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Good day. Welcome to the Cheetah Mobile First Quarter 2026 Earnings Call. All participants will be in 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 then one on your telephone keypad. To withdraw your question, please press star then two. Please note this event is being recorded. I would now like to turn the conference over to Cheetah Mobile Investor Relations, Helen. Please go ahead.

Thank you, operator. Welcome to Cheetah Mobile's First Quarter 2026 Earnings Conference Call. With us today are our company's Chairman and CEO, Mr. Fu Sheng, and our company's Director and CFO, Mr. Thomas Jintao Ren. Following management's prepared remarks, we will conduct the Q&A section. Please note that the management's script will be presented by an AI agent. Before we begin, I refer you to the safe harbor statement in our 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. Fu Sheng. Please go ahead, Fu Sheng.

2026 remains an important transition year for Cheetah Mobile. We are continuing to evolve from a traditional internet company into a company focused on AI-enabled applications for AI agents and robotics. More importantly, we believe we are gradually moving from capability building into early-stage commercial validation. Our focus is not only on developing AI capabilities, but on turning these capabilities into practical products for real business scenarios, helping customers deliver better ROI. Starting from this quarter, we are separating our robotics and others business into an independent reportable segment. In the first quarter, revenue from robotics and others business increased 176% year-over-year to RMB 51 million, approaching 20% of total revenue. At the same time, adjusted operating loss from this segment narrowed by 57% year-over-year. Customer demand remains strong. We expect robotics and others revenue to grow strongly in 2026.

In Q2, our robotics and other revenue will continue growing on both year-over-year and quarter-over-quarter basis. Today, our robotics business mainly focuses on commercial scenarios with real customer demand and clear long-term value, including reception, guided tours, and intelligent service applications. Our smart personal mobility is another important step for us. This product extends our robotics and AI capabilities into personal mobility and healthcare-related scenarios. More importantly, it further validates that our robotics platform can extend beyond commercial service robots into broader consumer applications. We are encouraged to see recognition from leading industry partners. During the second quarter, we started initial product shipments to a top global designer and manufacturer of mobility products, as well as a leading elderly mobility scooter manufacturer in China. We are seeing encouraging early market feedback and initial commercial traction. Moving to our agent. We are seeing strong customer adoption.

We work closely with Google Cloud and AWS, helping enterprises serving international markets access AI models and use multi-cloud environments more efficiently. In 2026, revenue from our cloud and AI infrastructure services as a part of global enterprise service revenue increased 68% year-over-year, contributing 18% of total revenue. Daily average token usage has increased more than 20 times since January 2026, exceeding 400 billion in May. We expect this revenue growth to continue. We also kept building EasyFlow. It's early, but we believe it will help customers deploy AI agents and boost productivity.

The two fast-growing businesses, namely robotics and others, as well as cloud and AI infrastructure, already accounted for 38% of our first quarter revenue, and we expect their revenue growth and revenue contributions to continue growing in the coming quarter and to exceed more than 50% of our total revenue in the second half of this year. During the quarter, revenue from our advertising agency business within the global enterprise services segment was affected by policy changes from certain overseas advertising platforms. We believe this revenue decline was primarily driven by external factors rather than changes in customer demand. This was the primary reason for the company's widening year-over-year operating loss in the first quarter. Our internet services business continues to provide important profit and cash flow support for the company. In the first quarter of 2026, our internet service business generated approximately RMB 15 million in adjusted operating profit.

While ad agency revenue was hit by policy changes, which impacts our financial results in the near term, it is a stronger base for growth. Moreover, our $186 million cash also supports our AI agents and robotics growth. Thank you.

Thank you, Fu Sheng. Hello, everyone, and thank you for joining us. Unless otherwise stated, all financial figures presented in RMB. During the first quarter of 2026, we continued focusing on operating discipline, improving revenue quality, and maintaining financial flexibility as we invest in AI and robotics initiatives. Total revenue remained relatively stable year-over-year at RMB 259 million during the quarter. While internet service revenue declined due to continued weakness in online advertising, the quality of our revenue mix continued improving. Within the internet service segment, revenue from internet value-added services continued to grow steadily at 8.2% year-over-year, contributing 72.8% of segment revenue. Within a larger portion from internet value-added services, our internet service revenue is becoming increasingly predictable.

More importantly, the internet service business remained profitable and continued generating stable cash, which provides an important financial foundation for our long-term AI and robotics investments. Turning to our robotics and other segments. Starting from this quarter, we began reporting the robotics and others business as a separate segment to present the operating progress of this business. Historical results previously reported under AI and others are now presented as robotics and others as well as global enterprise services. During the first quarter, revenue from robotics and others increased significantly year-over-year, with revenue increasing 175.9% year-over-year to RMB 51.2 million, accounting for 19.8% of total revenue. Adjusted operating loss from this segment narrowed by 57.1% year-over-year, reflecting continued improvement in operating efficiency and commercial execution. Turning to global enterprise services.

