Cheetah Mobile, Inc. Fourth Quarter and Full Year 2018 Results - - PowerPoint PPT Presentation

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Cheetah Mobile, Inc. Fourth Quarter and Full Year 2018 Results - - PowerPoint PPT Presentation

Cheetah Mobile, Inc. Fourth Quarter and Full Year 2018 Results March 25, 2019 1 Disclaimer This presentation contains forward-looking statements. These statements are made under the safe harbor provisions of the U.S. Private Securities


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Cheetah Mobile, Inc.

Fourth Quarter and Full Year 2018 Results

March 25, 2019

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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

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01

Overview

Business Highlights

Financial Highlights

Revenue Guidance

Share Repurchase

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FY2018 Financial Results Were in Line w/ Our Expectations

*Non-GAAP = GAAP + share-based compensation expenses

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342 277

Net Cash Generated from Operating Activities Free Cash Flow

Our Core Business Continued to Generate Strong Cash

million, RMB

RMB, million FY2018 As A % of Total Revenues YoY Total Revenues 4,982 2% Mobile Entertainment 1,779 36% 19% Content-driven Product 854 17%

  • 2%

Mobile Game 925 19% 48% Others 83 2% 123% Gross Profit 3,441 69% 8% Operating Profit 467 9% 5% Non-GAAP* Gross Profit 3,441 69% 8% Operating Profit 552 11% 6%

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3 Driving Forces for Our Revenue Growth in 2018

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 Mobile Games Operation  Mobile Utility Products In China  AI-Powered Business

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Overview

Business Highlights

Financial Highlights

Revenue Guidance

Share Repurchase

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Mobile Games: Revenues from Our Mobile Games Operation

7 RMB million

623 925

  • 200

400 600 800 1,000 2017 2018

Mobile Games Revenue

Mobile Games

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Mobile Games: Contined to Introduced New Games

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 Launched Bricks n Balls, a casual elimination game  Remained a top mobile casual games in the US on Google Play, and a top board games on Apple’s App Store in terms of user downloads  Discovered the right combination of tactics to grow our average revenue per mobile gamer  Bricks n Ball’s ARPU was much higher than those of Piano Tiles 2, Rolling Sky and Dancing Line, respectively in 2H18  Almost half of the revenues from Bricks n Balls were generated through sales of in-game virtual items

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2017 2018

Combined Operating Profits For Our 3 Flagship Titles

Mobile Games: Increased Operating Profits for Gaming Business

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10% 25%

2017 2018

Non-GAAP Operating Margin For Our 3 Flagship Titles

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Mobile Utility Products in China: Introduced New Utility Products

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Personalized Experience

AI-Driven

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

  • An AI-powered keyboard app

to appeal young users in China

  • Offering smart prediction,

voice input, and thousands of themes

  • Introducing a gamified user

loyalty program

CM Show Qu Keyboard

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  • A personalized ring tone app

designed to appeal to generation Z in China

  • Added premium content to

induce users subscription  Many users are happy to pay a small amount to gain access to the premium content

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RMB, million

Our Utility Product Business Continued to Earn Healthy Revenue and Profits in 2018

3,119 1,035

  • 500

1,000 1,500 2,000 2,500 3,000 3,500 Revenues Non-GAAP Operating Profits

Utility Product Business

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We Began Offering AI-Powered Hardware in China

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 Offering AI-powered hardware allows us to serve more users and customers in the era of human-computer interaction  Our hardware business is a joint effort with Beijing OrionStar. As of today, Cheetah Mobile holds about ~40% of equity in Beijing OrionStar

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Cheetah Translator: An AI-based Interpretation Device – Developed by Cheetah Mobile

  • The sales of Cheetah Translator drove the growth of our

revenues from other business segment in 2018

  • Enrich use cases:

 VIPKid, an online educational company, purchased a large quantity of Cheetah Translators to help its young students learn English  Uroaming, an overseas WiFi service rental platform, also bought a number of Cheetah Translators to enrich its product offerings. Cheetah Translator marks an important milestone of our expansion into AI-based products and solutions

