Cheetah Mobile Announces Fourth Quarter 2019 and Full Year 2019 Unaudited Consolidated Financial Results

3月 24, 2020

BEIJING, March 24, 2020 /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 fourth quarter and full year ended December 31, 2019.

Management Commentary

Mr. Sheng Fu, Cheetah Mobile's Chairman and Chief Executive Officer, stated, "We are currently facing some difficulties in our legacy mobile internet business. However, these challenges are not causing any damage to our company at the systemic level. Over the past years, we have built an unyielding and relentless team while amassing a strong balance sheet. Importantly, the recent outbreak of COVID-19 has increased customer demand for our robotics products and solutions, while robotics business will not generate significant revenues in the near term. Going forward, we are confident in our ability to rejuvenate growth in our business by capturing those opportunities emerging in the field of artificial intelligence."

Mr. Thomas Ren, Cheetah Mobile's Chief Financial Officer, commented, "Despite facing difficulties in growing our revenues, we continued to implement strict cost and expense controls while simultaneously restructuring some of our business units. In the fourth quarter of 2019, total non-GAAP costs and expenses decreased by 36% year over year while the operating profit of our utility products and related services business grew to RMB29 million from RMB24 million in the third quarter of 2019. Looking into 2020, we will continue to implement prudent cost-saving measures. In addition, we believe that our strong balance sheet will enable us to weather through these difficulties."

Fourth Quarter 2019 Consolidated Financial Results

REVENUES

Total revenues were RMB612.0 million (US$87.9 million) in the fourth quarter of 2019, decreasing by 55.7% year over year. Excluding the impact resulting from the deconsolidation of LiveMe's revenues, total revenues decreased by 46.9% year over year in the fourth quarter of 2019.

Revenues from utility products and related services decreased by 61.9% year over year to RMB298.6 million (US$42.9 million) in the fourth quarter of 2019. The year-over-over decrease was primarily due to (i) a decline in the Company's mobile utility product business in overseas markets, (ii) a decline in the Company's mobile utility product business in the domestic market, and (iii) a decline in PC-related revenues. In the fourth quarter of 2019, approximately 80.4% of the Company's revenues from its utility products and related services business were generated from online advertising while the rest of its revenues were generated from other sources, such as providing premium services, anti-virus software sales and office software sales.

Revenues from the Company's mobile utility product business in overseas markets decreased by 68.6% year over year to RMB92.8 million in the fourth quarter of 2019, mainly due to the suspension of the Company's advertising collaboration with Facebook since December 2018, and a decline in MAUs. Revenues from the Company's mobile utility product business in the domestic market decreased by 69.9% year over year to RMB106.5 million in fourth quarter of 2019 as a result of headwinds in the domestic online advertising market. PC-related revenues decreased by 25.7% year over year to RMB99.4 million in the fourth quarter of 2019 as internet traffic in China continued to migrate from PC to mobile devices.

Revenues from the mobile games business decreased by 12.6% year over year to RMB285.1 million (US$40.9 million) in the fourth quarter of 2019. This decrease was mainly attributable to a lack of new hit games and the market saturation of our existing hyper-casual games. In the fourth quarter of 2019, approximately 77.3% of the revenues from the mobile games business were generated from advertising while the remaining revenues were generated from in-game purchases.

COST OF REVENUES AND GROSS PROFIT

Cost of revenues decreased by 56.2% year over year to RMB182.3 million (US$26.2 million) in the fourth quarter of 2019. The year-over-year decrease was primarily due to the deconsolidation of LiveMe and a significant reduction in the costs associated with the Company's utility product business. Non-GAAP cost of revenues decreased by 56.2% to RMB182.2 million (US$26.2 million) in the fourth quarter of 2019.

Gross profit decreased by 55.5% year over year to RMB429.7 million (US$61.7 million) in the fourth quarter of 2019. Non-GAAP gross profit decreased by 55.5% year over year to RMB429.8 million (US$61.7 million) in the fourth quarter of 2019.

Gross margin was 70.2% in the fourth quarter of 2019, compared to 69.9% in the fourth quarter of 2018. Non-GAAP gross margin was 70.2% in the fourth quarter of 2019, compared to 69.9% in the fourth quarter of 2018.

OPERATING INCOME/LOSS AND EXPENSES

Total operating expenses increased by 36.0% year over year to RMB1,210.2 million (US$173.8 million) in the fourth quarter of 2019. Total non-GAAP operating expenses decreased by 25.9% year over year to RMB633.3 million (US$91.0 million) in the fourth quarter of 2019.

