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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
(Mark One)
REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934 |
OR
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the fiscal year ended
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from ________ to ________
OR
SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Date of event requiring this shell company report ________
For the transition period from ________ to ________
Commission file number:
(Exact name of Registrant as specified in its charter)
N/A
(Translation of Registrant’s name into English)
(Jurisdiction of incorporation or organization)
Chaoyang District
(Address of principal executive offices)
Chief Financial Officer
Cheetah Mobile Inc.
Chaoyang District
Tel: +
Email: IR@cmcm.com
(Name, Telephone, Email and/or Facsimile number and Address of Company Contact Person)
Securities registered or to be registered pursuant to Section 12(b) of the Act.
Title of each class |
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Trading Symbol(s) |
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Name of each exchange on which registered |
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* for trading, but only in connection with the listing on the New York Stock Exchange of American depositary shares, each representing fifty Class A ordinary shares.
Securities registered or to be registered pursuant to Section 12(g) of the Act.
NONE
(Title of Class)
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Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act.
NONE
(Title of Class)
Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report:
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. ☐ Yes ☒
If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934. ☐ Yes ☒
Note – Checking the box above will not relieve any registrant required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 from their obligations under those Sections.
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. ☒
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☒
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or an emerging growth company. See definition of “large accelerated filer,” “accelerated filer,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer |
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Accelerated filer |
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Emerging growth company |
If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards† provided pursuant to Section 13 (a) of the Exchange Act. ☐
† The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April 5, 2012.
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report.
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐
Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:
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International Financial Reporting Standards as issued by the International Accounting Standards Board ☐ |
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Other ☐ |
If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow. ☐ Item 17 ☐ Item 18
If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes
(APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PAST FIVE YEARS)
Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. ☐ Yes ☐ No
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TABLE OF CONTENTS
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Item 14. |
Material Modifications to the Rights of Security Holders and Use of Proceeds |
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Item 16E. |
Purchases of Equity Securities by the Issuer and Affiliated Purchasers |
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Item 16F. |
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Item 16G. |
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Item 16H. |
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Item 16I. |
Disclosure Regarding Foreign Jurisdictions That Prevent Inspections |
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INTRODUCTION
In this annual report, except where the context otherwise requires and for purposes of this annual report only:
Due to rounding, numbers presented throughout this annual report may not add up precisely to the totals provided and percentages may not precisely reflect the absolute figures.
We present our financial results in RMB. This annual report contains translations of RMB amounts into U.S. dollars at specific rates solely for the convenience of the reader. The conversion of RMB into U.S. dollars in this annual report is based on the exchange rate set forth in the H.10 statistical release of the Board of Governors of the Federal Reserve System. Unless otherwise noted, all translations from RMB to U.S. dollars and from U.S. dollars to Renminbi in this annual report were made at a rate of RMB6.8972 to US$1.00, the exchange rate on December 30, 2022 set forth in the H.10 statistical release of The Board of Governors of the Federal Reserve System. We make no representation that any RMB or U.S. dollar amount could have been, or could be, converted into U.S. dollars or RMB, as the case may be, at any particular rate, or at all.
Effective September 2, 2022, we effected a change of the ratio of the ADS to our Class A ordinary shares from one ADS representing ten Class A ordinary share to one ADS representing fifty Class A ordinary shares. Currently, each ADS represents fifty Class A ordinary shares. The change in the ratio of the ADS to our Class A ordinary shares had no impact on our underlying Class A ordinary shares, and no Class A ordinary shares were issued or cancelled in connection with the change in the ratio of the ADS to our Class A ordinary shares. Unless otherwise indicated, ADSs and per ADS amount in this annual report have been retroactively adjusted to reflect the changes in ratio for all periods presented.
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FORWARD-LOOKING STATEMENTS
This annual report on Form 20-F contains forward-looking statements that reflect our current expectations and views of future events. These statements are made under the “safe harbor” provisions of the U.S. Private Securities Litigation Reform Act of 1995. You can identify these forward- looking statements by words or phrases such as “may,” “could,” “should,” “would,” “will,” “expect,” “anticipate,” “aim,” “estimate,” “intend,” “plan,” “believe,” “likely to,” “project,” “continue,” “potential,” or other similar expressions. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our financial condition, results of operations, business strategy and financial needs. These forward-looking statements include, but are not limited to, statements about:
You should not place undue reliance on these forward-looking statements and you should read these statements in conjunction with other sections of this annual report, in particular the risk factors disclosed in “Item 3. Key Information—D. Risk Factors.” These statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from those expressed or implied by the forward-looking statements. Moreover, we operate in a rapidly evolving environment. New risks emerge from time to time and it is impossible for our management to predict all risk factors, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ from those contained in any forward-looking statement. The forward-looking statements made in this annual report relate only to events or information as of the date on which the statements are made in this annual report. We do not undertake any obligation to update or revise the forward-looking statements except as required under applicable law.
