Hello (US:MOMO)2023-12-08 17:47Financial Performance - Total group revenue for Q3 2023 was RMB3.04 billion, down 6% year-over-year and 3% sequentially, but exceeded previous guidance [6][23] - Adjusted operating income was RMB681 million, up 30% year-over-year, with a profit margin of 22.4%, up 3.7 percentage points year-over-year [6][29] - Non-GAAP net income attributable to the company was RMB605.9 million, up 13% year-on-year, but down 4% from the previous quarter [23][24] Business Line Performance - Revenue from the Momo app was RMB2.74 billion, down 5% year-over-year and 3% sequentially, with adjusted operating income of RMB675 million, up 4% year-over-year [7][24] - Tantan's revenue was RMB295 million, down 40% year-over-year and 8% sequentially, but achieved adjusted operating income of RMB27.6 million, compared to a loss in the previous year [8][16] - VAS revenue, excluding Tantan, totaled RMB1.3 billion, down 3% year-over-year and 2% sequentially, with Momo's VAS revenue down 12% year-over-year [13][24] Market Performance - The number of Momo paying users decreased by 100,000 to 7.8 million, primarily due to policy adjustments in VAS membership [10] - Tantan's MAU decreased 9% sequentially to 15.7 million, with 1.4 million paying users remaining stable [15][16] - New apps generated revenue of RMB302 million, up 49% year-over-year and 50% sequentially, indicating strong growth in overseas markets [20][21] Company Strategy and Industry Competition - The company aims to maintain stable user and revenue scales for Momo while optimizing cost structures [9][53] - Tantan is focusing on achieving breakeven and developing monetization models suitable for the Asian dating culture [14][40] - The company is reducing investments in low-efficiency marketing and focusing on profitable user growth rather than top-line growth [57][61] Management Commentary on Operating Environment and Future Outlook - Management noted that the softer economy and product adjustments impacted revenue, but effective cost optimization led to improved profitability [6][24] - The outlook for Q4 2023 anticipates a revenue decline of 7.9% to 6.6% year-over-year, with Tantan expected to see a low-teens revenue decrease [31][32] - Management remains optimistic about Tantan's long-term potential, citing strong demand for dating applications in China [40][41] Other Important Information - Non-GAAP gross margin for Q3 was 41.8%, remaining stable compared to previous periods [26] - The company ended the quarter with cash and equivalents totaling RMB13.64 billion, indicating strong liquidity [31] - A share repurchase plan of $200 million is ongoing, with approximately $90 million already utilized [61][62] Q&A Session Summary Question: Tantan's user scale and financial outlook in 2024 - Management highlighted Tantan's achievement of operational breakeven and plans to focus on improving ARPPU and channel ROI while maintaining a healthy ecosystem [36][39] Question: Updates on new apps and revenue guidance for 2024 - Management discussed the growth of new standalone apps and their contribution to revenue, expecting this to increase to double digits next year [44][46] Question: Core Momo product strategies and shareholder returns - Management emphasized the goal of maintaining stable user and revenue scales for Momo while optimizing costs, and discussed ongoing share repurchase plans and dividends [52][60]