  • Research and development (R&D) expenses decreased by 19.7% year over year to RMB153.5 million (US$22.1 million) in the fourth quarter of 2019. This decrease was primarily attributable to a reduction in the personnel for the Company's utility products and related services business as well as the deconsolidation of LiveMe. Non-GAAP R&D expenses decreased by 21.8% year over year to RMB137.5 million (US$19.8 million) in the fourth quarter of 2019.
  • Selling and marketing expenses decreased by 40.7% year over year to RMB344.0 million (US$49.4 million) in the fourth quarter of 2019. This decrease was mainly due to the reduction in promotional activities for the Company's utility products and related services business as well as the deconsolidation of LiveMe. Non-GAAP selling and marketing expenses decreased by 40.6% year over year to RMB342.9 million (US$49.3 million) in the fourth quarter of 2019.
  • General and administrative expenses increased by 32.7% year over year to RMB174.9 million (US$25.1 million) in the fourth quarter of 2019. This year-over-year increase was primarily due to the one-time asset impairment charges. Non-GAAP general and administrative expenses increased by 40.3% year over year to RMB160.7 million (US$23.1 million) in the fourth quarter of 2019.

Operating loss was RMB780.4 million (US$112.1 million) in the fourth quarter of 2019, compared to an operating profit of RMB75.1 million in the same period last year. Non-GAAP operating loss was RMB203.5 million (US$29.2 million) in the fourth quarter of 2019, compared to an operating profit of RMB110.3 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 RMB28.6 million (US$4.1 million) in the fourth quarter of 2019, compared to RMB224.0 million in the fourth quarter of 2018, which was mainly due to the decrease in revenues.
  • Operating loss for the mobile entertainment business was RMB120.3 million (US$17.3 million) in the fourth quarter of 2019, compared to RMB64.8 million in the same period last year, which was mainly attributable to the increased amount of investment made into the Company's mobile games business as it continued to launch new titles.
  • Operating loss for AI and other business was RMB111.8 million (US$16.1 million) in the quarter, compared to RMB48.9 million in the same period last year, mainly due to the Company's increased investment into its AI-related business.

Share-based compensation expenses were RMB31.3 million (US$4.5 million) in the fourth quarter of 2019, compared to RMB35.3 million in the same period last year.

GOODWILL IMPAIRMENT

For the year ended December 31, 2019, the Company performed qualitative and quantitative assessments for each of its reporting units. As a result, the Company booked a goodwill impairment charge of RMB545.7 million (US$78.4 million) in the fourth quarter of 2019.  

NET INCOME/LOSS ATTRIBUTABLE TO CHEETAH MOBILE SHAREHOLDERS

Net loss attributable to Cheetah Mobile shareholders was RMB821.2 million (US$118.0 million) in the fourth quarter of 2019, compared to a net income attributable to Cheetah Mobile shareholders of RMB733.3 million in the fourth quarter of 2018.

Non-GAAP net loss attributable to Cheetah Mobile shareholders was RMB244.2 million (US$35.1 million) in the fourth quarter of 2019, compared to a non-GAAP net income attributable to Cheetah Mobile shareholders of RMB768.6 million in the fourth quarter of 2018.

NET INCOME/LOSS PER ADS

Basic/diluted loss per ADS was RMB5.98 (US$0.86) in the fourth quarter of 2019, compared to diluted earnings per ADS of RMB5.09 of 2018. Non-GAAP basic/diluted loss per ADS was RMB1.78 (US$0.26) in the fourth quarter of 2019, compared to diluted earnings per ADS of RMB5.34 of 2018.

BALANCE SHEET

As of December 31, 2019, the Company had cash and cash equivalents, restricted cash, and short-term investments of RMB2,354.8 million (US$338.2 million). 

SHARES ISSUED AND OUTSTANDING

As of December 31, 2019, the Company had a total of 1,393,070,159 Class A and Class B ordinary shares issued and outstanding. One ADS represents 10 Class A ordinary shares.

Fiscal Year 2019 Results

REVENUES

Total revenues decreased by 28.0% to RMB3,587.7 million (US$515.3 million) in 2019. 

Revenues from utility products and related services decreased by 49.6% year over year to RMB1,573.0 million (US$226.0 million) in 2019. The year-over-over decrease was primarily due to (i) a decline in the Company's mobile utility product business in overseas markets, (ii) a decline in the Company's mobile utility product business in the domestic market, and (iii) a decline in PC-related revenues. In 2019, approximately 85.4% of the Company's revenues from its utility products and related services business were generated from advertising while the rest of its revenues were generated from other sources, such as providing premium services, anti-virus software sales and office software sales.

