UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

 

FORM 6-K

 

 

REPORT OF FOREIGN PRIVATE ISSUER

PURSUANT TO RULE 13a-16 OR 15d-16

UNDER THE SECURITIES EXCHANGE ACT OF 1934

For the month of August 2019

Commission File Number: 001-36427

 

 

CHEETAH MOBILE INC.

 

 

Building No. 8

Hui Tong Times Square

Yaojiayuan South Road

Beijing 100123

People’s Republic of China

(Address of principal executive offices)

 

 

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.

Form 20-F  ☒            Form 40-F  ☐

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):  ☐

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):  ☐

 

 

 


SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

CHEETAH MOBILE INC.

By:

  /s/ Vincent Zhenyu Jiang

Name:

  Vincent Zhenyu Jiang

Title:

  Chief Financial Officer

Date: August 21, 2019


Exhibit Index

Exhibit 99.1 — Press Release

Exhibit 99.2 — Press Release

EX-99.1

Exhibit 99.1

Cheetah Mobile Announces Second Quarter 2019

Unaudited Consolidated Financial Results

BEIJING, August 20, 2019 /PRNewswire/ — Cheetah Mobile Inc. (NYSE: CMCM) (“Cheetah Mobile” or the “Company”), a leading mobile internet company with global market coverage, today announced its unaudited consolidated financial results for the second quarter ended June 30, 2019.

Management Commentaries

Mr. Sheng Fu, Cheetah Mobile’s Chairman and Chief Executive Officer, stated, “Our second quarter revenues exceeded the high end of our revenue guidance for the quarter. Notably, this revenue growth was driven by our mobile games and AI-related businesses. During the quarter, revenues from our mobile games business increased by 109% year over year while revenues from AI and other businesses increased by 236% year over year. These robust growth performances are a testament to our continuous product enhancement and innovation. By leveraging our massive user base and cash generated from our utility product business, we have increasingly streamlined our operations to bolster these two growing business segments. Looking ahead, we will continue to invest heavily in our AI-related business to build our growth engine over the long-term in a new technological era.”

Mr. Vincent Jiang, Cheetah Mobile’s Chief Financial Officer, commented, “In the quarter, our utility products and related services continued to generate a solid profit of RMB121 million while losses from the mobile entertainment business continued to narrow. As of June 30, 2019, we had cash, cash equivalents, restricted cash, short-term investments of US$488 million, and long-term investments of US$287 million. Looking ahead, we are confident in our long-term growth prospects and believe that our strong cash generation capabilities in utilities products and related services and games, combined with our healthy cash balance, will enable us to continue expanding into the AI space through the integration of AI technology and innovative product design.”

Second Quarter 2019 Operating Metric

The average number of global mobile monthly active users (“Mobile MAUs”) was 376.5 million in the second quarter of 2019. The number of Mobile MAUs from markets outside of China, or overseas markets, accounted for 74.2% of the total number of Mobile MAUs in the second quarter of 2019.

Second Quarter 2019 Consolidated Financial Results

REVENUES

Total revenues were RMB970.1 million (US$141.3 million) in the second quarter of 2019, decreasing by 12.1% year over year.

Revenues from utility products and related services decreased by 44.0% year over year to RMB423.5 million (US$61.7 million) in the second quarter of 2019. This year-over-year decrease was primarily due to the slowdown of the Company’s overseas mobile utility business, resulting from the negative publicity caused by a news article from 2018, and the softness of the domestic advertising industry in 2019.

 

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Revenues from the mobile entertainment business increased by 49.6% year over year to RMB498.0 million (US$72.5million), driven by the growth of both the Company’s mobile games business and LiveMe business.

 

Revenues from the mobile games business increased by 108.5% year over year to RMB289.2 million (US$42.1 million) in the quarter. This increase was mainly attributable to the strong performance of Bricks n Balls, which began to ramp up in the middle of July 2018, as well as several new casual games launched earlier in the year. In addition, the Company’s flagship titles, including Piano Tiles 2, Rolling Sky, and Dancing Line, also exhibited strong performance throughout the quarter.

