Q2 2020 Cheetah Mobile Inc Earnings Call

After today's presentation, there will be an opportunity to question.

Today's event is being recorded.

At this time I'd like to turn.

How would you.

<unk> director of Cheetah Mobile. Please go ahead.

Thank you operator, welcome to Cheetah mobile second quarter 2020, <unk> earnings Conference call, we said today or <unk> or company, chairman and CEO, Mr., social and or company theatrical Mr. Thomas Kim.

Management's prepared remarks, well, that's a two and a section.

Before people do I refer you to the Safe Harbor statement Youre, earning three D, which also applied for a company called today I will make forward looking statement at this time I'd now like to turn the conference call over to our chairman and CEO Mr. Cool. Please go ahead.

Sionko Helen.

Hello, everybody.

Where do you de bird Oh wonderful they heard the dark each result.

During the quarter of a turnkey pumping.

Good day.

Total revenue.

Yeah.

Mm 300, Nike called media is eating the high Oh I'll buy revenue guidance.

Moca not to comment though to be.

HM 204 people need it.

However.

With the leasing challenges.

Taking a.

Our business.

Oh, what these mckee.

Well I'll neighbor to resume.

Do you still our cooperation with the physical kind of Google as a result, we have Cody.

Acquiring new users.

And the monetizing our traffic.

And Oh, what these revenue continued to decline.

Given today's environment.

Not confident.

Yeah, the resuming our collaboration with the Facebook and Google.

But there must be good markets. The only other what typing industry has been not kibali impacted by the pardon me.

The beginning of this year, leading to the decline you CPM.

The cope.

Oh Buddies, how do when we chose to strategically shift our focus from Oh, what the bucket to the domestic bucket.

<unk> introduced the user since books you modem.

And that's really we have reduced costs I think about it I.

The focus all Oh Wow.

My estimates the shocking bought.

In today's call I would like to highlight following.

Okay.

Well, it's significantly reduce our costs I think it's paid during the quarter.

That's already thought smoke up over 18 law.

No I I'm eight media quarter over quarter into two despite that our total revenue is crazy, but I'd be well has yet to 13 media from to approve you caught caught her.

The revenue creep.

Well, it's primarily due to that's especially true up I walk collaboration with Google Things February 2020.

Well the outbreak of college Nike.

Which continue to encourage.

Our online advertising using its in China.

During the quarter, we've cut back our costs I think this past.

Well what these market.

Do you do two nights.

Q1 percent <unk>, Oh, what the year over year, I listen to your 1% quarter over quarter decreased.

Called <unk>.

And that your pet.

But.

Well, our mobile Internet business.

Namely the utility products and the mobile game operation.

These are coming quarter, we will continue to improve operational efficiency reduce costs I think it's Pat.

Recently that old how Albrecht Kellogg's.

Oh, no covering copart reach lever.

Second PC revenue increased by 2% quarter over quarter <unk> well on July 20 media.

Driving for girls overuse, though suspects you revenue.

Subscription revenue.

During the quarter, both paying user.

Use up coat and the baby since so.

That's crips you revenue from our Dubai anti virus software reached new Heights.

There's a true much fruit so use us it says.

Subscription modal leasing go to cap.

Recently, we have a copy the user.

Subscription model from PC to mobile by introducing premium sobi for cream. After the initial yields a adoption has been very encouraging.

Encouraging as we said the thing the paying user count at the daily So subscription revenue the men brilliant.

Tremendous thoroughly since inception.

Sure even today's environment, we P.D., we try try to mobile Internet company well fees increasing.

Challenges I bought.

As a result, our your utility products be thinking well move from overseas market to the domestic market.

No no allow us to reduce cost and expense gradually.

During the quarter, we introduced some new utility you've heard about.

Our home markets.

In the future we were at a more utility part about either domestic market to further enrich our product offering and the boot although revenue.

Well.

The number I relate to the robot <unk> grow too about the summer so that by the end of the second quarter.

No, but how.

October five Michelle and the Brendan.

I'll spend a brett.

They are looking for.

Improved cost how much joking theory.

And the crazy to more business opportunity ball.

Metric.

Metric.

The Coppermark Bailey inquiry leased Oh, I don't watch has it been going.

Increased the cup term or use age I touched many shop and the bread to come to up to getting coverage.

Recently.

We tried to what we said were Brad including that's true.

Oh No company.

No I.

That's it.

So the accessory.

So do you got to traffic to their local shelf.

The progress of our help watching shopping mall do you need about a six month due to the pandemic. However, we will accelerate the monetization monetization alone we dug recovery from.