Revenues from the Company's mobile utility product business in overseas markets decreased by 60.4% year over year to RMB502.1 million in 2019, mainly due to the suspension of the Company's advertising collaboration with Facebook since December 2018, and a decline in MAUs resulting from our flagship product life cycle reaching maturity. Revenues from the Company's mobile utility product business in the domestic market decreased by 50.8% year over year to RMB664.2 million in 2019 as the result of headwinds in the domestic online advertising market. PC-related revenues decreased by 19.0% year over year to RMB406.7 million in 2019 as internet traffic in China continued to migrate from PC to mobile devices.

Revenues from the mobile entertainment business increased by 5.2% year over year to RMB1,872 million (US$268.8 million), mostly driven by the growth of the Company's casual mobile game, Bricks n Balls.   

  • Revenues from the mobile game business increased by 26.8% year over year to RMB1,173.0 million (US$168.5 million). The increases were mainly due to the contribution from the casual mobile game, Bricks n Balls.
  • Revenues from the content-driven products decreased by 18.2% year over year to RMB698.6 million (US$100.3 million), mainly due to the deconsolidation of LiveMe effective since September 30, 2019. In the first nine months of 2019, revenues generated from content-driven products increased by 11.9% year over year.

COST OF REVENUES AND GROSS PROFIT

Cost of revenues decreased by 19.4% year over year to RMB1,241.9 million (US$178.4 million) in 2019. The year-over-year decrease was primarily due to a significant reduction in costs associated with the Company's utility product business and the deconsolidation of LiveMe. Non-GAAP cost of revenues decreased by 19.4% year over year to RMB1,241.4 million (US$178.3 million) in 2019.

Gross profit decreased by 31.8% year over year to RMB2,345.8 million (US$336.9 million) in 2019. Non-GAAP gross profit decreased by 31.8% year over year to RMB2,346.3 million (US$337.0 million) in 2019.

Gross Margin decreased to 65.4% in 2019 from 69.1% in 2018. Non-GAAP gross margin decreased to 65.4% in 2019 from 69.1% in 2018.

OPERATING INCOME/LOSS AND EXPENSES

Total operating expenses increased by 16.2% year over year to RMB3,456.7 million (US$496.5 million) in 2019. Total non-GAAP operating expenses decreased by 3.6% year over year to RMB2,784.1 million (US$399.9 million).

  • Research and development expenses increased by 17.7% year over year to RMB787.3 million (US$113.1 million) in 2019. The year-over-year increase was mainly due to the rise in R&D personnel for both the Company's mobile games and AI-related businesses, partially offset by a reduction in the personnel for the Company's utility products and related services business. Non-GAAP research and development expenses increased by 11.1% year over year to RMB727.6 million (US$104.5 million).
  • Selling and marketing expenses decreased by 18.4% year over year to RMB1,558.3 million (US$223.8 million) in 2019. The year-over-year decrease was primarily due to the reduction in promotional activities for the Company's utility products and related services business. Non-GAAP selling and marketing expenses decreased by 18.2% year over year to RMB1,554.5 million (US$223.3 million).
  • General and administrative expenses increased by 36.4% year over year to RMB587.5 million (US$84.4 million) in 2019, which was mainly due to one-time asset impairment charges. Non-GAAP general and administrative expenses increased by 42.0% year over year to RMB524.1 million (US$75.3 million).

Operating loss was RMB1,110.9 million (US$159.6 million) in 2019, compared to an operating profit of RMB467.2 million in 2018. Non-GAAP operating loss was RMB437.8 million (US$62.9 million) in 2019, compared to a non-GAAP operating profit of RMB552.3 million in 2018.

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

  • Operating profit for utility products and related services was RMB297.1 million (US$42.7 million) in 2019, compared to RMB1,035.0 million in 2018, primarily due to a decrease in revenue from this reporting segment.
  • Operating loss for the mobile entertainment business was RMB375.3 million (US$53.9 million) in 2019, compared to RMB312.5 million in 2018, attributable to the Company's increased investment into its mobile game operations.

Share-based compensation expenses increased by 49.7% year over year to RMB127.4 million (US$18.3 million) in 2019, as the Company granted a certain quantity of restricted shares to key employees.

NET LOSS ATTRIBUTABLE TO CHEETAH MOBILE SHAREHOLDERS

Net loss attributable to Cheetah Mobile shareholders was RMB314.0 million (US$45.1 million) in 2019, as compared to net income attributable to Cheetah Mobile shareholders of RMB1,166.9 million in 2018. 

Non-GAAP net income attributable to Cheetah Mobile shareholders was RMB359.1 million (US$51.6 million) in 2019, as compared to RMB1,252.0 million in 2018.

