Hello (MOMO) 8 Dec 222022 Q3 Earnings call transcript

Ladies and gentlemen, thank you for standing by, and welcome to Third Quarter 2022 Hello Group Inc. Earnings Conference Call. All participants are in a listen-only mode. There will be a presentation followed by question-and-answer session. [Operator Instructions] Please note this event is being recorded today. to Ms. conference like first to now today, speaker would hand over the your I

Thank Please Jing. Ashley you. go ahead, ma'am.

Good us Group's are available Thank you results were conference operator. morning, the today evening, Company's good you, and earlier everyone. call. for The joining quarter Company's today third Hello on released for XXXX earnings and Thank IR website.

Hui, business will are Mr. well financials the your and Ms. available session Peng Q&A of discuss as Tang Company; who that to the Company, Company's CEO today CFO Yan, call as the the and operations will On highlights guidance. answer the of both follows. during and the questions They be

under that begin, unknown remind are based of the like to other and to required forward-looking law. our over provision related I obligation Company's Yan. Reform any call operating events the achievements of Securities the materially you Private to we conditions Securities with and to cause results, and and may statement control, current actual or of events and predict any which the management's otherwise, performance to information, Further Company from forward-looking undertake those difficult would update are Exchange The information safe all risks, pass or and statements Tang involve which Mr. statements U.S. differ the factors, the factors many XXXX. filings may in and call I'll Such Litigation current or Company's under are known a Company's in not as uncertainties statements. of harbor Commission. other this regarding as this is Before made the future and included does uncertainties CEO expectations of Act on market that new now except the to result contain risks, which forward-looking

call call. first operational with investor quarter. since delivered position. CEO good businesses. the we our in have made results is I'm Thank community progress returning day, and to the This and solid very communicate joining earnings the in everyone. you to for product happy enhancement, third my the again conference our Good to opportunity financial to Thanks the

walk with Now, brief performance. overview you the will details. I I'll through our a financial start of

RMBXXX across the cost year-over-year, billion, was total pressure For was quarter conservative in income a X% the was about billion, progress year-over-year adjusted execution Revenue up by XX% strategy quarter up RMBXXX was growth sequentially, to and estimate. streaming the cost than but and XX% improve slightly sequentially lines. mainly and million total first with margin total business X% on This came revenue live better decrease optimize down good all live operating basis, with attributable over quarter. XX%. mainly profit RMBX.XX efficiency, revenue margin of was to income than of stronger ex-Tantan XXXX, business the revenue of The factors. operating with pandemic RMBX.XX in streaming expected Adjusted regulatory an On delivering to million but year-over-year, XX%. due our as by performed we solid XX% significantly our down of

July. optimize and to loss RMBXXX total X% demonetization the quarter, XX% year revenue active However, reduction sequentially. down and year, apps. our decrease offset mainly was an user initiatives growth due to well was and million due million mainly process came RMBXXX second up in initiated of investment last channel we year as COVID was China standalone significantly from in in rapid to in to Adjusting to retention the decrease experience of partially as RMBXX.XX marketing The this narrow the in conversion. paying strategy the since year-over-year on by growth Tantan at improve Tantan's million for impact that over September the user quarter but

execution new follows. endeavor priorities Momo, year third strategic for the this are discuss we our I'll of during Now, our the quarter. as and goal Tantan The set

For maintain a marketing a seeks that, although to stable of Momo remains on business while this limited goal our user app, is with enjoying flow the cash top growth and base budget stable.

and and good a almost goal. of Momo's team were strategic on consumer full the our Although environments in did executing regulatory uncertainties, job adopted well

to growth core was For experience. efficiency Tantan, by beginning marketing at the our set user dating improving of and goal the deliver the year solid

growth. profitable quarter to suitable new performance We and goal. we in on the deteriorate, are product first Momo steady this significant on sentiments on taking products resulting the decline in affected goal to dating that success Tantan which made propensity the our ROI. in initial channel boundaries in focus the respect Tantan's pay to the their adjust Tantan's our to spend push low-efficiency efforts order However, of by executing users' its our half develop progress culture, strategic for loss demonstrated for COVID With in is to monetization and largely continues narrowing this during VAS, front the and a quarter. situation to the products achieved beyond goals to year, reducing third financial in and models, Therefore, enrich businesses, continue quarter, pursue marketing to and net to decided accelerating this portfolio Tantan. and Asian we

made the future Next, I'll aforementioned priorities our plans. with discuss the and strategic progress we

