Cheetah Mobile Announces First Quarter 2018 Unaudited Consolidated Financial Results

May 21, 2018

BEIJING, May 21, 2018 /PRNewswire/ -- Cheetah Mobile Inc. (NYSE: CMCM) ("Cheetah Mobile" or the "Company"), a leading mobile internet company with strong global vision, today announced its unaudited consolidated financial results for the first quarter ended March 31, 2018.

First Quarter 2018 Financial Highlights

  • Total revenues[1] were RMB1,145.1 million (US$182.6 million), exceeding the Company's previous guidance range of RMB1,100 million to RMB1,140 million.
  • Gross profit increased by 2.9% year over year to RMB753.9 million (US$120.2 million). Gross margin was 65.8% in the first quarter of 2018 compared to 61.5% in the same period last year.
  • Operating profit increased to RMB136.4 million (US$21.7 million) from RMB26.3 million in the same period last year. Operating margin expanded to 11.9% from 2.2% in the same period last year.
  • Operating profit for utility products and related services increased by 47.8% year over year to RMB264.7 million (US$42.2 million) in the first quarter of 2018. Operating margin for utility products and related services expanded to 35.5% in the first quarter of 2018 from 21.7% in the same period last year.

First Quarter 2018 Operating Metrics

  • The average number of global mobile monthly active users ("Mobile MAUs") was 574 million in the first quarter of 2018. The number of Mobile MAUs from markets outside of China, or overseas markets, accounted for 75.4% of the total number of Mobile MAUs in the first quarter of 2018.  

Artificial Intelligence Technology

  • In March 2018, Beijing OrionStar Technology, an investee of Cheetah Mobile, achieved a record-setting 98.355% recognition rate in the MegaFace challenge (Challenge1/FaceScrub identification), an internationally recognized facial recognition test managed by the Paul G. Allen School of Computer Science & Engineering at the University of Washington. Cheetah Mobile holds approximately 30% equity interest in Beijing OrionStar Technology and has a two-year warrant to subscribe for additional equity interest to achieve a controlling position.

Mr. Sheng Fu, Cheetah Mobile's Chairman and Chief Executive Officer, stated, "We began 2018 on a solid note with total revenues exceeding the high-end of our guidance. In the first quarter of 2018, our utility product business continued to generate strong profits and cash flow. We also solidified our leading position in the mobile casual game market by further enriching our game pipeline. Our artificial intelligence ("AI") powered businesses made steady progress as well. In March, Cheetah Mobile and Beijing OrionStar jointly launched five practical and easy-to-use robotics products, which are powered by Orion OS, an open platform for robotics, which has been developed by Beijing OrionStar. Going forward, we aim to drive steady and healthy profit from our core businesses while simultaneously leveraging our extensive technology and product experience to expand our robotic product offerings."

Mr. Vincent Jiang, Cheetah Mobile's Chief Financial Officer, commented, "We continued to expand our profits and margins in the first quarter of 2018 as a result of our strategic efforts to optimize the cost and expense structure for our utility products business and our initiative to dispose of News Republic. Looking ahead, we will continue to drive higher operational efficiency for our core businesses, which in turn will fund our investment in AI-powered business and build long-term growth for Cheetah Mobile and its shareholders."

 

[1] Starting from January 1, 2018, Cheetah Mobile adopted a new revenue accounting standard (ASC 606), which reclassifies value added tax from the cost of
revenues to net against revenues. To increase comparability of operating results and help investors better understand our business performance and operating
trends, 2017 net revenues have been used to calculate all percentage changes in revenues. 2017 net revenues are defined as gross revenues under legacy GAAP
after the deduction of value added taxes, which is presented on the same basis as 2018 and going forward.

 

First Quarter 2018 Consolidated Financial Results

REVENUES

Total revenues were RMB1,145.1 million (US$182.6 million) in the first quarter of 2018. 

