Cheetah Mobile Stock Price Rises After “Better-than-Expected” Q2 Earnings
Cheetah Mobile stock price soared over 23 percent on August 20 in the U.S. stock market, after the Chinese mobile internet company published its financial reports for the second quarter of 2018.
Total revenues in Q2 were 1.1 billion yuan ($166.8 million), exceeding its own guidance by 20 million yuan. The company expects their total revenues in Q3 to be between 1.29 billion yuan and 1.35 billion yuan, representing a 10 to 15 percent year-over-year growth.
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“We are pleased that the initiatives we have implemented to resume growth for our company are starting to bear fruit,” said Fu Sheng, chairman and CEO of Cheetah Mobile. Fu mentioned two main growth drivers, one being the mobile utility products in the domestic market and other being the mobile game business.
Mobile utility products in China achieved a high-level of user engagement which allowed the company to attract and diversify advertising. In Q2, revenues from mobile utility products in the domestic market grew substantially, primarily driven by the Clean Master application in the Chinese market, which reached over 30 million DAUs in June, according to Fu.
The strong performance of our mobile utility products in China has largely offset the weakness in the overseas market, said Vincent Jiang, Chief Financial Officer of Cheetah Mobile, who thought the financial performance was better than expected.
Operating profit for utility products and related services increased by 32.5 percent year-over-year to 282.1 million yuan and operating margin for utility products and related services expanded to 37.3 percent in the second quarter of 2018 from 26.7 percent in the same period last year.
As for the mobile game business, although its revenues decreased by 9.2 percent year-over-year to 138.7 million yuan due to a temporary void of new games, Fu expect that the mobile game business will resume sequential growth in the third quarter with the release of new titles.
Cheetah Mobile also made some progress in their AI-powered hardware business, such as the recently released translation tool. The $40 Cheetah Translator released in July allows users to easily communicate in English, Chinese, Japanese or Korean.