Core Viewpoint - Hello Group Inc. is experiencing a significant decline in its domestic business, prompting a strategic pivot towards international markets to seek growth opportunities [2][4][12]. Financial Performance - The company reported a revenue of 2.6 billion yuan ($359 million) for the fourth quarter, down 12% year-over-year, marking a continued decline since 2020 [5]. - Net income for the fourth quarter fell 59% to 187.2 million yuan from 452.5 million yuan a year earlier, with a nearly 50% drop for the entire year to 1 billion yuan [6]. - Livestreaming revenue decreased by 16% year-over-year to 5.1 billion yuan in 2024, now accounting for 48% of total revenue, down from 80% in previous years [11]. User Metrics - Tantan's monthly active users decreased by 2.9 million to 10.8 million, while Momo's paying users dropped from 7.4 million to 5.7 million year-over-year [9]. - The decline in paying users is attributed to a regulatory crackdown and increased competition from other platforms [10][12]. International Expansion Strategy - The company aims for overseas revenue growth of up to 100% this year, with a focus on its Soulchill app targeting Middle Eastern markets [7][12]. - New apps launched in late 2023, including Yaahlan and AMAR, are generating stable returns despite initial marketing costs [14]. - CFO Peng Hui projects overseas revenue to grow from 1 billion yuan in 2024 to between 1.7 billion yuan and 2 billion yuan in 2025 [15]. Market Challenges - The company faces competition in the Middle East from other Chinese social media companies and must navigate potential instability in the region [16]. - Entering competitive Western markets may lead to increased marketing costs and challenges against established players [17]. Investor Sentiment - Following the earnings release, Hello Group's shares fell 8%, indicating investor skepticism regarding the sustainability of its domestic services and the capital needed for international expansion [19]. - Despite a 12% increase in stock price over the last six months, it lags behind the 45% rally of the Hang Seng China Enterprises Index, reflecting doubts about the company's turnaround strategy [20].

Investment Rating - The report maintains a neutral rating for MOMO US with a target price adjusted to $7.20, down from $7.40, indicating a potential upside of 0.4% [1][19][22]. Core Insights - The company is focusing on expanding its overseas business while maintaining stable shareholder returns. The revenue forecast for 2025 remains unchanged at RMB 10,015 million, but the adjusted net profit estimate has been reduced by 5% to RMB 1,239 million due to increased overseas product investments [1][6][24]. - The company has announced a special dividend of $0.30 per ADS, representing a payout ratio of 29% and a dividend yield of 4%. Additionally, the share repurchase program has been extended to March 31, 2027, with an increased buyback amount of $200 million [1][6]. Financial Performance - For Q4 2024, the total revenue was RMB 2,636 million, a year-on-year decrease of 12%, while the adjusted net profit was RMB 230 million, down 55% year-on-year, primarily due to a one-time film production cost of RMB 94 million [6][16]. - The adjusted gross profit margin for 2025 is expected to be 36.2%, reflecting a decline due to changes in revenue structure and increased operational costs [5][17]. - The company’s market capitalization is $1.2 billion, which is lower than its net cash of $1.4 billion as of Q4 2024 [1][4]. Revenue and Profit Forecasts - The revenue forecast for 2025 is RMB 10,015 million, with MOMO expected to contribute RMB 9,328 million and Tantan RMB 683 million. The adjusted net profit for 2025 is projected at RMB 1,239 million [5][17]. - The report anticipates a continued decline in revenue for Tantan, with a year-on-year decrease of 20% expected in Q1 2025 [6][17]. Market Position and Trends - The company is experiencing pressure on its main platform and Tantan due to reduced user engagement and a soft social consumption sentiment, leading to a decrease in paid users by 1.2 million [6][16]. - New application revenues have increased by 37% year-on-year, driven by the rapid growth of the overseas social product Soulchill [6][16].