NET INCOME PER ADS

Basic/diluted loss per ADS was RMB2.51 (US$0.36) in 2019, as compared to diluted earnings per ADS of RMB7.84 in 2018. Non-GAAP basic/diluted loss per ADS was RMB2.41 (US$0.35) in 2019, as compared to non-GAAP diluted earnings per ADS of RMB8.43 in 2018.

Business Outlook

For the first quarter of 2020, the Company expects its total revenues to be between RMB490 million (US$70 million) and RMB540 million (US$78 million). This amount has reflected the fact that LiveMe's revenues will no longer be included in the Company's revenues. The above outlook is based on the current market conditions and reflects the Company's preliminary estimates, which are all subject to change, particularly in light of the uncertainties related to how COVID-19 develops.

Recent Development

Updates on Google Collaboration

On February 21, 2020, the Company announced that it was informed by Google that the Company's Google Play Store, Google AdMob and Google AdManager accounts were disabled on February 20, 2020.

Pending the restoration of Google collaboration, the Company expects its ability to attract new users and generate revenue from Google may be materially adversely affected from February 2020. In 2019, Cheetah Mobile generated 21.9% of its total revenues from Google, including revenues from the mobile advertising business and revenues from the purchase and consumption of virtual items by users via Google as a channel.

According to Google, the decision was made because some of the Company's apps had not been compliant with Google policies, resulting in certain invalid traffic. Since February 20, 2020, the Company has been in continuous communication with Google to appeal the decision, clarify any misunderstanding, and adopt any requisite remedial measures to restore the disabled accounts. However, the Company was recently notified that Google was unable to reinstate its accounts after a thorough review of its appeal and additional information the Company provided. While the Company will continue to communicate with Google, and the Company cannot guarantee that its appeals will be successful.

Conference Call Information

The Company will hold a conference call on Tuesday, March 24, 2020, at 8:00 a.m. Eastern Time (or 8:00 p.m. Beijing Time) to discuss its 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

Mainland China Toll Free:

4001-201-203

Hong Kong Toll Free:

800-905-945

Conference ID:

Cheetah Mobile

The replay will be accessible March 31, 2020, by dialing the following numbers:

International:

+1-412-317-0088

United States Toll Free:

+1-877-344-7529

Access Code:

10140026

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 RMB6.9618 to US$1.00, the exchange rate in effect as of December 31, 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, and Bricks n Balls. 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.

Use of Non-GAAP Financial Measures

This release contains the following non-GAAP financial measures:

  • 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 expense
  • Total non-GAAP operating expenses exclude share-based compensation expenses and impairment of goodwill
  • Non-GAAP research and development expenses exclude share-based compensation expenses
  • Non-GAAP selling and marketing expenses exclude share-based compensation expenses
  • Non-GAAP general and administrative expenses exclude share-based compensation expenses
  • Non-GAAP operating profit/loss excludes share-based compensation expenses and impairment of goodwill
  • Non-GAAP net income/loss attributable to Cheetah Mobile shareholders excludes share-based compensation expenses and impairment of goodwill
  • Non-GAAP diluted income/loss per ADS excludes share-based compensation expenses and impairment of goodwill

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".

Investor Relations Contact

Cheetah Mobile Inc.
Helen Jing Zhu
Tel: +86 10 6292 7779 ext. 1600
Email: helenjingzhu@cmcm.com

ICR Inc.
Xinran Rao
Tel: +1 (646) 417-5395
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, 2018


December 31, 2019


December 31, 2019


RMB


RMB


USD

ASSETS






Current assets:






Cash and cash equivalents

2,783,843


983,004


141,200

Restricted cash

6,133


2,638


379

Short-term investments

930,610


1,369,118


196,661

Accounts receivable

655,261


469,276


67,407

Prepayments and other current assets

1,064,714


936,109


134,464

Due from related parties

126,990


233,255


33,505

Total current assets

5,567,551


3,993,400


573,616







Non-current assets:






Property and equipment, net

63,919


103,397


14,852

Right-of-use assets, net*

-


183,563


26,367

Intangible assets, net 

48,421


44,476


6,389

Goodwill

617,837


-


-

Investment in equity investees

151,533


194,473


27,934

Other long term investments

1,697,510


2,322,251


333,570

Due from related parties

21,139


25,533


3,668

Deferred tax assets

88,896


31,951


4,589

Other non-current assets

35,830


112,700


16,188

Total non-current assets

2,725,085


3,018,344


433,557







Total assets

8,292,636


7,011,744


1,007,173







LIABILITIES, MEZZANINE EQUITY AND
SHAREHOLDERS' EQUITY












Current liabilities: 






Accounts payable

171,055


87,524


12,571

Accrued expenses and other current liabilities

1,514,642


1,446,225


207,737

Due to related parties

37,298


92,210


13,245

Income tax payable

112,770


60,657


8,713

Total current liabilities

1,835,765


1,686,616


242,266







Non-current liabilities: 






