BEIJING, Nov. 21, 2018 /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
third quarter ended September 30,
2018.
Third Quarter 2018 Financial Highlights
- Total revenues[1] grew by 15.6% year over
year and 22.5% quarter over quarter to RMB1,352.0 million (US$196.9 million).
- Revenues from the mobile entertainment business increased by
37.5% year over year and 49.6% quarter over quarter to RMB497.9 million (US$72.5
million). Revenues from utility products and related
services increased by 4.4% year over year and 10.5% quarter over
quarter to RMB835.6 million
(US$121.7 million).
- Gross profit increased by 22.0% year over year to RMB970.3 million (US$141.3
million). Gross margin expanded to 71.8% in the third
quarter of 2018 from 68.0% in the same period last year.
- Net income attributable to Cheetah Mobile shareholders
increased by 19.6% year over year to RMB167.0 million (US$24.3
million) in the third quarter of 2018.
- The Company generated RMB338.8
million (US$49.3 million) of
net cash from operating activities and RMB326.3 million (US$47.5
million) of free cash flow in the third quarter of
2018.
Third Quarter 2018 Operating Metrics
- The average number of global mobile monthly active users
("Mobile MAUs") was 535 million in the third quarter of 2018. The
number of Mobile MAUs from markets outside of China, or overseas markets, accounted for 68%
of the total number of Mobile MAUs in the third quarter of
2018.
- The average number of Mobile MAUs from China grew by 18% year over year and 6%
quarter over quarter to 171 million as the Company's mobile
products continued to gain popularity in the domestic market.
Mr. Sheng Fu, Cheetah Mobile's
Chairman and Chief Executive Officer, stated, "We successfully
reinvigorated our growth engine through our mobile games, mobile
utility, and artificial intelligence ("AI") businesses. In the
third quarter of 2018, both revenues and profits from our mobile
games business hit record highs, driven mostly by the long-tail
success of Bricks n Balls, a game we started to operate earlier
this year, and users' increasing in-game purchases. In our mobile
utility business, we grew the mobile utility revenue in the
domestic market by 54% year over year, stopped the revenue decline
in the overseas market, and stabilized the revenues from our PC
business. In our AI business, our consumer product -- Cheetah
Translator -- has been the top seller among its peers since its
launch in July, while our enterprise product -- Cheetah GreetBot –
has now gone into commercial production. Looking forward, we are
confident that we have the strategy and the team in place to
overcome the challenge of market uncertainties. To express our
strong conviction about our long-term success, we have initiated a
12-month share repurchase plan of up to US$100 million."
[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 the
Company's 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.
|
Mr. Vincent Jiang, Cheetah
Mobile's Chief Financial Officer, commented, "Driven by our mobile
games operation and our mobile utility products and related
services business in the domestic market, our total revenues
resumed the year-over-year and quarter-over-quarter growth
trajectory in the third quarter of 2018 and exceeded the high end
of our guidance range. On the profit side, our utility products and
related services business continued to generate strong profits and
cash flow. Our mobile games operation also achieved significant
margin improvement sequentially and year over year attributable to
a better operating leverage. These improvements contributed to the
strong cash flow generated from our operating activities in the
third quarter of 2018. As of September 30,
2018, we had cash and cash equivalents, restricted cash, and
short-term investments of approximately RMB3.6 billion. Our strong cash generation
capabilities and our high cash balance are enabling us to continue
to invest in our long-term growth and our business expansion into
the AI space."
Third Quarter 2018 Consolidated Financial
Results
REVENUES
Total revenues in the third quarter increased by 15.6% year over
year and 22.5% quarter over quarter to RMB1,352.0 million (US$196.9 million).
Revenues from utility products and related
services increased by 4.4% year over year and 10.5% quarter
over quarter to RMB835.6 million
(US$121.7 million) in the third
quarter of 2018. The growths were mainly driven by increases in
revenues from the mobile utility products and related services
business in the domestic market due to the increasing mobile
traffic and effective cost per mille ("eCPM"). Revenues from the
mobile utility products and related services business in the
domestic market accounted for 27.5% of the total revenues in the
third quarter of 2018. This year-over-year growth was partially
offset by (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 the Company's overseas third-party advertising
partners, and (ii) a decline in PC revenues as the internet traffic
continued to migrate from PC to mobile.
Revenues from the mobile entertainment business increased
by 37.5% year over year and 49.6% quarter over quarter to
RMB497.9 million (US$72.5 million) driven by the growth of the
Company's mobile game business in the third quarter of 2018.
