Publisher of. Mobile Application in the Google Play Tools Worldwide 1. Internet Security Software Provider in China 2. Who We Are

Transcription

1 June 2014

2 Disclaimer The following presentation has been prepared by Cheetah Mobile Inc. ( Cheetah or the Company ) solely for informational purposes and is not an offer to buy or sell or a solicitation of an offer to buy or sell any security or instrument or to participate in any trading strategy, nor shall it or any part of it form the basis or be relied on in connection with any contract, commitment or investment decision in relation thereto. The information included herein was obtained from various sources, including certain third parties, and has not been independently verified. No representation or warranty, expressed or implied, is made and no reliance should be placed on the accuracy, fairness or completeness of the information or sources presented or contained in these materials. By viewing or accessing the information contained in these materials, you hereby acknowledge and agree that neither the Company nor any of its directors, officers, employees, agents, affiliates, advisers or representatives accepts any responsibility for or makes any representation or warranty, express or implied, with respect to the truth, accuracy, fairness, completeness or reasonableness of the information contained in, and omissions from, these materials and that neither the Company nor any of its directors, officers, employees, agents, affiliates, advisers or representatives accept any liability whatsoever for any loss howsoever arising from any information presented or contained in these materials. This presentation may contain forward-looking statements made under the safe harbor provisions of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and as defined in the Private Securities Litigation Reform Act of Statements that are not historical facts, including statements about the Company s future financial or business performance, strategies or expectations, are forward-looking statements. These forward-looking statements can be identified by terminology such as will, expects, anticipates, future, intends, plans, believes, estimates, confident and similar statements. These forward-looking statements are made only as of the date of this presentation and are based on estimates and information available to the Company at the time of this presentation. These forward-looking statements are not guarantees of future performance, are based on a number of assumptions about the Company s operations, its future development plans, market (financial and otherwise) conditions and growth prospects and factors beyond the Company s control and are subject to significant risks and uncertainties that are difficult to predict. Accordingly, actual results, performance or achievements may differ materially from those expressed or implied by these forward-looking statements and future results could materially differ from historical performance. The Company assumes no duty to and does not undertake to publicly update or revise any forward-looking statements except as required by applicable law. These materials are provided solely for your information and for your use and may not be retained, copied, reproduced or redistributed directly or indirectly to any other person in any manner; or published, in whole or in part, for any purpose. 2

3 Company Overview

4 Who We Are #1 Publisher of Mobile Application in the Google Play Tools Worldwide 1 #2 Internet Security Software Provider in China 2 Source: 1. By monthly downloads; according to App Annie Mar 2014 data 2. By MAU; according to iuser Tracker of iresearch Mar 2014 data 4

5 Make the Internet & Mobile Experience SPEEDIER SIMPLER SAFER for Users WORLDWIDE 5

6 Company Highlights Massive, highly engaged and fastgrowing global user base Diversified suite of mission critical applications for users Continuous R&D and innovation focused on optimizing user experience 4 Cloud-based data analytics engines enhancing platform performance 5 Proven monetization model driven by platform products and extensive network of business partners 6 Experienced management team with strategic vision and a proven execution track record 6

7 1 Massive Global Mobile User Base MASSIVE USER BASE GLOBAL FOOTPRINT 362MM Total MAU 1 223MM Mobile MAU 1 63% Mobile MAU Overseas 1 Notes: 1. As of March

8 1 Accelerating Growth of Massive Global Mobile User Base Mobile MAU (MM) As % of Total MAU 23% 34% 46% 50% 62% x Mar 2013 Jun 2013 Sep 2013 Dec 2013 Mar 2014 Source: Company for mobile applications, iresearch for PC 8

9 2 Diversified Suite of Mission Critical Applications Mission Critical Apps MAU 1 Ranking Google Play Rating 4 Descriptions Mobile 140MM Clean Master #1 Most Downloaded Tools Apps Globally 2 #4 Most Downloaded App (excl. games) Globally Junk file cleaning Memory boosting Privacy protection 23MM CM Security #2 Most Downloaded Tools Apps Globally Anti-virus and security 59MM Battery Doctor #1 Utility App in China 3 #5 Most Downloaded Productivity App Globally Power optimization 25MM #1 Most Downloaded Photography App in the U.S Photo collage Photo Grid PC 120MM 5 #2 Internet Security Software Provider in China Internet security Duba Anti-virus Notes: 1. MAU as of Mar App Annie, in terms of monthly downloads on Google Play as of Mar iresearch, in terms of MAU as of Feb Out of a score of 5, as of Mar 31, Primarily PC 6. iuser Tracker of iresearch, in terms of MAU as of Mar