  • Revenues from utility products and related services decreased by 7.7% year over year to RMB744.8 million (US$118.7 million) in the first quarter of 2018. The year-over-year change was primarily due to (i) a decline in revenues from mobile utility products and related services business in the overseas markets as certain ad formats, i.e., ads on mobile phone lock screens, have been discontinued by our overseas third-party advertising partners, and (ii) a decline in PC revenues. This decrease was largely offset by an increase in mobile utility products and related services business in China.
  • Revenues from the mobile entertainment business increased by 8.0% year over year to RMB392.5 million (US$62.6 million). The year-over-year increase was driven by the Company's mobile game business, which grew by 25.3% year over year to RMB174.7 million (US$27.9 million) in the quarter. The increase in the mobile game operation was a result of the Company's continued efforts to expand its mobile game portfolio by introducing some new mobile games in early 2017. In the first quarter of 2018, revenues from content-driven product decreased by 2.7% year over year to RMB217.7 million (US$34.7 million). The decrease was a result of a year-over-year growth in revenues from Live.me, which was offset by a decline in revenues from the News Republic application as the Company disposed of this operation in the fourth quarter of 2017.

By platform, revenues generated from the mobile business were 88.9% of total revenues in the first quarter of 2018, up from 85.3% in the same period last year.

By region, revenues generated from the Chinese market constituted 39.1% of total revenues in the first quarter of 2018, up from 27.6% in the same period last year. The growth of the Company's revenues in the Chinese market was attributable to a ramp-up of mobile utility products and related services businesses in China and increased mobile game revenues in the Chinese market, where the Company's mobile games continue to gain popularity.

Revenues generated from the overseas market constituted 60.9% of total revenues in the first quarter of 2018, a 17.6% decrease year over year to RMB697.5 million (US$111.2 million), mainly due to the impact of lock screen ads. Excluding the foreign exchange impact, revenues from the overseas market decreased by 11.4% year over year.  

COST OF REVENUES AND GROSS PROFIT

Cost of revenues decreased by 14.6% year over year to RMB391.2 million (US$62.4 million) in the first quarter of 2018. The year-over-year decrease resulted from reduced bandwidth and IDC costs associated with the Company's mobile utility applications in the overseas markets as well as lower amortization of acquired intangible assets. Non-GAAP cost of revenues decreased by 14.4% year over year to RMB391.3 million (US$62.4 million) in the first quarter of 2018.

Gross profit increased by 2.9% year over year to RMB753.9 million (US$120.2 million) in the first quarter of 2018. Non-GAAP gross profit increased by 2.7% year over year to RMB753.8 million (US$120.2 million) in the first quarter of 2018.

OPERATING INCOME AND EXPENSES

Total operating expenses decreased by 12.6% year over year to RMB617.6 million (US$98.5 million) in the first quarter of 2018. Total non-GAAP operating expenses decreased by 10.9% year over year to RMB608.5 million (US$97.0 million) in the first quarter of 2018.

  • Research and development (R&D) expense decreased by 23.0% year over year to RMB147.3 million (US$23.5 million) in the first quarter of 2018. The decreases were due to lower share-based compensation expenses and reduced R&D headcount resulting from the Company's mobile utility application business in the overseas markets, and the disposal of News Republic. Non-GAAP R&D expenses, which exclude share-based compensation expenses, decreased by 15.6% year over year to RMB153.4 million (US$24.5 million) in the first quarter of 2018.
  • Selling and marketing expenses decreased by 5.5% year over year to RMB391.4 million (US$62.4 million) in the first quarter of 2018. The decreases were mainly due to decreased promotional activities for the Company's mobile products in the overseas markets. Non-GAAP selling and marketing expenses, which exclude share-based compensation expenses, decreased by 5.6% year over year to RMB391.1 million (US$62.3 million) in the first quarter of 2018.
  • General and administrative expenses decreased by 12.5% year over year to RMB90.6 million (US$14.4 million) in the first quarter of 2018. The year-over-year decrease was primarily due to lower professional service fees and employee benefits. Non-GAAP general and administrative expenses, which exclude share-based compensation expenses, decreased by 15.4% year over year to RMB75.8 million (US$12.1 million) in the first quarter of 2018.

