Cheetah Mobile, Inc.
Transcript of Cheetah Mobile, Inc.
This presentation contains forward-looking statements. These statements are made under the “safe harbor”
provisions of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can 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.
Disclaimer
Three Pillars to Drive Revenue Growth
Utility
Products
Core Utility Apps
Personalization and
life style Utility AppsContent App
Mobile
Entertainment
Games
AI
Business
To Consumers
To Businesses
4
Revenue Model
Mobile
Traffic
3rd Party
Ad Platform
Cheetah
Mobile
Ad
Platform
Direct Sales
Monetize mobile traffic through advertising
Monetize mobile traffic through in-app purchases
Mobile
Games/
Live.me
In-app
Purchases
5
Revenue Contribution by Region
Overseas
Utility Products
and Related Services
Mobile
Games
LiveMe
AI
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China
PCPC
Mobile
Core Utility Products
CM
Browser
Duba
Website
Navigator
DriverGenius
Clean
Master
Security
Master
Battery
Doctor
Safe
Wallet
Photo
Grid
CM
Launcher
Cheetah
Keyboard
CM
Show
AI Driven
Broad Product Matrix for Utility Apps
Personalization
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Life style
Qu
Keyboard
Mini ProgramYundong
Zhuan
(运动赚)
Mobile in China
Mobile in China
Mobile in China
Mobile Overseas
Mobile Overseas
Mobile Overseas
PC
PC
PC
0
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200
300
400
500
600
700
800
900
3Q17 2Q18 3Q18
825756
836 • 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
Healthy Revenues from Utility Products
RMB, million
8
RMB, million
• 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
Strong Profits and Cash from Utility Products
9
157 141
228
318
179
213
260
327
265 282
264
17%15%
24%
32%
22%
26%
32%
34%36%
37%
32%
0%
5%
10%
15%
20%
25%
30%
35%
40%
0
50
100
150
200
250
300
350
1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18
Non-GAAP Operating Profit Non-GAAP Operating Margin
New Utility Apps in China and Overseas Market
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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
Mobile Utility Business in China Grew Rapidly
• 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 Achievements in the Domestic Market
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
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• 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
Market Opportunities in China’s Mobile Internet
Space
Mobile Internet Population in China
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Source: Deutsche Bank Research Report
Population million
446 475 469 499 505
454 496 538
571 599
0
200
400
600
800
1000
1200
2016 2017 2018F 2019F 2020F
First- and second- tier Cities Lower-tier Cites
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
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Arrow.io
Rolling Sky
Dancing Ball
Cooking Adventure
Tap Tap Dash
Mafia Revenge
Piano Tiles 2
Skid Storm
Tap Tap Fish
Bricks n Balls
Liveme Trade Town
Mobile
Entertainment
Dancing Line
Fast Growing Mobile Entertainment Business
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498
333
362
• 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
Significant Increase in Mobile Entertainment Revenue
RMB, million
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Strong Game Developing and Publishing Capability
2015 2016 2017 2018
• 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
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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
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Leveraging Mini Game to Promote Our Games
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Bricks n BallsPiano Tiles 2Dancing Line Rolling Sky
• 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
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LiveMe: Popular Live Streaming Platform in the
Overseas Markets
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• LiveMe: a popular live streaming app launched
in April 2016. 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
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
Non-GAAP Operating Loss for the Mobile Entertainment
Business Continued to Narrow
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• 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
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Invest in Beijing OrionStar to Strengthen AI Technologies
Innovative AI Hardware Offerings from Cheetah Mobile
and OrionStar
Orion OS Platform
AI Hardware Products
Users
Facial
Recognition
Voice
Recognition
Text to
SpeechNLP
Indoor
Navigation
Robotics
Arm 24
To BusinessesTo Consumers
Cheetah Voicepod is An AI-based Smart Speaker –
Developed by Cheetah Mobile
Superior sound WIFI music
streaming
Play audiobooks, news
briefs, and more Far-field
voice
recognition
2-year
QQ Music
subscription
service
• 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
• Sound and voice have been
the two most favorite
features of our users.
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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
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• Cheetah Mobile has exclusive distribution rights and is
responsible for implementation in various work
locations
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
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Balance sheet snapshot
Notes1. Free cash flow = operating cash flow – Capex
Sep. 2018
Free cash flow1
Capital expenditure
(RMB, million)
(RMB, million)
35
(RMB, million)
Balance Sheet
Cash and cash equivalents, restricted cash
and short-term investments3,625
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 7,693
96
118
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2015 2016 2017
851
280
595
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2015 2016 2017