Cheetah Mobile Announces First Quarter 2019 Unaudited Consolidated Financial Results

BEIJING,June 14,2019 -- Cheetah Mobile Inc. (NYSE: CMCM) ("Cheetah Mobile" or the "Company"),a leading mobile internet company with global market coverage,today announced its unaudited consolidated financial results for the first quarter ended March 31,2019.

First Quarter 2019 Financial Highlights

Total revenues were RMB1,085.6 million (US$161.8 million),reaching the high end of Company's previous guidance range of RMB1,060 million to RMB1,090 million.

Revenues from the mobile entertainment business increased by 41.7% year over year to RMB556.2 million (US$82.9 million),accounting for 51.2% of total revenues in the first quarter of 2019.

Other revenues grew by 299.2% to RMB31.5 million (US$4.7 million),mainly driven by the sales of the artificial intelligence ("AI") based interpretation device,Cheetah Translator,in China.

Gross profit was RMB718.7 million (US$107.1 million) in the first quarter of 2019. Gross margin remained stable year over year at 66.2%.

Operating profit from utility products and related services was RMB123.2 million (US$18.4 million) in the first quarter of 2019. Operating loss for the mobile entertainment business further reduced to RMB44.1 million (US$6.6 million) in the first quarter of 2019 from RMB75.0 million in the same period last year.

Net income attributable to Cheetah Mobile shareholders was RMB7.1 million (US$1.1 million). Non-GAAP net income attributable to Cheetah Mobile shareholders was RMB33.8 million (US$5.0 million).

As of March 31,2019,the Company had cash and cash equivalents,restricted cash,and short-term investments of RMB3,422.6 million (US$510.0 million).

First Quarter 2019 Operating Metrics

The average number of global mobile monthly active users ("Mobile MAUs") was 434.8 million in the first quarter of 2019. The number of Mobile MAUs from markets outside of China,or overseas markets,accounted for 70.3% of the total number of Mobile MAUs in the first quarter of 2019.

Mr. Sheng Fu,Cheetah Mobile's Chairman and Chief Executive Officer,stated,"Our AI businesses made strong progress in the first quarter of 2019. We continued to enrich our AI product portfolio and build more use cases for our AI products. As to consumer-facing products,we launched a tailor-made version of CM Translator for Chinese primary school students in the first quarter of 2019 to help them learn English at home. CM Translator has been the top seller among its peers since its launch in July 2018. As to enterprise-focused products,we expanded Cheetah GreetBot's consumer locations to university libraries to help students easily find the books they need. Looking ahead,we are quite excited about additional AI opportunities. 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."

Mr.Vincent Jiang,Cheetah Mobile's Chief Financial Officer,commented,"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. Notably,revenues from the mobile games business increased by 73% year over year to RMB302 million,already accounted for 28% of total revenue in the quarter. On the profit side,our utility products and related services continued to generate solid profit of RMB123 million in the quarter. Losses from the mobile entertainment business continued to narrow in the quarter thanks to the reduced loss from our LiveMe business. 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."

First Quarter 2019 Consolidated Financial Results

REVENUES

Total revenueswere RMB1,085.6 million(US$161.8 million) in the first quarter of 2019.

Revenues fromutility products and related servicesdecreased by 33.1% year over year toRMB497.9 million(US$74.2 million) in the first quarter of 2019. The year-over-year decrease was primarily due to continuous disruptions to the Company's overseas mobile utility business as a result of the negative publicity caused by a news article published in 2018.

Revenues from the mobile entertainment businessincreased by 41.7% year over year toRMB556.2 million(US$82.9 million),driven by the growth of both mobile games business and LiveMe business. Revenues from the mobile entertainment business contributed to 51.2% of the total revenue in the first quarter of 2019,up from 34.3% in the first quarter of 2018.

Revenues from the mobile games business increased by 72.5% year over year to RMB301.5 million (US$44.9 million) in the quarter. The increase was mainly attributable to the strong performance of Bricks n Balls,which started to ramp up from the middle of July 2018. The Company's flagship titles,including Piano Tiles 2,Rolling Sky,and Dancing Line,also exhibited very strong performance in the first quarter of 2019. In the first quarter of 2019,we also launched a number of casual games,which also contributed to the revenue growth,although their aggregate revenue contributions were still insignificant.