10 2 Top Mobile App Publisher on Google Play All Chinese Apps on Google Play Top 50 1 China Rank Global Rank Applications Publisher Category Clean Master 9 CM Security Tools Tools WeChat 26 Camera360 Ultimate Communication Photography 5 28 Photo Grid Photography Security Tools 7 35 Battery Doctor Productivity 8 42 GO Launcher Personalization GO Keyboard 49 DU Speed Booster Tools Tools Notes: 1. App Annie ranking (excluding games) in terms of monthly downloads as of Mar

11 2 Clean Master's Rise to Global Super App Top Apps on Google Play by Monthly Downloads (Excluding Games) Mar 2013 Jun 2013 Sep 2013 Dec 2013 Mar #4 5 6 #6 7 8 # #16 #48 Source: App Annie 11

12 2 Top Apps Across Major Overseas Markets Google Play Top Matrix of Free Apps in Tools Category U.S. Japan U.K. Australia Germany Canada France Italy #1 #2 #3 #4 #5 Source: App Annie, in terms of monthly downloads as of Mar 31,

13 2 Leaders in Mobile Apps Worldwide Mobile MAU (As of March 31, 2013) (m) 1,500 1, Source: Company Filings, News Release Notes: 1. WhatsApp and Instagram are not included 2. Latest available data as of December 2013, periodic availability 13

14 3 Highest Rating in Top Apps Applications Google Play Ranking 1 Avg. Rating 2 Review ,153,221 Whatsapp ,787, ,146,186 Clean master ,304, ,533, ,119, ,406, ,775,521 CM Security ,238, ,425, ,788,820 Notes: 1. App Annie ranking (excluding games) in terms of monthly downloads in Mar Out of a score of 5, as of April 17, As of April 17,

15 4 Cloud-based Data Analytics Engines APP CLOUD App Behavior Analysis Facemark Crossover 4MM+ Apps User behavior analysis Better Performance of Mission Critical Apps Targeted marketing 15

16 5 Three-stage Rocket Monetization Model PC MOBILE MONETIZATION Search E-commerce Ads Games Ads Games Search PLATFORM Navigator Browser Cheetah browser Mobile Assistant UTILITY AND SECURITY APPS Duba (KIS Anti-virus) Clean Master Duba (KIS Antivirus) CM Security PhotoGrid Battery Doctor AnTuTu Benchmark 16

17 5 Proven Monetization Model Online Marketing IVAS 82% 1 11% 1 Search e-commerce Performance Based Advertising Webgame Mobile Game Revenue Sharing Internet Security Services and Others 7% 1 Internet Security Cheetah Japan Revenue Per Thousand Search Mainly CPS CPS + CPC Membership Fee Licensing Fee Notes: revenue contribution 17

18 5 Cheetah Mobile A Collaborative Leader Cheetah s Collaboration with China Internet Leaders is an Advantage 18

19 5 Case Study: Battery Doctor Mobile Game Monetization Love Chinese Odyssey 天天爱西游 #5 in ios free app rank list #6 in ios bestselling list Featured marketing on highlighted mobile apps Unparalleled Distribution Capability 19

20 6 Experienced Management Team with Strategic Vision Sheng FU Chief Executive Officer Director Previously worked at 3721, Qihoo 360 (NYSE: QIHU), Matrix Partners, and co-founded Conew, an Internet security company 12+ years of internet experience Bachelor in economics, Shandong Institute of Business and Technology Ming XU Chief Technology Officer Previously worked at 3721, Qihoo 360 (NYSE: QIHU) and CTO of Conew Partnered with Sheng Fu since years of internet experience Master in engineering, Harbin Institute of Technology Bachelor in engineering, Harbin Institute of Technology Xinhua LIU Chief Marketing Officer Previously worked as chief strategy officer and managing director at Shunya Communication Group 16 years of marketing and public relations experience MBA, Beijing International MBA program, Peking University Bachelor in international economics, the University of International Relations Andy YEUNG Chief Financial Officer Previously worked as a managing director in the research division at Oppenheimer, focusing on China s TMT sector 14+ years of finance and consulting related experience MBA, Yale University Bachelor in mechanical engineering and applied mathematics, the University of California, Berkeley 20

