UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16
UNDER THE SECURITIES EXCHANGE ACT OF 1934
For the month of March 2018
Commission File Number: 001-36427
CHEETAH MOBILE INC.
Building No. 8
Hui Tong Times Square
Yaojiayuan South Road
Beijing 100123
People’s Republic of China
(Address of principal executive offices)
Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.
Form 20-F ☒ Form 40-F ☐
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): ☐
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): ☐
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| CHEETAH MOBILE INC. | ||
| By: | /s/ Vincent Zhenyu Jiang | |
| Name: | Vincent Zhenyu Jiang | |
| Title: | Chief Financial Officer | |
Date: March 23, 2018
Exhibit Index
Exhibit 99.1 — Press release
Exhibit 99.1
Cheetah Mobile Announces Fourth Quarter and Fiscal Year 2017
Unaudited Consolidated Financial Results
Beijing, China, March 19, 2018 – 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 fourth quarter and fiscal year ended December 31, 2017.
Fourth Quarter 2017 Financial Highlights
| • | Total revenues increased by 8.9% year over year and 16.2% quarter over quarter to RMB1,387.8 million (US$213.3 million), exceeding the Company’s previous guidance range of RMB1,250 million to RMB 1,310 million. Stronger-than-expected growth was driven by the Company’s record-high mobile revenues in the fourth quarter of 2017, which increased by 17.8% year over year and 15.9% quarter over quarter. |
| • | Gross profit increased by 14.3% year over year and 16.5% quarter over quarter to RMB926.4 million (US$142.4 million). Gross margin was 66.8% in the fourth quarter of 2017, compared to 63.6% in the same period last year and 66.5% in the third quarter of 2017. |
| • | Operating profit increased to RMB222.0 million (US$34.1 million) from RMB62.2 million in the same period last year and RMB132.3 million in the third quarter of 2017. Operating margin expanded to 16.0% from 4.9% in the same period last year and 11.1% in the third quarter of 2017. |
| • | Operating profit for utility products and related services increased by 3.0% year over year and 25.5% quarter over quarter to RMB327.0 million (US$50.3 million) in the fourth quarter of 2017. Operating margin for utility products and related services expanded to 33.8% in the fourth quarter of 2017 from 31.5% in the same period last year and 31.6% in the third quarter of 2017. |
| • | Net income attributable to Cheetah Mobile shareholders increased to RMB1,047.1 million (US$160.9 million) from RMB58.8 million in the same period last year and RMB139.7 million in the third quarter of 2017. |
| • | Diluted income per ADS increased to RMB7.27 (US$1.12) in the fourth quarter of 2017 from RMB0.41 in the same period last year and RMB0.95 in the third quarter of 2017. |
| • | The Company generated RMB267.5 million (US$41.1 million) of net cash from operating activities and RMB258.9 million (US$39.8 million) of free cash flow1 in the fourth quarter of 2017. |
Fourth Quarter 2017 Operating Metric
| • | The average number of global mobile monthly active users (“Mobile MAUs”) was 552 million in the fourth quarter of 2017. 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 fourth quarter of 2017. |
Fiscal Year 2017 Financial Highlights
| • | Total revenues increased by 9.0% year over year to RMB4,974.8 million (US$764.6 million). |
| • | Gross profit increased by 5.8% year over year to RMB3,194.7 million (US$491.0 million). |
| • | Operating profit increased to RMB446.9 million (US$68.7 million) from an operating loss of RMB12.4 million in 2016. |
| • | Operating profit for utility products and related services increased by 16.1% year over year to RMB979.4 million (US$150.5 million) in 2017. Operating margin for utility products and related services expanded to 28.5% in 2017 from 21.8% in 2016. |
| • | Net income attributable to Cheetah Mobile shareholders increased to RMB1,348.2 million (US$207.2 million) from a net loss attributable to Cheetah Mobile shareholders of RMB80.5 million in 2016. |
| 1 | Free cash flow is defined as net cash generated by operating activities less capital expenditure |
| • | Diluted net income per ADS in 2017 was RMB9.37 (US$1.44) as compared to diluted loss per ADS of RMB0.58 in 2016. |
| • | Net cash generated by operating activities was RMB621.1 million (US$95.5 million). |
Mr. Sheng Fu, Cheetah Mobile’s Chairman and Chief Executive Officer, stated, “We are delighted to report a strong set of results for the fourth quarter of 2017. Our utility products and related service continued to expand its profitability and generate cash flow. Revenues from our Live.me and mobile game business continued to grow, thanks to our efforts in product innovation, creative operations, and content enrichment. Cheetah Mobile is a user- and product-focused company, so it is encouraging that our products continue to achieve notable progress. In this quarter, Live.me remained the No.1 grossing social app in the U.S. on Google Play and one of the top 6 in the Apple App Store. CM Launcher and Cheetah Keyboard were among the top 10 personalized apps in the U.S. on Google Play. Recently, we became one of the top 10 game publishers in the U.S. on both Google Play and the Apple App Store. Going forward, we will continue to use artificial intelligence (“AI”) to enhance our products and services. We also believe that technologies such as blockchain will create opportunities for us to expand our product offerings.”
Mr. Vincent Jiang, Cheetah Mobile’s Chief Financial Officer, commented, “Driven by considerable growth in our mobile utility products and related services businesses in China and the overall growth of Live.me and mobile games, our total revenues exceeded the high end of our revenue guidance in the fourth quarter of 2017. Our operating profits continued to improve and achieved all-time highs in the quarter, driven by robust revenue growth and continued optimization of the cost and expense structure for utility products and related services. In the fourth quarter, we closed two significant disposals, News Republic and our interests in Musical.ly, which generated a gain of RMB1,089.0 million (US$167.4 million) in the fourth quarter of 2017 and greatly boosted our balance sheet. In addition, our core business continues to generate strong cash flow, which allows us to reallocate our resources to execute expansion plans in order to drive our long-term growth.”
Fourth Quarter 2017 Consolidated Financial Results
REVENUES
Total revenues increased by 8.9% year over year and 16.2% quarter over quarter to RMB1,387.8 million (US$213.3 million) in the fourth quarter of 2017.
| • | Revenues from utility products and related services decreased by 4.2% year over year but increased by 17.3% quarter over quarter to RMB967.2 million (US$148.7 million) in the fourth quarter of 2017. The year-over-year decrease 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 one of our overseas third-party advertising partners, and (ii) a decline in PC revenues. This decrease was largely offset by an increase in our mobile utility products and related services business in China. The quarter-over-quarter increase was primarily due to the strong growth of our mobile utility products and related services business in China and seasonality in advertising spending in both China and the overseas markets. |
| • | Revenues from the mobile entertainment business increased by 50.5% year over year and 10.2% quarter over quarter to RMB399.5 million (US$61.4 million). The year-over-year increase was primarily a result of the rapid growth in Live.me’s broadcasting revenues and the Company’s continued efforts to expand the mobile game portfolio by introducing several new mobile games in early 2017. The quarter-over-quarter growth was mainly attributable to Live.me’s increased revenues in the overseas market and mobile game revenues in China, where the Company’s mobile games continue to gain popularity. |
By platform, revenues generated from the mobile business increased by 17.8% year over year and 15.9% quarter over quarter to RMB1,217.5 million (US$187.1 million), or 87.7% of our total revenues in the fourth quarter of 2017.
