Q4 2019 Earnings Call
Dead dead dead dead good day and welcome to the Cheetah Mobile fourth-quarter and full-year 2019, All participants will be in a listen-only mode.
Did you need assistance, please signal conference specialist by pressing the star key followed by zero after today's presentation. There will be an opportunity to ask questions. Please note this event is being recorded. I would now like to turn the conference over to Helen to investor relations director of T-Mobile, please go ahead.
Thank you. I'll prepare welcome to Cheetah Mobile.
2019 and 4 years 29th and earnings conference call leaves up today or chairman and CEO. Mr. From Shawn and our CFO. Mr. Tech II fully management prepared remarks. We will contact the Q&A sections a presentation of the company's earnings release is already on or I our website before we begin. I refer you to the safe harbor statement in learning through these which also applies to our earnings conference call today. I I will we will make full payment at this time. I would now like to turn the call over to our CEO. Mr. Jones, please go ahead Google. Thank you Helen. Hello everyone our first page Avenue for line with the management in expectation.
Hi, how are we?
We'll correct. Okay now Gap efficient lost about two hundred million in the quarter to key factor factor contributed to this long first was our increase investments into our mobile game business particularly for overseas markets second was our so drugged teaching investment for a i you need initiatives.
Batman from the
body from really generate to 20 20
strategic spending for our mobile game business due to the slower you age then expertise the progress in launching new games as well as intense competition in the market.
On February 8th on February 20th, 2020. We were made aware of the fact that the Google had a disabled our account for the Google Play Store Google admob and the Google management and the management as a result. Our company's app has been removed from the Google Play Store and we were able to generate revenues from Google which is negatively impacted our overseas business according to google a decision was made because some of our apps were not in compliance with Google policy, which has reduced results resulted.
Results are certainly married in traffic during the quarter. We engaged in talks with Google to class clarify. This page showed me a misunderstanding. However dispatch making up making a appeal and the providing more information. We were recently got notified.
So the Google was Labor to read in stage our account where we continue to speak with Google. We cannot currently in Thursday. We will be able to resume this collaboration. Nevertheless. We were we have already ruled out some measures but I just it's a current harboring.
How do we such measures include the Folly first? We have a significant significant a car cost and it just pains wire streaming our operations in overseas markets as a result the coverage level we expect to reduce our operating loss from the same quarter of 2020 going forward second. We will choose we will choosing to refocus our business strategy on to the page Mobile internet package as such we have brought brought back both our mobile utility product and the lights off the game business by doing so we plan to build a robot.
medium
Ton of growth engine for the company in the coming quarters our mobile internet business has already made good progress in damage domestic markets twenty-twenty our product and the game has experienced significant growth in Deus vult time spent retention rate and a commercial Impressions. This achievement was a result of our proactive effort to improve our user experience.
Why are also reducing some of our ads in our products so delay employees retaining?
Returning to walk to work follow in the Spring Festival holiday also job. All right engagement. And the user time spent we believed our product recovered recovery of user might share will have to pay the wait for the future monetization dead ends up post-crisis.
Also in the demos leave a message, we introduced some premium service for our utility products in the middle part of 2019 wage results results in our number of paying user experience is experiencing significant growth. For example, the pain user count for do bath and she virus Girls by the road by about sixty
I sent between December 2019 and the match 2028.
Yeah Edition Oh Black Sheep mobile Colour game, including Piano Tiles 2 rolling Sky something like on the bulletin board has already received the package license for distribution in China. So we will continue to execute our strategy to drive long-term growth.
Said recent Corona virus outbreaks has increased customer demand of our robot robotics project and the solutions since the outbreak studies. We were launched and she and her stomach products for hospital to ready or some of the pressure caused by shortage of medical personal and under threat of the Cross fashion.
As of today our medical robot. Our medical robots has been deployed in Men in Chinese Hospital including taking University.
Hospital Beijing haidian Hospital One hospital and Windows X. P. Normally, we have received high price from local government in this area for our initial initiatives in with the to the outbreak very much for all of our properties properties products were no
No.
No late fees for the use in 2022 Winter Olympic Games.
We are the only company with the most person being domain naked.
Why aren't you well makes you don't well makes take her wire for our robotics products and the solutions to generate the material revenues materials revenues. We had already witnessed.
Increase in consumer awareness and the demand for our offering as a result on the past several years. We have built a great team develop a strong balance sheet and executed a number of successful business transaction.
position
that you might we remain confident in our ability to whether this short-term challenges and resilience our growth in the coming quarter with that. I will hand the phone over to our sales for Thomas.