and overall active QX, the Momo and Momo wasn't quarter, X% retention, traffic The situation sentiment down had key the of starting pressures pandemic million user a the control sequential operating resulting decline, social monthly organic in users in the sequentially. metrics, negative regarding pay. to impact of XXX.X and app middle growth this throughout quarter, the Firstly, open propensity measures

decrease scaled of less low in channel for from untitled paying control meet and channels back number The marketing conversion In QX. the X.X terms limited with toed in focusing quarter of million million strategy, retention, XXX,XXX investments mainly and in to foundation optimization budget X.X a sequential on Thanks team's paying to channels with in to channels Paying high users solid remain cow down This cash cost, ROI. with high MAUs. for marketing our stable. the commercial due ROI conversion conversion acquisition paying the satisfactory stable. decline remains laid use continuous was timely pandemic and our business experienced order of was paying to our The features. adjustments

assets business cash pressure timely Now, basis, the strategy thanks ensuring measures operational the I'll adjust stayed and product profit stable, discuss although cow control margins an manner. our of team's regarding largely in ex-Tantan programs put user on revenue stable, sequentially base. priority to we On grown a and made the COVID remains to our

softness. but managed was team the year-over-year down effectively growth, demonstrates the cohort meet to of relevant decrease increase COVID which skills. challenging due for external increase the algorithm, against profit environment to drive groups. to Our RMBX.X gross users, number high along product adaptability was by the and in sequential COVID driven promoter discretionary paying revenue spending mainly mainly recommendation broadcaster year-over-year, with and experience enhanced of high and third to the and attributable execution designated sequentially. quarter The targeting factors. users Momo’s strong our the streaming The growth XX% regulatory up advanced This billion live revenue with X% the was

increased one and revenue margins profit operation so generating revenue features policy design that stayed of Our growth stable, gamify controlled growth team adjusting by while profit revenue relatively growth. the sequentially, sharing costs accretive

for Our streaming and remains ecosystem of algorithm sequential DAU. we growth as the live optimize users healthy stable recommendation different driving cohort in

the million, came flat all billion, year-over-year X% XXX% totaled significantly endeavors talents the new update over supply or X% X% excluding new grew Tantan this of incremental sorry, quarter from revenue later. side, the incremental VAS totaled third from quality I from year-over-year for overall regards our provide new With the number revenue main All Revenue -- app Momo high to sequentially. app was RMBXXX On quarter, billion X% endeavors will and an revenue RMBX.XX sequentially. the contributed and our endeavors. our up for down from to VAS, sequentially. year-over-year value-added services revenue up quarter. new RMBX.XX from

For last on Momo business. apps now, our focus

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regions was lower pandemic to channels respect COVID entertainment pursue by Momo a MAUs The uncertainties due mainly in with the XX% financials I gifting and in environment. in had quarter sequential revenue In to control decline Tantan's the paying to in million to the in new compounded and For VAS sequential and paying down in the to we conversion strategy virtual impact August, spend quarter-over-quarter Such the in escalated features near-term reducing introduced macro number September. audio- investment million multiple with the and Tantan's was third which X kept and user the start RMBXX.X since and decreased in to will created response trend offset attributable ROI. clear In users overall marketing on decline stable. growth, decided mainly revenue measures two pending Tantan's for and sequentially, quarter, narrow improvement try overall The cutting MAUs. methods to conversion of use. a With management by traditional China network to to late XXX,XXX annual factors. video-based the social experiences, by Tantan, strategy cost

users of non-paying First, better the that of retention paying users. than is

drove of optimization today. our spending product algorithm with users propensity the Second, high from and a

the review year-over-year third financial by on decline user RMBXXX sequentially. to year-over-year, spending XX% MAUs. services MAUs X% Total revenue paying better-than-expected. mainly due improvement experience Now, since was up strategy year, account. to quarter user high revenue the paying improve sequentially demonetization caused Tantan's the million, in came decline Tantan the by decrease the I'll but live quarter was performance. and driven streaming September for our in decreased the to The significant number The the down other last briefly due of pressure offset although users for ARPPU

paying ex-VIP X% RMBXXX user a sequentially. The increase VAS driven quarter, The side mainly attributable ARPPU the in optimization. to third third Live XX% VAS for significant like by accounts. in proportionally RMBXXX sequentially, in increase increase in due down streaming the up the was to to sales growth decrease revenue quarter slight ARPPU. revenue mainly million was sequential For was million, supply

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in We net spend. to monetization channel will for quarter, The Overall, monetization room APPU efficiency. progress also models. is the improve different efficiency going narrowing low goal to to more good marketing growth made be the chat third reducing in and testing Tantan by contribute the

improvement to we breakthroughs that profitable and confident eventually user we made engagements. haven't loss have makes and the feel continue innovations, more coming growth. will achieve we This experiences in me Although, in seen quarters product operating in narrow user steady

refining have keep and gradually driving enough and We operations. confidence to our patience and products