Revenues from LiveMe,increased by 17.0% year over year to RMB254.8 million (US$38.0 million). The increase was primarily driven by higher average revenue per paying user. LiveMe introduced several new features in the quarter to enhance user interaction,competition,and engagement.

Other revenues grew by 299.2% year over year toRMB31.5 million(US$4.7 million),mainly driven by the sales of the AI-based interpretation device,in China. Revenues from others represented 2.9% of total revenues in the first quarter of 2019,up from 0.7% in the first quarter of 2018.

COST OF REVENUES AND GROSS PROFIT

Cost of revenuesdecreased by 6.2% year over year toRMB366.9 million(US$54.7 million) in the first quarter of 2019. The year-over-year decrease resulted from the reduced traffic acquisition costs associated with the Company's third-party advertising platform business,partially offset by an increase in content and channel costs in relation to the Company's mobile game business,as well as increased costs associated with the AI business. Non-GAAP cost of revenuesdecreased by 6.3% year over year toRMB366.8 million(US$54.7 million) in the first quarter of 2019.

Gross profitdecreased by 4.7% year over year toRMB718.7 million(US$107.1 million) in the first quarter of 2019.Non-GAAP gross profitdecreased by 4.6% year over year toRMB718.9 million(US$107.1 million). Gross margin and non-GAAP gross margin remained stable at 66.2% year over year.

OPERATING INCOME AND EXPENSES

Total operating expensesincreased by 19.2% year over year toRMB736.4 million(US$109.7 million) in the first quarter of 2019.Total non-GAAP operating expensesincreased by 16.7% year over year toRMB709.9 million(US$105.8 million) in the first quarter of 2019.

Research and development (R&D) expense increased by 33.7% year over year to RMB196.9 million (US$29.3 million) in the first quarter of 2019. The increase primarily resulted from higher share-based compensation expenses and increased R&D headcount in relation to the Company's mobile games and AI-related businesses. Non-GAAP R&D expenses,which exclude share-based compensation expenses,increased by 17.6% year over year to RMB180.4 million (US$26.9 million) in the first quarter of 2019.

Selling and marketing expenses increased by 11.6% year over year to RMB436.6 million (US$65.1 million) in the first quarter of 2019. The increase was mainly due to increased promotion efforts for the Company's mobile games and AI-related business. Non-GAAP selling and marketing expenses,increased by 10.9% year over year to RMB433.8 million (US$64.6 million) in the first quarter of 2019.

General and administrative expenses increased by 16.8% year over year to RMB105.8 million (US$15.8 million) in the first quarter of 2019. The year-over-year increase was primarily due to higher professional service fees and increased employee benefits for general and administrative staff. Non-GAAP general and administrative expenses,increased by 30.3% year over year to RMB98.7 million (US$14.7 million) in the first quarter of 2019.

Operating losswas RMB17.7 million(US$2.6 million) in the first quarter of 2019 compared to an operating profit ofRMB136.4 millionin the same period last year.Non-GAAP operating profitwas RMB9.0 million (US$1.3 million) in the first quarter of 2019 compared to RMB145.3 million in the same period last year.

The Company has reported its operating profit (loss) along the following segments since the second quarter of 2017:

Operating profit for utility products and related services was RMB123.2 million (US$18.4 million) in the first quarter of 2019,decreasing from RMB 264.7 million in the first quarter of 2018,mainly due to the revenue decrease in the overseas market.

Operating loss for the mobile entertainment business was RMB44.1 million (US$6.6 million) in the first quarter of 2019 compared to operating loss of RMB75.0 million in the same period last year. The reduced losses were mainly attributable to the increasing operational leverage and stricter cost and expense management for LiveMe,as well as the improved operating profits for the Company's flagship games,partially offset by initiatives to launch new titles.

Share-based compensation expenseswas RMB26.7 million (US$4.0 million) in the first quarter of 2019 compared toRMB8.9 million in the same period last year,as the Company granted a certain number of restricted shares to key employees.

