Hello Group Inc (MOMO) Q4 2024 Earnings Call Highlights: Navigating Revenue Declines with ...

• Total Revenue (Q4 2024): RMB2.64 billion, down 12% year over year.
• Adjusted Operating Income (Q4 2024): RMB280 million with a margin of 10.6%.
• Mobile App and Standalone New Apps Revenue (Q4 2024): RMB2.42 billion, down 11% year over year.
• Standalone New App Revenue Growth (Q4 2024): Increased 37% year over year.
• Live Streaming Revenue (Q4 2024): RMB1.19 billion, down 16% year over year.
• Value Added Services Revenue (Q4 2024): RMB1.33 billion, down 7% year over year.
• Non-GAAP Net Income (Q4 2024): RMB230.5 million, compared to RMB514.7 million in Q4 2023.
• Cash and Cash Equivalents (End of 2024): RMB14.73 billion.
• Net Cash Provided by Operating Activities (Q4 2024): RMB423.6 million.
• Fiscal 2024 Total Revenue: RMB10.6 billion, compared to RMB12 billion in 2023.
• Fiscal 2024 Adjusted Operating Income: RMB1.173 billion with a margin of 16.3%.
• Special Cash Dividend: USD0.3 per ADS, totaling approximately USD50 million.

• Warning! GuruFocus has detected 6 Warning Signs with MOMO.

Release Date: March 12, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Hello Group Inc (NASDAQ:MOMO) reported a robust growth in its overseas business, contributing significantly to the group's financial standing.
• The company introduced an AI assistant chat tool to enhance user interaction and improve response rates, particularly targeting female users.
• Revenue from standalone new apps increased by 37% year over year, driven by rapid growth in overseas markets.
• The company has been successful in optimizing user acquisition costs and improving marketing efficiency, particularly through collaborations with influencers on platforms like Douyin.
• Hello Group Inc (NASDAQ:MOMO) announced a special cash dividend, marking the seventh consecutive year of returning value to shareholders.

Negative Points

• Total group revenue for Q4 was down 12% year over year, with a significant decline in mobile app revenue.
• The number of paying users decreased, particularly due to a reduction in low-return users, impacting overall user count.
• Live streaming revenue saw a 16% year-over-year decline, attributed to reduced revenue-oriented competition events and spending softness among top-paying users.
• Tantan's revenue and user scale continued to decline, with a 22% year-over-year decrease in Q4 revenue.
• The company faces challenges in maintaining profitability amid declining revenues and macroeconomic headwinds.

Q & A Highlights

Q: In the first quarter, the number of paying users on Momo decreased significantly. What caused this, and what is the impact on revenue and profit? Are there further adjustments planned for live streaming and value-added services? A: Sichuan Zhang, COO: The decline in paying users is due to our decision to focus on profitability rather than acquiring low-return users. This shift should enhance our main business's profitability. We have improved Momo's content and will focus on adding engaging features while continuing cost-saving measures. Peng Hui, CFO: Despite the decline in paying users, the core user engagement remains strong, and we expect the "dolphin" user group to drive business stability. Regulatory and macroeconomic factors will influence revenue, with a low 10% revenue decline expected for 2025.

Q: Can you comment on the key markets for your overseas applications and the growth potential in 2025? A: Sichuan Zhang, COO: Our overseas app, particularly in Turkey, Egypt, and Gulf countries, has shown strong growth due to improved localization strategies. We launched two new apps, Yahale and Amar, which are showing promising potential. Peng Hui, CFO: We expect overseas revenue to grow significantly, with a target range of RMB1.7 billion to RMB2 billion in 2025. Profitability is not the priority as we focus on scaling, but ROI remains stable.

Q: What are the plans for Tantan in 2025, given its declining user and revenue scale? A: Peng Hui, CFO: Tantan will focus on delivering a good dating experience and building a sustainable business model. We will significantly cut user acquisition costs to improve ROI, even if it means a decline in active users. This strategy will allow us to refine user experience and retention strategies. We expect a 20% to 30% revenue decline in 2025, but profitability should improve due to cost optimization.

Q: Are there plans to make the dividend program regular, and how do you decide between dividends and share buybacks? A: Peng Hui, CFO: We do not plan to make the dividend program regular as we prefer flexibility in capital allocation. We prioritize growth opportunities over a fixed dividend schedule. Given our stock's current valuation, share buybacks offer better returns for shareholders compared to dividends.

Q: How does management view the adjustments to live streaming and value-added services over the past year? A: Sichuan Zhang, COO: After a year of efforts, Momo's content has improved significantly. We will focus on adding engaging features and cost-saving measures to ensure profitability, even if revenue declines slightly.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.