Cheetah Mobile's Q3 2025: Contradictions Emerge on AI Robot Market Strategy, Profitability Balancing, and Tool vs. Robot Focus

Date of Call: None provided

Financials Results

• Revenue: RMB 287 million, up 50% YOY
• Gross Margin: 75%, up from 68% in the year‑ago quarter (gross profit +64% YOY)
• Operating Margin: Operating profit RMB 4 million (first quarterly operating profit in six years); non‑GAAP operating profit RMB 50 million vs non‑GAAP operating loss RMB 60 million prior year; internet adjusted operating profit ~RMB 21 million, up 55% YOY; AI & other adjusted operating loss RMB 15 million, narrowed 82% YOY and 53% QoQ

Guidance:

• Company expects to approach break‑even for full year 2025.
• Q4 internet revenue and profit expected to be roughly in line with Q3 absolute levels.
• Internet revenue may show YoY decline in Q4 due to advertising weakness; user‑paid internet revenue expected to grow >10% YoY in Q4.
• AI robots: backlog growth and demand support continued strong YoY growth in Q4 and into 2026.
• Maintain disciplined, ROI‑focused investment in AI robots and AI tools; consider shareholder returns only after sustained profitability.

Business Commentary:

* Revenue Growth and AI Integration: - Cheetah Mobile reported revenue of RMB 287 million for Q3 2025, up 50% year-over-year. - The growth was driven by both the internet business and the AI and other businesses, with the latter contributing to 50% of total revenues, up 151% year-over-year.

• AI Robot Segment Performance:
• The AI robot business contributed 15% of total revenue in Q3, growing 100% year-over-year and 40% quarter-over-quarter.

• This growth was attributed to strong demand for voice-enabled wheel robots in China, with a 32% increase in contract backlog from the previous quarter.

• Operational Profitability:

• Cheetah Mobile reported its first operating profit in Q3, reaching RMB 4 million.
• This milestone was achieved through disciplined execution and improved operational efficiency, reflecting a significant turnaround in the company's financial performance.

* Machine Arm Business Integration: - The robotic arm business, acquired through a strategic acquisition, is already profitable with tens of millions in R&D and annual revenue, primarily from overseas customers. - The integration has expanded Cheetah Mobile's product line and global market presence, with plans to test combinations of wheel robots and robotic arms for more complex real-world tasks.

Sentiment Analysis:

Overall Tone: Positive

• Management: “We hit quarterly break even ahead of expectations. In Q3, we made an operating profit for the first time in six years.” Q3: revenue RMB 287M (+50% YOY); AI/other +151% YOY and now ~50% of revenue; non‑GAAP operating profit RMB 50M vs loss last year—signals turnaround and constructive outlook.

Q&A:

• Question from Thomas Zhang (Jefferies): 我们刚好现在关于长线收入的提问。我们注意到机器人业务在Q3的收入同比增长接近100%，占比大概是15%。国内语音机器人与机械臂是当前两大核心的增长点。我们应该如何理解他们所面向的市场的空间？哪些是刚需？哪些是可选型的场景？客户接受度如何？谢谢。
  Response: Both wheel voice robots and collaborative robotic arms have large markets; arms are a steady 'must‑have' in manufacturing and service scenarios, while voice robots are transitioning from optional to must‑have due to LLM-driven UX improvements and growing customer acceptance (strong domestic demand, improving overseas prospects).

• Question from Vicky Wei (Citi): 管理层晚上好，谢谢接受我的提问。恭喜公司新季度实现盈利。我们知道公司在AI业务上还布局两大方向：AI机器人和AI工具应用。中长期公司如何平衡继续投资AI业务和保持盈利之间的关系？在成本结构上是否还有进一步优化的空间？我们有没有设定中长期的盈利目标？谢谢。
  Response: Maintain profitable internet business as cash‑generating base while tightly controlling losses and focusing ROI in AI; cut costs and accelerate R&D efficiency via internal AI tools, open‑source/third‑party models and focused product bets; no specific mid‑term numeric profit target disclosed.

• Question from Lydia Lin (Morgan Stanley): 管理层好，我的问题是，电报我们看到机器臂的业务在行业收入排名中相对比较靠后，但是却有相对很不错的盈利能力。想请教一下，就是咱们公司的这一块的核心的竞争优势是在哪里？谢谢。
  Response: Competitive edge stems from early overseas focus and channel/brand build, customer‑centric culture prioritizing profitable customers, high product quality and long‑term reputation—yielding stable overseas growth and solid margins.