 

Revenues from LiveMe increased by 7.5% year over year to RMB208.8 million (US$30.4 million). The increase was primarily driven by higher average revenue per paying user. LiveMe introduced several new features in the quarter to enhance user interaction, competition, and engagement.

AI and other revenues grew by 236.2% year over year to RMB48.6 million (US$7.1 million), mainly driven by the sales of Cheetah Translator, the Company’s AI-based interpretation device.

COST OF REVENUES AND GROSS PROFIT

Cost of revenues decreased by 6.9% year over year to RMB327.0 million (US$47.6 million) in the second quarter of 2019. The year-over-year decrease resulted from the reduced traffic acquisition costs associated with the Company’s third-party advertising platform business, partially offset by increases in both content and channel costs in relation to the Company’s mobile game business as well as costs associated with the Company’s AI business. Non-GAAP cost of revenues decreased by 7.0% year over year to RMB326.8 million (US$47.6 million) in the second quarter of 2019.

Gross profit decreased by 14.5% year over year to RMB643.2 million (US$93.7 million) in the second quarter of 2019. Non-GAAP gross profit decreased by 14.5% year over year to RMB643.3 million (US$93.7 million). Gross margin was 66.3% in the second quarter of 2019, compared to 68.2% in the second quarter of 2018. Non-GAAP gross margin was 66.3% in the second quarter of 2019, compared to 68.2% in the second quarter of 2018.

OPERATING INCOME/LOSS AND EXPENSES

Total operating expenses increased by 12.0% year over year to RMB698.9 million (US$101.8 million) in the second quarter of 2019. Total non-GAAP operating expenses increased by 9.1% year over year to RMB665.1 million (US$96.9 million) in the second quarter of 2019.

 

Research and development (R&D) expenses increased by 36.2% year over year to RMB211.4 million (US$30.8 million) in the second quarter of 2019. This increase was primarily attributable to higher share-based compensation expenses and an increased R&D headcount in relation to the Company’s mobile games and AI-related businesses. Non-GAAP R&D expenses, which exclude share-based compensation expenses, increased by 24.7% year over year to RMB197.8 million (US$28.8 million) in the second quarter of 2019.

 

Selling and marketing expenses increased by 3.2% year over year to RMB381.8 million (US$55.6 million) in the second quarter of 2019. This increase was mainly a result of the Company’s increased promotional efforts for its new mobile games. Non-GAAP selling and marketing expenses, which exclude share-based compensation expenses, increased by 3.8% year over year to RMB381.2 million (US$55.5 million) in the second quarter of 2019.

 

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General and administrative expenses increased by 17.5% year over year to RMB117.6 million (US$17.1 million) in the second quarter of 2019. This year-over-year increase was primarily due to increases in professional service fees, and share-based compensation expenses. Non-GAAP general and administrative expenses, which exclude share-based compensation expenses, increased by 15.5% year over year to RMB98.0 million (US$14.3 million) in the second quarter of 2019.

Operating loss was RMB55.7 million (US$8.1 million) in the second quarter of 2019, compared to an operating profit of RMB127.9 million in the same period last year. Non-GAAP operating loss was RMB21.8 million (US$3.2 million) in the second quarter of 2019, compared to a Non-GAAP operating income of RMB142.6 million in the same period last year.

The Company has reported its operating profit (loss) along the following segments since the second quarter of 2017:

 

Operating profit for utility products and related services was RMB121.1 million (US$17.6 million) in the second quarter of 2019, decreasing from RMB282.1 million in the second quarter of 2018, mainly due to the revenue decrease.

 

Operating loss for the mobile entertainment business was RMB68.4 million (US$10.0 million) in the second quarter of 2019, compared to operating loss of RMB98.6 million in the same period last year. The reduced losses were mainly attributable to the increasing operational leverage and stricter cost and expense management for LiveMe, as well as the improved operating profits for the Company’s flagship games, partially offset by initiatives to launch new titles.