NET INCOME ATTRIBUTABLE TO CHEETAH MOBILE SHAREHOLDERS

Net income attributable to Cheetah Mobile shareholderswasRMB7.1 million(US$1.1 million) in the first quarter of 2019.Non-GAAP net income attributable to Cheetah Mobile shareholderswasRMB33.8 million(US$5.0 million) in the first quarter of 2019.

NET INCOME PER ADS

Diluted loss per ADSwasRMB0.02(US$0.00)in the first quarter of 2019.Non-GAAP diluted income per ADSwasRMB0.17 (US$0.03)in the first quarter of 2019.

ADJUSTED EBITDA

Adjusted EBITDA (Non-GAAP)decreased by 85.0% year over year toRMB25.3 million(US$3.8 million) in the first quarter of 2019.

BALANCE SHEET

As ofMarch 31,and short-term investments ofRMB3,422.6 million (US$510.0 million).

SHARES ISSUED AND OUTSTANDING

As ofMarch 31,the Company had a total of 1,433,343,199 Class A and Class B ordinary shares issued and outstanding. One ADS represents 10 Class A ordinary shares.

SHARE REPURCHASE PROGRAM

On September 13,2018,the Company announced that its board of directors had approved a share repurchase program of up to US$100 million of the Company's outstanding ADSs for a period not to exceed 12 months. Cheetah funded repurchases made under this program from its available cash balance. As of June 14,the Company had repurchased approximately 4.5 million ADSs for approximately US$32 million under this program.

Business Outlook

For the second quarter of 2019,the Company expects its total revenues to be betweenRMB920 million(US$137 million) andRMB950 million(US$142 million). This estimate represents management's preliminary view as of the date of this release,which is subject to change.

Conference Call Information

The Company will hold a conference call onFriday,2019at8:00 a.m. Eastern Timeor8:00 p.m.Beijing Time to discuss the financial results. Listeners may access the call by dialing the following numbers:

International: +1-412-902-4272

United States Toll Free: +1-888-346-8982

China Toll Free: 4001-201-203

Hong Kong Toll Free: 800-905-945

Conference ID: Cheetah Mobile

The replay will be accessible throughJune 21,2019by dialing the following numbers:

International:

+1-412-317-0088

United States Toll Free:

+1-877-344-7529

Access Code:

10131962

A live and archived webcast of the conference call will also be available at the Company's investor relations website athttp://ir.cmcm.com.

EXCHANGE RATE

This press release contains translations of certain Renminbi amounts into U.S. dollars at specified rates solely for the convenience of readers. Unless otherwise noted,all translations from Renminbi to U.S. dollars in this press release were made at a rate of RMB 6.7112 to US$1.00,the exchange rate in effect as of March 31,as set forth in the H.10 statistical release of the Federal Reserve Board. Such translations should not be construed as representations that RMB amounts could be converted into U.S. dollars at that rate or any other rate,or to be the amounts that would have been reported under accounting principles generally accepted in the United States of America ("U.S. GAAP").

ABOUT CHEETAH MOBILE INC.

Cheetah Mobile is a leading mobile Internet company with global market coverage. It has attracted hundreds of millions of monthly active users through its mobile utility products such as Clean Master and Cheetah Keyboard,casual games such as Piano Tiles 2,Bricks n Balls,and live streaming product LiveME. The Company provides its advertising customers,which include direct advertisers and mobile advertising networks through which advertisers place their advertisements,with direct access to highly targeted mobile users and global promotional channels. The Company also provides value-added services to its mobile application users through the sale of in-app virtual items on selected mobile products and games. Cheetah Mobile is committed to leveraging its cutting-edge artificial intelligence technologies to power its products and make the world smarter. It has been listed on the New York Stock Exchange since May 2014.

SAFE HARBOR STATEMENT

This press release contains forward-looking statements. These statements,including management quotes and business outlook,constitute forward-looking statements under the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as "will," "expects," "anticipates," "future," "intends," "plans," "believes," "estimates" and similar statements. Such statements involve inherent risks and uncertainties. A number of factors could cause actual results to differ materially from those contained in the forward-looking statements,including but are not limited to the following: Cheetah Mobile's growth strategies; Cheetah Mobile's ability to retain and increase its user base and expand its product and service offerings; Cheetah Mobile's ability to monetize its platform; Cheetah Mobile's future business development,financial condition and results of operations; competition with companies in a number of industries including internet companies that provide online marketing services and internet value-added services; expected changes in Cheetah Mobile's revenues and certain cost or expense items; and general economic and business condition globally and in China. Further information regarding these and other risks is included in Cheetah Mobile's filings with the U.S. Securities and Exchange Commission. Cheetah Mobile does not undertake any obligation to update any forward-looking statement as a result of new information,future events or otherwise,except as required under applicable law.