This business remains strategically important to the company. In addition to profitability contribution, it provides us with valuable enterprise customer relationships, overseas operating experience, and real-world deployment scenarios for AI-related services. During the quarter, revenue from the advertising agency business was affected by policy changes from overseas advertising platforms, which impacted year-over-year segment revenue performance. However, revenue from our cloud and AI infrastructure services business increased by 68.3%, supported by increasing enterprise demand for AI-related cloud and token management services. Turning to profitability. Operating loss was RMB 28.3 million during the quarter, compared with RMB 26.5 million in the same period last year. The increase mainly reflected lower profitability from the internet and global enterprise services business, following revenue declines in online advertising and advertising agency services, as well as our continued investment in AI and robotics initiatives.

More importantly, both the internet service and the global enterprise services business remained profitable during the quarter. The internet service business generated approximately RMB 15.2 million in adjusted operating profit, while global enterprise services generated approximately RMB 13.8 million in adjusted operating profit. We also maintained a strong balance sheet. As of March 31, 2026, we had approximately $186 million in cash and cash equivalents, as well as over $100 million in long-term investments. We believe our financial position provides sufficient flexibility to continue investing in AI and robotics with a disciplined and sustainable approach. Looking ahead, our financial priorities remain consistent. A, maintaining operating discipline. B, improving revenue quality and operating efficiency. C, supporting long-term investments while preserving financial flexibility.

Overall, we believe the company continues moving toward a more sustainable and balanced operating structure as our AI and robotics businesses gradually scale. Thank you. We are now ready to take your questions.

Operator, we are able to take questions.

The first question comes from Thomas Chong with Jefferies. Please go ahead.

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Operator, can we move to the next question?

Yes. The next question comes from Vicky Wei from Citi. Please go ahead.

Vicky, are you on the line?

Okay, we'll go to the next question. The next question comes from Lydia Lin from Morgan Stanley. Please go ahead.

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Operator, can we move to the next question?

The next question comes from Vicky Wei with Citi. Please go ahead.

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Operator, please move to the next question.

The next question comes from Nancy Lu with JPMorgan. Please go ahead.

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Thank you. Operator, please move to the next question.

The next question comes from Zeping Zhao with ICBC International. Please go ahead.

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Thank you, Zhao. Operator, please move to the next question.

Thank you. The next question comes from Yunpeng Diao with Guotai Haitong. Please go ahead.

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Operator, please move to the next question.

Thank you. The next question comes from Guangpeng Zhan with Guohai Securities. Please go ahead.

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Okay, operator. Please check if they have further questions. If not, then we will end this call.

Thank you. Seeing there are no further questions. This concludes both our question-and-answer session and today's conference. Thank you for attending today's presentation. You may now disconnect.

Thank you. Bye bye.

Thank you.

Good day, and welcome to the Cheetah Mobile Fourth Quarter 2025 Earnings Conference Call. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference over to Helen Jing Zhu, Investor Relations of Cheetah Mobile. Please go ahead.

Thank you, operator. Welcome to Cheetah Mobile's Fourth Quarter 2025 Earnings Conference Call. With us today are our company's Chairman and CEO, Mr. Fu Sheng; and our company's Director and CFO, Mr. Thomas Ren. Following management's prepared remarks, we will conduct the Q&A section. Please note that the management's prepared remarks are presented by AI agent. Before we begin, I refer you to the safe harbor statement in our 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. Fu Sheng. Please go ahead, Fu Sheng.