Thank you. And who they everyone thank you all for joining us today and very exciting to have caught the Cheetah Mobile key and look forward to meeting with everyone else coming months. Now, that's our attention to our financial results in the fourth quarter of 2019. Please note that unless I'm old and old growth comparison am a a year-over-year basis total revenue off the equator 5:56 for Saturday.
612 in the fourth quarter of 2019 excluding the impact of the deconsolidation of like missed Revenue total revenue decreased by 47% year-over-year in the quarter.
The stadium in the previous quarter like me Amanda is Sherry incentive plan on September 13th, 2019.
It's a result you no longer holds the majority voting power in like me and has started to give Consolidated Financial results. It's the fourth quarter of time.
No look into our results for each feeding. Last starting is utility product and related services.
Driving from your products and related Services decreased by 62% to 299 million in the quarter of moreover during the quarter about eighty percent of our revenue from utility product or generated from advertising.
The increase was primarily the sequence or was primarily due to the following four at the club in our mobile security product issue in overseas Market.
Mobile Kennedy product Revenue in overseas markets decreased by 69% from 93 million in the quarter which was mainly due to avoid suspension of our collaboration with Facebook of the advertising front since December 2018 and a decline our menu.
Mobile productivity is a domestic Market.
Mobile market by 70% to 107 million in 1/4, which was the result had been in China a lot of advertising Market.
I declined when PCV valve PCV taking Revenue decreased by 26% to ninety nine million in the quarter, but the internet off in China continue to migrate from PC to mobile devices.
Daniel Sproul mobile came equipped by 13% to 285 million in the quarter due to a lack of his games on the market saturation of our existing hyper title case.
During the car about 77% of revenues from our mobile case business or generated from advertising round remaining portion of Revenue was generated from New Jersey.
Turning to our car and the expenses.
The following options. You'll be on a normal basis which excludes stock-based compensation expensive food building permit office.
you of danke lighters in this contact you help us to fight representing the results of our operating performance without the effect of number that I
well
I told information presented in accordance with U.S, Please refer to our press release. This is available actionable. Website i r. P.,
You were going to call her you continue to implement trip cost and expense control as a result total non-gaap costs and expenses decreased by 36% to 860 minutes in the quarter mainly due to our efforts to reduce costs and expenses month for our product of last month.
Revenue decreased by 56% to 182 million is a quarter.
We're off profit equipped by 56% 430 million in the quarter.
All righty expenses decreased by 22% to 138 million in the quarter.
Starting the marketing expenses decreased by 41% from 343 million in the court.
DNA expensive increased by 14% to 161 million in the quarter and then the time as I am talking
are pretty low for 204 million in the quarter compared to an operating profit of 510 million in the same.
moving on to each reporting segment
Operating profit flowering and Kitty products and related services for 29 minutes in the cost increasing from 224 million. When did you do the sequencing rally?
Approving law for our mobile case fifty five hundred and twenty million is covered compared to an operating loss of eleven million in the same place from here.
Least when the car by The increased amount of investment made into our mobile capabilities as we continued to launch new game titles.
moving on to our balance sheet
we have on that a strong balance sheet at all, December 4th, 2019. We have cash and cash in Cleveland with cash and short-term Investments u.s. Dollar 338 medium and long-term investment of your boss 302 million.
our
Post-polio long-term Investments include Factor by frame master code knob and other well-known I text.
Hold on, please.
No, let me provide you with our first quarter Revenue guidance.
The currently exact total revenue for the first quarter to be between r b 419 million and R&B 540 month lease not this forecast is locked the company cars and the preliminary Bill and is subject to change this concludes. Our prepared remarks operator. We are now ready to take questions. Thank you.
Operators we are now ready to take questions, please.
operator
Yes, we are now ready to hear me.
Okay. Thank you.
We will now begin the question-and-answer session to ask a question may press * then 1 on your touchtone phone you're using a speakerphone. Please pick up your handset before pressing the keys to ask your question, please press * then two for the benefit of all participants on call if you wish to ask your question in Chinese, please immediately repeat your question in English.
At this time, we will pause momentarily to assemble our roster. The first question today comes from Thomas Chung with Jeffries, please go ahead.
What's up? I need this is Thomas Bolen Keno bolte between shop for me for white though. I you know your sheet about ten. Now. How do you handle when he's trying you know that she's going to be out my thank you. Thank you management for taking my questions have a few questions. First question is about the update about advertising Trend in domestic and off Market as a result covid-19. And what are the new games in the pipeline under entertainment segment and how the performance of like the same games and the incorrect?
It's in time Senate.