Operating profit increased to RMB136.4 million (US$21.7 million) in the first quarter of 2018 from RMB26.3 million in the same period last year. Non-GAAP operating profit increased to RMB145.3 million (US$23.2 million) in the first quarter of 2018 from RMB50.7 million in the same period last year. 

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 increased by 47.8% year over year to RMB264.7 million (US$42.2 million) in the first quarter of 2018 due to the optimization of the cost and expense structure for this segment.   
  • Operating loss for the mobile entertainment business was RMB75.0 million (US$12.0 million) in the first quarter of 2018, compared to operating loss of RMB128.5 million in the same period last year. The reduced loss was mainly a result of increased revenues generated from the Company's mobile game businesses and reduced costs and expenses from the News Republic business, partially offset by the Company's increased investments in the Live.me operation.

Share-based compensation expenses decreased by 63.4% year over year to RMB8.9 million (US$1.4 million) in the first quarter of 2018. The decrease resulted from a combination of several factors. The Company employed an accelerated method to recognize share-based compensation expenses. In addition, a significant number of share-based awards that were granted by the Company during its IPO in 2014 approached the end of their vesting periods in 2017. Furthermore, fewer share-based awards were granted in the first quarter of 2018 than in the same period last year.

IMPAIRMENT OF INVESTMENTS

Impairment of investments were RMB58.0 million (US$9.2 million) in the first quarter of 2018 primarily due to a one-time non-cash write-down of certain convertible loans to a third-party. The loss was recorded as a non-operating item since the loans were provided for investment purposes, which is outside of the Company's main business activity.

NET INCOME ATTRIBUTABLE TO CHEETAH MOBILE SHAREHOLDERS

Net income attributable to Cheetah Mobile shareholders was RMB70.0 million (US$11.2 million) in the first quarter of 2018. Non-GAAP net income attributable to Cheetah Mobile shareholders was RMB78.9 million (US$12.6 million) in the first quarter of 2018.

NET INCOME PER ADS

Diluted income per ADS was RMB0.42 (US$0.07) in the first quarter of 2018. Non-GAAP diluted income per ADS was RMB0.48 (US$0.08) in the first quarter of 2018.

ADJUSTED EBITDA

Adjusted EBITDA (Non-GAAP) increased by 93.3% year over year to RMB168.8 million (US$26.9 million) in the first quarter of 2018.

CASH AND CASH EQUIVALENTS, RESTRICTED CASH AND SHORT-TERM INVESTMENTS BALANCE

As of March 31, 2018, the Company had cash and cash equivalents, restricted cash, and short-term investments of RMB3,355.8 million (US$535.0 million). 

SHARES ISSUED AND OUTSTANDING

As of March 31, 2018, the Company had a total of 1,421,649,639 Class A and Class B ordinary shares issued and outstanding. One ADS represents 10 Class A ordinary shares.

Business Outlook

For the second quarter of 2018, the Company expects its total revenues to be between RMB1,020 million (US$163 million) and RMB1,080 million (US$172 million). This estimate represents management's preliminary view as of the date of this release, which is subject to change.

Conference Call Information

The Company will hold a conference call on Monday, May 21, 2018 at 8:00 a.m. Eastern Time or 8:00 p.m. Beijing Time to discuss the 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

China Toll Free:

4001-201-203

Hong Kong Toll Free:

800-905-945

Conference ID:

Cheetah Mobile

 

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/.

A presentation for the Company's earnings call is available at the Company's investor relations website.

