Cheetah Mobile, Inc. Disclaimer This presentation contains - - PowerPoint PPT Presentation

Cheetah Mobile, Inc.

This presentation contains forward-looking statements. These statements are made under the “safe harbor” provisions of 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. Among other things, the business outlook and quotations from management in this presentation, as well as Cheetah Mobile’s strategic and operational plans, contain forward-looking statements. Cheetah Mobile may also make written or oral forward-looking statements in its periodic reports to the U.S. Securities and Exchange Commission (“SEC”), in its annual report to shareholders, in press releases and other written materials and in oral statements made by its officers, directors or employees to third parties. Statements that are not historical facts, including statements about Cheetah Mobile’s beliefs and expectations, are forward-looking

• statements. Forward-looking statements involve inherent risks and uncertainties. A number of factors could cause

actual results to differ materially from those contained in any forward-looking statement, including but not limited to the following: Cheetah Mobile’s goals and 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 from companies in a number

• f 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; fluctuations in general economic and business conditions in China and assumptions underlying or related to any of the foregoing. Further information regarding these and other risks is included in Cheetah Mobile’s filings with the SEC. All information provided in this presentation is as of the date of this presentation, and Cheetah Mobile does not undertake any

• bligation to update any forward-looking statement, except as required under applicable law.

Disclaimer

01

◼

Business Overview

◼

Financials

3

Cheetah Mobile Has Three Business Lines

Utility Products

Core Utility Apps New Utility Apps Live Streaming

Mobile Entertainment

Games

AI Business

To Consumers To Businesses

4

65% of our total revenues* 34% of our total revenues* In the first nine months of 2018* 1% of our total revenues*

Business Models for Our Utility Product and Mobile Entertainment Businesses

Mobile Traffic 3rd Party Ad Platform

Cheetah Mobile Ad Platform

Direct Sales

Advertising: In-app purchases:

Mobile Games/ LiveMe In-app Purchases

5

Revenue Contribution by Region

Overseas

Utility Products and Related Services Mobile Games LiveMe AI

6

China

In the first nine months of 2018

Accounted for 40% of total revenues* Accounted for 60% of total revenues*

Mobile utility product business in China is a driving force Mobile game is a driving force in the

• verseas markets

PC Mobile

Core Utility Products

CM Browser Duba Website Navigator Driver Genius Clean Master Security Master Battery Doctor Safe Wallet Photo Grid CM Launcher Cheetah Keyboard CM Show AI Driven

Our Utility Product Portfolio

Personalization

7

Life style Qu Keyboard

Mini Program

Yundong Zhuan （运动赚）

New Utility Products Mission Critical Utility Products

Mobile in China Mobile in China Mobile in China Mobile Overseas Mobile Overseas Mobile Overseas PC PC PC 100 200 300 400 500 600 700 800 900 3Q17 2Q18 3Q18

825 756 836

• Revenues: +4% y/y, +11% q/q, ~60%
• f the total revenue in 3Q18
• Growth Engine: mobile utility

business in the domestic market +54% y/y, +18% q/q to 28% of total revenue in 3Q18. This growth was driven by user expansion of our core utility products, new product launch and expanded partnership with mobile ad platforms

• Challenge: overseas mobile revenue

were impacted by Facebook and Google discontinuing ads on mobile phone lock screens

Our Utility Product Business Continued to Generate Healthy Revenue

RMB, million

8

RMB, million

• The q/q decrease in

3Q18 mainly due to increased promotional activities in the domestic market, where we have seen more emerging growth

• pportunities

Our Utility Product Business Continued to Earn Strong Profits and Cash

9

157 141 228 318 179 213 260 327 265 282 264 17% 15% 24% 32% 22% 26% 32% 34% 36% 37% 32%

0% 5% 10% 15% 20% 25% 30% 35% 40% 50 100 150 200 250 300 350 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 Non-GAAP Operating Profit Non-GAAP Operating Margin

We Continued to Enrich Our Utility Product Portfolio by Introducing New Utility Apps

