cheetah mobile, inc
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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 beidentified 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 thispresentation, 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 otherwritten materials and in oral statements made by its officers, directors or employees to third parties. Statements thatare not historical facts, including statements about Cheetah Mobile’s beliefs and expectations, are forward-lookingstatements. Forward-looking statements involve inherent risks and uncertainties. A number of factors could causeactual results to differ materially from those contained in any forward-looking statement, including but not limited tothe following: Cheetah Mobile’s goals and strategies; Cheetah Mobile’s ability to retain and increase its user baseand expand its product and service offerings; Cheetah Mobile’s ability to monetize its platform; Cheetah Mobile’sfuture business development, financial condition and results of operations; competition from companies in a numberof 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 generaleconomic and business conditions in China and assumptions underlying or related to any of the foregoing. Furtherinformation regarding these and other risks is included in Cheetah Mobile’s filings with the SEC. All informationprovided in this presentation is as of the date of this presentation, and Cheetah Mobile does not undertake anyobligation to update any forward-looking statement, except as required under applicable law.
Disclaimer
Cheetah Mobile Has Three Business Lines
UtilityProducts
Core Utility Apps
New Utility Apps Live Streaming
Mobile Entertainment
Games
AI Business
To Consumers
To Businesses
46% of our total revenues* 51% of our total revenues*
For 1Q19
3% of our total revenues*
4
Business Models for Our Utility Products and Mobile Entertainment Business
MobileTraffic
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
China
For 1Q19
Accounted for 39% of total revenues* Accounted for 61% of total revenues*
AI business in China is a driving force
Mobile game is a driving force in the overseas markets
6
Clean Master
Battery Doctor
Security Master (Previous known as CM Security)
CM Browser
Core Utility Products
CM Launcher
Other Utility Products Google Play Rating
4.7
4.5
4.7
Photo Grid 4.6
4.6
4.7
Google Play Rating
Cheetah Keyboard 4.6
N/A
We Create A Powerful Matrix of Utility Products
CM Show
7
• Revenue: -33% YoY, 46% of total revenues in 1Q19
• Operating profit: -RMB142 million YoY
• Challenges: user traffic continued to migrate to
mobile some of our business partners in
overseas markets, such as Facebook and MoPub, have paused their collaborations with us as a result of the allegation made by a third-party in late November 2018
unfavorable macro environment in our home market
Our Utility Product Business Continued to Generate Solid Revenue and Profit
RMB, million
8
498
123
Revenue Operating Profit
Utility Products Continued to Generate Solid Revenue & Profit
Misleading Leading Statements Made by A Third-Party in Late November 2018
• Our audit committee has conducted an independent review of these allegations with outside counsel Skadden Arps and independent data auditing firm AlixPartners
• The review did not identify any information inconsistent with our previous disclosures• informed our business partners about the conclusion of the review• Planed to engage reputable third-party ad fraud intelligence companies to independently
monitor our ad services
• Some of our business partners have resumed business relations with us.
Impact to Business• More significant than we expected• Made considerable damage to our brand reputation• Led to a pause in our collaboration with some of our business partners in the
overseas market, such as Facebook and MoPub
Our Efforts
Initial Results
9
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
MobileEntertainment
Dancing Line
We Expanded to the Mobile Entertainment Business to Grow Our User Engagement and User Time Spent
10
The Growth of Mobile Entertainment was Driven by Mobile Game Operation and LiveMe
RMB, million
Revenues from mobile entertainment business grew by 42% year over year in1Q19, driven by the growth of both mobile games and LiveMe
• Mobile games: RMB302 million, +73% YoY, 28% of total revenues
Mobile Games
Mobile Games
LiveMe
LiveMe
1Q18 1Q19
Revenues from Mobile Entertainment Business
392
556
• LiveMe: RMB255 million, +17% YoY, 23% of total revenues
Driven by the strength in BnB
Our flagship titles, including Piano Tiles 2, Rolling Sky, and Dancing Line, were still very strong in 1Q19
Driven by higher ARPPU of LiveMe
11
Bricks n Balls (BnB), an Elimination Casual Game, Started Ramping Up in 3Q18
Became a mobile game revenue’s driver
July2018
BnB started to ramp up Top 3 casual games in
US on Google Play Top 10 board games on
Apple’s App Store
September2018
Google Play featured BnB on its global homepage
Present
12
Piano Tiles 2 Rolling Sky Dancing Line
We Continue to Use High-Quality Third-Party Content to Enrich Our Flagship Titles
13
We Are Testing Many New Casual Games Overseas
2015 2016 2017 2018
• About 50 new games in the pilot stage
• Experienced in Identifying new casual games suitable for publishing in international markets and developing hit titles on both Google Play and Apple’s App Store
14
2019
LiveMe: Popular Live Streaming Platform in the Overseas Markets
• LiveMe: a popular live streaming app launchedin April 2016. Live broadcasting is very popularin China. We brought this model overseas
• Monetization: introduced virtual gifts in 2Q16;this feature contributes to the vast majority ofLiveMe’s revenues
• Financing: Series A – US$60 million in May2017; Series B - US$50 million in November2017
• Recent Development:
New features have helped to improve user interaction, competition, and engagement for broadcasting hosts
As a result, ARPPU grew higher
15
Mobile Entertainment Business Continued to Narrow Its Loss for 3 Consecutive Quarters
The reduced losses were a result of:
• Increased revenues from the mobile game operation and LiveMe business
• Increased operational leverage and prudent cost and expenses for LiveMe
• Improved operating profits for our flagship games, partially offset by initiatives to launch new titles
RMB, million
-75
-44
1Q18 1Q19
Operating Loss from Mobile Entertainment business
16
Our Mobile Internet Business Continued to Deliver Healthy Revenue, Profits and Cash Flow
Our Strategies for the Mobile Internet Business Include:
Mobile Internet Business Includes:
17
Utility Products and Related Services
Mobile Game Business
LiveMe
We will implement stricter cost controls
We will streamline and refine our product lines
We will optimize our corporate structures to focus more on AI business
RMB, million Revenue OperatingProfit/Loss
Utility Productsand Related 498 123
MobileEntertainment 556 -44
- Mobile Game 301
- LiveMe 255
Mobile Internet 1,054 79
Mobile Internet Business'Financial Results for 1Q19
We Have A Strong Team
• Over the years, we have built up a formidable R&D team, which has been continuously rolled-out chart-topping mobile applications
18
• In September 2017, Cheetah Mobile invested ~US$40 million in Beijing OrionStar, an AI company incorporated in China.
