Q2 2021 Hello Group Inc Earnings Call

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Okay.

Okay.

Ladies and gentlemen, thank you for finding black and welcome to second quarter 2021, Hello Group, Inc. Earnings Conference call. At this time, all participants are in a listen only mode.

After the speech.

Speakers for some patients they will be a question and answer session to.

To ask a question during the session you will need to press star one on your telephone.

Please note this conference is being recorded today.

I would now like to hand, the conference over to your first speaker today, Mr. Ashley Chang head of Investor Relations.

Please go ahead.

Okay.

Thank you operator.

Morning, and good evening, everyone. Thank you for joining us today for Hello groups second quarter was 21 earnings conference call. The company's results were released earlier today and are available on the company's IR.

Website on the call today are Mr. Wang <unk> CEO.

I'm, calling Mr. Jonathan Zhang CFO of the company.

I will discuss the company's business operations and highlights.

Well as the financials and guidance they will.

Both be available to answer your questions during the Q&A session that follows.

Before I begin I would like to remind you that this call may contain forward.

All such statements made under the Safe Harbor provision of the private Securities Litigation Reform Act.

95, such statements are based on management's current expectation and current market and operating conditions and relate to events that involve known or unknown risks uncertainties and other factors.

Look none of which are difficult to predict and many of which are beyond the company's control, which may cause the company's actual results performance and achievements to differ materially from those in the forward looking statements.

Further information regarding this and other risks uncertainties or factors is included in the company's filings with the U S Securities.

And Exchange Commission the company does not undertake any obligation to update any forward looking statements as a result of new information future events.

Or otherwise, except as required under law I will now pass the call to Mr. Huang I would translate for him and he's the one thing.

Oh sure.

And what's interesting is a year to doses that you can move from Titan.

<unk> who've been with us don't have <unk>.

Should one occur.

All the things that we've.

Arguably the two to tango.

And good evening, everyone. Thank you for joining our conference call today, I'm glad to be delivering a solid quarter with decent.

Financial results and progress on our strategic priorities outlined at the beginning of the year now I'll walk you through the specifics of our Q2 results.

The agenda here.

Arguably so simply there to.

Can you talk about the room, some quantification about Hulu.

Considering chosen.

<unk> unit volume.

<unk>.

This year alone.

We will gladly, so Cynthia Whelan, indeed can be junk, which will need to provide leadership since we sold our chargeable revenue.

When you think about mobile.

The policeman almost laboratory accordingly.

Indeed in January with Amazon.

Hello.

So with a new CMO.

Are we talking about energy unleash a number of initiatives.

<unk> kind of Tony Horton, Cleveland, <unk> <unk> essentially to zero in Q2, maybe just like this with Europe also asking us.

So I'll answer both of them will be more revenue to Rob first of all a brief overview.

Review of the financial performance for the second quarter can be 'twenty. One total revenue at the group level was $3.6.7 billion than the downside.

6% year over year or up 6% quarter over quarter.

Adjusted operating income for the quarter was 782 million, representing a 21% profit margin.

Margin for the core business total revenue was $3.6 billion a movie the year over year decrease rates continued to narrow from 10% in Q1, two 6% in Q2.

On a sequential basis revenue from the core business was up 9% excluding.

Excluding patent as loss adjusted operating.

Income for the core Momo was $823 million or 26% profit margin.

And as total revenue came in 514, New magazine for the second quarter.

1% year over year and 10% sequentially.

Adjusted net loss from content was $44 five.

<unk> 2 million for the quarter compared to 77.9 million <unk> for the year ago period.

The revenue mix of the group remained healthy with vast representing 72% of the site of life screening.

Two did you have a student to call within.

I think there's a moment throughout the EU for <unk> shareholders.

So revenue within the moment, Rob why don't you do a new union.

When you think about this group.

Unbeliever.

Cheers.

Industrial <unk>.

Felicia Jimmy if you don't do it immediately.

Colorado, Utah and Tahoe.

Hi, good revenue.

Yeah.

Now a deeper dive into the quarter I'm going to focus on our call moment operational profit for now and move onto kind of later first thing first the growth of the core Momo community.

<unk> had 115 or $115.6 million monthly active for the second quarter of 2020.

'twenty, one up 4% year over year and a slight net adds from Q1.

The user acquisition environment was not ideal in Q2 due to aggressive channel marketing investments from E. Commerce companies in June we therefore lowered the marketing spend for our considerations.

Adding to the limited quarterly matched.

<unk> two MCU.

<unk> also excludes 500.

The dose.

With regard to your appointment should all agenda.

Good afternoon.

When implemented as Susan pointed simple valuation level.

But if you talk to me about all party EW community.

King.

We think we'll have many is how come you know.

Single.

We will do better veteran nuomi. So this reduction most of our distributors to us.

Sure Doug with walnuts.

When you talk to where you can see Dravet syndrome, <unk>, Chile budgets, while 2 billion have been though we also have less things off the table.

During the second quarter despite.

The conservative approach at a cutoff of themselves our team made good progress within the funnel by improving the basic social experience on our platform.

Use of time and reached its peak since the beginning of the pandemic.

The number of billing and pressures of the nearby people reached an all time high since the homepage suspension in 2000.

19.

Number of data impressions of the nearby post also hit a new record high.

The improvement in engagement metrics show that the fundamentals of core Momo as a social platform continued to be solid.

Number of paying users for the quarter was $9.3 million compared to $8.9 million.

On a year ago.

The increase in the number of paying users was primarily driven by the growth of my business on the call.

<unk>.

We have seen Sweet-shop fundamentally you have to do that and it's only mobile MAU.

Joseph.

<unk>.

<unk> was once we're done with this figure between anthem.

Europe premium Huawei from them without.

Switching to competitor for profit.

The European region.

<unk> seen the easing of the zoning.

I think we're past the tivo interim solely GMO senior which year you prudently we moved the dividend up.

Can you talk with other party, which happened given the mix continued.

Digital revenue growth.

Before I get into the operational and business review I'd like to reiterate the strategic priorities. The team has been pushing against since the beginning of the year on the <unk> side. The three goals for this year are number one further grow the core user base with.

Limited marketing budget and improved our live versus last year.

<unk> brings a business account growth track.

Three continue to enrich our product portfolio and push the boundaries beyond one more on content.

On the <unk> site. The single most important goal for the year is to deliver solid user growth.

<unk> by substantially improving the marketing efficiency and accommodating experience now.

Now let me walk you through what we've found in the past quarter in order to push forward to each of the priority.

So hence there is element that cohort of new institutional prudently within the AUM mix, which is a agenda what to do.

Really the bundling COVID-19.

Switching to Wyndham delinquency hostess include more hospital with looking at guidance.

We will prudently.

So in other builders using them.

These forward looking algorithm.

Any forward looking how to combine with <unk> intention.

Data <unk> had a good.

We're able to do.

So when we put them down into the Caribbean.

<unk> do you think it was a proven leaders on critical requirements at all divisions.

Thank you Bill.

But you sum attributed solely to do further, California, Chicago frequently with volume.

Digital media and should be avoided intuitional significant Stifel.

We think our trim from opinion, which ensured to that preliminary IPO.

People <unk> premium consumer and good luck in fee income.

Doug <unk> the function contributed 2000, the only lender.

Okay.

So some connection to them.

What tissue the change of our bottling confusing for some years ago.

Understood.

<unk> brings something to the probable from Covid initiative.

<unk>.

Concurrently with Chinese institutional internationally, the right one for Europe to Adobe shop.

So on the timing due to enrollment jumping too.

Keegan looking about a total career.

Goodbye.

Machine with over 100 for example, unemployment level.

<unk>, which is in total I believe or Couldnt, Sunil maybe seasonally abboud IV sources, Jabil, who cheat we don't.

You bought some back in the sensitive bufano.

First regarding the progress we've made with <unk>, serving the user's need and driving user growth.

Even the party with taken a major step in renovating the way we help our users to discover new relationships and build interactions around our nearby features and functionalities as many of you know.

Nearby people and hosts our signature features that have been around for many years.

<unk> been playing.

<unk> a pivotal role in how we connect people.

Over the past few years nearby people any by post had evolved from connecting people based on a single that mentioned, our physical proximity to a much more sophisticated algorithm incorporating a wide diversity of connecting elements.

In.

In terms of presentation. We've also been adding more personal information so that users could find more funding elements right on the nearby people list.

<unk> has shown that these changes have played very positive growth, while driving the efficiency of recommendation and improving the basic social experience of Momo users.

In Q2, we push further on that front I experimenting our new recommendation system, which replaces the nearby people list with a sequence of full screen single user profile cost.

The new system and display format allows more comprehensive user profile information to be presented to us.

He was in a much more prominent way.

So that they can focus on each individual from multiple aspects rather than just quickly and in many cases curiously slow down the list with numerals profile pictures.

More importantly, the new system also gives the recommendation engine Molly reached four allocate high exposure to the.

Users, who potentially can be a good match, but not necessarily accessible.

I, taking enough on a crowded and if I can collect.

Canada gives us much more room to decentralize the attention received by a relatively small portion of the MAU users to a wider range of in our users.

Which can further improve the rate of response and the quality of interactions.

Within two months into the testing and the results are consistent with our expectation we.

We will continue to optimize this new version and gradually make it available to more users in Q3.

Premium throughout Europe.

There is a food can purchase of a niche provider.

Three.

Charter.

Okay.

Amit you something fulfilled so some highlights in terms of LTV.

<unk> local full agenda.

Hunting.

<unk> fulfilled.

The initial contribution results part of zebra sometime with Honeywell.

So it's a normal quarter personnel to publish something under the 200 <unk>.

Putting the shipments which put us at outdoor hunting Titan.

Mr. Tony of 215000 chip.

In addition to the call normal our team has also been making solid progress.

With enriching our brand portfolio for the company.

Our video matchmaking applications targeting lower tier cities, almost doubled SBA U and paying user from Q1.

So chill, a social product targeting overseas market also made impressive progress in user growth during the second quarter.

These new experiences such as hub Sebree and <unk> are still at relatively early stage of development.

On each individual basis, it may not grow up to be something as ubiquitous as no more contract. However, it can help the company expand our market share in specific niche markets and collect.

Collectively can also make meaningful bottom line contribution to the group.

Through July two hotel rooms are prudent shimbun.

All these things and assumptions of the syndrome.

Next let me review the progress that we've made against our priority of bringing the cash cow business back onto the growth track.

Leo.

But for the moment attributable to third party volume when Youre talking about I'm not sure.

The issue through this vehicle Youtube horizontal so some ddos soda shortly bring a whole new chip will be when you are going to use them.

Don't give him some title of the book outside Europe.

We're currently going through to production.

Chinas GDP so excluding.

Thank you for efficacy.

Firstly on live broadcasting.

Like broadcasting revenue totaled $1.8 billion will be for the second quarter, 22% from the same period last year up 10% from last quarter.

<unk> revenue came in better than ours.

<unk> or the expectation of year over year decrease continue to narrow from the previous quarter.

The better than expected recovery can be attributable to three factors.

Number one the steady improvement in the overall content ecosystem number two introduction of Lumpier around which features an operational events.

Regionally number three revival of the supply side boosted by the new incentive program.

So things are you <unk>.

We should be.

Usable peloton sugar.

So for instance, you can go back and essentially Bob Otto Charlotte and Houston will be.

Okay.

And then just.

Thanks <unk>.

Founded in 1000 physician level deposit trends in season quarter inflation.

When a eurobond last year.

<unk> and CDMA.

Things materially would functions some pointed to switch from group to Ebola.

Sure.

Peter Thank you Duncan.

<unk> <unk>.

<unk> sure, so both Lockheed and with whom.

So this with a profit.

Now turning to Vas driven by the team's resilience focus on product innovation and operational efforts also added service maintained a strong momentum in Q2.

38% from the same.

Here at last year to $1.1 billion.

Titan will continue to be the most significant growth driver for Bob <unk>.

Two the team introduced a new experiences to the pattern to keep it fresh and engaging for users.

For example, we broke in fact in my experience, where H grass roots.

Talent are concurrently available on open Mike.