Core Insights - Hello Group (NASDAQ: MOMO) reported Q4 earnings, missing EPS estimates by $0.05 on a GAAP basis and $0.07 on a non-GAAP basis while beating revenue estimates [1] Financial Performance - EPS missed estimates by $0.05 on a GAAP basis and $0.07 on a non-GAAP basis [1] - Revenue estimates were exceeded, indicating a positive performance in terms of sales despite the EPS miss [1]

Investment Rating - The report maintains a neutral rating for MOMO US with a target price adjusted to $7.20, reflecting a potential upside of 0.4% from the current price of $7.17 [1][19][22]. Core Insights - The company is focusing on expanding its overseas business while maintaining stable shareholder returns. The revenue forecast for 2025 remains unchanged at RMB 10,015 million, but the adjusted net profit estimate has been reduced by 5% to RMB 1,239 million due to increased overseas product investments [1][6][24]. - The company announced a special dividend of $0.30 per ADS, representing a payout ratio of 29% and a dividend yield of 4%. Additionally, the share repurchase program has been extended to March 31, 2027, with an increased buyback amount of $200 million [1][6]. Financial Performance - For Q4 2024, the total revenue was RMB 2,636 million, a year-on-year decrease of 12%. The adjusted net profit was RMB 230 million, down 55% year-on-year, primarily due to a one-time film production cost of RMB 94 million [6][16]. - The adjusted gross profit margin for 2025 is expected to be 36%, reflecting a decline due to changes in revenue structure and increased operational costs [6][17]. - The company’s market capitalization is $1.2 billion, which is lower than its net cash of $1.4 billion as of Q4 2024 [1][4]. Earnings Forecast Changes - The revenue forecast for 2025 is maintained at RMB 10,015 million, with adjusted net profit estimates for 2025 and 2026 at RMB 1,239 million and RMB 1,354 million, respectively [5][17]. - The adjusted operating profit for 2025 is projected to be RMB 1,217 million, with an operating profit margin of 12.2% [5][17]. Market Context - The stock has experienced a year-to-date decline of 7%, with a 52-week high of $8.15 and a low of $4.84 [4][24]. - The company’s main platform, Momo, and its subsidiary, Tantan, continue to face challenges due to reduced user engagement and competition in the social networking space [6][16].

Investment Rating - The report maintains a Neutral rating for MOMO US with a target price adjusted to $7.20 from $7.40, indicating a potential upside of 0.4% [1][2][19]. Core Insights - The company is focusing on expanding its overseas business while maintaining stable shareholder returns. The revenue forecast for 2025 remains unchanged, but the adjusted net profit estimate has been reduced by 5% to RMB 1.24 billion due to increased investment in potential new overseas products [1][6]. - The company has announced a special dividend of $0.30 per ADS, with a payout ratio of 29% and a dividend yield of 4%. Additionally, the share repurchase program has been extended to March 31, 2027, with an increased buyback amount of $200 million [1][6]. Financial Performance - For Q4 2024, the total revenue was RMB 2.64 billion, a year-on-year decrease of 12%, while the adjusted net profit was RMB 230 million, down 55% year-on-year, primarily due to a one-time film production cost of RMB 94.1 million [6][16]. - The adjusted net profit margin for Q4 2024 was 12%, a decline of 5 percentage points year-on-year, attributed to the increased proportion of revenue from new overseas applications and rising operational costs [6][16]. - The company expects a 4% year-on-year decline in revenue for Q1 2025, with the main platform's live streaming business under pressure [6][17]. Revenue and Profit Forecasts - The revenue forecast for 2025 is set at RMB 10.015 billion, with the main platform MOMO expected to generate RMB 9.328 billion and Tantan projected at RMB 683 million [5][17]. - The adjusted gross profit for 2025 is estimated at RMB 3.630 billion, with an adjusted gross margin of 36.2% [5][17]. - The adjusted operating profit is forecasted to be RMB 1.217 billion, with an adjusted operating margin of 12.2% [5][17]. Market Position and Valuation - The company's market capitalization is $1.2 billion, which is lower than its net cash of $1.4 billion as of Q4 2024 [1][6]. - The stock has a 52-week high of $8.15 and a low of $4.84, with a year-to-date change of -7% [4][19].