USE OF NON-GAAP FINANCIAL MEASURES

To supplement Cheetah Mobile's consolidated financial information presented in accordance with U.S. GAAP,Cheetah Mobile uses the following non-GAAP financial measures:

Non-GAAP cost of revenues reflects cost of revenues excluding the portion of share-based compensation expenses allocated to cost of revenues.

Non-GAAP gross profit reflects gross profit excluding the portion of share-based compensation expenses allocated to gross profit.

Non-GAAP operating income and expenses reflect operating income and expenses excluding the portion of share-based compensation expenses allocated to operating expenses.

Non-GAAP operating profit reflects operating profit excluding share-based compensation expenses.

Non-GAAP net income attributable to Cheetah Mobile shareholders is net income attributable to Cheetah Mobile shareholders excluding share-based compensation expenses.

Non-GAAP diluted earnings per ADS is non-GAAP net income attributable to Cheetah Mobile shareholders excluding net income attributable to redeemable non-controlling interests,divided by weighted average number of diluted ADSs.

Adjusted EBITDA is earnings before interest,taxes,depreciation,amortization,other non-operating income and share-based compensation expenses.

Free cash flow is net cash generated by operating activities less capital expenditure.

The Company believes that separate analysis and exclusion of share-based compensation expenses and the use of Adjusted EBITDA add clarity to the constituent parts of its performance from the cash perspective. The Company reviews these non-GAAP financial measures together with GAAP financial measures to obtain a better understanding of its operating performance. It uses the non-GAAP financial measures for planning,forecasting and measuring results against the forecast. The Company believes that non-GAAP financial measures are useful supplemental information for investors and analysts to assess its operating performance without the effect of share-based compensation expenses,which have been and will continue to be significant recurring expenses in its business. However,the use of non-GAAP financial measures has material limitations as an analytical tool. One of the limitations of using non-GAAP financial measures is that they do not include all items that impact the Company's net income for the period. In addition,because non-GAAP financial measures are not measured in the same manner by all companies,they may not be comparable to other similarly titled measures used by other companies. In light of the foregoing limitations,you should not consider non-GAAP financial measure in isolation from or as an alternative to the financial measure prepared in accordance with U.S. GAAP. For more information on these non-GAAP financial measures,please see the tables captioned "Cheetah Mobile Inc. Reconciliations of GAAP and Non-GAAP Results" and "Cheetah Mobile Inc. Reconciliation of Net Income Attributable to Cheetah Mobile Shareholders to Adjusted EBITDA (Non-GAAP)" at the end of this release.

INVESTOR RELATIONS CONTACT

Cheetah Mobile Inc.

Helen Jing Zhu

Tel: +86 10 6292 7779 ext. 1600

Email: helenjingzhu@cmcm.com

ICR Inc.

Jack Wang

Tel: +1 (646) 417-5395

Email: IR@cmcm.com

CHEETAH MOBILE INC.

Condensed Consolidated Balance Sheets

(Unaudited,amounts in thousands of Renminbi ("RMB") and US dollars ("US$")

As of

December 31,2018

31-Mar-19

31-Mar-19

RMB

RMB

USD

ASSETS

Current assets:

Cash and cash equivalents

2,783,843

2,048,801

305,281

Restricted cash

6,133

2,613

389

Short-term investments

930,610

1,371,144

204,307

Accounts receivable

655,261

569,495

84,857

Prepayments and other current assets

1,064,714

1,140,449

169,932

Due from related parties

126,990

198,363

29,557

Total current assets

5,567,551

5,330,865

794,323

Non-current assets:

