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Earnings call · Jun 2026 (Q2 FY26)

Cheetah Mobile Q2 FY26 earnings call CMCM

Sep 11, 2026 Source

Executive summary

Cheetah Mobile Q2 FY26 — AI and Robotics Drive Revenue Mix Shift

Cheetah Mobile is undergoing a significant business transformation, with new AI and robotics segments rapidly growing and shifting the revenue mix. While traditional advertising services face headwinds, the company is focused on disciplined investment in its high-growth areas and improving the profitability and efficiency of its established businesses. The management emphasizes a capital-efficient approach to product development and a focus on real customer demand.

Highlights

4

  • Services of cloud and AI infrastructure revenue grew 83% year-over-year to RMB 59 million.

  • Gross billings from services of cloud and AI infrastructure exceeded RMB 500 million, up from RMB 200 million in the prior year period.

  • Robotics and others revenue increased 73% year-over-year to RMB 55 million.

  • Adjusted operating margin of the Internet Services segment improved to 19.4% this quarter, up from 11.3% in Q1 FY26.

Concerns

3

  • Advertising agency services revenue decreased 70% year-over-year and 15.6% quarter-over-quarter to RMB 22.0 million due to policy changes by a major global advertising platform.

  • Robotics and others adjusted operating loss widened sequentially to RMB 34.0 million from RMB 26.9 million in Q1 FY26 due to continued investment.

  • Global Enterprise Services adjusted operating profit decreased 80.7% year-over-year and 32.0% quarter-over-quarter to CNY 94.3 million.

Guidance & targets

CategoryTargetConfidence
Gross billings from services of cloud and AI infrastructure
exceed RMB 2 billion
high materiality
High
Revenue from services of cloud and AI infrastructure
exceed RMB 200 million
high materiality
High

Segment performance

SegmentRevenueYoYQoQMargin
Internet services
Internet value-added services growth partially offset the decline in online advertising revenue. The segment showed stronger operating efficiency, improving profitability despite lower segment revenue.
Internet value-added services revenue: RMB 101.2 millionInternet value-added services growth YoY: 6.7%Internet value-added services growth QoQ: 2.9%Internet value-added services as % of segment revenue: 77.6%Online advertising revenue: RMB 29.3 millionOnline advertising revenue growth YoY: -53.5%Online advertising revenue growth QoQ: -20.2%Adjusted operating profit growth YoY: 14.2%Adjusted operating profit growth QoQ: 67.2%Adjusted operating margin Q2 FY25: 14.1%Adjusted operating margin Q1 FY26: 11.3%
RMB 130.5 million-17.3%-3.4%Adjusted operating profit RMB 25.4 million (19.4% margin)
Robotics and others
Revenue growth was driven by an increase in sales volume of robotic products, benefiting from a new factory acquired in July 2025. The sequential widening of operating loss reflects continued investment in development and commercialization, particularly for Smart Mobility, which is in an early investment phase.
Adjusted operating loss YoY: narrowed by 35.5% from RMB 52.7 millionAdjusted operating loss QoQ: widened from RMB 26.9 millionAs % of total revenue: 20.5%
RMB 54.5 million72.5%6.4%Adjusted operating loss RMB 34.0 million
Global Enterprise Services
The year-over-year decline was primarily due to a significant decrease in advertising agency services revenue, partially offset by strong growth in services of cloud and AI infrastructure. Despite the decline in advertising services, the segment remained profitable on an adjusted operating basis.
Adjusted operating profit YoY: -80.7%Adjusted operating profit QoQ: -32.0%Advertising agency services revenue: RMB 22.0 millionAdvertising agency services growth YoY: -70.0%Advertising agency services growth QoQ: -15.6%Services of cloud and AI infrastructure revenue: RMB 59.1 millionServices of cloud and AI infrastructure growth YoY: 83.1%Services of cloud and AI infrastructure growth QoQ: 26.2%Services of cloud and AI infrastructure as % of segment revenue: 72.8%Services of cloud and AI infrastructure as % of total revenue: 22.2%Services of cloud and AI infrastructure as % of total revenue Q2 FY25: 11%
RMB 81.1 million-23.3%11.5%Adjusted operating profit CNY 94.3 million

Orderbook & backlog

Gross billings from services of cloud and AI infrastructure RMB 500 million Q2 FY26

compared with RMB 200 million in Q2 FY25 and RMB 300 million in Q1 FY26

Reflects the total value of services sold through the company.