- Revenues from the mobile game business increased by 77.8% year
over year and 105.7% quarter over quarter to RMB285.3 million (US$41.5
million). The year-over-year increase in the mobile game
business mainly resulted from the success of the new game Bricks
n Balls, which was released in the first half of 2018. The
increase was also attributable to the improved performances of the
Company's existing game titles, including Dancing Line,
Piano Tiles 2, and Rolling Sky, as the Company
continued to add in-game purchase features to its existing game
portfolio and integrate its best-selling game titles with the
WeChat mini game platform to expand its user base. In addition, the
Company further improved its eCPM by utilizing innovative video
advertisement placements while leveraging machine learning
technologies to improve the targeting of its advertisements. The
quarter-over-quarter increase was attributable to the typical
seasonality during the third quarter, which has summer breaks and
more holidays both in China and
overseas. As a result, the Company's players tend to spend more
time on our games during the third quarter.
- Revenues from the content-driven products increased by 5.4%
year over year and 9.5% quarter over quarter to RMB212.6 million (US$31.0
million), due to the increase in revenues from Live.me,
which introduced a new series of features in the third quarter of
2018 to further expand its average revenue per user. In addition,
the appreciation of the US dollar against the RMB in the third
quarter of 2018 also contributed to LiveMe's year-over-year revenue
growth as most of its revenues were generated in US dollars but
reported in RMB.
By platform, revenues generated from the mobile business
accounted for 89.4% of the Company's total revenues in the third
quarter of 2018, up from 88.4% in the same period last year, and
87.5% in the second quarter of 2018.
By region, revenues generated from the Chinese market
increased by 44.6% year over year and 18.2% quarter over quarter to
RMB536.4 million (US$78.1 million), and constituted 39.7% of the
Company's total revenues in the third quarter of 2018, up from
31.7% in the same period last year but down slightly from 41.1% in
the second quarter of 2018. The revenue growth in the Chinese
market was primarily attributable to a ramp-up of mobile utility
products and related services in China.
Revenues generated from the overseas market increased by 2.1%
year over year and 25.5% quarter over quarter to RMB815.5 million (US$118.7
million), constituting 60.3% of the Company's total revenues
in the third quarter of 2018, down from 68.3% in the same period
last year but up from 58.9% in the second quarter of 2018. The
revenue growth in the overseas market was primarily driven by the
rapid growth of our mobile games business, whose market is mostly
overseas.
COST OF REVENUES AND GROSS PROFIT
Cost of revenues increased by 1.9% year over year and
increased by 8.6% quarter over quarter to RMB381.7 million (US$55.6
million) in the third quarter of 2018. The sequential
increase was primarily driven by higher costs of payment channels,
such as Google Play and Apple's App
Store, for the Company's mobile game business, and higher
revenue sharing with live broadcasters of the Company's Live.me
business. Non-GAAP cost of revenues decreased by 4.5% year
over year and increased by 8.6% quarter over quarter to
RMB381.6 million (US$55.6 million) in the third quarter of
2018.
Gross profit increased by 22.0% year over year and 29.0%
quarter over quarter to RMB970.3
million (US$141.3
million). Non-GAAP gross profit increased by
22.1% year over year and 29.0% quarter over quarter to RMB970.3 million (US$141.3
million) in the third quarter of 2018. Gross margin
expanded to 71.8% in the third quarter of 2018 from 68.0% in the
same period last year and 68.2% in the second quarter of 2018,
primarily due to higher revenue contribution from mobile games in
the third quarter of 2018. Non-GAAP gross margin increased
to 71.8% in the third quarter of 2018 from 68% in the same period
last year and 68.2% in the second quarter of 2018.
OPERATING INCOME AND EXPENSES
Total operating expenses increased by 27.1% year over
year and 35.0% quarter over quarter to RMB842.4 million (US$122.7
million) in the third quarter of 2018. Total non-GAAP
operating expenses increased by 27.3% year over year and 33.9%
quarter over quarter to RMB816.2
million (US$118.8 million) in
the third quarter of 2018.
Research and development (R&D) expenses remained flat
year over year and increased by 13.0% quarter over quarter to
RMB175.3 million (US$25.5 million) in the third quarter of 2018.
The quarter-over-quarter increase was primarily due to higher
share-based compensation expenses. Non-GAAP R&D
expenses, which exclude share-based compensation expenses,
decreased by 2.9% year over year and increased by 5.2% quarter over
quarter to RMB166.7 million
(US$24.3 million) in the third
quarter of 2018. The quarter-over-quarter increase was mainly due
to increased R&D staff members.
Selling and marketing expenses increased by 39.0% year
over year and 53.7% quarter over quarter to RMB568.4 million (US$82.8
million) in the third quarter of 2018. The increases were
mainly due to increased marketing promotions for the Company's
utility products and related services business in the domestic
markets and its mobile games business. Non-GAAP selling and
marketing expenses, which exclude share-based compensation
expenses, increased by 37.6% year over year and 53.9% quarter over
quarter to RMB565.1 million
(US$82.3 million) in the third
quarter of 2018.