By region, revenues generated from the overseas markets increased by 1.4% year over year and 5.4% quarter over quarter to RMB843.8 million (US$129.7 million) in the fourth quarter of 2017. Revenues generated from the Chinese market increased by 23.0% year over year and 38.0% quarter over quarter to RMB544.0 million (US$83.6 million) in the fourth quarter of 2017. The growth of our 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 markets constitutes 60.8% of our total revenues in the fourth quarter of 2017.
COST OF REVENUES AND GROSS PROFIT
Cost of revenues decreased by 0.6% year over year but increased by 15.4% quarter over quarter to RMB461.4 million (US$70.9 million) in the fourth quarter of 2017. The quarter-over-quarter increase was a result of one-time higher channel costs associated with our mobile game business in China, and higher revenue sharing fees with online broadcasters associated with the Live.me business. Non-GAAP cost of revenues decreased by 0.2% year over year but increased by 15.7% quarter over quarter to RMB462.4 million (US$71.1 million) in the fourth quarter of 2017.
Gross profit increased by 14.3% year over year and 16.5% quarter-over-quarter to RMB926.4 million (US$142.4 million) in the fourth quarter of 2017. Non-GAAP gross profit increased by 14.1% year over year and 16.4% quarter to quarter to RMB925.4 million (US$142.2 million) in the fourth quarter of 2017.
OPERATING INCOME AND EXPENSES
Total operating expenses decreased by 5.9% year over year but increased by 6.3% quarter over quarter to RMB704.4 million (US$108.3 million) in the fourth quarter of 2017. Total non-GAAP operating expenses increased by 0.7% year over year and 9.2% quarter over quarter to RMB700.1 million (US$107.6 million) in the fourth quarter of 2017.
| • | Research and development (R&D) expense decreased by 35.5% year over year and 13.0% quarter over quarter to RMB151.9 million (US$23.3 million) in the fourth quarter of 2017. The decreases were due to lower share-based compensation expenses and reduced R&D headcount resulting from the disposal of News Republic and the Company’s strategy to optimize the cost and expense structure for its utility products and related services business. Non-GAAP R&D expenses, which exclude share-based compensation expenses, decreased by 30.7% year over year and 14.2% quarter over quarter to RMB147.4 million (US$22.7 million) in the fourth quarter of 2017. |
| • | Selling and marketing expenses increased by 2.9% year over year and 2.7% quarter over quarter to RMB420.1 million (US$64.6 million) in the fourth quarter of 2017. The increases were mainly due to increased promotional activities for the Company’s mobile utility products in China and Cheez, a short video application operated by Live.me in the overseas markets. Non-GAAP selling and marketing expenses, which exclude share-based compensation expenses, increased by 3.7% year over year and 3.0% quarter over quarter to RMB423.1 million (US$65.0 million) in the fourth quarter of 2017. |
| • | General and administrative expenses decreased by 9.3% year over year but increased by 29.7% quarter over quarter to RMB115.1 million (US$17.7 million) in the fourth quarter of 2017. The year-over-year decrease was primarily due to higher professional service fees and employee benefits, which was offset by lower share-based compensation expenses. The quarter-over-quarter increase primarily resulted from increased professional service fees and employee benefits. Non-GAAP general and administrative expenses, which exclude share-based compensation expenses, increased by 16.6% year over year and 63.9% quarter over quarter to RMB112.2 million (US$17.2 million) in the fourth quarter of 2017. |
| • | Impairment of goodwill and intangible assets were RMB38.7 million (US$5.9 million) in the fourth quarter of 2017 primarily due to a one-time non-cash write-down of intangible assets, which the Company considered other-than-temporary. Their carrying values exceed the expected undiscounted cash flows expected to result from the use of the assets and their eventual disposition. |
Operating profit increased to RMB222.0 million (US$34.1 million) from RMB62.2 million in the same period last year and RMB132.3 million in the previous quarter. Non-GAAP operating profit increased by 93.7% year over year and 46.6% quarter over quarter to RMB225.4 million (US$34.6 million) in the fourth quarter of 2017.
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 3.0% year over year and 25.5% quarter over quarter to RMB327.0 million (US$50.3 million) in the fourth quarter of 2017 mainly due to the optimization of the cost and expense structure and the increase in revenue in the fourth quarter of 2017. |
| • | Operating loss for the mobile entertainment business was RMB61.8 million (US$9.5 million) in the fourth quarter of 2017, compared to operating losses of RMB201.1 million in the same period last year and RMB105.0 million in the third quarter of 2017. The reduced loss was mainly a result of increased revenues generated from the Company’s Live.me and mobile game businesses and reduced costs and expenses from the News Republic business, partially offset by the Company’s increased investments in Live.me and Cheez, the short video business operated by Live.me in overseas markets. |
Share-based compensation expenses decreased by 93.8% year over year and 84.2% quarter over quarter to RMB3.4 million (US$0.5 million) in the fourth quarter of 2017. The decrease resulted from a combination of several factors. The Company employed an accelerated method to recognize share-based compensation expenses. 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 2017 than in previous years and more unvested awarded shares were forfeited in 2017.
IMPAIRMENT OF INVESTMENTS
Impairment of investments were RMB209.6 million (US$32.2 million) in the fourth quarter of 2017 primarily due to a one-time non-cash write-down of some investment assets, which the Company considered other-than-temporary, to its fair value. This write-down was the result of lower-than-expected performance and financial position of the investment assets.
OTHER INCOME, NET
Other income, net, was RMB1,089.0 million (US$167.4 million) in the fourth quarter of 2017, mainly resulting from the disposals of the Company’s interests in Musical.ly and the Company’s News Republic business.
NET INCOME ATTRIBUTABLE TO CHEETAH MOBILE SHAREHOLDERS
Net income attributable to Cheetah Mobile shareholders increased to RMB1,047.1 million (US$160.9 million) in the fourth quarter of 2017 from RMB58.8 million in the same period last year and RMB139.7 million in the third quarter of 2017. Non-GAAP net income attributable to Cheetah Mobile shareholders increased to RMB1,050.5 million (US$161.5 million) in the fourth quarter of 2017 from RMB113.0 million in the same period last year and RMB161.1 million in the third quarter of 2017.
NET INCOME PER ADS
Diluted income per ADS increased to RMB7.27 (US$1.12) in the fourth quarter of 2017 from RMB0.41 in the same period last year and RMB0.95 in the third quarter of 2017. Non-GAAP diluted income per ADS increased to RMB7.29 (US$1.12) in the fourth quarter of 2017 from RMB0.80 in the same period last year and RMB1.10 in the third quarter of 2017.