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PART I
Item 1. Identity of Directors, Senior Management and Advisers
Not applicable.
Item 2. Offer Statistics and Expected Timetable
Not applicable.
Item 3. Key Information
Our Holding Company Structure and Contractual Arrangements with the Consolidated Variable Interest Entities
Cheetah Mobile Inc. is not a Chinese operating company but a Cayman Islands holding company with no equity ownership in its consolidated variable interest entities. We conduct our operations in China through (i) our PRC subsidiaries and (ii) the consolidated variable interest entities and their subsidiaries with which we have maintained contractual arrangements. PRC laws and regulations restrict and impose conditions on foreign investment in the internet industry, including the mobile internet industry. Accordingly, we operate part of our business in China through the consolidated variable interest entities, and rely on contractual arrangements among our PRC subsidiaries, the consolidated variable interest entities and their shareholders to control the business operations of the consolidated variable interest entities. External revenues contributed by the consolidated variable interest entities accounted for 36.6%, 33.1% and 31.8% of our total revenues for the years of 2020, 2021 and 2022, respectively. As used in this annual report, “we,” “us,” “our company,” or “our” refers to Cheetah Mobile Inc., its subsidiaries and, in the context of describing our operations and consolidated financial information, the consolidated variable interest entities and their subsidiaries in China, including but not limited to Beijing Mobile, Beijing Network and Beijing Conew. References to the consolidated variable interest entities may include their subsidiaries, depending on the context as appropriate.
The following diagram summarizes our corporate structure and identifies our significant subsidiaries and VIEs as of the date of this annual report. 
Notes:
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Holders of our Class A ordinary shares or the ADSs hold equity interest in Cheetah Mobile Inc., our Cayman Islands holding company, and do not have direct or indirect equity interests in the VIEs and their subsidiaries. A series of contractual agreements, including business operation agreements, shareholder voting proxy agreements, equity pledge agreements, exclusive technology development, support and consultancy agreements, loan agreements and exclusive option agreements, have been entered into by and among our subsidiaries, the consolidated variable interest entities and their respective shareholders. Terms contained in each set of contractual arrangements with the consolidated variable interest entities and their respective shareholders are substantially similar. As a result of the contractual arrangements, we have effective control over and are considered the primary beneficiary of these companies, and we have consolidated the financial results of these companies in our consolidated financial statements. For more details of these contractual arrangements, see “Item 4. Information on the Company—C. Organizational Structure.”
However, the contractual arrangements may not be as effective as direct ownership in providing us with control over the consolidated variable interest entities, and we may incur substantial costs to enforce the terms of the arrangements. In addition, these agreements have not been tested in China courts. See “Item 3. Key Information—D. Risk Factors—Risks Relating to Our Corporate Structure—We rely on contractual arrangements with the VIEs and their shareholders for the operation of our business in China, which may not be as effective as direct ownership.” and “Item 3. Key Information—D. Risk Factors—Risks Relating to Our Corporate Structure—The shareholders of the VIEs may have potential conflicts of interest with us, which may materially and adversely affect our business.”
There are also substantial uncertainties regarding the interpretation and application of current and future PRC laws, regulations and rules regarding the status of the rights of our Cayman Islands holding company with respect to its contractual arrangements with the consolidated variable interest entities and their shareholders. It is uncertain whether any new PRC laws or regulations relating to variable interest entity structures will be adopted or if adopted, what they would provide. If we or any of the consolidated variable interest entities are found to be in violation of any existing or future PRC laws or regulations, or fail to obtain or maintain any of the required permits or approvals, the relevant PRC regulatory authorities would have broad discretion to take action in dealing with such violations or failures. See “Item 3. Key Information—D. Risk Factors—Risks Relating to Our Corporate Structure—If the PRC government finds that the structure we have adopted for our business operations does not comply with PRC governmental restrictions on foreign investment in internet businesses, or if these laws or regulations or interpretations of existing laws or regulations change in the future, we could be subject to severe penalties, including the shutting down of our platform and our business operations” and “—Substantial uncertainties exist with respect to the interpretation and implementation of PRC Foreign Investment Law and how it may impact the viability of our current corporate structure, corporate governance and business operations.”