Koby the Nike situation.

But.

Our long come in chronic pain you it could take you back much called Sabril when Tom cracked up.

As a jewel.

So to me Twentytwenty, we had to you U.S. dollar 200 at Nike.

Uhhuh media Volcker.

Hey, you Batman <unk>.

Thinking on our balance sheet.

During the quarter some of our major you Matt.

He's made a notable.

Made a note about development.

For example, like me a treatment.

Put off peak, but.

Groping <unk> ability.

Oh code the mall I'd be leading Chinese online education platform, that's teachers teach crooked I'm going to try to choose you close to two or close to the new rump of a founding in reading.

Looking ahead, we expect to continue pacing if 10 show hideaway.

Those that a week oh neighbor to grow.

Well, that's pet Oh, what total revenue in second half over time do you plan.

However, we will continue to reduce costs I think its pen and then there, though oh breaking loose ends up coming quota.

The same time, we were oh uphold our commitment to a.

Big huge we Oh, what John cash resell.

We believe the iwear allow us to be which I knew guerrillas anger for the company in the long come with that I will highlight the phone well what too.

Oh, I see Apple Palmer.

Thank you for them.

Good day everybody.

Thank you, okay, what running up today, no I'd be a walk you through our financial results.

Please note that I'm not they did other oh money among our your RMB terms.

Oh comparison amazing I'm, a year over year basis.

These stated in previous calls her.

Not me on Monday, the share incident, you plan on September 30, or 29, Kim I started result, you no longer hold them my gerke voting power lockney unhappy starting to Deconsolidate like me financial result.

In the fourth quarter Oftwenty Nike.

To find her present, our financial result video provide year over year comparison, excluding the impact of the deconsolidation off knocked me.

Total revenue were 300 and Nike for meeting in the quarter exceeding the high end off our revenue guidance for the second quarter I'm Twentytwenty.

On the representing a decrease of 59%.

Excluding the impact on the deconsolidation now let me.

Total revenue decreased.

By 48% user called her.

This decrease was primarily due to the suspension of our collaboration with Google is Fibria Twentytwenty.

I want the outbreak.

Cobiz 19, which continue to impact our online advertising business in China during the quarter.

By business segment.

Revenue from utility products and related services, whereby hundred 95 million in the quarter.

Representing 50% off our total revenue in the caught her.

Revenues from our mobile game business.

<unk> hundred 79 million in the called her.

Representing 46% off our total revenue in the quantity.

By region revenue from China accounted for 41% off our total revenue in the quarter.

Revenue from overseas market accounted for 59% off our total revenue quarter.

By platform, if you see revenue improved slightly quarter over quarter to 118 in the represented 30% off our total revenue in the quarter.

Mobile algavia accounted for 70% off our total revenue.

Further.

Turning to our call an extensive.

The following discussion of results there will be on non-GAAP basis.

If you exclude stock based compensation expenses and goodwill impairment.

You know got matters in this context, the will help us to fight her present, the result off our operating performance dissolved the fact noncash items.

For financial information presented in accordance with U.S. GAAP, please refer to our earnings release.

During the second quarter of Twentytwenty vitro to strategically shift our focus from overseas market to that domestic market.

Compute would reduce our expenditures.

Our mobile internet busy in overseas markets incorrect.

At the same time be remained focused on our age related investments for shopping mall.

I thought result, total cost and expenses decreased by 47% year over year on 22% quarter over quarter.

To 528, meaning in the quarter.

Excluding the impact of Black me, our total costs and expenses decreased.

30% year over year.

A turnkey two person quarter over quarter.

In particular.

Cost of revenue decreased by 65% year over year.

And 23% quarter over quarter to 113 meeting in the quarter.

R&D expenses decreased.

43% year over year.

17% quarter over quarter.

To 130 million in the quarter.

Selling and marketing expenses decreased.

By 46% year over year <unk>.

33% quarter over quarter to 205 million caught.

Moving onto our coffee and market.

<unk> coffee <unk> 280 button, meaning you have caught her.

Walk margin, what 71% not caught her.

Compared to 66% no same period last year.

72% in the previous quarter.

Operating loss narrowed to 133 million in the quarter, one button hungry walkie bottom in previous calls.

The decrease in operating loss during the second quarter was the result of our strict cost saving measures underrepresented in the third street corner using their own off reducing operating losses.

Fifth third quarter Oftwenty nicely.

During the quarter. These post our remaining stake in fact that.

Beach resulted in an investment again about U.S. dollar sixtyth fixed muni.