ADJUSTED EBITDA
Adjusted EBITDA (Non-GAAP) increased by 61.3% year over year and 36.8% quarter over quarter to RMB255.8 million (US$39.3 million) in the fourth quarter of 2017.
CASH AND CASH EQUIVALENTS, RESTRICTED CASH AND SHORT-TERM INVESTMENTS BALANCE
As of December 31, 2017, the Company had cash and cash equivalents, restricted cash, and short-term investments of RMB3,803.3 million (US$584.6 million).
CASH FLOW FROM OPERATING ACTIVITIES AND FREE CASH FLOW
In the fourth quarter of 2017, the Company generated RMB267.5 million (US$41.1 million) of net cash from operating activities and RMB258.9 million (US$39.8 million) of free cash flow.
SHARES ISSUED AND OUTSTANDING
As of December 31, 2017, 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.
Fiscal Year 2017 Results
REVENUES
Total revenues increased by 9.0% year over year to RMB4,974.8 million (US$764.6 million) in 2017, which was primarily driven by rapid growth in the Company’s Live.me and mobile game businesses.
| • | Revenues from utility products and related services decreased by 11.1% year over year to RMB3,439.6 million (US$528.7 million) in 2017. The decrease was primarily due to a decline in PC revenues as internet traffic in China continued to migrate from PC to mobile devices. |
| • | Revenues from the mobile entertainment business increased by 115.9% year over year to RMB1,496.4 million (US$230.0 million). The increase was primarily due to the rapid growth in Live.me’s revenues and the Company’s enriched mobile game portfolio as a result of the introduction of several new mobile games in early 2017. |
By platform, revenues generated from the mobile business increased by 22.2% year over year to RMB4,315.0 million (US$663.2 million), or 86.7% of our total revenues in 2017. The increase was a result of the rapid growth of the Company’s Live.me business in the overseas markets and the growth of the Company’s mobile game revenues, particularly in the overseas markets.
By region, revenues generated from overseas markets increased by 21.4% year over year to RMB3,335.5 million (US$512.7 million), or 67.0% of our total revenues, in 2017.
COST OF REVENUES AND GROSS PROFIT
Cost of revenues increased by 15.3% year over year to RMB1,780.1 million (US$273.6 million) in 2017, which primarily resulted from increased investment in the Company’s Live.me business. Non-GAAP cost of revenues increased by 15.4% year over year to RMB1,779.3 million (US$273.5 million) in 2017.
Gross profit increased by 5.8% year over year to RMB3,194.7 million (US$491.0 million) in 2017. Non-GAAP gross profit increased by 5.7% year over year to RMB3,195.4 million (US$491.1 million) in 2017.
OPERATING INCOME/LOSS AND EXPENSES
Total operating expenses decreased by 9.4% year over year to RMB2,747.8 million (US$422.3 million) in 2017. Total non-GAAP operating expenses decreased by 2.0% year over year to RMB2,675.2 million (US$411.2 million).
| • | Research and development expenses decreased by 24.4% year over year to RMB684.9 million (US$105.3 million) in 2017, which primarily resulted from lower share-based compensation expenses and reduced R&D headcount for the Company’s News Republic business and mobile utility product operation. Non-GAAP research and development expenses, which exclude share-based compensation expenses, decreased by 12.3% year over year to RMB664.2 million (US$102.1 million). |
| • | Selling and marketing expenses remained relatively flat year over year at RMB1,656.5 million (US$254.6 million) in 2017, which was primarily due to increased product promotional activities for the Live.me business. This was partially offset by reduced spending on product promotional activities for utility applications in the overseas markets. Non-GAAP selling and marketing expenses, which exclude share-based compensation expenses, remained relatively flat year over year at RMB1,656.5 million (US$254.6 million). |
| • | General and administrative expenses decreased by 27.5% year over year to RMB407.4 million (US$62.6 million) in 2017, which was a result of lower share-based compensation expenses and a decrease in allowance for doubtful accounts. Non-GAAP general and administrative expenses, which exclude share-based compensation expenses, decreased by 15.2% year over year to RMB355.6 million (US$54.7 million). |
Operating profit was RMB446.9 million (US$68.7 million) in 2017 as compared to an operating loss of RMB12.4 million in 2016. Non-GAAP operating profit increased by 77.1% year over year to RMB520.2 million (US$80.0 million) in 2017.
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 16.1% year over year to RMB979.4 million (US$150.5 million) in 2017 mainly due to the optimization of the cost and expense structure of this segment. |
| • | Operating loss for the mobile entertainment business was RMB417.4 million (US$64.1 million) in 2017, compared to operating loss of RMB532.0 million in 2016. The reduced loss was mainly a result of the year-over-year increases in revenues generated from the Company’s Live.me and mobile game businesses and reduced costs and expenses from News Republic business, partially offset by the Company’s increased investments in Live.me and Cheez, the short video business operated by Live.me in the overseas markets. |
Share-based compensation expenses decreased by 76.1% year over year to RMB73.3 million (US$11.3 million) in 2017. The decrease resulted from a combination of several factors. The Company employed an accelerated method to recognize share-based compensation expenses. 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 2017 than in previous years and more unvested awarded shares were forfeited in 2017.
NET INCOME/LOSS ATTRIBUTABLE TO CHEETAH MOBILE SHAREHOLDERS
Net income attributable to Cheetah Mobile shareholders was RMB1,348.2 million (US$207.2 million) in 2017 as compared to a net loss attributable to Cheetah Mobile shareholders of RMB80.5 million in 2016. Non-GAAP net income attributable to Cheetah Mobile shareholders increased by 530.0% year over year to RMB1,421.5 million (US$218.5 million) in 2017.
NET INCOME/LOSS PER ADS
Diluted income per ADS in 2017 was RMB9.37 (US$1.44) as compared to diluted loss per ADS of RMB0.58 in 2016. Non-GAAP diluted income per ADS in 2017 was RMB9.88 (US$1.52) as compared to RMB1.59 in 2016.
ADJUSTED EBITDA
Adjusted EBITDA (Non-GAAP) increased by 43.6% year over year to RMB656.5 million (US$100.9 million) in 2017.
Recent Developments
Senior Management Promotions
Cheetah Mobile’s board of directors has approved the promotions of Ms. Yuki Yandan He and Mr. Edward Mingyan Sun as Senior Vice Presidents in the fourth quarter of 2017.
Yuki joined Cheetah Mobile in 2010 and has been in charge of a number of the Company’s flagship products, including Duba Anti-virus, Clean Master, and Battery Doctor. In particular, Clean Master has been the Company’s most significant mobile product. Yuki has led the launch of Live.me, a popular living streaming application, in the overseas markets since April 2016. Live.me is Cheetah Mobile’s first subsidiary to raise funds from outside investors. As the chief executive officer of Live.me, Yuki led Live.me’s two rounds of financing in 2017 and raised an aggregate of US$110 million. Live.me has also been named one of Fast Company’s Most Innovative Companies in Video for 2017. Prior to Cheetah Mobile, Yuki was a product director at Tencent and Kingsoft and played a significant role in designing various products. Yuki received a bachelor’s degree in electronic science and technology from the University of Electronic Science and Technology of China.
