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

Jing Zhu: Thank you, operator. Welcome to Cheetah Mobile’s Second Quarter 2025 Earnings Conference Call. With us today are our Chairman and CEO, Mr. Fu Sheng; and our Director and CFO, Mr. Thomas Ren. Following management’s prepared remarks, we will conduct the Q&A section. Please note that the management’s trade 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.

Sheng Fu: Thank you, everyone, for joining us today. In the second quarter, we delivered our best results since Q1 2021. Revenue grew 58% year-over-year driven by a 39% year-over-year increase in Internet business and an 86% year-over-year increase in AI and other segments. Our operating loss decreased 86% year-over-year, while non-GAAP operating loss was down 97% from last year, almost breakeven. In the first half of 2025, our revenue grew by 47% year-over-year. We believe we can maintain fast growth in the second half of 2025, driven by about 100% year-over-year revenue growth in our AI and other segments, along with a stable Internet business. This shows our turnaround is working and gaining momentum. What is even more important is how we work today.

We have made AIA core part of our process working in an AI native way. Our R&D teams are small and flexible using AI every day to design, test and build products, much like open source developers. This helps us move faster and use fewer resources ensures AI allows 1 person to do what once took a whole team. We have been investing in AI since 2016 and at the intersection of AI and robotics today, we now have advantages and experience that are hard to replicate. For example, depo our AI tool that turns video, audio and documents into summaries and my maps times with only 3 full-time employees. Our core Internet business remains solid, thanks to our shift from advertising to a subscription model, which has improved user engagement and retention Today, subscriptions make up about 60% of our Internet revenues.

This healthy base gives us the room to invest in new AI products out staying financially disciplined. We are enhancing existing apps like Duba Anti-virus Wallpaper apps and PDF tools with AI agents. For example, in Duba Anti-virus, we are testing a new AI feature that helps users fix PC issues, especially long tail problems, it couldn’t solve before and early feedback is encouraging. While we are still in the launch and improvement base for most AU utilities. We believe Chase has a natural advantage of utility applications. At the end of the day, the core value of AI utilities is to help people work more efficiently and productivity. If we can deliver on that, we believe users will be willing to use our products. On the service robotics side, we made solid progress.

Revenues from service robots continue to contribute to growth in the AI and other segment. In late July, we completed the acquisition of new factor on of a few robotic on companies that is already profitable and earn small service revenue overseas, combining new factory strengths with Cheetah’s distribution network and 100-plus global partners give us a clear advantage to scale globally. In fact [indiscernible] are already being used at scale in real-world scenarios. From assembly picking, painting and expensing tasks in factories to grabbing beverages, making coffee and beers and commercial applications, strawberry harvesting in agricultural setting and even in universities for robot research. We now have a broad range of robots and our piloting wheel robots with arms that can handle more physical tasks in more places.

We believe the true breakthrough in robotics is not just in using the most advanced lab technology about finding technologies that match real-world use cases, which can scale and generate earnings for the company. While the future of robotics is exciting. Our years of experience tell us that real commercial adoption depends on delivering sustainable ROI that customers can clearly see. Our strategy is to stay optimistic, yet patient, moving forward steadily. We will continue to identify scalable use cases and grow the business gradually. That said, we want to caution investors that it is not something that will reach math deployment in the coming quarters. The service robotics market is still developing, but AI agents are making robots smarter and easier to use.

Since adding agent OS, our next-generation voice system powered by AI agents. Earlier this year, our voice enabled robot revenue in China grew by about 100% in Q2 both driven by recurring demand from our existing channel partners alongside expansion into new high-quality customers in health care, education, health care and cultural institutions, such as the national center for the performing arts. In addition, this growth does not rely on 1 of large orders that comes from steady and repeat demand, especially in use cases like for guiding and reception, which shows it is sustainable. Few companies have both our global experience in consumer engine products and use of real-world robotics operations. This unique combination allows us to apply AI agent technology across both software and hardware, creating synergies that are hard to replicate, supporting our goal to become a leading service robot company in the coming years.

Looking ahead, our core Internet business remains healthy and profitable. We will keep investing in AI tools and robotics with discipline, and we are on track to reach profitability in the near term. Our strong cash position and zero debt give us the flexibility to grow while keeping our finances strong. transformation is just getting started, but it is already producing results. We are building 2 growth engines, AI-powered utility apps and AI robots that work together as synergistic forces, combining software and hardware to create a stronger moat, expand our market reach and open new growth opportunities. At the same time, our solid Internet business and strong cash resource provides a stable base with over 7 years of R&D in AI focused strategy and a culture of innovation, we are confident about the world ahead.

