Cheetah Mobile Announces Second Quarter 2024 Unaudited Consolidated Financial Results
PR Newswire
BEIJING, Sept. 13, 2024
BEIJING, Sept. 13, 2024 /PRNewswire/ -- Cheetah Mobile Inc. $(CMCM)$ ("Cheetah Mobile" or the "Company"), a China-based IT company, today announced its unaudited consolidated financial results for the second quarter ended June 30, 2024.
Management Commentary
Mr. Sheng Fu, Cheetah Mobile's Chairman and Chief Executive Officer, remarked, "In Q2, Cheetah Mobile achieved solid revenue growth of 12.3% year-over-year, with AI and others contributing around 40% of total revenue. Our service robotics business, both domestically and internationally, continues to drive growth. Customers choose us for our superior product experience, after-sales services, and strong AI capabilities, including far field speech recognition. With a team that brings extensive experience from the PC and mobile eras, we are investing in developing the best products to capture opportunities in the service robotics and LLMs markets. We remain focused on expanding our robotics use cases, advancing product innovation with LLMs, and growing our global presence. Rather than pursuing short-term gains, we are committed to achieving high-quality, long-term growth. We are confident in our ability to capture long-term opportunities ahead."
Mr. Thomas Ren, Chief Financial Officer of Cheetah Mobile, stated, "In this quarter, we were able to reduce our operating loss compared to the previous quarter by strategically focusing on AI and service robots. Our operating margin, excluding share-based compensation expense for our legacy internet business, increased by 6.9 percentage points year over year and 4.5 percentage points quarter over quarter. Although Cheetah Mobile is still incurring losses, we generated more than RMB218 million in cash from operating activities in the second quarter, showcasing strong capabilities in cash generation and management. Moving forward, we are committed to continuing to enhance our operational efficiency and cash generation capabilities."
Second Quarter 2024 Financial Highlight
Total revenues accelerated to a year-over-year growth of 12.3%, reaching RMB187.4 million (US$25.8 million) in the second quarter of 2024, driven by an increase in the delivery of the Company's service robots in both domestic and international markets.
-- Revenues from internet business remained relatively flat year over year
at RMB113.7 million (US$15.7 million) in the second quarter of 2024. In
the second quarter of 2024, revenues generated from the internet business
accounted for 60.7% of total revenues, compared to 69.1% in the same
period last year.
-- Revenues from AI and others increased by 42.8% year over year to RMB73.7
million (US$10.1 million) in the second quarter of 2024. The growth was
primarily driven by an increase in the delivery of the Company's service
robots, following the acquisition of a controlling stake in Beijing
OrionStar. In the second quarter of 2024, revenues generated from AI and
others accounted for 39.3% of total revenues, compared to 30.9% in the
same period last year.
Operating loss was RMB77.5 million (US$10.7 million) in the second quarter of 2024, compared to RMB65.6 million in the same period of last year. Non-GAAP operating loss was RMB62.5 million (US$8.6 million) in the second quarter of 2024, compared to RMB48.3 million in the same period of last year.
The increase in operating losses on a year-over-year basis was due to the Company's investments in AI, which have helped it enhance the product experience of its service robots. As previously mentioned in the past earnings releases, Cheetah Mobile's year-over-year costs and expenses increased, particularly associated with headcount and hardware.
-- Cost of revenues increased by 15.2% year over year to RMB65.9 million
(US$9.1 million) in the second quarter of 2024, primarily resulting from
the rise in the hardware-related costs for the Company's service robots.
Non-GAAP cost of revenues increased by 14.8% year over year to RMB65.5
million (US$9.0 million) in the second quarter of 2024.
-- Research and development expenses increased by 14.5% year over year to
RMB54.3 million (US$7.5 million) in the second quarter of 2024, primarily
due to 1) amortization of intangible assets resulting from the
acquisition of a controlling stake in Beijing OrionStar, 2) higher R&D
personnel-related expenses following the acquisition of Beijing
OrionStar. Non-GAAP research and development expenses increased by 3.3%
year over year to RMB48.0 million (US$6.6 million) in the second quarter
of 2024.
-- Selling and marketing expenses increased by 17.3% year over year to
RMB73.4 million (US$10.1 million) in the second quarter of 2024,
primarily due to 1) increased marketing and promotion expenses related to
our user acquisition for certain products of our internet business; and
2) increased personnel-related expenses as the Company increased its
sales personnel following the acquisition of a controlling stake in
Beijing OrionStar. Non-GAAP selling and marketing expenses increased by
16.7% year over year to RMB72.8 million (US$10.0 million) in the second
quarter of 2024.
-- General and administrative expenses increased by 8.0% year over year to
RMB71.6 million (US$9.9 million) in the second quarter of 2024, primarily
due to increased personnel-related expenses as the Company increased the
number of its G&A personnel following the acquisition of a controlling
stake in Beijing OrionStar. Non-GAAP general and administrative expenses
increased by 26.9% year over year to RMB63.8 million (US$8.8 million) in
the second quarter of 2024.
In terms of sequential performance, the Company was able to reduce its operating loss from RMB80.6 million in the first quarter of 2024 to RMB77.5 million in this quarter, and its non-GAAP operating loss from RMB66.4 million in the first quarter of 2024 to RMB62.5 million in this quarter. Notably, operating margin, excluding share-based compensation expense for the internet business, was 12.4% in the second quarter of 2024, an improvement from 7.9% in the first quarter of 2024 and 5.5% in the same period of last year.
As of June 30, 2024, the Company had cash and cash equivalents and short-term investments of RMB1,973.0 million (US$271.5 million).
As of June 30, 2024, the Company has long-term investments of RMB866.9 million (US$119.3 million).
Conference Call Information
The Company will hold a conference call on September 13th, 2024, at 7:00 a.m. Eastern Time (or 7:00 p.m. Beijing Time) to discuss its financial results. Listeners may access the call by dialing the following numbers:
Main Line:
International: 1-412-317-6061
United States Toll Free: 1-888-317-6003
Mainland China Toll Free: 4001-206115
Hong Kong Toll Free: 800-963976
Conference ID: 3980144
English Translation:
International: 1-412-317-6061
United States Toll Free: 1-888-317-6003
Mainland China Toll Free: 4001-206115
Hong Kong Toll Free: 800-963976
Conference ID: 7908950
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 RMB7.2672 to US$1.00, the exchange rate in effect as of June 28, 2024, 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 China-based IT company with a commitment to AI innovation. It has attracted hundreds of millions of users through an array of internet products and services on PCs and mobile devices. At the same time, it actively engages in the independent research and development of AI technologies, including LLM technologies. Cheetah Mobile provides advertising services to advertisers worldwide, value-added services including the sale of premium membership to its users, multi-cloud management platform to companies globally, as well as service robots to international clients. Cheetah Mobile is also committed to leveraging its cutting-edge AI technologies, including LLM technologies, to empower 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
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