Q3 2020 Cheetah Mobile Inc Earnings Call
Please note this event is being recorded.
I would now like the kind of the conference over to Howard The Investor Relations Director of Cheetah Mobile. Please go ahead ma'am.
Thank you operator, welcome to Cheetah mobile the quarter 2020, <unk> earnings Conference call Lisa Today, Our company Chairman and CEO Mr. from shell.
The company the Apple Mr of public yet.
Following managements prepared remarks, well come back the Q and a session before the again I refer you to the Safe Harbor statement or is the call early for me, which also applied for a couple of calls today I won't make for work themselves day I. This time I would now like to try the conference call all work.
For chairman and CEO Mr. from Kelly. Please go ahead.
Thank you Hello.
Hello, everybody.
Total revenue.
The key to our revenue guidance, we still face challenges in growing all the revenue.
Total revenue decreased by 16% year over year and the.
What percentage of quarter to quarter.
Two of the 335 media in the sort of click over 2000 a day.
Moving due to the decline because of the Oh, what the season.
What do you celebrate the.
Some stuff that you know what these markets Facebook and Google <unk> ex logic.
Roger.
The the need for popular stopped walking with us as a result, we look to the can you get the channel so quite users of the Motorparts tropical what's the.
Well, it's always the called the 10 day comedy Picky. The weighted this book kind of Google All part of the Zimbra the wishes to the presumed.
Oh, the tourism all the walk.
The other thought.
The book to Bill.
The walk at least the <unk>.
Moving to the international market, which we don't expect the.
We expect to zone.
The resumed our cooperation in the near future.
To cope with the headwinds.
We have taken several mothers day.
And I've seen some initial results at the totally.
<unk>.
We have a streamline our outreach operations and of course, the caught all of car of the pets.
The results non-GAAP operating loss narrowed the to other people.
And you of the Nike media.
Media from 200 to put the media country to media in the same period same pure pure debt last year.
And on the 100, the suddenly the three media in the previous cash.
Uh huh.
Our operating loss for the quarter also include the sort of one Oh I thought the stop the drop to you for that.
So we expect to continue reduce reducing our operating loss for the fourth quarter.
Good day.
Revenue from Pcs Pcs and the mobile your total per adopt all of whom buckets, that's the whole <unk> the.
The line.
Oh, the <unk> piece of the business has a chunk of book from I do my part of the mobile to our membership the.
Subscription model the.
The words of whatever we can.
The two new to the.
Like the fight our premium content and the Soviet.
Richard <unk>.
Which Joe.
The increase in paying user accounts and the subscription revenue.
As a result, they the PC revenue from membership subscription fees increased the for [laughter] hi.
Hi.
Yes for one year and up for Q2 percentage hotel the <unk> use of quota.
They do you remember the current should be already accounts for about 15.
Percentage of out there the PC revenue.
Which that was true kids.
Our kids. The B then you had the transport from Uh Huh.
At the blood typing model to our membership subscription model.
Besides.
Our mobile you've kind of you've heard about using it for you all.
All of whom buckets.
Resumed the summed up quarter over quarter growth.
In Q3, driven by improved the CPM revenue from mobile your total production business Yeah. All the whole market grew by 7% of course, all the <unk> in Q3.
So well.
Where do you suppose the can be the needs and that's it.
He said.
That's the use of quota.
The resulting result of net of cash gain of the U.S.
Couldn't do you want the media.
Total up into the second half of the Twentys.
Oh 2000, the punter.
Come off the apparel watch more details about of the deal you get the pot.
I wouldn't like to other sites, but we will continue to coverage and the dealers the shareholder value in the future.
Today, we have already returned to abolish the U.S.
The 300 immediate dollar.
<unk> shareholder of.
All of the the shareholder.
We still have a.
John Palates change to the approach our ambition I think in the back from a recent.
Recently code the mall, a Chinese online education kind of problem, which focused on the teaching programming to try to children.
Right, so the new drunk well the quite nicely true mobile use I'm Joel you must show from code them all the both of these round of.
For nicely <unk> Cheetah mobile.
What about the comparisons of.
