Cheetah Mobile Inc.

Good day and welcome to the Cheetah Mobile third quarter 2020 conference call. All participants will be in a listen-only mode. After today's presentation, there will be an opportunity to ask questions. Please note this event is being recorded. I would now like to turn the conference over to Helen Zhu, Investor Relations Director of Cheetah Mobile. Please go ahead, ma'am.

Thank you, Operator. Welcome to Cheetah Mobile's third quarter 2020's earnest conference call. With us today are our company's chairman and CEO, Mr. Fu Sheng, and our company's CFO, Mr. Tang Manjin. Following management's prepared remarks, we will conduct a Q&A session. Before we begin, I refer you to the Sage Hopper Statement in your earnings release, which also applies to our conference call today, as we will make forward-looking statements. At this time, I would now like to turn the conference call over to our chairman and CEO, Mr. Fusheng. Please go ahead, Fusheng.

Thank you, Helen. Hello, everyone. While total revenue exceeded our revenue guidance, we still face challenges in growing our revenues. Total revenues decreased by 60% year-over-year and 7% quarter-to-quarter. To unbeat three hundred thirty-five million in the third quarter of two thousand twenty mainly due to the decline of overseas business we will separate Some setbacks in overseas markets. Facebook and Google, our ex-largest business partners, stopped working with us. As a result, we lost two significant channels to acquire users and monetize traffic overseas. Although we have consistently communicated with Facebook and Google, offered several solutions to them to resume to resume our work. We are still not able to rework with them. Given today's international environment, we don't expect to resume our cooperation in the near future. To cope with these headwinds, we have taken several measures and have seen some initial results as following. First, We have streamlined our operations and cut our costs and expense. As a result, non-GAAP operating loss narrowed to RMB 119 million from 22 million in the same period last year and RMB 133 million in the previous quarter. Our operating loss in the quarter also included a certain one-off staff restructuring expense. So we expect to continue reducing our operating loss in the fourth quarter. Second, our revenues from PC business and the mobile utility products in our home market as a whole stabilized Our PC business has transformed from an advertising model to a membership subscription model. During the quarter, we continue to diversify our premium content and service, which shows an increase in paying user accounts and subscription revenues. As a result, daily PC revenues from membership subscription fees increased 14 times year-over-year and 42% quarter-over-quarter in the quarter. Daily member subscription fees already accounted for about 50% of our daily PC revenues, which demonstrated that our PC business has transferred from an advertising model to a membership subscription model. Besides, our mobile utility products business in our home market resumed quarter-over-quarter growth in Q3. Driving by improved ECPM, revenues from mobile utility products business in our home market grew by 7% quarter-over-quarter in Q3. We disposed certain business and assets in the quarter, resulting a net cash gain of US$21 million. In the second half of 2020, Thomas will provide more details about the deal in his part. But I would like to emphasize that we will continue to create and deliver shareholder value in the future. As of today, we have already returned about US$300 million to our shareholders. After the shareholder returns, we still have strong balance sheets to support our ambitions and investments. Recently, CodeMao, a Chinese online education platform which focuses on teaching programming to children, raised a new round of financing. Chika Mobile is an angel investor of CodeMao. Before this round of financing, Chika Mobile held about 10% of equity interest in CodeMao. First, we continue to focus our resources on AI-related robotics business to build our ecosystem and eventually build our long-term growth. Together with our investing company, Beige Orange Star, we have developed our AI-related robotics in an increased number of user cases. The recent outbreak of COVID-19 has also helped us expand usage of our robotics products and solutions. One highlight is our robots developed in shopping malls. Today our robots have been developed in about 1,000 shopping malls across 35 cities in China. As more users use our robots in shopping malls, we have began to build tentative business models. Meanwhile, we found that hotels in China had increasingly welcomed delivery and reception robots, so we quickly responded. and developed customized robots for hotel customers in the fourth quarter. Our cooperation with Beijing Orange Star is in AI business, built our respective gens. Beijing Orange Star developed and produced AI robots, and Cheta Mobile built user case for the customer. Notably, Beijing Orange Stars robot has been nominated twice in a row in the service robot contest held by Beijing Municipal Scientist and Technology Commission for Beijing 2022 Olympic Games. We won four first prize and one second prize in this contest. Looking to the fourth quarter of 2020, we currently expect total revenues to be between RMB 230 million and RMB 280 million. The quarter-of-quarter decrease were due to disposed assets and business, which Thomas will provide provide more details at this portion. Going forward, utility products and services, in particular in PC business, were primarily drivers of our revenues. Driving by subscription business, our PC revenue will resume consequential growth in Q4. On the other hand, we will continue to cut our cost and expense and narrow our operating loss in both year-over-year and quarter-of-quarter basis. Before I hand over the call to our CFO, I would like to emphasize that while we don't want downplay the challenges we face, it is not the first time that Trader Mobile encounters favorable outside environment. We believe that our AI strategy will enable us to build a new future for Cheetah Mobile. With that, we will now turn the call to our CFO, Thomas Ren, to go through the details of our third quarter financial results.