Cheetah Mobile Announces Fourth Quarter 2015 and Fiscal Year 2015 Unaudited Financial Results and US$100 million Share Repurchase Program

Mar 16, 2016, 08:19 ET from Cheetah Mobile

BEIJING, March 16, 2016 /PRNewswire/ -- Cheetah Mobile Inc. (NYSE: CMCM) ("Cheetah Mobile" or the "Company"), a leading mobile internet company that provides mission critical applications to help make the internet and mobile experience speedier, simpler, and safer for users worldwide, today announced its unaudited financial results for the fourth quarter and fiscal year ended December 31, 2015.

Fourth Quarter 2015 Financial Highlights

  • Total revenues increased by 92.3% year over year and 12.3% quarter over quarter to RMB1,132.7 million (US$174.9 million).
  • Mobile revenues increased by 261.8% year over year and 14.4% quarter over quarter to RMB803.5 million (US$124.0 million), which was primarily driven by robust growth in mobile advertising revenues in both overseas and domestic markets. Mobile revenues accounted for 70.9% of total revenues. 
  • Overseas revenues[1] increased by 343.1% year over year and 14.6% quarter over quarter to RMB616.2 million (US$95.1 million), which was driven by a continued increase in mobile advertising revenues in overseas markets. Overseas revenues accounted for 54.4% of total revenues and 76.7% of mobile revenues.
  • Non-GAAP operating profit increased by 66.4% year over year and 7.3% quarter over quarter to RMB175.2 million (US$27.0 million).
  • Non-GAAP net income attributable to Cheetah Mobile shareholders increased by 88.1% year over year and 8.5% quarter over quarter to RMB155.7 million (US$24.0 million).

Fourth Quarter 2015 Key Operating Metrics

  • Mobile monthly active users ("Mobile MAUs") increased by 68 million quarter over quarter to 635 million in December 2015. Mobile MAUs from overseas markets were 78.6% of total mobile MAUs in December 2015.
  • Total global mobile user installations increased by 399 million quarter over quarter to 2,341 million as of December 31, 2015.

Fiscal Year 2015 Financial Highlights

  • Total revenues increased by 108.9% year over year to RMB3,684.4 million (US$568.8 million).
  • Mobile revenues increased by 423.2% year over year to RMB2,433.2 million (US$375.6 million). Mobile revenues accounted for 66.0% of total revenues.  
  • Overseas revenues increased by 730.0% year over year to RMB1,841.5 million (US$284.3 million). Overseas revenues accounted for 50.0% of total revenues and 75.7% of mobile revenues.
  • Non-GAAP operating profit increased by 104.1% year over year to RMB522.3 million (US$80.6 million).
  • Non-GAAP net income attributable to Cheetah Mobile shareholders increased by 104.0% year over year to RMB492.0 million (US$76.0 million).

Mr. Sheng Fu, Cheetah Mobile's Chief Executive Officer, stated, "We continued to achieve our core strategic goals in 2015 in terms of overseas user expansion and better monetization of our growing global mobile user base.  By December 2015, we had expanded our user base to over 635 million mobile users globally with 79% of them located outside of China.  Cheetah Mobile remained the third largest global publisher in Google Play's non-game category, with four of its mobile apps, namely Clean Master, CM Security, Photo Grid and CM Lockers, ranked among the top 40 most downloaded non-game apps on the Google Play App store in December.  Looking forward, we remain firmly committed to strengthening our mobile and global businesses, and building Cheetah Mobile into one of the leading mobile platforms globally.  We will continue to leverage our mission critical apps as the main entry point to acquire users, build a content platform to enhance user engagement, and strengthen our strong data analytics capabilities to fortify our strategic advantage."   

Mr. Andy Yeung, Cheetah Mobile's Chief Financial Officer, commented, "Robust mobile and overseas performances once again drove our top-line growth in the quarter.  Total revenues grew by 92% year over year and 12% quarter over quarter to RMB1,133 million in the fourth quarter of 2015.  On the mobile monetization side, mobile revenues climbed to 71% of our total revenues in the fourth quarter, up from 38% in the fourth quarter of 2014.  Overseas revenues contributed to 77% of our mobile revenues and 54% of our total revenues in the fourth quarter. Our strong top-line growth and execution yielded better-than-expected profitability in the quarter, as evidenced by the new records we set for non-GAAP operating profit and non-GAAP net income in the quarter.  Our board of directors has authorized the repurchase of up to US$100 million worth of our shares or ADSs. The board's decision reflects our belief that our shares are presently undervalued and demonstrates our confidence in the long-term outlook for our business.  Looking forward, we will stay focused on building a profitable and sustainable growth model over the long-term, as well as implementing a more balanced approach when looking at our key priorities, such as user acquisition, user engagement, revenue growth and profitability."

Fourth Quarter 2015 Financial Results

REVENUES

Total revenues for the fourth quarter of 2015 increased by 92.3% to RMB1,132.7 million (US$174.9 million) from RMB588.9 million in the prior year period. This increase was mainly driven by the Company's organic business growth, which was attributable to the Company's growing global mobile user base and substantial improvements in mobile monetization, especially in overseas markets. 