The true.
Yeah put them up.
Well, we continue to focus our resources.
The <unk> robotics be the need to build our ecosystem and the you may actually built our non come growth.
The good though we are widening back to company average or the stock we have the about the put oh, yeah, I relate to the GAAP, but robotics, yeah increased the number of you use the cases.
Use of <unk>.
The recent outbreak of.
Oh wait out toward the Nike had had the also help cost you expect the usage of our goal, but the bread box and the solution.
Well I'll highlight is our GAAP GAAP.
GAAP.
Oh not go but.
You buy the coach you show people per.
For the our knowledge.
Oh, no I would think you buy the poach moving about one so.
I wasn't showcase for across.
35 cities in China.
As the more yields or yields our robot.
Showcase for we have begun to build the pen, Kentucky, we tended to be the needs the modal.
Meanwhile, we found that the hotel you China had had increased increasing work comp do you worry that I never stops you robot.
Oh, we quickly the spot responded I, let you benefit would come from a couple.
At the moment.
That's the most of the drop off for.
<unk> hotel customer in the fourth quarter.
Our current should we be Georgia Dot you.
Get the new built out what is the talk to you Jeff.
But youre talking about the.
And the purview of <unk> and the true up mobile build use okay for the pop from or not.
Most of the elite.
Hey, George spots robots had the being no.
No I mean straight price.
No.
For the Soviets.
The bought cone cash held by Beijing.
The.
Yes.
You mean.
I mean, you say per psyches, and the pack and knowledge of <unk> competition Commission.
For the June 2000, the punch you too Oh, the impact of games.
We wall for for put the price and the what's it going to price this call of <unk>.
Looking to the fourth quarter of the 2000 the pumping we currently expect.
We expect total revenue to be between on the 200 of study media and the RMB 218 media the.
For the of course, the decreases were due to dispose of the that's the.
On the business.
Average told us the appropriate real word for more detailed.
At the this pushing the.
Oh, you for what you did he brought about by the Soviets in particular, you beat the PC business, but primarily driver of our revenue driver.
Driving by the British of using our PC revenue, though the resume the crunch control of the growth sequential growth in Q4.
The other hedge we work continue to cut our costs and the your kind of.
And the next <unk>, our operating losses in both year over year end of quarter over quarter basis.
Before I hand the.
Oh for to the core of the core to our simple I would like to other sites the.
The other why wait the which well.
The place the challenges we face it it is not the first time, that's true the mobile income person.
Oh.
Favorable outside the environments like we did with Oh, Hey.
Sure Jackie.
The neighbor opt for the old and you feel true for Cheetah mobile.
That's well in the Alton.
On the call to our CFO of Thomas the to go through the details of our sort of caught her financial results.
Thank you for the good day, everybody. Thank you all put running as of today.
No I'd be a walk you through our financial results.
Please note that I'm not stated other high Oh money among our use of RMB terms.
Oh the stated in previous calls for like me on Monday, the the share incentive plan on September 30, or 20 Nike.
The result, we no longer hold the majority voting power. He left for me and have started to Deconsolidate Love Me. The financial result, since the fourth quarter of 2019.
Two part of her present, our for natural resolved the.
The also provide year over year comparison ex glued, Inc. The impact of the deconsolidation of knock me.
Total revenue for 365 moving in the quarter.
Exceeding the high end of our guidance.
Representing a year over year decrease of 60% and the sequential decline of 7%.
Excluding the impact of from the deconsolidation of lack of me total revenue decreased.
By 47% year over year during the quarter the.
The decrease was primarily due to the suspension of our collaborations with Google see the Fabry Twentytwenty.
By business segment.
Revenue from utility products and the related services decreased by 47% year over year, and the 5% quarter over quarter to 186 million in the quarter.
Representing 51% of our total revenue in the quarter.
Piece, the revenue and the mobile utility products revenue in our home markets are stabilizing already contributing to 33% off of our total revenue in the quarter.
Revenue from our mobile games business for about 100, and the C. P. Eight of meeting you in the quarter, representing 43% of our total revenue in the quarter.
