Shares of Cheetah Mobile (NYSE:CMCM) briefly sprinted higher this morning, up as much as 9% in early trading, after the company reported second-quarter earnings. The stock has since given back most of those gains and is up 2% as of 12:20 p.m. EDT.
Revenue in the second quarter declined by 59% to 394.2 million yuan ($55.8 million), which translated into adjusted net income of 243.9 million yuan ($34.5 million), or 1.74 yuan ($0.25) per American depositary share (ADS).
The Chinese mobile tech company said that its advertising revenue was significantly impacted by the COVID-19 pandemic, as many large advertising customers are located in big cities like Beijing. Cheetah also acknowledged that its mobile entertainment business took a major hit after Alphabet's Google suspended its apps and kicked the company off its advertising platforms in February.
"Our second quarter revenue came in ahead of management's expectations despite the unfavorable macro environment caused by the outbreak of COVID-19," CEO Sheng Fu said in a statement. "We have shifted our business focus from overseas markets to the domestic market."
Looking ahead, revenue in the third quarter is expected to be in the range of 310 million yuan ($43.9 million) to 360 million yuan ($51 million), which includes the deconsolidation of LiveMe's revenue since Cheetah Mobile no longer holds a majority stake in that company.
"In addition, Cheetah Mobile has a very strong balance sheet," added CFO Thomas Ren. "Backed by our clear, strategic focus, strict cost saving measures, and strong cash position, we are confident in our ability to improve our financial condition in the coming quarters."