  • Revenues from online marketing services increased by 131.2% to RMB1,031.4 million (US$159.2 million) in the fourth quarter of 2015 from RMB446.1 million in the prior year period. Mobile advertising revenues represented approximately 74% of online marketing revenues in the quarter, which increased from approximately 38% of online marketing revenues in the prior year period. The increase in mobile advertising revenues was driven by the Company's growing global mobile user base, and strong demand from advertisers for the Company's mobile advertising services worldwide.  
  • Revenues from internet value added services ("IVAS") decreased by 34.8% to RMB89.3 million (US$13.8 million) in the fourth quarter of 2015 from RMB137.0 million in the prior year period. The year over year decrease was primarily due to the temporary suspension of our online lottery operation in response to regulatory changes in China, and moderating trends in web games business in China.   
  • Revenues from internet security services and others increased by 106.3% to RMB12.0 million (US$1.8 million) in the fourth quarter of 2015 from RMB5.8 million in the prior year period. This increase was primarily due to the sales of the Company's air purifier product.

By platform, revenues generated from mobile business increased by 261.8% to RMB803.5 million (US$124.0 million) from RMB222.1 million in the prior year period. This increase was primarily driven by the Company's growing global mobile user base, and the increasing popularity of the Company's mobile marketing services in overseas and domestic markets. 

By region, revenues generated from overseas markets increased by 343.1% to RMB616.2 million (US$95.1 million) from RMB139.1 million in the prior year period. This increase was primarily due to continued growth of the Company's overseas mobile user base, and rapid growth of the Company's mobile advertising revenues in the overseas markets.

COST OF REVENUES AND GROSS PROFIT

Cost of revenues increased by 110.7% to RMB297.0 million (US$45.8 million) in the fourth quarter of 2015 from RMB141.0 million in the prior year period. The increase in cost of revenues was mainly due to higher traffic acquisition costs associated with the Cheetah Mobile ad platform business, and higher bandwidth and internet data center (IDC) costs associated with increased user traffic worldwide and data analytics.

Gross profit increased by 86.6% to RMB835.7 million (US$129.0 million) in the fourth quarter of 2015 from RMB447.9 million in the prior year period.

OPERATING INCOME AND EXPENSES

Total operating income and expenses for the fourth quarter of 2015 increased by 93.1% to RMB759.1 million (US$117.2 million) from RMB393.2 million in the prior year period. Total non-GAAP operating income and expenses, increased by 91.9% to RMB658.9 million (US$101.7 million) from RMB343.3 million in the prior year period.

  • Research and development expenses increased by 73.5% to RMB208.4 million (US$32.2 million) from RMB120.1 million in the prior year period. The increase was primarily due to higher share-based compensation and personnel-related costs. Non-GAAP research and development expenses, which exclude share-based compensation expenses, increased by 51.6% to RMB159.6 million (US$24.6 million) from RMB105.3 million in the prior year period.
  • Selling and marketing expenses increased by 174.6% to RMB506.0 million (US$78.1 million) from RMB184.3 million in the prior year period. The increase was primarily due to the spending on promotional activities for the Company's mobile business, including the global promotional activities associated with the launch of a new mobile game. Non-GAAP selling and marketing expenses, which exclude share-based compensation expenses, increased by 174.8% to RMB500.3 million (US$77.2 million) from RMB182.0 million in the prior year period.
  • General and administrative expenses increased by 14.1% to RMB91.9 million (US$14.2 million) from RMB80.5 million in the prior year period. The year-over-year growth was primarily due to an increase in staff benefits, share-based compensation expenses and expenses associated with increased headcount, which was offset by a decrease in professional services fees. Non-GAAP general and administrative expenses, which exclude share-based compensation expenses, decreased by 3.0% to RMB46.2 million (US$7.1 million) from RMB47.7 million in the prior year period. The decrease was primarily due to a decline in professional services fees.
  • The Company recognized an impairment loss of goodwill and intangible assets of RMB12.5 million (US$1.9 million) for the fourth quarter of 2015, which was primarily associated with the online lottery business. The online lottery business was temporarily suspended in response to regulatory changes in China.
  • Other operating income was RMB59.7 million (US$9.2 million) for the fourth quarter 2015, which primarily consisted of government grants, subsidies and financial incentives that the Company received for its operations that fell outside the scope of R&D project subsidies.

Operating profit increased by 40.0% year over year to RMB76.6 million (US$11.8 million) from RMB54.7 million in the prior year period.

Non-GAAP operating profit increased by 66.4% to RMB175.2 million (US$27.0 million) in the fourth quarter of 2015 from RMB105.3 million in the prior year period.

For the fourth quarter of 2015, share-based compensation expenses were RMB98.5 million (US$15.2 million), compared to RMB50.6 million in the prior year period.

NET INCOME ATTRIBUTABLE TO CHEETAH MOBILE SHAREHOLDERS

Net income attributable to Cheetah Mobile shareholders increased by 77.6% to RMB57.1 million (US$8.8 million) in the fourth quarter of 2015 from RMB32.2 million in the prior year period.

Non-GAAP net income attributable to Cheetah Mobile shareholders increased by 88.1% to RMB155.7 million (US$24.0 million) from RMB82.7 million in the prior year period.

NET INCOME PER ADS

Diluted earnings per ADS in the fourth quarter of 2015 increased by 73.9% to RMB0.40 (US$0.06) from RMB0.23 in the prior year period.

Non-GAAP diluted earnings per ADS in the fourth quarter of 2015 increased by 84.7% to RMB1.09 (US$0.17) from RMB0.59 in the prior year period.

CASH AND CASH EQUIVALENTS, RESTRICTED CASH AND SHORT-TERM INVESTMENTS BALANCE

As of December 31, 2015, the Company had cash and cash equivalents, restricted cash and short-term investments of RMB1,994.7 million (US$307.9 million). 

SHARES ISSUED AND OUTSTANDING

As of December 31, 2015, the Company had a total of 1,424,475,911 Class A and Class B ordinary shares issued and outstanding. One ADS represents 10 Class A ordinary shares.