Good evening, everyone. Thank you for joining us. In 2025, we finished stabilizing the business and built a stronger foundation for Cheetah Mobile. During the year, our total revenue grew 43% year-over-year, driven by continued growth in both our Internet business and AI and Others segments. In the fourth quarter, AI and Others already accounted for half of total revenues, reflecting the increasing contribution of our new growth initiatives. More importantly, we achieved full year non-GAAP operating profitability, our first time in 6 years. Our Internet business remained resilient in 2025, generating approximately RMB 460,000 in adjusted operating profit every working day. This consistent operating cash flow forms the financial backbone of the company and allows us to invest in robotics and AI in a disciplined and sustainable way. Our second highlight is robotics, which is emerging as a key structural growth driver. For full year, robotics revenue grew approximately 31%. In the fourth quarter alone, robotics revenue reached about RMB 60 million, up 94% year-over-year and 43% quarter-over-quarter. A voice robot in China achieved 100% year-over-year growth for 3 consecutive quarters, accounting for high single digits of the fourth quarter's total revenues. This progress is driven by our strategic focus on core strength in voice robotics and the integration of AI agent technology to enhance product experience. We are now seeing our voice robot become a must-have solution in receptions, guided tours, retail environment, hospitals and service halls as they deliver proven measurable value. We recently introduced a new version of our voice robots, which comes with built-in skills like guiding, patrolling and advertising, enabling end customers to start using them right away, our robotic arm business mainly in serving overseas markets is making up high single digit of the first quarter's total revenues. We focus on long-term demand from research institutions and the R&D teams that value openness and the customization. This customer base is sticky and repeatable, supporting long-term demand, building on our proven indoor autonomous mobility technologies. We are introducing a smart wheelchair, targeting developed regions such as Western Europe and North America. This product is positioned as a premium solution for users who value safety, independence and confidence in daily mobility. We are seeing a clear shift in demand as users increasingly value safety, assistance, and intelligent features in mobility products, while scalable solutions in the market remain limited. By applying our experience in service robots we are able to meaningfully improve the user experience. During my own recent recovery, I personally used our smart wheelchair and saw a clear improvement in safety and convenience. Importantly, we can deliver these benefits without significantly increasing the costs compared to traditional high-end electric wheelchairs, making this a more practical and accessible product for users. We have entered into framework agreements with established mobility brands who will manage branding, distribution and aftersales services. Initial shipments are expected to begin in the second quarter of 2026, representing an early-stage commercial validation of this product category. Across the industry, more companies are starting to test and deploy service robots. We believe the next 1 to 2 years will be a validation phase, where ROI and reliability will matter most. You don't need a robot that looks like a human. You need a robot that works every day, delivers measurable value and it's easy to operate at scale. This is exactly where our current products are positioned. Our Internet business remains strong, generating steady cash flow, which allows us to invest in AI in a disciplined and sustainable way. For more than a decade, we have built utility applications serving hundreds of millions of users. This product DNA shapes how we approach AI, rather than competing in model development we focused on turning AI capabilities into practical tools that help users complete real tasks. During the Chinese New Year, I spend a lot of efforts experimenting with an AI agent system built on the OpenCloud framework starting from a single agent that could barely complete basic tasks, the system evolved into a multi-agent team capable of running tests continuously. In one scenario, the system generated personalized New Year messages for more than 600 colleagues and managed the entire sending workflow automatically. What we see emerging is not simply a new AI tool but a new way to organize digital work. AI agents can automate entire workflows from information gathering to processing and distribution, significantly improving productivity. Building on these learnings, we introduced EasyClaw based on OpenCloud and open source agent framework for both domestic and overseas markets. EasyClaw is our AI coworker platform that helps users create and deploy task-oriented AI agents capable of executing real-world tasks autonomously. At this stage, we focus on execution capability rather than scale. We are already seeing a continued increase in user engagement as reflected in the rapid growth of our total token usage. We are building EasyClaw into an agentic operating system that changes how users interact with software and machines. By integrating EasyClaw into our PC products, we are improving user experience and driving higher conversion and ARPU. In robotics, EasyClaw allows users to program and customize robots using natural language, lowering customization barriers. This helps us deploy faster, reduce cost and scale more easily, making our products more competitive. Some investors may ask how we compete with our training foundation models. We believe the real advantage in the agent era lies not in the model itself, but in the systems built on top of it, including task orchestration, tool usage and cost management. By leveraging open ecosystems and leading APIs, our product can evolve as models continue to improve. Finally, our global DNA remains a core competitive advantage. We continue to expand both our AI tools and robotics businesses internationally with a disciplined approach. Looking ahead to 2026, we do not provide specific financial guidance, but we see continued structural improvements. We believe our robotics business will maintain strong growth momentum as commercial validation deepens and become a more important part of our revenue mix. At the same time, AI-enabled products will gradually enhance engagement and monetization efficiency across our software ecosystem. We will increasingly apply AI internally to accelerate the development, aiming to further improve operational efficiency. As we grow, we will continue improving transparency and disclosure, credibility to data and our focus remains clear. Execute with discipline and net results compound over time. Cheetah is entering its next phase of development combining digital coworkers through AI agents and physical coworkers through service robots supported by real operating cash flow and disciplined financial management. We are building the foundation for our next stage of growth. Thank you.