Share-based compensation expenses were RMB34.0 million (US$4.9 million) in the second quarter of 2019, compared to RMB14.6 million in the same period last year, as the Company granted a certain number of restricted shares to employees.

OTHER INCOME, NET

Other income, net was RMB33.8 million (US$4.9 million) in the second quarter of 2019, which was primarily due to increases in fair value of certain long-term investments, including our investments in Codemao, a Chinese online education platform that teaches programming to children, and SuperAtom, an online finance platform focusing on the southeastern Asia markets, in the second quarter of 2019.

NET INCOME ATTRIBUTABLE TO CHEETAH MOBILE SHAREHOLDERS

Net income attributable to Cheetah Mobile shareholders was RMB48.5 million (US$7.1 million) in the second quarter of 2019. Non-GAAP net income attributable to Cheetah Mobile shareholders was RMB82.5 million (US$12.0 million) in the second quarter of 2019.

NET INCOME PER ADS

Diluted earnings per ADS was RMB0.28 (US$0.04) in the second quarter of 2019. Non-GAAP diluted income per ADS was RMB0.52 (US$0.08) in the second quarter of 2019.

 

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BALANCE SHEET

As of June 30, 2019, the Company had cash and cash equivalents, restricted cash, and short-term investments of RMB3,351.4 million (US$488.2 million).

SHARES ISSUED AND OUTSTANDING

As of June 30, 2019, the Company had a total of 1,433,343,199 Class A and Class B ordinary shares issued and outstanding. One ADS represents 10 Class A ordinary shares.

RECENT UPDATES

LiveMe to Amend its Share Incentive Plan

To better incentivize LiveMe’s key employees amid increasingly fierce competition throughout the live streaming and short-form video market, both LiveMe’s board of directors and Cheetah Mobile’s board of directors have approved LiveMe to (i) amend its share incentive plan to increase the number of shares to be issued under the current plan and (ii) issue a certain number of new shares into a trust under the plan for the benefit of current and future recipients of LiveMe’s share incentive awards. The amendment of the plan and the issuance of new shares will become effective on September 30, 2019.

As a result, Cheetah Mobile will no longer hold the majority voting power in LiveMe and will cease to consolidate LiveMe’s financial results into the Company’s consolidated financial statements starting the fourth quarter of 2019.

Share Repurchase Program

On September 13, 2018, the Company announced that its board of directors had approved a share repurchase program of up to US$100 million of the Company’s outstanding ADSs for a period not to exceed 12 months. The Company funded repurchases made under this program from its available cash balance. As of August 19, 2019, the Company had repurchased approximately 4.5 million ADSs for approximately US$32 million under this program.

Business Outlook

For the third quarter of 2019, the Company expects its total revenues to be between RMB940 million (US$137 million) and RMB980 million (US$143 million). This estimate represents management’s preliminary view as of the date of this release, which is subject to change.

Conference Call Information

The Company will hold a conference call on Tuesday, August 20, 2019 at 8:00 a.m. Eastern Time or 8:00 p.m. Beijing Time to discuss the financial results. Listeners may access the call by dialing the following numbers:

International: +1-412-902-4272

United States Toll Free: +1-888-346-8982

China Toll Free: 4001-201-203

Hong Kong Toll Free: 800-905-945

Conference ID: Cheetah Mobile

 

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The replay will be accessible through August 27, 2019 by dialing the following numbers:

International: +1-412-317-0088

United States Toll Free: +1-877-344-7529

Access Code: 10134187

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 RMB6.8650 to US$1.00, the exchange rate in effect as of June 30, 2019, 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 leading mobile Internet company with global market coverage. It has attracted hundreds of millions of monthly active users through its mobile utility products such as Clean Master and Cheetah Keyboard, casual games such as Piano Tiles 2, Bricks n Balls, and live streaming product LiveMe. The Company provides its advertising customers, which include direct advertisers and mobile advertising networks through which advertisers place their advertisements, with direct access to highly targeted mobile users and global promotional channels. The Company also provides value-added services to its mobile application users through the sale of in-app virtual items on selected mobile products and games. Cheetah Mobile is committed to leveraging its cutting-edge artificial intelligence technologies to power 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.