ADJUSTED EBITDA

Adjusted EBITDA (Non-GAAP) was RMB213.2 million ($32.9 million) for the fourth quarter of 2015, representing a 61.9% increase from the prior year period.

Fiscal Year 2015 Results

REVENUES

Total revenues for 2015 increased by 108.9% to RMB3,684.4 million (US$568.8 million) from RMB1,763.6 million in the prior year. This increase was primarily due to growth in our mobile user traffic and strong demand for our mobile advertising services in both overseas and domestic markets.

  • Revenues from online marketing services increased by 145.3% to RMB3,244.1 million (US$500.8 million) in 2015 from RMB1,322.6 million in the prior year. Mobile advertising revenues represented approximately 69% of online marketing revenues in 2015, which increased from approximately 24% of online marketing revenues in the prior year. The increase in mobile advertising revenues was driven by the Company's growing global mobile user base, and strong demand from advertisers for the Company's mobile advertising services worldwide. 
  • Revenues from internet value added services ("IVAS") decreased by 1.3% to RMB395.3 million (US$61.0 million) in 2015 from RMB400.7 million in the prior year. The decrease was primarily due to the temporary suspension of our online lottery operation in response to regulatory changes in China, and moderating trends in web games business in China.
  • Revenues from internet security services and others increased by 11.6% to RMB45.0 million (US$6.9 million) in 2015 from RMB40.3 million in the prior year. This increase was primarily due to the sales of the Company's air purifier product.

By platform, revenues generated from our mobile business increased by 423.2% to RMB2,433.2 million (US$375.6 million) from RMB465.0 million in the prior year.  This increase was primarily driven by the Company's growing global mobile user base, and the increasing popularity of the Company's mobile marketing services in overseas and domestic markets.

By region, revenues generated from overseas markets increased by 730.0% to RMB1,841.5 million (US$284.3 million) from RMB221.9 million in the prior year. This increase was primarily due to continued growth of the Company's overseas mobile user base, and rapid growth of the Company's mobile advertising revenues in the overseas markets.

COST OF REVENUES AND GROSS PROFIT

Cost of revenues increased by 131.8% to RMB935.2 million (US$144.4 million) in 2015 from RMB403.4 million in the prior year period. The increase was due to higher traffic acquisition costs associated with the Cheetah Mobile ad platform business, higher bandwidth and internet data center (IDC) costs associated with increased user traffic worldwide and data analytics, in addition to higher amortization costs from intangible assets resulting from acquisitions.

Gross profit increased by 102.1% to RMB2,749.3 million (US$424.4 million) in 2015 from RMB1,360.2 million in the prior year.

OPERATING INCOME AND EXPENSES

Total operating income and expenses for 2015 increased by 99.0% to RMB2,542.3 million (US$392.5 million) from RMB1,277.5 million in the prior year. Total non-GAAP income and expenses for 2015 increased by 101.6% to RMB2,228.5 million (US$344.0 million) from RMB1,105.6 million in the prior year.

  • Research and development expenses increased by 57.3% to RMB687.2 million (US$106.1 million) from RMB436.8 million in the prior year. This increase was primarily due to an increase in the number of research and development personnel as well as an increase in share-based compensation expenses. Non-GAAP research and development expenses, which exclude share-based compensation expenses, for 2015 increased by 41.2% to RMB544.6 million (US$84.1 million) from RMB385.7 million in the prior year.
  • Selling and marketing expenses increased by 154.8% to RMB1,479.4 million (US$228.4 million) from RMB580.6 million in the prior year. The increase was primarily due to promotional spending for the mobile business. Non-GAAP selling and marketing expenses, which exclude share-based compensation expenses, increased by 154.9% to RMB1,461.4 million (US$225.6 million) from RMB573.2 million in the prior year.
  • General and administrative expenses increased by 68.1% to RMB423.2 million (US$65.3 million) from RMB251.7 million in the prior year. This increase was primarily due to an increase in share-based compensation expenses and professional service fees as well as an increase in headcount. Non-GAAP general and administrative expenses, which exclude share-based compensation expenses, increased by 95.1% to RMB270.1 million (US$41.7 million) from RMB138.4 million in the prior year.
  • The Company recognized an impairment loss of goodwill and intangible assets of RMB49.9 million (US$7.7 million) for 2015, which was primarily associated with the online lottery business. The online lottery business was temporarily suspended in response to regulatory changes in China.
  • Other operating income was RMB 97.5 million (US$15.0 million) for 2015, which primarily consisted of government grants, subsidies and financial incentives that the Company received for its operations that fell outside the scope of R&D project subsidies.  

Operating profit increased by 150.3% to RMB206.9 million (US$31.9 million) in 2015 from RMB82.7 million in the prior year.

Non-GAAP operating profit increased by 104.1% to RMB522.3 million (US$80.6 million) in 2015 from RMB255.9 million in the prior year.

For 2015, share-based compensation expenses were RMB315.4 million (US$48.7 million), compared to RMB173.3 million in the prior year.

NET INCOME ATTRIBUTABLE TO CHEETAH MOBILE SHAREHOLDERS

Net income attributable to Cheetah Mobile shareholders increased by 159.9% to RMB176.6 million (US$27.3 million) in 2015 from RMB67.9 million in the prior year.

Non-GAAP net income attributable to Cheetah Mobile shareholders increased by 104.0% to RMB492.0 million (US$76.0 million) from RMB241.2 million in the prior year.

NET INCOME PER ADS

Diluted earnings per ADS for 2015 increased by 143.1% to RMB1.24 (US$0.19) from RMB0.51 in the prior year.

