(47,426)
(54,285)
(7,470)
(92,854)
(111,616)
(15,359)
Selling and marketing (a)
(62,561)
(73,396)
(10,100)
(130,827)
(148,532)
(20,439)
General and administrative (a)
(66,333)
(71,610)
(9,854)
(110,459)
(140,755)
(19,369)
Other operating income,net
944
228
31
2,215
736
101
Total operating income and expenses
(175,376)
(199,063)
(27,393)
(331,925)
(400,167)
(55,066)
Operating loss
(65,611)
(77,541)
(10,670)
(107,889)
(158,113)
(21,758)
Other income/(expenses):
Interest income,net
14,896
9,773
1,345
27,238
25,089
3,452
Foreign exchange losses
(48,684)
(7,564)
(1,041)
(34,221)
(10,841)
(1,492)
Other expense,net
(152,351)
(51,612)
(7,102)
(154,152)
(59,207)
(8,147)
Loss before taxes
(251,750)
(126,944)
(17,468)
(269,024)
(203,072)
(27,945)
Income tax (expenses)/ benefits
(3,583)
6,391
879
(3,761)
6,193
852
Net loss
(255,333)
(120,553)
(16,589)
(272,785)
(196,879)
(27,093)
Less: net income attributable to noncontrolling interests
3,461
3,288
452
4,608
6,997
963
Net loss attributable to Cheetah Mobile shareholders
(258,794)
(123,841)
(17,041)
(277,393)
(203,876)
(28,056)
Net loss per share
Basic
(0.1772)
(0.0841)
(0.0116)
(0.1925)
(0.1390)
(0.0191)
Diluted
(0.1774)
(0.0841)
(0.0116)
(0.1933)
(0.1391)
(0.0191)
Net loss per ADS
Basic
(8.8615)
(4.2042)
(0.5785)
(9.6239)
(6.9488)
(0.9562)
Diluted
(8.8693)
(4.2067)
(0.5789)
(9.6665)
(6.9542)
(0.9569)
Weighted average number of shares outstanding
Basic
1,454,090,428
1,495,962,672
1,452,066,835
1,088,007
1,007
Diluted
1,007
Weighted average number of ADSs outstanding
Basic
29,081,809
29,919,253
29,041,337
29,901,760
29,760
Diluted
29,760
Other comprehensive income/(loss),net of tax of nil
Foreign currency translation adjustments
148,160
8,383
1,154
108,142
29,414
4,048
Unrealized losses on available-for-sale securities,net
(43,494)
(9,206)
(1,267)
(43,494)
(7,434)
(1,023)
Other comprehensive income/(loss)
104,666
(823)
(113)
64,648
21,980
3,025
Total comprehensive loss
(150,667)
(121,376)
(16,702)
(208,137)
(174,899)
(24,068)
Less: Total comprehensive income attributable to
noncontrolling interests
2,964
2,118
291
3,877
4,544
625
Total comprehensive loss attributable to Cheetah
Mobile shareholders
(153,631)
(123,494)
(16,993)
(212,014)
(179,443)
(24,693)
For The Three Months Ended
For The Six Months Ended
June 30,2024
(a) Share-based compensation expenses
RMB
RMB
USD
RMB
RMB
USD
Cost of revenues
107
357
49
226
449
62
Research and development
958
116
16
870
408
56
Selling and marketing
195
154
21
391
110
15
General and administrative
16,091
7,831
1,078
16,643
15,076
2,075
Total
17,351
8,458
1,164
18,130
16,043
2,208
CHEETAH MOBILE INC.