Deferred tax liabilities

110,291


82,847


11,900

Other non-current liabilities*

64,185


247,734


35,586

Total non-current liabilities

174,476


330,581


47,486







Total liabilities

2,010,241


2,017,197


289,752







Mezzanine equity:






Redeemable noncontrolling interests

687,847


-


-







Shareholders' equity:






Ordinary shares

230


225


32

Treasury stock

(221,932)


-


-

Additional paid-in capital

2,742,893


2,649,342


380,554

Retained earnings

2,705,970


1,944,938


279,373

Accumulated other comprehensive income

249,304


337,773


48,518

Total Cheetah Mobile shareholders' equity

5,476,465


4,932,278


708,477

Noncontrolling interests

118,083


62,269


8,944







Total equity

5,594,548


4,994,547


717,421







Total liabilities, mezzanine equity and equity

8,292,636


7,011,744


1,007,173













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

 

 

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


December 31, 2018


September 30, 2019


December 31, 2019


December 31, 2019


RMB


RMB


RMB


USD

Revenues

1,381,173


919,919


612,003


87,909

Utility products and related services 

783,021


352,932


298,640


42,897

Mobile entertainment

555,597


532,234


285,058


40,946

AI and others

42,555


34,753


28,305


4,066









Cost of revenues (a)

(416,399)


(365,748)


(182,271)


(26,182)

Gross profit

964,774


554,171


429,732


61,727









Operating income and expenses: 








Research and development (a)

(191,135)


(225,492)


(153,530)


(22,053)

Selling and marketing (a) 

(580,330)


(395,875)


(343,993)


(49,412)

General and administrative (a) 

(131,849)


(189,085)


(174,899)


(25,123)

Impairment of goodwill 

-


-


(545,665)


(78,380)

Other operating income (expenses)

13,591


(778)


7,910


1,136

Total operating income and expenses

(889,723)


(811,230)


(1,210,177)


(173,832)









Operating profit (loss)

75,051


(257,059)


(780,445)


(112,105)

Other income (expenses):








Interest income, net

27,519


27,556


18,849


2,707

Foreign exchange gain (loss) , net

6,096


(1,336)


5,478


787

Gain (loss) from equity method investments, net

2,694


3,396


(322)


(46)

Other income (loss), net

690,440


732,852


(151,665)


(21,786)









Income (Loss) before taxes

801,800


505,409


(908,105)


(130,443)

Income tax (expenses) benefits

(57,008)


(56,819)


36,927


5,304

Net income (loss)

744,792


448,590


(871,178)


(125,139)

Less: net gain (loss) attributable to noncontrolling interests 

11,457


(2,946)


(50,020)


(7,185)

Net income (loss) attributable to Cheetah Mobile shareholders

733,335


451,536


(821,158)


(117,954)









Earnings (Losses) per share








Basic 

0.52


0.32


(0.60)


(0.09)

Diluted 

0.51


0.32


(0.60)


(0.09)









Earnings (Losses) per ADS








Basic 

5.19


3.22


(5.98)


(0.86)

Diluted 

5.09


3.21


(5.98)


(0.86)









Weighted average number of shares outstanding








Basic 

1,393,015,891


1,368,904,228


1,374,016,957


1,374,016,957

Diluted 

1,420,765,216


1,376,116,022


1,374,016,957


1,374,016,957

Weighted average number of ADSs outstanding








Basic 

139,301,589


136,890,423


137,401,696


137,401,696

Diluted 

142,076,522


137,611,602


137,401,696


137,401,696









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








Foreign currency translation adjustments

(23,031)


127,208


(60,937)


(8,753)

Unrealized (loss) gain on available-for-sale securities, net

(1,203)


(698)


4,241


609

Other comprehensive (loss) income

(24,234)


126,510


(56,696)


(8,144)

Total comprehensive income (loss)

720,558


575,100


(927,874)


(133,283)

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

12,574


(2,048)


(52,056)


(7,477)

Total comprehensive income (loss) attributable to Cheetah
Mobile shareholders

707,984


577,148


(875,818)


(125,806)

 

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


December 31, 2018


September 30, 2019


December 31, 2019


December 31, 2019

(a) Share-based compensation expenses

RMB


RMB


RMB


USD

Cost of revenues

160


114


108


16

Research and development

15,169


13,686


15,995


2,298

Selling and marketing

2,665


(660)


1,058


152

General and administrative

17,266


22,379


14,155


2,033

Total

35,260


35,519


31,316


4,499

 