Non-GAAP diluted earnings per ADS for 2015 increased by 91.7% to RMB3.45 (US$0.53) from RMB1.80 in the prior year.

ADJUSTED EBITDA

Adjusted EBITDA (Non-GAAP) increased by 99.7% year over year to RMB668.5 million ($103.2 million) in 2015.

Share Repurchase Program On March 16, 2016, the Company's board of directors approved a share repurchase program whereby the Company may purchase its SHARES/ADSs with an aggregate value of up to US$100 million over the next 12-month period.

The repurchases may be made from time to time on the open market at prevailing market prices pursuant to a 10b5-1 plan, in negotiated transactions off the market, in block trades or other legally permissible means. The timing and extent of any purchases will depend on market conditions, the trading price of the Company's ADSs and other factors, subject to applicable law. The Company expects to implement this share repurchase program in a manner consistent with market conditions and in the best interests of the Company's shareholders. The Company's board of directors will review the share repurchase program periodically, and may authorize adjustment of its terms and size accordingly. The Company plans to fund repurchases made under this program from its available cash balance.

Business Outlook

For the first quarter of 2016, the Company expects its estimated total revenues to be between RMB1,080 million (US$167 million) and RMB1,100 million (US$170 million), representing a year over year growth of approximately 61% to 64%. The forecast reflects the Company's current and preliminary view, which is subject to change.

Conference Call Information

Company will hold a conference call on Wednesday, March 16, 2015 at 8:00 am Eastern Time or 8:00 pm Beijing Time to discuss the financial results. Listeners may access the call by dialing the following numbers:

International:

+1-412-902-4272

United States Toll Free:

+1-888-346-8982

China Toll Free:

4001-201203

Hong Kong Toll Free:

800-905945

Conference ID:

Cheetah Mobile

A live and archived webcast of the conference call will also be available at the Company's investor relations website at http://ir.cmcm.com/.

Exchange Rate

This press release contains translations of certain Renminbi amounts into U.S. dollars at specified rates solely for the convenience of readers. Unless otherwise noted, all translations from Renminbi to U.S. dollars in this press release were made at a rate of RMB6.4778 to US$1.00, the noon buying rate in effect on December 31, 2015 in the City of New York for cable transfers in Renminbi per U.S. dollar as certified for customs purposes by the Federal Reserve Bank of New York. Such translations should not be construed as representations that RMB amounts could be converted into U.S. dollars at that rate or any other rate, or to be the amounts that would have been reported under accounting principles generally accepted in the United States of America ("U.S. GAAP").

About Cheetah Mobile Inc.

Cheetah Mobile is a leading mobile internet company. The Company aims to provide the best apps for mobile users worldwide, while building a leading global mobile ad platform for advertisers. Cheetah Mobile had approximately 635 million global mobile monthly active users in December 2015. Its mission critical applications, including Clean Master, CM Security, Battery Doctor and Duba Anti-virus, help make the internet and mobile experience speedier, simpler, and safer for users worldwide.  

The Company also provides various platform products such as Duba.com, Cheetah browser, game centers, and mobile app stores to provide multiple user traffic entry points and global content distribution channels for its business partners.

Safe Harbor Statement

This press release contains forward-looking statements.  These statements, including management quotes and business outlook, constitute forward-looking statements under the U.S. Private Securities Litigation Reform Act of 1995.  These forward-looking statements can be identified by terminology such as "will," "expects," "anticipates," "future," "intends," "plans," "believes," "estimates" and similar statements.  Such statements involve inherent risks and uncertainties. A number of factors could cause actual results to differ materially from those contained in the forward-looking statements, including but are not limited to the following: Cheetah Mobile's growth strategies; Cheetah Mobile's ability to retain and increase its user base and expand its product and service offerings; Cheetah Mobile's ability to monetize its platform; Cheetah Mobile's future business development, financial condition and results of operations; competition with companies in a number of industries including internet companies that provide online marketing services and internet value-added services; expected changes in Cheetah Mobile's revenues and certain cost or expense items; and general economic and business condition globally and in China. Further information regarding these and other risks is included in Cheetah Mobile's filings with the U.S. Securities and Exchange Commission. Cheetah Mobile does not undertake any obligation to update any forward-looking statement as a result of new information, future events or otherwise, except as required under applicable law.

Use of Non-GAAP Financial Measures

To supplement Cheetah Mobile's consolidated financial information presented in accordance with U.S. GAAP, Cheetah Mobile uses the following non-GAAP financial measures:

Non-GAAP operating expenses reflect operating expenses excluding share-based compensation expenses.

Non-GAAP operating profit reflects operating profit excluding share-based compensation expenses.

Non-GAAP net income attributable to Cheetah Mobile shareholders is net income attributable to Cheetah Mobile shareholders excluding share-based compensation expenses.

Non-GAAP diluted earnings per ADS is non-GAAP net income attributable to Cheetah Mobile shareholders divided by weighted average number of diluted ADSs.

Adjusted EBITDA is earnings before interest, taxes, depreciation, amortization, other non-operating income and share-based compensation expenses.