• Beijing OrionStar has a complete AI technology suite, including facial recognition, voice recognition, text to speech, indoor navigation, NLP and robotics arms
Through Our Investment in Beijing OrionStar, Cheetah Mobile Has Strengthened Our AI Capabilities
19
Focus on AI Business
Orion OS Platform
AI Products
Users
Facial Recognition
VoiceRecognition
Text to Speech NLP
IndoorNavigation
Robotics Arm
20
To BusinessesTo Consumers
Cheetah Translator: An AI-Based Interpretation Device
21
• User-friendly single-button design that can automatically identify source language and target language
• Currently supported languages: Chinese, English, Japanese, Korean, Thai and Spanish
• Enrich use cases：
Tailor-made version for young students Contain English
textbooks and Popular vocabulary
for Chinese students in grades 1 to 6
International Travel Get directions, order
meals, and check into hotels
Corporate clients: Uroaming
Language Learning Parent-led and home
English learning Corporate clients:
VIPKid and Rise Education
Affordable price of ~US$40 Affordable price of ~US$70
Cheetah Translator: An AI-Based Interpretation Device
22
Microsoft Featured Cheetah Translator on its Global Homepage
CM Voice Assistant: Newly Launched AI-Powered Mini-Program on WeChat
• How CM Voice Assistant works: Answer phone calls Take down notes and send text messages to
users through WeChat
• A WeChat mini-program that answers phone calls for users
• Leverages Cheetah’s proprietary AI technologies• Converses fluently and sounds like a real person
23
Cheetah GreetBot: A Receptionist Robot Focusing on the Business-to-Business Market
24
• Cheetah Mobile has exclusive distribution rights and is deploying Cheetah GreetBot in various locations
• Developed by OrionStar, Cheetah GreetBot is a life size reception robot that focuses on the business-to-business market
• Cheetah GreetBot is used in over 20 scenarios
• Most recently, we began to make such robot intelligent solutions open-source, which has allowed third-party developers to create more use cases for Cheetah GreetBot
29
(RMB, million)
Non-GAAP Gross Profit
754 752
970 965
719
66%68%
72%70%
66%
50%
55%
60%
65%
70%
75%
80%
85%
90%
0
200
400
600
800
1,000
1,200
1Q18 2Q18 3Q18 4Q18 1Q19
Non-GAAP Gross Profits Non-GAAP Gross Margin
Non-GAAP Operating Expenses
30
(RMB, million)
153 159 167 176 180
391 367
565 578434
76 85
94 115
99
1Q18 2Q18 3Q18 4Q18 1Q19
Non-GAAP R&D Non-GAAP S&M Non-GAAP G&A
31
(RMB, million)
Non-GAAP Operating Profit
145 143154
110
9
13% 13%
11%
8%
1% 0%
5%
10%
15%
20%
25%
30%
0
20
40
60
80
100
120
140
160
180
1Q18 2Q18 3Q18 4Q18 1Q19
Non-GAAP Operating Profit Non-GAAP Operating Margin
32
(RMB, million)
Non-GAAP Net Income Attributable to Cheetah Mobile Shareholders
84
208166
780
29
1Q18 2Q18 3Q18 4Q18 1Q19
Balance sheet snapshot
Notes1. Free cash flow = operating cash flow – Capex
March. 2019
Free cash flow1
Capital expenditure(RMB, million)
(RMB, million)
33
(RMB, million)
Balance Sheet
280
612
278
0
100
200
300
400
500
600
700
2016 2017 2018
118
26
65
0
20
40
60
80
100
120
140
2016 2017 2018
Cash and cash equivalents, restricted cash and short-term investments 3,423
Accounts receivable, net 569 Other current assets 1,339 Total current assets 5,331 Long-term Investment 1,858 Other non-current assets 1,082 Total non-current assets 2,940 Total assets 8,271 Accounts payable 160 Accrued expenses and others 1,320 Others 159 Total current liabilities 1,639 Total non-current liabilities 398 Total liabilities 2,036 Total mezzanine equity 698 Total shareholders' equity 5,422 Noncontrolling interests 114 Total equity 5,536
Total liabilities, mezzanine equity and equity 8,271
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