Reconciliation of GAAP and Non-GAAP Results
(Unaudited,except for per share data )
For The Three Months Ended June 30,2024
For The Six Months Ended June 30,2024
GAAP
Share-based
Amortization of
Non-GAAP
GAAP
Share-based
Amortization of
Non-GAAP
Result
Compensation
intangible assets*
Result
Result
Compensation
intangible assets*
Result
RMB
RMB
RMB
RMB
USD
RMB
RMB
RMB
RMB
USD
Revenues
187,417
-
-
187,417
25,790
377,705
-
-
377,705
51,974
Cost of revenues
(65,895)
357
-
(65,538)
(9,018)
(135,651)
449
-
(135,202)
(18,604)
Gross profit
121,522
357
-
121,879
16,772
242,054
449
-
242,503
33,370
Research and development
(54,285)
116
6,156
(48,013)
(6,607)
(111,616)
408
12,312
(98,896)
(13,609)
Selling and marketing
(73,396)
154
469
(72,773)
(10,014)
(148,532)
110
938
(147,484)
(20,294)
General and administrative
(71,610)
7,831
-
(63,779)
(8,776)
(140,755)
15,076
-
(125,679)
(17,294)
Other operating income,net
228
-
-
228
31
736
-
-
736
101
Total operating income and expenses
(199,063)
8,101
6,625
(184,337)
(25,366)
(400,167)
15,594
13,250
(371,323)
(51,096)
Operating loss
(77,541)
8,458
6,625
(62,458)
(8,594)
(158,113)
16,043
13,250
(128,820)
(17,726)
Net loss attributable to Cheetah Mobile shareholders
(123,841)
8,625
(108,758)
(14,965)
(203,876)
16,250
(174,583)
(24,024)
Diluted losses per ordinary share (RMB)
(0.0841)
0.0057
0.0043
(0.0741)
(0.1391)
0.0107
0.0089
(0.1195)
Diluted losses per ADS (RMB)
(4.2067)
0.2850
0.2167
(3.7050)
(6.9542)
0.5350
0.4442
(5.9750)
Diluted losses per ADS (USD)
(0.5789)
0.0392
0.0299
(0.5098)
(0.9569)
0.0736
0.0611
(0.8222)
For The Three Months Ended June 30,2023
For The Six Months Ended June 30,2023
GAAP
Share-based
Non-GAAP
GAAP
Share-based
Non-GAAP
Result
Compensation
Result
Result
Compensation
Result
RMB
RMB
RMB
RMB
RMB
Revenues
166,951
-
166,951
337,385
-
337,385
Cost of revenues
(57,186)
107
(57,079)
(113,349)
226
(113,123)
Gross profit
109,765
107
109,872
224,036
226
224,262
Research and development
(47,426)
958
(46,468)
(92,854)
870
(91,984)
Selling and marketing
(62,561)
195
(62,366)
(130,827)
391
(130,436)
General and administrative
(66,333)
16,091
(50,242)
(110,459)
16,643
(93,816)
Other operating income,net
944
-
944
2,215
-
2,215
Total operating income and expenses
(175,376)
17,244
(158,132)
(331,925)
17,904
(314,021)
Operating loss
(65,611)
17,351
(48,260)
(107,889)
18,130
(89,759)
Net loss attributable to Cheetah Mobile shareholders
(258,794)
17,351
(241,443)
(277,393)
18,130
(259,263)
Diluted losses per ordinary share (RMB)
(0.1774)
0.0119
(0.1655)
(0.1933)
0.0125
(0.1808)
Diluted losses per ADS (RMB)
(8.8693)
0.5943
(8.2750)
(9.6665)
0.6243
(9.0422)
* This represents amortization of intangible assets resulting from business acquisitions.
CHEETAH MOBILE INC.
Information about Segment
(Unaudited,except for percentage)
For The Three Months Ended June 30,2024
Internet Business
AI and others
Unallocated*
Consolidated
Internet Business
AI and others
Unallocated*
Consolidated
RMB
RMB
RMB
RMB
USD
RMB
RMB
RMB
RMB
USD
Revenue
113,729
73,688
-
187,790
222,749
154,956
-
377,974
Operating profit/(loss)
14,159
(83,242)
(8,458)
(77,541)
(10,670)
22,821
(164,891)
(16,043)
(158,113)
(21,758)
Operating margin
12.4%
(113.0)%
-
(41.4)%
(41.4)%
10.2%
(106.4)%
-
(41.9)%
(41.9)%
For The Three Months Ended June 30,2023
Internet Business
AI and others
Unallocated*
Consolidated
Internet Business
AI and others
Unallocated*
Consolidated
RMB
RMB
RMB
RMB
Revenue
115,336
51,615
-
166,951
235,645
101,740
-
337,385
Operating profit/(loss)
6,370
(54,630)
(17,351)
(65,611)
10,125
(99,884)
(18,130)
(107,889)
Operating margin
5.5%
(105.8)%
-
(39.3)%
4.3%
(98.2)%
-
(32.0)%
*Unallocated expenses refer toSBCexpenses that are not allocated to individual segments.
CHEETAH MOBILE INC.
Reconciliation from Net Income Attributable to Cheetah Mobile Shareholders to Adjusted EBITDA (Non-GAAP)
(Unaudited,amounts in thousands ofRenminbi("RMB") and US dollars ("US$"))
For The Three Months Ended
For The Six Months Ended
June 30,2024
RMB
RMB
USD
RMB
RMB
USD
Net loss attributable to Cheetah Mobile shareholders
(258,794)
(123,841)
(17,041)
(277,393)
(203,876)
(28,056)
Add:
Income tax expenses/ (benefits)
3,583
(6,391)
(879)
3,761
(6,193)
(852)
Interest income,net
(14,896)
(9,773)
(1,345)
(27,238)
(25,089)
(3,452)
Depreciation and amortization
8,273
12,317
1,695
17,106
24,629
3,389
Net income attributable to noncontrolling interests
3,997
963
Other expense,net
201,035
59,176
8,143
188,373
70,048
9,639
Share-based compensation
17,351
8,458
1,164
18,130
16,043
2,208
Adjusted EBITDA
(39,987)
(56,766)
(7,811)
(72,653)
(117,441)
(16,161)