Cheetah Mobile, Inc.
Disclaimer This presentation contains forward-looking statements. These statements are made under the “safe harbor” provisions of 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. Among other things, the business outlook and quotations from management in this presentation, as well as Cheetah Mobile’s strategic and operational plans, contain forward-looking statements. Cheetah Mobile may also make written or oral forward-looking statements in its periodic reports to the U.S. Securities and Exchange Commission (“SEC”), in its annual report to shareholders, in press releases and other written materials and in oral statements made by its officers, directors or employees to third parties. Statements that are not historical facts, including statements about Cheetah Mobile’s beliefs and expectations, are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties. A number of factors could cause actual results to differ materially from those contained in any forward-looking statement, including but not limited to the following: Cheetah Mobile’s goals and 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 from 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; fluctuations in general economic and business conditions in China and assumptions underlying or related to any of the foregoing. Further information regarding these and other risks is included in Cheetah Mobile’s filings with the SEC. All information provided in this presentation is as of the date of this presentation, and Cheetah Mobile does not undertake any obligation to update any forward-looking statement, except as required under applicable law.
01 ◼ Business Overview Financials ◼ 3
Cheetah Mobile Has Three Business Lines AI Mobile Utility Business Entertainment Products 1% of our total revenues* 34% of our total revenues* 65% of our total revenues* Core Utility Apps Games To Consumers To Businesses New Utility Apps Live Streaming In the first nine months of 2018* 4
Business Models for Our Utility Product and Mobile Entertainment Businesses Advertising: 3 rd Party Ad Platform Cheetah Mobile Mobile Ad Traffic Platform Direct Sales In-app purchases: Mobile In-app Games/ Purchases LiveMe 5
Revenue Contribution by Region China Overseas Accounted for 40% of total revenues* Accounted for 60% of total revenues* Utility Products and Related Services Mobile Games Mobile utility product Mobile game is a business in China is driving force in the a driving force overseas markets LiveMe AI In the first nine months of 2018 6
Our Utility Product Portfolio PC Mini Program Driver CM Duba Yundong Genius Browser Website Zhuan （运动赚） Navigator Personalization Life style Core Utility Products AI Driven Mobile Clean Security Battery CM CM Cheetah Qu Safe Photo Master Master Doctor Launcher Show Keyboard Keyboard Wallet Grid Mission Critical New Utility Products Utility Products 7
Our Utility Product Business Continued to Generate Healthy Revenue RMB, million 836 • Revenues : +4% y/y, +11% q/q, ~60% 900 825 of the total revenue in 3Q18 756 800 PC PC • Growth Engine: mobile utility 700 business in the domestic market PC +54% y/y, +18% q/q to 28% of total 600 revenue in 3Q18. This growth was Mobile driven by user expansion of our core Overseas 500 Mobile Mobile utility products, new product launch Overseas Overseas and expanded partnership with 400 mobile ad platforms 300 • Challenge: overseas mobile revenue Mobile in were impacted by Facebook and 200 Mobile in China Google discontinuing ads on mobile Mobile in China China 100 phone lock screens 0 3Q17 2Q18 3Q18 8
Our Utility Product Business Continued to Earn Strong Profits and Cash RMB, million 350 40% 37% 327 318 36% 35% 300 32% 282 34% 32% 265 32% 264 260 30% 26% 250 • The q/q decrease in 228 213 3Q18 mainly due to 22% 24% 25% increased promotional 200 179 activities in the 20% 157 domestic market, 141 150 where we have seen 17% 15% more emerging growth 15% opportunities 100 10% 50 5% 0 0% 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 Non-GAAP Operating Profit Non-GAAP Operating Margin 9