• Question from Zheng Huang (Everbright Securities): 副总，原告，Helen总，晚上好。我是光大海外的黄峥。我现在的公司取得了非常亮眼的业绩。我这边的问题是，也看到公司其实在机身智能方向有一些布局。不知道能不能请公司管理层对于一些进展或者说明后年在机身智能这方面有重点投入的方向，能跟我们有一些分享。还有就是不知道能不能帮我们展望一下，包括因为轮式机器人跟我们现在收购的机械臂可能会有一些新的，比如说廉价币的这种解决方案的场景，这些未来会不会有一些高价值的场景去进行拓展。谢谢。
  Response: Embodied intelligence (wheel+arm) is strategically important and likely commercializable earlier than humanoid robots, but technical/engineering challenges remain; company is testing wheel+arm combos and adding vision, prioritizing exploration next year but no market product/launch yet.

• Question from Alicia Xu (JP Morgan): 好，谢谢管理层接受我的提问。我这边主要一个问题就是，我们看到公司的语音机器人已经跟Google的大模型集成了。那未来的话，会不会计划跟更多的大模型生态去合作？那我们怎么看这个对于公司推动全球市场的拓展的机会？谢谢。
  Response: Company is open to multiple large‑model partners; Google Gemini gives leading end‑to‑end speech performance today and aids multilingual capabilities—such integrations accelerate global expansion and improve voice UX.

• Question from Zheng Zhao (ICBC International): 管理层你好，感谢给我这个提问机会。然后我这边想问一下，公司在AI工具产品是否有计划打造一个单一爆款，还是形成一个多产品组合？假设在没有爆款的早期阶段的话，公司是否有一套机制或者说方向来帮助突破这个瓶颈？谢谢。
  Response: Focus is on AI‑fying existing large user‑base products (multiple bets) rather than banking on one breakout; lower development costs and faster iteration via AI coding tools and small experimental teams to increase chances of finding hits.

• Question from Joanna Ma (CNBC): 各位晚上好，感谢接受我的提问。我这个问题是想请教一下Thomas，就是公司是如何展望这个四季度互联网的收入跟经营利润呢？因为我们也理解公司一直是定位互联网是公司稳定的现金流业务，能否请您量化一下这个四季度的趋势呢？谢谢。
  Response: Q4 internet absolute revenue and profit expected roughly level with Q3; Q4 internet revenue may be down YoY due to ad weakness, but user‑paid internet revenue expected to grow >10% YoY; overall Q4 total revenue still expected to grow YoY driven by AI segments.

• Question from Jing Wan (CICC): 管理层晚上好，感谢接受我的提问。我的问题是有关于AI工具的，就是了解到公司正在快速开发AI工具和相关的功能，想了解一下目前哪些产品方向用户的反馈比较好一些。同时展望未来的话，计划重点发力哪些类型的AI工具？谢谢。
  Response: Best feedback from AI enhancements to existing PC apps—Huba Antivirus agent and wallpaper generation show high engagement and satisfaction; future focus on productivity and PC usage efficiency tools (PDF, desktop utilities) that improve user workflows.

• Question from Nguyễn Thanh Giang (CLAN Securities): 你好，管理层你好，请问可以听到吗？ 随着公司开始盈利，请问是否会开始对市场进行一些现金分红和股票的一个回购，然后去增加一下投资人信心和确定性？谢谢。
  Response: Company will consider shareholder returns (dividends/buybacks) once sustainable profitability is established, but no current plans—priority remains funding robot growth and strategic opportunities.

• Question from Yung Peng Diao (Guotai Haitong): 好，谢谢管理层给我这个提问的机会。我想问一下关于公司对于资本运作方面有什么样的一个中期规划，猎豹是不是会考虑在香港二次上市，或者说将机器人业务拆分融资，或者单独在香港上市？谢谢管理层。
  Response: HK secondary listing and spin‑off are being evaluated but current constraints (market cap, dual‑class voting structure) and recent robot integration mean no immediate plan to list or split the robot business; company will continue to assess options.

• Question from Cheng Ru Li (Huayong Securities): 你好，感谢管理层接受我的提问，然后也非常恭喜公司在成都实现了这么好的一个业绩情况。然后我的问题是关于公司对于仲维利收购的，因为我们以一个非常合理的估值把它进行了收购，然后也是显著地增强了我们在机器人业务产品线和商业化方面的一个协同能力。请问管理层是否考虑在未来合适的时机将这个资产整合，然后进一步增强猎豹在AI机器人或者AI工具业务的一些战略终身呢？谢谢。
  Response: Acquisitions like Zhongwei were strategic to strengthen product/commercial capabilities; the company will consider deeper integration of portfolio investments when clear synergies exist, but no specific integration timetable or targets disclosed.