I said resolved the reported non-GAAP net income attributable to see some of our shareholder.

244 million Yakov.

Compared to 82 million in the same period last year, and our non-GAAP net loss actually good vote to Cheetah mobile shareholders of 98 million.

Previous quarter.

In addition, the reported non-GAAP diluted earnings per 80 odd of U.S. dollar 25 side, you know caught her which grew from U.S. dollar eight cents in the same period last year and the non-GAAP diluted loss per eight yeah.

You asked all their 10 cents in a previous calls.

Moving onto our balance sheet.

That's all June Thirtyth Twentytwenty.

We had cash cash equivalents.

Or restricted cash and short term me bachman.

The U.S. dollar 400.

53 million and long term magazine Backman U.S. dollar 292 meeting.

Oh July nine Twentytwenty Bu cash from our balance sheet to pay a special cash dividend.

[laughter] top U.S. dollar.

$1.44 cents Brady add to our shareholder.

<unk> aggregate amount on a cash dividend what about U.S. dollar 200 meeting.

Now, let me provide you with our third quarter revenue guidance.

We currently expect total revenue for the third quarter to be between RMB 310 million, an RMT 300 and safety meeting.

Excluding the impact on Deconsolidating back me this guidance implied.

A year over year decline in total revenue between 47%.

55% disappearing.

Please note these ballcock reflect our current and preliminary view.

And is subject to change.

This concludes our prepared remarks, operator, we're now ready to take question. Thank you.

Ladies and gentlemen, we will now begin the question and answer session.

Question, You May Press Star then one.

Uh huh.

You are using a speaker phone we do after you please pick up the handset before pursuing the key.

So withdraw your questions you May press star into.

We do I see you. Please ask your question and Chinese first followed by.

At this time, we will pause momentarily to assemble the roster.

And our first question today comes from Vicki way from Citi. Please go ahead with your question.

Glenn if someone so.

Yes. It does all the teams Oh my goodness Michelin. He goes this is going to month I need to.

Kidnappings wanted your thoughts on digital Oh, gosh, I don't shouldn't be done how should I take that yeah.

Well it doesn't show when do you look like so my mom either.

My since then Ocwens see I'm, hoping that you don't know yet I guess blow junk I'm pretty sure well then they'll be sounds good such England, Oh citizens you how can I shouldn't say that she calls.

So.

That's anything you show isn't in management. Thanks for taking my question I have two small question.

Firstly about the advertising market.

So a management provide some color about that category performance.

<unk> second quarter.

Well.

And my second question there's about.

The U.S. tension U.S. tried attention so lots of Chinese I'd I thought coming back to try not to do less overpaid privatized. So what does management think upstairs and what if some pent up the company. Thank you [laughter].

Well just see dot once you do it comments that up with Uh huh, Okay. So I do I answer your two questions. So first button, it's Bob Yeah.

Industry with a good performance for our advertising P. thing. So I think our situation is that similar with other players in a hidden the fundamentals within the industry most although our advertising revenue it's called me.

From major domestic platform.

Because of the a great greater contribution from E Commerce online education button, the increased investment for their I'd like to 18 promote promotion no content or cool summer holiday coffee.

Uh huh.

In a category such an automobile in consumer electronics.

They are marketed more so.

I'd say the B that has.

Consumption recovered.

This uncertainty on sports question.

Well for your second question, it's about the or how what the management view.

About the delisting from U.S. marcon or.

The only thing in Hong Kong cut the market so.

Yeah, D.V. did not address in the money Chinese company.

They have either to the told them to the list from the U.S. stock market or completed do you lifting into Hong Kong Stockmarket means I'll be a beehive, whose though no notice that many I tried to companies have completed their successful U.S. ipos in the past couple of Hoffman.

So I believe that the deeper in capital markets provide I'm not by radke off options, what deepen companies that deepen goal stage.

For Bob that's not Cheetah mobile Nijman, our top priority is definitely a company business development and girl.

The same time me the also pay attention to our various options available in different type of market. So yeah for sure. If he has any plan deal scope to the public I assume that's possible.

Thank you.

[noise] once again, if he would like to ask your question. Please press Star then one.

All your questions you May press star it's too.

And ladies and gentlemen at this time is showing no additional questions I'd like to turn the conference call back over to management for any closing remarks.

Thank you all for joining US today, if you have any further questions. Please do not sensitive to contact that same store so much bye.

Ladies and gentlemen, what that will conclude today's conference call with you. Thank you for attending you may now disconnect your lines.

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