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Cheetah Mobile Announces First Half 2023 Unaudited Consolidated Financial Results

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Cheetah Mobile Inc. announces unaudited consolidated financial results for H1 2023. Total revenue was RMB337.4 million ($46.5 million), a decrease of 5.5% YoY. Revenues from internet business decreased by 14.5% YoY to RMB235.6 million ($32.5 million), while revenues from AI and others increased by 24.8% YoY to RMB101.7 million ($14.0 million). Gross profit decreased by 4.2% YoY to RMB224.0 million ($30.9 million). Operating loss was RMB107.9 million ($14.9 million), compared to RMB126.1 million in the same period last year. Net loss attributable to Cheetah Mobile shareholders was RMB277.4 million ($38.3 million), compared to RMB72.6 million in the same period last year.
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BEIJING, Aug. 18, 2023 /PRNewswire/ -- Cheetah Mobile Inc. (NYSE: CMCM) ("Cheetah Mobile" or the "Company"), a leading internet company, today announced its unaudited consolidated financial results for the first half 2023 ended June 30, 2023.

Management Commentary

Mr. Sheng Fu, Cheetah Mobile's Chairman and Chief Executive Officer, stated, "In the first half of 2023, Cheetah Mobile's total revenue was RMB337.4 million (USD46.5 million), aligning with our guidance. Despite operating challenges, we maintain strong confidence in the growth potential of our membership and subscription business. Throughout this period, we launched several innovative AI-powered products that have yielded favorable outcomes. Moving forward, we remain committed to optimizing our revenue structure by strategically streamlining unprofitable operations. At the same time, we anticipate ramping up investments in AI technology and products to empower our valued customers and enable them to thrive in the new era of AI. We are steadfastly dedicated to navigating the current challenging landscape while capitalizing on the opportunities that lie ahead."

Mr. Thomas Ren, Cheetah Mobile's Chief Financial Officer, commented, "In the first half of 2023, we continued prudent cost management practices that resulted in a reduction of our non-GAAP operating loss. Furthermore, as of June 30, 2023, we maintained a robust cash position of RMB2,071.1 million. This strong liquidity position holds immense strategic importance as it provides us with the necessary capacity to make investments that support our long-term growth and sustainable development objectives. Through diligent cost management and the preservation of a solid cash foundation, we are well-positioned to seize opportunities and allocate resources effectively, ensuring a prosperous future for our company."

First Half 2023 Consolidated Financial Results

REVENUES

Total revenues were RMB337.4 million (US$46.5 million) in the first half of 2023, representing a decrease of 5.5% year over year.

Revenues from the Company's internet business decreased by 14.5% year over year to RMB235.6 million (US$32.5 million) in the first half of 2023. The year-over-year decrease was due to the strategic downsizing of our advertising business, coupled with external market headwinds.

Revenues from the AI and others were RMB101.7 million (US$14.0 million) in the first half of 2023, representing a 24.8% year-over-year increase. The year-over-year increase was primarily attributable to the growth of our advertising agency services as well as our global cloud service business.

COST OF REVENUES AND GROSS PROFIT

Cost of revenues decreased by 8.0% year over year to RMB113.3 million (US$15.6 million) in the first half of 2023. The year-over-year decrease was mainly attributable to a decline in traffic acquisition costs and channel costs associated with our advertising business. Non-GAAP cost of revenues decreased by 7.9% year over year to RMB113.1 million (US$15.6 million) in the first half of 2023.

Gross profit decreased by 4.2% year over year to RMB224.0 million (US$30.9 million) in the first half of 2023. Non-GAAP gross profit decreased by 4.2% year over year to RMB224.3 million (US$30.9 million) in the first half of 2023.

Gross margin was 66.4% in the first half of 2023, compared to 65.5% in the first half of 2022. Non-GAAP gross margin was 66.5% in the first half of 2023, compared to 65.6% in the first half of 2022.

OPERATING INCOME/LOSS AND EXPENSES

Total operating expenses decreased by 7.8% year over year to RMB331.9 million (US$45.8 million) in the first half of 2023. Total non-GAAP operating expenses decreased by 11.9% year over year to RMB314.0 million (US$43.3 million) in the first half of 2023.

  • Research and development expenses decreased by 2.3% year over year to RMB92.9 million (US$12.8 million) in the first half of 2023. Non-GAAP research and development expenses decreased by 2.9% year over year to RMB92.0 million (US$12.7 million) in the first half of 2023. The year-over-year decrease was primarily due to our continuous effort to improve operating efficiency.
  • Selling and marketing expenses decreased by 23.2% year over year to RMB130.8 million (US$18.0 million) in the first half of 2023. Non-GAAP selling and marketing expenses decreased by 23.0% year over year RMB130.4 million (US$18.0 million) in the first half of 2023. This year-over-year decrease was the result of strategic reduction in promotional activities.
  • General and administrative expenses increased by 11.4% year over year to RMB110.5 million (US$15.2 million) in the first half of 2023. The year-over-year increase was attributable to inclusion of share-based compensation expenses arising from our newly implemented 2023 share incentive plan. Non-GAAP general and administrative expenses decreased by 3.3% year over year to RMB93.8 million (US$12.9 million) in the first half of 2023. The year-over-year decrease was primarily due to a reduction of certain professional fee.