I saw the September 30 years of Twentytwenty the.
The company had to dispose of certain Pcs and the assets related to the gaming business in the overseas market.
In the third quarter of Twentytwenty the.
The is post the P. These are the asset that's the whole contributed approximately 27 per cent of our total revenue on the.
China reported operating losses.
That's the result for the fourth quarter of Twentytwenty the.
We expect revenue from the mobile games pieces to shrink significantly.
However, the expected revenues from PC and mobile your tidied product in our home market to remain stable and the account for the vast majority of our total revenue.
[noise] kind of for our fourth quarter revenue guidance you currently expect total revenue.
Between RMB three I've got 230 million.
RMB 200 <unk>.
18 million. Please note this forecast reflects our current and preliminary view.
On the subject to change.
Turning to our third quarter of Twentytwenty call an expensive.
The following discussion of resolve the LP Oh, a non-GAAP basis.
Which exclude stock based compensation expenses and the goodwill impairment.
The use of non-GAAP measures. The this income tax bill Helpouts therapies that the.
The results of our operating performance.
Dissolved the fact of non cash items.
For financial information presented in accordance with the U.S. GAAP. Please refer to our earnings release.
In the past several quarter, we continue to streamline our operations and the cop our call an expensive.
In the third quarter of Twentytwenty total.
Total costs and expenses.
Decreased by 58% year over year and.
9% quarter over quarter to 480 about of meeting.
Excluding the impact of lack of me, our total cost and the expenses the.
Quinn.
38% year over year.
I thought resolved the.
Gross margin expanded to safety.
69% in the third quarter of Twentytwenty.
From 60% in the same period last year.
Operating loss for.
The deal to 100, and the night immunity in the quarter.
From 222 million in the same period last year, and the 100 and the 33 million in the previous quarter.
During the quarter, we dispose of some of our business and the other related to the gaming is the in overseas market.
The other disposal boosted our wording and the helped us to create shareholder value in the.
The third quarter of Twentytwenty, our net income attributable to of Cheetah mobile share holders who.
Grew to 200, and the 66 million from 240 for meeting in the previous quarter.
The importantly, our balance sheet remained strong.
So the number 30 years of Twentytwenty behind the cash and cash equivalent.
Restricted cash and short on the investment bank.
Bob you what the other 235 million.
On the long per property investment off the U.S. dollar 332 minutes.
Our strong balance sheet gives us the confidence to continue to you back in the iden related beat the for our future.
This concludes our prepared remarks, operator, we're now ready for take question. Thank you.
Thank you.
We will now begin the question answer session to ask the question you May Press Star then one on your Touchtone phone you are you seeing the speakerphone. Please pick up your handset before pressing the keys to withdraw your question. Please press Star then two when asking the questions. Please state your question in Chinese first and immediately repeat.
For your question English for the convenience of everyone on the call.
Our first question today comes from Thomas Chang with Jefferies. Please go ahead.
Oh, especially plenty channel.
But if you read the talent so all of the wouldn't teach well sure why the earning of union debt that one.
Well its only a finish line so.
It's on the line that's done and you got decent that's true.
Oh, I don't think true a the meeting the named Oh, Okay Oh.
Yes, I kind of thought I'd tell you is on the.
Claims management for picking my question.
My question is about each other and titrated, one Oh net.
And then if you can share about a goal do you about the east of the strength of course of bunch of satellites as well as of the competitive landscape I think it.
Oh, well I definitely that have come out of the see the.
Did you see our Yagi ended the about you don't show from kind of the you'll actually show my highlight the which I call well, that's the type of and the interest will let Jim Webb.
Nick the.
Hi, its actually will merely just to walk out of the dollar the total a woman she should or shouldn't be shut out of home channel and Chinese as operating a one.
One of the woman said she sees challenging share that's the good she's probably emotional cigarettes I assume the joshi jump onto for do you have on color on from call. It. So she got such a whole range of quota say debt when really the engine cash is that all the.
The Tom mentioned the cash huh.