We Continued to Enrich Our Utility Product Portfolio by Introducing New Utility Apps Personalization, Lifestyle, AI-driven • An AI-powered keyboard app Offering personalized ring tones • and a wide array of 3D video Offering smart prediction, voice • effects input, and thousands of themes • Targeting younger users in China Targeting users worldwide • CM Show Cheetah Keyboard 10
Our Mobile Utility Product Business Grew Rapidly in China Our Achievements in the Domestic Market • Users : MAU in the domestic market grew by 17% y/y and 6% q/q, reaching a new high of 171 million in 3Q18 • Revenues : Revenues from mobile utility products in the domestic market grew by 54% y/y and 18% q/q in 3Q18 Our Strengths in the Domestic Market • Replicating our success in the overseas market to China • Establishing partnerships with several local partners to distribute our apps • Strong profits and cash flow generated by utility products provides a solid foundation for our investments in new initiatives 11
We Have Seen Massive Market Opportunities in China’s Mobile Internet Space • Market Trend : growth of mobile Internet penetration in lower-tier cities and generation Z • Our Tactics : tailor our products to attract these users • Achievement : DAUs continue to grow in our domestic market, driven by the growth of active users in lower-tier cities and users born from the mid-1990s to the early 2000s Mobile Internet Population in China Population million 599 571 538 496 454 499 505 475 469 446 2016 2017 2018F 2019F 2020F First- and second- tier Cities Lower-tier Cites Source: Deutsche Bank Research Report 12
We Expanded to the Mobile Entertainment Business to Grow Our User Engagement and User Time Spent Mobile Rolling Sky Bricks n Balls Dancing Line Piano Tiles 2 Entertainment Tap Tap Fish Cooking Adventure Arrow.io Mafia Revenge Tap Tap Dash Skid Storm Liveme Trade Town Dancing Ball 13
The Growth of Mobile Entertainment Revenue Was Driven by Our Mobile Game Operation RMB, million • Revenues : +37% y/y, +50% q/q, accounted 498 for ~40% of total revenue in 3Q18. The growth was driven by both our mobile games operation and LiveMe 362 ✓ Mobile games: +78% y/y, +106% q/q to 333 RMB285 million, driven by ramp-up of Bricks n Balls , and the continued strong performance of Piano Tiles 2 , Dancing Line , and Rolling Sky ✓ Content: +5% y/y and +9% q/q to RMB213 million, driven by LiveMe, as several new features were introduced, which further improved its ARPU 14
We Have A Strong Game Developing and Publishing Capability • Identify promising titles from a large amount of candidates • Improve game experience • Increase user engagement and time spent • Drive the ARPU of mobile gamers 2015 2016 2017 2018 15
Bricks n Balls (BnB), An Elimination Casual Game, Started Ramping Up in 3Q18 • Google Play featured BnB on its global homepage in September 2018 • According to App Annie, BnB was ranked among the top 3 casual games in the US on Google Play in terms of user downloads • According to App Annie, BnB was ranked among the top 10 board games on Apple’s App Store in terms of user downloads 16
We Use High-quality Third-party Content to Enrich Our Flagship Titles Piano Tiles 2 Rolling Sky Dancing Line 17
18 We Leverage Several Mini Game Platforms to Amplify The Reach of Our Games • We have integrated our best-selling game titles with several mini game platforms to expand its user base • So far, our games have been on the WeChat, QQ and Facebook mini game platforms. We expect to integrate our games with more platforms in the future Dancing Line Piano Tiles 2 Rolling Sky Bricks n Balls 18
LiveMe: Popular Live Streaming Platform in the Overseas Markets • LiveMe : a popular live streaming app launched in April 2016. Live broadcasting is very popular in China. We brought this model overseas • Monetization : introduced virtual gifts in 2Q16; this feature contributes to the vast majority of LiveMe’s revenues • Financing : Series A – US$60 million in May 2017; Series B - US$50 million in November 2017 • Ranking : No. 3 grossing social app in the U.S. on Google Play. Top 10 gross social app in the U.S. on Apple’s App Store • Recent Development : ✓ Improve the ARPU of top paying users in the US and Middle East ✓ Tailor-made several offline and online activities for top paying users in the US and Middle East 19
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