Our corporate structure is subject to risks associated with our contractual arrangements with the consolidated variable interest entities. If the PRC government deems that our contractual arrangements with the consolidated variable interest entities do not comply with PRC regulatory restrictions on foreign investment in the relevant industries, or if these regulations or the interpretation of existing regulations change or are interpreted differently in the future, we could be subject to severe penalties or be forced to relinquish our interests in those operations. Our holding company, our PRC subsidiaries and consolidated variable interest entities, and investors of our company face uncertainty about potential future actions by the PRC government that could affect the enforceability of the contractual arrangements with the consolidated variable interest entities and, consequently, significantly affect the financial performance of the consolidated variable interest entities and our company as a whole. For a detailed description of the risks associated with our corporate structure, please refer to risks disclosed under “Item 3. Key Information—D. Risk Factors—Risks Relating to Our Corporate Structure.”
Risks and Uncertainties Related to Doing Business in China
We face various risks and uncertainties related to doing business in China. Our business operations are primarily conducted in China, and we are subject to complex and evolving PRC laws and regulations. For example, we face risks associated with regulatory approvals on offshore offerings, oversight on cybersecurity and data privacy, which may impact our ability to conduct certain businesses, accept foreign investments, or list on a United States or other foreign exchange. These risks could result in a material adverse change in our operations and the value of our ADSs, significantly limit or completely hinder our ability to continue to offer securities to investors, or cause the value of such securities to significantly decline. For a detailed description of Risks Relating to Doing Business in China, please refer to risks disclosed under “Item 3.D. Key Information—Risk Factors—Risks Relating to Doing Business in China.”
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PRC government’s significant authority in regulating our operations and its oversight and control over offerings conducted overseas by, and foreign investment in, China-based issuers could significantly limit or completely hinder our ability to offer or continue to offer securities to investors. Implementation of industry-wide regulations, including data security or anti-monopoly related regulations, in this nature may cause the value of such securities to significantly decline. For more details, see “Item 3. Key Information—D. Risk Factors—Risks Relating to Doing Business in China—Failure to meet the PRC government’s complex regulatory requirements on our business operation could have a material adverse effect on our operations and the value of our ADSs.”
Risks and uncertainties arising from the legal system in China, including risks and uncertainties regarding the enforcement of laws and quickly evolving rules and regulations in China, could result in a material adverse change in our operations and the value of our ADSs. For more details, see “Item 3. Key Information—D. Risk Factors—Risks Relating to Doing Business in China—Uncertainties in the interpretation and enforcement of Chinese laws and regulations could limit the legal protections available to you and us.” and “We may be adversely affected by the complexity of, and uncertainties and changes in, PRC regulation on mobile and PC internet businesses and companies.”
Our business requires us to collect, store and process certain personal data relating to our customers. In recent years, the PRC regulators have tightened the regulations of the collection, storage, use, processing, transmission, provision, disclosure and deletion of personal information and data. Privacy, data protection and cybersecurity concerns and domestic or foreign laws and regulation may reduce the effectives of our business operating, and may result in significant costs and compliance challenges, and adversely affect our business. On December 28, 2021, twelve regulatory authorities jointly released the Cybersecurity Review Measures, which became effective on February 15, 2022. The Cybersecurity Review Measures provides that a critical information infrastructure operator purchasing network products and services, and platform operators carrying out data processing activities which affect or may affect national security, must apply for cybersecurity review. The Cybersecurity Review Measures also provides that a platform operator with more than one million users’ personal information aiming to list abroad must apply for cybersecurity review. New York Stock Exchange fall within the definition of “abroad” in the provision, however, we are already listed on the New York Stock Exchange, therefore, there can be no assurance if we are required to follow the cybersecurity review or the security assessment procedures, and if so, whether we would be able to complete the applicable cybersecurity review or the security assessment procedures in a timely manner.
On December 31, 2021, the CAC, MIIT, the Ministry of Public Security, the SAM promulgated the Administrative Provisions on Internet Information Service Algorithm Recommendation, or the Provisions on Algorithm Recommendation, which came into effect on March 1,2022. However, as the scope of algorithm recommendation service providers with public sentiment attributes or social mobilizing capability is currently unclear under the Provisions on Algorithm Recommendation, there remains substantial uncertainties as to its interpretation and enforcement. The internet information services algorithm filing system was launched on March 1, 2022, and we may have to subject the report filing obligation through such system.
On July 7, 2022, the Cyberspace Administration of China, or the CAC promulgated the Security Assessment Measures for Outbound Data Transfer, or the Security Assessment Measures, which took effect on September 1, 2022. The Security Assessment Measures require that any data processor which processes or exports personal information exceeding certain volume threshold under such measures shall apply for security assessment by the CAC before transferring any personal information outbound. The security assessment requirement also applies to any transfer of important data outside of China. We do not expect the Security Assessment Measures to have material impact on our daily operations in respect of the outbound data transfer. However, since the Security Assessment Measures is newly promulgated, there are uncertainties as to its interpretation and application. There can be no assurance that relevant regulatory authority will take the same view as ours. In the event if the regulatory authority deems certain of our activities as a cross-border data transfer, we will be subject to the relevant requirements.
