Hello Group, Inc. Q3 FY2024 earnings call

• Momo app's main goal is to maintain productivity of cash cow business with healthy social ecosystem, with product team optimizing user experience, introducing voice-based chats and using mini social games for female users.
• Tantan's goal is to improve core dating experience and build efficient profitable business model, with marketing team organizing activities to promote brand awareness and reducing unit acquisition costs.
• New endeavors focus on enriching brand portfolio, pushing business frontiers, with overseas business driving significant revenue growth for standalone new app, and plans to further localize operations in key markets.

For Q3 2024, total group revenue was RMB2.67 billion, down 12% y-o-y. Adjusted operating income was RMB455 million, down 33% y-o-y. For Momo app and standalone new app, total revenue was RMB2.46 billion, down 10% y-o-y. The Momo app saw a 17% y-o-y decline due to proactive product adjustments and weak macroeconomy, while standalone new app had 41% y-o-y revenue growth driven by overseas business. Adjusted operating income for this segment was RMB440 million, down 33% y-o-y. For Tantan, Q3 total revenue was RMB212 million, down 28% y-o-y due to decreased paying users. Adjusted operating income was $15.17 million, down from $27.58 million y-o-y.

• Fourth quarter revenue expected to be in range of RMB2.56 billion to RMB2.66 billion, down 14.7%-11.4% y-o-y.
• On segment level, Momo revenue expected to decrease mid-to-low single digits sequentially in Q4, Tantan revenue expected to decrease low single digits sequentially.
• Overseas social business expected to continue rapid growth, with other Middle Eastern apps likely to enter rapid revenue growth and possibly breakeven next year.

• Macro-economic weakness impacting revenue and user acquisition.
• Regulatory uncertainties affecting product adjustments and business operations.
• Uncertainty regarding the impact of product upgrades and operational changes on user retention and revenue.

Q: Congrats on strong growth momentum of overseas business. Share main contributors to overseas business growth in Q3, latest revenue and profit figures for overseas business and growth outlook for fourth quarter and 2025.

A: Tang Yan mentioned sequential growth acceleration in Q3 due to optimization of cross-border personnel management, empowering local staff for better localization. Third quarter new apps total revenue close to RMB220 million, social contributing 60-70%, surpassing Tantan's revenue scale. Expect social to continue rapid growth next year, other Middle Eastern apps to enter rapid revenue growth and possibly breakeven next year.

Q: Outlook for cash cow business, adjustments ongoing and recovery timeline and profit sustainability.

A: Tang Yan said continuing de-emphasizing high revenue competition events, increasing monetization of mid-to-long tail paying users. Peng Hui mentioned Momo segment likely to see revenue decline in low teens y-o-y in 2024, next year Y-o-Y decrease to narrow but cash cow may still face top-line decrease, focus on cost control to mitigate bottom-line impact.

Q: About Tantan, product ideas with positive results, upgrade timeline and Q4 and 2025 outlook.

A: Tang Yan said focusing on addressing user identity authenticity and chat interaction post-matching issues, testing features to improve response rate. Expect user base to stabilize, revenue decline to continue next two quarters, then recovery through improving dating experience, branding and innovative features.

Q: Shareholder returns, dividend plan and share buyback plan.

A: Peng Hui said see buyback as priority due to undervaluation, current repurchase run rate may use up authorized program by early 2025, will consider cash dividend if excess cash remains after buyback to return prosperity to shareholders.