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 RMB6.2726 to US$1.00, the exchange rate in effect as of March 31, 2018, 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 strong global vision. 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 live streaming product Live.me. 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

To supplement Cheetah Mobile's consolidated financial information presented in accordance with U.S. GAAP, Cheetah Mobile uses the following non-GAAP financial measures:

  • Non-GAAP cost of revenues reflects cost of revenues excluding the portion of share-based compensation expenses allocated to cost of revenues.
  • Non-GAAP gross profit reflects gross profit excluding the portion of share-based compensation expenses allocated to gross profit.
  • Non-GAAP operating income and expenses reflect operating income and expenses excluding the portion of share-based compensation expenses allocated to operating expenses.
  • Non-GAAP operating profit reflects operating profit excluding share-based compensation expenses.
  • Non-GAAP net income attributable to Cheetah Mobile shareholders is net income attributable to Cheetah Mobile shareholders excluding share-based compensation expenses.
  • Non-GAAP diluted earnings per ADS is non-GAAP net income attributable to Cheetah Mobile shareholders excluding net income attributable to redeemable noncontrolling interests, divided by weighted average number of diluted ADSs.
  • Adjusted EBITDA is earnings before interest, taxes, depreciation, amortization, other non-operating income and share-based compensation expenses.

The Company believes that separate analysis and exclusion of share-based compensation expenses and the use of Adjusted EBITDA add clarity to the constituent parts of its performance from the cash perspective. 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" and "Cheetah Mobile Inc. Reconciliation of Net Income Attributable to Cheetah Mobile Shareholders to Adjusted EBITDA (Non-GAAP)" at the end of this release.

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

ICR, Inc.
Jack Wang
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, 2017


March 31, 2018


March 31, 2018


RMB


RMB


USD

ASSETS






Current assets:






Cash and cash equivalents

2,317,488


1,580,591


251,983

Restricted cash

90,149


9,494


1,514

Short-term investments

1,395,694


1,765,758


281,503

Accounts receivable

621,272


585,810


93,392

Prepayments and other current assets

918,243


881,568


140,544

Due from related parities

54,052


47,049


7,501

Total current assets

5,396,898


4,870,270


776,437







Non-current assets:






Property and equipment, net

89,137


81,468


12,988

Intangible assets, net 

70,225


67,548


10,769

Goodwill

634,157


615,947


98,196

Investment in equity investees

149,969


147,833


23,568

Other long term investments

1,002,721


982,797


156,681

Due from related parities

5,216


8,148


1,299

Deferred tax assets

57,642


65,267


10,405

Other non-current assets

42,966


42,020


6,699

Total non-current assets

2,052,033


2,011,028


320,605







Total assets

7,448,931


6,881,298


1,097,042







LIABILITIES, MEZZANINE EQUITY AND SHAREHOLDERS' EQUITY












Current liabilities: 






Bank loans

336,304


-


-

Accounts payable

164,537


174,520


27,823

Accrued expenses and other current liabilities

1,532,489


1,356,612


216,276

Due to related parties

81,810


45,535


7,259

Income tax payable

50,614


55,980


8,925

Total current liabilities

2,165,754


1,632,647


260,283







Non-current liabilities: 






Deferred tax liabilities

73,393


74,427


11,865

Other non-current liabilities

54,574


52,806


8,419

Total non-current liabilities

127,967


127,233


20,284







Total liabilities

2,293,721


1,759,880


280,567







Mezzanine equity:






Redeemable noncontrolling interests

649,246


658,247


104,940







Shareholders' equity:






Ordinary shares

229


230


37

Additional paid-in capital

2,644,043


2,656,818


423,559

Retained earnings

1,564,883


1,637,837


261,110

Accumulated other comprehensive income (loss)

84,206


(48,983)


(7,809)

Total Cheetah Mobile shareholders' equity

4,293,361


4,245,902


676,897

Noncontrolling interests

212,603


217,269


34,638







Total equity

4,505,964


4,463,171


711,535







Total liabilities, mezzanine equity and equity

7,448,931


6,881,298


1,097,042

   

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


March 31, 2017


December 31, 2017


March 31, 2018


March 31, 2018


RMB


RMB


RMB


USD

Revenues (a)

