On the evening of June 7th, Cheetah Mobile released its Q1 2024 financial report in pre-market trading. The market is once again focusing on this company that constantly explores and cultivates in the AI field.

Previously, the AI business of the company demonstrated outstanding performance in the annual performance report, which not only brought positive market feedback to the company but also greatly increased investors' confidence in the company's future development. Therefore, the latest performance of the AI business in this quarter's financial report has become the focus of attention. Everyone is eager to know how the latest performance of the company's AI business is and whether it really has the potential to become the company's future growth engine. This is also an important reference for evaluating Cheetah Mobile's long-term value growth.

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Reading this long-lost quarterly report of Cheetah, it is worth noting the positive changes in several key indicators.

Firstly, overall revenue performance. As a key indicator for measuring corporate operational development, for Cheetah Mobile which is actively laying out in the AI field, ensuring sustained revenue growth can provide a more solid foundation for its strategic deployment.

In the first quarter of 2024, Cheetah Mobile achieved a revenue of RMB 190 million, a year-on-year increase of 11.6%, an increase of 13.7% compared to the previous quarter, showing a good growth momentum.

Focusing on various business sectors.

In the first quarter, the internet business contributed RMB 109 million in revenue, although the proportion in total revenue decreased from 70.6% in the same period last year to 57.3%, the revenue growth rate still maintained at 1.2%. At the same time, the operating profit margin of the sector reached 7.9%, which was slightly higher than 3.1% in the same period last year. This indicates that the company's basic internet business is still solid and maintains steady growth.

At the same time, revenue from artificial intelligence and other fields increased significantly. The revenue in the first quarter reached RMB 81.3 million, a year-on-year increase of 62.1% and a quarter-on-quarter increase of 36.3%, accounting for 43% of total revenue.

By comparing the revenue structure in recent quarters, we can clearly see that Cheetah Mobile is gradually transforming from a revenue model that relies heavily on the internet business to a diversified revenue structure driven by both the internet business and the AI business.

In this regard, the significant growth of AI and other revenues in this quarter's financial report is also explained. It is mainly due to the increase in delivery volume of service robots after acquiring a controlling stake in Lighthouse Star. It is worth noting that the sales of Lighthouse Star’s service robots overseas have surpassed those in China, and the potential for international expansion is constantly being opened up.

Finally, the company's strong cash reserves are also a highlight of this quarter's financial report.

As of March 31, 2024, Cheetah Mobile held a total of RMB 1.793 billion in cash, cash equivalents and short-term investments, and RMB 933 million in long-term investments. The good funding strength provides a solid financial guarantee for Cheetah Mobile's in-depth research and innovation in the AI field. At the same time, this also means that the company can maintain flexibility and competitiveness in future market changes and explore more possibilities.

Overall, this financial report of Cheetah Mobile conveys bullish signals for the company's business development. The steady growth of the internet business and the rapid growth of the AI business jointly promote the steady improvement of revenue. With the company's continuous cultivation in the AI field, we have reason to expect that Cheetah Mobile can achieve more balanced and diversified business development in the future, driving rapid performance growth.

2. Acquiring Lighthouse Star, transition from B2C to B2B, entering a new growth stage.

Cheetah Mobile's excellent performance this quarter is due to the company's keen grasp of the AI 2.0 wave and generative AI technology.

Looking back in history, since 2016, Fu Sheng, Chairman and CEO of Cheetah Mobile, announced that Cheetah Mobile will be "All in" Artificial Intelligence. In the AI 1.0 era, the investment of Liehu Xingkong, invested by Cheetah Mobile, has accumulated a certain scale of sales network in the Chinese market with its self-developed intelligent service robot family. In 2021, Liehu Xingkong began to expand its international business, signed strategic cooperation agreements with important clients in Japan and South Korea, extensively developing related markets, and established cooperative relationships with agents from Europe and the United States, becoming a leading enterprise in the field of AI service robots. After welcoming the AI 2.0 era, Cheetah Mobile accelerated its transformation from consumer-to-consumer (ToC) to enterprise-to-business (ToB). At the end of last year, Cheetah Mobile completed the strategic acquisition of Liehu Xingkong, marking an important milestone for the company.

At the beginning of this year, at the public class "How to Innovate Under the AI Wave", Fu Sheng released a series of products such as the Orion-14B, a enterprise-level foundation large model that supports operation on a thousand-yuan graphics card. Cheetah Mobile insists on improving the application capabilities of large models with "product thinking", trains 10 billion parameter large models based on actual enterprise application scenarios, which not only guarantees data security, but also helps enterprises achieve private deployment at a more economical price.

There is a widely spread concept in the current market that "the more parameters, the better" and the parameter size of large models is growing rapidly. However, Cheetah Mobile insists on improving the application capabilities of large models with "product thinking" and trains 10 billion parameter large models based on actual enterprise application scenarios. This pragmatic strategy has achieved significant results. This also proves that Cheetah Mobile's profound understanding, defined scenarios, fine-tuning and application polishing, combined with enterprise data, can achieve performance of 100 billion parameter models in actual use that are comparable to that of the 1 billion parameter models.

In May, the Liehu Xingkong large models, as well as the Xiaomi large model, the Tencent Cloud industry large model, the DeepseekChat large model, were filed with the "Interim Measures for the Management of Generate Service AI Services". This signified that the Liehu Xingkong large model became a dual-filed large model that obtained both the national "generated service AI service record" and the "deep synthesis service algorithm record". It can officially provide generated service AI services.

In addition to possessing the complete technical and filing capabilities, Cheetah Mobile also has a hard and soft merged full-chain large model capabilities and an experienced ToB sales team and ToB sales network, which can quickly commercialize the company's large model capabilities. Currently, the private deployment of large models has been applied by domestic first-line enterprises such as Chaotic Academy and Ningxia Hope Information. In addition, the overseas market is also booming. The sales of Liehu Xingkong's service robots overseas have exceeded those in the domestic market and have shown a steady and stable development trend.

In conclusion, the results achieved in the first quarter demonstrate that AI capabilities have brought new opportunities to the company. With the continuous increase in the penetration rate of large models, continuous enhancement of product performance, diversification of landing scenarios, and further expansion of overseas business, Cheetah Mobile is expected to welcome a broader development space.

Overall, the achievements made in the first quarter demonstrates that AI capabilities have brought new opportunities to the company. With the continuous increase in the penetration rate of large models, continuous enhancement of product performance, diversification of landing scenarios and further expansion of overseas business, Cheetah Mobile is expected to welcome a broader development space.

From the perspective of the capital markets, with the gradual recognition of the market of the company's potential in the generative AI field and the strong landing application capabilities, coupled with the positive changes of business structure at the performance level, the company's future growth and explosive potential have been further confirmed. Based on this, the market valuation has the possibility of reassessment, and the current favorable trend is believed to continue to be worth looking forward to.