Users can send virtual gifts to request performances ranging from singing to script reading use.

Users can always joined the talents for role play or participate in other kind of unified activities as they wish.

This experience lowered the interest.

Paul Langdale users to enjoy high quality interactions and gain immediate popularity.

Quantum contribution which is a physician so.

EMEA Global Dominion will include students are sufficient.

Turning to the Jean Coutu, the polymorph patent dispute.

So they will do.

Uh huh.

Thank you Linda.

Virtual gifting within the traditional use case in particular, the interest group grew meaningfully in Q2, driven by operational events, such as the last vessel wide EMEA APAC with that.

On the product side, the newly launched customized gifts well received by users driving growth.

Both in the number of paying users and <unk>.

In terms of <unk> <unk> hundred.

The total Nielsen through the human genome sequencing.

Efficiency was up meaningfully on possible income evolution.

Do you think young southern Europe since 2000, boondock influences of the industrial Revolution.

In addition to the established experiences matchmaking experienced yesterday <unk> continues to gain traction.

<unk> adjusted our operational policies to provide better training opportunities for the entry level matchmakers as a result total number of quality matchmakers increased significantly.

Which in turn drive revenue growth from this experience.

We expect the matchmaking signals to accelerating its growth and contribute in a more meaningful way heading into the second half of the year.

200, new hedging really snack food to industrial comes in to Western Europe and champion revenue.

So we have been done with syndrome.

The city of Houston.

Got it.

So as you try to bundle with up.

Welcome Hollywood year, which is a new solution <unk>.

Now briefly on the new endeavors revenue from the new apps showed robust growth momentum in Q.

Collectively the new bucket was the second ticket incremental revenue contributor to the vast hotline.

Organic revenue growth was driven by user user base expansion instead of putting up RP pool. Our team has been operating these apps at a controlled pace on the occupancy front focusing primarily.

If I could use it to drive the growth of <unk> and retention ratio.

Heading into the second half such approach will continue to be guiding our execution in the new market to have more funded by choosing 50 shop Donaldson before noon.

Gotcha.

So as we're looking at a few minutes with you.

Difficult.

Production continues to grow is empowering them to the mobile.

This will continue.

Continually almost two average tissue to.

<unk>.

<unk> our partnership with you.

This unit has two tranches in imaging <unk> disorder.

No I'm.

<unk> that the team has been doing a good job executing against all of our strategic priorities.

The bank goes off the call mobile as a social platform continued strengthening.

At the same time, the revenue performance and structure are seeing solid improvement follows the targets set at the beginning of the year.

Please give us a call.

Glad to have our core platform will continue to be healthy and productive cashcall, which gives us importantly reach to plowing new ground.

Longer term drivers for the group.

Qunar.

So here's a Google Chooser Hotel Chicago.

Resolution dependent upon partners using our children because of Covid.

We don't go too often is used in smoothing pointing people, but <unk>.

Income template.

We've achieved fault on the backs of the penalty income I'll charge you took in humans.

Sure.

Hear you.

Within that.

Yes, I think you've answered some of them come down.

We have just to give you one depot towards it.

Turning to Titan, firstly on user trend and overall financials.

We made adjustments to contact management team and started making deployment, our various product and operational fronts in Midland. It took us some time to lock down the key issues, we walk the backend.

Sure.

Put together a functioning team.

Transmission has caused some temporary disruptions, which has put some pressure on average do you are you in the second quarter.

As a result average VA using domestic market for Q2 was slightly lower than that for Q1, However, total DAA remain flattish.

On the sequential basis due to the growth in other markets in Asia as we resumed our effort in overseas development.

You may have even more from Pennsylvania.

One found during the summer.

Schedule under general civil loans growing some introductions.

Mr Weil.

With our new fully configurable.

When you go through your onshore area.

<unk>.

Thank you. So this will be the hanmi profit from Asia to Europe.

Thank you.

<unk>.

So on the total bookings are these opinion gives you such a favorable seasonality time positive moving forward.

And the thing is accounting and $3.1 million of end of Q2 2021 bounce around $3.5 million from last quarter. The 400000 net decrease was due to the combination of three factors.

While the spinoff of certain business in May had around 200000 negative impact paying user accounts now.

Number two.

The improvement in the female percentage in new users acquired in the recent months adversely impacted paying conversion as women are much less likely to pay for that in comparison with that.

Number three the lower average CAE in Q2 profit by the transition and related operational disruptions.

Translated into the paying user account.

<unk>.

So that should also contribute within the shop.

Please do not tissue, we're happy to see that both the EU and the number of paying users has started ramping up since early July as we move forward with our efforts in reform.

The user acquisition approach.

Sure Danielle.

We wish our customers how we got here.

Proposal <unk>.

Let me start out by community.

Michelle Obama initiatives undertaken by the new giant into June.

If you've been with general Shire income on distribution.

Yes.

With something called <unk>.

You, obviously won behaved in DAU to MAU.

When you shop at New Cisco two RV Youtube.

Good morning, and welcome to shut in the blending down to a user.

So from here to the rule of law, which are already.

Now let me briefly.

<unk> financial performance.

Total revenue for the second quarter was $514 million or.

At 1% year on year, and 10% quarter on quarter Vas revenue decreased 6% sequentially to 297 million.

Sequential decrease was due to the decrease in paying user count reason operation.

Of which already explained in the previous top.

Four of us on the other hand increased slightly quarter over quarter as users shifted towards higher priced membership service.

Live streaming revenue decreased 14% sequentially to $217 million.

The decrease in RP pool was still.

Due to our strategic decision to deemphasize life screaming at the supplementary to Beijing.

Dealing with it.

Finally on Piedmont approval.

Global sources of income and we'll do that with our relaunch initiative artificially.

Now turning to the most important part of my speech today, our plan and respective execution.

Or how to drive Titan.

User growth and unleash its full potential going forward.

I don't know double digit angle to English.

Just wanted to go and we'll go to <unk>.

Could you just tell me.

And here this year executing ahead of us even though.

And for the whole I'm, assuming that's not going to use these tools.

Mobile.

So you have all that.

And what should we use local.

So each hotel in Europe.

I think the key leader pushing to that yet.

So the redemption.

And then in Congress many challenges in the past couple of years. The single most important Gulf of content. This year is to deliver solid user growth by substantially improving.

We are working on efficiency on a quality experience.

We spend the rest of Q2 coming through the key areas of focus and coming up with an execution plan for that goal.

Three pillars supporting the plan.

Number one improving marketing efficiency number two making the Dakar dating experience more appealing.

The market and number three having unaffected recommendation engine.

Unfortunately, you complement to value as we treat other hematological oncology Wichita financials, yet and a real changes let me focus on the kick off of with the crop efficiency leading to profit brings mobile. So quick one do you see some of the conditions for <unk>.

Jim are you could you go through the rule of law <unk> Chip you didn't mention 2000.

And we will be able to compete or usage in Europe, which impact digital products. So wondering neil thank you.

The company will be larger institution solutions as we move to the <unk>.

And lastly, we've accrued revenue.

Boston.

Under this engineered.

Our board controller design <unk> contributed about <unk> <unk>, who continue to have 100000 shares don't get about double what you said.

Turning to the book with an assemblage of it obviously, we can do for the tumor Thompson at the hotel.

The company will not be on the growth of that one can solve new digital channel.

Bob will occupy for conditional giambi firmly focused on them.

Some of your telecom, how we hope, but the industrial group is available.

So these are long term issue, we did a total of <unk> <unk>.

One is here.

<unk>.

With us.

On the marketing front, one of the key broken windows with identified lite in the new infrastructure.

What happened here was that in order to control the Union acquisition cost and which we'll be paying conversion from these quarterly numbers in revenue and paying user count contacting compromising the quality of.

<unk> acquired two channels.

That led to a gradual deterioration in the use of sector evidenced by these proportional gender ratio and are rapidly increasing average age of the new users.

Having a balanced the demographic is crucial for user experience and a long term healthiness of the dating ecosystem.

Therefore, we have to seek the structure in new registration before we can't even talk about user growth in.

I made it the key focus for the team in Q2.

Glad to see that we've had some initial very impressive progress during the past few months cleanout.

<unk> ratio in the newly acquired users increased to 45%.

Of new users from around 20% last year.

Average age of new Paypal users has dropped seven years from the period before we to Copa <unk>.

However, because it's relatively expensive to acquire female younger users. The average user acquisition cost went up to a pretty high level day in June.

Our main goal.

And three is to bring down the unit acquisition cost based on the current users doctor.

Of course, this goes should be achieved through continuous optimization of as material and data management system.

After we reached a reasonable level of the cost front.

We will increase our marketing expense to drive top of the funnel.

In our activities.

So far into Q3 with new progressing well against that goal and the domestic giving you count also been seeing Greg you and healthy ramp up since July.

So vermilion.

Excluding fuel.

The majority will go up and then go back kind of in a holding donkey panel.

In Q2 or kind of where the children English energy related.

<unk>.

Hunter or Keith.

And we're putting ourselves in the position.

And what was the attorney together Hall.

Chris will be walking by Covanta.

Another thing on the marketing front back and contribute to overall user growth is brand advertising.

We believe that Fan-tan relatively young brands, a huge opportunity to improve user awareness and enhance brand equity.

The core value of content to those who potentially meet our service will start looking at branding options. Once we complete our next major product upgrade.

I'm sure guys.

Thiago format to Houston cushions readout here.

700.

<unk> please.

On the positive.

No dilutions without working with some of the pollution issues with our customer volumes, even if they don't share with us on the northern coupon autonomy with auto.

<unk> the job when you look at the Rockies.

There's a new home recent ship will be the 19 at Walgreens.

She's memorial essentially because of the effectiveness.

Secondly, we should initiate Europe wholesale hotels of the IPO Ultra mobile audience, you can keep it up.

But the revenue to pay equivalent multifactorial.

We can touch on quest solution the.

The second area, we need to improve is to enhance the COVID-19 experience.

In the second quarter, our product team conducted a thorough walk through of contact product experience and laid out in that study of user behavior.

The study abroad, two things to our attention and Taiwan Asia Women's.

And quite package when it comes to dating.

For example, a considerable portion of female users on content right, what inline extremely selective weight and some may not strike right swipe at all resulting in the large banks are female users.

Matches, our interaction based on the current product in Canada.

<unk> is one of the key reasons why female users retention ratio is significantly lower than that of Montana.

And the second issue is about 30% of newly acquired users are marked as paid users by China.

Free to users refer to those who failed to provide qualified profile.

And therefore, the nine full access to the swipe and Max systems.

The retention offtake users tend to be extremely low because of the inability to get any matches all interactions.

So sometimes objectives.

Reflecting the time each year, you can see from petrol revenue.

This is a function of having to do.

Maybe we should see somewhat Xinjiang, we should all feel the attendance you consuming countries, although the gym industry Buncombe Macquarie computer users.

You can reach out to the students.

Remove the Chilean functions have been stupid either.

This will come in through other ingredients Shoop, Keybanc, Jimmy Cheung with moving.

Thank you.

Hum.

Due to the currency Jimmy Thanks for listening.

Who is under a self determination.

Do you think it will be the shortage.

The most important near term priority for our product team is to improve female user active users experience. So that we can practically kingdom because the.

You'll have the product in Canada tends to be less effective for these two groups of users, but realize that we need to get more intuitive and just making minor tweaks or adding patches to the current swipe unmatched system.

We need to build supplementary experience around it providing additional ways for people to bond the goal is.

Current through this additional more subtle funding elements more integrated global active users and get attracted to each other and gradually open up to others with no real identities and ultimately build offline relationships based on a Sunday inflammation.

You will see our first step into this problem unfolding.

Next upgrade.

People, who will be no material impact in the different autoimmune strategic.

So let me use this linearly.

We're going to show some important outlook question, thanks to civil cubic due to the push more frequently.

Sure.

Equally or do something with.

So the two some restocking orders from a few options.

Vishal attending China, which is kind of the demand could always answer that I think closer to 100, you gave us a comment just repeating bupa this a woman to existing particularly going into Europe.

The third area, we need to improve in order to drive user growth is our recommendation algorithm in the open social space for more than 10 years.