General and administrative expenses increased by 22.0%
year over year and 8.2% quarter over quarter to RMB108.3 million (US$15.8
million) in the third quarter of 2018. The increases were
primarily due to increased employee benefits, higher professional
and legal service fees, and other administrative expenses.
Non-GAAP general and administrative expenses, which exclude
share-based compensation expenses, increased by 37.2% year over
year and 10.6% quarter over quarter to RMB93.9 million (US$13.7
million) in the third quarter of 2018.
Operating profit decreased by 3.4% year over year and
remained relatively flat quarter over quarter at RMB127.9 million (US$18.6
million). The year-over-year decrease in the Company's
operating profit was primarily due to the Company's proactive
investments in both its mobile utility product business in the
domestic market and its mobile games operation. Both of these two
businesses drove the Company's year-over-year and
quarter-over-quarter revenue growth in the third quarter of 2018.
Non-GAAP operating profit remained relatively flat year over
year and increased by 8.1% quarter over quarter to RMB154.2 million (US$22.4
million).
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 1.4% year over year and decreased by 6.4%
quarter over quarter to RMB264.1
million (US$38.5 million) in
the third quarter of 2018. The quarter-over-quarter decrease was
primarily due to the Company's increased marketing promotions for
its utility products and related services business in the domestic
market.
Operating loss for the mobile entertainment business was
RMB74.1 million (US$10.8 million) in the third quarter of 2018,
compared to an operating loss of RMB105.0
million in the same period last year and RMB98.6 million in the second quarter of 2018.
The reduced losses were mainly a result of increased revenues from
the mobile games operation and reduced costs and expenses from the
News Republic business.
Share-based compensation expenses increased by 23.0% year over
year and 79.8% quarter over quarter to RMB26.3 million (US$3.8
million) in the third quarter of 2018, as the Company
granted a certain quantity of restricted shares to our key
employees.
NET INCOME ATTRIBUTABLE TO CHEETAH MOBILE
SHAREHOLDERS
Net income attributable to Cheetah Mobile shareholders
increased by 19.6% year over year, and decreased by 15.0% quarter
over quarter to RMB167.0 million
(US$24.3 million) in the third
quarter of 2018. Non-GAAP net income attributable to Cheetah
Mobile shareholders increased by 20.0% year over year and
decreased by 8.4% quarter over quarter to RMB193.3 million (US$28.2
million) in the third quarter of 2018. The quarter over
quarter decrease in net income was mainly due to the investment
income recognized in the second quarter of 2018.
NET INCOME PER ADS
Diluted income per ADS increased by 14.7% year over year,
and decreased by 15.5% quarter over quarter to RMB1.09 (US$0.16)
in the third quarter of 2018. Non-GAAP diluted income per
ADS increased by 15.5% year over year and decreased by 8.6%
quarter over quarter to RMB1.27
(US$0.19) in the third quarter of
2018. The quarter over quarter decrease was mainly due to the
investment income recognized in the second quarter of 2018.
ADJUSTED EBITDA
Adjusted EBITDA (Non-GAAP) decreased by 8.0% year over
year and increased by 4.8% quarter over quarter to RMB172.0 million (US$25.0
million) in the third quarter of 2018.
BALANCE SHEET AND CASH FLOW
Net cash from operating activities in the third quarter
of 2018 was RMB338.8 million
(US$49.3 million) compared to
RMB197.8 million in the same period
of 2017. Free cash flow in the third quarter of 2018 was
RMB326.3 million (US$47.5 million) compared to RMB192.3 million in the same period of 2017.
As of September 30, 2018, the
Company had cash and cash equivalents, restricted cash, and
short-term investments of RMB3,624.7
million (US$527.8
million).
SHARES ISSUED AND OUTSTANDING
As of September 30, 2018, the
Company had a total of 1,433,343,199 Class A and Class B ordinary
shares issued and outstanding. One ADS represents 10 Class A
ordinary shares.
Business Outlook
For the fourth quarter of 2018, the Company expects its total
revenues to be between RMB1,390
million (US$202 million) and
RMB1,430 million (US$208 million). This estimate represents
management's preliminary view as of the date of this release, which
is subject to change.
Share Repurchase Program
On September 13, 2018, the Company
announced that its board of directors approved a share repurchase
program of up to US$100 million of
the Company's outstanding ADSs for a period not to exceed 12
months. Cheetah funded repurchases made under this program from its
available cash balance. As of November 20,
2018, the Company had repurchased approximately 1 million
ADSs for approximately US$8 million
under this program.
Dispose of Certain Portion of Shares of Bytedance
Ltd.