Some of that went down the woman to see the assertion that she's the so you could see the change. The later day of the Chanel payable of the initial Cheetah true sure sure check Cutchet tickets unless you see the use of Dahlia once the war I share heightened dozens and dozens of them.
Yeah. The the simple merely me I think that elements of the yeah, but you're going to see a way to go.
I'd have to live within the though.
Yeah. Thanks, Yeah, Okay, let me translate.
<unk> for the fourth part of course or I'm, sorry. So indeed this year the your Twentytwenty for hot she the mobile I saw a difficult year, the especially after our product of the removed from Google and other than I thought you know before.
Our most of our utility revenue coming from overseas market.
But after the performed the second of Drachman.
Hi for me mentioned just now after the.
The organ removed from Google Google play the war no.
No the out for cutting.
Our Oh I first to the domestic market and the window unless the market all of a piece.
If the side of the already or.
The lead the ER.
Pivoting from all of them a tightening model two of the subscription model.
GAAP Savi I rely on the.
On the Luckily the products of the real now advertisement.
A lot of B pack.
Exactly but on the other what had been industry view or even the influenced by the.
Our partners significantly so of.
Do you think.
No the have improved.
Significantly as the.
Just talk and.
No piece the.
Mergeco.
Vertical markets.
It will not disappear allow for the the.
Uh huh.
The the thousands of you saw for mobile phone.
No because the the youth.
User base is still stabilizing our PC brown and the reside.
The as I had a slight increase.
So the thing that the year.
For our utility Pcs the cannot be getting some the increasing.
Oh the knick.
Jimmy I know you usually I wouldn't.
I think that you can get <unk>, that's for sure do it yourself out of you shouldn't get wish the handling tick the you'd mentioned some of the U.S., So bucking shop, especially given that some of the somehow though the the heck of a change out of the share of wondering about the go politically from quite a bit.
Yeah for the losses on price.
Hi students of the Yeah, we would say it's a good it's just it's okay, meaning that when the tone to the AD for for potentially of Leal from though.
Okay for.
For the the IP theater the specialty our.
Shopping more robotics it depends on the offline.
So due to the Cobi Nike and it was the fact that.
A little bit, but Uh huh.
But now I think the recovering from the Cobi 19 situation I know so the whole offline the traffic in the shopping mall. So I think there is still good channel in our shopping mall business model.
A decent let's see the kind of Todd what was the signature job that's true it's almost the job the woman clearly it's a good some of what timing it doesn't look from something that's a chinchilla bullshit.
The Dod challenging the boss they want mission of that's how the I should say that you've chosen bush of a hard about to the country and the yeah, Yeah 10 buttons for Chicago and see that's Arkansas.
Yeah for the Oh, the Greek or economic view, I'm, not Oh professional but.
For my friend of feel the of the thing for sure in China like the year.
The the the growth should be.
From the beating part of.
Globally and the no our strategy is focusing on the China market to focusing on our utility and the idea.
The time to do of great job in the you know the whole market.
So that the transition.
Yes exactly.
I'd sort of your question Thomas.
Thank you.
Thank you.
The next question comes from Vicky way with Citi. Please go ahead.
Let me tell line <unk> said, there's a lot of the well that you watch the fine yeah, I, yeah, well the Commsuite essentially one goes the thing that's true what kind of but yeah. Yeah, We'll fund the S. One she yeah.
Hello, guys from cheap shots the cycles of the 17 non sort of somebody.
Yeah.
Yeah, so eased in the mountains, but thanks for taking my question. My question is the about the investment.
Yes, its net investment so given the come to me that's not the pit to pay significant revenue from the yeah I think that's it for the future.
The management team called the investment needed for the I'd say from that and what that implies for the company cash balances in the meat true. Thank you.
The way I did see the your what you know what washout from Intel Huh. So do you not just true a woman confirms the the to show them. The tech what's your deal for the audience for the by eight does seem to see the other production from the shuttle. So you kind of tell me what you're seeing so you probably I'm not sure you'll use these oh.
Some of the other thing volume Jaime each of the diet books for who are the much of what is the the high initial cash all of the films of the able to hold true, but she got sick of having two minutes you should switch sitting shall EBIT fulfillment parents for the actual side of it you shouldn't take the I will catch up for that true Archie the leaching. The you may actually get what you like machine shops.
