- Total Group Revenue: RMB2.69 billion, down 14% year over year, up 5% sequentially.
- Adjusted Operating Income: RMB477 million, down 33% year over year, down 7% sequentially.
- Profit Margin: 17.7%, down 4.9 percentage points year over year, down 2.4 percentage points sequentially.
- Momo App and Standalone New Apps Revenue: RMB2.46 billion, down 13% year over year, up 6% sequentially.
- Momo App and Standalone New Apps Adjusted Operating Income: RMB456 million, down 33% year over year, down 6% sequentially.
- Momo App and Standalone New Apps Adjusted Operating Margin: 18.5%, down 5.5 percentage points year over year, down 2.4 percentage points sequentially.
- Tantan Revenue: RMB234 million, down 27% year over year, down 3% sequentially.
- Tantan Adjusted Operating Income: RMB20.6 million, down from RMB31.9 million year over year, down from RMB28.8 million sequentially.
- Tantan Adjusted Operating Margin: 8.8%, down 1.1 percentage points year over year, down 3.1 percentage points sequentially.
- Non-GAAP Net Income: RMB449.2 million, down from RMB632.1 million year over year, up from RMB59.9 million sequentially.
- Live Broadcasting Revenue: RMB1.30 billion, down 18% year over year, up 5% sequentially.
- Value-Added Services Revenue: RMB1.35 billion, down 10% year over year, up 4% sequentially.
- Non-GAAP Gross Margin: 40.8%, down 1.3 percentage points year over year.
- Non-GAAP R&D Expenses: RMB179.9 million, down 11% year over year.
- Non-GAAP Sales and Marketing Expenses: RMB360.6 million, up from RMB349.7 million year over year.
- Non-GAAP G&A Expenses: RMB89.5 million, up from RMB83.2 million year over year.
- Non-GAAP Operating Income: RMB476.5 million, down 33% year over year, down 7% sequentially.
- Non-GAAP Operating Margin: 17.7%, down 4.9 percentage points year over year, down 2.4 percentage points sequentially.
- Cash and Cash Equivalents: RMB14.32 billion as of June 30, 2024.
- Net Cash Provided by Operating Activities: RMB475.2 million.
- Q3 2024 Revenue Guidance: RMB2.58 billion to RMB2.68 billion, representing a decrease of 15.2% to 11.9% year over year, or a decrease of 4.1% to 0.4% sequentially.
Release Date: September 03, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Standalone new apps maintained growth momentum, driven by overseas business.
- Momo app's product team focused on optimizing the community ecosystem and improving female user experience.
- Efforts to improve Momo's social brand perception through pilot programs and algorithm strategies.
- Introduction of new interactive features and props in live streaming to enhance user engagement.
- Overseas business showed significant growth, with a 36% year-over-year increase in revenue from new apps.
Negative Points
- Total group revenue decreased by 14% year over year.
- Adjusted operating income declined by 33% year over year.
- Tantan's total revenue decreased by 27% year over year, mainly due to a reduction in paying users.
- Momo app's live streaming revenue fell by 15% year over year.
- Tantan's user base and revenue showed a slow downward trend due to lack of significant breakthroughs in the core dating experience.
Q & A Highlights
Q: Considering the current micro and regulation environment, how do you view the revenue and profit for the last half of the year? What’s your strategy for live streaming and VAS business in the next few years? Does Momo have a chance to achieve top-line goals in 2025?
A: (Yan Tang, CEO) At the end of last year, we adjusted our operating strategy for live streaming and VAS to reduce revenue-oriented events. This has had a negative impact on core Momo app revenue, but we managed to partially offset this by introducing new interactive features. We will continue these adjustments in the second half of the year, focusing on social entertainment rather than competition-driven events. As for 2025, it depends on macroeconomic and regulatory changes. (Peng Hui, CFO) For the second half, we expect a slight dip in revenue but are on track to meet our annual profit target. The Momo segment revenue will likely see a 10-12% YoY decrease, but we are managing costs to deliver our profit target.
Q: Could management update us on the overseas progress so far and provide any financial outlook or guidance for this year?
A: (Yan Tang, CEO) Growth in our overseas business depends on strengthening localized operations, expanding product offerings, and expanding in the GCC region and other Middle Eastern countries. We have made progress in feature design and refined services for high-paying users. However, we need to continue expanding our overseas personnel and improving cross-border management. (Peng Hui, CFO) We need to spend time beefing up local operations before pursuing larger-scale revenue growth. Revenue growth may slow to mid-30s in the second half as we lay the groundwork for strong localization.
Q: Can management talk about the current situation of Tantan and its ultimate goal, as well as how revenue and profitability will be impacted by the revamp?
A: (Yan Tang, CEO) Tantan has achieved profitability but faces challenges in stabilizing its user base and revenue. We aim to improve the core dating experience by encouraging users to upload real pictures and complete real-person authentication. We are allowing some fluctuations in user scale and revenue in the short term to focus on long-term user experience. (Peng Hui, CFO) We are not focusing on short-term KPIs and will maintain marketing spend to keep Tantan's scale. Profit will likely decrease in the second half, but Tantan will remain profitable for the whole year.
Q: What are the key factors driving the growth of the overseas business, and what challenges do you face?
A: (Yan Tang, CEO) The key factors are strengthening localized operations, expanding product offerings, and focusing on the GCC region and other Middle Eastern countries. We have made progress in feature design and refined services for high-paying users. However, we need to continue expanding our overseas personnel and improving cross-border management. The rollout of live streaming has been slower than expected due to localization and agency cooperation issues.
Q: How do you plan to address the decline in Tantan's user base and revenue?
A: (Yan Tang, CEO) We are focusing on improving the core dating experience by encouraging users to upload real pictures and complete real-person authentication. We are also adjusting our algorithm to improve chat conversions. We are allowing some fluctuations in user scale and revenue in the short term to focus on long-term user experience. (Peng Hui, CFO) We will maintain marketing spend to keep Tantan's scale and expect profit to decrease in the second half, but Tantan will remain profitable for the whole year.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