Edward joined Cheetah Mobile in 2010 and has been in charge of various mobile utility products, including CM Launcher, Cheetah Keyboard, Cheetah Browser for both PC and mobile, and Duba Aiti-virus. Prior to Cheetah Mobile, Edward worked at Qihoo 360 and Trent Micro, serving in various management roles. Edward received a college degree and continued his post-graduate studies at the University of Science and Technology of China.
Update Regarding Bytedance-Related Deals
Cheetah Mobile completed the disposals of News Republic and Musical.ly to Bytedance in the fourth quarter of 2017. The two transactions resulted in a gain of RMB1,089.0 million (US$167.4 million) in the fourth quarter of 2017. In addition, Live.me Inc., which operates Live.me, a live video streaming application raised US$50 million from Bytedance in the fourth quarter of 2017. The new funding is presented as redeemable non-controlling interests on the Company’s balance sheet as of December 31, 2017.
Business Outlook
For the first quarter of 2018, the Company expects its total revenues to be between RMB1,100 million (US$169 million) and RMB1,140 million (US$175 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, March 19, 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: | 4001-201203 | |
| Hong Kong Toll Free: | 800-905945 | |
| 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/.
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 RMB6.5063 to US$1.00, the exchange rate in effect as of December 31, 2017, 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 actively users through its mobile utilities 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 select 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 | ||||||||||||
| 31-Dec-16 RMB |
31-Dec-17 RMB |
31-Dec-17 USD |
||||||||||
| ASSETS |
||||||||||||
| Current assets: |
||||||||||||
| Cash and cash equivalents |
1,411,000 | 2,317,488 | 356,191 | |||||||||
| Restricted cash |
167,751 | 90,149 | 13,856 | |||||||||
| Short-term investments |
361,499 | 1,395,694 | 214,514 | |||||||||
| Accounts receivable |
600,885 | 621,272 | 95,488 | |||||||||
| Prepayments and other current assets |
571,306 | 918,243 | 141,131 | |||||||||
| Due from related parities |
44,278 | 54,052 | 8,308 | |||||||||
| Deferred tax assets |
15,527 | — | — | |||||||||
|
|
|
|
|
|
|
|||||||
| Total current assets |
3,172,246 | 5,396,898 | 829,488 | |||||||||
|
|
|
|
|
|
|
|||||||
| Non-current assets: |
||||||||||||
| Property and equipment, net |
117,439 | 89,137 | 13,700 | |||||||||
| Intangible assets, net |
227,251 | 70,225 | 10,793 | |||||||||
| Goodwill |
943,922 | 634,157 | 97,468 | |||||||||
| Investment in equity investees |
100,063 | 149,969 | 23,050 | |||||||||
| Other long term investments |
877,094 | 1,002,721 | 154,115 | |||||||||
| Due from related parities |
— | 5,216 | 802 | |||||||||
| Deferred tax assets |
74,809 | 57,642 | 8,859 | |||||||||
| Other non-current assets |
28,310 | 42,966 | 6,604 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total non-current assets |
2,368,888 | 2,052,033 | 315,391 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total assets |
5,541,134 | 7,448,931 | 1,144,879 | |||||||||
|
|
|
|
|
|
|
|||||||
| LIABILITIES, MEZZANINE EQUITY AND SHAREHOLDERS’ EQUITY |
||||||||||||
| Current liabilities: |
||||||||||||
| Bank loans |
379,544 | 336,304 | 51,689 | |||||||||
| Accounts payable |
194,882 | 164,537 | 25,289 | |||||||||
| Accrued expenses and other current liabilities |
1,408,419 | 1,532,489 | 235,539 | |||||||||
| Due to related parties |
71,167 | 81,810 | 12,574 | |||||||||
| Income tax payable |
12,209 | 50,614 | 7,779 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total current liabilities |
2,066,221 | 2,165,754 | 332,870 | |||||||||
|
|
|
|
|
|
|
|||||||
| Non-current liabilities: |
||||||||||||
| Bank loans |
118,797 | — | — | |||||||||
| Deferred tax liabilities |
112,438 | 73,393 | 11,280 | |||||||||
| Other non-current liabilities |
42,500 | 54,574 | 8,388 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total non-current liabilities |
273,735 | 127,967 | 19,668 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total liabilities |
2,339,956 | 2,293,721 | 352,538 | |||||||||
|
|
|
|
|
|
|
|||||||
| Mezzanine equity: |
||||||||||||
| Redeemable noncontrolling interests |
— | 649,246 | 99,787 | |||||||||
|
|
|
|
|
|
|
|||||||
| Shareholders’ equity: |
||||||||||||
| Ordinary shares |
230 | 229 | 35 | |||||||||
| Treasury stock |
(178,991 | ) | — | — | ||||||||
| Additional paid-in capital |
2,725,675 | 2,644,043 | 406,382 | |||||||||
| Retained earnings |
237,293 | 1,564,883 | 240,518 | |||||||||
| Accumulated other comprehensive income |
228,145 | 84,206 | 12,943 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total Cheetah Mobile shareholders’ equity |
3,012,352 | 4,293,361 | 659,878 | |||||||||
| Noncontrolling interests |
188,826 | 212,603 | 32,676 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total equity |
3,201,178 | 4,505,964 | 692,554 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total liabilities, mezzanine equity and equity |
5,541,134 | 7,448,931 | 1,144,879 | |||||||||
|
|
|
|
|
|
|
|||||||
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 | ||||||||||||||||
|
31-Dec-16 RMB |
30-Sep-17 RMB |
31-Dec-17 RMB |
31-Dec-17 USD |
|||||||||||||
| Revenues |
1,274,672 | 1,194,687 | 1,387,806 | 213,302 | ||||||||||||
| Utility products and related services |
1,009,206 | 824,764 | 967,232 | 148,661 | ||||||||||||
| Mobile entertainment |
265,466 | 362,448 | 399,493 | 61,401 | ||||||||||||
| Others |
— | 7,475 | 21,081 | 3,240 | ||||||||||||
| Cost of revenues (a) |