The Company believes that separate analysis and exclusion of share-based compensation expenses and the use of Adjusted EBITDA add clarity to the constituent parts of its performance from the cash perspective. The Company reviews these non-GAAP financial measures together with GAAP financial measures to obtain a better understanding of its operating performance. It uses the non-GAAP financial measures for planning, forecasting and measuring results against the forecast. The Company believes that non-GAAP financial measures are useful supplemental information for investors and analysts to assess its operating performance without the effect of share-based compensation expenses, which have been and will continue to be significant recurring expenses in its business. However, the use of non-GAAP financial measures has material limitations as an analytical tool. One of the limitations of using non-GAAP financial measures is that they do not include all items that impact the Company's net income for the period. In addition, because non-GAAP financial measures are not measured in the same manner by all companies, they may not be comparable to other similarly titled measures used by other companies. In light of the foregoing limitations, you should not consider non-GAAP financial measure in isolation from or as an alternative to the financial measure prepared in accordance with U.S. GAAP. For more information on these non-GAAP financial measures, please see the tables captioned "Cheetah Mobile Inc. Reconciliations of GAAP and Non-GAAP Results" and "Cheetah Mobile Inc. Reconciliation of Net Income Attributable to Cheetah Mobile Shareholders to Adjusted EBITDA (Non-GAAP)" at the end of this release.

Investor Relations Contact

Cheetah Mobile Inc. Helen Jing Zhu Tel: +86 10 6292 7779 ext. 1600 Email: IR@cmcm.com

ICR, Inc. Vera Tang Tel: +1 (646) 417-5395 Email: IR@cmcm.com


[1] Overseas revenues refers to revenues generated by our operating legal entities incorporated outside China. Such revenues are primarily attributable to customers located outside China

Cheetah Mobile Inc.

Condensed Consolidated Balance Sheet

(In '000, except for per share data)

As of

  December 31, 2014  

 December 31, 2015

 December 31, 2015

 RMB 

RMB

USD

 (Audited) 

 (Unaudited) 

 (Unaudited) 

ASSETS

Current assets:

Cash and cash equivalents

1,093,285

1,809,288

279,306

Restricted cash

-

156,161

24,107

Short-term investments

513,621

29,234

4,513

Accounts receivable

260,347

620,556

95,797

Prepayments and other current assets

180,029

358,631

55,363

Due from related parities

43,570

63,762

9,843

Deferred tax assets

2,693

3,954

610

Total current assets

2,093,545

3,041,586

469,539

Non-current assets:

Property and equipment, net

45,905

119,329

18,421

Intangible assets, net 

199,616

232,029

35,819

Goodwill

261,686

613,220

94,665

Investment in equity investees

131,707

199,723

30,832

Other long-term investments

207,135

698,497

107,829

Deferred tax assets

6,384

12,843

1,983

Other non-current assets

55,197

25,422

3,924

Total non-current assets

907,630

1,901,063

293,473

Total assets

3,001,175

4,942,649

763,012

LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities: 

Bank loans

-

130,273

20,111

Accounts payable

61,793

136,997

21,149

Accrued expenses and other current liabilities

481,694

1,297,288

200,266

Redemption right liabilities

520

474

73

Deferred revenue

44,180

54,155

8,360

Due to related parties

29,885

62,580

9,661

Income tax payable

3,584

26,506

4,092

Deferred tax liabilities

-

414

64

Total current liabilities

621,656

1,708,687

263,776

Non-current liabilities: 

Bank loans

-

10,523

1,624

Deferred revenue

1,134

2,477

382

Deferred tax liabilities

65,991

99,006

15,284

Other non-current liabilities

29,525

73,826

11,397

Total non-current liabilities

96,650

185,832

28,687

Total liabilities

718,306

1,894,519

292,463

Shareholders' equity:

Ordinary shares

222

226

35

Additional paid-in capital

2,059,983

2,468,562

381,080

Retained earnings

142,760

319,356

49,299

Accumulated other comprehensive income

3,373

123,795

19,111

Total Cheetah Mobile shareholders' equity

2,206,338

2,911,939

449,525

Noncontrolling interests

76,531

136,191

21,024

Total equity

2,282,869

3,048,130

470,549

Total liabilities, noncontrolling interests and shareholders' equity

3,001,175

4,942,649

763,012

 

Cheetah Mobile Inc.

Condensed Consolidated Statements of Comprehensive Income

(In '000, except for per share data and number of shares and ADSs)

For The Three Months Ended

December 31, 2014

September 30, 2015

December 31, 2015

December 31, 2015

RMB

RMB

RMB

USD

 (Unaudited) 

 (Unaudited) 

 (Unaudited) 

 (Unaudited) 

Revenues

588,888

1,008,744

1,132,657

174,852

Online marketing services

446,122

900,484

1,031,357

159,214

Internet value-added services

136,968

99,516

89,337

13,791

Internet security services and others

5,798

8,744

11,963

1,847

Cost of revenues (a)

(140,973)

(270,375)

(296,965)

(45,843)

Gross profit

447,915

738,369

835,692

129,009

Operating income and expenses: 

Research and development (a)  

(120,086)

(203,100)

(208,365)

(32,166)

Selling and marketing (a) 

(184,287)

(382,622)

(506,022)

(78,116)

General and administrative (a) 

(80,518)

(124,167)

(91,891)

(14,186)

Impairment of goodwill and intangible assets

(8,304)

(11,750)

(12,525)

(1,934)

Other operating income

-

31,763

59,727

9,220

Total operating income and expenses 

(393,195)

(689,876)

(759,076)

(117,182)

Operating profit

54,720

48,493

76,616

11,827

Other (expenses) income:

Interest income, net

9,678

2,555

2,815

435

Changes in fair value of redemption right and put options granted

372

(213)

68

10

Settlement and changes in fair value of contingent consideration

(11,271)

(1,286)

9,097

1,404

Foreign exchange gain (loss), net

129

(1,081)

1,444

223

Impairment loss of long-term investments

(8,664)

-

(8,837)

