Cheetah Mobile Inc. (NYSE:CMCM) Q1 2019 Earnings Conference Call - Final Transcript

Jun 14, 2019 • 08:00 am ET


Cheetah Mobile Inc. (NYSE:CMCM) Q1 2019 Earnings Conference Call - Final Transcript


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Good day, and welcome to the Cheetah Mobile's First Quarter 2019 Earnings Conference Call. All participants will be in a listen-only mode. (Operator Instructions) After today's presentation, there will be an opportunity to ask questions. (Operator Instructions) Please note, this event is being recorded.

I would now like to turn the conference over to Helen Zhu of Cheetah Mobile's Investor Relations Department. Please go ahead.

Helen Jing Zhu

Thank you, operator. Welcome to Cheetah Mobile's First Quarter 2019 Earnings Conference Call. With us today are our Chairman and the CEO, Mr. Fu Sheng; and our company's CFO, Mr. Vincent Jiang. Following management's prepared remarks, we will conduct a Q&A session. Before we begin, I refer you to the Safe Harbor statement in our earnings release, which also applies to our conference call today, as we will make forward-looking statements.

At this time, I would now like to turn the conference call over to our company's Chairman and CEO, Mr. Fu Sheng. Please go ahead.

Sheng Fu

Thank you. (Foreign Language) Hi everyone. First, our first quarter of 2019 financial results, management's expectations we had meet certain -- deals face some challenges to grow our revenues in the near term. Additionally, we have planned to increase our investment in AI, which may reduce our profitability in the short term as our AI business is still in it's early stage of development. The recent global business environment has brought some difficulties to our overseas business. In addition, we are still facing challenging results, resulted from misleading statements made by a third party in late November 2018. The impact of misleading statements on our business was more significant than we expected. Although, we have issued several public statement to clarify and explain the situation. Those allegations inflicted considerable damage to our brand reputation and resulted to a pause in our collaboration with some of our business partners in the overseas market.

Cheetah Mobile audit committee has conducted an independent review of these allegations with outside counsel at Skadden, Arps and independent data according auditing firm AlixPartners. The reveal did not identify any information in consistent with the company's previous disclosures. We have informed our business partners about the conclusion of the review. Some of them had resumed business relations with us. While some of them still have not, including Facebook, even though Facebook had pre-approved acceleration of auditing firm. We are committed to providing the high quality advertising product and the service to our business partners. We plan to engage reputable third party approach, encourages companies to independently monitor our ad surveys. We hope that by taking this additional step, we can fully adjust the content. Our overseas business partners may have as a result of last year allegations.

Second, our utility product business and the mobile entertainment business have continued to collectively deliver house revenues and profit as well as generates cash flow. In the quarter, our utility products business earned about RMB500 million in revenue and a RMB123 million operating profits. Revenues from mobile games grow by