(464,197 | ) | (399,664 | ) | (461,383 | ) | (70,913 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Gross profit |
810,475 | 795,023 | 926,423 | 142,389 | ||||||||||||
| Operating income and expenses: |
||||||||||||||||
| Research and development (a) |
(235,355 | ) | (174,646 | ) | (151,867 | ) | (23,342 | ) | ||||||||
| Selling and marketing (a) |
(408,097 | ) | (409,045 | ) | (420,080 | ) | (64,565 | ) | ||||||||
| General and administrative (a) |
(126,846 | ) | (88,737 | ) | (115,089 | ) | (17,689 | ) | ||||||||
| Impairment of goodwill and intangible assets |
(539 | ) | — | (38,690 | ) | (5,947 | ) | |||||||||
| Other operating income |
22,545 | 9,739 | 21,307 | 3,275 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total operating income and expenses |
(748,292 | ) | (662,689 | ) | (704,419 | ) | (108,268 | ) | ||||||||
| Operating profit |
62,183 | 132,334 | 222,004 | 34,121 | ||||||||||||
| Other income (expense): |
||||||||||||||||
| Interest income, net |
954 | 7,380 | 10,227 | 1,572 | ||||||||||||
| Settlement and changes in fair value of contingent consideration |
(3,011 | ) | — | — | — | |||||||||||
| Foreign exchange gain (loss), net |
2,951 | (3,867 | ) | (5,943 | ) | (913 | ) | |||||||||
| Impairment of investments |
(45,863 | ) | (65,461 | ) | (209,565 | ) | (32,210 | ) | ||||||||
| Gains (Losses) from equity method investments, net |
2,889 | (582 | ) | 1,921 | 295 | |||||||||||
| Other income, net |
38,648 | 82,370 | 1,088,965 | 167,371 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Income before taxes |
58,751 | 152,174 | 1,107,609 | 170,236 | ||||||||||||
| Income tax benefits (expenses) |
9,278 | (7,767 | ) | (40,259 | ) | (6,188 | ) | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net income |
68,029 | 144,407 | 1,067,350 | 164,048 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Less: net income attributable to noncontrolling interests |
9,254 | 4,727 | 20,264 | 3,115 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net income attributable to Cheetah Mobile shareholders |
58,775 | 139,680 | 1,047,086 | 160,933 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Earnings per share |
||||||||||||||||
| Basic |
0.04 | 0.10 | 0.74 | 0.11 | ||||||||||||
| Diluted |
0.04 | 0.09 | 0.73 | 0.11 | ||||||||||||
| Earnings per ADS |
||||||||||||||||
| Basic |
0.42 | 0.97 | 7.43 | 1.14 | ||||||||||||
| Diluted |
0.41 | 0.95 | 7.27 | 1.12 | ||||||||||||
| Weighted average number of shares outstanding |
||||||||||||||||
| Basic |
1,384,035,270 | 1,396,601,023 | 1,400,420,814 | 1,400,420,814 | ||||||||||||
| Diluted |
1,419,820,902 | 1,429,237,411 | 1,432,849,633 | 1,432,849,633 | ||||||||||||
| Weighted average number of ADSs outstanding |
||||||||||||||||
| Basic |
138,403,527 | 139,660,102 | 140,042,081 | 140,042,081 | ||||||||||||
| Diluted |
141,982,090 | 142,923,741 | 143,284,963 | 143,284,963 | ||||||||||||
| Other comprehensive income (loss), net of tax of nil |
||||||||||||||||
| Foreign currency translation adjustments |
72,411 | (48,572 | ) | (52,267 | ) | (8,033 | ) | |||||||||
| Unrealized gains (losses) on available-for-sale securities, net |
415 | — | (433 | ) | (67 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Other comprehensive income (loss) |
72,826 | (48,572 | ) | (52,700 | ) | (8,100 | ) | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total comprehensive income |
140,855 | 95,835 | 1,014,650 | 155,948 | ||||||||||||
| Less: Total comprehensive income attributable to noncontrolling interests |
6,941 | 2,604 | 18,568 | 2,854 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total comprehensive income attributable to Cheetah Mobile shareholders |
133,914 | 93,231 | 996,082 | 153,094 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| (a) Share-based compensation expenses |
||||||||||||||||
| Cost of revenues |
824 | (63 | ) | (981 | ) | (151 | ) | |||||||||
| Research and development |
22,716 | 2,847 | 4,471 | 687 | ||||||||||||
| Selling and marketing |
34 | (1,680 | ) | (3,049 | ) | (469 | ) | |||||||||
| General and administrative |
30,627 | 20,288 | 2,933 | 451 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total |
54,201 | 21,392 | 3,374 | 518 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
CHEETAH MOBILE INC.
Information about Segment
(Unaudited, in’000, except for percentage)
| For The Three Months Ended December 31, 2017 | ||||||||||||||||||||||||
| Utility Products and Related Services |
Mobile Entertainment |
Others | Unallocated* | Consolidated | ||||||||||||||||||||
| RMB | RMB | RMB | RMB | RMB | USD | |||||||||||||||||||
| Revenue |
967,232 | 399,493 | 21,081 | — | 1,387,806 | 213,302 | ||||||||||||||||||
| Operating profit (loss) |
326,950 | (61,846 | ) | (39,726 | ) | (3,374 | ) | 222,004 | 34,121 | |||||||||||||||
| Operating margin |
33.8 | % | (15.5 | )% | (188.4 | )% | 16.0 | % | 16.0 | % | ||||||||||||||
| 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 | % | ||||||||||||
| For The Three Months Ended December 31, 2016 | ||||||||||||||||||||
| Utility Products and Related Services |
Mobile Entertainment |
Others | Unallocated* | Consolidated | ||||||||||||||||
| RMB | RMB | RMB | RMB | RMB | ||||||||||||||||
| Revenue |
1,009,206 | 265,466 | — | — | 1,274,672 | |||||||||||||||
| Operating profit (loss) |
317,463 | (201,079 | ) | — | (54,201 | ) | 62,183 | |||||||||||||
| Operating margin |
31.5 | % | (75.7 | )% | 4.9 | % | ||||||||||||||
| * | 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 December 31, 2017 | ||||||||||||||||||||||||||||
| GAAP Result |
% of Net Revenues |
Share-based Compensation |
% of Net Revenues |
Non-GAAP Result |
% of Net Revenues |
Non-GAAP Result ($) |
||||||||||||||||||||||
| Revenues |
1,387,806 | 1,387,806 | 213,302 | |||||||||||||||||||||||||