For more details, see “Item 3. Key Information—D. Risk Factors—Risks Relating to Our Business and Industry—Actual or alleged failure to comply with laws and regulations on cybersecurity and data protection could damage our reputation, discourage current and potential users from using our products and services applications and subject us to damages, administrative penalties and criminal liabilities, which could have material adverse effects on our business and results of operation.”
The Holding Foreign Companies Accountable Act
Trading in our securities on U.S. markets, including the OTC market, may be prohibited under the Holding Foreign Companies Accountable Act, or the HFCAA, if the Public Company Accounting Oversight Board, or the PCAOB, determines that it is unable to inspect or investigate completely our auditor for two consecutive years. On December 16, 2021, the PCAOB issued a report to notify the SEC of its determination that the PCAOB is unable to inspect or investigate completely registered public accounting firms headquartered in mainland China and Hong Kong, or the 2021 Determinations. As of the date of this annual report, our auditor is not included in the 2021 Determinations. However, our former auditor, Ernst & Young Hua Ming LLP, or EY, was subject to the 2021 Determinations. Therefore, we have been identified as a “Commission-Identified Issuer” shortly after the filing of our annual report on Form 20-F in August 2022.
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On December 15, 2022, the PCAOB determined that it was able to secure complete access to inspect and investigate registered public accounting firms headquartered in mainland China and Hong Kong in 2022 and vacated the 2021 Determinations accordingly. As a result, we do not expect to be identified as a “Commission-Identified Issuer” under the HFCAA for the fiscal year ended December 31, 2022 after we file our annual report on Form 20-F for such fiscal year. Accordingly, until such time as the PCAOB issues any new determination, we believe that we are at no risk of having our securities subject to a trading prohibition under the HFCAA.
However, whether the PCAOB will continue to conduct inspections and investigations completely to its satisfaction of PCAOB-registered public accounting firms headquartered in mainland China and Hong Kong is subject to uncertainty and depends on a number of factors out of our, and our auditor’s, control, including positions taken by authorities of the PRC. The PCAOB is expected to continue to demand complete access to inspections and investigations against accounting firms headquartered in mainland China and Hong Kong in the future and states that it has already made plans to resume regular inspections in early 2023 and beyond. The PCAOB is required under the HFCAA to make its determination on an annual basis with regards to its ability to inspect and investigate completely accounting firms based in the mainland China and Hong Kong. The possibility of being a “Commission-Identified Issuer” and risk of delisting could continue to adversely affect the trading price of our securities. Should the PCAOB again encounter impediments to inspections and investigations in mainland China or Hong Kong as a result of positions taken by any authority in either jurisdiction, the PCAOB will make determinations under the HFCAA as and when appropriate then such lack of inspection could cause our securities to be delisted from the stock exchange. For more details, see “Item 3. Key Information—D. Risk Factors—Risks Relating to Doing Business in China—The ADSs may be prohibited from trading in the United States under the HFCAA if the PCAOB is unable to inspect or fully investigate our auditor. The delisting of the ADSs, or the threat of their being delisted, may materially and adversely affect the value of your investment.”
Permissions Required from the PRC Authorities for Our Operations
We conduct our business primarily through our subsidiaries and consolidated variable interest entities in China. Our operations in China are governed by PRC laws and regulations. As of the date of this annual report, our PRC subsidiaries and consolidated variable interest entities have obtained the requisite licenses and permits from the PRC government authorities that are material for the business operations of our holding company and the consolidated variable interest entities in China, including, among others, Internet Content Provider Licenses, or ICP Licenses, for the provision of internet information services, a license for value-added telecommunications services with the specification of online data processing and transaction processing business, or EDI license, Business License of Value-Added Telecommunications Services, or SP license, and Computer Information System Security Products Sales License for our mobile and PC security applications. Given the uncertainties of interpretation and implementation of relevant laws and regulations and the enforcement practice by relevant government authorities, we may be required to obtain additional licenses, permits, filings or approvals for the functions and services of our platform in the future. Any lack of, or failure to keep, requisite licenses, permits, filings or approvals to our business operations, may harm our business. For more detailed information, see “Item 3. Key Information—D. Risk Factors—Risks Relating to Doing Business in China—We may be adversely affected by the complexity of, and uncertainties and changes in, PRC regulation on mobile and PC internet businesses and companies.”
Furthermore, in connection with our issuance of securities to foreign investors, under current PRC laws, regulations and regulatory rules, as of the date of this annual report, we, our PRC subsidiaries and the consolidated variable interest entities, (i) are not required to obtain permissions from the China Securities Regulatory Commission, or the CSRC, (ii) have not received any formal notice from any cybersecurity regulator that we should apply for a cybersecurity review, and (iii) have not received or were denied such requisite permissions by any PRC authority.