  • The success of Cheetah Translator helps us further improve
  • ur AI technologies and our capabilities to deliver AI-based

solutions to customers and businesses

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  • 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, Cheetah GreetBot is a human-sized reception robot that focuses
  • n the business-to-business market

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  • We have also found more use cases for Cheetah GreetBot to serve customers in

diverse verticals in China, including as guides in museums, receptionists in hospitals or schools, and salespersons in convenience stores

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03

Overview

Business Highlights

Financial Highlights

Revenue Guidance

Share Repurchase

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399 498 556

4Q17 3Q18 4Q18

Revenues from Mobile Entertainment Business

Revenues from Mobile Entertainment Business

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RMB, million

  • The revenue growths were mainly driven by

Bricks n Balls, a casual elimination game that started ramping up in the middle of July 2018

  • Mobile game revenue

 Increased by 91% YoY and 14% QoQ to RMB326 million in 4Q18; accounted for 24% of total revenues in 4Q18  Increased by 48% to RMB925 million in FY2018; accounted for 19% of total revenues in FY2018

RMB, million

1,495 1,779

2017 2018

Revenues from Mobile Entertainment Business

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Revenues from Utility Products and Related Services

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RMB, million

  • The YoY decrease in 4Q18 were

mainly due to the discontinuation of certain ad formats, i.e. ads on mobile phone lock screens, by the Company’s

  • verseas third-party advertising

partners

  • The QoQ decrease in 4Q18 were

mainly due to the disruption of our business as a result of certain allegations made by a third-party in November 2018, about which the company made a number of public statements to clarify

RMB, million

938 836 783

4Q17 3Q18 4Q18

Revenues from Utility Products and Related Services

3,343 3,119

2017 2018

Revenues from Utility Products and Related Services

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Gross Profit and Gross Margin Increased Year Over Year

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4Q18 FY2018

RMB, million RMB, million

3,195 3,441

2017 2018

Gross Profit

926 965

4Q17 4Q18

Gross Profit

68% 70%

4Q17 4Q18

Gross Margin

66% 69%

2017 2018

Gross Margin

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We Grew Our Operating Profit in 2018 Despite Our Continued Investments in New Initiatives

20 RMB, million

447 467

2017 2018

Operating Profit

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Our Mobile Entertainment Business Continued to Narrow Its Loss

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 The reduced losses were a result of:

  • Increased revenues from

the mobile game operation

  • Reduced expenses from

the News Republic business

RMB, million

  • 417
  • 313

2017 2018

Losses for the Mobile Entertainment Business

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We Sold A Certain Portion of Our Equity Ownership in Bytedance - Boosted Our Earnings and Balance Sheet

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 How Cheetah Mobile became a shareholder of Bytedance?

  • In November 2017, Cheetah Mobile sold News Republic to

Bytedance for a total consideration of US$85.8 million.

  • Cheetah Mobile chose to receive up to US$50 million of the

consideration in shares of Bytedance.

  • The transaction was closed in December 2017.

 Dispose of certain portion of Bytedance shares in 4Q18

  • This transaction resulted in a disposal gain of investment of US$43.3
  • million. This transaction also resulted in a fair value gain of US$43.3

million in 4Q18 for the remaining portion of the equity ownership which the Company still holds, in accordance with ASC 321, adopted

  • n January 1, 2018.
  • As of December 31, 2018, our cash, cash equivalents, restricted cash,

and short-term investments were US$541 million.

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Overview

Business Highlights

Financial Highlights

Revenue Guidance

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1Q19 Revenue Guidance:

  • RMB1,060 -1,090 million

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1Q19 Revenue Guidance

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Overview

Business Highlights

Financial Highlights

Revenue Guidance

Share Repurchase

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Share Repurchase

Share Repurchase Program

  • Up to US$100 million
  • From September 13, 2018 ~

September 13, 2019

  • As of March 27, 2019, we had

repurchased ~4.5 million ADSs for approximately US$32 million under this program

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Thank you!

IR Contact:

Helen Jing Zhu Phone: +86 10 6292 7779 Email: helenjingzhu@cmcm.com

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