1,190,703


1,387,806


1,145,097


182,555

Utility products and related services 

827,225


967,232


744,763


118,732

Mobile entertainment

363,468


399,493


392,452


62,566

Others

10


21,081


7,882


1,257









Cost of revenues (b)

(457,953)


(461,383)


(391,182)


(62,364)

Gross profit

732,750


926,423


753,915


120,191









Operating income and expenses: 








Research and development (b)

(191,367)


(151,867)


(147,278)


(23,480)

Selling and marketing (b) 

(414,264)


(420,080)


(391,355)


(62,391)

General and administrative (b) 

(103,588)


(115,089)


(90,600)


(14,444)

Impairment of goodwill and intangible assets

-


(38,690)


-


-

Other operating income

2,784


21,307


11,679


1,862

Total operating income and  expenses

(706,435)


(704,419)


(617,554)


(98,453)









Operating profit

26,315


222,004


136,361


21,738

Other income (expense):








Interest income, net

1,616


10,227


16,652


2,655

Foreign exchange gain (loss), net

1,213


(5,943)


(12,829)


(2,045)

Impairment of investments

-


(209,565)


(58,000)


(9,247)

(Losses) Gain from equity method investments, net

(367)


1,921


(2,739)


(437)

Other income, net

66,685


1,088,965


500


80









Income before taxes

95,462


1,107,609


79,945


12,744

Income tax expenses

(4,912)


(40,259)


(5,042)


(804)

Net income

90,550


1,067,350


74,903


11,940

Less: net (loss) income attributable to noncontrolling interests 

(679)


20,264


4,906


782

Net income attributable to Cheetah Mobile shareholders

91,229


1,047,086


69,997


11,158









Earnings per share








Basic 

0.07


0.74


0.04


0.01

Diluted 

0.06


0.73


0.04


0.01









Earnings per ADS








Basic 

0.66


7.43


0.43


0.07

Diluted 

0.64


7.27


0.42


0.07









Weighted average number of shares outstanding








Basic 

1,387,446,596


1,400,420,814


1,403,597,719


1,403,597,719

Diluted 

1,422,443,105


1,432,849,633


1,452,802,118


1,452,802,118

Weighted average number of ADSs outstanding








Basic 

138,744,660


140,042,081


140,359,772


140,359,772

Diluted 

142,244,310


143,284,963


145,280,212


145,280,212









Other comprehensive loss, net of tax of nil








Foreign currency translation adjustments

(8,517)


(52,267)


(134,774)


(21,486)

Unrealized losses on available-for-sale securities, net

-


(433)


-


-

Other comprehensive loss

(8,517)


(52,700)


(134,774)


(21,486)

Total comprehensive income (loss)

82,033


1,014,650


(59,871)


(9,546)

Less: Total comprehensive income attributable to noncontrolling interests

119


18,568


3,321


529

Total comprehensive income (loss) attributable to Cheetah Mobile shareholders

81,914


996,082


(63,192)


(10,075)

 

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)

  (a) On January 1, 2018, The Group adopted ASC 606, applying the modified retrospective method to contracts that were not completed as of January 1, 2018. Adoption did not have a material impact as of January 1, 2018. Results for reporting periods beginning on or after January 1, 2018 are presented under ASC 606, while prior period amounts are not adjusted and continue to be reported in accordance with historic accounting under ASC 605. As ASC 605 has been superseded by ASC 606 on this subject, value added tax was reclassified from the cost of revenues to net against revenues. Advertising-for-advertising barter transactions should be recorded at the fair value of the advertising received by reference to the fair value of advertising services provided to other customers. Revenues are recognized in the same amount with costs and  expenses. Previously, such transactions were recorded at  cost which was nil as no consideration was exchanged. The following table illustrates the effect of the adoption of ASC 606 by presenting a comparison of revenues for the three months ended March 31, 2018, as actually reported and as they would have been reported under ASC 605, without the adoption of ASC 606:  










For The Three Months Ended






March 31, 2018


March 31, 2018






RMB


USD





As reported

1,145,097


182,555





Add: value added taxes

28,314


4,514





Less: barter transactions

3,801


606





Without adoption of ASC 606

1,169,610


186,463














For The Three Months Ended


March 31, 2017


December 31, 2017


March 31, 2018


March 31, 2018

(b) Share-based compensation expenses

RMB


RMB


RMB


USD

Cost of revenues

934


(981)


(90)


(14)

Research and development

9,571


4,471


(6,143)


(979)

Selling and marketing

(188)


(3,049)


302


48

General and administrative

14,051


2,933


14,850


2,367

Total

24,368


3,374


8,919


1,422

 

CHEETAH MOBILE INC.