Cheetah Mobile has entered into an agreement to sell a certain
portion of its equity ownership in Bytedance Ltd. and this
transaction will result in a disposal gain of investment of
approximately US$43 million in the
fourth quarter of 2018. This transaction will also result in a fair
value gain of US$43 million in the
fourth quarter of 2018 for the remaining portion which the Company
still holds. This transaction is expected to close by the end of
November 2018, subject to customary
closing conditions.
Conference Call Information
The Company will hold a conference call on Wednesday, November 21, 2018 at 8:00 am Eastern Time or 9:00 pm 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
|
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 be
available at the Company's investor relations website at
http://ir.cmcm.com/.
A presentation for the Company's earnings call is also available
at the aforementioned 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 RMB6.868 to US$1.00, the exchange rate in effect as of
September 30, 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 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,
Bricks n Balls, 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.
- Free cash flow is net cash generated by operating activities
less capital expenditure.
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
|
|
September
30, 2018
|
|
September
30, 2018
|
|
RMB
|
|
RMB
|
|
USD
|
ASSETS
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
Cash and cash
equivalents
|
2,317,488
|
|
2,808,721
|
|
408,958
|
Restricted
cash
|
90,149
|
|
6,119
|
|
891
|
Short-term
investments
|
1,395,694
|
|
809,902
|
|
117,924
|
Accounts
receivable
|
621,272
|
|
567,042
|
|
82,563
|
Prepayments and other
current assets
|
918,243
|
|
851,657
|
|
124,004
|
Due from related
parties
|
54,052
|
|
134,116
|
|
19,528
|
Total current
assets
|
5,396,898
|
|
5,177,557
|
|
753,868
|
|
|
|
|
|
|
Non-current
assets:
|
|
|
|
|
|
Property and
equipment, net
|
89,137
|
|
68,546
|
|
9,980
|
Intangible assets,
net
|
70,225
|
|
57,241
|
|
8,334
|
Goodwill
|
634,157
|
|
660,071
|
|
96,108
|
Investment in equity investees
|
149,969
|
|
151,072
|
|
21,997
|
Other long term investments
|
1,002,721
|
|
1,456,884
|
|
212,126
|
Due from related
parties
|
5,216
|
|
15,539
|
|
2,263
|
Deferred tax
assets
|
57,642
|
|
62,997
|
|
9,173
|
Other non-current
assets
|
42,966
|
|
43,164
|
|
6,285
|
Total non-current
assets
|
2,052,033
|
|
2,515,514
|
|
366,266
|
|
|
|
|
|
|
Total
assets
|
7,448,931
|
|
7,693,071
|
|
1,120,134
|
|
|
|
|
|
|
LIABILITIES,
MEZZANINE EQUITY AND
SHAREHOLDERS' EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
Bank loans
|
336,304
|
|
-
|
|
-
|
Accounts
payable
|
164,537
|
|
164,185
|
|
23,906
|
Accrued expenses and
other current liabilities
|
1,532,489
|
|
1,484,952
|
|
216,215
|
Due to related
parties
|
81,810
|
|
35,274
|
|
5,136
|
Income tax
payable
|
50,614
|
|
59,238
|
|
8,625
|
Total current
liabilities
|
2,165,754
|
|
1,743,649
|
|
253,882
|
|
|
|
|
|
|
Non-current
liabilities:
|
|
|
|
|
|
Deferred tax
liabilities
|
73,393
|
|
74,442
|
|
10,839
|
Other non-current
liabilities
|
54,574
|
|
71,780
|
|
10,451
|
Total non-current
liabilities
|
127,967
|
|
146,222