Thomas Jintao Ren: Thank you, Fu Sheng. Hello, everyone, and thank you for joining the call. Unless otherwise stated, all financial figures are presented in RMB. In the second quarter of 2025, we continue to make meaningful progress narrowing our losses and improving probability as we remain focused on execution, efficiency and financial discipline. In fact, on a non-GAAP basis, we almost reached a breakeven point on the operating level in Q2. Let me walk you through the key financial results in the quarter. Total revenue reached RMB 295 million, up 58% year-over-year and 14% quarter-over-quarter, marking a strong acceleration. Gross profit increased by 85% year-over-year and 19% quarter-over-quarter to RMB 22 million. Gross margin improved to 76%, up from 65% in the year ago quarter and 73% in the previous quarter.

Operating loss narrowed to RMB 11 million, an 86% year-over-year decreased a 58% quarter-over-quarter decrease. On a non-GAAP basis, our operating loss declined $2 million, down 97% year-over-year and 6% quarter-over-quarter. Net loss attributable to Cheetah shareholders decreased by 82% year-over-year and 32% quarter-over-quarter to RMB 23 million. Loan net loss attributable to Cheetah Mobile shareholders now by 87% year-over-year at 35% quarter-over-quarter to RMB 14 billion. These probability improvements reflect our ongoing efforts to sharpen the focus, improve efficiency and optimize our cost structure, particularly as we string from early-stage experimentation to ROI focused execution in our AI initiatives in our PI Autobolics business, we have exited certain compute sensitive directions, such as playing our own foundation models, a strategic shift that significantly reduced infrastructure spend.

At the same time, we have streamlined our R&D process by levering AI tools and refocused resources on AI utility applications that generate user value. For example, R&D expenses accounted for 24% of our AI and other segment revenue in the quarter, down from 39% in the year ago quarter and 28% in the previous quarter. These efforts have materially improved the operating profit of our AI and other segments where adjusted operating losses decreased 63% year-over-year. and 32% quarter-over-quarter. Looking ahead, we remain confident in our ability to achieve profitability with a clear and disciplined strategy. We see 2 key drivers for this path. First, our Internet business continues to deliver steady profits and serves as a solid financial foundation in Q2.

Adjusted operating margin for this segment was 14%, up from 12% in the year ago quarter. Our transition from an ad centric model for user subscription-driven model is showing good momentum. We believe this momentum is sustainable, supported by loyal user cohorts and diversified distribution channels. Second, in RA and Other segment. We are building for long-term probability by growth in both our consumer-facing AI tools and enterprise-facing robotics for our robotics business we are prioritizing salable use cases with clear user demand and engagement, emphasizing our core competence. In powered voice interaction, including natural conversation capabilities similar to our LOM based ages and we best indoor mobility, which we believe offers the most reliable and cost-effective solution for scalable robot deployment, continuously improving our robust intelligence and product experience through agents maintaining a lean and at team structure.

A recent milestone was our acquisition of new factor, 1 of the few profitable robotic arm companies globally, new factory brings a proven track record of profitable growth, clear market position and consistent value creation only aligned with our vision to scale differentiated robotic solutions over time. On the AI tools front, people an AI tool that suberizes video, audio, PDS and other documents is to concise takeaways and mind maps, has shown encouraging early user adoption, validating product market fit. Our balance sheet remains strong as of the 30th of June 2025, we have 282 billion in cash. and cash equivalents and USD 110 million in long-term investments. We generated RMB 362 million in operating cash flow during the quarter. This financial strength gives us the flexibility to continue investing in high potential growth opportunities while maintaining capital discipline.

We will also remain open to strategic and can accelerate capability building in targeted verticals. To summarize, this was another quarter of measurable progress on our path to breakeven. We are encouraged by early signs of sustainable profitability supported by: one, our profitable and resilient Internet business; two, a disciplined ROI focused eye strategy; and three, strong capital flexibility to invest in long-term growth. Thank you. We are now happy to take your questions.

Operator: [Operator Instructions] The first question today will come from Thomas Chong of Jefferies.

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Thomas Chong: [Foreign Language]