10

Personalization, Lifestyle, AI-driven

• Offering personalized ring tones

and a wide array of 3D video effects

• Targeting younger users in China
• An AI-powered keyboard app
• Offering smart prediction, voice

input, and thousands of themes

• Targeting users worldwide

CM Show Cheetah Keyboard

Our Mobile Utility Product Business Grew Rapidly in China

• Users: MAU in the domestic market grew by

17% y/y and 6% q/q, reaching a new high of 171 million in 3Q18

• Revenues: Revenues from mobile utility

products in the domestic market grew by 54% y/y and 18% q/q in 3Q18

Our Achievements in the Domestic Market Our Strengths in the Domestic Market

• Replicating our success in the overseas market

to China

• Establishing partnerships with several local

partners to distribute our apps

• Strong profits and cash flow generated by utility

products provides a solid foundation for our investments in new initiatives

11

• Market Trend: growth of mobile Internet penetration in lower-tier cities and generation Z
• Our Tactics: tailor our products to attract these users
• Achievement: DAUs continue to grow in our domestic market, driven by the growth of

active users in lower-tier cities and users born from the mid-1990s to the early 2000s

We Have Seen Massive Market Opportunities in China’s Mobile Internet Space

Mobile Internet Population in China

12

Source: Deutsche Bank Research Report

Population million

446 475 469 499 505 454 496 538 571 599 2016 2017 2018F 2019F 2020F

First- and second- tier Cities Lower-tier Cites

Arrow.io Rolling Sky Dancing Ball Cooking Adventure Tap Tap Dash Mafia Revenge Piano Tiles 2 Skid Storm Tap Tap Fish Bricks n Balls Liveme Trade Town

Mobile Entertainment

Dancing Line

We Expanded to the Mobile Entertainment Business to Grow Our User Engagement and User Time Spent

13

498 333 362

• Revenues: +37% y/y, +50% q/q, accounted

for ~40% of total revenue in 3Q18. The growth was driven by both our mobile games

• peration and LiveMe

✓ Mobile games: +78% y/y, +106% q/q to RMB285 million, driven by ramp-up of Bricks n Balls, and the continued strong performance of Piano Tiles 2, Dancing Line, and Rolling Sky ✓ Content: +5% y/y and +9% q/q to RMB213 million, driven by LiveMe, as several new features were introduced, which further improved its ARPU

The Growth of Mobile Entertainment Revenue Was Driven by Our Mobile Game Operation

RMB, million

14

We Have A Strong Game Developing and Publishing Capability

2015 2016 2017 2018

• Identify promising titles from a large amount of candidates
• Improve game experience
• Increase user engagement and time spent
• Drive the ARPU of mobile gamers

15

Bricks n Balls (BnB), An Elimination Casual Game, Started Ramping Up in 3Q18

• Google Play featured BnB on its global

homepage in September 2018

• According to App Annie, BnB was ranked

among the top 3 casual games in the US on Google Play in terms of user downloads

• According to App Annie, BnB was ranked

among the top 10 board games on Apple’s App Store in terms of user downloads

16

Piano Tiles 2 Rolling Sky Dancing Line

We Use High-quality Third-party Content to Enrich Our Flagship Titles

17

We Leverage Several Mini Game Platforms to Amplify The Reach of Our Games

18

Bricks n Balls Piano Tiles 2 Dancing Line Rolling Sky

• We have integrated our best-selling game titles with several mini game

platforms to expand its user base

• So far, our games have been on the WeChat, QQ and Facebook mini

game platforms. We expect to integrate our games with more platforms in the future

18

LiveMe: Popular Live Streaming Platform in the Overseas Markets

19

• LiveMe: a popular live streaming app launched

in April 2016. Live broadcasting is very popular in China. We brought this model overseas

• Monetization: introduced virtual gifts in 2Q16;

this feature contributes to the vast majority of LiveMe’s revenues

• Financing: Series A – US$60 million in May

2017; Series B - US$50 million in November 2017

• Ranking: No. 3 grossing social app in the U.S.
• n Google Play. Top 10 gross social app in the