Information about Segment 

(Unaudited, in'000, except for percentage)













For The Three Months Ended March 31, 2018



Utility Products and
Related Services


Mobile Entertainment


Others 


Unallocated*


Consolidated


RMB


RMB


RMB


RMB


RMB

USD

Revenue

744,763


392,452


7,882


-


1,145,097

182,555

Operating profit (loss)

264,706


(75,046)


(44,380)


(8,919)


136,361

21,738

Operating margin

35.5%


(19.1)%


(563.1)%




11.9%

11.9%














For The Three Months Ended December 31, 2017



Utility Products and

Related Services


Mobile Entertainment


Others 


Unallocated*


Consolidated



RMB


RMB


RMB


RMB


RMB


Revenue

967,232


399,493


21,081


-


1,387,806


Operating profit (loss)

326,950


(61,846)


(39,726)


(3,374)


222,004


Operating margin

33.8%


(15.5)%


(188.4)%




16.0%

























For The Three Months Ended March 31, 2017



Utility Products and 
Related Services


Mobile Entertainment


Others 


Unallocated*


Consolidated



RMB


RMB


RMB


RMB


RMB


Revenue

827,225


363,468


10


-


1,190,703


Operating profit (loss)

179,158


(128,478)


3


(24,368)


26,315


Operating margin

21.7%


(35.3)%


30.0%




2.2%













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




 

CHEETAH MOBILE INC.

Reconciliation of GAAP and Non-GAAP Results

(Unaudited, in'000, except for per share data and percentage)
















For The Three Months Ended March 31, 2018




GAAP


% of Net


Share-based 


% of Net


Non-GAAP


% of Net


Non-GAAP


Result


Revenues


Compensation


Revenues


Result


Revenues


Result ($)

Revenues

1,145,097








1,145,097




182,555

Cost of revenues

(391,182)


34.2%


(90)


0.0%


(391,272)


34.2%


(62,378)

Gross profit

753,915


65.8%


(90)


0.0%


753,825


65.8%


120,177















Research and development 

(147,278)


12.9%


(6,143)


0.5%


(153,421)


13.4%


(24,459)

Selling and marketing 

(391,355)


34.2%


302


0.0%


(391,053)


34.2%


(62,343)

General and administrative 

(90,600)


7.9%


14,850


1.3%


(75,750)


6.6%


(12,077)

Other operating income

11,679


1.0%


-


0.0%


11,679


1.0%


1,862

Total operating income and expenses

(617,554)


53.9%


9,009


0.8%


(608,545)


53.1%


(97,017)















Operating profit 

136,361


11.9%


8,919


0.8%


145,280


12.7%


23,160

Net income attributable to

Cheetah Mobile shareholders

69,997


6.1%


8,919


0.8%


78,916


6.9%


12,581















Diluted earnings per ordinary share (RMB)

0.04




0.01




0.05





Diluted earnings per ADS (RMB)

0.42




0.06




0.48





Diluted earnings per ADS (USD)

0.07




0.01




0.08


































For The Three Months Ended December 31, 2017




GAAP


% of Net


Share-based 


% of Net


Non-GAAP


% of Net




Result


Revenues


Compensation


Revenues


Result


Revenues



Revenues

1,387,806








1,387,806





Cost of revenues

(461,383)


33.2%


(981)


0.1%


(462,364)


33.3%



Gross profit

926,423


66.8%


(981)