However, the PRC government has recently exerted more oversight and control over offerings that are conducted overseas and/or foreign investment in China-based issuers. For more detailed information, see “Item 3. Key Information—D. Risk Factors—Risks Relating to Doing Business in China—The approval of and filing with the CSRC or other PRC government authorities may be required in connection with our future offshore offerings under PRC law, and, if required, we cannot predict whether or for how long we will be able to obtain such approval or complete such filing.”
Cash and Asset Flows through Our Organization
Cheetah Mobile Inc. is a holding company with no material operations of its own. We conduct our operations primarily through our PRC subsidiaries, the VIEs and their subsidiaries in China. As a result, Cheetah Mobile Inc.’s ability to pay dividends depends upon dividends paid by our PRC subsidiaries. If our existing PRC subsidiaries or any newly formed ones incur debt on their own behalf in the future, the instruments governing their debt may restrict their ability to pay dividends to us. In addition, our wholly foreign-owned subsidiaries in China are permitted to pay dividends to us only out of its retained earnings, if any, as determined in accordance with PRC accounting standards and regulations. Under PRC law, each of our subsidiaries and the VIEs in China is
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required to make appropriations to certain statutory reserve funds or may make appropriations to certain discretionary funds, which are not distributable as cash dividends except in the event of a solvent liquidation of the companies. For more details, see “Item 5. Operating and Financial Review and Prospects—Liquidity and Capital Resources—Holding Company Structure.” and “Item 3. Key Information—Risk Factors—Risks Relating to Doing Business in China—We may rely on dividends paid by our subsidiaries, including PRC subsidiaries, to fund any cash and financing requirements we may have. Any limitation on the ability of our subsidiaries to pay dividends to us could have a material adverse effect on our ability to conduct our business and to pay dividends to holders of the ADSs and our ordinary shares.”
Under PRC laws and regulations, our PRC subsidiaries and consolidated variable interest entities are subject to certain restrictions with respect to paying dividends or otherwise transferring any of their net assets to us. Remittance of dividends by a wholly foreign-owned enterprise out of China is also subject to examination by the banks designated by State Administration of Foreign Exchange, or SAFE. The amounts restricted include the paid-up capital and the statutory reserve funds of our PRC subsidiaries and the net assets of the consolidated variable interest entities in which we have no legal ownership, totaling RMB218.4 million, RMB200.6 million and RMB201.7 million (US$29.2 million) as of December 31, 2020, 2021 and 2022, respectively. For details, see “Item 3. Key Information—Risk Factors—Risks Relating to Doing Business in China—PRC regulation of loans to, and direct investment in, PRC entities by offshore holding companies and governmental control of currency conversion may restrict or prevent us from loans to our PRC entities or to make additional capital contributions to our PRC subsidiaries, which may materially and adversely affect our liquidity and our ability to fund and expand our business.”
For the years ended December 31, 2020, 2021 and 2022, certain of our PRC subsidiaries have declared dividends to our Hong Kong subsidiaries for an aggregate amount of RMB19.6 million, RMB9.5 million and nil; the dividend payments are subject to withholding tax. We have made tax provisions based on the corresponding tax rate. If our PRC subsidiaries further declare and distribute profits earned after January 1, 2008 in the future, the dividend payments will be subject to withholding tax, which will increase our tax liability and reduce the amount of cash available to our company. For the potential distributable profits to be distributed to our qualified Hong Kong incorporated subsidiary, the deferred tax liabilities are accrued at a 5% withholding tax rate. Cheetah Mobile Inc. transfers cash to its wholly-owned Hong Kong and Singapore subsidiaries, by making capital contributions or providing loans, and the Hong Kong or Singapore subsidiaries transfer cash to the subsidiaries in China by making capital contributions, providing loans or by making payment for inter-group transactions. Because Cheetah Mobile Inc. and its subsidiaries have contractual arrangements with the VIEs instead of equity ownership, they are not able to make direct capital contribution to the VIEs and their subsidiaries. However, they may transfer cash to the VIEs by loans or by making payment to the VIEs for inter-group transactions.
For the years ended December 31, 2020, 2021 and 2022, Cheetah Mobile Inc. through its intermediate holding companies provided capital contribution and loans with principal amount of RMB309.7 million, RMB74.2 million and RMB92.3 million (US$13.4 million), respectively, to its subsidiaries in China, and the subsidiaries haven’t repaid the loans for the years ended December 31, 2020, 2021 and 2022. For the years ended December 31, 2020, 2021 and 2022, our PRC subsidiaries provide technical support, marketing and operating services to our overseas subsidiaries, total amounts paid for such services by our overseas subsidiaries to our PRC subsidiaries were RMB54.7 million, RMB3.3 million and RMB9.5 million (US$1.4 million). In 2020, our PRC subsidiaries transferred some game assets to one of our Hong Kong subsidiary, the total consideration of such transfer was US$15.5 million which was fully paid in 2021.
