Cheetah Mobile Q1 Earnings Call Highlights

Cheetah Mobile (NYSE:CMCM) said its first quarter of 2026 reflected continued progress in its transition from a traditional internet company toward AI-enabled applications, AI agents and robotics, while near-term results were pressured by weakness in advertising-related businesses.

Chairman and CEO Fu Sheng described 2026 as “an important transition year” for the company, saying Cheetah Mobile is moving from capability building into “early-stage commercial validation.” He said the company is focused on turning AI capabilities into practical products for business scenarios and helping customers improve return on investment.

Total revenue was RMB 259 million in the first quarter, which Director and CFO Thomas Jian said was “relatively stable” year over year. Operating loss was RMB 28.3 million, compared with RMB 26.5 million in the same period last year. Jian attributed the increase mainly to lower profitability in internet and global enterprise services, due to declines in online advertising and advertising agency services, along with continued investment in AI and robotics.

Robotics Becomes Separate Reporting Segment

Cheetah Mobile began reporting its robotics and others business as an independent segment in the quarter. Revenue from robotics and others rose 175.9% year over year to RMB 51.2 million, representing 19.8% of total revenue. Adjusted operating loss for the segment narrowed 57.1% year over year, which management said reflected improved operating efficiency and commercial execution.

Fu said demand remains strong and that the company expects robotics and others revenue to grow on both a year-over-year and quarter-over-quarter basis in the second quarter. He said the company’s robotics efforts currently focus on commercial scenarios such as reception, guided tours and intelligent service applications.

The company also highlighted smart personal mobility as an extension of its robotics and AI platform into personal mobility and healthcare-related uses. Fu said Cheetah Mobile began initial shipments in the second quarter to a top global designer and manufacturer of mobility products and to a leading elderly mobility scooter manufacturer in China. He said early feedback and commercial traction have been encouraging.

Cloud and AI Infrastructure Revenue Rises

Management said Cheetah Mobile’s cloud and AI infrastructure services, within its global enterprise services segment, are seeing strong customer adoption. Fu said the company works with Google Cloud and AWS to help enterprises serving international markets access AI models and manage multi-cloud environments more efficiently.

Revenue from cloud and AI infrastructure services increased 68.3% year over year in the quarter, supported by enterprise demand for AI-related cloud and token management services. Fu said daily average token usage has increased more than 20 times since January 2026, exceeding 400 billion in May.

Fu said robotics and others, together with cloud and AI infrastructure services, accounted for 38% of first-quarter revenue. He said management expects their revenue contribution to continue growing and to exceed 50% of total revenue in the second half of the year.

Advertising Pressures Weigh on Results

Cheetah Mobile said revenue from the advertising agency business within global enterprise services was affected by policy changes from certain overseas advertising platforms. Fu said the decline was driven primarily by external factors rather than changes in customer demand, and called it the main reason for the company’s wider year-over-year operating loss.

Jian said the company’s internet services business continued to provide profit and cash flow support. Internet value-added services revenue grew 8.2% year over year and accounted for 72.8% of internet services revenue, making the segment more predictable, he said. The internet services business generated approximately RMB 15.2 million in adjusted operating profit in the quarter, while global enterprise services generated approximately RMB 13.8 million in adjusted operating profit.

As of March 31, 2026, Cheetah Mobile had approximately $186 million in cash and cash equivalents and more than $100 million in long-term investments. Jian said that position gives the company flexibility to continue investing in AI and robotics in a disciplined way.

Management Discusses Robotics Strategy

During the question-and-answer session, Fu said real-world deployment data is critical for improving robotics capabilities. He said the robotics industry lacks the kind of large-scale data foundation that helped drive large language model development, adding that physical environments are far more complex than labs or simulators.

Fu cited Cheetah Mobile’s experience in voice interaction across noisy and varied commercial environments, as well as indoor navigation and obstacle avoidance, as examples of capabilities improved through long-term deployment data. He said the company’s smart wheelchair applies technology developed through years of deploying robots in environments with different floors, carpets, walls and reflections.

Asked about future competition in robotics, Fu said he believes the most important barriers over the next three to five years will be scenario operation capabilities and customer networks, rather than a single general-purpose robot model. He said customers ultimately care about cost performance and ROI, not whether a product is labeled as a robot.

Fu also expressed skepticism that humanoid robots will achieve meaningful commercialization beyond demonstrations within the next three to five years. He said wheeled robots and robotic arms are more mature forms for deployment, and argued that specialized vertical robots will likely develop first, collect data and gradually evolve toward more general forms.

AI Applications and Enterprise Demand

In response to analyst questions about the AI industry, Fu said he believes the application layer is likely to capture the greatest long-term value, even though models and infrastructure have drawn significant attention recently. He said model capabilities are converging, costs are declining and many models already perform well on daily tasks, making application depth increasingly important.

Fu said enterprise AI moats will come from deep understanding of customer needs and industries, as well as organizational ability to move quickly. He said AI-native organizations can use AI to restructure internal workflows, improve efficiency and launch products and services more rapidly.

Looking ahead, Jian said Cheetah Mobile’s priorities remain maintaining operating discipline, improving revenue quality and operating efficiency, and supporting long-term investments while preserving financial flexibility. He said management believes the company is moving toward a more sustainable and balanced operating structure as AI and robotics businesses scale.

About Cheetah Mobile (NYSE:CMCM)

Cheetah Mobile Inc operates as a mobile internet company primarily focused on developing and distributing utility and entertainment applications for smartphones and tablets. Its portfolio includes well-known security and optimization products such as Clean Master, security Master and Battery Doctor, alongside consumer-oriented offerings in mobile gaming and content discovery. The company's software solutions are designed to enhance device performance, improve privacy protection and deliver engaging digital experiences for end users.

Founded as the mobile internet division of Kingsoft in 2010, Cheetah Mobile spun off as an independent, publicly traded company in late 2014.

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