Operating loss was RMB107.9 million (US$14.9 million) in the first half of 2023, compared to RMB126.1 million in the same period of the last year. Non-GAAP operating loss was RMB89.8 million (US$12.4 million) in the first half of 2023, compared to RMB122.2 million in the same period of the last year.

  • Operating profit for the internet business was RMB10.1 million in the first half of 2023, compared to an operating loss of RMB18.1 million in the same period last year.
  • Operating loss for AI and others was RMB99.9 million in the first half of 2023, compare with an operating loss of RMB104.0 million in the same period last year.

Share-based compensation expenses were RMB18.1 million (US$2.5 million) in the first half of 2023, compared to RMB3.9 million in the same period of the last year. The year-over-year increase was attributable to our newly implemented 2023 share incentive plan.

OTHER EXPENSE, NET

Other expense, net was RMB154.2 million (US$21.3 million) in the first half of 2023, which was primarily from the fair value change of some investments.

NET INCOME/(LOSS) ATTRIBUTABLE TO CHEETAH MOBILE SHAREHOLDERS

Net loss attributable to Cheetah Mobile shareholders was RMB277.4 million (US$38.3 million) in the first half of 2023, compared to a net loss attributable to Cheetah Mobile shareholders of RMB72.6 million in the same period of the last year.

Non-GAAP net loss attributable to Cheetah Mobile shareholders was RMB259.3 million (US$35.8 million) in the first half of 2023, compared to a non-GAAP net loss attributable to Cheetah Mobile shareholders of RMB68.6 million in the same period of the last year.

NET INCOME/(LOSS) PER ADS

Diluted loss per ADS was RMB9.67 (US$1.33) in the first half of 2023, compared to diluted loss per ADS of RMB2.59 in the same period of the last year. Non-GAAP diluted loss per ADS was RMB9.04 (US$1.25) in the first half of 2023, compared to Non-GAAP diluted loss per ADS of RMB2.45 in the same period of the last year.

BALANCE SHEET

As of June 30, 2023, the Company had cash and cash equivalents, restricted cash and short-term investments of RMB2,071.1 million (US$285.6 million).

SHARES ISSUED AND OUTSTANDING

As of June 30, 2023, the Company had a total of 1,497,535,861 Class A and Class B ordinary shares issued and outstanding.

Business Outlook

For the second half of 2023, the Company expects its total revenues to be between RMB310 million (US$42.8 million) and RMB360 million (US$49.6 million). This amount reflects the Company's current and preliminary expectations.

Exchange Rate

This press release contains translations of certain Renminbi amounts into U.S. dollars at specified rates solely for the convenience of readers. Unless otherwise noted, all translations from Renminbi to U.S. dollars in this press release were made at a rate of RMB7.2513 to US$1.00, the exchange rate in effect as of June 30, 2023 as set forth in the H.10 statistical release of the Federal Reserve Board. Such translations should not be construed as representations that RMB amounts could be converted into U.S. dollars at that rate or any other rate, or to be the amounts that would have been reported under accounting principles generally accepted in the United States of America ("U.S. GAAP").

About Cheetah Mobile Inc.

Cheetah Mobile is a China-based IT company. It has attracted hundreds of millions of  users through an array of internet products and services on PCs and mobile devices. The Company provides advertising services to advertisers worldwide, value-added services including the sale of premium membership and in-app virtual items to its users as well as multi-cloud management platform to companies globally. Cheetah Mobile is also 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

This release contains the following non-GAAP financial measures:

  • Non-GAAP cost of revenues excludes share-based compensation expenses
  • Non-GAAP gross profit excludes share-based compensation expenses
  • Non-GAAP gross margin excludes share-based compensation expense
  • Total non-GAAP operating expenses exclude share-based compensation expenses
  • Non-GAAP research and development expenses exclude share-based compensation expenses
  • Non-GAAP selling and marketing expenses exclude share-based compensation expenses
  • Non-GAAP general and administrative expenses exclude share-based compensation expenses
  • Non-GAAP operating profit/loss excludes share-based compensation expenses
  • Non-GAAP net income/loss attributable to Cheetah Mobile shareholders excludes share-based compensation expenses
  • Non-GAAP diluted earnings/losses per ADS excludes share-based compensation expenses
  • Non-GAAP adjusted EBITDA represents net income/loss attributable to Cheetah Mobile shareholders excluding share-based compensation, interest income, depreciation and amortization, net income attributable to noncontrolling interests, other income, net and income tax expenses

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. Reconciliation of GAAP and Non-GAAP Results".