For the years ended December 31, 2020, 2021 and 2022, our consolidated VIEs received debt financing of RMB278.0 million, RMB91.1 million and RMB128.4 million (US$18.6 million) from Cayman and subsidiaries, respectively, and the VIEs repaid the principal amount of RMB286.6 million, RMB121.0 million and RMB139.9 million (US$20.3 million), respectively to the related subsidiaries.
The VIEs may transfer cash to the relevant subsidiaries by paying service fees related to technical support, backoffice support, marketing and sales agency services. For the years ended December 31, 2020, 2021 and 2022, the total amount of service fees that VIEs paid to the relevant subsidiaries related to such services was RMB243.6 million, RMB155.3 million and RMB154.7 million (US$22.4 million), respectively. The VIEs also provide cloud and promotion services to our subsidiaries, the total amount received from the relevant subsidiaries related to such services was RMB53.2 million, RMB33.3 million and RMB57.6 million (US$8.4 million), respectively for the years ended December 31, 2020, 2021 and 2022.
For the years ended December 31, 2020, 2021 and 2022, no material assets other than the above cash transactions were transferred between our subsidiaries and the consolidated variable interest entities.
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Cheetah Mobile Inc. declared and paid cash dividends on its ordinary shares of approximately US$200.0 million in 2020.We currently don’t have any present plan to pay any cash dividends on its ordinary shares in the foreseeable future. We currently intend to retain most, if not all, of our available funds and any future earnings to fund the development and growth of our business. See “Item 8. Financial Information—A. Consolidated Statements and Other Financial Information—Dividend Policy.” For the material Cayman Islands, PRC and U.S. federal income tax consequences of an investment in our ADSs or ordinary shares, see “Item 10. Additional Information—E. Taxation.”
Financial Information Related to The Consolidated Variable Interest Entities
The following table presents the condensed consolidating schedule of financial information of Cheetah Mobile Inc., its subsidiaries, and its consolidated variable interest entities and other entities as of the dates presented.
Selected Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) Data
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|
Consolidated |
|
|
Eliminations |
|
|
Consolidated |
|
|||||
|
|
(RMB, in thousands) |
|
|||||||||||||||||
Revenues |
|
|
— |
|
|
|
833,330 |
|
|
|
344,288 |
|
|
|
(293,552 |
) |
|
|
884,066 |
|
Net (loss) income |
|
|
(513,475 |
) |
|
|
(486,404 |
) |
|
|
3,792 |
|
|
|
475,396 |
|
|
|
(520,691 |
) |
|
|
For the Year Ended December 31, 2021 |
|
|||||||||||||||||
|
|
Cheetah |
|
|
Company |
|
|
Consolidated |
|
|
Eliminations |
|
|
Consolidated |
|
|||||
|
|
(RMB, in thousands) |
|
|||||||||||||||||
Revenues |
|
|
— |
|
|
|
894,352 |
|
|
|
320,942 |
|
|
|
(430,678 |
) |
|
|
784,616 |
|
Net (loss) income |
|
|
(351,126 |
) |
|
|
(358,345 |
) |
|
|
(8,489 |
) |
|
|
364,756 |
|
|
|
(353,204 |
) |
|
|
For the Year Ended December 31, 2020 |
|
|||||||||||||||||
|
|
Cheetah |
|
|
Company |
|
|
Consolidated |
|
|
Eliminations |
