Cheetah Mobile Announces Second Quarter 2024 Unaudited Consolidated Financial Results
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 2,964 2,118 291 3,877 4,544 625
noncontrolling interests
Total comprehensive loss attributable to Cheetah (153,631) (123,494) (16,993) (212,014) (179,443) (24,693)
Mobile shareholders
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 Result Result Compensation intangible
assets* 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$"), except for percentage)
For The Three Months Ended June 30, 2024
For The Six Months Ended June 30, 2024
Internet AI and Unallocated* Consolidated Internet AI and
Business others Business others Unallocated* Consolidated
RMB RMB RMB RMB USD RMB RMB RMB RMB USD
Revenue 113,729 73,688 187,417 25,790 222,749 154,956 377,705 51,974
Operating profit/(loss) 14,159 (83,242) (8,458) (77,541) (10,670) 22,821 (164,891) (16,043) (158,113) (21,758)
Operating margin 12.4 % (113.0) % (41.4) % (41.4) % 10.2 % (106.4) % (41.9) % (41.9) %
For The Three Months Ended June 30, 2023
For The Six Months Ended June 30, 2023
Internet AI and Unallocated* Consolidated Internet
Business others Business AI and others Unallocated* Consolidated
RMB RMB RMB RMB
Revenue 115,336 51,615 166,951 235,645 101,740 337,385
Operating profit/(loss) 6,370 (54,630) (17,351) (65,611) 10,125 (99,884) (18,130) (107,889)
Operating margin 5.5 % (105.8) % (39.3) % 4.3 % (98.2) % (32.0) %
*Unallocated expenses refer to SBC expenses that are not allocated to individual segments.
CHEETAH MOBILE INC.
Reconciliation from Net Income Attributable to Cheetah Mobile Shareholders to Adjusted EBITDA (Non-GAAP)
(Unaudited, amounts in thousands of Renminbi ("RMB") and US dollars ("US$"))
For The Three Months Ended For The Six Months Ended
June 30, June 30, June 30, June 30, June 30, June 30,
2023 2024 2024 2023 2024 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)
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SOURCE Cheetah Mobile