Investor Relations Contact

Cheetah Mobile Inc.
Tel: +86 10 6292 7779
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, 2022



June 30, 2023



RMB



RMB



USD


ASSETS









Current assets:









Cash and cash equivalents


1,515,799




1,956,275




269,783


Restricted cash


696




723




100


Short-term investments


156,182




114,150




15,742


Accounts receivable, net


283,774




321,990




44,404


Prepayments and other current assets, net


968,145




1,127,692




155,516


Due from related parties, net


199,099




214,027




29,516


Total current assets


3,123,695




3,734,857




515,061











Non-current assets:









Property and equipment, net


58,727




45,817




6,318


Operating lease right-of-use assets


39,579




32,283




4,452


Intangible assets, net


8,430




7,396




1,020


Investment in equity investees


238,591




234,643




32,359


Other long term investments


1,553,740




1,351,555




186,388


Due from related parties, net


3,840




-




-


Deferred tax assets


19,337




20,235




2,791


Other non-current assets


93,480




67,419




9,296


Total non-current assets


2,015,724




1,759,348




242,624











Total assets


5,139,419




5,494,205




757,685











LIABILITIES AND SHAREHOLDERS' EQUITY









Current liabilities:









Accounts payable


132,994




130,184




17,953


Accrued expenses and other current liabilities


1,586,769




2,126,135




293,207


Due to related parties


23,629




31,253




4,310


Income tax payable


35,135




36,266




5,001


Total current liabilities


1,778,527




2,323,838




320,471











Non-current liabilities:









Deferred tax liabilities


55,770




57,824




7,974


Other non-current liabilities


200,336




200,667




27,673


Total non-current liabilities


256,106




258,491




35,647











Total liabilities


2,034,633




2,582,329




356,118











Shareholders' equity:









Ordinary shares


236




244




34


Additional paid-in capital


2,688,571




2,704,592




372,980


Accumulated deficit


(9,424)




(287,190)




(39,605)


Accumulated other comprehensive income


353,948




419,327




57,828


Total Cheetah Mobile shareholders' equity


3,033,331




2,836,973




391,237


Noncontrolling interests


71,455




74,903




10,330











Total equity


3,104,786




2,911,876




401,567











Total liabilities and equity


5,139,419




5,494,205




757,685


 

 

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 Six Months Ended




June 30, 2022



June 30, 2023




RMB



RMB



USD


Revenues



357,023




337,385




46,528


Internet business



275,468




235,645




32,497


AI and others



81,555




101,740




14,031


Cost of revenues (a)



(123,221)




(113,349)




(15,632)


Gross profit



233,802




224,036




30,896












Operating income and expenses:










Research and development (a)



(95,037)




(92,854)




(12,805)


Selling and marketing (a)



(170,339)




(130,827)




(18,042)


General and administrative (a)



(99,188)




(110,459)




(15,233)


Other operating income



4,682




2,215




305


Total operating income and expenses



(359,882)




(331,925)




(45,775)












Operating loss



(126,080)




(107,889)




(14,879)


Other income/(expenses):










Interest income, net



14,163




27,238




3,756


Foreign exchange losses



(55,039)




(34,221)




(4,719)


Other income/(expense), net



91,158




(154,152)




(21,259)












Loss before taxes



(75,798)




(269,024)




(37,101)


Income tax expenses



(1,129)




(3,761)




(519)


Net loss



(76,927)




(272,785)




(37,620)


Less: net (loss)/income attributable to noncontrolling interests



(4,355)




4,608




635


Net loss attributable to Cheetah Mobile shareholders



(72,572)




(277,393)




(38,255)












Net loss per share










Basic



(0.0504)




(0.1925)




(0.0265)


Diluted



(0.0517)




(0.1933)




(0.0267)












Net loss per ADS










Basic



(2.5207)




(9.6239)




(1.3272)


Diluted



(2.5865)




(9.6665)




(1.3331)












Weighted average number of shares outstanding










Basic



1,439,543,148




1,452,066,835




1,452,066,835


Diluted



1,439,543,148




1,452,066,835




1,452,066,835


Weighted average number of ADSs outstanding










Basic



28,790,863




29,041,337




29,041,337


Diluted



28,790,863




29,041,337




29,041,337












Other comprehensive income/(loss), net of tax of nil










Foreign currency translation adjustments



151,644




108,142




14,913


Unrealized losses on available-for-sale securities, net



-




(43,494)




(5,998)


