Cheetah Mobile (CMCM) Q3 2025: AI Segment Hits 151% Growth, Now Half of Revenue
Cheetah Mobile’s Q3 marked a pivotal inflection as the company turned profitable for the first time in six years, powered by a surging AI business that now comprises half of total revenue. The company’s AI and robotics initiatives are outpacing legacy segments, with voice-enabled robots driving both backlog and margin expansion. With a leaner cost structure and visible momentum in next-gen products, Cheetah Mobile is repositioning itself as an AI-first growth story heading into 2026.
Summary
- AI Revenue Engine Accelerates: AI and other businesses now represent half of total revenue, with triple-digit growth.
- Profitability Milestone: Operating profit achieved for the first time in six years signals turnaround progress.
- Backlog Momentum: Voice-enabled robot demand and contract backlog expansion support sustained growth visibility.
Performance Analysis
Cheetah Mobile delivered a significant turnaround in Q3, achieving operating profitability ahead of schedule and reporting the first profitable quarter in six years. This result follows a period of aggressive restructuring and resource reallocation toward AI-driven businesses. Revenue grew 50% year-over-year, with the AI and other segment surging 151% year-over-year and 6% sequentially, now accounting for 50% of total revenue. This marks a clear pivot from legacy internet services to scalable, high-growth AI applications.
The AI robotics business, specifically voice-enabled wheeled robots, was a standout contributor, growing roughly 100% year-over-year and 40% quarter-over-quarter. These robots now comprise about 5% of total revenue, with shipment volumes the primary growth driver. The contract backlog for these robots in China increased 32% sequentially as of September 30 and has doubled again since quarter-end, indicating robust future demand. Management attributes this growth to improved product experience via AgentOS, its proprietary AI agent platform, and integration with Google’s Gemini 2.5 Flash.
- AI Segment Scale: AI and other businesses have overtaken legacy operations as the largest revenue source, validating the company’s strategic pivot.
- Robotics Backlog Expansion: Contract backlog for wheeled robots doubled post-quarter, providing strong near-term growth visibility.
- Cost Structure Rationalization: Profitability improvement reflects deliberate cost discipline alongside top-line acceleration.
The company’s first nine months revenue rose 48%, further confirming that the transformation is not a one-off but a sustained shift. Investors now have a clearer path to assess Cheetah’s long-term earnings power as the AI flywheel gains traction.
Executive Commentary
"I'm very happy to report that our turnaround efforts are paying off. We hit quarterly break even ahead of expectation. In Q3, we made an operating profit at first time in six years. We believe we are well positioned to approach breakeven for the full year 2025. At the same time, our growth stays strong in Q3, building on the momentum from the first half of the year."
Fuxiang, Chairman and CEO
"Today, I will talk about our vision and progress in these areas. Thomas will follow with more on how we are building a lean cost structure to support long-term profitability. Both AI robots and AI tools have enormous market potential. And Chittimobot has strong advantages to build new growth engines in these areas."
Fuxiang, Chairman and CEO
Strategic Positioning
1. AI-Centric Revenue Model
Cheetah Mobile’s business model is now anchored by AI-driven growth engines, with the AI and other segment eclipsing legacy internet businesses. This shift is not only about revenue mix but also margin profile, as proprietary platforms like AgentOS enable premium pricing and differentiation in a crowded robotics market.
2. Robotics Leadership and Product Innovation
The company’s voice-enabled wheeled robots are experiencing rapid adoption in China, with repeat orders and new customer wins fueling backlog growth. Integration with Google’s Gemini 2.5 Flash and deployment of AgentOS are enhancing user experience and providing a technological moat. Cheetah is also positioning these products for international expansion, leveraging its expertise in voice AI and autonomous mobility.
3. Disciplined Cost Structure and Profit Focus
After years of restructuring, management has engineered a leaner cost base that supports sustainable profitability as growth accelerates. This operational discipline is evident in the company’s ability to achieve break-even ahead of expectations while still investing in R&D for AI initiatives.
4. Minority Investments in AI Ecosystem
Cheetah holds minority stakes in several companies within the AI sector, which could provide additional organic growth opportunities and strategic optionality as the market matures.
5. Market Validation and Endorsements
Recent recognition by Google Cloud at the AI Asia conference, where Cheetah’s voice-enabled robot was featured, signals growing industry validation and enhances the company’s credibility with enterprise customers.
Key Considerations
Q3’s results reflect a company at a strategic crossroads, with legacy businesses giving way to a high-growth AI platform model. Investors should weigh the durability of this transition and the scalability of new growth engines.
Key Considerations:
- AI Growth Sustainability: The pace of AI and robotics revenue expansion must be sustained for the turnaround to remain credible.
- Backlog Conversion: Execution on the rapidly expanding contract backlog will determine near-term revenue realization and margin leverage.
- International Expansion: Success in overseas markets is critical for long-term TAM (total addressable market) expansion beyond China.
- Cost Discipline: Continued profitability depends on maintaining a lean cost structure even as R&D and go-to-market investments increase.
Risks
Key risks include execution slippage in ramping AI and robotics deployments, customer concentration in China, and potential competitive responses from larger AI and robotics players. The evolving regulatory environment for AI products and cross-border expansion also introduces uncertainty. Any slowdown in AI adoption or product delivery could pressure both growth and profitability.
Forward Outlook
For Q4, Cheetah Mobile management signaled:
- Continued strong year-over-year growth in AI and robotics revenue, led by backlog conversion in China
- Focus on maintaining operating profitability for the full year 2025
For full-year 2025, management maintained a target of break-even or better performance, with AI initiatives expected to drive incremental margin improvement.
- Full-year break-even remains the baseline, with upside tied to AI segment outperformance
Management highlighted several factors that will shape Q4 and beyond:
- Robust demand for voice-enabled robots and further product upgrades
- Ongoing cost discipline to support sustainable earnings power
Takeaways
Cheetah Mobile’s Q3 marks a credible inflection to an AI-first business model, with profitability and segment growth both exceeding expectations.
- AI-Led Turnaround: The company’s pivot to AI and robotics is now the primary driver of both revenue and investor narrative, with clear evidence of product-market fit and expanding backlog.
- Execution on Backlog: The ability to convert record backlog into revenue and margin expansion will be the key metric to watch in Q4 and 2026.
- International Growth Potential: Investors should monitor early signals from overseas deployments and partnerships, as global adoption will be critical for multi-year growth.
Conclusion
Cheetah Mobile’s Q3 2025 results confirm a successful pivot from legacy internet services to high-growth AI solutions, anchored by strong execution and cost discipline. The company now offers investors a tangible AI growth story, with profitability and backlog momentum supporting a more durable outlook.
Industry Read-Through
Cheetah Mobile’s results reinforce a broader industry trend of legacy internet companies reinventing themselves as AI-first platforms, with robotics and voice AI emerging as key battlegrounds. The rapid adoption of voice-enabled robots in China and growing enterprise demand for AI-powered automation signal robust market appetite, while integration with cloud AI platforms like Google’s Gemini 2.5 Flash highlights the importance of ecosystem partnerships. Competitors in the consumer internet, robotics, and enterprise AI sectors should expect heightened competition and increasing customer expectations for smart, scalable solutions. Investors across the sector should focus on execution, backlog visibility, and the ability to monetize AI innovation at scale.