Product announcements

ProductTypeDetails
Smart Mobility products (intelligent wheelchairs)launch

Deals & partnerships

established electric mobility manufacturers Collaboration on Smart Mobility products, combining robotics capabilities with their product and market expertise.

Developed Smart Mobility products by combining Cheetah Mobile's robotics capabilities with the product and market expertise of established electric mobility manufacturers.

world's largest or top traditional wheelchair manufacturers Formal cooperation on smart wheelchairs.

Cheetah Mobile has formally cooperated with leading traditional wheelchair manufacturers who highly recognize their smart wheelchair product.

Risks & headwinds

Advertising agency services revenue decline near term

Decreased 70% YoY and 15.6% QoQ to RMB 22.0 million.

Mitigation:Focus on underlying growth excluding advertising agency services; improving efficiency in Internet Services segment.

Widening adjusted operating loss in Robotics and others segment ongoing investment phase

Adjusted operating loss widened sequentially to RMB 34.0 million from RMB 26.9 million in Q1 FY26.

Mitigation:Disciplined and capital-efficient approach to product development; focus on commercial results and market expansion for long-term profitability.

What to watch in Q3 FY26

Gross billings from services of cloud and AI infrastructure

FY26
Current Exceeded RMB 500 million in Q2 FY26
Target Progress towards exceeding RMB 2 billion in FY26

Why it matters

This is a key indicator of demand and future revenue for a primary growth driver.

We expect gross billings from services of cloud and AI infrastructure to exceed RMB 2 billion in 2026, representing year-over-year growth of over 100%.

Q&A highlights

What are the plans for the smart wheel/wheelchair product, and what are the expected growth and sales?

The smart wheel has started contributing revenue, leveraging existing robotics technology for assisted driving. It's already selling overseas, with rapid progress from initiation to mass production in a year with tens of millions of RMB investment. The high-end wheelchair market is estimated at over USD 100 million, and they are partnering with traditional manufacturers.

“Our company's smart wheel has started to contribute revenue this quarter... The biggest feature of our intelligent wheel chair is to help people sitting in will shares, achieve assistant driving... The high-end wheel term market is worth over USD 100 million.”

asked by Jeffrey Thomas Chong · answered by Sheng Fu

2 min read 5 chapters

Detailed narrative

Business Transformation and Segment Focus

Cheetah Mobile is actively transforming its business, with a strategic shift towards AI and robotics. The company now operates with three reporting segments: Internet services, Robotics and others, and Global Enterprise Services, with the latter including cloud and AI infrastructure services and advertising agency services. This transformation has led to a significant change in revenue mix, with AI and robotics-related segments now accounting for 43% of total revenue, up from 22% a year ago.

AI Infrastructure Strategy

The company positions itself as a connection point between global cloud/AI ecosystems and enterprises expanding overseas. It focuses on helping companies integrate and manage AI models, computing power, and cost control, rather than building foundational models. This approach emphasizes disciplined investment, customer demand, service quality, and healthy returns, aiming to deepen customer relationships and expand services over time. The company leverages its internal AI experience to offer training and differentiated services beyond just reselling APIs.

Smart Mobility in Robotics

Within the Robotics segment, Smart Mobility products, particularly intelligent wheelchairs, are highlighted as a key growth engine. The company leverages existing robotics capabilities (autonomous mobility, environmental perception) and partners with established electric mobility manufacturers to control costs and accelerate time to market. The focus is on delivering reliable products that meet local standards and earn trust, with a long-term vision for independent, safe, and dignified travel solutions, targeting a high-end market estimated at over USD 100 million.

Capital Efficiency and Product Development

Management emphasized a capital-efficient approach, moving from project initiation to mass production and shipments for Smart Mobility products in just over a year with cumulative investment in the range of "several tens of millions of RMB." This reflects a strategy of reusing existing technological accumulation and collaborating with partners to accelerate development, rather than relying on extensive long-term investments.

Internet Services and Advertising Agency Challenges

The Internet Services segment remains profitable and cash-generative, with adjusted operating margin improving to 19.4%. However, the advertising agency services business within Global Enterprise Services faces significant headwinds, with revenue decreasing 70% YoY due to policy changes by a major global advertising platform. This decline impacts overall revenue and profitability, though underlying revenue excluding advertising agency services showed growth.

AI-generated summary of the company's earnings call. Not investment advice.