 

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Use of Non-GAAP Financial Measures

To supplement Cheetah Mobile’s consolidated financial information presented in accordance with U.S. GAAP, Cheetah Mobile uses the following non-GAAP financial measures:

 

Non-GAAP cost of revenues reflects cost of revenues excluding the portion of share-based compensation expenses allocated to cost of revenues.

 

Non-GAAP gross profit reflects gross profit excluding the portion of share-based compensation expenses allocated to gross profit.

 

Non-GAAP operating income and expenses reflect operating income and expenses excluding the portion of share-based compensation expenses allocated to operating expenses.

 

Non-GAAP operating profit reflects operating profit excluding share-based compensation expenses.

 

Non-GAAP net income attributable to Cheetah Mobile shareholders is net income attributable to Cheetah Mobile shareholders excluding share-based compensation expenses.

 

Non-GAAP diluted earnings per ADS is non-GAAP net income attributable to Cheetah Mobile shareholders excluding net income attributable to redeemable non-controlling interests, divided by weighted average number of diluted ADSs.

 

Adjusted EBITDA is earnings before interest, taxes, depreciation, amortization, other non-operating income and share-based compensation expenses.

 

Free cash flow is net cash generated by operating activities less capital expenditure.

The Company believes that separate analysis and exclusion of share-based compensation expenses and the use of Adjusted EBITDA add clarity to the constituent parts of its performance from the cash perspective. 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, 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. Reconciliations of GAAP and Non-GAAP Results” and “Cheetah Mobile Inc. Reconciliation of Net Income Attributable to Cheetah Mobile Shareholders to Adjusted EBITDA (Non-GAAP)” at the end of this release.

 

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Investor Relations Contact

Cheetah Mobile Inc.

Helen Jing Zhu

Tel: +86 10 6292 7779 ext. 1600

Email: helenjingzhu@cmcm.com

ICR Inc.

Jack Wang

Tel: +1 (646) 417-5395

Email: IR@cmcm.com

 

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CHEETAH MOBILE INC.

Condensed Consolidated Balance Sheets

(Unaudited, amounts in thousands of Renminbi (“RMB”) and US dollars (“US$”)

 

     As of  
     December 31, 2018     June 30, 2019     June 30, 2019  
     RMB     RMB     USD  

ASSETS

      

Current assets:

      

Cash and cash equivalents

     2,783,843       1,928,068       280,855  

Restricted cash

     6,133       2,657       387  

Short-term investments

     930,610       1,420,652       206,941  

Accounts receivable

     655,261       537,329       78,271  

Prepayments and other current assets

     1,064,714       1,198,326       174,556  

Due from related parties

     126,990       250,607       36,505  
  

 

 

   

 

 

   

 

 

 

Total current assets

     5,567,551       5,337,639       777,515  
  

 

 

   

 

 

   

 

 

 

Non-current assets:

      

Property and equipment, net

     63,919       66,575       9,698  

Right-of-use assets, net*

     —         210,267       30,629  

Intangible assets, net

     48,421       64,687       9,423  

Goodwill

     617,837       629,583       91,709  

Investment in equity investees

     151,533       165,690       24,135  

Other long term investments

     1,697,510       1,803,940       262,773  

Due from related parties

     21,139       16,878       2,459  

Deferred tax assets

     88,896       129,085       18,803  

Other non-current assets

     35,830       36,177       5,269  
  

 

 

   

 

 

   

 

 

 

Total non-current assets

     2,725,085       3,122,882       454,898  
  

 

 

   

 

 

   

 

 

 

Total assets

     8,292,636       8,460,521       1,232,413  
  

 

 

   

 

 

   

 

 

 

LIABILITIES, MEZZANINE EQUITY AND SHAREHOLDERS’ EQUITY

      

Current liabilities:

      

