Hello Group, Inc. Q4 FY2024 earnings call

• Momo app: Proactive product adjustments, shifted to profit-focused ROI-driven growth model, explored KOL traffic acquisition, reduced low-paying user acquisition. Live streaming revenue in Q4 down 16% YOY, fiscal 2024 down 14% YOY due to macro and operational adjustments.
• Tantan: Focused on improving core dating experience, reduced user acquisition spending, shifted focus from ARPPU growth to reducing user acquisition cost for positive ROI. 2024 revenue down 25% YOY, adjusted operating income RMB75.94 million vs RMB101 million in Q4 '23.
• Overseas business: Sustained robust growth, localized products, expanded into new regions, launched new apps like Yaahlan and AMAR, with revenue in 2024 up 40% YOY. Plan to increase investments in overseas in 2025.
• Dividend: Board approved special cash dividend of $0.30 per ADS, seventh consecutive year of cash dividends.

For Q4 '24, total group revenue was RMB2.64 billion, down 12% year-over-year. Adjusted operating income was RMB280 million, with a margin of 10.6%. Revenue from the Momo app and standalone new app totaled RMB2.42 billion, down 11% year-over-year. The Momo app saw an 18% year-over-year decline due to product adjustments and weak macroeconomy, while standalone new app revenue increased 37%. Tantan Q4 revenue was RMB213 million, down 22% year-over-year due to decreased paying users. For fiscal 2024, total group revenue was RMB10.6 billion, down from RMB12 billion last year. Momo app and standalone new apps revenue totaled RMB9.7 billion, down 11% YOY, with Momo app revenue down 16% and standalone new apps up 40%. Tantan's 2024 total revenue was RMB900 million, down 25% YOY. Overseas business was a key growth driver, with standalone new app revenue in 2024 up 40% YOY, driven by overseas expansion.

• First quarter revenue expected to be in range RMB2.4 billion to RMB2.5 billion, down 6.3%-2.4% YOY or 9%-5.2% QOQ.
• Q1 2025 Momo segment revenue expected to decrease mid to low-single digits YOY, offset by overseas growth.
• Tantan revenue expected to decrease ~20% YOY due to user base decline and operational adjustments to deemphasize non-dating centric live streaming.
• Group aims for non-GAAP operating margin range 12%-13% in 2025, but guidance is soft due to early year uncertainties.

• Macro-economic uncertainties impacting revenue, especially for Momo app.
• Regulatory risks affecting product adjustments and monetization.
• User acquisition cost pressures, especially for Tantan as it reduces spending.
• Overseas expansion faces uncertainties in new market penetration and ROI maintenance.

Q: About core Momo, what's the reason for paying users dropping and impact on revenue and profit?

A: Cut back on low-return paying users due to unrecouped costs, expecting further paying user drops but improved profitability. No immediate product changes, focus on adding engaging features and cost savings.

Q: About overseas apps, key markets and revenue/earnings of Soulchill?

A: Soulchill grew 50% YOY in 2024, revenue near RMB1 billion, strong in Turkey, Egypt, Gulf. New apps Yaahlan and AMER are voice-focused, ROI-driven, with plans to increase marketing in 2025. Overseas revenue expected to grow from ~RMB1 billion in 2024 to RMB1.7-2 billion in 2025.

Q: About Tantan, plan for 2025 in product and operation?

A: Shift focus to reducing user acquisition cost for positive ROI, cut marketing spend drastically, scale back personnel costs. Revenue expected to decline 20%-30% YOY in 2025, but profitability to improve due to cost optimization.

Q: About capital return, regular dividend policy?

A: No plan to make special dividend regular. Prefer flexibility in capital allocation, may deploy cash to growth opportunities instead of rigid dividend schedule. Share buybacks considered when stock undervalued, offering better return than fixed dividends.