|
|
21,290
|
|
|
|
|
|
|
Total
liabilities
|
2,293,721
|
|
1,889,871
|
|
275,172
|
|
|
|
|
|
|
Mezzanine
equity:
|
|
|
|
|
|
Redeemable
noncontrolling interests
|
649,246
|
|
677,606
|
|
98,661
|
|
|
|
|
|
|
Shareholders'
equity:
|
|
|
|
|
|
Ordinary
shares
|
229
|
|
230
|
|
33
|
Treasury
stock
|
-
|
|
(19,191)
|
|
(2,794)
|
Additional paid-in
capital
|
2,644,043
|
|
2,705,890
|
|
393,985
|
Retained
earnings
|
1,564,883
|
|
1,982,569
|
|
288,668
|
Accumulated other
comprehensive income
|
84,206
|
|
274,655
|
|
39,991
|
Total Cheetah
Mobile shareholders' equity
|
4,293,361
|
|
4,944,153
|
|
719,883
|
Noncontrolling
interests
|
212,603
|
|
181,441
|
|
26,418
|
|
|
|
|
|
|
Total
equity
|
4,505,964
|
|
5,125,594
|
|
746,301
|
|
|
|
|
|
|
Total liabilities,
mezzanine equity and equity
|
7,448,931
|
|
7,693,071
|
|
1,120,134
|
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
|
|
September
30, 2017
|
|
June 30,
2018
|
|
September
30, 2018
|
|
September
30, 2018
|
|
RMB
|
|
RMB
|
|
RMB
|
|
USD
|
Revenues
(a)
|
1,194,687
|
|
1,103,456
|
|
1,351,979
|
|
196,852
|
Utility products and
related services
|
824,764
|
|
756,093
|
|
835,606
|
|
121,667
|
Mobile
entertainment
|
362,448
|
|
332,907
|
|
497,911
|
|
72,497
|
Others
|
7,475
|
|
14,456
|
|
18,462
|
|
2,688
|
|
|
|
|
|
|
|
|
Cost of revenues
(b)
|
(399,664)
|
|
(351,360)
|
|
(381,692)
|
|
(55,575)
|
Gross
profit
|
795,023
|
|
752,096
|
|
970,287
|
|
141,277
|
|
|
|
|
|
|
|
|
Operating income
and expenses:
|
|
|
|
|
|
|
|
Research and
development (b)
|
(174,646)
|
|
(155,202)
|
|
(175,303)
|
|
(25,525)
|
Selling and marketing
(b)
|
(409,045)
|
|
(369,914)
|
|
(568,445)
|
|
(82,767)
|
General and
administrative (b)
|
(88,737)
|
|
(100,107)
|
|
(108,270)
|
|
(15,764)
|
Impairment of
goodwill and intangible assets
|
-
|
|
(5,587)
|
|
-
|
|
-
|
Other operating
income
|
9,739
|
|
6,660
|
|
9,595
|
|
1,397
|
Total operating
income and expenses
|
(662,689)
|
|
(624,150)
|
|
(842,423)
|
|
(122,659)
|
|
|
|
|
|
|
|
|
Operating
profit
|
132,334
|
|
127,946
|
|
127,864
|
|
18,618
|
Other income
(expense):
|
|
|
|
|
|
|
|
Interest income,
net
|
7,380
|
|
19,425
|
|
24,120
|
|
3,512
|
Foreign exchange
(loss) gain, net
|
(3,867)
|
|
10,022
|
|
10,532
|
|
1,533
|
(Impairment) reversal
of investment impairment
|
(65,461)
|
|
14,500
|
|
-
|
|
-
|
(Losses) gain from
equity method investments, net
|
(582)
|
|
(2,818)
|
|
2,479
|
|
361
|
Other income,
net
|
82,370
|
|
52,666
|
|
1,242
|
|
181
|
|
|
|
|
|
|
|
|
Income before
taxes
|
152,174
|
|
221,741
|
|
166,237
|
|
24,205
|
Income tax
expenses
|
(7,767)
|
|
(27,993)
|
|
(26,957)
|
|
(3,925)
|
Net
income
|
144,407
|
|
193,748
|
|
139,280
|
|
20,280
|
Less: net income
(loss) attributable to noncontrolling interests
|
4,727
|
|
(2,792)
|
|
(27,757)
|
|
(4,041)
|
Net income
attributable to Cheetah Mobile shareholders
|
139,680
|
|
196,540
|
|
167,037
|
|
24,321
|
|
|
|
|
|
|
|
|
Earnings per
share
|
|
|
|
|
|
|
|
Basic
|
0.10
|
|
0.13
|
|
0.11
|
|
0.02
|
Diluted
|
0.09
|
|
0.13
|
|
0.11
|
|
0.02
|
|
|
|
|
|
|
|
|
Earnings per
ADS
|
|
|
|
|
|
|
|
Basic
|
0.97
|
|
1.33
|
|
1.12
|
|
0.16
|
Diluted
|
0.95
|
|
1.29
|
|
1.09
|
|
0.16
|
|
|
|
|
|
|
|
|
Weighted average
number of shares outstanding
|
|
