Cheetah Mobile, Inc.

Transcription

1 Cheetah Mobile, Inc.

2 Disclaimer 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 These forward-looking statements can be identified 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 this presentation, 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 other written materials and in oral statements made by its officers, directors or employees to third parties. Statements that are not historical facts, including statements about Cheetah Mobile s beliefs and expectations, are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties. A number of factors could cause actual results to differ materially from those contained in any forward-looking statement, including but not limited to the following: Cheetah Mobile s goals and 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 from 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; fluctuations in general economic and business conditions in China and assumptions underlying or related to any of the foregoing. Further information regarding these and other risks is included in Cheetah Mobile s filings with the SEC. All information provided in this presentation is as of the date of this presentation, and Cheetah Mobile does not undertake any obligation to update any forward-looking statement, except as required under applicable law.

3 01 Business Overview Financials 3

4 Three Pillars to Drive Revenue Growth Utility Products Mobile Entertainment AI Business Core Utility Apps Games To Consumers Personalization and life style Utility Apps Content App To Businesses 4

5 Revenue Model Monetize mobile traffic through advertising Mobile Traffic Cheetah Mobile Ad Platform 3 rd Party Ad Platform Direct Sales Monetize mobile traffic through in-app purchases Mobile Games/ Live.me In-app Purchases 5

6 Revenue Contribution by Region China Overseas Utility Products and Related Services Mobile Games LiveMe AI 6

7 Broad Product Matrix for Utility Apps PC PC CM Browser Duba Website Navigator Driver Genius Yundong Zhuan ( 运动赚 ) Mini Program Core Utility Products Personalization AI Driven Life style Mobile Clean Master Security Master Battery Doctor CM Launcher CM Show Cheetah Keyboard Qu Keyboard Safe Wallet Photo Grid 7

8 Healthy Revenues from Utility Products RMB, million PC Mobile Overseas Mobile in China 756 PC Mobile Overseas Mobile in China PC Mobile Overseas Mobile in China 3Q17 2Q18 3Q Revenues: +4% y/y, +11% q/q, ~60% of the total revenue Mobile utility business in the domestic market +54% y/y, +18% q/q to 28% of total revenue in 3Q18 ; growth in the domestic market offset the decline in overseas markets, which were impacted by Facebook and Google discontinuing ads on mobile phone lock screens Revenue from overseas mobile utility business + 8% y/y in US$ terms, excluding the Facebook and Google incidents The sequential growth was due to seasonality effect 8

9 Strong Profits and Cash from Utility Products RMB, million % 15% % % % % 32% % 36% 37% % 40% 35% 30% 25% 20% 15% 10% Non-GAAP operating profit margin was 32% in 3Q18 The q/q decrease mainly due to increased promotional activities in the domestic market, where we have seen more emerging growth opportunities 50 5% 0 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 0% Non-GAAP Operating Profit Non-GAAP Operating Margin 9

10 New Utility Apps in China and Overseas Market Personalization, Life style, AI-driven Offering personalized ring tones Offering a wide array of 3D video effects Targeting younger users in China An AI-powered keyboard app Offering smart prediction, and voice input Offering thousands of themes 10

11 Mobile Utility Business in China Grew Rapidly Our Achievements in the Domestic Market Users: MAU in the domestic market grew by 17% y/y and 6% q/q, reaching a new high of 171 million Revenues: Revenues from mobile utility products in the domestic market grew by 54% y/y and 18% q/q Our Strengths in the Domestic Market Replicating our success in the overseas market to China Built partnerships with several local partners to distribute our apps Strong profits and cash flow generated by utility products provides a solid foundation for our investments in new initiatives 11

12 Market Opportunities in China s Mobile Internet Space Market Trend: growth of mobile Internet penetration in lower-tier cities Our Tactics: tailor our products to attract users in lower-tier cities Achievement: DAUs continue to grow in our domestic market, driven by the growth of active users in lower-tier cities Population million Mobile Internet Population in China F 2019F 2020F First- and second- tier Cities Lower-tier Cites Source: Deutsche Bank Research Report 12

13 Both Mobile Utility Product Revenues in the Overseas Markets and PC Revenues were Stabilized Mobile Utility Products in the Overseas Markets: While 3Q18 revenues from mobile utility products in the overseas markets decreased double digits y/y, it resumed its sequential growth. However, excluding the Facebook and Google incidents, revenues from overseas mobile utility business + 8% y/y in US$ terms Non-GAAP operating profit for our mobile utility product in the overseas market was more than 40% PC Business: 3Q18 PC revenues were flat y/y, but +4% q/q 13

14 Fast Growing Mobile Entertainment Business Dancing Line Piano Tiles 2 Mobile Entertainment Rolling Sky Bricks n Balls Arrow.io Mafia Revenge Cooking Adventure Tap Tap Fish Tap Tap Dash Skid Storm Liveme Trade Town Dancing Ball 14

15 Significant Increase in Mobile Entertainment Revenue RMB, million Revenues: +37% y/y, +50% q/q, accounted for ~40% of total revenue in 3Q18. The growth was driven by both our mobile games operation and LiveMe Mobile games: +78% y/y, +106% q/q to RMB285 million, driven by ramp-up of Bricks n Balls, and the continued strong performance of Piano Tiles 2, Dancing Line, and Rolling Sky Content: +5% y/y and +9% q/q to RMB213 million, driven by Live.me, as several new features were introduced, which further improved its ARPU 15