Total other comprehensive income



151,644




64,648




8,915


Total comprehensive income/(loss)



74,717




(208,137)




(28,705)


Less: Total comprehensive (loss)/income attributable to noncontrolling interests



(7,709)




3,877




535


Total comprehensive income/(loss) attributable to Cheetah Mobile shareholders



82,426




(212,014)




(29,240)


 



For The Six Months Ended




June 30, 2022



June 30, 2023


(a) Share-based compensation expenses


RMB



RMB



USD


Cost of revenues



403




226




31


Research and development



321




870




120


Selling and marketing



1,039




391




54


General and administrative



2,165




16,643




2,295


Total



3,928




18,130




2,500


 

 

CHEETAH MOBILE INC.

Reconciliation of GAAP and Non-GAAP Results

(Unaudited, amounts in thousands of Renminbi ("RMB") and US dollars ("US$"), except for per share data)



For The Six Months Ended June 30, 2023



GAAP



Share-based



Non-GAAP



Result



Compensation



Result



RMB



RMB



RMB



USD


Revenues


337,385




-




337,385




46,528


Cost of revenues


(113,349)




226




(113,123)




(15,601)


Gross profit


224,036




226




224,262




30,927














Research and development


(92,854)




870




(91,984)




(12,685)


Selling and marketing


(130,827)




391




(130,436)




(17,988)


General and administrative


(110,459)




16,643




(93,816)




(12,938)


Other operating income


2,215




-




2,215




305


Total operating income and expenses


(331,925)




17,904




(314,021)




(43,306)














Operating loss


(107,889)




18,130




(89,759)




(12,379)


Net loss attributable to Cheetah Mobile shareholders


(277,393)




18,130




(259,263)




(35,755)














Diluted loss per ordinary share (RMB)


(0.1933)




0.0125




(0.1808)





Diluted loss per ADS (RMB)


(9.6665)




0.6243




(9.0422)





Diluted loss per ADS (USD)


(1.3331)




0.0861




(1.2470)





 


For The Six Months Ended June 30, 2022




GAAP



Share-based



Non-GAAP




Result



Compensation



Result




RMB



RMB



RMB



Revenues


357,023




-




357,023



Cost of revenues


(123,221)




403




(122,818)



Gross profit


233,802




403




234,205













Research and development


(95,037)




321




(94,716)



Selling and marketing


(170,339)




1,039




(169,300)



General and administrative


(99,188)




2,165




(97,023)



Other operating income


4,682




-




4,682



Total operating income and expenses


(359,882)




3,525




(356,357)













Operating loss


(126,080)




3,928




(122,152)



Net loss attributable to Cheetah Mobile shareholders


(72,572)




3,928




(68,644)













Diluted loss per ordinary share (RMB)


(0.0517)




0.0027




(0.0490)



Diluted loss per ADS (RMB)


(2.5865)




0.1364




(2.4501)



 

 

CHEETAH MOBILE INC.

Information about Segment

(Unaudited, amounts in thousands of Renminbi ("RMB") and US dollars ("US$"), except for percentage)




For The Six Months Ended June 30, 2023




Internet Business



AI and others



Unallocated*



Consolidated




RMB



RMB



RMB



RMB



USD


Revenue



235,645




101,740




-




337,385




46,528


Operating profit/(loss)



10,125




(99,884)




(18,130)




(107,889)




(14,879)


Operating margin



4.3

%



(98.2)

%



-




(32.0)

%



(32.0)

%

 



For The Six Months Ended June 30, 2022





Internet Business



AI and others



Unallocated*



Consolidated





RMB



RMB



RMB



RMB



Revenue



275,468




81,555




-




357,023



Operating loss



(18,107)




(104,045)




(3,928)




(126,080)



Operating margin



(6.6)

%



(127.6)

%



-




(35.3)

%


 

* 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, amounts in thousands of Renminbi ("RMB") and US dollars ("US$"))




For The Six Months Ended




June 30, 2022



June 30, 2023




RMB



RMB



USD


Net loss attributable to Cheetah Mobile shareholders



(72,572)




(277,393)




(38,255)


Add:










Income tax expenses



1,129




3,761




519


Interest income, net



(14,163)




(27,238)




(3,756)


Depreciation and amortization



27,892




17,106




2,359


Net (loss)/income attributable to noncontrolling interests



(4,355)




4,608




635


Other (income)/expense, net



(36,119)




188,373




25,978


Share-based compensation



3,928




18,130




2,500


Adjusted EBITDA



(94,260)




(72,653)




(10,020)


 

 

 

Cision View original content:https://www.prnewswire.com/news-releases/cheetah-mobile-announces-first-half-2023-unaudited-consolidated-financial-results-301904360.html

SOURCE Cheetah Mobile

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