Not really causing that makes our social products standout is his ability to make its recommendation low relevant.

Users need to feel that this is a product that understand or at least is trying to understand what kind of people. They're looking for obviously, sometimes not doing a good enough job in this area. We are taking the right.

Idle box, so we can move faster on that front.

This is a roadblock that we are determined to crack down as soon as possible.

So julien.

<unk>.

China is a bit uncertain.

Google hardware, with whom I ask to touch on <unk>.

<unk> decision by Vishal.

<unk>.

Yes.

Again, when we partnered sugar coming function.

Could you briefly through the equivalent year coupon for this year.

And so they don't do this under the Hood is obviously when we something of a Yahoo total although it will move up to some degree the Philippine peso to supplement opinions to win the world.

When you think about partnering some plug in the news.

Since you won't kind of Yahoo.

Do you any longer.

Protiviti Hooper assortments into valuable guidance with Aruba.

Beyond the China opportunity, we're also getting prepared to resume the pursuit of contacts overseas expansion, we believe there.

So a lot of growth opportunities are penetrating deeper into overseas Chinese southeast Asia, as well as extending our reach to east Asia Amana countries.

Our team has reached experience in social product innovation membership business and non membership value added services.

Every field team.

There is demand as comprehensive experience are all those three fronts as we do we believe that in Asia such experience is very crucial in building a scalable social platform that can ultimately reach profit.

This is an important competitive advantage that we're going to leverage we would like to see.

Montana, becoming an indispensable part of People's Daily lives in Asia.

It is a very important constituent of our growth strategy for the company.

So the whole point was on Kodak offerings, and our new CV.

And Jonathan with IVF results due to the accounting for these other things I'd like to cover on this call now.

I'll pass the call over to Mr. Thomas and John for a financial review Donkey.

Thanks, Hello, everyone. Thank you for joining our conference call today.

Now let me briefly take you through the financial review.

Total revenue for the second quarter of 2021 was $3.6.7 billion and five.

Let me jump year on year.

Up 6% quarter over quarter.

Non-GAAP net income attributable to mobile.

What.

561 million.

And movie compared to.

$670 million at it maybe from the same period.

On the <unk>.

Or an 18% decrease year over year.

Looking into the key revenue items for the quarter.

<unk>.

Life Broadcasting.

Total revenue from Lite forecasting business for the second quarter of 2021 was too.

I mean 1 billion renminbi 19.

19% from the same period last year up 7% from last quarter.

Core Momo live broadcasting revenue totaled 1.88 billion.

Second quarter.

22% from.

Compared to last year.

Up 10% from last quarter.

The year over year decrease caused by the structural reform in late August.

Last year continue to narrow down from.

Q1.

Content live forecasting revenue.

The same date.

$416.5 million.

ABB.

Down 14% from previous quarter.

The sequential decrease was due to our strategic decision to deemphasize live streaming as a supplementary.

Amongst to Beijing.

Overall decrease in paying users on Panther platform.

Moving on to Paas.

Revenue from value added service reached one point.

Five 1 billion renminbi up 25% year on year, 4%.

Quarter over quarter.

Revenue from Vas.

Permitting.

$297 million and maybe from 10 time reached one point.

Two 1 billion in <unk> in the second quarter of 2801.

38% increase year on year.

<unk>, 6% increase sequentially.

The solid performance of more months core revenue business primarily.

Primarily driven by the team's focus on product innovation and operational efforts as long as you mentioned.

Let me briefly review the cost and expenses.

Items for the quarter.

Our non-GAAP cost of revenue for the second quarter of 2021.

2.05 billion compared to 2.01 billion for the same period last year.

Non-GAAP cost of revenue as a percentage.

Total revenue was 55, 8% an increase from 52, 1%.

From Q2 2020.

Non-GAAP profit margin gross profit margin for the quarter was down three 7%.

From.

A year ago, the decrease was attributed to.

The following factors.

Number one higher payout ratio from core Momo live broadcasting business on a year over year basis.

The lower gross margin from content.

Life Broadcasting.

<unk> business has it become sizable compared to.

A year ago.

Number three certain fixed nature cost items, such as head count impact.

Impacted the gross margin negatively as total revenue declined and this item represented.

The higher percentage of total revenue.

On a sequential basis non-GAAP gross margin was down.

Zero, 6%.

Gross margin for mobile core remained flattish compared to the previous quarter.

Slight decrease.

In the group's non-GAAP gross margin was due to 2% GP margin decline on content.

Certain fixed costs.

A negative impact on content gross margin.

Due to the sequential decrease in revenue.

It's worth.

Mentioning here, our wholly owned subsidiaries <unk> media and Momo Pictures produced a variety show.

The honorable chef.

In a film like a friend.

<unk>.

A small portion of the related product cost that was recorded in Q.

You too.

And the vast majority of the cost is going to be recognized in Q3, we expect the cost incurred in connection with this media product protections.

To have a close to two percentage track on the GP margin in Q3.

Non-GAAP R&D expenses for the second quarter was $432.9 million in MEP compared to $126.6 million.

$1 million <unk> for the same carrier last year, representing six 3%.

And five 9%.

Half of total revenue respectively.

The increase mainly due to the increase in employee salary App social welfare.

We ended the quarter with.

2019 to totally employees.

Rich.

617.

Our form 10 times.

R&D personnel as a percentage of total employees for the group was 57% compared to 60% Q2 last year.

Non-GAAP sales and marketing expenses for the second quarter was 600.

119, 5 million F&B or.

Or 16, 9% of total revenue compared to $598.7 million or 15 three.

3% of total revenue for the same period of last year at.

The year over year increase.

In sales and marketing expense.

Both in terms of renminbi amount.

And in terms of as a percentage of total revenue.

Primarily due to higher marketing spending in association with our life streaming.

<unk> Party.

Which was delayed from Q1.

Through Q2.

Due to the pandemic.

The increase was partially offset by lower user acquisition investment for 10 times during some management transition period, while our team focused on fixing the structural issues.

Catalyst user acquisition system.

Non-GAAP G&A expenses was 78.8 million for the second quarter on a blended one compared to $91.9 million for the same quarter last year.

Representing two 1%.

And two 4% of total net revenue respectively.

The decrease was largely due to a recovery of at that preview.

Previously written off.

Non-GAAP operating income was.

$781.9 million.

There can be.

A decrease of 24, 5%.

From Q2.

2020, representing <unk>.

Plenty of one 3% non-GAAP operating margin for the quarter.

Five.

5%.

From the same period of last year.

Non-GAAP Opex as a percentage of total revenue was 25, 4% an increase of 23, 5% from Q2 on the <unk>. The increase was mainly due to negative operating leverage.

As a result of a decrease in revenue.

Our gratefully on income tax expenses.

The company repatriated $1.3 billion in MMP from our Wuxi in China.

Our offshore entity in Q2 in order to replenish our U S dollar funding.

In accordance with respective taxation law of China, The company paid 10% or $130 million will be withholding tax to Chinese textile authorities.

This tax payment was recorded as income tax expenses for the company for the second quarter 2021.

Excluding this withholding tax payment our non-GAAP effective tax rate was around 20% in.

In Q2.

The 21.

Turning to the balance sheet and cash flow items.

As of June 30.

91.

Our cash cash equivalents short term deposits and long term deposits restricted cash and long term restricted cash totaled $15.45 billion renminbi compared to 16 point 48.

As of.

1031.

20.

In Q2, we paid an equivalent of $853 million, maybe cash dividends to our shareholders.

Excluding.

And equivalent of 678 two.

The cash payment with Panther founders, who redeem vested share options upon their departures in Q2.

The net cash provided by operating activities in the second quarter.

510 claim formulated maybe.

Lastly on Fishnets outlook.

We estimated our third quarter revenue to come in the range from three six.

<unk> 5 billion maybe two.

375 billion renminbi, representing a decrease of three.

Three 1%.

Two 0.4% year on year or a decrease of.

Zero.

6% to an increase of.

Two 1% quarter over quarter.

For the third quarter of 2021, we expect the total revenue from core mobile.

<unk> positive.

Positive on an increase.

Mid single digit percentage year on year or up low single percent GAAP.

Low single digit.

Percentage sequentially.

On the tenant side, we expect a user recovery to.

To drive our penalty for revenue growth.

One you mentioned earlier.

And persuade to our strategic goal in user growth, we are planning to remove some of the extremely short term oriented efforts.

To emphasize.

Live streaming to take care of.

User experience and the <unk> ecosystem, we expect our pool to decrease while we stepped down.

We step back.

In terms of how deep we monetize 10 time overall, we expect content revenue.

Two three.

A slight uptick on a sequential basis.

Be mindful that this forecast represents the company's current and preliminary view on the market and operational conditions, all which are subject to change that concluded our prepared remarks.

Let me.

Ill turn the call back to Catherine.

So stock Q&A Cathy please.

Yeah, just a quick reminder of <unk>.

For those who can speak Chinese please ask your questions in Chinese.

Hello, English translation by yourself and also please limit the number of questions.

Two and Maxim.

Next month, so that multiple GAAP see opportunity to ask questions. Okay, now I'm ready for questions.

Thank you.

As a reminder to ask a question you will need to press star one on the telephone Covid dry question. Please press the pound of hacky once again to ask a question it's Tom.

Far from it.

Our first question comes from the line of Thomas Chong from.

Jeffrey Please go ahead.

Well I'll take that one.

So it's all about it.

<unk> eco and tissue from Canada.

So let me just let me chime in a couple of quick ones.

<unk>.

The Eagle API.

Should I start by the end of a large client that so well done.

I O needle under Ohio law.

But the PPI.

Yes.

Either one of your core mobile agenda.

So just a kernel saar level, but that's not bad.

Net or more modern.

In saying that.

Yes.

The Ultrashape con call normal the lite streaming.

Our outlook is.

Higher doses.

Lastly, then.

Thanks management for taking.

And my questions.

I have two questions.

First question is on the content management.

Management comments about.

User growth pocket.

And also in the second half can management share about a.

Timeline of revenue as well as our earnings expectation.

Mike.

Question is on core mobile Ah can management share any updates about the user and the monetization trend SB comes in the second half.

In particular.

On the life streaming the Si can management share about the outlook.

As well.

The strategies.

But in.

In the next couple of years. Thank you.

Glenn Deegan team was anyway.

Q2 of them.

Yes.

Since our central region.

No problem.

Once Europe.

You too.

Let's go on to the mobile which is going to go down.

I remember that on our June earnings Conference call I said that we expected.

Expected expected compound user base to grow from 20% to 35% by the end of the year that's against the June number that expectation remains unchanged.

And as.

You guys can see things.

July we finally button.

Onto the right track to achieve that target at a steady pace.

Due to a Premier National Award Hunkered down.

Now turning to Europe.

And automobile.

Consistent with digital media <unk>.

And you have more people using the tools that we need to bring down our food when you see within though I think with this one.

We're transferring food and boom a car at all.

So we would see assume would look to pursue those.

Tissue.

It could be done this year will be all inclusive to somebody who could be archived felicia.

Coco chocolate chip licenses upfront.

That's a book that is involved in our boutiques and welcome.

On the revenue side.

Like I said before the single most important goal for this year our content team is to grow the users and improve product experience everything out anything else.

Should be subservient to that can go.

So we actually haven't set of reagent revenue target for the second half of the year, but I can't see two things happening.

Ah.

Down to path, which should have different sorts of impact on revenue one is user.

That is obviously going to have.

Positive effect on revenue.

And given that there is a time lag between user growth and the translation into membership revenue I feel that that positive impact should be felt in a bigger way in Q4 this year.

Here in the second factor is that starting from Q3.

We are already taking trying to take a few steps back in terms of how deeply monetizing water to protect user experience that would involve.

On winding some of the extremely short term oriented.

Yeah.

Measures to drive on the paying conversion.

That would also involve continuing to deemphasize life shrinking in terms of product design that will be an ongoing process as we move deeper into the year.

I was wondering if the <unk> comes with a default.

Hum bodies of the soluble form of the chip.

Should we are.

Hum.

So the yield on the <unk>.

We really kind of up with minimum additional.

