Cheetah Mobile Inc.

Good day, and welcome to the Cheetah Mobile second quarter 2024 earnings conference call. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star and one on your touch-tone phone. Please note, this event is being recorded. I would now like to turn the conference over to Helen Chu. Please go ahead.

Thank you, operator. Welcome to Cheetah Mobile's second quarter 2024 earnings conference call. With us today, our company's chairman and CEO, Mr. Fu Shun, and our director and CFO, Mr. Thomas Jin. Following management's prepared remarks, we will conduct the Q&A section. Please note that the CEO's script will be presented by an AI agent. Before we begin, I refer you to the Steve Hopper statement in our earnings release, which also applies to our conference call today, as we will make forward-looking statements. At this time, we will now let the AI agent to speak on behalf of our CEO and Chairman Fusheng.

Thank you for joining us today. We choose to. Our total revenue accelerated with a year-over-year growth of 12.3%. AI and others accounted for about 40% of our total revenue. This growth was primarily driven by the sales of our wheeled service robotics in both domestic and international markets, showing our progress in becoming an enterprise-facing company. The acquisition of Beijing Orion Star has made service robotics a key pillar for Chita Mobile, contributing to a solid revenue growth. Our service robots hold a dominant position in voice-based use cases and are widely used in exhibition centers, museums, corporate receptions, and other areas. Moreover, our delivery service robot ranks among the top three in restaurants and continues to gain market share from competitors. Customers choose us because of our best product experience and after-sales services, strong core AI capabilities, including far-field voice recognition. Our robots have benefited from LLM, being able to better understand end-to-end customers' inquiries and smartly respond to their requests versus previously. Customers can easily tailor-make apps within our robots, thanks to our strong software abilities that support customization. To further expand the revenue growth of our wheeled service robotics business, we are focusing on two key strategies. Firstly, we aim to broaden the use cases of our service robots through continuous product innovations with a focus on our core competencies, including voice interaction capabilities and enabling autonomous delivery, for instance. In factories and fulfillment centers, we have recently introduced robots designed for autonomous delivery for relatively low payloads. We offer over-date performance and pricing for our customers in both China and overseas. With a focus on providing the most reliable robots in the market, we have already started shipping robots to South Korea and have received orders from customers in Japan and Southern Europe. In the hotel industry, our service robots are making progress. Hotel is a proven use case for wheeled service robots, but we are gaining market to share from existing players. We are also further upgrading our robots for the hotel industry to increase our competitiveness. In supermarkets, our service robots have successfully facilitated the sale of low ticket price products by identifying potential buyers. proactively approaching them, providing comprehensive product introduction, and clearly responding to consumer inquiries. Following our collaboration with Shanghai to sell cod sausages in supermarkets, we are now expanding into more local stores and supermarkets. Secondly, we are expanding our service robotics business globally with overseas revenue already surpassing domestic revenue, Following our success in South Korea and Japan, we're actively building our presence in Southern Europe, Southeast Asia, North America, and Australia, particularly in use cases such as restaurants, factories, and fulfillment centers. Chinese electronic products have demonstrated their ability to compete globally. And with Chidamobi's extensive experience in international operations, we are confident in our potential to succeed in these overseas markets. We believe that the service robotics industry offers one of the largest market opportunities for AI commercialization. LLMs and generative AI serve as brains for robots, enhancing machine intelligence and accelerating their commercial deployment at scale. However, this industry is still early and will take time to unlock its full potential. Cheetah Mobile is working hard to make service robots more affordable for enterprises across a growing number of use cases. enabling them to reduce labor costs through the use of our robots. We focus on wheeled service robots because we believe they offer the best balance between performance and cost at this stage, making them helpful solutions. As the only robotics company in China to have trained an LLM from scratch, and it's LLM approved by local authorities for a larger scale rollout. We've used the LM to power our robots, focusing on hardware, software, thinking through serving customers in various use cases. We have notably enhanced our voice-based capabilities, in particular for reception-related use cases. And we will continue to use data generated by our robots to enhance our LM and product experience, creating a positive feedback loop. This approach should allow us to deliver the best products for price and performance in the global market. At the same time, we remain committed to product innovation, always striving to balance performance with cost-effectiveness during the last earnings call. We discussed how we are helping enterprises build LM-based applications. Applications are key to making LMs useful in enterprises. This is because LLMs need industry-specific or company-specific knowledge to avoid errors and effectively address enterprise challenges. Chidamoba is developing Gen-I applications for enterprises. We are encouraging our employees to create Gen-I tools or apps to improve work efficiency. At the same time, we are working closely with key accounts helping them develop Gen-I apps to streamline their daily operations. Our goal is to identify cases where Gen-I can enhance efficiency and then standardize tools and features that can be scaled to other companies. For example, savings note, NLM-based cloud management app helps enterprises monitor and optimize cloud usage across platforms after successfully using an edge shader to reduce costs. We've begun offering it to enterprise clients. Early customer feedback has been positive. We've also helped a major hotel operator in China develop a Gen-I AF for employee training programs. Looking ahead, we will continue working closely with key customers, applying the Gen-I product we've developed internally to their business operations. This approach will help us further refine our product experience and gradually build a comprehensive product portfolio. Before I turn the call over to Thomas for financial highlights, I want to emphasize the following. First, our enterprise businesses service robots and LM-based apps each represent a huge market opportunity and are still in the early stages of development. She's a mobile with a team that has extensive experience on the PC and mobile areas, along with strong AI capabilities. She's investing in developing the best products to capture these opportunities. We are focused on achieving high quality, long-term growth, rather than pursuing short-term gains.