Homes have to Performance of game and virtually about the investment strategy on initiative. And when should we expect it to achieve break-even? Thank you.
How old is he?
Okay. So let me answer your first question about the coronavirus defect to our overseas and Dome advertising business right now. Yeah, I think for for the overseas advertising business, I think for this year off you mentioned because the received a notification from Google that our collaboration with Google was terminated since late February. I think this Realty know the biggest impact for our overseas and appetizing business for the domestic advertising. Did you know V to see some increase from the user user login numbers and users constant birth?
I think there there was some impact by the coronavirus that some advertisers reduced their advertising partied at least for the first couple of quarters of this year. So it may have some like negative tax law or domestic advertising revenues.
So your second question is about the it's about our gaming pipelines, right? Yeah, and also the performance of our current games, I would say that as mentioned in our prepared remarks the Google Google event did have some impact also on our gaming business. So for this year, we will be pivoting some from overseas markets for too long lasting market for the gaming business as well. So we do have some large amount of gaming pipelines, but well, we you know, I'm listening from overseas to domestic be we may need some time to figure out. What's the right channels. What was the right strategy or the game?
in the domestic Market
and for the current game like the hot games we used to have like Piano Tiles 2 rolling sky dancing line BNB. I think I think most of them you can see the kind of games use useful life is reaching to a situation or maturity. So we may see something like decreased for those existing Gates.
Yeah.
Yeah, the third question about the break-even part, right?
Yeah, well the the mentioned in the prepared remarks, we do see some significant, you know customer demand, especially during the month of Corona virus outbreak, you know in China and they also do want to do something to relieve the pressure by the medical staff. But also because of the you know, the, you know, people cannot retain into work there is there was some impact off the supply and also the sales side. So I think we may need to call her to pick up all the others off if they can, you know, if the the the the coronavirus situation can recover and near future we believe we can see some sights phone number.
Revenue from the AI business along with the increased, you know, the forecasted increase on Revenue. We may see something know reducing loss for the I did this but I think for now it's a little bit too early to tell you know, very it's it's trying to break in but I think the fact we mentioned the whole company's law operating loss on corporate level will be reducing authored by Calder compared to the Q4 results. So we remain confident that you know, maybe in another couple of quarters we can be more clear than you can break even hope that answers your question.
Thank you.
The next question comes from Vickie we with City, please. Go ahead.
Good evening management. Thanks for taking my questions. And which everyone could help under the I have two questions. The first one that is about all the Googles collaboration. So the company has any Plan B if the Google corporation cannot resume the same time, and my second question is about the AI investment so management, please provide some color on the 20/20 investment strategy and the margin profile. Thank you.
Hello,
Hold on, How many open to you shoot you if she doesn't buy the argument he should call you on the phone.
What time do you have tomorrow?
Would you say you don't take off Google. Take a page from what I show an Apple iPhone 6 that usually no woman off. I'm sure.
Mm. Mm. Oh, yeah, and sometimes take off today until Wednesday.
Okay, so I will translate food for them to answer for your two questions. First question is regarding the business class after Google terms of collaborations. So we think on the mobile internet front our Focus will be a domestic Market in the future and Chyna already have a large enough market to accommodate all kind of players and on the Google from the same tact communicating with done, but we cannot guarantee, you know, or cannot predict it and whether we can be restored to Google Google. I know it's all the real life that for the Android system, you know, utilities apps no longer log.
to have
Form our own Revenue, you can see that you already have gaming revenues latter than your teeth off. So yeah for for the gaming video also focus on the domestic Market.
yeah, so for the
For the a I say I initiative so during the Corona virus outbreak our business. I mean is dead is being you know, kind of delayed because people cannot travel but well we can see, you know, people are returning to the office and the you know, the situation is being recovered as we speak right now. So we do see a game with great growth potential on the front and also during the outbreak of the coronavirus V. We also realize that you know, the fact that way I can be applied. It's actually larger than we originally think so our original scenarios for birth
Application or you know like a library shopping War and the government but now we realize that you know, you know robotic I can do way more than that. We can you know, we can do the remote infrared temperature management team know that the doctors can uh can do remote consultation with patient result being facing the risk of you know, the infection. So we do see, you know, a lot of increasing demand for the disease. Yeah, so we will continue to invest to the boss. Sorry. I have to put this car selling of
Thank you.
Thank you. This concludes our question-and-answer session. I would now like to turn the conference back over to the management for any closing remarks.
Thank you all for joining or a conference call today. If you have any further questions, please do not hesitate to contact us. Thank you so much. Bye.
This conference has now concluded. Thank you for attending today's presentation. You may now discuss.