Accounts payable

     171,055       163,490       23,815  

Accrued expenses and other current liabilities

     1,514,642       1,355,760       197,489  

Due to related parties

     37,298       37,516       5,465  

Income tax payable

     112,770       100,745       14,675  
  

 

 

   

 

 

   

 

 

 

Total current liabilities

     1,835,765       1,657,511       241,444  
  

 

 

   

 

 

   

 

 

 

Non-current liabilities:

      

Deferred tax liabilities

     110,291       116,920       17,031  

Other non-current liabilities*

     64,185       279,579       40,724  
  

 

 

   

 

 

   

 

 

 

Total non-current liabilities

     174,476       396,499       57,755  
  

 

 

   

 

 

   

 

 

 

Total liabilities

     2,010,241       2,054,010       299,199  
  

 

 

   

 

 

   

 

 

 

Mezzanine equity:

      

Redeemable noncontrolling interests

     687,847       708,534       103,210  
  

 

 

   

 

 

   

 

 

 

Shareholders’ equity:

      

Ordinary shares

     230       231       34  

Treasury stock

     (221,932     (221,932     (32,328

Additional paid-in capital

     2,742,893       2,801,117       408,029  

Retained earnings

     2,705,970       2,740,847       399,249  

Accumulated other comprehensive income

     249,304       266,821       38,867  
  

 

 

   

 

 

   

 

 

 

Total Cheetah Mobile shareholders’ equity

     5,476,465       5,587,084       813,851  

Noncontrolling interests

     118,083       110,893       16,153  
  

 

 

   

 

 

   

 

 

 

Total equity

     5,594,548       5,697,977       830,004  
  

 

 

   

 

 

   

 

 

 

Total liabilities, mezzanine equity and equity

     8,292,636       8,460,521       1,232,413  
  

 

 

   

 

 

   

 

 

 

 

*

On January 1, 2019, the company adopted ASC 842, the new lease standard, using the modified retrospective basis and did not restate comparative periods.

 

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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  
     June 30, 2018     March 31, 2019     June 30, 2019     June 30, 2019  
     RMB     RMB     RMB     USD  

Revenues

     1,103,456       1,085,628       970,145       141,318  

Utility products and related services

     756,093       497,933       423,524       61,694  

Mobile entertainment

     332,907       556,230       498,021       72,545  

AI and others

     14,456       31,465       48,600       7,079  

Cost of revenues (a)

     (351,360     (366,931     (326,982     (47,630
  

 

 

   

 

 

   

 

 

   

 

 

 

Gross profit

     752,096       718,697       643,163       93,688  

Operating income and expenses:

        

Research and development (a)

     (155,202     (196,938     (211,369     (30,789

Selling and marketing (a)

     (369,914     (436,629     (381,818     (55,618

General and administrative (a)

     (100,107     (105,829     (117,644     (17,137

Impairment of goodwill and intangible assets

     (5,587     —         —         —    

Other operating income

     6,660       3,002       11,957       1,742  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total operating income and expenses

     (624,150     (736,394     (698,874     (101,802

Operating profit (loss)

     127,946       (17,697     (55,711     (8,114

Other income (expense):

        

Interest income, net

     19,425       31,617       31,988       4,660  

Foreign exchange gain (loss) , net

     10,022       (5,373     1,280       186  

(Loss) Gain from equity method investments, net

     (2,818     6,141       10,566       1,539  

Other income, net

     67,166       432       33,766       4,919  
  

 

 

   

 

 

   

 

 

   

 

 

 

Income before taxes

     221,741       15,120       21,889       3,190  

Income tax expenses (benefits)

     (27,993     (12,434     24,422       3,557  
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income

     193,748       2,686       46,311       6,747  
  

 

 

   

 

 

   

 

 

   

 

 

 

Less: net loss attributable to noncontrolling interests

     (2,792     (4,428     (2,220     (323
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income attributable to Cheetah Mobile shareholders

     196,540       7,114       48,531       7,070  
  

 

 

   

 

 

   

 

 

   

 

 

 

Earnings (Losses) per share

        

