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CMCM Cheetah Mobile

Participants
Sheng Fu Chairman and Chief Executive Officer
Sheryl Zhang Investor Relations Director
Thomas Ren Chief Financial Officer
Melody Chan Jefferies
Call transcript
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Operator

Good day, and welcome to the Cheetah Mobile Third Quarter 2021 Conference Call. All participants will be in a listen-only mode. 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 Sheryl Zhang, Investor Relations Director of Cheetah Mobile. ma'am. ahead, go Please

Sheryl Zhang

Welcome With Mobile Sheng us and CFO. and operator. earnings Fu, quarter conference CEO, Ren, Thomas call. today Mr. to you third Cheetah XXXX Chairman Thank are Mr.

we management's will Following remarks, conduct Q&A session. the prepared

conference I to to will Before Safe over in Fu. At make call will apply forward-looking Harbor which turn call conference time, the to we statements. release, refer Fu. our CEO, earnings now today, our statements like Mr. I go also begin, Please the would you now our as to this we Sheng ahead,

Sheng Fu

Thank the Mobile’s consistent revenue XXXX, Hello you, Cheetah million. with RMBXXX Sheryl. everyone. third quarter was guidance, In our previous of

diversified we users percentage our of to revenues membership a subscription. the we business internal For states and overall increased [ph] platform, been model In our our our service quarters huge more of through our internet, a business present to continue high further than our The transform The service. our level membership internet In products we after well as a the has our renewal packed platform advertising the for rates, members fixed the members plus and both right And The user [Indiscernible] -- include from [ph] more a double-digit planned. optimization penny privilege. growth. five enhanced as single as general mobile kept numbers regular interference of check increased. external challenges the business have business, business of from advertising to we model consecutively.

Companies, slowed and due real Baidu optimistic in some advertising and are has very about China reasons regulation estate, the passed our advertising to some COVID-XX. Tencent now However, tower quarters. such sectors uncertainly business. supervision to facing as on is the and been impact including in other not Garment coming globally, education, down have advertising

companies big business related also headwinds this factors. also iOS such from factors faced overseas, of Our the COVID of the reflects quarter first and for change as outlook advertising Facebook, Macroeconomic XX.

agency been might be a our and very in clients revenues factored advertising rare adversely this guidance. has overseas impact. a affected, been business base inevitably in our Our from service well is due the explore service as is for news global March Good quarter and also to This fourth markets cloud this [ph] as which expanding quarter, growing quarter try service. has the categories in price overseas demand to this

about We future growth. are opportunistic very its

malls, robots AI for For and our shopping coupon-selling the [Indiscernible]. up row. applied has We several marketing from months been in online business, revenue a offline GMU and marketing, strategies both

our have data review malls some use more more register robots third has GMV XX,XXX and deployed than can online, gyms, XXXX sale, another more to country. At milestone. the coupons over for sale, more sell coupon Machines end then can Chando’s all Currently, professional the of the program. than shopping also XXX of achieved and the weekend analyze. October, in to mini XXs than more XXXXs platform own we in coupons merchants of Program, than Chando well in at Mini as in XX maze use Chando displayed than choose we robots Customers community our their our network list opportunities as We of some cities robots through this platforms. party mall from local our other WeChat shopping favorite

robots as business business widely created the the and we from Generally typically. has customers. competition by shopping global -- the cloud been the were business welcomed new mall, merchants more such business, speaking, this our service business, membership gradually have and it For revenue more and coupon-selling

the faced some cost business expense. and advertising coming from related we quarter, revenues have challenges While in for

comes still control our will we in has of and shareholders. quarters, greatly strict efficiency interest Our maximize continue the investment been the past this control and upon expense our as to efficiency to due operational our cost to improved operational the

XXXX grow that, rows and that the through XX, with they The Ren strategies us our million Thomas was our call issue I state to September position the to capital focus of now reserves [Indiscernible] as investments on our US$XXX around long cash Additional about financial to results. will With believe. go USD$XXX million. term and equity detail of the CFO quarter our the turn third

Thomas Ren

everyone. Thank Thank joining And today. you hello, all Sheng. you, for us

note our unless in key are otherwise, through stated I money terms. will Now, financial RMB Please amounts all that walk you highlights.