Contradiction Point 1

AI Robot Market Potential and Strategy

It involves the assessment of AI robot market potential and the company's strategic approach, which are critical factors for business planning and investment decisions.

What is the market opportunity and growth potential for AI-powered robotics? What are the core competitive advantages driving your AI robotics business? - Thomas Zhang (Jefferies)

2025Q3: AI robots have significant market potential with a shift from optional to necessary due to advancements in AI technology. Voice-enabled wheel robots have strong demand in China, driven by customer acceptance and improved product experience with AgentOS. AI enhances product experience, allowing premium pricing. - Fu Sheng(CEO)

What drives overseas revenue growth? Do you expect any domestic business slowdown? - Jay Lulu (Vopak)

2024Q1: We have remained committed to the B2B growth strategy, focusing on improving and expanding the service robot business through the integration of AI, particularly LLM, with service robot products. We aim to enhance the product experience and competitiveness of service robots through LLM integration, which has led to increased demand in Japan and South Korea. - Sheng Fu(CEO)

Contradiction Point 2

AI Business Investment and Profitability

It involves the balance between AI business investment and profitability, which are crucial for understanding the company's financial strategy.

How is Cheetah Mobile balancing AI investments with profitability? Are further cost optimization opportunities available? - Vicky Wei (Citi)

2025Q3: The strategy aims to maintain profitability in the internet business and control costs in AI and other segments. Reducing costs through technology and leveraging AI tools is a priority. For AI robots, the focus is on high-quality use cases and integrating open-source models for efficiency. Long-term growth is expected from AI robots and tools. - Fu Sheng(CEO)

How do you balance profitability in the internet business with AI investments, especially with the integration of OrionStar? - Vicky Wei (Citi)

2024Q1: We are committed to investing in the AI business while maintaining profitability in the Internet business. By redirecting resources from the Internet business to the AI business, we aim to improve the operating margin of the Internet business and enhance the competitiveness of service robots. - Sheng Fu(CEO)

Contradiction Point 3

AI Tool vs. Robot Focus

It involves the strategic focus of the company, highlighting whether Cheetah Mobile will concentrate more on AI tools or robots for future development, which impacts investment decisions and long-term growth expectations.

How does Cheetah Mobile balance AI investments with profitability? Are there further cost optimization opportunities? - Vicky Wei(Citi)

2025Q3: Long-term growth is expected from AI robots and tools. - Fu Sheng(CEO)

Will Cheetah prioritize strategic investment and revenue contribution over the next three years in building an AI tool matrix and improving consumer-side AI efficiency, or in robotics development? How will the company balance technical challenges, commercialization timelines, and long-term moats between these two directions? - Unknown Analyst

2025Q1: In the short term, focus is on the AI tool matrix. - Unknown Executive(CIO)

Contradiction Point 4

AI Business Investment and Profitability Strategy

It involves the company's strategy regarding AI business investments and maintaining profitability, which is crucial for investor expectations and financial planning.

How does Cheetah Mobile balance AI investments with profitability? Are there further cost optimization opportunities? - Vicky Wei (Citi)

2025Q3: The strategy aims to maintain profitability in the internet business and control costs in AI and other segments. - Fu Sheng(CEO)

What are your AI business's key investment areas, particularly in technology and product development? - Thomas Chong (Jefferies LLC)

2025Q2: We are also increasing our investment in AI technologies and AI product development by creating dedicated teams. - Fu Sheng(CEO)

Contradiction Point 5

AI Tools Integration and Strategy

It pertains to Cheetah Mobile's strategy in integrating AI tools, which is essential for product innovation and competitive advantage.

Will Cheetah Mobile integrate large-scale AI models to expand globally? - Alicia Xu (JP Morgan)

2025Q3: The integration with Google's Gemini 2.5 Flash is strategic due to its market leadership in voice-to-text conversion. - Fu Sheng(CEO)

What AI-driven product innovations should we expect, and how will you monetize them? - Unknown Analyst (JPMorgan)

2025Q2: We are committed to integrating our AI technologies and capabilities into our existing products. - Fu Sheng(CEO)