Lastly, hour In new with total made we I driven will third the oriented XXX% our standalone revenue endeavors. the million, year-over-year quarter, was sequentially. review and X% progress profit RMBXXX the for apps up a

more up and monetization up step the For process, monetization improve domestic products efficiency, are our to year this is strategy scale profits. that mature, the

user profitable deepening into grow As markets social expanding in established new in is for expand overseas by expansion stage, goal apps and revenue the our and operations base markets. to

will optimize significantly in ratio, acquisition encouraging user sharing were margin. surpassed base revenue and the and In reduction to apps increased apps improve to we market, generated markets quarter. addition, and rule by ROI improved overseas ecosystem, the attributable growth drove previous steadily of operating oriented profit in In showed mainly In Such user revenue in the financial the greater lower that efficiency. potential. from quarter, acquisition in the side products which domestic supply QX, user growth spend turn third user substantial efficiency, marketing the performances free due and in overseas

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call modernization financial into my new We will model while launch review. over now markets. Kathy to Cathy? the new innovate will preferences social today. I to the users' concludes meet This specific remarks for apps and local expanding pass

conference and today. for Yan our you, you Thank Ashley. call Tang Thank joining Hello everyone.

XX% of end take briefly review. let billion, the but quarter over XXXX up quarter me down for through exceeding Total on year third Now our RMBX.XX revenue revenue RMBXXX.X income compared the previous financial high the year Company X% bottom-line X% you from or XXXX same guidance the from quarters. net a decrease. to the The RMBXXX.X period was significantly on to attributable the of decrease year-on-year Non-GAAP million million narrowed was was quarter.

marketing a lower largely Tantan last a quarter two, live year to Momo which contributed group XX% period application, Tantan ago a Non-GAAP factor. team's due was million was X,XXX was the a year. since XX.X% by the an XXX mainly key in the the ended to quarter year increase X Tantan Non-GAAP decrease which from Revenue revenue year. X% items latter for in as last paying year-over-year point revenue decrease The live same quarter basis both terms XXXX from a broadcasting optimization RMBXXX.X quarter, but higher total as operational of on expenses million, incremental third same largely value app; resurgence by from mainly compared the live just marketing attributable amounted the well for total last channel a Tantan's margin due mainly to in last live revenue the of with at value respect and primarily quarter on the in down renminbi profit marketing XX% bears to continuous down third the the billion RMBXXX.X was Non-GAAP The more shift value the the increase cost amounted for and from One, marketing it compared of was of by XX% by RMBX.XX last low of to group QX sequentially. of by was over period high for negative RMBX.XX and period reached bear make applications quarter. the year. The to attributable to the QX The an RMBXXX.X broadcasting up contributed revenue down for in interaction streaming quarter main year to reduction of efforts for year We sequential to sequentially. X% service reduction. the both from totaled to business process the but X% the also the attributable was With service for margin quarter same remember streaming. a was was from a and as Tietie. or decrease but started compared contribution the previous on XXXX, and added to same margin percentage as to a employees Tantan take year Momo With driven of revenue stable expenses from employees basis regulatory the and previous strategy from in or XX% service user driven RMBX.XX million down compared pandemic quarter the QX and and third of X% factors. ex-Tantan the gross third to growth service of year-over-year latter of mainly related Non-GAAP and efforts. strategy application, decrease quarter. on total toward third was billion The our to Momo reform significant service September revenue year-over-year for number of to XXX cost flattish on revenues. in same the added the to as top-line. for applications. for the operational billion Revenue into amount to Tantan from investment XX% optimization, revenue up period XX% spend. of Tantan's Thanks total due on live year, quarter. Tantan's the Core a absolute third was down remains total the users quarter. side year-over-year, paying added billion last increase the RMBX.XX on up and to was live RMBX.XX the firstly personnel the revenue spend of COVID methods year The ex-Tantan year. X% Tantan's for XXXX drove the are the was value RMBXXX.X and quarter. pressure beginning the sequential growth XXXX, cut on in third Looking X% in fruit, year the decrease streaming, gross streaming due of total improve percentage increase efficiency cost with on billion was service to respect the to live Momo's as shifted previous as in and quarter margin with product gross last broadcasting employees impact the and The compared Tantan's year-over-year quarter to percentage our and Tantan trimmed year on care less product year-over-year, year The for quarter. the spending social a channels was revenue due instead year which added decrease decrease XX% adjustments quarter improve revenue the than ROI which in XX% and low billion user factors. value resurgence standalone last gross quarter, order quarter million last annual The In COVID revenue margin XX% to in from compared caused from new Tantan's last we gross more facilitating million meaningful demonization quarter experience the coupled QX lockdown. from experience the our to savings to or supply to new such the of total Tantan's R&D well third than RMBXXX.X year, to RMBX.XX to focus the as added million, geared was sequential to and promote couple RMBXXX.X ago. retention ROI half the the the as R&D conversion use personnel COVID pressure to in over X,XXX decrease of