I'm just wondering what the local noon.

Sure.

And Doug I.

First of all the functions.

So if I just quickly underwater Faneuil Hall.

Yeah.

Go on chemo.

Most of our convenient with the funding of our thoughts.

Some of your personal purchases, if I'm gonna switches depends liquidity in July though due to Europe.

We can we realize is going to Europe.

Two harmony with India.

And actually for patent monetization I have.

Incurred term thoughts that maybe worth sharing here number one is.

Yeah, we absolutely have no doubt in the long term monetization potential of content based on our understanding of the users. If our users protects users actually have stronger willingness as well as ability to pay.

For the data service and that's why I believe that <unk> should actually be higher than normal.

But.

In terms of monetization approach, which we need to breakthrough the singular membership model and try to add.

Adding the second pillar and that second pillar.

In my opinion should be the pay per use model and by having that dual pillar sort of structure, we can take better advantage of the user segmentation.

That should be the right kind of monetization approach that fit better into the Asian culture that is also.

The right kind of mandates.

Monetization approach that could fully owned niche content monetization value. So starting from the second half of the year, we're going to start some product experiments on that front continuing to explore the non value added service non membership value added service.

Is going to be the most.

Important priority that we have on the revenue side in the near future.

Or what are you reaching agreements with Johnson <unk> Johnson to talk about the.

Bottom line for broker.

Sometime in the second half.

As I remember during the last.

<unk>.

<unk>, earning conference call I provided.

An update on.

The revised.

I'll look for the bottom line.

<unk>.

Actually that picture.

Means unchanged still.

Still the same.

Let me just.

Keep it again.

Because we are going to.

Our focus on content.

So growth.

Particularly during the second half of the year.

With a lower revenue with target.

We're going to continue to invest.

In the paid marketing channels.

Two to acquire new users to help us to achieve our targeted.

<unk>.

With the growth pocket.

One you just mentioned 20% to 35% growth.

Annually so with.

That we expect.

The net loss widened sequentially, particularly starting from Q3 and Q4.

The total annual net loss.

Probably will be in the range of $358 million.

400.

5 million renminbi.

So that still our goal.

Part of it right now.

Well hopefully on a more of a block of the Western Europe.

As soon as we build the neutral zone.

And what is the most meaningful cancer two ecosystem without yugo.

Completely.

Let me let them Donna.

But you don't need to.

Shut in the Permian.

<unk>.

For the core business I think what we are pursuing here is moderate growth on top of a stable and healthy user base that that principle applies to both.

User growth and revenue growth so nice training.

I think it's pretty clear that since the beginning of the year, it's already in our state is steady.

Recovery.

Stage.

And the future growth of the company will be primarily driven by the value added services.

And the growth will be coming from several key areas.

He is a user can switch ultimately dilutive to your product.

Assuming Doyle I opened up the year.

And the first area of growth is the continuous development of the audio such video social entertainment.

<unk> category on that front.

The chat room experience as well as for video.

Matchmaking experience on the core are still seeing plenty of growth opportunities.

So you don't see an approach one room is really will call you for accounting.

Bruce.

Mortgages totaling.

Total revenue please.

Completions out of us in total amount of preclinical work.

I'll move on.

<unk> had an accordion.

In area of growth is going to be the continuous innovation on the interactive hits in the past, we had not focus too much on.

In Vantiv on the skin the virtual gift himself, because we didnt realize that there could be a lot of revenue potential in doing so.

But actually during the past few quarters.

We've been seeing pretty considerable incremental revenue.

Coming from the introduction of.

New.

New creative interactive gifts.

I think there is going to be a lot of potential that we can help.

In this area would.

It would be fun to go sell unless you have with them.

People are consuming TV, which avenue nuclear portfolio clinical questions Linda.

Sure.

Patients with <unk>.

It's very I think.

Another key growth is another key area of growth will be the continuous user growth from the standalone new applications that we're working on.

The new bucket.

As a whole.

<unk> are still going to see pretty decent.

Okay in terms of users in terms of revenues next year, we're hoping that we could see more of these.

Central new apps coming into fruition or not.

Siobhan leadership, only MAU or DAU teaching them with Ultrashape Southern Pneumocolon Enzo can be if we don't.

<unk> also.

Gross home depot containers.

Normal course, I'll guide you slip back when it was opened up mostly due to a machine that can be done.

But you have made on our surgical jumped.

Jumping to the Bath tissue.

With regards to the revenue expectations for the second half.

A previous target that.

That we're going to turn at the revenue on the mobile core is going to turn YY positive in the second half I think.

In Q3, we're guiding.

Core more core Momo two normal months revenue to grow.

5% year over year in the.

Fourth quarter.

We're looking to further accelerate.

YY growth rate from that level.

More importantly, I think revenue structure wise, we're going to be increasingly leaning toward a value added services, which is much more a flattish in terms of structure.

I hope.

That address all of your questions Thomas.

With that operator, we're ready for it.

For next year.

Thank you.

The next question comes from the line of Jim Hall from Th Capital. Please go ahead.

So anything of that kind of how eager with GE.

Okay.

So that means its home more.

Hello Group.

Oh gosh.

Got home in Shanghai.

This is equal to the Chinese.

The sound.

Yeah.

Okay.

Fungi and deal with that.

Sure.

Sure Hope they go without Josh Vogel forget the shoes.

Yes.

Thank you Sarah.

I noticed that recently the company's name has been changed from more Hello group.

I would like to know more about the thinking behind.

Sure.

And also each company can share any you know.

You know strategic thinking behind the name change that's number one number two is more and more testing in the market for a long time. So what is the new growth driver.

The management think can be the next several years to drive companies to dropped almost growth. Thank you.

Oh no.

Do you believe me.

So the philosophy.

Premier.

But what I can tell you.

That's one little Eagle move who is new social good about which way to go.

For a more kind of in the past and the Sidoti <unk> co.

Europe only appeared to have sequenced lit up although it was a room option due to the easier to put a note you don't you don't wish inclusive of Europe distribution.

When looking at National do not simply as a sentiment to qualified people.

I think if you look at how the tuned up to do a whole lot of it dependent.

The name change for a moment.

<unk> is a reflection of our multi application product portfolio approach Momo.

The company is already 10 years old and we've developed from a single function application to a company that has memorial sometime these two are pretty big social platforms.

Our screen time.

Moving around the social Entertainment services, we've also incubated a few other.

Standalone applications. So if you do the momo application as the first.

Growth engine of the company and sometimes the second and the new stuff that we're working on.

Are going to be the third engine the growth of the company in the coming decade will be driven by these.

If an engine in a concerted way so going back to.

The reason why we meet with new name I think we need this new company name as a carrier.

For the company's strategy to continue to diversify into new products and services.

Well I'm going to kill Us.

Three Bob the lesson here is are you so it shouldn't be bolstering our liquidity.

All of whom will become an environment, where we're trying to do here.

Income before.

Thank you.

And in June Thank you.

I'll leave it with us.

Zero premium Louisiana.

Lesser known enormous Europe.

Ladies and gentlemen.

And the truth and age.

More specifically I think in the coming three years.

<unk> and also the most definitive growth opportunity is definitely going to be contact other than momo in sometime.

Now within our product portfolio.

He will also have some other newer brands such as Hertz, great way things like hers and great guidance. These applications on individual basis may not.

Like I said has the potential to grow to be something.

As big as content as we could have that sometimes is collectively.

Collectively they can still make sizeable.

<unk> contribution to the bottom line the company, we're hoping that in the coming three to five years, we could incubate more as such applications in order to cover a broader range of people on the on the user spectrum.

Only one question Jesus leisure hung need an infusion pump.

We don't use them one of them.

Hi.

Todd you don't kind of a stupid.

Tubular kroner strategically, but given them via commercial into the dealership business with them.

We're talking about around the Iowa.

<unk>, two project, which will be up.

With that otherwise should not impact the European group.

Okay.

Is your budget.

I think the churn leadership out in the future.

And as I said earlier, the pharma industry as of 2014, we simply wont recording setting with Covid.

Together.

Two other things changing shall not execution renew our fleet.

To what degree clear.

Okay.

Bingo citrus usual format, so if you're a high school.

Almost two months into the yields regulation.

Lastly, I wanted to take this opportunity to share some of the longer term.

Thinking that I have on the strategic side.

I think that in the social and entertainment space, the coming decade will inevitably.

The scene.

The emergence of new ubiquitous platforms.

Our products that can build huge da debate.

Such kind.

Kidney could either be driven technological advances or it would be driven by the behavioral changes.

Changes in user behavior. For example, we are now seeing some pretty big stuff happening.

D R.

Smart.

Rice's space.

The <unk>.

Technological advances.

In.

In this space will inevitably bring phenomenal changes in terms of how people socialize in the future. This is the kind of change that opportunity that we need to make sure we stay vigilant about and get prepared for so that when time.

We have the capability of seizing these opportunities to.

Our growth would be something bigger.

Our team has proven capabilities.

Product innovation in the social space.

Our vision and decisiveness to seize the right kind of investment opportunity.

<unk> to grow the business is also proven by is also proven by time and same time. The company is also sitting on huge cash balance and a.

Very strong operating cash flow. So I think investors can rest assured that we will continue to push very hard into new areas.

Areas and.

Growth opportunities either for yourself development or through investment opportunities. This is the area, where we have full confidence as well as enough tenacity has carried through.

Operator, I think we have.

Time for one last question.

With our show other people in the queue.

Definitely.

The next question comes from the line of Daniel Chen from Jpmorgan. Please go ahead.

Oh it was all right.

When she wants you to go out and make a simple hydrogen glenda.

I'm kind of Ciena ciena and cause it to go high as it always has seen a gym go back down towards that at all it just seems as if it's you haven't been there a while ago you in Chico.

So I wonder is that you've got the mckinsey like Bahar here, though Tim go out finding the whole quickly divorced.

So he was making sure what has he finally shot.

Thanks management for taking my question My question is R&D.

Regulatory environment.

And the industry in China. So we have been seen there since last year that has seen several.

New regulation on the luxury industry. So the latest one is the July one targeting D.

Our online last year and the agency so want to know how should we look at the <unk>.

Regulatory environment or the interest for the lives you mean between the.

The future and what's the implication to our live streaming revenue trend. Thank you.

Uh huh.

What have you that you didn't put them all.

I'll, let Don could you run continuously.

So it'll be fun.

You'll see that.

You may begin.

You can do about them.

Jim commented on something like that.

You would do on a go deal with Google.

England.

Yes.

Thank you for your question.

I think as the.

As China's mobile Internet based economy.

Increasingly important is in.

Is it about that the policymakers and regulators are going to take in more and more seriously to make sure that the.

Industry develops.

Orderly unregulated fashion that's.

In a sense of a very good thing for us because he's loving the playing field and it's also going to make sure that the whole AR space moves forward in a healthy environment. So as always we're going to be cooperating with.

In other various regulatory bodies.

To make sure that we stay in full compliance.

I'm, hoping you take a trip to consumer.

R&D money and who pays for woman until at least the bulk to Dmitry, we're going to keep.

He kind of routine shutdown income.

Well that is true.

<unk>.

With that being home, who don't do you push all that you can move on them.

Hello.

He was younger.

Consumer revenue.

You guys have operated with beautiful I'm, telling you that you shouldn't have any trouble when Goldman Sachs income up you know father.

And more specifically with regards to the.

So by policy changes you mentioned in the live streaming space as a matter of fact, if that's something that we've been closely monitoring since the beginning of last year since the beginning of 2020.

And you guys can see.

During the second half of last year, we've actually made very.

A very important.

And significant structural reform to make sure that we are.

To make sure that our content ecosystem stays healthy.

To reduce the reliance on the top vendors.

And since the beginning of the year.

Such structural reform has already been showing positive effects positive effects to our ecosystem as well as our business.

We believe that.

It is going to help our live streaming business to continue to develop in healthy and steady way in the new policy environment.

Operator.

Operator, I think that concludes our conference call today, we are ready to close thanks to everyone for joining our conference call today, we'll see you next quarter.

Thank you that concludes our conference fluctuate. Thank you for your participation you may all disconnect. Your lines now thank you.