Basic

     0.13       0.00       0.03       0.00  

Diluted

     0.13       0.00       0.03       0.00  

Earnings (Losses) per ADS

        

Basic

     1.33       (0.02     0.28       0.04  

Diluted

     1.29       (0.02     0.28       0.04  

Weighted average number of shares outstanding

        

Basic

     1,407,191,965       1,365,622,524       1,367,557,150       1,367,557,150  

Diluted

     1,452,195,012       1,392,184,524       1,388,236,454       1,388,236,454  

Weighted average number of ADSs outstanding

        

Basic

     140,719,197       136,562,252       136,755,715       136,755,715  

Diluted

     145,219,501       139,218,452       138,823,645       138,823,645  

Other comprehensive income (loss), net of tax of nil

        

Foreign currency translation adjustments

     188,530       (82,541     93,367       13,600  

Unrealized gain on available-for-sale securities, net

     —         3,498       3,872       564  
  

 

 

   

 

 

   

 

 

   

 

 

 

Other comprehensive income (loss)

     188,530       (79,043     97,239       14,164  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total comprehensive income (loss)

     382,278       (76,357     143,550       20,911  

Less: Total comprehensive income (loss) attributable to noncontrolling interests

     1,358       (4,271     (1,698     (247
  

 

 

   

 

 

   

 

 

   

 

 

 

Total comprehensive income (loss) attributable to Cheetah Mobile shareholders

     380,920       (72,086     145,248       21,158  
  

 

 

   

 

 

   

 

 

   

 

 

 

 

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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  
     June 30, 2018     March 31, 2019      June 30, 2019      June 30, 2019  
(a) Share-based compensation expenses    RMB     RMB      RMB      USD  

Cost of revenues

     90       159        143        21  

Research and development

     (3,365     16,512        13,578        1,978  

Selling and marketing

     2,683       2,827        593        86  

General and administrative

     15,225       7,153        19,640        2,861  
  

 

 

   

 

 

    

 

 

    

 

 

 

Total

     14,633       26,651        33,954        4,946  
  

 

 

   

 

 

    

 

 

    

 

 

 

CHEETAH MOBILE INC.

Reconciliation of GAAP and Non-GAAP Results

(Unaudited, in’000, except for per share data and percentage)

 

     For The Three Months Ended June 30, 2019  
     GAAP     % of Net     Share-based      % of Net     Non-GAAP     % of Net     Non-GAAP  
     Result     Revenues     Compensation      Revenues     Result     Revenues     Result ($)  

Revenues

     970,145              970,145         141,318  

Cost of revenues

     (326,982     33.7     143        0.0     (326,839     33.7     (47,609
  

 

 

   

 

 

   

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 

Gross profit

     643,163       66.3     143        0.0     643,306       66.3     93,709  

Research and development

     (211,369     21.8     13,578        1.4     (197,791     20.4     (28,811

Selling and marketing

     (381,818     39.4     593        0.1     (381,225     39.3     (55,532

General and administrative

     (117,644     12.1     19,640        2.0     (98,004     10.1     (14,276

Other operating income

     11,957       1.2     —          0.0     11,957       1.2     1,742  
  

 

 

   

 

 

   

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 

Total operating income and expenses

     (698,874     72.0     33,811        3.5     (665,063     68.6     (96,877

Operating loss

     (55,711     5.7     33,954        3.5     (21,757     2.2     (3,168

Net income attributable to Cheetah Mobile shareholders

     48,531       5.0     33,954        3.5     82,485       8.5     12,015  

Diluted earnings per ordinary share (RMB)

     0.03         0.02          0.05      

Diluted earnings per ADS (RMB)

     0.28         0.24          0.52      

Diluted earnings per ADS (USD)

     0.04         0.04          0.08      

 

     For The Three Months Ended March 31, 2019  
     GAAP     % of Net     Share-based     % of Net     Non-GAAP     % of Net  
     Result     Revenues     Compensation     Revenues     Result     Revenues  

Revenues

     1,085,628             1,085,628    

Cost of revenues

     (366,931     33.8     159       0.0     (366,772     33.8
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Gross profit