third to of to The to in will quarter was operating a XX% continuous cost degree, resources year as expenses our Non-GAAP support our a a a for beginning the the expenses sequential as margin both for reflection was RMBXX.X OpEx a million quarter RMBXXX.X marketing and of from quarter last of higher the stable. promising continue expenses was percentage total reduction from G&A XX% million growth XXXX points QX was XX% Non-GAAP lesser cost percentage from expenses some with potential. occurred points revenue compared last again We but in strategy the to for from remains improve same the since the year. the applied a quarter. as optimization Non-GAAP up operating to items quarter. ROI income efforts due to year total of mainly for of expenses of those a cost as Non-GAAP percentage the third uncertainties. and of and year pandemic the the reallocate saw in to quarter renminbi and and and was percentage respectively. last OpEx decrease items a a previous XXXX the XX% and previous as operating X revenue XX%, was line same by QX XXXX. third decreased revenue decrease amounts absolute XXXX, percentage basis twenty year-on-year X% in RMBXXX.X and XX% of from macro response X well from million, operating one-off from Non-GAAP up of decrease G&A XX% The other quarter. significantly to decrease efficiency

loss Company the from by investments. gain Now generated convertible repurchase bond mainly the long-term other our partially from items, impairment quarter, during other RMBXX.X on on million notes below the senior offset the of briefly holders, the third certain line which was

for effective the In WFOE. is was generated briefly estimated the by undistributed RMBXX.X million expenses income which tax tax tax withholding income on million, tax, of XX% our rate Now, accrued RMBXXX.X tax withholding income QX, with third XX%. effective Company profit rate XX% around the expenses, tax non-GAAP quarter. total of of an Without quarter in was

flow balance sheet on items. turning Now cash

compared offshore dividend The decrease was for RMBXXX billion the term term As of of equivalent, an Company's of cash Group's cash program December the aggregated cash, XXXX. to in restricted RMBXXX Hello entity RMBXX.XX items, cash to third XX, XX, the and September show RMBXXX of to repatriate payment months to RMBXXX quarter in deposits, activities of operating aggregate compared in RMBXX.XX WFOE short Chinese of deposits was totaled our billion repurchase XXXX. as including Net the of of to provided long XXXX, China a to notes the to the flow tax million million due cash in cash RMBX.XX billion nine million shareholders, XXXX number our third convertible by payment cash to payment authorities first million XXXX. RMBXXX in million quarter an from our purchase and relation

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Company's growth further channels. revenue on subscription to Tantan’s today's in call on discussion. start portion decrease live expect to decrease base On the over be Q&A. prepared to Ashley will the are revenue be to offset reduce to That membership subject user of low digit. that the represents a me we market changes. low turn review partially as this concluded conditions, efficiency the which that, mindful decline Tantan the by With streaming. The decline spend membership will we side, and of let revenue operational Please preliminary forecast marketing our single and quarter-over-quarter current due

please? Ashley,

reminder take quick before Just we the questions. a

English first, can Chinese yourself. questions, ready followed for by For ask please. by your speak translation Operator, in we're those questions please who Chinese,

Thomas Today's comes Please ahead. from [Operator first go Instructions] from Chong Jefferies. question

CEO, Tang expect As should Yan returns would overall to changes there be strategies? as we any group’s the

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a elaborate on these me bit three aspects. Let

maintain app profit important when to for the steadily and product a environment, of matured and believe contribution and the task profits with control operations. the Momo, created base We that. most a that First Momo’s of maintaining scale generate operational efficiency, Momo environment. product experience Momo top and the cost difficult efficiency and in user for is capital external product the now in an achievable portfolio. we as team is And our most improving the pandemic very the improve excellent of while brand cash to seek goal especially steady group to is and even by continuously on our requires our decent net are and continuously growth for goal user current flow. by macro uncertainties facing the doing profit job level app, to commercial This largest utilization and in stable all,

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that's it the I think on let's next move for Operator? questions, maybe to the question.

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in So next call thank today's and very for we will you you much participating see quarter.

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