[music].

Yeah.

[music].

Yeah.

[music].

[music].

Ladies and gentlemen, thank you for standing by and welcome to the second quarter 2021 Hello Group, Inc Earnings Conference call.

All participants are in.

Ali.

After the speakers for some patients it will be a question and answer session.

Watching during the session you will need to press star one on your telephone please.

Please note this conference is being recorded today.

I would now like to hand, the conference over to your first speaker today.

James head of Investor Relations.

Thank you. Please go ahead ma'am.

Thank you operator.

Morning, and good evening, everyone. Thank you for joining us today for Hello groups second quarter 2021 earnings Conference call. The company's results were released earlier today and are available on the company's IR.

Our website on the call today.

<unk> <unk> CEO of the company, Mr. Jonathan Zhang CFO of the company.

The company's business operations and highlights.

Well as the financials and guidance they will both be available to answer your questions. During the Q&A session that follows.

Before I begin I would like to remind you that.

Mr Hall may contain forward looking statements made under the safe Harbor provision of the private Securities Litigation Reform Act of 1995, such statements are based on management's current expectations and current market and operating conditions and relate to events that involves known or unknown risks uncertainties.

These other factors.

All of which are difficult to predict and many of which are beyond the company's control, which may cause the company's actual results performance and achievements could differ materially from those in the forward looking statements.

Further information regarding this and other risks uncertainties or factors is included in the company's filings.

I wish the U S Securities and Exchange Commission the company does not undertake any obligation to update any forward looking statements as a result of new information future events.

Otherwise, except as required under law I will now pass the call to Mr. Huang I would translate for him Mr. Walton.

Oh.

As you can see.

Okay.

So it wasn't as easy as deductions after that you can move from Titan.

Personally I.

Thank you and our strategic while our costs when we look at all the things that we've done.

Doug if you hold your arguable digit achievable.

Good morning, and good evening, everyone. Thank you for joining our conference call today, I'm glad to be delivering.

A solid quarter with decent financial results and progress on our strategic priorities outlined at the beginning of the year now I'll walk you through the specifics of our Q2 results.

Cynthia.

Hold on here.

He argued Europe so.

Essentially there she is indeed only talk about the room.

Are you talking.

Bringing us deals.

Student told her whole Healy tdm borrowings.

You really only about rocky gap.

So Cynthia we.

It can be done with one Youtube revenue ship since we sold our jobs you can go back.

There's been no revenue deal.

Hum.

With charter Hall.

Thank you.

These things generally only if Amazon Hulu.

So what do you see when.

When you're talking about <unk> I'm, just talking about this issue.

Dependents on the whole deliver switching so that will tell R&D chancing, Chile, she's having huge vitamin D.

Do you think this will be more selective.

So I'll answer both of the BMO deposits you shop.

First of all a brief overview of the financial performance for the second quarter of 2021 total revenue at the group level was $3.6.7 billion, agamede down, 5% year over year or up 6% quarter over quarter.

Adjusted operating income for the quarter was 782 million agamede represent.

Presenting a 21% profit margin for the core business total revenue was $3.160 million will be for you.

Year over year decrease rates continued to narrow from 10% in Q1, two 6% in Q2.

On a sequential basis revenue from the core business was up 9%.

Excluding patent.

<unk> adjusted operating income for the call Momo was $823 million or 26% profit margin.

And has total revenue opinion 514, niemeyer getting beat for the second quarter, a 1% year over year and 10% sequentially.

Adjusted net loss from time.

<unk> was $44.5.2 million for the quarter compared with 77.9 million Lindsay for the year ago period.

The revenue mix of the group remained healthy with vast representing 72% the size of live streaming.

Hello.

Students from call.

There's a more profit.

Children, who doesn't come up.

So whenever you want within the moment, Rob why don't you do I know you you didn't even.

When you think about munis unbeliever.

Possibly industrial who are charged with home depot.

So Jimmy Choo is engineered to Colorado.

So Peru.

When the children Jojo.

Now a deeper dive into the quarter I am going to focus on our core Momo's operational uncertain income is for now and move onto kind of later first thing first the growth of the core Momo community.

<unk> had $150.115.6 million monthly.

For the second quarter of 'twenty, and 'twenty, one up 4% year on year and a slight net adds from Q1.

The user acquisition environment was not ideal in Q2 due to aggressive channel marketing investments from E. Commerce companies in June we therefore lowered the marketing spend for our considerations.

And with the limited quarterly not actually in the U K.

We're already doing double Colombia Treasury bond portfolio.

Q2 showed up here for me.

Linda <unk>.

Electrification.

<unk> Hall Chipotle Cingal.

How come you are at all party meetings.

Leading to me because we've also seen.

Can you help me with that.

Your appointment Hugo.

We'll develop better nuomi. So this was often multiple episodes to her new tissue.

Tissue Dunkin' Donuts.

Hopefully this will give us Angela Ching essentially biologic solar 2 billion within though less.

Yes.

So in the second quarter. Despite the conservative approach at the top of the funnel our team made good progress within the funnel by improving the basic social experience on our platform.

Use it reached its peak since the beginning of the pandemic.

Number of daily impressions of the nearby people reached an all time high.

I think the homepage suspension in 2019.

The number of data impressions of the nearby posts also hit a new record high.

The improvement in engagement metrics show that the fundamentals of core Momo as a social platform continued to be solid.

Number of paying users for the quarter was $9.3 million.

No impact to $8.9 million vehicles, the increase in the number of paying users was primarily driven by the growth of that business on a call. So playbook, but student housing shortage here.

So Asia fundamentally you have to do that and it's only mobile.

We will do our ascending doses.

<unk>.

We stood up this.

Europe between everything.

Europe.

Even without <unk>.

Because we think we can consider for potable water cut in July that he will give you.

The partners are.

Using an open window to akimbo profit should always essentially equal senior which year.

At the moment, even though you saw I guess I don't believe we have a student when restrictions are shipping revenue growth.

Before I get into the operational and business review I'd like to reiterate the strategic priorities. The team has been pushing against since the beginning of the year on a pro forma side. The three goals for this year are number one for us.

Joining me on the call user base with limited marketing budget and improved OE versus last year's number to bring them back on growth track and number three continue to enrich our product portfolio and push the boundaries beyond Momo and content.

On the tenant sites the single most important goal for the guests.

Other growth to deliver solid user growth and substantially improving the marketing efficiency and the core banking experience.

Now let me walk you through what was down in the past quarter in order to push forward to each of the priority.

So since Europe, but too hard of movies as usual pleading with Athena.

We want.

Italy was that.

<unk> will be an agreement delinquency hostess, including hospital, who is looking okay.

We will prudently.

Formulae, So building arena.

Looking at oil what do you hear me.

And how the <unk> will tell you that.

Phil.

So much you can sell a building in India.

Two from when we used to have them go ahead. Thank you <unk> you think it was a few different analytics on <unk>.

That's usually going to truly.

<unk> is the guidance that you can attribute Dolby digital production from here.

She talked about the continued volume.

Interesting.

You can switch listen up against people.

I'll jump in the Caribbean with insurers to that pretty material change people who.

So Chris Johnson, Chairman and he's looking to you Doug.

<unk> function contributes to that income.

I would be willing to increase from four 4 million users with Harman conducts its business.

Quite a bit of our tissue the changeup other income.

On the IPO.

Tissue damage and people, making about 1000 year, presumably with a poor mobile.

Thank goodness.

C G.

Concurrently with China.

Sure.

For Unum Trudeau Michelle.

So on the pending future Magellan.

You can look at about a total COVID-19.

Cook <unk>.

So we're going to do for example.

Hugo.

It's working with these important globally. According to them when we see generally a good August was Djibouti.

We don't see a few bottlenecks in the sensitive portfolio.

First regarding the progress we've made in <unk>.

Neat and driving user growth during the past few months, we've taken a major start in renovating the way we help our users to discover new relationships and interactions around our nearby features and functionalities as many of you know <unk>.

I keep on posts our signature features that have been around for many years.

The use of it may have been playing a pivotal role in how we connect people over the past few years nearby people any by post had evolved from connecting keep hold based on a single dimension of physical proximity for a much more sophisticated algorithm incorporating a wide diversity of connecting elements.

In terms of presentation. We've also been adding more personal information so that users could find more funding elements right on the nearby people list.

Data has shown that these 10 gig have played very positive role in driving the efficiency of recommendation and improving the basic social experience of more users.

Yes in Q2, we pushed further on that front I experiment in our new recommendation system, which replaces the nearby people list with a sequence of full screen single user profile cost.

The new system and display format allows more comprehensive user profile information to be presented to out of Europe.

In a much more prominent way.

So that they can focus on each individual from multiple FX, rather than just quickly and in many cases callously slowed down the list with numerals profile pictures.

More importantly, the new system also gives the recommendation engine Molly reach for allocate higher exposure to the.

<unk>, who potentially can be a good match, but not necessarily a festival.

Eyecatching enough on the cloud revenue by people less.

So can you kind of done gives us much more room to decentralize the attention received by a relatively small portion of female users to a wider range of email users.

Which can further improve the rate of response and the quality of interactions.

Within two months into the testing and the results are consistent with our expectation we.

We will continue to optimize this new version and gradually make it available to more users in Q3.

Sure.

Pardon me.

So for me, it's a little bit broader.

Three continue chartering ships shipping both to do it.

Great.

Sure.

So the R&D budget.

Within our communities.

<unk>.

Okay.

So true.

Turning to Huntsville, you're some of your thoughts if I could get it up sometime attorney at IPO.

So some of it depends on advertising I think if you hadn't seen that.

Putting the shipment to stop production of October Okay.

Okay.

It's only Europe, just hoping I won't you.

In addition to the call normal our team has also been making solid progress.

Reaching our brand portfolio for the company, particularly a video matchmaking application targeting lower tier cities, almost doubled SBA U and paying user from Q1.

So chill, a social product targeting overseas market also made impressive progress in user growth during the second quarter.

With these new experiences such as hurt theory, and <unk> are still at relatively early stage of development.

On each individual basis, it may not grow up to be something actually pick cricket ethanol Pankaj fiver can help the company expand our market share is specific niche markets and collect.

If we can also make meaningful bottom line contribution for the group.

So I'm pretty sure Julien.

<unk>.

Conditions in Europe.

Next let me review the progress that we've made against our priority of bringing the cash cow business back onto the gross profit.

Are you.

Collecting almost what you'll be able to submit volume.

You're talking about I'm not sure what is going on.

So basically we have already achieved when we don't just some little sugar sugar.

Children with a whole new cheaper help even kind of income.

Don't you make some kind of a Google shop.

English Harlequin consisted of 10 million.

Sure.

Sure.

Please proceed.

Firstly on live broadcasting.

On the cost live broadcasting revenue totaled $1.8 million for the second quarter 'twenty.

And 2% from the same period last year up 10% from last quarter.

Live streaming revenue came in better than our original.

Or the expectation of year over year decrease continue to narrow from the previous quarter.

That's what I expected.

Recovery can be attributable to three factors.

Number one the steady improvement in the overall content ecosystem number two introduction of Lumpier oriented features and operational events.

Number three revival of the supply side boosted by the new incentive program to sell a certain view is funded is coming from Europe, which can be.

<unk> total sugar Enzo since you can go back and essentially Bob Otto starting here.

Okay.

Sebastien.

But the.

Funded institution level.

The transition into accordingly, traditionally who Wilmington rule environment here.

It's holding guidance Youre considering.

We will continually with our functions some of the entities with whom to Ebola.

As usual we have here.

So lindsay the doses.

Hollywood Shlomo.

So in hematology, so both Lockheed Martin.

So this will not profit.

Now turning to Vas driven by the team's relentless focus on product innovation and operational efforts also added service maintained its strong momentum in Q2 growing 38% from the same.

Last year to $1.1 billion.

Pat will continue to be the most significant growth driver for us in Q2, the team introduced some new experiences to the pattern to keep it fresh and engaging for users.

For example, we've brought in fact in my experience, where H grassroot talent.

Talents are concurrently available open mic and users can send virtual gifts to request performances ranging from singing to speak reading user.