     718,697       66.2     159       0.0     718,856       66.2

Research and development

     (196,938     18.1     16,512       1.5     (180,426     16.6

Selling and marketing

     (436,629     40.2     2,827       0.3     (433,802     40.0

General and administrative

     (105,829     9.7     7,153       0.7     (98,676     9.1

Other operating income

     3,002       0.3     —         0.0     3,002       0.3
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total operating income and expenses

     (736,394     67.8     26,492       2.4     (709,902     65.4

Operating (loss) profit

     (17,697     1.6     26,651       2.5     8,954       0.8

Net income attributable to Cheetah Mobile shareholders

     7,114       0.7     26,651       2.5     33,765       3.1

Diluted (losses) earnings per ordinary share (RMB)

     (0.00       0.02         0.02    

Diluted (losses) earnings per ADS (RMB)

     (0.02       0.19         0.17    
     For The Three Months Ended June 30, 2018  
     GAAP     % of Net     Share-based     % of Net     Non-GAAP     % of Net  
     Result     Revenues     Compensation     Revenues     Result     Revenues  

Revenues

     1,103,456             1,103,456    

Cost of revenues

     (351,360     31.8     90       0.0     (351,270     31.8
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Gross profit

     752,096       68.2     90       0.0     752,186       68.2

Research and development

     (155,202     14.1     (3,365     0.3     (158,567     14.4

Selling and marketing

     (369,914     33.5     2,683       0.2     (367,231     33.3

General and administrative

     (100,107     9.1     15,225       1.4     (84,882     7.7

Impairment of goodwill and intangible assets

     (5,587     0.5     —         0.0     (5,587     0.5

Other operating income

     6,660       0.6     —         0.0     6,660       0.6
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total operating income and expenses

     (624,150     56.6     14,543       1.3     (609,607     55.2

Operating profit

     127,946       11.6     14,633       1.3     142,579       12.9

Net income attributable to Cheetah Mobile shareholders

     196,540       17.8     14,633       1.3     211,173       19.1

Diluted earnings per ordinary share (RMB)

     0.13         0.01         0.14    

Diluted earnings per ADS (RMB)

     1.29         0.10         1.39    

 

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CHEETAH MOBILE INC.

Information about Segment

(Unaudited, in’000, except for percentage)

 

     For The Three Months Ended June 30, 2019  
     Utility Products
and
Related Services
    Mobile
Entertainment
    AI and others     Unallocated*     Consolidated  
     RMB     RMB     RMB     RMB     RMB     USD  

Revenue

     423,524       498,021       48,600       —         970,145       141,318  

Operating profit (loss)

     121,079       (68,398     (74,438     (33,954     (55,711     (8,114

Operating margin

     28.6     (13.7 )%      (153.2 )%        (5.7 )%      (5.7 )% 

 

     For The Three Months Ended March 31, 2019  
     Utility Products
and
Related Services
    Mobile
Entertainment
    AI and others     Unallocated*     Consolidated  
     RMB     RMB     RMB     RMB     RMB  

Revenue

     497,933       556,230       31,465       —         1,085,628  

Operating profit (loss)

     123,175       (44,148     (70,073     (26,651     (17,697

Operating margin

     24.7     (7.9 )%      (222.7 )%        (1.6 )% 
     For The Three Months Ended June 30, 2018  
     Utility Products
and
Related Services
    Mobile
Entertainment
    AI and others     Unallocated*     Consolidated  
     RMB     RMB     RMB     RMB     RMB  

Revenue

     756,093       332,907       14,456       —         1,103,456  

Operating profit (loss)

     282,090       (98,568     (40,943     (14,633     127,946  

Operating margin

     37.3     (29.6 )%      (283.2 )%        11.6

*  Unallocated expenses refer to SBC expenses that are not allocated to individual segments.

   

   

 

11 / 12


CHEETAH MOBILE INC.

