Will removing 45 Cheetah mobile products from Google Store affect its revenue in the first quarter of 2020?
On March 24, Beijing time, Cheetah Mobile (NYSE: CMCM) announced its unaudited financial results for the fourth quarter of 2019 and the full year of 2019.
According to the financial report, Cheetah Mobile’s fourth-quarter revenue was 612 million yuan (RMB, the same below), a year-on-year decrease of 55.7%. Under US GAAP, the net loss attributable to shareholders of Cheetah Mobile was 841 million yuan, compared to a net profit of 733 million yuan in the same period in 2018; non-GAAP net loss was 244 million yuan, compared to 2018 Net profit for the same period of the year was 768 million yuan.
One of the reasons for the decrease in revenue was that the live broadcast software LiveMe, a subsidiary of Cheetah Mobile, was completed in the third quarter of 2019, and its revenue was not included in Cheetah Mobile’s financial report. Excluding this factor, Cheetah Mobile’s fourth-quarter revenue fell 46.9% year-on-year.
Data source: Cheetah Mobile Financial Report Mapping: (the same below)
For the full year of 2019, Cheetah Mobile’s total revenue was 3.587 billion yuan, a year-on-year decrease of 28.0%. Under U.S. GAAP, the net loss attributable to shareholders of Cheetah Mobile for the year was 314 million yuan, compared with a net profit of 1.167 billion yuan for the same period in 2018; non-GAAP net profit was 359 million yuan, a year-on-year Down 71.3%.
The financial report shows that the tool business revenue in the fourth quarter of 2019 was 296 million yuan, a year-on-year decrease of 61.9%. This revenue was the main driver of Cheetah Mobile’s revenue this quarter. This decline can be attributed to the following two reasons: firstly, the size of the overseas and domestic mobile tools market has decreased; secondly, the related revenue of the personal computer business has decreased.
In addition to the tool business, the entertainment industryService revenue was 285 million yuan, a year-on-year decrease of 12.6%. The decline can be attributed to the absence of new games and the saturation of the current game product market. The main source of entertainment business income is in-game consumption and advertising expenses, which account for about 77.3% of total entertainment business income.
The total operating cost of Cheetah Mobile in the fourth quarter of 2019 reached 1.210 billion, a year-on-year increase of 36%. The cost of research and development was 153 million, a year-on-year decrease of 19.7%; the cost of marketing and promotion was 344 million, a year-on-year decrease of 40.7%. The decrease in these two operating expenses is still due to the completion of the divestiture of the original Cheetah Mobile ’s live streaming software LiveMe in the third quarter of 2019, and its operating costs are not included in the Cheetah Mobile earnings report. The company’s management and operating cost was 175 million yuan, a year-on-year increase of 32.7%. This increase was mainly due to one-time asset impairment expenses.
Fu Sheng, chairman and CEO of Cheetah Mobile, said in the financial report that the company is facing some challenges, but these challenges will not affect the company’s normal operation and development. The outbreak will also affect the company’s robotics products and business, but will not affect the company’s revenue too much.
Before, the 45 software versions of Cheetah Mobile were removed from the Google Store on February 20, 2020. The company is still communicating with Google as of now, and its communication may not guarantee success. According to the financial report, 21.9% of Cheetah Mobile’s revenue in 2019 will come from Google.
Cheetah Mobile estimates that total revenue in the first quarter of 2020 will be between 490 million yuan and 540 million yuan.