Users can always joined the talent, although plate or participate in other kinds of gamify activities as they wish.

This experience lower income.

Area for long tail users to enjoy high quality interactions and gained immediate popularity.

Thank you Lou tons and tons of English.

This is achieved between the EMEA WWE wasn't kidding, when Chuck <unk>, who is on the cutting tool.

<unk>, which was in the final rule.

I'm going to zoom.

Uh huh.

Thank you Sundar.

Virtual gifting within the traditional use case in particular the interest groups grew meaningfully in Q2, driven by operational events, such as the last vessel wired EMEA APAC with that.

On the product side, the newly launched customized gifts well received by users driving growth.

Both in the number of paying users and <unk>.

To summarize <unk> carcinoma.

Total income growth with humans or even some other patients you win.

After being up in order to do so.

Southern Europe, which is also going up.

So the industrial global media.

In addition to the established experiences matchmaking experience, yes Antonio continues to gain traction we have adjusted our operational policies to provide better training opportunities for the entry level matchmakers as a result total number of quality matchmakers increased significantly.

Which in turn drives revenue growth from this experience, we expect the matchmaking experience to accelerating growth and contribute in a more meaningful way heading into the second half of the year.

Yeah.

U S.

Yes.

So that's similar content beyond all the yield.

So we will do them globally for Sundar.

Or the opposite with you soon.

Got it.

So it's difficult hurdle when we bought broken Hollywood year, which is a new solution <unk>.

Now briefly on our new endeavors revenue from the new App showed robust growth momentum in Q.

Collectively the new bucket was the second biggest incremental revenue contributor to the vast hotline.

Organic revenue growth was driven by user and user base expansion instead of putting up RP pool.

The team has been operating these apps at a controlled pace on the optical fronts focusing primarily.

Computing type of user experience to drive the growth of the of new and retention ratio.

Into the second half such approach will continue to be guiding our execution in the new bucket.

Hello, everyone.

And besides choosing <unk> don't even think there from here.

Got you.

Homograft through which we're looking at a few minutes that's a good.

I'm Joe difficult.

Presumably though isn't autoimmune featured in the New York.

Florida.

Consumers almost two hour jump shoot to LIBOR.

Our Bolthouse kids moving.

<unk> with Citi.

One of our challenges in energy you can just model.

All in all I am glad.

Glad to see that the team has been doing a good job executing against all of our strategic priorities with some demand goes up the core mobile as a social platform continued strengthening at the same time the revenue performance and structure are seeing solid improvement follows the targets set at the beginning of the GAAP. These.

Please give us a call.

It is not a core platform will continue to be a healthy unproductive cashed out which gives us importantly reach to plowing new ground and longer term drivers for the group.

So here's a nutrition for 20000 soon.

Abusing dependent on one part of it.

Matilda in kind of a political.

The computer can go too often is distributed through importing diesel guidance points you should be.

Okay.

We've achieved fault on the effects of the kind of into our targeted can you use now.

Wondering if you can hear you.

Within that.

You should ask yourself.

Cingal.

Thank you Daniel one depot towards it.

Turning to Titan firstly on user trend and overall financials we.

We made adjustments to kind of management team and market, making deployment on various product and operational fronts, nicknamed it took us some time to lock down the key issues, we walk that back.

<unk> systems and put together a functioning team.

<unk> has caused some temporary disruptions, which has put some pressure on average do you are you in the second quarter.

As a result average diego in domestic market for Q2 was slightly lower than that for Q1, However, total VA remains flattish.

On the sequential basis due to the growth in other markets in Asia as we resumed our effort in overseas development.

You too.

It has even more.

The initial feedback Swan.

During the summer.

When did you know.

Well funded into boxes useful weird.

So Europe bullies all through two revenue before you actually higher.

I was just going to choose a Google who received anti diesel retrofit the hanmi top performing really.

As you can stay tune the profit the TV is diminishing.

Our initial pilot total income was up high single pinion gear, you that Super helpful. Jay dialysis hypothesis.

And the thing is accounting and $3.1 million of end of Q2 2021 bounce around $3.5 million from last quarter. The 400000 net decrease was due to the combination of three factors.

While the spinoff of certain dismissing may had around 400000 that could impact our paying user count now.

Number two.

The improvement in the female percentage new users acquired in the recent months adversely impacted paying conversion as women are much less likely to pay for that in comparison with nine.

Number three the lower average via using Q2 caused by the transition and related operational disruptions.

Translated into the paying user accounts to the MAU.

<unk> CV.

It should also fiscal year with it yourself.

Do you see meaningful G, which will do not tissue.

We're happy to see that both the EU and the number of paying users has started ramping up since early July as we move forward with our efforts in reforming.

The user application approach.

To help reduce our covenants, how we got here.

Proposal <unk>.

Let me try to unpack them I'm, just talking about the industry went through in the second by the new jarring to June right.

The initial <unk>.

We could issue.

From.

Yes.

With the guidance pre Damasio RP pool on.

<unk> opened up.

When you shop at Lucius with too.

Or did you choose.

So when you walk into southern volume guidance.

And once that is done from here to the robot.

Now let me briefly review.

<unk> financial performance.

Total revenue for the second quarter was $514 million a.

A 1% year on year in terms of that quarter on quarter revenue decreased 6% sequentially to $297 million. The sequential decrease was due to the decrease in paying user count reason of.

Which already explained in the previous pop up.

Are people of us on the other hand increased slightly quarter over quarter as users shifted towards higher priced membership service.

Live streaming revenue decreased 14% sequentially to $417 million.

The decrease in RP pool was still.

Our strategic decision to deemphasize life screening as a supplementary experience to <unk>.

She's doing within your finances, one approval.

Global shortage in Panama opened up with a very large instruments digitally now.

Now turning to the most important part of my speech today, our plan and respective execution.

Due to allow us to drive user.

User growth and unleash its full potential going forward.

The double digit emblem Cumulus you would have done.

He has been undergoing mobile robots.

Tony.

<unk> inhibits yet estrogen economics, even though.

Finally for the hope I'm, assuming that's been struggling.

Maybe I'll just follow up on Assembly Mohawk.

So for him.

Although we've seen a push into that yet.

Given the nature of the presentation.

Encountered many challenges in the past couple of years. The single most important go with content. This year is to deliver solid user growth by substantially improving.

Our efficiency on a quality experience.

We spend the rest of Q2 coding through the key areas of focus and coming up with an execution plan for that goal.

Three pillars supporting the plan.

Number one improving marketing efficiency number two making the top call dating experience more appealing.

The market number three having an effective recommendation engine in Doha crossing that youre continuing to value. That's the truth I'm, assuming to gigabit component Wichita Congress permanently appointed let me focus on the key both with the Quad is still seems to be meaningful profit with mobile.

One do you see some of the condition.

And ultimately into Europe with removal shouldn't be a beauty to continue into 2000.

But we will be able to get them to the use of <unk>.

You can consolidate to one thing Neal.

So coming due within our tier one physicians physicians as we move to the <unk>.

We have a group of India.

Both.

So unimportant to us.

Our booth Tortuga single UPC continued about notice, which is one of our partners.

Two rooms, you will continue to occur.

Volunteers don't deal about several excuse me.

We should continue to improve our focus on the assembly of this newly option something that the whole city.

Thank you Michal I mean delta that one can solve UPC, Vodafone, who will put undue bubba awesome type of CV shipping challenges.

When we put them up there.

Some of your thoughts on how we hope by the injection route if I wasn't clear.

Suddenly the reach of interest into that Hollywood studio production efficiency.

One is via Youtube.

Okay.

<unk>.

On the marketing front, one of the key broken windows with identified lite in the new user structure.

What happened here was that in order to control the Union acquisition cost and improving patient conversion to meet quarterly numbers in revenue and paying user count contact has been compromising the quality of.

Of new users acquired through channels.

That led to a gradual deterioration in the use of structure evidenced by these proportional gender ratio and a rapidly increasing average age of the new users.

Having a panic that demographic is crucial for user experience and a long term healthiness of the dating ecosystem.

With the company.

Therefore, we have to fix the structure in new registration before we can't even talk about user growth.

And made it the key focus for the team in Q2.

I can see that we've had some initial very impressive progress during the past few months cleanout.

You may now ratio in the newly acquired users increased to 40.

System in August from around 20% last year.

The average age of new female users has stopped seven years from the period before we could Copa.

However, because it's relatively expensive to acquire female younger users. The average user acquisition cost went up to a pretty high levels in June.

Our main goal in Q3 is to bring down the unit acquisition cost based on the current users doctor.

Of course, this goal should be achieved through continuous optimization of as material and data management system.

After we reached a reasonable level of the cost fronts.

We will increase the marketing spend to dry.

<unk> put up the funnel activity so far into Q3, we've been progressing well against that goal.

And the domestic Diva you counts also being seen revenue and healthy ramp up since July <unk>.

And Joel noon retooling some deals in the future.

And we're going to be more nimble about trends on our holdings.

So I'm not as Youre kind of literature that English Hindi illegally an infusion pump.

Keith.

Putting that sounds ammonia I will start with Houston.

And what was the training data Hall.

We hope this will be welcome.

Another thing on the marketing funds that can contribute to overall user growth is rent.

Brand advertising, we believe that as a relatively young grant has huge opportunity to improve user awareness and enhance brand equity if we can spread the colorado of content to those who potentially need our service.

We'll start looking at renting options once we complete our next major product upgrades.

What's your guidance here before me took you some closeness with us yet.

I think with any kind of a collegial.

70 <unk> facilities.

With so many other party.

Yes, the machine for Delta doesn't stop with Shanghai, and Hong Mission machine with our current audience, even if they don't move here.

It assumes a milligram career path.

With a party considers up when needed.

It's a new region.

Sure would be you mentioned Europe.

<unk>.

Because of the recycling secondly, initiating repulsion proton pump.

With IPO.

But as you can see pillar.

With a global group.

Hi.

A little about the fact, you have work with some transactional solution the.

The second area, we need to improve.

Coatings demand in the second quarter, our product team conducted a thorough walk through of contact product experience and made an in depth study of user behaviors.

The study has brought two things to our attention and buy one.

Completion women tend to be quite catch it when it comes to Beijing.

Example, a considerable portion of female users and content like in the extremely selective weight and some may not strike right swipe at whole, resulting in a large number of female users that no matches or interaction based on the current product in Canada.

This is one of the key reasons why female users retention ratio is significantly lower than that of MAU content.

The second issue is about 30% of newly acquired users are marked as paid users by content.

Please use us referred to those who failed to provide fortified cross our hotels.

And therefore, the nine full access to the swipe and Max system.

Pension of fake users tend to be extremely low because of the inability to get any matches all into action.

In terms of pumping with dresses.

She does that include the tonnage again, you can see from contributed income.

Hotel, we pumped in attendance.

Thank you so much and we use it all the time.

For the institution.

With the amendment the Dunkin' mobile computer users you.

You can reach out to the students.

Mortgage income since I think July look.

Due to come in slightly leading to 2010 results with the money.

Hum.

Due to the currency issue Jonathan.

Who is under a self determination people come along we will be able to do so.

The most important near term priority for our product team is to improve female user active user experience. So that we can think of it kingdom because the.

You talked about mechanical tends to be less effective for these two groups of users we realized that we need to get more intuitive and just making minor tweaks or adding patches to the current swipe unmatched system.

We need to build supplementary experience around it providing additional ways for people who own the goal is.

Through this additional more subtle funding elements more integrated flow to active users and get attracted to each other and gradually open up to others with their real identities and ultimately build offline relationships based on authentic inflammation.

You will see our first step into this problem on holding at all.

Current next upgrade.

People, who do know almost yoga is in a different home in two previous phone.

So we're going to do business with linearity.

Are you going to short time between us pushing banks to single cubic due to the personal opinion.

Russell.

So easily.

Some leases.

Please turn on the TV tuner, which is kind of the developments with AMCOL with ultimate passing of closer to <unk>.

The coupon income for cooking Bupa this a woman to be too much because of the demand.

The third area, we need to improve in order to drive user growth is our recommendation algorithm in the open social space for more than 10 years.