16 Strong Game Developing and Publishing Capability Identify promising games from large amount of candidates Improve and fine tune game experience Increase user engagement and time spent Improve ARPU from mobile gamers

17 Bricks n Balls (BnB), a Classic Block Elimination Game, Started Ramping Up Google Play featured BnB on its global homepage in September 2018 According to App Annie, BnB was ranked among the top 3 casual games in the US on Google Play in terms of user downloads According to App Annie, BnB was ranked among the top 10 board games on Apple s App Store in terms of user downloads 17

18 High-quality Third-party Content Enriching Flagship Games Piano Tiles 2 Rolling Sky Dancing Line 18

19 19 Leveraging Mini Game to Promote Our Games We have integrated our best-selling game titles with several mini game platforms to expand its user base So far, our games have been on the WeChat, QQ and Facebook mini game platforms. We expect to integrate our games with more platforms in the future Dancing Line Piano Tiles 2 Rolling Sky Bricks n Balls 19

20 LiveMe: Popular Live Streaming Platform in the Overseas Markets LiveMe: a popular live streaming app launched in April Live broadcasting is very popular in China. We brought this model overseas Monetization: introduced virtual gifts in 2Q16; this feature contributes to the vast majority of LiveMe s revenues Financing: Series A US$60 million in May 2017; Series B - US$50 million in November 2017 Ranking: No. 3 grossing social app in the U.S. on Google Play. Top 10 gross social app in the U.S. on Apple s App Store Recent Development: Improve the ARPU of top paying users in the US and Middle East Tailor-made several offline and online activities for top paying users in the US and Middle East 20

21 Non-GAAP Operating Loss for the Mobile Entertainment Business Continued to Narrow RMB, million The reduced losses were primarily attributable to an increase in revenues from mobile game operations Non-GAAP operating profit for mobile games operation +RMB13 million y/y, +17 million q/q OPM for the existing games reached 24% VS 7% same period last year The y/y reduced loss was due to the disposal of News Republic in 4Q17 21

22 Invest in Beijing OrionStar to Strengthen AI Technologies Cheetah Mobile invested ~US$40 million in Beijing OrionStar, an AI company incorporated in China Cheetah Mobile holds about ~40% of equity in Beijing OrionStar 22

23 Complete AI Technology Suite in Beijing OrionStar 23

24 Innovative AI Hardware Offerings from Cheetah Mobile and OrionStar Users AI Hardware Products To Consumers To Businesses Facial Recognition Voice Recognition Orion OS Platform Text to Speech Indoor Navigation NLP Robotics Arm 24

25 Cheetah Voicepod is An AI-based Smart Speaker Developed by Cheetah Mobile Play audiobooks, news briefs, and more Superior sound WIFI music streaming Far-field voice recognition Started delivering in April. Promoted on leading social media platforms such as Douyin and Miaopai. Distribution channels: Available on JD.com and Tmall.com Expanding offline distribution channel 2-year QQ Music subscription service Sound and voice have been the two most favorite features of our users. 25

26 Cheetah Translator: A Top Seller During This Year s Single s Day Shopping Festival Developed by Cheetah Mobile Jointly developed with Beijing OrionStar User-friendly single-button design that can automatically identify source language and target language Affordable price of ~US$40 Currently supported languages: Chinese, English, Japanese, Korean, Thai and Spanish Partnerships with well-known retail chains for a larger customer base 26

27 GreetBot: A Commercially Launched Receptionist Robot Focusing on the Business to Business Market - Developed by OrionStar Developed by OrionStar, a robot that can function as a receptionist or guide working at office front desks, hotel lobbies, shopping malls, or supermarkets Cheetah Mobile has exclusive distribution rights and is responsible for implementation in various work locations 27

28 Financial Guidance 4Q18 Revenue Guidance: RMB1,390 RMB1,430 million (US$ million) 28

29 02 Business Overview Financials 29

30 Total Revenues (RMB, million) 30

31 Non-GAAP Gross Profit (RMB, million) 31

32 Non-GAAP Operating Expenses (RMB, million) 32

33 Non-GAAP Operating Profit (RMB, million) 33

34 Non-GAAP Net Income (Loss) (RMB, million)

35 Balance Sheet Balance sheet snapshot (RMB, million) Cash and cash equivalents, restricted cash and short-term investments Notes1. Free cash flow = operating cash flow Capex Sep ,625 Accounts receivable, net 567 Other current assets 986 Total current assets 5,178 Long-term Investment 1,608 Other non-current assets 908 Total non-current assets 2,516 Total assets 7,693 Accounts payable 164 Accrued expenses and others 1,485 Others 95 Total current liabilities 1,744 Total non current liabilities 146 Total liabilities 1,890 Total mezzanine equity 678 Total shareholders' equity 4,944 Noncontrolling interests 181 Total equity 5,126 Total liabilities, mezzanine equity and equity 7, Capital expenditure (RMB, million) Free cash flow 1 (RMB, million)

36 Thank you!