Hello Group and Industry Analysis Summary Company Overview - **Company**: Hello Group - **Industry**: Social Networking and Mobile Applications Key Financial Performance - **Total Revenue**: 2024 total revenue was 10.6 billion RMB, a decrease of 11.7% from 2023's 12 billion RMB [3][5] - **Adjusted Operating Income**: 1.73 billion RMB with a profit margin of 16.3% [3][5] - **Fourth Quarter Revenue**: 2.64 billion RMB, down 12% year-over-year [3][11] - **Cost Structure**: Fourth quarter included 940 million RMB in fuel production costs; adjusted operating income would be 3.174 billion RMB without these costs [3] Revenue Breakdown - **Mobile Applications and New Apps**: Combined revenue of 9.7 billion RMB, down 11% year-over-year; however, independent new app revenue grew by 40% due to overseas expansion [3][5] - **Tantan Performance**: 2024 total revenue was 900 million RMB, a 25% decline; Vast business line revenue down 18%, and live streaming revenue down 38% [3][6] Strategic Initiatives - **Cost Optimization**: Hello Group is reducing marketing expenses and exploring partnerships with short video platforms to acquire users [3][8] - **Product Innovation**: Focus on enhancing user experience through product upgrades, particularly in live streaming and interactive features [3][9] - **User Acquisition**: Tantan is implementing offline events and integrated marketing strategies to optimize user acquisition costs [3][10] Future Outlook - **First Quarter 2025 Revenue Forecast**: Expected between 2.4 billion to 2.5 billion RMB, a decline of 6.3% to 2.4% year-over-year [3][14] - **International Growth**: Anticipated overseas revenue of approximately 1 billion RMB in 2024, growing to 1.7 billion to 2 billion RMB in 2025 [3][22] - **Cash Dividend**: Board approved a special cash dividend of $0.3 per American Depositary Share, totaling approximately $15 million, representing 30% of adjusted net income for 2024 [3][13] Research and Development - **R&D Spending**: 101 million RMB in 2024, significantly reduced from 423 million RMB in 2023, indicating a shift in investment strategy [3][9] Market Challenges - **User Engagement**: Despite a 1.2 million increase in paid users in Q1 2025, the company anticipates a decline in overall paid users due to economic conditions [3][15] - **Live Streaming and Content Adjustments**: Management believes significant improvements have been made in mobile content, with no further revenue-reducing changes planned [3][16] Conclusion - Hello Group is navigating a challenging economic landscape with a focus on cost optimization, product innovation, and international expansion. The company is strategically reducing R&D expenses while maintaining a flexible approach to capital returns, balancing between dividends and stock buybacks to maximize shareholder value.

Financial Data and Key Metrics Changes - For Q4 2024, total group revenue was RMB2.64 billion, down 12% year-over-year. Adjusted operating income was RMB280 million, with a margin of 10.6% [9][51]. - For fiscal 2024, total group revenue was RMB10.6 billion, compared to RMB12 billion in the previous year. Adjusted operating income was RMB1.173 billion with a margin of 16.3% [12][13]. Business Line Data and Key Metrics Changes - Revenue from the Momo app and standalone new apps totaled RMB2.42 billion, down 11% year-over-year, with Momo app revenue decreasing by 18% [10][13]. - Tantan's Q4 revenue totaled RMB213 million, down 22% year-over-year due to a decrease in paying users [12][34]. - Revenue from value-added services (VAS), excluding Tantan, totaled RMB1.2 billion in Q4, down 5% year-over-year [26][55]. Market Data and Key Metrics Changes - The overseas business maintained robust growth, contributing significantly to the group's financial standing [8]. - The Momo app had 5.7 million paying users, a sequential decrease of 1.2 million due to cost reduction strategies [22]. Company Strategy and Development Direction - The company aims to maintain the productivity of the Momo app while focusing on improving user experience and optimizing operational efficiency [15][48]. - For Tantan, the strategic goal is to reduce costs and improve efficiency while exploring dating experiences suitable for agents [48][110]. - The company plans to increase investments in overseas markets, particularly in the MENA region, to drive growth and innovation [41][104]. Management's Comments on Operating Environment and Future Outlook - Management acknowledged the challenges posed by the macroeconomic environment and regulatory changes but expressed confidence in the resilience of the Momo platform [80][83]. - The company expects a revenue decline in Q1 2025 but anticipates a slight rebound in Q2, depending on macroeconomic conditions [68][86]. Other Important Information - The Board approved a special cash dividend of $0.30 per ADS, totaling approximately $50 million, marking the seventh consecutive year of cash dividends [49]. - The company is focusing on optimizing headcount and improving marketing efficiency to absorb top-line pressure while reallocating resources to overseas business [88]. Q&A Session All Questions and Answers Question: What caused the significant drop in paying users for the Momo app? - Management indicated that the drop was due to a strategic shift away from acquiring low-return paying users, which has historically pressured profitability [74][76]. Question: What adjustments have been made to live streaming and VAS products? - Management stated that after improving Momo's content, no further changes to reduce earnings are planned, focusing instead on adding engaging features [77]. Question: What is the outlook for Tantan's revenue and profit in 2025? - Management expects a revenue decline of 20% to 30% year-over-year for Tantan in 2025, but profitability is anticipated to improve due to better ROI from reduced marketing spend [120].