U.S. on Apple’s App Store

• Recent Development:

✓ Improve the ARPU of top paying users in the US and Middle East ✓ Tailor-made several offline and online activities for top paying users in the US and Middle East

RMB, million

• The reduced losses were primarily

attributable to an increase in revenues from mobile game operations ✓ Non-GAAP operating profit for mobile games operation +RMB13 million y/y, +17 million q/q ✓ OPM for the existing games reached 24% VS 7% in same period last year

• The y/y reduced loss was due to the

disposal of News Republic in 4Q17

Non-GAAP Operating Loss for the Mobile Entertainment Business Continued to Narrow

20

• in September 2017, Cheetah Mobile

invested ~US$40 million in Beijing OrionStar, an AI company incorporated in China. As of today, Cheetah Mobile holds about ~40% of equity in Beijing OrionStar

• Beijing OrionStar has a complete AI

technology suite, including facial recognition, voice recognition, text to speech, indoor navigation, NLP and robotics arms

21

Through Our Investment in Beijing OrionStar, Cheetah Mobile Has Strengthened Our AI Capabilities

Innovative AI Hardware Offerings from Cheetah Mobile and OrionStar

Orion OS Platform

AI Hardware Products Users Facial Recognition Voice Recognition Text to Speech NLP Indoor Navigation Robotics Arm

22

To Businesses To Consumers

Cheetah Voicepod is An AI-based Smart Speaker – Developed by Cheetah Mobile

Superior sound WIFI music streaming Play audiobooks, news briefs, and more Far-field voice recognition 2-year QQ Music subscription service

• Started delivering in April.
• Promoted on leading social

media platforms such as Douyin and Miaopai.

• Distribution channels:

➢ Available on JD.com and Tmall.com ➢ Expanding offline distribution channel

• Sound and voice have been

the two most favorite features of our users.

23

Cheetah Translator: A Top Seller During This Year’s Single’s Day Shopping Festival – Developed by Cheetah Mobile

• Jointly developed with Beijing OrionStar
• User-friendly single-button design that can

automatically identify source language and target language

• Affordable price of ~US$40
• Currently supported languages: Chinese,

English, Japanese, Korean, Thai and Spanish

• Partnerships with well-known retail chains

for a larger customer base

24

• Cheetah Mobile has exclusive distribution rights and is

responsible for implementation in various work locations

GreetBot: A Commercially Launched Receptionist Robot Focusing on the Business to Business Market - Developed by OrionStar

• Developed by OrionStar, a robot that can function as a

receptionist or guide working at office front desks, hotel lobbies, shopping malls, or supermarkets

25

4Q18 Revenue Guidance:

RMB1,390 – RMB1,430 million (US$202 – 208 million)

26

Financial Guidance

02

◼

Business Overview

◼

Financials

27

28 (RMB, million)

Total Revenues

29 (RMB, million)

Non-GAAP Gross Profit

Non-GAAP Operating Expenses

30 (RMB, million)

31

(RMB, million)

Non-GAAP Operating Profit

32

(RMB, million)

Non-GAAP Net Income (Loss)

1050

Balance sheet snapshot

• Notes1. Free cash flow = operating cash flow – Capex
• Sep. 2018

Free cash flow1 Capital expenditure

(RMB, million) (RMB, million)

33

(RMB, million)

Balance Sheet

Cash and cash equivalents, restricted cash and short-term investments 3,625 Accounts receivable, net 567 Other current assets 986 Total current assets 5,178 Long-term Investment

1,608

Other non-current assets 908 Total non-current assets 2,516 Total assets 7,693 Accounts payable 164 Accrued expenses and others 1,485 Others 95 Total current liabilities 1,744 Total non current liabilities 146 Total liabilities 1,890 Total mezzanine equity 678 Total shareholders' equity 4,944 Noncontrolling interests 181 Total equity 5,126 Total liabilities, mezzanine equity and equity 7,693

96 118 26 20 40 60 80 100 120 140 2015 2016 2017

851 280 595 100 200 300 400 500 600 700 800 900 2015 2016 2017

Thank you!