Thank you, Fu Sheng. Hello, everyone, and thank you for joining us. Unless otherwise stated, all financial figures are presented in RMB. 2025 marked a year of meaningful operational recovery and improved financial discipline for Cheetah Mobile. During the year, we continued improving operating discipline and cost structure across the company. We concentrated resources on commercially validated use cases in robotic products and practical AI applications, while leveraging open source ecosystem and third-party models to improve R&D efficiency and optimize infrastructure costs. This approach allows us to accelerate iteration without significantly increasing fixed costs. For the full year 2025, total revenue grew approximately 43% year-over-year to RMB 1,150 million. Although we reported a GAAP operating loss of RMB 179 million for the year, this represented a substantial improvement compared with operating loss of RMB 437 million in 2024. On a non-GAAP basis, operating profit reached RMB 14 million compared with a non-GAAP operating loss of RMB 232 million, in the prior year, reflecting improved operating leverage. We ended the year with USD 215 million cash and cash equivalents. Turning to our segment performance. Our Internet business continued to serve as a stable cash generating platform for the company in 2025. Revenue from Internet business increased 19% year-over-year to RMB 615 million with Internet revenue, Internet value-added services revenue increased 21% year-over-year in 2025, contributing 65% of segment revenue, supported by both paying user growth and ARPU expansion. In addition, we observed that many users subscribe for periods longer than 12 months, reflecting the recurring nature of our utility applications and strengthening revenue visibility. In terms of profitability, the Internet business generated approximately RMB 115 million in adjusted operating profit in 2025, maintaining healthy margins and strong operating cash flow. As Fu Sheng mentioned earlier, the Internet business generates roughly RMB 460,000 in adjusted operating profit per working day which provides predictable cash flow to support strategic investments in new initiatives. Looking ahead, we expect the Internet business to remain stable and profitable while continuing to provide financial flexibility for the company to invest in long-term growth opportunities. Turning to our AI and Others segment. Revenue from this segment increased 85% year-over-year to RMB 535 million in 2025, as a result, this segment accounted for 46.5% of our total revenue compared with 35.9% in 2024, reflecting the growing contribution from our emerging businesses. Within the segment, the robotics business continued to scale since the second half of 2025, making up 27% of the segment's revenue and 13% of total revenue in 2025. Robotics revenue increased 31% in 2025 driven by deployment of voice robot in China and continued demand for robotic arms in overseas markets. Other businesses, namely overseas advertising agencies, service and multi-cloud management platform within this segment also contributed significantly to revenue growth, benefiting from increasing overseas expansion by Chinese enterprises. At the same time, we continued to improve operating efficiency to more selective investment and disciplined cost control. For the full year, adjusted operating loss from the AI and Others segments reduced by 42% year-over-year to RMB 274 million as we continued scaling the business while maintaining disciplined investments. Turning briefly to the first quarter performance. Total revenue reached RMB 309 million representing a 30% year-over-year increase and a 7% quarter-over-quarter increase, while Internet revenue declined slightly year-over-year, in the fourth quarter it increased quarter-over-quarter as we continue shifting toward a subscription-driven business model. In addition, user subscription revenue within the Internet segment increased 32% year-over-year and 16% quarter-over-quarter as we chose to focus on subscription business model, which supports a healthier product and user experience. Revenue from the AI and Others segment reached RMB 153 million, accounting for nearly half of total revenue in the quarter. With this segment, robotics revenues increased by 94% year-over-year and 43% quarter-over-quarter to about 19% of the fourth quarter's total revenue. Other than that, our revenues from overseas advertising agency service and multi cloud management platform also contributed to this segment's year-over-year growth. On a non-GAAP basis, the company generated operating profit of RMB 15 million in the fourth quarter compared to RMB 42 million operating losses in the same period last year. We believe the improvement we achieved in 2025 reflected structural improvements in both our cost structure and revenue mix. Looking ahead, our priorities remain clear: disciplined growth, continued improvement in operating efficiency, balanced and disciplined capital allocation with stronger financial discipline, clearer strategic focus and increasing contribution from our emerging businesses, we believe the company is entering a more stable and predictable operating phase. Thank you. We are now ready to take your questions.

[Operator Instructions] The first question today comes from Thomas Chong with Jefferies.

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Operator, can we move to the next question?

The next question comes from [ Nancy Lu ] with JPMorgan.

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Operator, please move to the next question. Thank you.

The next question comes from Cheng Ru Li from Guoyuan Securities.

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Operator, please move to the next question. Thank you.

The next question comes from [ Yongping Diao ] with Guotai Haitong.

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Thank you, operator. Please move to the next question.

The next question comes from [ Jie Zhu ] with GF Securities.

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Operator, please move to the next question.

The next question comes from [ Wei Feng ] with Mizuho Securities.

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Operator, please move to the next question.

The next question comes from Lydia Lin with Morgan Stanley.

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Operator, please move to the next question.

The next question comes from Vicky Wei with Citi.

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Operator, please move to the next question.

The next question comes from Zeping Zhao with ICBC.

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Yes. Thank you. Operator, please check if we have any further questions.

We have no further questions at this time, which concludes our question-and-answer session. I would like to turn the conference back over to management for any closing remarks.

Thank you so much for joining our conference call today. And if you have any further questions, please do not hesitate to let us know. Thank you so much. Bye.

Bye-bye.

The conference has now concluded, and we thank you for attending today's presentation, and you may now disconnect your lines.