|
|
|
|
|
|
Basic
|
1,396,601,023
|
|
1,407,191,965
|
|
1,408,570,797
|
|
1,408,570,797
|
Diluted
|
1,429,237,411
|
|
1,452,195,012
|
|
1,440,581,762
|
|
1,440,581,762
|
Weighted average
number of ADSs outstanding
|
|
|
|
|
|
|
|
Basic
|
139,660,102
|
|
140,719,197
|
|
140,857,080
|
|
140,857,080
|
Diluted
|
142,923,741
|
|
145,219,501
|
|
144,058,176
|
|
144,058,176
|
|
|
|
|
|
|
|
|
Other
comprehensive loss, net of tax of nil
|
|
|
|
|
|
|
|
Foreign currency
translation adjustments
|
(48,572)
|
|
188,530
|
|
149,722
|
|
21,800
|
Other
comprehensive (loss) income
|
(48,572)
|
|
188,530
|
|
149,722
|
|
21,800
|
Total
comprehensive income
|
95,835
|
|
382,278
|
|
289,002
|
|
42,080
|
Less: Total
comprehensive income (loss) attributable to
noncontrolling interests
|
2,604
|
|
1,358
|
|
(17,293)
|
|
(2,518)
|
Total
comprehensive income attributable to Cheetah Mobile
shareholders
|
93,231
|
|
380,920
|
|
306,295
|
|
44,598
|
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 September 30, 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
|
|
|
|
|
|
September
30, 2018
|
|
September
30, 2018
|
|
|
|
|
|
RMB
|
|
USD
|
|
|
|
|
As
reported
|
1,351,979
|
|
196,852
|
|
|
|
|
Add: value added
taxes
|
32,763
|
|
4,770
|
|
|
|
|
Less: barter
transactions
|
4,810
|
|
700
|
|
|
|
|
Without adoption
of ASC 606
|
1,379,932
|
|
200,922
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For The Three
Months Ended
|
|
September
30, 2017
|
|
June 30,
2018
|
|
September
30, 2018
|
|
September
30, 2018
|
(b) Share-based
compensation expenses
|
RMB
|
|
RMB
|
|
RMB
|
|
USD
|
Cost of
revenues
|
(63)
|
|
90
|
|
46
|
|
7
|
Research and
development
|
2,847
|
|
(3,365)
|
|
8,563
|
|
1,247
|
Selling and
marketing
|
(1,680)
|
|
2,683
|
|
3,317
|
|
483
|
General and
administrative
|
20,288
|
|
15,225
|
|
14,380
|
|
2,094
|
Total
|
21,392
|
|
14,633
|
|
26,306
|
|
3,831
|
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 September 30, 2018
|
|
|
|
GAAP
|
|
% of
Net
|
|
Share-based
|
|
% of
Net
|
|
Non-GAAP
|
|
% of
Net
|
|
Non-GAAP
|
|
Result
|
|
Revenues
|
|
Compensation
|
|
Revenues
|
|
Result
|
|
Revenues
|
|
Result
($)
|
Revenues
|
1,351,979
|
|
|
|
|
|
|
|
1,351,979
|
|
|
|
196,852
|
Cost of
revenues
|
(381,692)
|
|
28.2%
|
|
46
|
|
0.0%
|
|
(381,646)
|
|
28.2%
|
|
(55,568)
|
Gross
profit
|
970,287
|
|
71.8%
|
|
46
|
|
0.0%
|
|
970,333
|
|
71.8%
|
|
141,284
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Research and
development
|
(175,303)
|
|
13.0%
|
|
8,563
|
|
0.6%
|
|
(166,740)
|
|
12.3%
|
|
(24,278)
|
Selling and
marketing
|
(568,445)
|
|
42.0%
|
|
3,317
|
|
0.2%
|
|
(565,128)
|
|
41.8%
|
|
(82,284)
|
General and
administrative
|
(108,270)
|
|
8.0%
|
|
14,380
|
|
1.1%
|
|
(93,890)
|
|
6.9%
|
|
(13,670)
|
Other operating
income
|
9,595
|
|
0.7%
|
|
-
|
|
0.0%
|
|
9,595
|
|
0.7%
|
|
1,397
|
Total operating
income and expenses
|
(842,423)
|
|
62.3%
|
|
26,260
|
|
1.9%
|
|
(816,163)
|
|
60.4%
|
|
(118,835)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
profit
|
127,864
|
|
9.5%
|
|
26,306
|
|
1.9%
|
|
154,170
|
|
11.4%
|
|
22,449
|
Net income
attributable to Cheetah Mobile shareholders
|
167,037
|
|
12.4%
|
|
26,306
|
|
1.9%
|
|
193,343
|
|
14.3%
|
|
28,151