(1,364)

 (Losses) gains from equity method investments

(524)

(5,813)

5,794

894

Other income, net

811

1,172

(302)

(47)

Income before taxes

45,251

43,827

86,695

13,382

Income tax expenses

(13,968)

(14,009)

(30,868)

(4,765)

Net income 

31,283

29,818

55,827

8,617

Less: net (loss) income attributable to noncontrolling interests 

(894)

1,055

(1,312)

(203)

Net income attributable to Cheetah Mobile shareholders

32,177

28,763

57,139

8,820

Earnings per share

Basic 

0.02

0.02

0.04

0.01

Diluted 

0.02

0.02

0.04

0.01

Earnings per ADS

Basic 

0.24

0.21

0.41

0.06

Diluted 

0.23

0.20

0.40

0.06

Weighted average number of shares outstanding

Basic 

1,354,673,777

1,383,355,451

1,385,225,872

1,385,225,872

Diluted 

1,410,449,593

1,434,461,272

1,434,672,741

1,434,672,741

Weighted average number of ADSs used in computation

Basic 

135,467,378

138,335,545

138,522,587

138,522,587

Diluted 

141,044,959

143,446,127

143,467,274

143,467,274

Other comprehensive income, net of tax

Foreign currency translation adjustments

(9,214)

77,782

41,677

6,434

Unrealized gains on available-for-sale securities, net

38,772

413

3,219

497

Reclassification adjustments for gains included in the consolidated statement of profit or loss

(21,121)

-

-

-

Other comprehensive income

8,437

78,195

44,896

6,931

Total comprehensive income 

39,720

108,013

100,723

15,548

Less: Total comprehensive (loss) income attributable to noncontrolling interests

(990)

1,338

(1,145)

(177)

Total comprehensive income attributable to Cheetah Mobile shareholders

40,710

106,675

101,868

15,725

(a) Share-based compensation expenses

 (In '000)

 For The Three Months Ended 

December 31, 2014

 September 30, 2015 

December 31, 2015

December 31, 2015

 RMB 

 RMB 

 RMB 

 USD 

  (Unaudited)  

  (Unaudited)  

  (Unaudited)  

  (Unaudited)  

Cost of revenues

677

1,656

(1,623)

(251)

Research and development

14,809

65,141

48,756

7,527

Selling and marketing

2,249

7,448

5,750

888

General and administrative

32,834

40,435

45,656

7,048

Total

50,569

114,680

98,539

15,212

 

Cheetah Mobile Inc.

Reconciliation of GAAP and Non-GAAP Results

(In'000, except for per share data and percentage)

For The Three Months Ended December 31, 2015

GAAP

% of Net

Share-based 

% of Net

Non-GAAP

% of Net

Non-GAAP

Result

Revenues

Compensation

Revenues

Result

Revenues

Result ($)

Revenues

1,132,657

1,132,657

174,852

Cost of revenues

(296,965)

26.2%

(1,623)

0.1%

(298,588)

26.4%

(46,094)

Gross profit

835,692

73.8%

(1,623)

0.1%

834,069

73.6%

128,758

Research and development 

(208,365)

18.4%

48,756

4.3%

(159,609)

14.1%

(24,639)

Selling and marketing 

(506,022)

44.7%

5,750

0.5%

(500,272)

44.2%

(77,229)

General and administrative 

(91,891)

8.1%

45,656

4.0%

(46,235)

4.1%

(7,137)

Impairment of goodwill and intangible assets

(12,525)

1.1%

-

-

(12,525)

1.1%

(1,934)

Other operating income

59,727

5.3%

-

-

59,727

5.3%

9,220

Total operating income and expenses

(759,076)

67.0%

100,162

8.8%

(658,914)

58.2%

(101,719)

Operating profit

76,616

6.8%

98,539

8.7%

175,155

15.5%

27,039

Net income attributable to Cheetah Mobile shareholders

57,139

5.0%

98,539

8.7%

155,678

13.7%

24,033

Diluted earnings per ordinary share (RMB)

0.04

0.07

0.11

Diluted earnings per ADS (RMB)

0.40

0.69

1.09

Diluted earnings per ADS (USD)

0.06

0.11

0.17

For The Three Months Ended September 30, 2015

GAAP

% of Net

Share-based 

% of Net

Non-GAAP

% of Net

Result

Revenues

Compensation

Revenues

Result

Revenues

Revenues

1,008,744

1,008,744

Cost of revenues

(270,375)

26.8%

1,656

0.2%

(268,719)

26.6%

Gross profit

738,369

73.2%

1,656

0.2%

740,025

73.4%

Research and development 

(203,100)

20.1%

65,141

6.5%

(137,959)

13.7%

Selling and marketing 

(382,622)

37.9%

7,448

0.7%

(375,174)

37.2%

General and administrative 

(124,167)

12.3%

40,435

4.0%

(83,732)

8.3%

Impairment of goodwill and intangible assets

(11,750)

1.2%

-

-

(11,750)

1.2%

Other operating income

31,763

3.1%

-

-

31,763

3.1%

Total operating income and expenses

(689,876)

68.4%

113,024

11.2%

(576,852)

57.2%

Operating profit

48,493

4.8%

114,680

11.4%

163,173

16.2%

Net income attributable to Cheetah Mobile shareholders

28,763

2.9%

114,680

11.4%

143,443

14.2%

Diluted earnings per ordinary share (RMB)

0.02

0.08

0.10

Diluted earnings per ADS (RMB)