|
|
Consolidated |
|
|||||
|
|
(RMB, in thousands) |
|
|||||||||||||||||
Revenues |
|
|
— |
|
|
|
1,316,872 |
|
|
|
659,626 |
|
|
|
(423,853 |
) |
|
|
1,552,645 |
|
Net income (loss) |
|
|
416,732 |
|
|
|
(48,734 |
) |
|
|
(8,825 |
) |
|
|
51,984 |
|
|
|
411,157 |
|
8
Table of Contents
Selected Condensed Consolidated Balance Sheets Data
|
|
As of December 31, 2022 |
|
|||||||||||||||||
|
|
Cheetah |
|
|
Company |
|
|
Consolidated |
|
|
Eliminations |
|
|
Consolidated |
|
|||||
|
|
(RMB, in thousands) |
|
|||||||||||||||||
Cash and cash equivalents |
|
|
130,746 |
|
|
|
1,163,321 |
|
|
|
221,732 |
|
|
|
— |
|
|
|
1,515,799 |
|
Restricted cash |
|
|
— |
|
|
|
696 |
|
|
|
— |
|
|
|
— |
|
|
|
696 |
|
Short-term investments |
|
|
— |
|
|
|
93,147 |
|
|
|
63,035 |
|
|
|
— |
|
|
|
156,182 |
|
Due from related parties, net |
|
|
— |
|
|
|
173,393 |
|
|
|
25,706 |
|
|
|
— |
|
|
|
199,099 |
|
Others |
|
|
111,986 |
|
|
|
1,097,519 |
|
|
|
42,414 |
|
|
|
— |
|
|
|
1,251,919 |
|
Total current assets |
|
|
242,732 |
|
|
|
2,528,076 |
|
|
|
352,887 |
|
|
|
— |
|
|
|
3,123,695 |
|
Investments in subsidiaries |
|
|
474,435 |
|
|
|
— |
|
|
|
— |
|
|
|
(474,435 |
) |
|
|
— |
|
Due from related parties, net |
|
|
— |
|
|
|
3,840 |
|
|
|
— |
|
|
|
— |
|
|
|
3,840 |
|
Others |
|
|
477,366 |
|
|
|
1,171,499 |
|
|
|
363,019 |
|
|
|
— |
|
|
|
2,011,884 |
|
Total non-current assets |
|
|
951,801 |
|
|
|
1,175,339 |
|
|
|
363,019 |
|
|
|
(474,435 |
) |
|
|
2,015,724 |
|
Amount due from Group companies |
|
|
2,345,588 |
|
|
|
1,596,664 |
|
|
|
737,129 |
|
|
|
(4,679,381 |
) |
|
|
— |
|
Total assets |
|
|
3,540,121 |
|
|
|
5,300,079 |
|
|
|
1,453,035 |
|
|
|
(5,153,816 |
) |
|
|
5,139,419 |
|
Due to related parties |
|
|
— |
|
|
|
9,349 |
|
|
|
14,280 |
|
|
|
— |
|
|
|
23,629 |
|
Others |
|
|
23,700 |
|
|
|
1,518,632 |
|
|
|
212,566 |
|
|
|
— |
|
|
|
1,754,898 |
|
Total current liabilities |
|
|
23,700 |
|
|
|
1,527,981 |
|
|
|
226,846 |
|
|
|
— |
|
|
|
1,778,527 |
|
Total non-current liabilities |
|
|
181,508 |
|
|
|
72,259 |
|
|
|
2,339 |
|
|
|
— |
|
|
|
256,106 |
|
Amount due to Group companies |
|
|
301,582 |
|
|
|
3,234,651 |
|
|
|
1,143,148 |
|
|
|
(4,679,381 |
) |
|
|
— |
|
Total liabilities |
|
|
506,790 |
|
|
|
4,834,891 |
|
|
|
1,372,333 |
|
|
|
(4,679,381 |
) |
|
|
2,034,633 |
|
Selected Condensed Consolidated Balance Sheets Data (Continued)
|
|
As of December 31, 2021 |
|
|||||||||||||||||
|
|
Cheetah |
|
|
Company |
|
|
Consolidated |
|
|
Eliminations |
|
|
Consolidated |
|
|||||
|
|
(RMB, in thousands) |
|
|||||||||||||||||
Cash and cash equivalents |
|
|
20,401 |
|
|
|
1,526,029 |
|
|
|
37,496 |
|
|
|
— |
|
|
|
1,583,926 |
|
Restricted cash |
|
|
— |
|
|
|
637 |
|
|
|
144 |
|
|
|
— |
|
|
|
781 |
|
Short-term investments |
|
|
— |
|
|
|
142,616 |
|
|
|
120,197 |
|
|
|
— |
|
|
|
262,813 |
|
Due from related parties, net |
|
|
— |
|
|
|
46,709 |
|
|
|
54,624 |
|
|
|
— |
|
|
|
101,333 |
|
Others |
|
|
147,396 |
|
|
|
467,870 |
|
|
|
34,368 |
|
|
|
— |
|
|
|
649,634 |
|
Total current assets |
|
|
167,797 |
|
|
|
2,183,861 |
|
|
|
246,829 |
|
|
|
— |
|
|
|
2,598,487 |
|
Investments in subsidiaries |
|
|
897,699 |
|
|
|
— |
|
|
|
— |
|
|
|
(897,699 |
) |
|
|
— |
|
Due from related parties, net |
|
|
— |
|
|
|
111,335 |
|
|
|
— |
|
|
|
— |