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per
ordinary share (RMB)
|
0.11
|
|
|
|
0.02
|
|
|
|
0.13
|
|
|
|
|
Diluted earnings per
ADS (RMB)
|
1.09
|
|
|
|
0.18
|
|
|
|
1.27
|
|
|
|
|
Diluted earnings per
ADS (USD)
|
0.16
|
|
|
|
0.03
|
|
|
|
0.19
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For The Three
Months Ended June 30, 2018
|
|
|
|
GAAP
|
|
% of
Net
|
|
Share-based
|
|
% of
Net
|
|
Non-GAAP
|
|
% of
Net
|
|
|
|
Result
|
|
Revenues
|
|
Compensation
|
|
Revenues
|
|
Result
|
|
Revenues
|
|
|
Revenues
|
1,103,456
|
|
|
|
|
|
|
|
1,103,456
|
|
|
|
|
Cost of
revenues
|
(351,360)
|
|
31.8%
|
|
90
|
|
0.0%
|
|
(351,270)
|
|
31.8%
|
|
|
Gross
profit
|
752,096
|
|
68.2%
|
|
90
|
|
0.0%
|
|
752,186
|
|
68.2%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Research and
development
|
(155,202)
|
|
14.1%
|
|
(3,365)
|
|
0.3%
|
|
(158,567)
|
|
14.4%
|
|
|
Selling and
marketing
|
(369,914)
|
|
33.5%
|
|
2,683
|
|
0.2%
|
|
(367,231)
|
|
33.3%
|
|
|
General and
administrative
|
(100,107)
|
|
9.1%
|
|
15,225
|
|
1.4%
|
|
(84,882)
|
|
7.7%
|
|
|
Impairment of
goodwill and intangible assets
|
(5,587)
|
|
0.5%
|
|
-
|
|
0.0%
|
|
(5,587)
|
|
0.5%
|
|
|
Other operating
income
|
6,660
|
|
0.6%
|
|
-
|
|
0.0%
|
|
6,660
|
|
0.6%
|
|
|
Total operating
income and expenses
|
(624,150)
|
|
56.6%
|
|
14,543
|
|
1.3%
|
|
(609,607)
|
|
55.2%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
profit
|
127,946
|
|
11.6%
|
|
14,633
|
|
1.3%
|
|
142,579
|
|
12.9%
|
|
|
Net income
attributable to Cheetah Mobile shareholders
|
196,540
|
|
17.8%
|
|
14,633
|
|
1.3%
|
|
211,173
|
|
19.1%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per
ordinary share (RMB)
|
0.13
|
|
|
|
0.01
|
|
|
|
0.14
|
|
|
|
|
Diluted earnings per
ADS (RMB)
|
1.29
|
|
|
|
0.10
|
|
|
|
1.39
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For The Three
Months Ended September 30, 2017
|
|
|
|
GAAP
|
|
% of
Net
|
|
Share-based
|
|
% of
Net
|
|
Non-GAAP
|
|
% of
Net
|
|
|
|
Result
|
|
Revenues
|
|
Compensation
|
|
Revenues
|
|
Result
|
|
Revenues
|
|
|
Revenues
|
1,194,687
|
|
|
|
|
|
|
|
1,194,687
|
|
|
|
|
Cost of
revenues
|
(399,664)
|
|
33.5%
|
|
(63)
|
|
0.0%
|
|
(399,727)
|
|
33.5%
|
|
|
Gross
profit
|
795,023
|
|
66.5%
|
|
(63)
|
|
0.0%
|
|
794,960
|
|
66.5%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Research and
development
|
(174,646)
|
|
14.6%
|
|
2,847
|
|
0.2%
|
|
(171,799)
|
|
14.4%
|
|
|
Selling and
marketing
|
(409,045)
|
|
34.2%
|
|
(1,680)
|
|
0.1%
|
|
(410,725)
|
|
34.4%
|
|
|
General and
administrative
|
(88,737)
|
|
7.4%
|
|
20,288
|
|
1.7%
|
|
(68,449)
|
|
5.7%
|
|
|
Other operating
income
|
9,739
|
|
0.8%
|
|
-
|
|
0.0%
|
|
9,739
|
|
0.8%
|
|
|
Total operating
income and expenses
|
(662,689)
|
|
55.5%
|
|
21,455
|
|
1.8%
|
|
(641,234)
|
|
53.7%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
profit
|
132,334
|
|
11.1%
|
|
21,392
|
|
1.8%
|
|
153,726
|
|
12.9%
|
|
|
Net income
attributable to Cheetah Mobile shareholders
|
139,680
|
|
11.7%
|
|
21,392
|
|
1.8%
|
|
161,072
|
|
13.5%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per
ordinary share (RMB)
|
0.09
|
|
|
|
0.02
|
|
|
|
0.11
|
|
|
|
|
Diluted earnings per
ADS (RMB)
|
0.95
|
|
|
|
0.15
|
|
|
|
1.10
|
|
|
|
|
CHEETAH MOBILE
INC.
