(Code: CMCM) Q2 quarterly financial report: total revenue of 394 million yuan, exceeding the previous quarter guidelines. Non GAAP belongs to the shareholders of cheetah mobile, with a net profit of 244 million yuan, a year-on-year increase of 196%; cash reserves and long-term investment of 5.266 billion yuan remained strong. The tool business benefits from the continuous improvement of user experience and the rapid growth of paid member size and revenue. In terms of AI business, 7000 AI shopping robots were deployed to lay the foundation for the construction of the company’s long-term growth engine. < p > < p > Fu Sheng, chairman and CEO of cheetah mobile, and Ren Jintao, CFO, attended the analysts’ wire financial performance and future strategic initiatives, gave a key interpretation and answered analysts’ questions. Fu Sheng, chairman and CEO of cheetah mobile, said: “despite the weak macro environment caused by the epidemic, the total revenue in the second quarter still exceeded the revenue guidelines given by the management. The company shifted its focus from overseas to domestic. In this context, non GAAP operating losses in the second quarter continued to narrow on a month on month basis. In fact, since the third quarter of 2019, the company’s non GAAP operating loss has been narrowed for three consecutive quarters. In addition, we disposed of all the byte hopping shares held by us, and the net profit of non GAAP attributable to the shareholders of cheetah mobile was 244 million yuan in this quarter. As of the second quarter, the number of AI robots deployed in shopping malls has increased to about 7000. Looking forward to the future, we will continue to focus on the domestic market and the AI robot business in shopping malls to build a long-term growth engine for cheetah mobile. ” Mr. Ren Jintao, chief financial officer of cheetah mobile, said: “in this quarter, we continued to streamline operations and optimize the cost structure of mobile Internet business and AI and related businesses. As a result, the total cost of the second quarter decreased by 47% year-on-year and 22% month on month. After strict cost control, our gross profit margin increased in the quarter and non GAAP operating loss narrowed. In addition, cheetah Mobile’s balance sheet remains strong. We believe that with a clear strategic focus, strict cost control and strong cash flow, cheetah mobile will continue its efforts to gradually improve its financial position. ” < / P > < p > performance in the second quarter of 2020 exceeded management expectations. In the second quarter, the total revenue reached 394 million yuan, exceeding the income guidelines. The net profit of non GAAP’s shareholders increased to 244 million yuan. However, we still face great external challenges. Overseas, we still haven’t resumed our cooperation with Facebook and Google, which makes it difficult for us to obtain new users and realize traffic. Overseas revenue continues to decline; in today’s international situation, we are not confident enough to resume working with Facebook and Google. In China, since the beginning of the year, the epidemic has affected the entire online advertising industry, resulting in the decline of ECPM. < / P > < p > in the face of many challenges, we: 1-shift strategic focus from overseas to domestic; 2-launch member payment model; 3-improve operational efficiency and substantially reduce operating expenses; 4-ai business focuses on shopping mall scene. First, large-scale reduction of costs and operating expenses. In the second quarter, non GAAP’s operating loss narrowed by 8 million yuan, while revenue decreased by 130 million yuan on a month on month basis. In the second quarter, the decline in revenue was mainly affected by the epidemic and Google’s suspension of cooperation. < / P > < p > in this quarter, we substantially reduced the cost of overseas business, which reduced the total cost of mobile Internet business (i.e. tool business and mobile game business) by 61% and 31% respectively. In the future, we will continue to improve the operational efficiency of the business, reduce cost input at the company level and improve operating losses. < / P > < p > Second, the paid member model promoted PC revenue to recover month on month growth in this quarter. In the quarter, PC revenue reached 120 million yuan, up 2% month on month. In this quarter, the scale of paid members and daily income of drug bullies hit a record high. This verifies the feasibility and development prospect of paid member model in tool products. < / P > < p > recently, we extended the paid membership model from PC to mobile, and took the lead in launching value-added services in cheetah cleaning master. Since its launch, the scale of paying members and the daily income of paying members have been rising. We are encouraged by the results. < / P > < p > Third, we focus on the Chinese market for mobile end tool products. In view of the current international situation, we believe that mobile Internet products will encounter challenges beyond more and more products. Therefore, we will gradually stop the service of overseas tool products to save operating costs. At the same time, we will focus on mobile product R & D back to China. In this quarter, we launched new tool products in China. In the future, we will launch more products, enrich the tool product matrix and increase revenue. < / P > < p > in the fourth quarter and the second quarter, the number of AI robot products deployed in shopping malls has increased to about 7000. These robot products help customers find the shops and brands they need, improve the shopping experience, and bring more business opportunities for businesses. < / P > < p > in this quarter, the daily average interaction volume of these AI robot products continued to increase. The growth of traffic has attracted more businesses and brands to settle in. Recently, we have cooperated with many brands of catering, automobile and daily necessities to give preferential flow to their local shops. The epidemic has delayed the progress of our AI business in shopping malls for nearly six months. However, with the recovery of the general environment in the future, we will accelerate the commercialization process of AI business in the field of shopping malls. Fifthly, there are many high-quality assets in our long-term investment. By the end of the second quarter, cheetah had a long-term investment of $292 million. Cheetah made good progress in the second quarter. Liveme, for example, is profitable. Programming cat’s income reached a new high and completed a new round of financing. Programming cat is an online programming education platform for children. < / P > < p > looking to the future: the external challenges are still huge, leading to a possible decline in revenue in the second half of 2020. However, we will continue to strictly control expenses and costs and narrow operating losses. At the same time, we will unswervingly invest in AI business. With abundant cash reserves, we believe that AI business will build a new long-term growth engine for the company.