|
|
|
111,335 |
|
Others |
|
|
449,850 |
|
|
|
1,465,166 |
|
|
|
353,480 |
|
|
|
— |
|
|
|
2,268,496 |
|
Total non-current assets |
|
|
1,347,549 |
|
|
|
1,576,501 |
|
|
|
353,480 |
|
|
|
(897,699 |
) |
|
|
2,379,831 |
|
Amount due from Group companies |
|
|
3,124,311 |
|
|
|
2,229,709 |
|
|
|
706,646 |
|
|
|
(6,060,666 |
) |
|
|
— |
|
Total assets |
|
|
4,639,657 |
|
|
|
5,990,071 |
|
|
|
1,306,955 |
|
|
|
(6,958,365 |
) |
|
|
4,978,318 |
|
Due to related parties |
|
|
— |
|
|
|
8,735 |
|
|
|
29,025 |
|
|
|
— |
|
|
|
37,760 |
|
Others |
|
|
31,107 |
|
|
|
1,129,974 |
|
|
|
155,053 |
|
|
|
— |
|
|
|
1,316,134 |
|
Total current liabilities |
|
|
31,107 |
|
|
|
1,138,709 |
|
|
|
184,078 |
|
|
|
— |
|
|
|
1,353,894 |
|
Total non-current liabilities |
|
|
169,629 |
|
|
|
86,705 |
|
|
|
7,947 |
|
|
|
— |
|
|
|
264,281 |
|
Amount due to Group companies |
|
|
1,159,795 |
|
|
|
3,876,360 |
|
|
|
1,024,511 |
|
|
|
(6,060,666 |
) |
|
|
— |
|
Total liabilities |
|
|
1,360,531 |
|
|
|
5,101,774 |
|
|
|
1,216,536 |
|
|
|
(6,060,666 |
) |
|
|
1,618,175 |
|
9
Table of Contents
Selected Condensed Consolidated Cash Flows Data
|
|
For the Year Ended December 31, 2022 |
|
|||||||||||||||||
|
|
Cheetah |
|
|
Company |
|
|
Consolidated |
|
|
Eliminations |
|
|
Consolidated |
|
|||||
|
|
(RMB, in thousands) |
|
|||||||||||||||||
Net cash (used in)/provided by operating activities |
|
|
(26,054 |
) |
|
|
(552,598 |
) |
|
|
154,403 |
|
|
|
— |
|
|
|
(424,249 |
) |
Net cash (used in)/ provided by investing activities |
|
|
137,160 |
|
|
|
(14,883 |
) |
|
|
(98,598 |
) |
|
|
165,373 |
|
|
|
189,052 |
|
Net cash provided by/(used in) financing activities |
|
|
— |
|
|
|
32,046 |
|
|
|
128,461 |
|
|
|
(165,373 |
) |
|
|
(4,866 |
) |
|
|
For the Year Ended December 31, 2021 |
|
|||||||||||||||||
|
|
Cheetah |
|
|
Company |
|
|
Consolidated |
|
|
Eliminations |
|
|
Consolidated |
|
|||||
|
|
(RMB, in thousands) |
|
|||||||||||||||||
Net cash provided by/(used in) operating activities |
|
|
666 |
|
|
|
(121,934 |
) |
|
|
209,357 |
|
|
|
14,722 |
|
|
|
102,811 |
|
Net cash (used in)/provided by investing activities |
|
|
(864,999 |
) |
|
|
251,806 |
|
|
|
(255,027 |
) |
|
|
1,089,056 |
|
|
|
220,836 |
|
Net cash provided by/(used in) financing activities |
|
|
891,960 |
|
|
|
111,085 |
|
|
|
91,093 |
|
|
|
(1,103,778 |
) |
|
|
(9,640 |
) |
|
|
For the Year Ended December 31, 2020 |
|
|||||||||||||||||
|
|
Cheetah |
|
|
Company |
|
|
Consolidated |
|
|
Eliminations |
|
|
Consolidated |
|
|||||
|
|
(RMB, in thousands) |
|
|||||||||||||||||
Net cash (used in)/provided by operating activities |
|
|
(2,186 |
) |
|
|
419,715 |
|
|
|
(36,196 |
) |
|
|
(427,465 |
) |
|
|
(46,132 |
) |
Net cash provided by investing activities |
|
|
1,345,523 |
|
|
|
85,901 |
|
|
|
21,168 |
|
|
|
427,771 |
|
|
|
1,880,363 |
|
Net cash (used in)/provided by financing activities |
|
|
(1,453,285 |
) |
|
|
2,934 |
|
|
|
— |
|
|
|
(306 |
) |
|
|
(1,450,657 |
) |
Not applicable.
Not applicable.
Summary of Risk Factors
An investment in our ADSs or ordinary shares involves significant risks. The following list summarizes some, but not all, of these risks. These risks are discussed more fully in this Item 3. Key Information—D. Risk Factors.
Risks Relating to Our Business and Industry