0.20

0.80

1.00

For The Three Months Ended December 31, 2014

GAAP

% of Net

Share-based 

% of Net

Non-GAAP

% of Net

Result

Revenues

Compensation

Revenues

Result

Revenues

Revenues

588,888

588,888

Cost of revenues

(140,973)

23.9%

677

0.1%

(140,296)

23.8%

Gross profit

447,915

76.1%

677

0.1%

448,592

76.2%

Research and development 

(120,086)

20.4%

14,809

2.5%

(105,277)

17.9%

Selling and marketing 

(184,287)

31.3%

2,249

0.4%

(182,038)

30.9%

General and administrative 

(80,518)

13.7%

32,834

5.6%

(47,684)

8.1%

Impairment of goodwill and intangible assets

(8,304)

1.4%

-

-

(8,304)

1.4%

Total operating expenses

(393,195)

66.8%

49,892

8.5%

(343,303)

58.3%

Operating profit

54,720

9.3%

50,569

8.6%

105,289

17.9%

Net income attributable to Cheetah Mobile shareholders

32,177

5.5%

50,569

8.6%

82,746

14.1%

Diluted earnings per ordinary share (RMB)

0.02

0.04

0.06

Diluted earnings per ADS (RMB)

0.23

0.36

0.59

 

Cheetah Mobile Inc.

Condensed Consolidated Statements of Comprehensive Income

(In '000, except for per share data and number of shares and ADSs)

Year Ended December 31,

2014

2015

2015

RMB

RMB

USD

 (Audited) 

 (Unaudited) 

 (Unaudited) 

Revenues

1,763,579

3,684,429

568,778

Online marketing services

1,322,612

3,244,130

500,807

Internet value-added services

400,671

395,312

61,026

Internet security services and others

40,296

44,987

6,945

Cost of revenues (a)

(403,412)

(935,154)

(144,363)

Gross profit

1,360,167

2,749,275

424,415

Operating income and expenses: 

Research and development (a)  

(436,840)

(687,235)

(106,091)

Selling and marketing (a) 

(580,610)

(1,479,441)

(228,386)

General and administrative (a) 

(251,743)

(423,248)

(65,338)

Impairment of goodwill and intangible assets

(8,304)

(49,882)

(7,700)

Other operating income

-

97,468

15,046

Total operating income and expenses 

(1,277,497)

(2,542,338)

(392,469)

Operating profit

82,670

206,937

31,946

Other income:

Interest income, net

28,216

14,545

2,245

Changes in fair value of redemption right and put options granted

4,375

22

3

Settlement and changes in fair value of contingent consideration

(13,749)

7,010

1,082

Foreign exchange gain (loss), net

16

(250)

(39)

Impairment loss of long-term investments

(8,664)

(34,728)

(5,361)

Losses from equity method investments

(5,447)

(9,334)

(1,441)

Other income, net

3,487

47,173

7,282

Income before taxes

90,904

231,375

35,717

Income tax expenses

(23,993)

(60,097)

(9,277)

Net income 

66,911

171,278

26,440

Less: net loss attributable to noncontrolling interests 

(1,030)

(5,318)

(821)

Net income attributable to Cheetah Mobile shareholders

67,941

176,596

27,261

Earnings per share

Basic 

0.05

0.13

0.02

Diluted 

0.05

0.12

0.02

Earnings per ADS

Basic 

0.53

1.29

0.20

Diluted 

0.51

1.24

0.19

Weighted average number of shares outstanding

Basic 

1,210,501,020

1,372,863,321

1,372,863,321

Diluted 

1,341,732,457

1,426,810,939

1,426,810,939

Weighted average number of ADSs used in computation

Basic 

121,050,102

137,286,332

137,286,332

Diluted 

134,173,246

142,681,094

142,681,094

Other comprehensive (loss) income, net of tax

Foreign currency translation adjustments

(6,960)

117,977

18,213

Unrealized gains on available-for-sale securities, net

18,119

9,729

1,502

Reclassification adjustments for gains included in the consolidated statement of profit or loss

(21,121)

(6,814)

(1,052)

Other comprehensive (loss) income

(9,962)

120,892

18,663

Total comprehensive income 

56,949

292,170

45,103

Less: Total comprehensive loss attributable to noncontrolling interests

(1,126)

(4,848)

(748)

Total comprehensive income attributable to Cheetah Mobile shareholders

58,075

297,018

45,851

(a) Share-based compensation expenses

 (In '000)

2014

2015

2015

 RMB 

 RMB 

 USD 

  (Audited)  

(Unaudited)  

 (Unaudited)  

Cost of revenues

1,393

1,523

235

Research and development

51,176

142,682

22,026

Selling and marketing

7,407

18,068

2,789

General and administrative

113,298

153,134

23,640

Total

173,274

315,407

48,690

 

Cheetah Mobile Inc.

Reconciliation of GAAP and Non-GAAP Results

(In'000, except for per share data and percentage)

For The Year Ended December 31, 2015

GAAP

% of Net

Share-based 

% of Net

Non-GAAP

% of Net

Non-GAAP

Result

Revenues

Compensation

Revenues

Result

Revenues

Result ($)

Revenues

3,684,429

3,684,429

568,778

Cost of revenues

(935,154)

25.4%

1,523

0.0%

(933,631)

25.3%

(144,128)

Gross profit

2,749,275

74.6%

1,523

0.0%

2,750,798

74.7%

424,650

Research and development 

(687,235)

18.7%

142,682

3.9%

(544,553)

14.8%

(84,064)

Selling and marketing 

(1,479,441)

40.2%

18,068

0.5%

(1,461,373)

39.7%

(225,597)

General and administrative 

(423,248)