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 December 31, 2019


GAAP


Share-based 


Impairment


Non-GAAP


Non-GAAP


Result


Compensation


of Goodwill


Result


Result


RMB


RMB


RMB


RMB


USD

Revenues

612,003


-


-


612,003


87,909

Cost of revenues

(182,271)


108


-


(182,163)


(26,166)

Gross profit

429,732


108


-


429,840


61,743











Research and development 

(153,530)


15,995


-


(137,535)


(19,755)

Selling and marketing 

(343,993)


1,058


-


(342,935)


(49,260)

General and administrative 

(174,899)


14,155


-


(160,744)


(23,090)

Impairment of goodwill

(545,665)


-


545,665


-


-

Other operating income

7,910


-


-


7,910


1,136

Total operating income and expenses

(1,210,177)


31,208


545,665


(633,304)


(90,969)











Operating loss

(780,445)


31,316


545,665


(203,464)


(29,226)

Net loss attributable to Cheetah Mobile shareholders

(821,158)


31,316


545,665


(244,177)


(35,074)











Diluted losses per ordinary share (RMB)

(0.60)


0.02


0.40


(0.18)



Diluted losses per ADS (RMB)

(5.98)


0.23


3.97


(1.78)



Diluted losses per ADS (USD)

(0.86)


0.03


0.57


(0.26)


































For The Three Months Ended September 30, 2019






GAAP


Share-based 


Non-GAAP






Result


Compensation


Result






RMB


RMB


RMB





Revenues

919,919


-


919,919





Cost of revenues

(365,748)


114


(365,634)





Gross profit

554,171


114


554,285















Research and development 

(225,492)


13,686


(211,806)





Selling and marketing 

(395,875)


(660)


(396,535)





General and administrative 

(189,085)


22,379


(166,706)





Other operating expenses

(778)


-


(778)





Total operating income and expenses

(811,230)


35,405


(775,825)















Operating loss

(257,059)


35,519


(221,540)





Net income attributable to Cheetah Mobile shareholders

451,536


35,519


487,055















Diluted earnings per ordinary share (RMB)

0.32


0.03


0.35





Diluted earnings per ADS (RMB)

3.21


0.26


3.47




































For The Three Months Ended December 31, 2018






GAAP


Share-based 


Non-GAAP






Result


Compensation


Result






RMB


RMB


RMB





Revenues

1,381,173


-


1,381,173





Cost of revenues

(416,399)


160


(416,239)





Gross profit

964,774


160


964,934















Research and development 

(191,135)


15,169


(175,966)





Selling and marketing 

(580,330)


2,665


(577,665)





General and administrative 

(131,849)


17,266


(114,583)





Other operating income

13,591


-


13,591





Total operating income and expenses

(889,723)


35,100


(854,623)















Operating profit 

75,051


35,260


110,311





Net income attributable to Cheetah Mobile shareholders

733,335


35,260


768,595















Diluted earnings per ordinary share (RMB)

0.51


0.02


0.53





Diluted earnings per ADS (RMB)

5.09


0.25


5.34





 

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 December 31, 2019




Utility Products
and
Related Services


Mobile Entertainment


AI and others 


Unallocated*


Consolidated


RMB


RMB


RMB


RMB


RMB


USD

Revenue

298,640


285,058


28,305


-


612,003


87,909

Operating profit (loss)

28,596


(120,310)


(111,750)


(576,981)


(780,445)


(112,105)

Operating margin

9.6%


(42.2)%


(394.8)%


-


(127.5)%


(127.5)%















For The Three Months Ended September 30, 2019




Utility Products
and
Related Services


Mobile Entertainment


AI and others 


Unallocated*


Consolidated




RMB


RMB


RMB


RMB


RMB



Revenue

352,932


532,234


34,753


-


919,919



Operating profit (loss)

24,248


(142,423)


(103,365)


(35,519)


(257,059)



Operating margin

6.9%


(26.8)%


(297.4)%


-


(27.9)%




























For The Three Months Ended December 31, 2018




Utility Products
and
Related Services


Mobile Entertainment


AI and others 


Unallocated*


Consolidated




RMB


RMB


RMB


RMB


RMB



Revenue

783,021


555,597


42,555


-


1,381,173



Operating profit (loss)

224,033


(64,780)


(48,942)


(35,260)


75,051



Operating margin

28.6%


(11.7)%


(115.0)%


-


5.4%















* Unallocated expenses refer to SBC expenses and goodwill impairment 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


December 31, 2018


September 30, 2019


December 31, 2019


December 31, 2019


RMB


RMB


RMB


USD

Net income (loss) attributable to Cheetah Mobile shareholders

733,335


451,536


(821,158)


(117,954)

Add:








Income tax expenses (benefits)

57,008


56,819


(36,927)


(5,304)

Interest income, net

(27,519)


(27,556)


(18,849)


(2,707)

Depreciation and amortization

17,237


16,193


16,108


2,314

Net gain (loss) attributable to noncontrolling interests 

11,457


(2,946)


(50,020)


(7,185)

Other (income) loss, net

(699,230)


(734,912)


146,509


21,045

Share-based compensation 

35,260


35,519


31,316


4,499

Impairment of goodwill

-


-


545,665


78,380

Adjusted EBITDA

127,548


(205,347)


(187,356)


(26,912)

 

CHEETAH MOBILE INC.







