Cheetah Mobile's Q1 Results Meet the Higher End of its Forecast, Stock Slips on Declining Revenue

Shares in the Chinese mobile internet company decrease 20 cents after it reports a disappointing result.

Author: Binwei Wang   

Shares of Cheetah Mobile Inc. (NYSE: CMCM) dropped 5.7 percent, closing Friday at $3.76 apiece, following the company's first quarter unaudited consolidated financial results.

The Beijing mobile internet company said in a statement today that its revenue decreased by 19.5 percent from $200.9 to $161.8 million during the three months through March. However, Cheetah reached the high end of the company's previous guidance.

Net income attributable to Cheetah Mobile shareholders was $1.1 million, representing a 89.8 percent decrease year-over-year and a drop of 99 percent from the last quarter in 2018.

Cheetah's chairman and chief executive officer, Sheng Fu, said the results were in line with the company's expectations, although they missed on some analysts' estimates.

"Our AI businesses made strong progress in the first quarter of 2019." Fu said.

"We will continue to leverage our AI technologies and rich experience in developing applications to grow our AI businesses. Backed with our strong cash position and cash generation capability, we believe that our AI business will enable us to drive our long-term growth." he added.

Cheetah, creator of some of the most popular global mobile apps, said it had 434.8 million mobile monthly active users globally during the first quarter, with 70.3 percent of those users located outside China.

Costs of revenue declined 6.2 percent year-over-year to $57.4 million during the first quarter, as the company reduced its traffic acquisition expenses. The company's operating expenses increased 19.2 percent to $109.7 million, rising across all departments.

"Driven by the robust revenue growth in our mobile entertainment business and AI-related business, our total revenues in the first quarter of 2019 reached the high end of our previous guidance," said Vincent Jiang, Cheetah's chief financial officer. "Looking ahead, we are confident that our long-term growth prospects remain healthy. We believe that our strong cash generation capabilities and our high cash balance will allow us to continue to expand into the AI space."

Cheetah Mobile forecasts revenue between $137 and $142 million for the second quarter.