0.1%


925,442


66.7%

















Research and development 

(151,867)


10.9%


4,471


0.3%


(147,396)


10.6%



Selling and marketing 

(420,080)


30.3%


(3,049)


0.2%


(423,129)


30.5%



General and administrative 

(115,089)


8.3%


2,933


0.2%


(112,156)


8.1%



Impairment of goodwill and intangible assets

(38,690)


2.8%


-


0.0%


(38,690)


2.8%



Other operating income

21,307


1.5%


-


0.0%


21,307


1.5%



Total operating income and expenses

(704,419)


50.8%


4,355


0.3%


(700,064)


50.4%

















Operating profit

222,004


16.0%


3,374


0.2%


225,378


16.2%



Net income attributable to Cheetah Mobile shareholders

1,047,086


75.4%


3,374


0.2%


1,050,460


75.7%

















Diluted earnings per ordinary share (RMB)

0.73




0.00




0.73





Diluted earnings per ADS (RMB)

7.27




0.02




7.29
















































For The Three Months Ended March 31, 2017




GAAP


% of Net


Share-based 


% of Net


Non-GAAP


% of Net




Result


Revenues


Compensation


Revenues


Result


Revenues



Revenues

1,190,703








1,190,703





Cost of revenues

(457,953)


38.5%


934


0.1%


(457,019)


38.4%



Gross profit

732,750


61.5%


934


0.1%


733,684


61.6%

















Research and development 

(191,367)


16.1%


9,571


0.8%


(181,796)


15.3%



Selling and marketing 

(414,264)


34.8%


(188)


0.0%


(414,452)


34.8%



General and administrative 

(103,588)


8.7%


14,051


1.2%


(89,537)


7.5%



Other operating income

2,784


0.2%


-


0.0%


2,784


0.2%



Total operating income and expenses

(706,435)


59.3%


23,434


2.0%


(683,001)


57.4%

















Operating profit

26,315


2.2%


24,368


2.0%


50,683


4.3%



Net income attributable to

Cheetah Mobile Shareholders

91,229


7.7%


24,368


2.0%


115,597


9.7%

















Diluted earnings per ordinary share (RMB)

0.06




0.02




0.08





Diluted earnings per ADS (RMB)

0.64




0.17




0.81





 

CHEETAH MOBILE INC.

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

(Unaudited, in '000)





For The Three Months Ended


March 31, 2017

December 31, 2017

March 31, 2018

March 31, 2018


RMB

RMB

RMB

USD

Net income attributable to Cheetah Mobile shareholders

91,229

1,047,086

69,997

11,158

Add:





Income tax expenses

4,912

40,259

5,042

804

Interest income, net

(1,616)

(10,227)

(16,652)

(2,655)

Depreciation and amortization

36,595

30,377

23,472

3,742

Net (loss) income attributable to noncontrolling interests 

(679)

20,264

4,906

782

Other non-operating  (income) expense, net

(67,531)

(875,378)

73,068

11,649

Share-based compensation 

24,368

3,374

8,919

1,422

Adjusted EBITDA

87,278

255,755

168,752

26,902

 

CHEETAH MOBILE INC.

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

(Unaudited, in '000)






For The Three Months Ended


March 31, 2017

December 31, 2017

March 31, 2018

March 31, 2018


RMB

RMB

RMB

USD

PC

182,337

170,259

127,094

20,262

Mobile

1,008,366

1,217,547

1,018,003

162,293

Total

1,190,703

1,387,806

1,145,097

182,555

 

CHEETAH MOBILE INC.

Revenues Generated from Domestic and Overseas Markets

(Unaudited, in '000)






For The Three Months Ended


March 31, 2017

December 31, 2017

March 31, 2018

March 31, 2018


RMB

RMB

RMB

USD

Domestic

342,383

543,974

447,620

71,361

Overseas

848,320

843,832

697,477

111,194

Total

1,190,703

1,387,806

1,145,097

182,555

 

SOURCE Cheetah Mobile


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