Core Viewpoint - The financial report of Zhiyuan Group (NASDAQ: MOMO), the parent company of Momo, reveals a decline in revenue and net profit for the first nine months of 2025, indicating challenges in domestic operations and user engagement [3][5][9]. Financial Performance - For the first nine months of 2025, Zhiyuan Group reported revenue of 7.791 billion yuan, a decrease of 1.7% from 7.926 billion yuan in the same period last year [3]. - The net profit for the same period was 567 million yuan, down 33.5% from 852 million yuan year-on-year [5]. - In Q3 2025, revenue was 2.65 billion yuan, a slight decline of 0.9% from 2.675 billion yuan in Q3 2024, with net profit falling by 22.27% to 349 million yuan [5][6]. Revenue Breakdown - Domestic business revenue decreased by 11% to 2.115 billion yuan, primarily due to new tax regulations affecting revenue sharing with mid-tier streamers and a decline in user payment capacity [4][6]. - The number of paying users on Momo dropped from 7.2 million to 3.7 million, while Tantan's paying users fell from 1 million to 700,000, reflecting a 30% decline in paying user numbers [4][7]. Cost and Profitability - The gross margin for the company was adjusted from 37.2% to 37.4% for 2025, with expectations of further decline to 35.5% in 2026 due to increased low-margin overseas business and changes in domestic revenue-sharing policies [5][8]. - Total costs and expenses for Q3 2025 were 2.3094 billion yuan, an increase of 1.0% from 2.2862 billion yuan in Q3 2024, driven by higher commission fees and intangible asset amortization from acquisitions [8][9]. Market Challenges - The company faces three major challenges: aging user demographics, intensified domestic market competition, and regulatory pressures [6][7]. - The competitive landscape in the domestic social networking sector has intensified, with new platforms like Soul and Yidui gaining market share through innovative features [6][10]. Future Outlook - The overseas business has become a key growth driver, with Q3 2025 overseas revenue reaching 535 million yuan, a 69% increase year-on-year, now accounting for 20% of total revenue [8][9]. - The company is cautiously optimistic about future growth, contingent on successful overseas expansion and effective cost management [9][10]. - The sustainability of growth will depend on the ability to replicate successful overseas products and innovate core domestic offerings to attract younger users [10].

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].