| Cost of revenues |
(461,383 | ) | 33.2 | % | (981 | ) | 0.1 | % | (462,364 | ) | 33.3 | % | (71,064 | ) | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Gross profit |
926,423 | 66.8 | % | (981 | ) | 0.1 | % | 925,442 | 66.7 | % | 142,238 | |||||||||||||||||
| Research and development |
(151,867 | ) | 10.9 | % | 4,471 | 0.3 | % | (147,396 | ) | 10.6 | % | (22,654 | ) | |||||||||||||||
| Selling and marketing |
(420,080 | ) | 30.3 | % | (3,049 | ) | 0.2 | % | (423,129 | ) | 30.5 | % | (65,034 | ) | ||||||||||||||
| General and administrative |
(115,089 | ) | 8.3 | % | 2,933 | 0.2 | % | (112,156 | ) | 8.1 | % | (17,238 | ) | |||||||||||||||
| Impairment of goodwill and intangible assets |
(38,690 | ) | 2.8 | % | — | 0.0 | % | (38,690 | ) | 2.8 | % | (5,947 | ) | |||||||||||||||
| Other operating income |
21,307 | 1.5 | % | — | 0.0 | % | 21,307 | 1.5 | % | 3,275 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Total operating income and expenses |
(704,419 | ) | 50.8 | % | 4,355 | 0.3 | % | (700,064 | ) | 50.4 | % | (107,598 | ) | |||||||||||||||
| Operating profit |
222,004 | 16.0 | % | 3,374 | 0.2 | % | 225,378 | 16.2 | % | 34,640 | ||||||||||||||||||
| Net income attributable to Cheetah Mobile shareholders |
1,047,086 | 75.4 | % | 3,374 | 0.2 | % | 1,050,460 | 75.7 | % | 161,453 | ||||||||||||||||||
| Diluted earnings per ordinary share (RMB) |
0.73 | 0.00 | 0.73 | |||||||||||||||||||||||||
| Diluted earnings per ADS (RMB) |
7.27 | 0.02 | 7.29 | |||||||||||||||||||||||||
| Diluted earnings per ADS (USD) |
1.12 | 0.00 | 1.12 | |||||||||||||||||||||||||
| For The Three Months Ended September 30, 2017 | ||||||||||||||||||||||||||||
| GAAP Result |
% of Net Revenues |
Share-based Compensation |
% of Net Revenues |
Non-GAAP Result |
% of Net 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 | % | |||||||||||||||||
| Impairment of goodwill and intangible assets |
— | 0.0 | % | — | 0.0 | % | — | 0.0 | % | |||||||||||||||||||
| 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 | |||||||||||||||||||||||||
| For The Three Months Ended December 31, 2016 | ||||||||||||||||||||||||||||
| GAAP Result |
% of Net Revenues |
Share-based Compensation |
% of Net Revenues |
Non-GAAP Result |
% of Net Revenues |
|||||||||||||||||||||||
| Revenues |
1,274,672 | 1,274,672 | ||||||||||||||||||||||||||
| Cost of revenues |
(464,197 | ) | 36.4 | % | 824 | 0.1 | % | (463,373 | ) | 36.4 | % | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
| Gross profit |
810,475 | 63.6 | % | 824 | 0.1 | % | 811,299 | 63.6 | % | |||||||||||||||||||
| Research and development |
(235,355 | ) | 18.5 | % | 22,716 | 1.8 | % | (212,639 | ) | 16.7 | % | |||||||||||||||||
| Selling and marketing |
(408,097 | ) | 32.0 | % | 34 | 0.0 | % | (408,063 | ) | 32.0 | % | |||||||||||||||||
| General and administrative |
(126,846 | ) | 10.0 | % | 30,627 | 2.4 | % | (96,219 | ) | 7.5 | % | |||||||||||||||||
| Impairment of goodwill and intangible assets |
(539 | ) | 0.0 | % | — | 0.0 | % | (539 | ) | 0.0 | % | |||||||||||||||||
| Other operating income |
22,545 | 1.8 | % | — | 0.0 | % | 22,545 | 1.8 | % | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
| Total operating income and expenses |
(748,292 | ) | 58.7 | % | 53,377 | 4.2 | % | (694,915 | ) | 54.5 | % | |||||||||||||||||
| Operating profit |
62,183 | 4.9 | % | 54,201 | 4.3 | % | 116,384 | 9.1 | % | |||||||||||||||||||
| Net income attributable to Cheetah Mobile Shareholders |
58,775 | 4.6 | % | 54,201 | 4.3 | % | 112,976 | 8.9 | % | |||||||||||||||||||
| Diluted earnings per ordinary share (RMB) |
0.04 | 0.04 | 0.08 | |||||||||||||||||||||||||
| Diluted earnings per ADS (RMB) |
0.41 | 0.39 | 0.80 | |||||||||||||||||||||||||
CHEETAH MOBILE INC.
Revenues Generated from PC-based and Mobile-based Applications and Services
(Unaudited, in ‘000)
| For The Three Months Ended | ||||||||||||||||
| 31-Dec-16 RMB |
30-Sep-17 RMB |
31-Dec-17 RMB |
31-Dec-17 USD |
|||||||||||||
| PC |
241,353 | 144,377 | 170,259 | 26,168 | ||||||||||||
| Mobile |
1,033,319 | 1,050,310 | 1,217,547 | 187,134 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total |
1,274,672 | 1,194,687 | 1,387,806 | 213,302 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
CHEETAH MOBILE INC.
Revenues Generated from Domestic and Overseas Markets
(Unaudited, in ‘000)
| For The Three Months Ended | ||||||||||||||||
| 31-Dec-16 RMB |
30-Sep-17 RMB |
31-Dec-17 RMB |
31-Dec-17 USD |
|||||||||||||
| Domestic |
442,089 | 394,236 | 543,974 | 83,607 | ||||||||||||
| Overseas |
832,583 | 800,451 | 843,832 | 129,695 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total |
1,274,672 | 1,194,687 | 1,387,806 | 213,302 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
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 | ||||||||||||||||
| 31-Dec-16 RMB |
30-Sep-17 RMB |
31-Dec-17 RMB |
31-Dec-17 USD |
|||||||||||||
| Net income attributable to Cheetah Mobile shareholders |
58,775 | 139,680 | 1,047,086 | 160,933 | ||||||||||||
| Add: |
||||||||||||||||
| Income tax (benefits) expenses |
(9,278 | ) | 7,767 | 40,259 | 6,188 | |||||||||||
| Interest income, net |
(954 | ) | (7,380 | ) | (10,227 | ) | (1,572 | ) | ||||||||
| Depreciation and amortization |
42,196 | 33,162 | 30,377 | 4,669 | ||||||||||||
| Net income attributable to noncontrolling interests |
9,254 | 4,727 | 20,264 | 3,115 | ||||||||||||
| Other non-operating (expense) income, net |
4,386 | (12,460 | ) | (875,378 | ) | (134,543 | ) | |||||||||
| Share-based compensation |
54,201 | 21,392 | 3,374 | 518 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Adjusted EBITDA |
158,580 | 186,888 | 255,755 | 39,308 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
CHEETAH MOBILE INC.