Property and equipment,net

63,919

60,185

8,968

Right-of-use assets,net*

-

216,155

32,208

Intangible assets,net

48,421

44,646

6,652

Goodwill

617,837

610,170

90,918

Investmentinequityinvestees

151,533

160,703

23,945

Otherlongterminvestments

1,697,510

1,382

252,918

Due from related parties

21,139

19,473

2,902

Deferred tax assets

88,896

95,586

14,243

Other non-current assets

35,830

35,432

5,279

Total non-current assets

2,725,085

2,939,732

438,033

Total assets

8,292,636

8,270,597

1,232,356

LIABILITIES,MEZZANINE EQUITY AND

SHAREHOLDERS' EQUITY

Current liabilities:

Accounts payable

171,055

159,567

23,776

Accrued expenses and other current liabilities

1,514,642

1,320,065

196,696

Due to related parties

37,298

37,341

5,564

Income tax payable

112,770

121,580

18,116

Total current liabilities

1,835,765

1,638,553

244,152

Non-current liabilities:

Deferred tax liabilities

110,291

112,601

16,778

Other non-current liabilities*

64,185

285,078

42,477

Total non-current liabilities

174,476

397,679

59,255

Total liabilities

2,010,241

2,036,232

303,407

Mezzanine equity:

Redeemable noncontrolling interests

687,847

697,996

104,005

Shareholders' equity:

Ordinary shares

230

231

34

Treasury stock

(221,932)

(221,932)

(33,069)

Additional paid-in capital

2,742,893

2,770,790

412,861

Retained earnings

2,705,970

2,703,251

402,797

Accumulated other comprehensive income

249,304

170,104

25,346

Total Cheetah Mobile shareholders' equity

5,476,465

5,422,444

807,969

Noncontrolling interests

118,083

113,925

16,975

Total equity

5,594,548

5,536,369

824,944

Total liabilities,mezzanine equity and equity

8,356

* On January 1,the company adopted ASC 842,the new lease standard,using the modified retrospective basis and did not restate

comparative periods.

CHEETAH MOBILE INC.

Condensed Consolidated Statements of Comprehensive Income (Loss)

(Unaudited,amounts in thousands of Renminbi ("RMB") and US dollars ("US$"),except for number of shares and per share(or ADS) data)

For The Three Months Ended

March 31,2018

December 31,2018

March 31,2019

March 31,2019

RMB

RMB

RMB

USD

Revenues

1,145,097

1,381,173

1,085,628

161,764

Utility products and related services

744,763

783,021

497,933

74,195

Mobile entertainment

392,452

555,597

556,230

82,881

Others

7,882

42,555

31,465

4,688

Cost of revenues (a)

(391,182)

(416,399)

(366,931)

(54,674)

Gross profit

753,915

964,774

718,697

107,090

Operating income and expenses:

Research and development (a)

(147,278)

(191,135)

(196,938)

(29,345)

Selling and marketing (a)

(391,355)

(580,330)

(436,629)

(65,060)

General and administrative (a)

(90,600)

(131,849)

(105,829)

(15,769)

Impairment of goodwill and intangible assets

-

(7,180)

-

-

Other operating income

11,679

20,771

3,002

447

Total operating income and expenses

(617,554)

(889,723)

(736,394)

(109,727)

Operating profit (loss)

136,361

75,051

(17,697)

(2,637)

Other income (expense):

Interest income,net

16,652

27,519

31,617

4,711

Foreign exchange (loss) gain,net

(12,829)

6,096

(5,373)

(801)

Impairment of investment impairment

(58,000)

(98,885)

-

-

(Loss) Gain from equity method investments,net

(2,739)

2,694

6,141

915

Other income,net

500

789,325

432

64

Income before taxes

79,945

801,800

15,120

2,252

Income tax expenses

(5,042)

(57,008)

(12,434)

(1,853)

Net income

74,903

744,792

2,686

399

Less: net income (loss) attributable to noncontrolling interests

4,906

11,457

(4,428)

(660)

Net income attributable to Cheetah Mobile shareholders

69,997

733,335

7,114

1,059

Earnings (Losses) per share

Basic

0.04

0.52

0.00

0.00

Diluted

0.04

0.51

0.00

0.00

Earnings (Losses) per ADS

Basic

0.43

5.19

(0.02)

0.00

Diluted

0.42

5.09

(0.02)

