omniture

Cheetah Mobile Announces Second Quarter 2024 Unaudited Consolidated Financial Results

2024-09-13 17:00 4930

BEIJING, Sept. 13, 2024 /PRNewswire/ -- 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 revenues accelerated 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 others increased 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 from the 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, 2024, 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, 2024, 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, 2024, 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 of Renminbi ("RMB") and US dollars ("US$"))



As of



December 31, 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


2,972,628




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


5,633,184




5,897,683




811,549


 

 

CHEETAH MOBILE INC.

Condensed Consolidated Statements of Comprehensive Income (Loss)

(Unaudited, amounts in thousands of Renminbi ("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, 2023


June 30, 2024


June 30, 2024


June 30, 2023


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


1,495,962,672


1,452,066,835


1,495,088,007


1,495,088,007

Diluted


1,454,090,428


1,495,962,672


1,495,962,672


1,452,066,835


1,495,088,007


1,495,088,007

Weighted average number of ADSs outstanding













Basic


29,081,809


29,919,253


29,919,253


29,041,337


29,901,760


29,901,760

Diluted


29,081,809


29,919,253


29,919,253


29,041,337


29,901,760


29,901,760














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, 2023


June 30, 2024


June 30, 2024


June 30, 2023


June 30, 2024


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, amounts in thousands of Renminbi ("RMB") and US dollars ("US$"), 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)


8,458


6,625


(108,758)


(14,965)


(203,876)


16,043


13,250


(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, amounts in thousands of Renminbi ("RMB") and US dollars ("US$"), except for percentage)



For The Three Months Ended June 30, 2024


For The Six 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


-


187,417


25,790


222,749


154,956


-


377,705


51,974

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


For The Six 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 to SBC expenses 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 of Renminbi ("RMB") and US dollars ("US$"))




For The Three Months Ended


For The Six Months Ended



June 30, 2023


June 30, 2024


June 30, 2024


June 30, 2023


June 30, 2024


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


3,461


3,288


452


4,608


6,997


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)

 

Source: Cheetah Mobile
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