Condensed Consolidated Statements of Comprehensive Income
(Unaudited, amounts in thousands of Renminbi (“RMB”) and US dollars (“US$”), except for number of shares and per
share(or ADS) data)
| Year Ended December 31 | ||||||||||||
| 2016 | 2017 | 2017 | ||||||||||
| RMB | RMB | USD | ||||||||||
| Revenues |
4,564,650 | 4,974,757 | 764,606 | |||||||||
| Utility products and related services |
3,870,995 | 3,439,563 | 528,651 | |||||||||
| Mobile entertainment |
693,195 | 1,496,443 | 229,999 | |||||||||
| Others |
460 | 38,751 | 5,956 | |||||||||
| Cost of revenues (a) |
(1,543,817 | ) | (1,780,089 | ) | (273,595 | ) | ||||||
|
|
|
|
|
|
|
|||||||
| Gross profit |
3,020,833 | 3,194,668 | 491,011 | |||||||||
| Operating income and expenses: |
||||||||||||
| Research and development (a) |
(905,854 | ) | (684,863 | ) | (105,262 | ) | ||||||
| Selling and marketing (a) |
(1,650,581 | ) | (1,656,505 | ) | (254,600 | ) | ||||||
| General and administrative (a) |
(561,834 | ) | (407,410 | ) | (62,618 | ) | ||||||
| Impairment of goodwill and intangible assets |
(2,889 | ) | (38,862 | ) | (5,973 | ) | ||||||
| Other operating income |
87,877 | 39,852 | 6,125 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total operating income and expenses |
(3,033,281 | ) | (2,747,788 | ) | (422,328 | ) | ||||||
| Operating (loss) profit |
(12,448 | ) | 446,880 | 68,683 | ||||||||
| Other income (expense): |
||||||||||||
| Interest income, net |
7,783 | 22,603 | 3,474 | |||||||||
| Settlement and changes in fair value of contingent consideration |
(3,377 | ) | (9,014 | ) | (1,385 | ) | ||||||
| Foreign exchange gain (loss) , net |
3,747 | (15,224 | ) | (2,340 | ) | |||||||
| Impairment of investments |
(141,069 | ) | (275,026 | ) | (42,271 | ) | ||||||
| Losses (Gains) from equity method investments, net |
(11,363 | ) | 495 | 76 | ||||||||
| Other income, net |
87,831 | 1,262,551 | 194,051 | |||||||||
|
|
|
|
|
|
|
|||||||
| (Loss) Income before taxes |
(68,896 | ) | 1,433,265 | 220,288 | ||||||||
| Income tax benefits (expenses) |
12,189 | (57,602 | ) | (8,853 | ) | |||||||
|
|
|
|
|
|
|
|||||||
| Net (loss) income |
(56,707 | ) | 1,375,663 | 211,435 | ||||||||
|
|
|
|
|
|
|
|||||||
| Less: net income attributable to noncontrolling interests |
23,818 | 27,469 | 4,222 | |||||||||
|
|
|
|
|
|
|
|||||||
| Net (loss) income attributable to Cheetah Mobile shareholders |
(80,525 | ) | 1,348,194 | 207,213 | ||||||||
|
|
|
|
|
|
|
|||||||
| (Losses) Earnings per share |
||||||||||||
| Basic |
(0.06 | ) | 0.96 | 0.15 | ||||||||
| Diluted |
(0.06 | ) | 0.94 | 0.14 | ||||||||
| (Losses) Earnings per ADS |
||||||||||||
| Basic |
(0.58 | ) | 9.57 | 1.47 | ||||||||
| Diluted |
(0.58 | ) | 9.37 | 1.44 | ||||||||
| Non-GAAP earnings per ADS |
||||||||||||
| Basic |
1.63 | 10.10 | 1.55 | |||||||||
| Diluted |
1.59 | 9.88 | 1.52 | |||||||||
| Weighted average number of shares outstanding |
||||||||||||
| Basic |
1,387,254,551 | 1,394,303,326 | 1,394,303,326 | |||||||||
| Diluted |
1,387,254,551 | 1,425,154,838 | 1,425,154,838 | |||||||||
| Diluted (non-GAAP) |
1,423,086,096 | 1,425,154,838 | 1,425,154,838 | |||||||||
| Weighted average number of ADSs used in computation |
||||||||||||
| Basic |
138,725,455 | 139,430,333 | 139,430,333 | |||||||||
| Diluted |
138,725,455 | 142,515,484 | 142,515,484 | |||||||||
| Diluted (non-GAAP) |
142,308,610 | 142,515,484 | 142,515,484 | |||||||||
| Other comprehensive income (loss), net of tax of nil |
||||||||||||
| Foreign currency translation adjustments |
132,450 | (148,304 | ) | -22,794 | ||||||||
| Unrealized gains (losses) on available-for-sale securities, net |
1,241 | (433 | ) | (67 | ) | |||||||
| Reclassification adjustments for gains included in net income (loss) |
(21,666 | ) | — | — | ||||||||
|
|
|
|
|
|
|
|||||||
| Other comprehensive income (loss) |
112,025 | (148,737 | ) | (22,861 | ) | |||||||
|
|
|
|
|
|
|
|||||||
| Total comprehensive income |
55,318 | 1,226,926 | 188,574 | |||||||||
| Less: Total comprehensive income attributable to noncontrolling interests |
26,814 | 22,671 | 3,484 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total comprehensive income attributable to Cheetah Mobile shareholders |
28,504 | 1,204,255 | 185,090 | |||||||||
|
|
|
|
|
|
|
|||||||
| (a) Share-based compensation expenses |
||||||||||||
| Cost of revenues |
1,490 | 762 | 117 | |||||||||
| Research and development |
148,211 | 20,691 | 3,180 | |||||||||
| Selling and marketing |
13,830 | 39 | 6 | |||||||||
| General and administrative |
142,618 | 51,824 | 7,965 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total |
306,149 | 73,316 | 11,268 | |||||||||
|
|
|
|
|
|
|
|||||||
CHEETAH MOBILE INC.