0.00

Weighted average number of shares outstanding

Basic

1,403,597,719

1,393,015,891

1,365,622,524

1,524

Diluted

1,452,802,118

1,420,765,216

1,392,184,524

Weighted average number of ADSs outstanding

Basic

140,359,772

139,301,589

136,562,252

136,252

Diluted

145,280,212

142,076,522

139,218,452

139,452

Other comprehensive (loss) income,net of tax of nil

Foreign currency translation adjustments

(134,774)

(23,031)

(82,541)

(12,299)

Unrealized (loss) gain on available-for-sale securities,net

-

(1,203)

3,498

521

Other comprehensive loss

(134,774)

(24,234)

(79,043)

(11,778)

Total comprehensive (loss) income

(59,871)

720,558

(76,357)

(11,379)

Less: Total comprehensive income (loss) attributable to

noncontrolling interests

3,321

12,574

(4,271)

(636)

Total comprehensive(loss) income attributable to Cheetah Mobile

shareholders

(63,192)

707,984

(72,086)

(10,743)

CHEETAH MOBILE INC.

Condensed Consolidated Statements of Comprehensive Income (Loss)

(Unaudited,2019

(a) Share-based compensation expenses

RMB

RMB

RMB

USD

Cost of revenues

(90)

160

159

24

Research and development

(6,143)

15,169

16,512

2,460

Selling and marketing

302

2,665

2,827

421

General and administrative

14,850

17,266

7,153

1,066

Total

8,919

35,260

26,651

3,971

CHEETAH MOBILE INC.

Reconciliation of GAAP and Non-GAAP Results

(Unaudited,in'000,except for per share data and percentage)

For The Three Months Ended March 31,2019

GAAP

% of Net

Share-based

% of Net

Non-GAAP

% of Net

Non-GAAP

Result

Revenues

Compensation

Revenues

Result

Revenues

Result ($)

Revenues

1,628

1,628

161,764

Cost of revenues

(366,931)

33.8%

159

0.0%

(366,772)

33.8%

(54,650)

Gross profit

718,697

66.2%

159

0.0%

718,856

66.2%

107,114

Research and development

(196,938)

18.1%

16,512

1.5%

(180,426)

16.6%

(26,885)

Selling and marketing

(436,629)

40.2%

2,827

0.3%

(433,802)

40.0%

(64,639)

General and administrative

(105,829)

9.7%

7,153

0.7%

(98,676)

9.1%

(14,703)

Other operating income

3,002

0.3%

-

0.0%

3,002

0.3%

447

Total operating income and expenses

(736,394)

67.8%

26,492

2.4%

(709,902)

65.4%

(105,780)

Operating(loss) profit

(17,697)

1.6%

26,651

2.5%

8,954

0.8%

1,334

Net income attributable to Cheetah Mobile shareholders

7,114

0.7%

26,651

2.5%

33,765

3.1%

5,031

Diluted (losses) earnings per ordinary share (RMB)

0.00

0.02

0.02

Diluted (losses) earnings per ADS (RMB)

(0.02)

0.19

0.17

Diluted (losses) earnings per ADS (USD)

0.00

0.03

0.03

For The Three Months Ended December 31,2018

GAAP

% of Net

Share-based

% of Net

Non-GAAP

% of Net

Result

Revenues

Compensation

Revenues

Result

Revenues

Revenues

1,173

1,173

Cost of revenues

(416,399)

30.1%

160

0.0%

(416,239)

30.1%

Gross profit

964,774

69.9%

160

0.0%

964,934

69.9%

Research and development

(191,135)

13.8%

15,169

1.1%

(175,966)

12.7%

Selling and marketing

(580,330)

42.0%

2,665

0.2%

(577,665)

41.8%

General and administrative

(131,849)

9.5%

17,266

1.3%

(114,583)

8.3%

Impairment of goodwill and intangible assets

(7,180)

0.5%

-

0.0%

(7,180)

0.5%

Other operating income

20,771

1.5%

-

0.0%

20,771

1.5%

Total operating income and expenses

(889,723)

64.4%

35,100

2.5%

(854,623)

61.9%

Operating profit

75,051

5.4%

35,260

2.6%

110,311

8.0%

Net income attributable to Cheetah Mobile shareholders

733,335

53.1%

35,260

2.6%

768,595

55.6%

Diluted earnings per ordinary share (RMB)