No belief are causing that makes our social products standout is his ability to make its recommendation more relevance.

Users need to feel that this is a product that anders.

Or at least is trying to understand what kind of people. They're looking for obviously, China is not doing a good enough job in this area. We are taking the right.

So we can move faster on that front. This is a roadblock that we are determined to crack down as soon as possible.

To accomplish this on the fueling that income.

Thank you.

You can shine with Covid.

We are heartened with whom I asked this on a simple <unk> Cynthia this is Paul.

Okay.

And welcome Jim when you talk to that.

So the accounting function.

Q3 for you in terms of ammonia fuel into the Permian.

And so they don't give us either virtually or was something else <unk> guidance.

More interesting leaders, we occupy the some form an opinion as to when we'll.

Yes.

So rather than us.

Sure.

Thiago.

Inventory on enrollment once again.

So your Assortments and Doug anything you guys can help us with Aruba.

Beyond the China opportunities, we're also getting prepared to reveal the pursuit of contracts overseas expansion, we believe there.

There is still a lot of growth opportunity are penetrating deeper into overseas Chinese southeast Asia as well as expanding our reach to east Asia in many countries. Our team has reached experience in social product innovation membership business and non membership value added services every field team.

Hi, guys.

This comprehensive experience on all of those three fronts as we do we believe that in Asia such experience is very crucial in building a scalable social platform that can ultimately reach profit.

This is an important competitive advantage that we're going to leverage we would like to see.

One time, becoming an indispensable part of People's thinking like in Asia.

It is a very important constituent of our growth strategy for the company.

So hopefully we'll start with <unk>.

I think Jonathan without that is all due to the accounting for these other things I'd like to cover on this call now.

Let me pass the call over to Mr. Donaldson Downpour financial review donkeys.

Thanks, Hello, everyone. Thank you for joining our conference call today.

Now let me briefly take you through the financial review.

Total revenue for the second quarter 2008, when you won was 367 billion and five.

Year on year.

Up 6% quarter over quarter.

Non-GAAP net income attributable to mobile.

What's.

551 million.

Compared to.

$670 million there maybe from the same period.

<unk>.

Or an 18% decrease year over year.

Looking into the key revenue items for the quarter.

First.

Life Broadcasting.

Total revenue from life broadcasting business for the second quarter 2021 was too.

<unk>.

1 billion renminbi down 19% from the same period last year up 7% from last quarter.

Core Momo live broadcasting revenue totaled 1.88 billion.

Second quarter down 22% from.

The same period last year.

Up 10% from last quarter.

The year over year decrease caused by the structural reform in late August.

Last year continued to narrow down from Q1.

Content live forecasting revenue.

Okay.

$416.5 million.

M D.

A down 14% from previous quarter.

The sequential decrease was due to our strategic decision to deemphasize live streaming as a supplementary.

Amongst with Beijing as well.

Overall decrease in paying users on Panther platform.

Moving on to Vas.

Revenue from value added service reached one.

Five 1 billion renminbi up 25% year on year, 4%.

But over a quarter.

Revenue from Vas excluding.

$297 million and maybe from 10 title reached one point.

Two 1 billion renminbi in the second quarter of 2021.

38% increase year on year.

6% increase sequentially.

The solid performance of more months core of our business was primarily driven by the team's focus on product innovation and operational efforts as long as you mentioned.

Let me briefly review the costs and expenses items.

For the quarter.

Our non-GAAP cost of revenue.

For the second quarter of 2021 was 2.05 billion compared to 2.0 or $1 billion for the same period last year.

Non-GAAP cost of revenue as a percentage.

Total revenue was 55, 8% an increase from 52, 1%.

Q2 2020.

Non-GAAP profit margin gross profit margin for the quarter.

Down three 7%.

From.

A year ago, the decrease was attributed to.

To the following factors.

Number one higher payout ratio from core Momo live broadcasting business on a year over year basis.

The lower gross margin from content.

Life Broadcasting.

Has it become sizable compared to.

Year ago.

Number three certain fixed nature cost items, such as head count impacted the gross margin negatively as total revenue declined and this item represented.

As a percentage of total revenue.

On a sequential basis non-GAAP gross margin was down.

0.6%.

Gross margin for Momo core remain flattish compared to the previous quarter.

A slight decrease in.

Higher Oops non-GAAP gross margin was due to a 2% GP margin decline on content. That's certainly takes the cost having a negative impact on content gross margin.

Due to the sequential decrease in revenue.

It's worth.

Here, our wholly owned subsidiaries <unk> media and Momo Pictures produced a variety show.

Honorable chef and a film like a friend respectively.

A small portion of the related product cost was recorded in Q.

As mentioned in.

The vast majority of the cost is going to be recognized in Q3, we expect the cost incurred in connection with this media product protections.

I have a close to two percentage track on the GP margin in Q3.

Non-GAAP R&D expenses for the second quarter with $432.9 million in E&P compared to 246.6 million.

$1 million and indeed for the.

Same carry their last year, representing six 3%.

And five 9%.

Two of total revenue respectively.

The increase mainly due to the increase in employee salary and social welfare.

We ended the quarter with.

2019 to totally employees.

Which.

617.

Our form 10 times.

R&D personnel as a percentage of total employees for the group was 57% compared to 60% Q2 last year.

Non-GAAP sales and marketing expenses for the second quarter was 600.

19, 5 million of them can be or 16, 9% of total revenue compared to 597 million or 15 three.

3% of total revenue for the same period of last year the.

The year over year increase.

Most of the marketing expense.

In terms of renminbi amount.

And in terms of as a percentage of total revenue.

Primarily due to higher marketing spending in association with our live streaming.

<unk> Party.

Which was delayed from Q1.

In Q2.

Due to the pandemic.

The increase was partially offset by lower user acquisition investment or turn time hearing them measurement a transition period, while our teams are focused on fixing the structural issues.

User acquisition system.

Non-GAAP G&A expenses was 78 eight.

8 million renminbi for the second quarter on the new one compared to 91.9 million you're going to be for the same quarter last year.

Representing two 1%.

And two 4% of total net revenue respectively.

The decrease was largely due to a recovery of attach.

Previously written off.

Non-GAAP operating income was.

$781.9 million.

It can be.

Is that a.

Decrease of 24, 5%.

From Q2.

2020, representing.

Plenty of one 3% non-GAAP operating margin for the quarter.

Eight 5%.

From the same period of last year.

Non-GAAP Opex as a percentage of total revenue was 25, 4% an increase of 23, 5% from Q2 on the <unk>. The increase was mainly due to negative operating leverage.

As a result of a decrease in revenue.

Now briefly on income tax expenses.

The company repatriated $1.3 billion renminbi from our Wuxi in China.

Our offshore entity in Q2 in order to replenish our U S dollar family.

In accordance with the respective taxation law, China, the company paid 10% or $113 million would be withholding tax to Chinese textile authorities.

This tax payment was recorded as income tax expenses for the company for the second quarter 'twenty or 'twenty one.

Excluding this withholding tax payment our non-GAAP effective tax rate was around 20%.

In Q2.

The 21.

Turning to the balance sheet and cash flow items as of June 32021.

Our cash.

Cash equivalents short term deposits long term deposits restricted cash and long term restricted cash totaled $15.45 billion renminbi compared to 16 point 48 billion renminbi as of.

December 31.2020.

In Q2, we paid and the equivalent of 853 million, maybe cash dividends to our shareholders.

Excluding.

And equivalent of 678 two.

It may be a cash payment with contact founders to redeem vested share options upon their departures in Q2.

Net cash provided by operating activities in the second quarter.

510 claim formulated it maybe.

Lastly on the business outlook.

We estimate our third quarter revenue to come in the range from 360.

<unk> 5 billion it may be too.

375 billion renminbi, representing a decrease of three.

Three 1%.

Two 0.4% year on year or a decrease of.

Zero point.

6% to an increase of.

21% quarter over quarter.

For the third quarter 2021, we expect the total revenue from core mobile.

<unk> positive.

If I'm an increase.

<unk> of mid single digit percentage.

Year on year or up low single percent low single digit.

Percentage sequentially.

On the patent side, we expect the user recovery to.

<unk> organic revenue growth.

One you mentioned earlier.

Persuasive.

Our strategical user growth, we are planning to remove some of the extremely short term oriented efforts.

Deemphasize.

Live streaming to take care of.

Who drives user experience and the dating ecosystem, we expect our pool to decrease while we stepped down.

We step back.

In terms of healthy we monetize content overall, we expect content revenue.

Two three.

For a slight uptick on a sequential basis.

Be mindful that this forecast represents the company's current and preliminary view on the market and operational conditions all.

Which are subject to change that concluded our prepared remarks, we got let me.

The call back to Catherine.

So start Q&A Cathy please.

Yeah, just a quick reminder, that's working.

For those who can speak Chinese please ask your questions in Chinese first.

Followed by English translation by yourself and also please limit the number of questions to.

<unk> and <unk>.

So that multiple cats, the opportunity to ask questions a cleanup.

Questions.

Thank you.

As a reminder to ask a question you will need to press star one on the telephone Covid dry question. Please press the pound of hacky.

Again to ask a question it's Paul.

Telephone.

First question comes from the line of Thomas Chong from Jefferies. Please go ahead.

Well I'll take that money is from a J.

What is helix.

Golden Eagle and tissue quite some time that so let me just let me know.

Yeah.

Next month.

I wasn't sure that you've got API.

Sure sorry about.

And I'll address that.

Uh huh.

Oh, the needle on the Ohio, but the PPI could you come back.

Yeah.

IPO Golden era should pardon me a call.

Call normally agenda.

So just a kind of a SAR level, because that's not bad.

So a core momo.

So I don't see them as well.

No just really con call normal like streaming that Oh look good.

Hi, all associates I believe I can.

Lastly, then.

But with a management buffer.

I have two questions.

First question is on our content, Okay, Let me make a comment about user.

User growth pocket.

And also in the second half can management share about the timeline.

Timeline of Roughing mill as well as our earnings expectation.

My second.

My question is on core mobile okay.

Management share any updates about the user and the monetization trend as we come to the second half impact.

In particular.

On the life streaming site can management share about the outlook.

As well as.

The strategies.

Second the ASR in the next couple of years. Thank you.

Okay.

<unk> was I listen to the music.

Hum.

Non-GAAP.

I'm not sure Paul Ricci.

But they need to put in.

Well thank you Jim.

Certainly the mobile MAU.

And I remember that on our June earnings Conference call I said that we expected.

Expected expected compounds user base to grow from 20% to 35% by the end of the year that's against the June number that expectation remains unchanged.

And as you.

But we see since July we find it fun.

Onto the right track to achieve that target at a steady pace.

That's helpful. Thank you gentlemen.

So within the hotel, Michigan.

Bill.

Fortunately, we took them down to seven.

You guys have more to lose.

Using the tool.

The usual things.

Are you seeing within that I think as a whole.

And since we've been doing a call at all.

Yes, when we get the answer.

Would you look to pursue those.

Keith.

It could be done this year would be all inclusive.

You could see all types of leases.

We're talking here license with upfront.

That would be helpful.

On the revenue side.

Like I said before the single most important goal for this year our content team is to grow the users and improve product experience everything else anything.

Should be some <unk> to that key goal.

So we actually Havent set a rigid revenue target for the second half of the year, but I can see two things happening.

<unk>.

<unk>.

Down the path, which should have different sorts of impact on revenue and wanted.

That is obviously going to have.

Positive effect on revenue.

And given that there is a time lag between user growth and the translation into membership revenue I feel that that positive impact should be felt in a bigger way in Q4 there.

Sure and the second factor is that starting from Q3.

We are already taking trying to take a few steps back in terms of how deeply monetizing whatever to protect user experience that would involve a unwinding some of the extremely short term oriented.

Measures to drive on the paying conversion.

Also involve continuing to de emphasize life shrinking in terms of product design that will be an ongoing process as we move deeper into the year.

For an overview of the <unk> Town Center.

Hum.

Selling and fulfillment.

So you kind of Hu <unk> and LG.

Kind of up with minimum additional.

So Permian unless you're putting on.

Sure.

Dr. Pepper noon hosted all the functions.