Information about Segment
(Unaudited, in’000, except for percentage)
| For The Year Ended December 31, 2017 | ||||||||||||||||||||||||
| Utility Products and Related Services |
Mobile Entertainment |
Others | Unallocated* | Consolidated | ||||||||||||||||||||
| RMB | RMB | RMB | RMB | RMB | USD | |||||||||||||||||||
| Revenue |
3,439,563 | 1,496,443 | 38,751 | — | 4,974,757 | 764,606 | ||||||||||||||||||
| Operating profit (loss) |
979,447 | (417,350 | ) | (41,901 | ) | (73,316 | ) | 446,880 | 68,683 | |||||||||||||||
| Operating margin |
28.5 | % | (27.9 | )% | (108.1 | )% | 9.0 | % | 9.0 | % | ||||||||||||||
| For The Year Ended December 31, 2016 | ||||||||||||||||||||||||
| Utility Products and Related Services |
Mobile Entertainment |
Others | Unallocated* | Consolidated | ||||||||||||||||||||
| RMB | RMB | RMB | RMB | RMB | ||||||||||||||||||||
| Revenue |
3,870,995 | 693,195 | 460 | — | 4,564,650 | |||||||||||||||||||
| Operating profit (loss) |
843,518 | (531,989 | ) | (17,828 | ) | (306,149 | ) | (12,448 | ) | |||||||||||||||
| Operating margin |
21.8 | % | (76.7 | )% | (3875.7 | )% | -0.3 | % | ||||||||||||||||
| * | 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 Year Ended December 31, 2017 | ||||||||||||||||||||||||||||
| GAAP Result |
% of Net Revenues |
Share-based Compensation |
% of Net Revenues |
Non-GAAP Result |
% of Net Revenues |
Non-GAAP Result ($) |
||||||||||||||||||||||
| Revenues |
4,974,757 | 4,974,757 | 764,606 | |||||||||||||||||||||||||
| Cost of revenues |
(1,780,089 | ) | 35.8 | % | 762 | 0.0 | % | (1,779,327 | ) | 35.8 | % | (273,478 | ) | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Gross profit |
3,194,668 | 64.2 | % | 762 | 0.0 | % | 3,195,430 | 64.2 | % | 491,128 | ||||||||||||||||||
| Research and development |
(684,863 | ) | 13.8 | % | 20,691 | 0.4 | % | (664,172 | ) | 13.4 | % | (102,081 | ) | |||||||||||||||
| Selling and marketing |
(1,656,505 | ) | 33.3 | % | 39 | 0.0 | % | (1,656,466 | ) | 33.3 | % | (254,594 | ) | |||||||||||||||
| General and administrative |
(407,410 | ) | 8.2 | % | 51,824 | 1.0 | % | (355,586 | ) | 7.1 | % | (54,653 | ) | |||||||||||||||
| Impairment of goodwill and intangible assets |
(38,862 | ) | 0.8 | % | — | 0.0 | % | (38,862 | ) | 0.8 | % | (5,973 | ) | |||||||||||||||
| Other operating income |
39,852 | 0.8 | % | — | 0.0 | % | 39,852 | 0.8 | % | 6,125 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Total operating income and expenses |
(2,747,788 | ) | 55.2 | % | 72,554 | 1.5 | % | (2,675,234 | ) | 53.8 | % | (411,176 | ) | |||||||||||||||
| Operating profit |
446,880 | 9.0 | % | 73,316 | 1.5 | % | 520,196 | 10.5 | % | 79,953 | ||||||||||||||||||
| Net income attributable to Cheetah Mobile shareholders |
1,348,194 | 27.1 | % | 73,316 | 1.5 | % | 1,421,510 | 28.6 | % | 218,482 | ||||||||||||||||||
| Diluted (losses) earnings per ordinary share (RMB) |
0.94 | 0.05 | 0.99 | |||||||||||||||||||||||||
| Diluted (losses) earnings per ADS (RMB) |
9.37 | 0.51 | 9.88 | |||||||||||||||||||||||||
| Diluted (losses) earnings per ADS (USD) |
1.44 | 0.08 | 1.52 | |||||||||||||||||||||||||
| For The Year Ended December 31, 2016 | ||||||||||||||||||||||||
| GAAP Result |
% of Net Revenues |
Share-based Compensation |
% of Net Revenues |
Non-GAAP Result |
% of Net Revenues |
|||||||||||||||||||
| Revenues |
4,564,650 | 4,564,650 | ||||||||||||||||||||||
| Cost of revenues |
(1,543,817 | ) | 33.8 | % | 1,490 | 0.0 | % | (1,542,327 | ) | 33.8 | % | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Gross profit |
3,020,833 | 66.2 | % | 1,490 | 0.0 | % | 3,022,323 | 66.2 | % | |||||||||||||||
| Research and development |
(905,854 | ) | 19.8 | % | 148,211 | 3.2 | % | (757,643 | ) | 16.6 | % | |||||||||||||
| Selling and marketing |
(1,650,581 | ) | 36.2 | % | 13,830 | 0.3 | % | (1,636,751 | ) | 35.9 | % | |||||||||||||
| General and administrative |
(561,834 | ) | 12.3 | % | 142,618 | 3.1 | % | (419,216 | ) | 9.2 | % | |||||||||||||
| Impairment of goodwill and intangible assets |
(2,889 | ) | 0.1 | % | — | 0.0 | % | (2,889 | ) | 0.1 | % | |||||||||||||
| Other operating income |
87,877 | 1.9 | % | — | 0.0 | % | 87,877 | 1.9 | % | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total operating income and expenses |
(3,033,281 | ) | 66.5 | % | 304,659 | 6.7 | % | (2,728,622 | ) | 59.8 | % | |||||||||||||
| Operating (loss) profit |
(12,448 | ) | 0.3 | % | 306,149 | 6.7 | % | 293,701 | 6.4 | % | ||||||||||||||
| Net (loss) income attributable to Cheetah Mobile shareholders |
(80,525 | ) | 1.8 | % | 306,149 | 6.7 | % | 225,624 | 4.9 | % | ||||||||||||||
| Diluted earnings per ordinary share (RMB) |
(0.06 | ) | 0.22 | 0.16 | ||||||||||||||||||||
| Diluted earnings per ADS (RMB) |
(0.58 | ) | 2.17 | 1.59 | ||||||||||||||||||||
Cheetah Mobile Inc.
Revenues Generated from PC-based and Mobile-based Applications and Services
(Unaudited, in ‘000)
| For The Year Ended December 31 | ||||||||||||
| 31-Dec-16 | 31-Dec-17 | 31-Dec-17 | ||||||||||
| RMB | RMB | USD | ||||||||||
| PC |
1,034,205 | 659,744 | 101,400 | |||||||||
| Mobile |
3,530,445 | 4,315,013 | 663,206 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total |
4,564,650 | 4,974,757 | 764,606 | |||||||||
|
|
|
|
|
|
|
|||||||
Cheetah Mobile Inc.
Revenues Generated from Domestic and Overseas Markets
(Unaudited, in ‘000)
| For The Year Ended December 31 | ||||||||||||
| 31-Dec-16 | 31-Dec-17 | 31-Dec-17 | ||||||||||
| RMB | RMB | USD | ||||||||||
| Domestic |
1,817,874 | 1,639,248 | 251,947 | |||||||||
| Overseas |
2,746,776 | 3,335,509 | 512,659 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total |
4,564,650 | 4,974,757 | 764,606 | |||||||||
|
|
|
|
|
|
|
|||||||
CHEETAH MOBILE INC.
Reconciliation from Net Income (Loss) Attributable to Cheetah Mobile Shareholders to Adjusted EBITDA (Non-GAAP)
(Unaudited, in ‘000)
| For The Year Ended December 31 | ||||||||||||
| 31-Dec-16 | 31-Dec-17 | 31-Dec-17 | ||||||||||
| RMB | RMB | USD | ||||||||||
| Net (loss) income attributable to Cheetah Mobile shareholders |
(80,525 | ) | 1,348,194 | 207,213 | ||||||||
| Add: |
||||||||||||
| Income tax (benefits) expense |
(12,189 | ) | 57,602 | 8,853 | ||||||||
| Interest income,net |
(7,783 | ) | (22,603 | ) | (3,474 | ) | ||||||
| Depreciation and amortization |
163,357 | 136,301 | 20,949 | |||||||||
| Net income attributable to noncontrolling interests |
23,818 | 27,469 | 4,222 | |||||||||
| Other non-operating expense (income), net |
64,231 | (963,782 | ) | (148,131 | ) | |||||||
| Share-based compensation |
306,149 | 73,316 | 11,268 | |||||||||
|
|
|
|
|
|
|
|||||||
| Adjusted EBITDA |
457,058 | 656,497 | 100,900 | |||||||||
|
|
|
|
|
|
|
|||||||