Cheetah Mobile, Inc. Q4 FY2024 earnings call

Financial Performance

• Q4 total revenue grew 42% year-over-year and 23% quarter-over-quarter. Full-year 2024 total revenue was RMB807 million, up 21%. Non-GAAP operating losses were reduced quarter-over-quarter and are expected to further decrease in the first quarter of 2025 both year-over-year and quarter-over-quarter.

Robotics Business

• Cheetah aims to become a top three service robot provider globally within three years. Launched AgentOS for enhanced voice interaction in robots. Transitioning to vision-based solutions for service robots. Expanding globally, with progress in Europe and plans to open European headquarters in Germany.

AI Applications

• AI DS platform well-received by enterprises. Leveraging advanced LLMs like DeepSeek, ChatGPT for product innovation. Traditional software being transformed to AI-enabled applications.

Personnel and Cash Flow

• As of December 31, 2024, had 935 employees. Strong cash flow generation in Q4, with operating cash flow of about $39 million and a net cash position of about $250 million.

In Q4, total revenue was RMB237 million, growing 42% year-over-year and 23% quarter-over-quarter. Revenues from the Internet business increased by 49% year-over-year and 19% quarter-over-quarter, accounting for 68% of total revenue. Revenues from AI and others increased by 29% year-over-year and 33% quarter-over-quarter. Within the AI and others segment, the robotics business contributed about one-third of AI and other revenues, or about 10% of total revenues.

• Q4 non-GAAP operating losses reduced quarter-over-quarter and year-over-year. Expect first quarter 2025 non-GAAP operating losses to further decrease year-over-year and quarter-over-quarter. Aim to drive revenue growth and achieve breakeven and generate operating profit as soon as possible.

• Competition in the AI and robotics fields. Technical challenges in achieving reliable indoor navigation on limited computing power. Dependence on rapid iteration and market adoption of products.

Q: How do you view the impact of the introduction of large language models like DeepSeek-V3 and R1 on the competitive landscape of AI applications?

A: DeepSeek's innovation will continue, competition in large language models' performance will intensify. Eventually, most companies will shift to AI applications. Cheetah uses these technologies to enhance robot and Internet products, improving interaction experience in robots and making traditional software more intelligent.

Q: Compared with the last quarter, have Cheetah adjusted its robot business strategy?

A: Robotics industry is booming. Humanoid robots face challenges. Cheetah's strategy remains following established path. Focus on voice interaction robots, with large language model technology maturity enabling progress. Adjustments in commercialization and channels but no significant change in overall strategy.

Q: How can real world data feedback be used to accelerate technological iteration in Cheetah's robot business?

A: In voice interaction, data iteration improves recognition rate in noisy environments. In indoor navigation, data growth enhances self-positioning and path planning. Data flywheel helps improve user experience and maintain lead in intelligent experience.

Q: With the emergence of AI agents, how do you view their impact on the existing application ecosystem?

A: AI agents will have a major impact on app technology roadmap. May replace many traditional apps as natural language interaction becomes mainstream. Existing apps can be remade with AI agent technology, but depends on companies' actions. How it complements super apps like WeChat depends on WeChat's future actions.

Q: Could you review the major achievements of Cheetah's robot business in 2024 and share the plans and goals for 2025?

A: 2024 achievements include overseas market expansion. 2025 goals: achieve differentiated competition centered on intelligence and interaction; become one of top three robot companies globally within three years; robot revenue to account for half of total revenue.

Q: How can Cheetah break through limitations of wheeled robots and open up market space?

A: Limited market space of wheeled robots was due to insufficient intelligence level. With AgentOS and multimodal interaction capabilities, intelligence level of robots can be enhanced. Once intelligence level is improved, task completion capabilities expand, opening up market space.