|
|
|
|
|
|
|
|
|
|
|
Information about
Segment
|
|
|
|
|
|
|
|
|
|
|
(Unaudited, in'000,
except for percentage)
|
|
|
|
|
|
|
|
|
|
|
|
|
For The Three
Months Ended September 30, 2018
|
|
|
Utility
Products
and
Related Services
|
|
Mobile
Entertainment
|
|
Others
|
|
Unallocated*
|
|
Consolidated
|
|
RMB
|
|
RMB
|
|
RMB
|
|
RMB
|
|
RMB
|
USD
|
Revenue
|
835,606
|
|
497,911
|
|
18,462
|
|
-
|
|
1,351,979
|
196,852
|
Operating profit
(loss)
|
264,139
|
|
(74,121)
|
|
(35,848)
|
|
(26,306)
|
|
127,864
|
18,618
|
Operating
margin
|
31.6%
|
|
(14.9)%
|
|
(194.2)%
|
|
|
|
9.5%
|
9.5%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For The Three
Months Ended June 30, 2018
|
|
|
Utility
Products
and
Related Services
|
|
Mobile
Entertainment
|
|
Others
|
|
Unallocated*
|
|
Consolidated
|
|
|
RMB
|
|
RMB
|
|
RMB
|
|
RMB
|
|
RMB
|
|
Revenue
|
756,093
|
|
332,907
|
|
14,456
|
|
-
|
|
1,103,456
|
|
Operating profit
(loss)
|
282,090
|
|
(98,568)
|
|
(40,943)
|
|
(14,633)
|
|
127,946
|
|
Operating
margin
|
37.3%
|
|
(29.6)%
|
|
(283.2)%
|
|
|
|
11.6%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For The Three
Months Ended September 30, 2017
|
|
|
Utility
Products
and
Related Services
|
|
Mobile
Entertainment
|
|
Others
|
|
Unallocated*
|
|
Consolidated
|
|
|
RMB
|
|
RMB
|
|
RMB
|
|
RMB
|
|
RMB
|
|
Revenue
|
824,764
|
|
362,448
|
|
7,475
|
|
-
|
|
1,194,687
|
|
Operating profit
(loss)
|
260,490
|
|
(104,957)
|
|
(1,807)
|
|
(21,392)
|
|
132,334
|
|
Operating
margin
|
31.6%
|
|
(29.0)%
|
|
(24.2)%
|
|
|
|
11.1%
|
|
|
|
|
|
|
|
|
|
|
|
|
* Unallocated
expenses refer to SBC expenses 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, in
'000)
|
|
|
|
|
|
|
|
|
For The Three
Months Ended
|
|
September
30, 2017
|
June 30,
2018
|
September
30, 2018
|
September
30, 2018
|
|
RMB
|
RMB
|
RMB
|
USD
|
Net income
attributable to Cheetah Mobile shareholders
|
139,680
|
196,540
|
167,037
|
24,321
|
Add:
|
|
|
|
|
Income tax
expenses
|
7,767
|
27,993
|
26,957
|
3,925
|
Interest income,
net
|
(7,380)
|
(19,425)
|
(24,120)
|
(3,512)
|
Depreciation and
amortization
|
33,162
|
21,573
|
17,826
|
2,596
|
Net income (loss)
attributable to noncontrolling interests
|
4,727
|
(2,792)
|
(27,757)
|
(4,041)
|
Other non-operating
income, net
|
(12,460)
|
(74,370)
|
(14,253)
|
(2,075)
|
Share-based
compensation
|
21,392
|
14,633
|
26,306
|
3,831
|
Adjusted
EBITDA
|
186,888
|
164,152
|
171,996
|
25,045
|
CHEETAH MOBILE
INC.
|
|
|
|
Revenues Generated
from PC-based and Mobile-based Applications and
Services
|
|
(Unaudited, in
'000)
|
|
|
|
|
|
|
|
|
|
For The Three
Months Ended
|
|
September
30, 2017
|
June 30,
2018
|
September
30, 2018
|
September
30, 2018
|
|
RMB
|
RMB
|
RMB
|
USD
|
PC
|
144,377
|
137,763
|
143,322
|
20,868
|
Mobile
|
1,050,310
|
965,693
|
1,208,657
|
175,984
|
Total
|
1,194,687
|
1,103,456
|
1,351,979
|
196,852
|
CHEETAH MOBILE
INC.
|
|
|
|
Revenues Generated
from Domestic and Overseas Markets
|
|
|
(Unaudited, in
'000)
|
|
|
|
|
|
|
|
|
|
For The Three
Months Ended
|
|
September
30, 2017
|
June 30,
2018
|
September
30, 2018
|
September
30, 2018
|
|
RMB
|
RMB
|
RMB
|
USD
|
Domestic
|
394,236
|
453,837
|
536,435
|
78,106
|
Overseas
|
800,451
|
649,619
|
815,544
|
118,746
|
Total
|
1,194,687
|
1,103,456
|
1,351,979
|
196,852
|
View original
content:http://www.prnewswire.com/news-releases/cheetah-mobile-announces-third-quarter-2018-unaudited-consolidated-financial-results-300754187.html
SOURCE Cheetah Mobile