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



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












For The Three Months Ended


December 31, 2018


September 30, 2019


December 31, 2019


December 31, 2019


RMB


RMB


RMB


USD

PC

171,837


123,789


123,842


17,789

Mobile

1,209,336


796,130


488,161


70,120

Total

1,381,173


919,919


612,003


87,909

 

CHEETAH MOBILE INC.







Revenues Generated from Domestic and Overseas Markets





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












For The Three Months Ended


December 31, 2018


September 30, 2019


December 31, 2019


December 31, 2019


RMB


RMB


RMB


USD

Domestic

533,221


299,339


282,049


40,514

Overseas

847,952


620,580


329,954


47,395

Total

1,381,173


919,919


612,003


87,909

 

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 Years Ended


December 31, 2018


December 31, 2019


December 31, 2019


RMB


RMB


USD

Revenues

4,981,705


3,587,695


515,340

Utility products and related services 

3,119,483


1,573,030


225,953

Mobile entertainment

1,778,867


1,871,543


268,830

AI and others

83,355


143,122


20,558







Cost of revenues (a)

(1,540,633)


(1,241,932)


(178,392)

Gross profit

3,441,072


2,345,763


336,948







Operating income and expenses: 






Research and development (a)  

(668,918)


(787,329)


(113,093)

Selling and marketing (a) 

(1,910,044)


(1,558,315)


(223,838)

General and administrative (a) 

(430,826)


(587,457)


(84,383)

Impairment of goodwill

-


(545,665)


(78,380)

Other operating income 

35,938


22,091


3,173

Total operating income and  expenses

(2,973,850)


(3,456,675)


(496,521)







Operating profit (loss)

467,222


(1,110,912)


(159,573)

Other income (expenses):






Interest income, net

87,716


110,010


15,802

Foreign exchange gain, net

13,821


49


7

 (Loss) Gain from equity method investments, net

(384)


19,781


2,841

Other income, net

701,348


615,385


88,394







Income (Loss) before taxes

1,269,723


(365,687)


(52,529)

Income tax expenses

(117,000)


(7,904)


(1,135)

Net income (loss)

1,152,723


(373,591)


(53,664)

Less: net loss attributable to noncontrolling interests 

(14,186)


(59,614)


(8,563)

Net income (loss) attributable to Cheetah Mobile shareholders

1,166,909


(313,977)


(45,101)







Earnings (Losses) per share






Basic 

0.80


(0.25)


(0.04)

Diluted 

0.78


(0.25)


(0.04)







Earnings (Losses)  per ADS






Basic 

8.05


(2.51)


(0.36)

Diluted 

7.84


(2.51)


(0.36)







Weighted average number of shares outstanding






Basic 

1,403,089,609


1,369,041,418


1,369,041,418

Diluted 

1,440,414,849


1,369,041,418


1,369,041,418

Weighted average number of ADSs outstanding






Basic 

140,308,961


136,904,142


136,904,142

Diluted 

144,041,485


136,904,142


136,904,142







Other comprehensive income, net of tax of nil






Foreign currency translation adjustments

179,244


77,097


11,074

Unrealized gains on available-for-sale securities, net

-


10,913


1,568

Other comprehensive income

179,244


88,010


12,642

Total comprehensive income (loss)

1,331,967


(285,581)


(41,022)

Less: Total comprehensive loss attributable to noncontrolling
interests

(40)


(60,072)


(8,629)

Total comprehensive income (loss) attributable to Cheetah Mobile
shareholders

1,332,007


(225,508)


(32,393)













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 Years Ended


December 31, 2018


December 31, 2019


December 31, 2019


RMB


RMB


USD

(a) Share-based compensation expenses






Cost of revenues

206


524


75

Research and development

14,224


59,771


8,586

Selling and marketing

8,967


3,818


548

General and administrative

61,721


63,327


9,096

Total

85,118


127,440


18,305

 

 

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 Year Ended December 31, 2019