11.5%

153,134

4.2%

(270,114)

7.3%

(41,698)

Impairment of goodwill and intangible assets

(49,882)

1.4%

-

-

(49,882)

1.4%

(7,700)

Other operating income

97,468

2.6%

-

-

97,468

2.6%

15,046

Total operating income and expenses

(2,542,338)

69.0%

313,884

8.5%

(2,228,454)

60.5%

(344,013)

Operating profit

206,937

5.6%

315,407

8.6%

522,344

14.2%

80,636

Net income attributable to Cheetah Mobile shareholders

176,596

4.8%

315,407

8.6%

492,003

13.4%

75,952

Diluted earnings per ordinary share (RMB)

0.12

0.22

0.34

Diluted earnings per ADS (RMB)

1.24

2.21

3.45

Diluted earnings per ADS (USD)

0.19

0.34

0.53

For The Year Ended December 31, 2014

GAAP

% of Net

Share-based 

% of Net

Non-GAAP

% of Net

Result

Revenues

Compensation

Revenues

Result

Revenues

Revenues

1,763,579

1,763,579

Cost of revenues

(403,412)

22.9%

1,393

0.1%

(402,019)

22.8%

Gross profit

1,360,167

77.1%

1,393

0.1%

1,361,560

77.2%

Research and development 

(436,840)

24.8%

51,176

2.9%

(385,664)

21.9%

Selling and marketing 

(580,610)

32.9%

7,407

0.4%

(573,203)

32.5%

General and administrative 

(251,743)

14.3%

113,298

6.4%

(138,445)

7.9%

Impairment of goodwill and intangible assets

(8,304)

0.5%

-

-

(8,304)

0.5%

Total operating expenses

(1,277,497)

72.4%

171,881

9.7%

(1,105,616)

62.7%

Operating profit

82,670

4.7%

173,274

9.8%

255,944

14.5%

Net income attributable to Cheetah Mobile shareholders

67,941

3.9%

173,274

9.8%

241,215

13.7%

Diluted earnings per ordinary share (RMB)

0.05

0.13

0.18

Diluted earnings per ADS (RMB)

0.51

1.29

1.80

 

Cheetah Mobile Inc.

Reconciliation from Net Income Attributable to Cheetah Mobile Shareholders to Adjusted EBITDA (Non-GAAP)

(In '000)

For The Three Months Ended

December 31, 2014

September 30, 2015

December 31, 2015

December 31, 2015

RMB

RMB

RMB

USD

 (Unaudited) 

 (Unaudited) 

 (Unaudited) 

 (Unaudited) 

Net income attributable to Cheetah Mobile shareholders

32,177

28,763

57,139

8,820

Add:

        Income tax expense

13,968

14,009

30,868

4,765

        Interest income,net

(9,678)

(2,555)

(2,815)

(435)

        Depreciation and amortization

26,458

37,365

38,081

5,879

        Net (loss) income attributable to noncontrolling interests 

(894)

1,055

(1,312)

(203)

        Other non-operating expense (income), net

19,147

7,221

(7,264)

(1,120)

        Share-based compensation 

50,569

114,680

98,539

15,212

Adjusted EBITDA

131,747

200,538

213,236

32,918

For The Year Ended December 31,

2014

2015

2015

RMB

RMB

USD

 (Unaudited) 

 (Unaudited) 

 (Unaudited) 

Net income attributable to Cheetah Mobile shareholders

67,941

176,596

27,261

Add:

        Income tax expense

23,993

60,097

9,277

        Interest income,net

(28,216)

(14,545)

(2,245)

        Depreciation and amortization

78,750

146,157

22,563

        Net loss attributable to noncontrolling interests 

(1,030)

(5,318)

(821)

        Other non-operating expense (income), net

19,982

(9,893)

(1,526)

        Share-based compensation 

173,274

315,407

48,690

Adjusted EBITDA

334,694

668,501

103,199

 

Cheetah Mobile Inc.

Revenues Generated from PC-based and Mobile-based Applications and Services

(In '000)

For The Three Months Ended

December 31, 2014

September 30, 2015

December 31, 2015

December 31, 2015

RMB

RMB

RMB

USD

 (Unaudited) 

 (Unaudited) 

 (Unaudited) 

 (Unaudited) 

PC

366,777

306,092

329,116

50,807

Mobile

222,111

702,652

803,541

124,045

Total

588,888

1,008,744

1,132,657

174,852

For The Year Ended December 31,

2014

2015

2015

RMB

RMB

USD

 (Unaudited) 

 (Unaudited) 

 (Unaudited) 

PC

1,298,561

1,251,279

193,164

Mobile

465,018

2,433,150

375,614

Total

1,763,579

3,684,429

568,778

 

Cheetah Mobile Inc.

Revenues Generated from Domestic and Overseas Markets

(In '000)

For The Three Months Ended

December 31, 2014

September 30, 2015

December 31, 2015

December 31, 2015

RMB

RMB

RMB

USD

 (Unaudited) 

 (Unaudited) 

 (Unaudited) 

 (Unaudited) 

Domestic revenues

449,819

471,038

516,412

79,720

Overseas revenues

139,069

537,706

616,245

95,132

Total

588,888

1,008,744

1,132,657

174,852

For The Year Ended December 31,

2014

2015

2015

RMB

RMB

USD

 (Unaudited) 

 (Unaudited) 

 (Unaudited) 

Domestic revenues

1,541,699

1,842,893

284,494

Overseas revenues

221,880

1,841,536

284,284

Total

1,763,579

3,684,429

568,778

 

SOURCE Cheetah Mobile