Financial Performance - Net revenues for Q4 2024 decreased by 12.2% year over year to RMB2,636.5 million (US$361.2 million) from RMB3,002.9 million in Q4 2023[5] - Net income attributable to Hello Group Inc. in Q4 2024 was RMB187.2 million (US$25.6 million), down from RMB452.5 million in the same period of 2023[5] - Full year 2024 net revenues were RMB10,563.0 million (US$1,447.1 million), a decrease of 12.0% from RMB12,002.3 million in 2023[24] - Non-GAAP net income for the full year 2024 was RMB1,232.9 million (US$168.9 million), compared to RMB2,224.7 million in the same period of 2023[25] - The net income for Q4 2024 was RMB187,235, down from RMB452,469 in Q4 2023, reflecting a decrease of about 58.6%[48] - Net income for the year ended December 31, 2024, was RMB 1,039,573, a decrease of 46.7% compared to RMB 1,951,695 in 2023[53] User Metrics - Monthly Active Users (MAU) on the Tantan app decreased to 10.8 million in December 2024, compared to 13.7 million in December 2023[5] - Total paying users for the Momo app in Q4 2024 was 5.7 million, down from 7.4 million in the same period last year[5] Expenses and Costs - Research and development expenses for Q4 2024 were RMB222,684, slightly down from RMB231,445 in Q4 2023, indicating a decrease of about 3.3%[46] - The total cost and expenses for Q4 2024 were RMB2,407,825, a slight decrease from RMB2,431,756 in Q4 2023[46] - The cost of revenues for the three months ended December 31, 2024, was RMB 1,724,821, reflecting an increase from RMB 1,621,151 in the previous year[61] - The company incurred total costs and expenses of RMB 9,089,204 (US$ 1,245,216) for the year ended December 31, 2024, with significant allocations to research and development at RMB 804,425 (US$ 110,206)[69] Cash and Assets - As of December 31, 2024, the company's cash and cash equivalents totaled RMB14,728.5 million (US$2,017.8 million), an increase from RMB13,478.5 million a year earlier[23] - Total current assets increased from RMB 7,833,378 in 2023 to RMB 12,011,870 in 2024, representing a growth of 53.9%[50] - Cash and cash equivalents at the end of the period rose to RMB 9,642,421, up from RMB 8,282,912, indicating an increase of 16.4%[53] - The company reported a cash inflow from the maturity of short-term deposits of RMB 1,047,165 in 2024, compared to RMB 800,000 in 2023, an increase of 30.9%[53] Shareholder Actions - The company declared a special cash dividend of US$0.30 per ADS, totaling approximately US$50 million, to be paid on April 30, 2025[27] - The share repurchase program was upsized to US$486.1 million, with US$222 million remaining as of March 12, 2025[29] Future Outlook - For Q1 2025, the Company expects total net revenues to be between RMB2.4 billion to RMB2.5 billion, representing a year-over-year decrease of 6.3% to 2.4%[31] - The company plans to continue expanding its market presence, particularly in live video and value-added services, which are key growth areas[69] Operational Metrics - Non-GAAP diluted net income per ADS for Q4 2024 was RMB1.30 (US$0.18), down from RMB2.63 in the same period of 2023[22] - The Company reported a comprehensive income of RMB510,170 for Q4 2024, compared to RMB356,695 in Q4 2023, showing an increase of approximately 43%[48] - The Company’s diluted net income per share for Q4 2024 was RMB0.53, compared to RMB1.16 in Q4 2023, representing a decline of approximately 54.4%[46] - The company reported an income from operations of RMB 236,686 for the three months ended December 31, 2024, compared to RMB 226,424 in the prior year[63] Investment and Growth - The Company has incubated several new apps since 2019, targeting niche markets and selective demographics, including Hertz, Soulchill, and Duidui[40] - The company demonstrated a strong performance in non-GAAP metrics, indicating operational efficiency[75] - Future strategies may focus on enhancing user engagement and expanding market presence[75]