a and the As representing reasons revenue revenues are our into range mentioned quarter quarter-over-quarter now within total guidance. behind XX% me year-over-year was Sheng and of just in the of explain other previous decrease the changes, The down the of and revenues break of Internet a XXXX, sectors. let RMBXXX our To decrease our million, third X%. AI

mall in in from the global AI reclassification shopping our change Company's and quarters. streamlining increase. quarter, increased services, increased was selling Revenues cost quarter be based As the that overseas business in decline segment increase now in this business due advertising meeting and to other representing coupon business a a the result efforts from coupon was primarily company's confirm efforts second and company's the drill the occurred agency Overseas promotional assists a quarter. created company's RMBXX business the to X% year-over-year in year-over-year, from XXXX The change the event on to XX% products. on promotional from XX% amendment advertising decrease quarter-over-quarter gaming-related the The as performance. The cloud shopping no was services due between company's diminish on-going this sales quarter as the this pieces. temporarily Revenues attributable was RMBXXX advertising company's business, of quarter. to advertising events, this company by were others launch segments of segments. has the year-over-year the the internet into segment company's of of to because due Consequently, internet in strategic mall retrospectively quarterly past synergies XXXX the related year-over-year from business mainly and revenue and Revenues increase XX% and well million to others assesses the to revenue overseas related in the as planned AI such global of this was at includes revised the to selling from a the a segment global our information services. segment The drop the and million decrease way realigned company quarter-over-quarter the of change robots cloud hardware agency platforms, which our segments advertisements The the and business. services, AI presentation some third quarter-over-quarter business. agency

our to will the results expenses. of Turning expenses. The our to help better stock-based the The costs results non-cash operating non-GAAP items. measures of will effect compensation non-GAAP discussion excludes which following performance, of present context basis, without and us in use of be this

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

RMBXX quarter. Our XXXX same period RMBXXX in million compared quarter previous of RMBXX with year, in the operating million the of and million third loss was last in the

previous to last by of million gaming RMBXX year-over-year Cost of revenue. quarter third to negative third the RMBXX year, RMBXXX.X Our was in Research The with the by million year-over-year was spending quarter. and year-over-year, decreased quarter in in primarily and period quarter by XXXX. decrease in of increase RMBXX decrease due was the million compared XXXX past the AI due in the same development of related to the over decreased XXXX. quarter-over-quarter a certain million third the and related million was quarters. revenue increased increased to XX% in quarter-over-quarter adjusted negative decreased quarter-over-quarter from deconsolidation The expenses XX% business. RMBXX.X negative of EBITDA XX% business XX% increased The

was of research grants and attributable mainly to streamlining been to quarter-over-quarter development year-over-year, Our quarter flat. This getting decrease and expenses because X% in RMBXX million to was expenses quarter. the of XXXX. the our XX% the of to mainly Selling and and The in by change strategic The quarter effective while we and was in RMBXX and the reduction XX decrease investment expense quarter-over-quarter business expenses the control. XX% to by costs, decreased decrease year-over-year government the of General quarter-over-quarter this due XX% million for XXXX. and third promotion due the less our second incurred third our the decreased mostly business marketing promotional in [Ph] has quarter-over-quarter in events the our year-over-year, of incremental was Administrative quarter. streamlining

our sheet. to balance me let turn Now,

strong cash expect currently strategic our our million of term and between million million. US$XXX guidance, term short million. and XX, plans for had us restricted equity of to total be US$XXX we ensures term investments we balance revenue and investments cash XXXX, achieve sheet and follow long fourth development revenues cash As RMBXXX our goals. RMBXXX September quarter And to of long This equivalents, and

you. As Sheng concludes Operator, global uncertainty just and prepared headwinds forecast to views Thank preliminary and has quarter advertising the note guidance in business. take our subject our reflected due to is we change. face Please reflects in we our current questions. the mentioned, ready the this to This fourth are remarks. now

Operator

from When of will And [Operator as call. question be first, Chinese poll questions. in go online Melody session. of everyone question-and-answer in Please please for the for the the repeat now on first Instructions] your Chan the then comes ahead. question convenience asking question begin English question, your today’s We Please state Jefferies. we

Melody Chan

is business. [Foreign Language] question. My Let first the me advertising on translate my question

the macro on also you. we in about is So the impact? we AI outlook Thank how the business think about should XXXX? regulation the AI business, uncertainty the witness? second and impact how And should And question my think the COVID of

Thomas Ren

Okay, second Sheng will answer first Melody. for him. your will your question I thank and and I Mr. answer question, will translate you,