0.51

0.02

0.53

Diluted earnings per ADS (RMB)

5.09

0.25

5.34

For The Three Months Ended March 31,097

1,097

Cost of revenues

(391,182)

34.2%

(90)

0.0%

(391,272)

34.2%

Gross profit

753,915

65.8%

(90)

0.0%

753,825

65.8%

Research and development

(147,278)

12.9%

(6,143)

0.5%

(153,421)

13.4%

Selling and marketing

(391,355)

34.2%

302

0.0%

(391,053)

34.2%

General and administrative

(90,600)

7.9%

14,850

1.3%

(75,750)

6.6%

Other operating income

11,679

1.0%

-

0.0%

11,679

1.0%

Total operating income and expenses

(617,554)

53.9%

9,009

0.8%

(608,545)

53.1%

Operating profit

136,361

11.9%

8,919

0.8%

145,280

12.7%

Net income attributable to Cheetah Mobile shareholders

69,997

6.1%

8,919

0.8%

78,916

6.9%

Diluted earnings per ordinary share (RMB)

0.04

0.01

0.05

Diluted earnings per ADS (RMB)

0.42

0.06

0.48

CHEETAH MOBILE INC.

Information about Segment

(Unaudited,except for percentage)

For The Three Months Ended March 31,2019

Utility Products

and

Related Services

Mobile Entertainment

Others

Unallocated*

Consolidated

RMB

RMB

RMB

RMB

RMB

USD

Revenue

497,933

556,230

31,465

-

1,628

161,764

Operating profit (loss)

123,175

(44,148)

(70,073)

(26,651)

(17,697)

(2,637)

Operating margin

24.7%

(7.9)%

(222.7)%

(1.6)%

(1.6)%

For The Three Months Ended December 31,2018

Utility Products

and

Related Services

Mobile Entertainment

Others

Unallocated*

Consolidated

RMB

RMB

RMB

RMB

RMB

Revenue

783,021

555,597

42,555

-

1,173

Operating profit (loss)

224,033

(64,780)

(48,942)

(35,260)

75,051

Operating margin

28.6%

(11.7)%

(115.0)%

5.4%

For The Three Months Ended March 31,2018

Utility Products

and

Related Services

Mobile Entertainment

Others

Unallocated*

Consolidated

RMB

RMB

RMB

RMB

RMB

Revenue

744,763

392,452

7,882

-

1,097

Operating profit (loss)

264,706

(75,046)

(44,380)

(8,919)

136,361

Operating margin

35.5%

(19.1)%

(563.1)%

11.9%

* Unallocated expenses refer to SBC expenses that are not allocated to individual segments.

CHEETAH MOBILE INC.

Reconciliation from Net Income Attributable to Cheetah Mobile Shareholders to Adjusted EBITDA (Non-GAAP)

(Unaudited,in '000)

For The Three Months Ended

March 31,2018

December 31,2018

March 31,2019

March 31,2019

RMB

RMB

RMB

USD

Net income attributable to Cheetah Mobile shareholders

69,997

733,335

7,114

1,059

Add:

Income tax expenses

5,042

57,008

12,434

1,853

Interest income,net

(16,652)

(27,519)

(31,617)

(4,711)

Depreciation and amortization

23,472

17,237

16,351

2,436

Net income (loss) attributable to noncontrolling interests

4,906

11,457

(4,428)

(660)

Other non-operating expense (income),net

73,068

(699,230)

(1,200)

(178)

Share-based compensation

8,919

35,260

26,651

3,971

Adjusted EBITDA

168,752

127,548

25,305

3,770

CHEETAH MOBILE INC.

Revenues Generated from PC-based and Mobile-based Applications and Services

(Unaudited,2019

RMB

RMB

RMB

USD

PC

127,094

171,837

120,278

17,922

Mobile

1,018,003

1,209,336

965,350

143,842

Total

1,097

1,173

1,628

161,764

CHEETAH MOBILE INC.

Revenues Generated from Domestic and Overseas Markets

(Unaudited,2019

RMB

RMB

RMB

USD

Domestic

447,620

533,221

424,323

63,226

Overseas

697,477

847,952

661,305

98,538

Total

1,764

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