- Though Cheetah Mobile (NYSE:CMCM -20.5%) beat Q1 estimates, the Chinese app developer is guiding for Q2 revenue of RMB975M-RMB1B ($151M-$155M), soundly below a 3-analyst RMB1.33B consensus. The guidance implies 10%-13% Y/Y RMB-based sales growth, a major slowdown from Q1's 63%.
- CEO Sheng Fu blames recent sales weakness on lower ad prices (CPMs) from certain ad platform partners in international markets, slower-than-expected progress in expanding Cheetah's direct sales force, and the fact it's taking longer than expected for Cheetah to execute on its content product strategy. The company has hired former Yahoo sales exec Todd Miller to be its VP of sales, and is investing in "new content products" to boost engagement.
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Top-line performance: Mobile revenue rose 110.5% Y/Y in Q1 and made up 74.1% of total revenue. Overseas (non-Chinese) revenue rose 115.6% and made up 56.8% of revenue. Mobile monthly active users rose by 16M Q/Q to 651M (less than the 68M added in Q4), and cumulative app installs rose by 421M Q/Q to 2.76B.
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Financials: Cost of revenue rose 96.7% Y/Y (outpacing revenue growth) due to higher traffic acquisition costs related to third-party ad sales, as well as higher bandwidth and data center costs. "Operating income and expenses" rose 57.7% to RMB771.7M ($119.7M). Cheetah ended Q1 with $258M in cash and $22M in bank loans.
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Cheetah's Q1 results, earnings release