Cheetah Mobile's Operating Challenges Impact H1 Financial Performance

Cheetah Mobile Inc reported a decline in H1 FY23 revenue, with a 14.5% decrease in internet business revenues. However, revenues from AI and other areas saw a 24.8% increase. Non-GAAP gross margin improved, but operating loss and EPADS loss per share were significant. The company remains confident in its membership and subscription business and plans to streamline operations while investing in AI technology. For the second half of 2023, Cheetah Mobile expects revenue between RMB310 million ($42.
Sep. 04, 2023 22:28
Cheetah Mobile's Operating Challenges Impact H1 Financial Performance

Cheetah Mobile Inc (CMCM) has reported a 5.5% year-on-year decline in revenue for the first half of fiscal year 2023, amounting to RMB337.4 million ($46.5 million). The company's internet business revenues experienced a larger drop of 14.5% year-on-year, reaching RMB235.6 million ($32.5 million). However, revenues from the AI and other sectors increased by 24.8% year-on-year, totaling RMB101.7 million ($14.0 million).

The non-GAAP gross margin for Cheetah Mobile improved to 66.5% from 65.6% in the previous year, despite a 4.2% year-on-year decline in gross profit. The non-GAAP operating loss for the first half of fiscal year 2023 was RMB(89.8) million ($(12.4) million), compared to RMB(122.2) million in the same period last year. The non-GAAP EPADS loss per share was RMB(9.04) or $(1.25).

Cheetah Mobile currently holds RMB2.07 billion ($285.6 million) in cash and equivalents. Despite facing operational challenges, the company's Chairman and CEO, Mr. Sheng Fu, expressed confidence in the growth potential of their membership and subscription business. He mentioned launching innovative AI-powered products that have yielded positive results and emphasized the company's commitment to optimizing their revenue structure by streamlining unprofitable operations. Additionally, Cheetah Mobile plans to increase investments in AI technology and products to empower their customers in the new era of AI.

Looking ahead, Cheetah Mobile expects revenue for the second half of 2023 to range between RMB310 million ($42.8 million) and RMB360 million ($49.6 million). On Thursday, CMCM shares closed 0.47% lower at $2.11.