GAAP


Share-based 


Impairment


Non-GAAP


Non-GAAP


Result


Compensation


of Goodwill


Result


Result


RMB


RMB


RMB


RMB


USD

Revenues

3,587,695


-


-


3,587,695


515,340

Cost of revenues

(1,241,932)


524


-


(1,241,408)


(178,317)

Gross profit

2,345,763


524


-


2,346,287


337,023











Research and development 

(787,329)


59,771


-


(727,558)


(104,507)

Selling and marketing 

(1,558,315)


3,818


-


(1,554,497)


(223,290)

General and administrative 

(587,457)


63,327


-


(524,130)


(75,287)

Impairment of goodwill

(545,665)


-


545,665


-


-

Other operating income 

22,091


-


-


22,091


3,173

Total operating income and expenses

(3,456,675)


126,916


545,665


(2,784,094)


(399,911)











Operating loss

(1,110,912)


127,440


545,665


(437,807)


(62,887)

Net (loss) gain attributable to Cheetah Mobile shareholders

(313,977)


127,440


545,665


359,128


51,586











Diluted (losses) earnings per ordinary share (RMB)

(0.25)


0.09


0.40


0.24



Diluted (losses) earnings per ADS (RMB)

(2.51)


0.93


3.99


2.41



Diluted (losses) earnings per ADS (USD)

(0.36)


0.13


0.57


0.35
























For The Year Ended December 31, 2018






GAAP


Share-based 


Non-GAAP






Result


Compensation


Result






RMB


RMB


RMB





Revenues

4,981,705


-


4,981,705





Cost of revenues

(1,540,633)


206


(1,540,427)





Gross profit

3,441,072


206


3,441,278















Research and development 

(668,918)


14,224


(654,694)





Selling and marketing 

(1,910,044)


8,967


(1,901,077)





General and administrative 

(430,826)


61,721


(369,105)





Other operating income

35,938


-


35,938





Total operating income and expenses

(2,973,850)


84,912


(2,888,938)















Operating profit 

467,222


85,118


552,340





Net income attributable to Cheetah Mobile shareholders

1,166,909


85,118


1,252,027















Diluted earnings per ordinary share (RMB)

0.78


0.06


0.84





Diluted earnings per ADS (RMB)

7.84


0.59


8.43





 

CHEETAH MOBILE INC.












Information about Segment 











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

















For The Year Ended December 31, 2019


Utility Products
and
Related Services


Mobile Entertainment


AI and others 


Unallocated*


Consolidated


RMB


RMB


RMB


RMB


RMB


USD

Revenue

1,573,030


1,871,543


143,122


-


3,587,695


515,340

Operating profit (loss)

297,099


(375,278)


(359,627)


(673,105)


(1,110,912)


(159,573)

Operating margin

18.9%


(20.1)%


(251.3)%




(31.0)%


(31.0)%















For The Year Ended December 31, 2018




Utility Products
and
Related Services


Mobile Entertainment


AI and others 


Unallocated*


Consolidated




RMB


RMB


RMB


RMB


RMB



Revenue

3,119,483


1,778,867


83,355


-


4,981,705



Operating profit (loss)

1,034,968


(312,515)


(170,113)


(85,118)


467,222



Operating margin

33.2%


(17.6)%


(204.1)%




9.4%



























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


 

CHEETAH MOBILE INC.







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

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














For The Years Ended



December 31, 2018


December 31, 2019


December 31, 2019



RMB


RMB


USD

Net income (loss) attributable to Cheetah Mobile shareholders


1,166,909


(313,977)


(45,101)

Add:







        Income tax expense


117,000


7,904


1,135

        Interest income, net


(87,716)


(110,010)


(15,802)

        Depreciation and amortization


80,108


65,461


9,403

        Net loss attributable to noncontrolling interests 


(14,186)


(59,614)


(8,563)

        Other income, net


(714,785)


(635,215)


(91,242)

        Share-based compensation 


85,118


127,440


18,305

        Impairment of goodwill


-


545,665


78,380

Adjusted EBITDA


632,448


(372,346)


(53,485)

 

CHEETAH MOBILE INC.







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


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












For The Years Ended



December 31, 2018


December 31, 2019


December 31, 2019



RMB


RMB


USD

PC


580,016


510,255


73,294

Mobile


4,401,689


3,077,440


442,046

Total


4,981,705


3,587,695


515,340

 

CHEETAH MOBILE INC.






Revenues Generated from Domestic and Overseas Markets



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









For The Years Ended


December 31, 2018


December 31, 2019


December 31, 2019


RMB


RMB


USD

Domestic

1,971,113


1,388,107


199,389

Overseas

3,010,592


2,199,588


315,951

Total

4,981,705


3,587,695


515,340

 

SOURCE Cheetah Mobile Inc