Of the shot of social Genco cool I don't share sort of hearing show us that you don't control it I see the such as the well Gee I should especially for them down.
Yeah.
Let me highlight I feel part of a problem. The I promise. So of course, the previously the outcome from both our eyes to see had to be a business revenue in the AD revenue.
So for the for the two day product to be used to have five.
Part of our named the she talked translate her which is Ah hey, I pace the interpretation device, but due to the situation of koby Nike and people don't travel the board so.
The east pardon me the old almost the spend there that for now and Oh so.
For the Oh Colby Nike in Q2 for power to be our sales beat the.
You cannot meet our customers due to some of travel.
Travel restrictions from.
Ah you talk to the.
It'll be the income to now I think we have seen some rebound of our cash.
In this quarter.
It was one of the shut in of course, all of that kind of that's for sure. He changed the whole do the thought that the so would you guess would of Oh.
Ah you share the food the Oh, how he had the judicial do session for us also.
Hi, after the recovery off of the Cobi 19 situation I think the market.
You are having a greater effect has for the low tax service lack of robotics services. So.
The effective for the industries of growing.
Yes, the big.
Okay, what was the actual the total purchases during the day.
The stop of bunch of the of coffee always with the so you should see the known to the total <unk> jose's of him what does the the terms of seek the couple of which just sort of how to take the.
Just had a feeling good books for sure the social.
Yeah, and Oh God.
Our investment in the AI it's.
Mostly come this off of R&D expenses, so after some function.
Functions for developed the the such the batsman may not be a continue.
You asked me the.
Hey, Nick.
Sorry, the joke I turned on the jump and you do you share kind of I'm sure does it the.
Critics of healthy on sheet switching the you should see the Tonight to the true I can't do.
Change until the day chip was on the so you want me to kind of cool for the woman some good to see the crucial feel Natasha.
You want the jewel in the city the UK would your share.
As the sound the seven day you good she should of how a woman day I think the total sounds true type of the say the we like you Danya true watch the mail wins.
I share when the you chiming in the actual really nicely indefinitely from zone indefinitely. The.
The the two of them show them.
Oh, the behind that price yet.
Yeah. So I I asked me mentioned just now.
In Q3, there is a.
Some of onetime.
Stop the restructuring expenses in Q3, so a lot from Q4 of the expected.
Our operating losses level could be improved a lot and as per hour.
Of commission, so I for such a trend.
Our balance sheet, the kind of the park our investment.
In the mid term and the also asked me about the explore the.
He said they should model for shopping more on the accounts that we mentioned I think the.
The ER you may expect some more growth.
From next year.
Okay. Just on the did you how Nick what would you look we only the woman say, hey, I should say the the that truly ocean what type of attention you from your should help the price. So that said she line of imaging gone seemed channel flow a bunch of dinning I should say is there something I am washes up with under the pencil I shipments the to the pool of shows that the u.
The the yeah, Yeah, Bob Texas thing you could kind of elements of that see the prison adaptable Tasha are actually from the yields will go the changing let's just see a woman who leads the the medium of bad to the tour.
For the chances are there to help.
And we will listen to the range.
Yeah, I think the yacht, we don't need to worry too much of our batsmen.
On the button on the bottom line.
You mentioned the market is recovering how quickly.
The including both of the whole kind of I know, it's one of the shopping more hog industry and also the Inc.
Flooring all of our business model.
And also on the other hand, along with our cost and expenses Karting.
You may see.
Our military improvement of our bottom line I know some of the have sufficient cash and the investments.
So I think I'll return the of two.
[music].
To make the odd.
The thing is off our service robotics are great to be our new growth engine.
Hi, This is ya.
Thank you.
Thank you.
As there are no further questions at this time I'd like to hand, the conference back to our management for closing remarks.
I. Thank you all for joining US today, if you have any for their question, we do not happen test of contact that thank you so much bye.
This conference has now concluded. Thank you for attending today's presentation you may now the.
Yeah.