Reconciliation from Net Income Attributable to Cheetah Mobile Shareholders to Adjusted EBITDA (Non-GAAP)

(Unaudited, in ‘000)

 

For The Three Months Ended

 
     June 30, 2018     March 31, 2019     June 30, 2019     June 30, 2019  
     RMB     RMB     RMB     USD  

Net income attributable to Cheetah Mobile shareholders

     196,540       7,114       48,531       7,070  

Add:

        

Income tax expenses (benefits)

     27,993       12,434       (24,422     (3,557

Interest income, net

     (19,425     (31,617     (31,988     (4,660

Depreciation and amortization

     21,573       16,351       16,809       2,449  

Net loss attributable to noncontrolling interests

     (2,792     (4,428     (2,220     (323

Other non-operating income , net

     (74,370     (1,200     (45,612     (6,644

Share-based compensation

     14,633       26,651       33,954       4,946  
  

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted EBITDA

     164,152       25,305       (4,948     (719
  

 

 

   

 

 

   

 

 

   

 

 

 

CHEETAH MOBILE INC.

 

Revenues Generated from PC-based and Mobile-based Applications and Services

 

(Unaudited, in ‘000)

        

 

For The Three Months Ended

 
     June 30, 2018      March 31, 2019      June 30, 2019      June 30, 2019  
     RMB      RMB      RMB      USD  

PC

     137,763        120,278        142,346        20,735  

Mobile

     965,693        965,350        827,799        120,583  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total

     1,103,456        1,085,628        970,145        141,318  
  

 

 

    

 

 

    

 

 

    

 

 

 

CHEETAH MOBILE INC.

Revenues Generated from Domestic and Overseas Markets

(Unaudited, in ‘000)

 

For The Three Months Ended

 
     June 30, 2018      March 31, 2019      June 30, 2019      June 30, 2019  
     RMB      RMB      RMB      USD  

Domestic

     453,837        424,323        382,396        55,702  

Overseas

     649,619        661,305        587,749        85,616  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total

     1,103,456        1,085,628        970,145        141,318  
  

 

 

    

 

 

    

 

 

    

 

 

 

 

12 / 12

EX-99.2

Exhibit 99.2

Cheetah Mobile Announces Dividend of US$ 0.50 per American Depositary Share

BEIJING, August 20, 2019 /PRNewswire/ — Cheetah Mobile Inc. (NYSE: CMCM) (“Cheetah Mobile” or the “Company”), a leading mobile internet company with global market coverage, today announced that the Company’s board of directors (the “Board”) approved a special cash dividend of US$0.50 per American Depositary Share (“ADS”), or US$0.05 per ordinary share.

The cash dividend will be paid on September 30, 2019 to shareholders of record at the close of business on September 13, 2019. The aggregate amount of cash dividends to be paid is approximately US$72 million, which will be funded by cash on the Company’s balance sheet.

Mr. Sheng Fu, Cheetah Mobile’s Chairman and Chief Executive Officer, stated, “Our special cash dividend payment demonstrates our commitment to delivering shareholder value, and our confidence in our business model, our execution capabilities and the long-term outlook of the Company.”

About Cheetah Mobile Inc.

Cheetah Mobile is a leading mobile Internet company with global market coverage. It has attracted hundreds of millions of monthly active users through its mobile utility products such as Clean Master and Cheetah Keyboard, casual games such as Piano Tiles 2, Bricks n Balls, and live streaming product LiveMe. The Company provides its advertising customers, which include direct advertisers and mobile advertising networks through which advertisers place their advertisements, with direct access to highly targeted mobile users and global promotional channels. The Company also provides value-added services to its mobile application users through the sale of in-app virtual items on selected mobile products and games. Cheetah Mobile is committed to leveraging its cutting-edge artificial intelligence technologies to power 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

 

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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.

Investor Relations Contact

Cheetah Mobile Inc.

Helen Jing Zhu

Tel: +86 10 6292 7779 ext. 1600

Email: helenjingzhu@cmcm.com

ICR Inc.

Jack Wang

Tel: +1 (646) 417-5395

Email: IR@cmcm.com

 

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