I I estate COVID can we and and and answer we uncertainty. the been In our education, regulations, some And now due by Yes, of think down the think uncertainty government China, regarding market COVID uncertainty reasons. first, weakness advertising have question, COVID-XX, will is your our And as such it's see the to affect business. firstly, travel, slowed supervision advertising some would weakness. market business. impact also the So real facing globally, sectors, also briefly some

impact So the business. been on advertising has passed to

reflect outlook these related internet also market big about from facing overseas, coming optimistic are in there light quarters. advertising macroeconomic the the is overseas some COVID fourth iOS not very the And from companies they are bigger our on and advertising of platform negative So XX, as we change mentioned, And Facebook, factors. business quarter company like also, the also for factors. the headwinds for

multi-quarters. also also And guidance. business, been for has our overseas by shops in it or there some So agency robot adversely cities advertising were might and also some It shopping this only stop. fourth factored cities, were our restaurants business affected. our be the coupon-selling quarter did, our And also business closed these is but This is areas. impacts impacted negative in in from limited mall controllable was certain in some impact

been So in significant by already impact think as company’s the and us, has we Information on mentioned didn't regulations see impact for have the shopping on seriously. the following involves related see, financial also some Chinese And regulations we and in a go starting mall this. This reflected regulation been we laws about busienss. expect Yes, departments strict could your And also supervision Law. question our also also, the results. slow related also And our I Personal internally, earlier, internet the advertising negative and Protection our some business. government impact down we advertising

on We with the we are as we also coupon-selling the updated focusing We confident of restructure platforms as cloud we business. this new about we shopping are and our display internal also such advertisements we government mentioned, on global business better information. to new mall collect regulations. how some service, user’s now how comply and can the adjusted conducted goals membership, And

about we question. business. generally your speaking, and comply the same strategies made ensure overall answers we business Hope So also growth at of this to our time have regulation strictly the the

Sheng Fu

Language] [Foreign

Thomas Ren

let part. Okay, this translate me

customers or recently realized we the XX,XXX mall of have the We the all dozens the across by deployed information merchants they of talking like robots robots inquiring service to that shopping to over are cities malls, already used those in So provided the service shopping merchants. in China. in that

Sheng Fu

[Foreign Language]

Thomas Ren

focus is found found [Ph] customers location robots, now the our service we to when for the our when customer with that already service the with or Because used communicating be you could the interaction recommend we acceptable. customers asking the we robots,

Sheng Fu

Language] [Foreign

Thomas Ren

mall all this restaurants, traffic. shopping And merchants some the especially to the that in in coupons to need they malls, of their the its shopping attract deploy also

Sheng Fu

[Foreign Language]

Thomas Ren

shopping the restaurant. is customer mall times, in And didn't have for the when they targeted the most of clear

they because recommend go in the So to sometimes we restaurants might -- recommend. coupons of it be might

Sheng Fu

Language] [Foreign

Thomas Ren

are promoting parties the three mini demands, program called Combining we the [Indiscernible]

Sheng Fu

Language] [Foreign

Thomas Ren

the our merchants When when can they restaurant firstly coupons the our member through the a the with customers mini mini to program. the electronic need to who so of interacts discounts. our they then to -- And program our program. they robots, enjoy or customer the become they coupons bring to register the And then pay

Sheng Fu

[Foreign Language]

Thomas Ren

promoting So our can successfully service user as offline around shopping online traffic mini robots our the into traffic malls, we program. online convert the by the of or

Sheng Fu

[Foreign Language]

Thomas Ren

we the we traffic of offline user traffic advantage our -- business As apply can combine this with the can model, to internet base. business model

Sheng Fu

Language] [Foreign

Thomas Ren

mini Yes, program. we the have in provided over XXXX our coupons

Sheng Fu

Language] [Foreign

Thomas Ren

combination three a this could we We fast business it’s mentioned as model grow be demands. parties believe because of just

Sheng Fu

Language] [Foreign

Thomas Ren

business model internet our the consuming previous from payment procedures. a This into traditional could and pure advertisement also the convert

Sheng Fu

[Foreign Language]

Thomas Ren

also could of be future We our coupons. source the another can commercial selling This by income. earn commissions

Sheng Fu

Language] [Foreign

Thomas Ren

basically This business our model. robots is service shopping mall

Operator

[Foreign Language]

Sheng Fu

Language] [Foreign

Thomas Ren

Melody. you, Thank

Operator

Ladies And back no – management closing to and there gentlemen. our are the remarks. for questions hand time, [Operator like at further conference to as I'd Instructions] this

Sheryl Zhang

for today. us joining operator. Thank you you, Thank all

any Thank have hesitate you questions, you. to Bye. contact If please us. don't

Operator

today's this ladies presentation. attending for call. concludes all you gentlemen, conference Thank And and today's

and lines day. your disconnect now may a You have wonderful