Cheetah Mobile Q2 2024: AI and Robotics Fuel Growth

Cheetah Mobile Announces Q2 2024 Financial Results

Cheetah Mobile Inc. (NYSE: CMCM), a leading China-based IT company, has released its unaudited financial results for the second quarter of 2024. The company continues to focus on artificial intelligence (AI) and robotics to drive growth, especially in service robots.

Strong Revenue Growth Driven by AI and Robotics

In Q2 2024, Cheetah Mobile achieved a 12.3% year-over-year revenue growth, reaching RMB187.4 million (US$25.8 million). This growth was driven by the company's AI and robotics segments, which accounted for 40% of the total revenue. Cheetah Mobile’s service robotics business, both domestically and internationally, is becoming a significant growth driver.

Internet Business Performance Remains Stable

Revenues from the company’s internet business remained flat compared to the same period last year. In Q2 2024, internet business contributed RMB113.7 million (US$15.7 million), or 60.7% of total revenues. However, its share of overall revenues dropped from 69.1% last year, reflecting the company's growing reliance on AI and robotics.

AI and Robotics Revenue Increases Significantly

Revenue from AI and other segments grew by 42.8% year-over-year, reaching RMB73.7 million (US$10.1 million). This increase was largely due to the growing demand for Cheetah Mobile’s service robots. The acquisition of a controlling stake in Beijing OrionStar also contributed to this growth. AI and other segments now account for 39.3% of the company's total revenue, up from 30.9% in the same period last year.

Operating Loss and Strategic Investments

Cheetah Mobile reported an operating loss of RMB77.5 million (US$10.7 million) for Q2 2024, which is higher than the RMB65.6 million loss from the same period last year. Non-GAAP operating loss stood at RMB62.5 million (US$8.6 million). The increase in losses was attributed to investments in AI and robotics, particularly in enhancing the product experience for service robots.

Cost of Revenues Increases Due to Hardware Investments

The cost of revenues increased by 15.2% year-over-year to RMB65.9 million (US$9.1 million). This rise was mainly due to higher hardware costs associated with the service robotics business. Non-GAAP cost of revenues also increased to RMB65.5 million (US$9.0 million).

Research and Development Expenses Rise

Cheetah Mobile’s R&D expenses grew by 14.5%, reaching RMB54.3 million (US$7.5 million). This increase was mainly due to the amortization of intangible assets and personnel expenses following the acquisition of Beijing OrionStar. Non-GAAP R&D expenses rose to RMB48.0 million (US$6.6 million).

Selling and Marketing Expenses Surge

Selling and marketing expenses saw a 17.3% year-over-year increase, amounting to RMB73.4 million (US$10.1 million). This was driven by increased marketing costs for internet business products and a rise in personnel costs. Non-GAAP selling and marketing expenses were RMB72.8 million (US$10.0 million).

Administrative Expenses Reflect Personnel Growth

General and administrative expenses increased by 8.0% to RMB71.6 million (US$9.9 million), primarily due to higher personnel expenses. Following the acquisition of Beijing OrionStar, Cheetah Mobile expanded its G&A team. Non-GAAP general and administrative expenses increased by 26.9% to RMB63.8 million (US$8.8 million).

Strong Cash Flow and Investments

Despite the increase in operating losses, Cheetah Mobile generated RMB218 million (US$30.0 million) in cash from operations during Q2 2024. As of June 30, 2024, the company held cash and short-term investments totaling RMB1,973.0 million (US$271.5 million). Long-term investments stood at RMB866.9 million (US$119.3 million).

Strategic Focus on AI and Robotics

Cheetah Mobile continues to invest in AI and service robots, focusing on product innovation, expanding use cases, and increasing its global presence. The company aims for high-quality, long-term growth rather than pursuing short-term gains. Its team, with expertise from the PC and mobile sectors, is committed to capturing opportunities in the AI and large language model (LLM) markets.

Conference Call Information

Cheetah Mobile will hold a conference call to discuss its Q2 2024 financial results on September 13th, 2024, at 7:00 a.m. Eastern Time (7:00 p.m. Beijing Time).

Participants can join the call using the following details:

• International Dial-In: 1-412-317-6061
• U.S. Toll-Free: 1-888-317-6003
• Mainland China Toll-Free: 4001-206115
• Hong Kong Toll-Free: 800-963976
• Conference ID: 3980144

Accessing the English Translation

Listeners may access the English translation of the call using these details:

• International Dial-In: 1-412-317-6061
• U.S. Toll-Free: 1-888-317-6003
• Mainland China Toll-Free: 4001-206115
• Hong Kong Toll-Free: 800-963976
• Conference ID: 7908950

Conclusion

Cheetah Mobile's focus on AI and robotics has driven revenue growth despite continued operating losses. As the company increases its global footprint in the service robotics sector, its commitment to innovation and operational efficiency positions it for long-term success. With a clear strategy to expand its AI-driven products and services, Cheetah Mobile aims to solidify its position in the global AI market.

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