Company Performance - Hello Group Inc. (MOMO) reported quarterly earnings of $0.18 per share, missing the Zacks Consensus Estimate of $0.21 per share, and down from $0.37 per share a year ago, representing an earnings surprise of -14.29% [1] - The company posted revenues of $361.2 million for the quarter ended December 2024, missing the Zacks Consensus Estimate by 1.06%, and down from $422.95 million year-over-year [2] - Over the last four quarters, the company has surpassed consensus EPS estimates two times and topped consensus revenue estimates two times [2] Market Outlook - Momo shares have lost about 3.8% since the beginning of the year, compared to the S&P 500's decline of -5.3% [3] - The company's earnings outlook, including current consensus earnings expectations for the coming quarters, will be crucial for investors [4] - The current consensus EPS estimate for the coming quarter is $0.24 on revenues of $319.48 million, and for the current fiscal year, it is $0.82 on revenues of $1.38 billion [7] Industry Context - The Internet - Software industry, to which Momo belongs, is currently in the top 33% of over 250 Zacks industries, indicating a favorable outlook [8] - Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can impact Momo's stock performance [5] - The current estimate revisions trend for Momo is mixed, resulting in a Zacks Rank 3 (Hold), suggesting the shares are expected to perform in line with the market in the near future [6]

Financial Data and Key Metrics Changes - For Q4 2024, total group revenue was RMB 2.64 billion, down 12% year over year [9] - Adjusted operating income was RMB 280 million with a margin of 10.6% [9] - For fiscal 2024, total revenue was RMB 10.6 billion compared to RMB 12 billion in the previous year [11] Business Line Data and Key Metrics Changes - Revenue from the Momo app and standalone new apps totaled RMB 9.7 billion, down 11% year over year [12] - Tantan's Q4 revenue was RMB 213 million, down 22% year over year due to a decrease in paying users [11] - Revenue from value-added services excluding Tantan totaled RMB 4.18 billion, down 6% year over year [20] Market Data and Key Metrics Changes - The overseas business maintained robust growth, contributing significantly to the group's financials [6] - Revenue from standalone new apps grew 40% year over year, driven by overseas expansion [12] - Tantan's MAU declined by 10% sequentially to 10.8 million in September [23] Company Strategy and Development Direction - The company aims to maintain the productivity of the Momo app while focusing on improving user experience and optimizing operational efficiency [13][14] - For Tantan, the strategy is to enhance the dating experience and build a sustainable business model while reducing user acquisition costs [78][80] - The company plans to increase investments in overseas markets and new product initiatives to drive growth [28][30] Management Comments on Operating Environment and Future Outlook - Management acknowledged challenges from the macroeconomic environment and regulatory changes but expressed confidence in the resilience of the Momo platform [56][58] - The outlook for Q1 2025 anticipates a revenue decline of 6.3% to 2.4% year over year, with expectations of a slight rebound in Q2 [45][61] - Management expects Tantan's revenue to decline by 20% in 2025 due to reduced marketing spend and operational adjustments [86] Other Important Information - The Board approved a special cash dividend of USD 0.3 per ADS, totaling approximately USD 15 million [32] - The company emphasized a flexible approach to capital allocation, preferring to invest in growth opportunities rather than committing to a fixed dividend policy [92] Q&A Session Summary Question: What caused the significant drop in paying users for Momo? - Management indicated that the drop was due to a strategic shift away from acquiring low-return paying users, which was necessary to improve profitability [52][53] Question: What are the adjustments to live streaming and value-added services? - Management stated that no major changes would be made to reduce earnings, focusing instead on enhancing user engagement and adding fun features [54] Question: What is the outlook for Tantan's revenue and profit in 2025? - Management expects a revenue decline of 20% to 30% for Tantan in 2025 due to reduced marketing spend and operational adjustments [86] Question: How does the company view its overseas business growth? - The overseas business is expected to grow significantly, with revenue projected to increase from around RMB 1 billion in 2024 to between RMB 1.7 billion to RMB 2 billion in 2025 [73] Question: What is the company's approach to capital returns? - Management prefers flexibility in capital allocation, indicating that a rigid dividend policy is not being considered, as they aim to optimize returns through various means [92]