21 Growth Strategies

22 Growth Strategies 1 2 Further Grow Our Mobile User Base Deepen Our Global Penetration 3 4 Enhance Monetization Capabilities Pursue Strategic Investment and Acquisition Opportunities 22

23 Financial Highlights

24 Financial Highlights Monetization model from subscription to free Success on PC Diversified revenue sources from online marketing and online games Strong revenue growth with good partnership in the ecosystem Bigger opportunities on Mobile 220MM+ mobile MAU Rapid growth: mobile revenue contribution 17% in 1Q2014 Continuous investment in R&D and user acquisition Strong operating momentum Increased scalability Improved margins and profitability Revenue CAGR at 131%, and continue to achieve strong performance in 1Q

25 Strong Revenue Growth (Annual) Revenue (RMB MM) Breakdown Online marketing services IVAS Internet security services and others % 11.1% 82.9% % 81.7%

26 Strong Revenue Growth (Quarterly) YoY Growth 256% 193% 152% 121% QoQ Growth 42% 36% 65% 12% 17% 17% 45% 132% 17% (RMB MM) Q12A 2Q12A 3Q12A 4Q12A 1Q13A 2Q13A 3Q13A 4Q13A 1Q14A Online marketing services IVAS Internet security services and others 26

27 Strong Mobile Revenue Growth (Quarterly) As % of total revenue 1% 2% 3% 2% 2% 4% 8% 12% 17% YoY Growth 1,087% 664% 511% 1,055% 2,414% QoQ Growth 361% 206% 7% (21%) 197% 145% 101% 72% (RMB MM) Q12A 2Q12A 3Q12A 4Q12A 1Q13A 2Q13A 3Q13A 4Q13A 1Q14A 27

28 Cost of revenues Cost of revenues As % of revenues 38.4% 24.9% 18.7% Currently, the largest components of cost of revenues are business tax, bandwidth costs and personnel costs Channel fee, licensing fee and loyalty fee are likely to increase in the future with the development of mobile game business 141 our gross margin may decrease in the future due to the increasing revenue contribution from mobile games

29 Operating expenses R&D S&M G&A as % of revenue Research and development expenses 88.0% (RMB MM) R&D expenses as % of revenue 56.5% 39.7% 29.0% 71.5% 69.0% Selling and marketing expenses (RMB MM) selling and marketing expenses as % of revenue 20.6% 19.9% 26.9% General and administrative expenses (RMB MM) G&A expenses as % of revenue 10.9% 12.0% 13.0%

30 Attractive profitability Non-GAAP 1 Gross profit Non-GAAP 1 EBITDA % Gross profit Gross margin % 75.2% 81.3% (11.4)% EBITDA 14.4% EBITDA margin% 20.7% Non-GAAP 1 Operating profit 42 (16) Non-GAAP 1 net income / (loss) (22.2)% (31) Operating profit Operating margin % 10.7% % Notes: 1. Non-GAAP = GAAP financials + share-based compensation 2. EBITDA = Operating Profit + Depreciation + Amortization Net income Net income margin % 10.5% 13.3% (17.4)% (24)

31 Attractive profitability (cont d) Operating income (Non-GAAP 1 ) (RMB MM) 3.7% 9.2% 27.3% Operating income Operating margin % 20.2% 22.2% 16.5% 8.6% 10.6% (29.5%) (11) Q12A 2Q12A 3Q12A 4Q12A 1Q13A 2Q13A 3Q13A 4Q13A 1Q14A Net income (Non-GAAP 1 ) (RMB MM) 3.5% 16.1% 21.1% 25.3% Net income Net income margin % 10.2% 7.1% 13.2% 10.4% (24.5%) (9) Q12A 2Q12A 3Q12A 4Q12A 1Q13A 2Q13A 3Q13A 4Q13A 1Q14A Notes: 1. Non-GAAP = GAAP financials + share-based compensation 31

32 Balance sheet and working capital Balance sheet snapshot RMB MM Cash Dec 31, Accounts receivable, net Others Total current assets Capital expenditure (RMB MM) PP&E and intangible assets 64.2 Other non-current assets 80.9 Total non-current assets Total assets Accounts payable 23.4 Accrued expenses and others Others Free cash flow 1 (RMB MM) 168 Total liabilities Total mezzanine equity Total shareholders equity (16) 28 Total liabilities, mezzanine and shareholders equity Notes: 1. Free cash flow = operating cash flow Capex 32

33 Thank you!