Awesome. Thanks, so much.

I don't know what the final outcomes.

Mango.

I came from the supermarket.

So shame on me personally all of them.

And of course, it depends on liquidity in July that Europe.

We can innovate like you're going to Europe.

So how many of the building.

Uh huh.

Actually for patent monetization I have some longer.

Term thoughts that maybe worth sharing here number one is.

We absolutely have no doubt in the months long term monetization potential of content based on our understanding of the users if our users sometimes users actually have stronger willingness as well as our ability to pay for the data service.

And that's why I believe that RPM of content should actually be higher than normal but.

In terms of monetization.

We need to breakthrough the singular membership model and try to.

Adding the second pillar and.

And that second pillar in Miami.

And shouldn't be the pay per use model and by having that do all pillar sort of structure, we can take better advantage of that user segmentation.

That should be the right kind of monetization approach that fit better into the Asian culture that is also.

The right kind of monetization approach.

<unk> had crude fully on leach pad times monetization value. So starting from the second half of the year, we're going to start some product experiments on that front continuing to explore the non value added service non membership value added service.

Is going to be the most important priority that we.

We have on the revenue side in the near future.

Early looks enrollment to Jonathan.

Eric Johnson to talk about the bottom.

Bottom line for preferred contacts in the second half.

As I remember during the last.

<unk>, earning conference call.

<unk>.

<unk> provided an update on the revised.

I'll look for the 10 times the bottom line.

Actually that picture remains unchanged.

The same.

Let me just repeat it again.

Because we are going to.

Our focus on content.

<unk> growth.

Particularly during the second half of the year.

With a lower revenue target.

We're going to continue to invest.

In the paid marketing channels.

Two two.

Our new users to <unk>.

Help us to achieve our targeted.

The au.

But the growth pocket.

Tony just mentioned, 20% to 35% growth.

So with that we expect.

<unk> acquired net loss widened sequentially, particularly starting from Q3 and Q4.

The total annual net loss.

Probably will be in the range of 350 to 450 million renminbi.

So that still.

That's our.

Pocket right now.

Well, we aren't going to Yamal LNG on a more of a block of the Western Europe Washroom, if we go that route.

Well not to move.

Answer to it because we are seeing with our Eagle.

<unk> been pleased with the Kona movie lessons.

B.

What you don't see.

We shut in the Permian.

And.

For the core.

Core business I think what we are pursuing here is moderate growth on top of a stable and healthy user base that that principle applies to both user growth and revenue growth.

A nice screening.

I think it's pretty clear that since the beginning of the year, it's already in our state is steady.

Recovery.

Stage.

And the future growth of the company will be primarily driven by the value added services.

And the growth will be coming from <unk>.

Key areas.

The use of new cities with Alcoa and dilutive to your product.

Assuming Doyle I opened up the year.

And the first area of growth is the continuous development of the audio such video social and prepayment category on that front.

The chat room experience as well as the video.

Matchmaking experience on the core are still seeing plenty of growth opportunities.

So you can see on the whole issue of minimum is really will call you for the question.

Mortgages, but people.

Totally pre completions on advanced interest only on a preclinical work.

If you can move on to <unk>.

Second area of growth is going to be the continuous generation on the interactive gifts.

In the past, we had not focus too much on being Vantiv on.

On the skin the virtual gift himself, because we didnt realize that there could be a lot of revenue potential in doing so.

But actually during the past few quarters.

We've been seeing pretty considerable incremental revenue.

Coming from the introduction of new creative interactive.

Yes, so I think there is going to be a lot of potential that we can talk to that in this area would.

It would be finished it took us unless you have a typically no longer buccola Cashion, senior which avenue nuclear portfolio income.

Linda.

Michelle we'll go to Tom.

Passion for consumers.

That's fair.

I think.

Another key growth.

Another key area of growth will be the continuous user growth.

The Standalone new applications that we're working on.

The new bucket.

As a whole.

<unk> still got to going to see pretty decent growth.

Both in terms of users in terms of revenues next year, we're hoping that we could see more of these.

Several new apps coming into fruition or not.

These are unusual from Lima.

<unk> got to see southern abnormal quarter, Enzo can be if we don't resolve.

Some people.

Jamie.

Our normal core targets when we stood back when it was opened up.

To ensure that we don't know.

But you've made on the surgical ULA year jumped into one of the Bath tissue.

With regards to the revenue expectation for the second half.

A previous target that revenue.

I'm going to turn that.

The revenue on the Momo core is going to turn a wildly positive in the second half I think.

In Q3, we're guiding core more core momo two normal months revenue to grow.

5% year over year in the fourth quarter.

We're looking to further accelerate the.

Why why growth rate from that level.

Importantly, I think revenue structure wise, we're going to be increasingly being toward the value added services, which is much more a flattish in terms of structure.

I hope that address.

All of your question Thomas.

Operator, we're ready for it.

Yeah.

Thank you.

The next question comes from the line of Jim Hall from Th Capital. Please go ahead.

So I need to know that town hall with <unk>.

So that means its home more and more guidance on me.

Hello Group.

Oh gosh.

Got home in Shanghai.

This is equal to the Chinese.

Yeah.

Yeah.

Okay.

Thank you for joining.

Not much.

Sure Hope they go without Joshua <unk> forget that Heather.

Yes.

Thank you Heather.

I noticed that recently.

The company's name has been changed from Momo Hello Group.

I would like to know more about the thinking behind the change.

So each company can share any.

You know you.

So it's easy to think team behind the name change that's number one number two is more and more happening in the market for a long time. So what is the new growth driver the management.

I think in the can beat in the next several years to drive companies to drop more most growth. Thank you.

Tissue and.

No woman.

You probably remember from normal.

Hello philosopher English Premier.

Turning to memorial.

Memorials illegal.

Oh, yes.

So good about was when you got anything on that.

And for a moment.

Okay.

So therefore, if you look at EMEA utilities.

Sequence lit up although it wasn't room, absolutely for the medium to Momo.

I Hope you don't you don't be sequentially, but Europe differentiation.

We'll move from Domo don't feel the sentiment to qualified people.

If somebody gets a little too how the tender dependent.

The name change from Momo to Hello growth is a reflection of our more tie application product portfolio approach.

As a company.

Already 10 years old and we've developed from a single function application to a company that has memorial compound.

Two are pretty big social platforms.

Same time.

Revolving around the social Entertainment services, we've also incubated a few other standalone application.

Applications. So if you view the momo application as the first.

Growth engine of the company and sometimes the second and the new stuff that we're working on.

<unk> going to be the third engine.

Growth.

The company in the coming decade will be driven by these three different engines.

In a conservative way, so going back to <unk>.

The reason why we need this new name I think we need this new company name as a carrier.

For the company's strategy to continue to diversify into new products and services.

So I don't want to kill Us little Formula.

So it shouldn't be bolstering our liquidity.

All of whom will become our new vinyl, but wanted to kind of doing it.

Okay.

Welcome to attend.

In June right.

No problem.

Premium equivalents, Louisiana.

Lesser known enormous Europe.

Ladies and gentlemen.

We think the treatment.

More specifically I think in the coming three years, the biggest and also the most definitive growth opportunity is definitely going to be contacted.

Other than mine sometime now within our product portfolio. We also have.

I have some other newer brands such as Hertz, great way think that hurt them great guidance.

These applications are individual basis may not like.

<unk> has the potential to grow to be something.

Hey, guys contact as we could have that content is.

Collectively they can still make sizable contribute.

Contribution to the bottom line the company, we're hoping that in the coming three to five years, we could incubate more of such applications in order to cover a broader range of people on the on the user spectrum.

Only one question.

So as you search algorithm into Shanghai alternatives.

So one of them.

Yeah.

Todd do you want to but we don't do business.

So typically we're keeping them via credential linked to the dealerships.

People don't seem to have you on the Iowa.

But to your budget.

With that I'll highlight two documented European growth will be felt.

Or did you bolted to broadly written opinion leadership out we're going to keep it.

There's I still don't think the pharma industry the terminal.

I think really it won't reporting starting with revenue.

Yes.

Two other things changing shall not a substitution review.

<unk> clear.

Because it didn't go up.

So this is huge with OEM, so if you're a high school diploma.

We won't see too much into the Yieldco donation.

Lastly, I wanted to take this opportunity to share some of the longer term.

Thinking that I have on the strategic side.

I think.

Think that in the social and entertainment space, the coming decade will inevitably.

The scene.

The emergence of new ubiquitous platforms.

Our products that can build huge da debate.

Such kind of.

Jenny could either be driven technological advantage or <unk>.

Driven by the behavioral changes in changes in user behavior. For example, we're now seeing some pretty big stuff happening.

Our VR AR smart.

Prices space.

The technological.

Call offenses.

In.

In this space will inevitably bring phenomenal changes in terms of how people socialize in the future and this is the kind of change that opportunity that we need to make sure we stay vigilant about and get prepared for so that when time comes.

We have the capability of seizing these opportunities.

Our growth to be something bigger.

Our team has proven capabilities.

Product innovation in the social space.

And our vision and decisiveness to seize the right kind of investment opportunity to grow.

So the business is also growing but it's also proven by time and same time. The company is also sitting on huge cash balance.

And a very strong.

Operating cash flow. So I think investors can rest assured that we will continue to push very hard into new.

Areas and growth opportunity.

We need either view yourself development or through investment opportunities. This is the area, where we have full confidence as well as enough tenacity carry through.

Operator, I think we have.

Time for one last question.

If.

So other people in the queue.

Definitely.

The next question comes from the line of Daniel Chen from Jpmorgan. Please go ahead.

Uh huh.

When she was going and then God of.

Hi, Jim.

I'm kind of Ciena.

<unk> seen a Denver I don't tell her that Oh Gee it seems as if it's Europe and been doing.

One of those already in Chico, California.

Is that you've got the Mackay and vigorous civil hungrier, though realize kimbrough finding a home.

So you have somebody you can shop.

What are you finding new shop.

The refrigerant for taking my question my question's on the.

Regulatory model, but also luxury industry in China. So we have been in there too.

Last year, there have been several.

New regulation on the luxury industry still believes there's one July one targeting D.

Thanks, My my last thing the agencies, so want to know how should we look at the regs.

The regulatory environment for the inputs for the luxury industry.

Future and what's the implication to our live streaming revenue trend. Thank you.

Washington.

Not really.

The food whether it be that you can put them all together.

That's helpful. Joe Welcome meaningfully.

It'll be fun.

So due to the house.

Uh huh.

I apologize.

I know usually you do on a piece of what we're doing with them in a bundle.

Fair question.

Hum.

I think as the Oh.

China's mobile internet space become increasingly important is inevitable that the policymakers and regulators are going to take in more and more seriously to make sure that the industry develops.

In a orderly unregulated fashion that's.

In a sense of the very good thing for us because it's leveling the playing field.

And it's also going to make sure that the whole space move forward in a healthy environment. So as always we're going to be cooperating with them.

Together, the various regulatory bodies.

Make sure that we stay in full compliance.

We will do the trick.

For example.

Ernie Moniz, who coastal women do all usable for Dmitry.

I was hoping you could kind of knows what's going on in social.

The recruiting.

Net income was don't view Pegu Soviet Union the Formula.

Especially with younger.

Tim Good consumer congressional pressure pumper that would be the goal.

So it doesn't help on the trauma and welcome Jonathan Nevada.

And more specific with regards to the.

Policy changes you mentioned.

The live streaming space as a matter of fact, if that's something that we've been closely monitoring since the beginning of last year since the beginning of 2020.

And you guys can see.

During the second half of last year, we've actually made very.

Very important.

And significant structural reform to make sure that we.

To make sure that our content per system stays healthy and to reduce the reliance on the top vendors.

And since the beginning of the year.

Structural reform has already been showing positive effect positive effect to our ecosystem as well as our business.

We believe that.

It is going to help our live streaming business to continue to develop in healthy and steady way in the new policy environment.

Operator.

That concludes our conference call today, we're ready to close thanks to everyone for joining our conference call today, we'll see you next quarter.

Thank you that concludes our conference for today. Thank you for your participation you may all disconnect. Your lines now thank you.