Q3 2022 Hello Group Inc Earnings Call

And gentlemen.

Standing by.

And welcome to the third quarter 2022, Hello Group, Inc Earnings Conference call.

And those are in a listen only mode.

There will be a presentation, followed by a question and answer session.

If you wish to ask a question you will need to press the star key followed by the number one on your telephone keypad.

Please note this conference is being recorded today.

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

Please go ahead ma'am.

Thank you operator.

Good morning, and good evening, everyone. Thank you for joining us today for all over the quarter. It sounds you're talking two 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. Tong Yang CEO of the company and there's probably several off the company.

I'll discuss the company's business operations and highlights as well as the financials and guidance.

Also available to answer your questions. During the Q&A session that follows before we begin I would like to remind you that this call 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.

On operating conditions and relate to events that involve known unknown risks uncertainties and other factors.

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 or achievements from materially from those in the forward looking statements.

Further information regarding this and other risks uncertainties and 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.

I'll pass the call over to our CEO , Mr. Tang Yan.

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Good day, everyone. Thank you for joining our conference call. This is my first earnings call since returning to the CEO position I'm very happy to have the opportunity to communicate with the investor community again in the third quarter, so as to the product and operational know how is that.

Would you leave us with financial results and made solid progress in all businesses.

Now I'll walk you through the details.

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Jim.

Sure.

I will start with a brief overview of our financial performance.

The third quarter of 2022 total revenue was 3.2 or three.

Down 14% year over year, but I'll focus on quarter over quarter.

Gross came in stronger than we expected as live streaming performed slightly better than our conservative estimates.

Adjusted operating income was $600 5 million and be up significantly by 30% sequentially with a profit margin of 19 beside.

This was mainly attributable to solid execution of our strategy to optimize costs and improve efficiency delivering good progress across all business lines.

On a constant basis total revenue was $2 98, 819, a M D.

1% year over year, but up 4% sequentially.

Adjusted operating income was 643, a M D with a margin of 22% the year over year decrease in total revenue was mainly due to pressure on the live streaming business caused by the pandemic and regulatory factors.

However, this decrease was partially offset by rapid growth in stand alone apps.

Honda has total revenue for the quarter Canyon at 341 magazine D down 73% year over year, but up 3% sequentially. The year over year decrease was mainly due to the monetization process. We initiated in September of last year to improve user experience and retention as well as an active impact of COVID-19.

And the reduction of channel investment, all kind of user growth and paying conversion.

Adjusted net loss was significantly narrowed to $38 eight 4 million from 119 million in the second quarter, mainly due to our initiatives to optimize channel marketing.

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Now I'll discuss the execution of our strategic priorities during the third quarter.

Goldman Sachs, where more and more contact on our U U in Dallas. This year are as follows.

For the mobile App. All go is to maintain a stable user base with a limited marketing budget and see growth on top of that while enjoying this cash cow business remains stable.

Although because hema and regulatory environments, well full of uncertainties our team adapted well I did a good job executing on more strategic goal.

What kind of all goes out at the beginning of the year was to deliver solid user growth by improving marketing efficiency on the called aging experience. However.

However, in the first half of the yes. The COVID-19 situation continues to deteriorate, which largely effective use of stadiums documents and their propensity to pay for a loss, resulting in a significant decline in China all right.

Therefore in the third quarter, we decided to adjust penthouse strategic goals to focus on narrowing that loss by reducing low efficiency your channel marketing spend and accelerating our efforts to develop products and monetization models that are suitable for the Asian dating culture in order to pursue profitable growth.

His financial performers this quarter demonstrated the initial success, we achieved in executing on these strategic vote.

With respect to new products and businesses. Our goal is to continue to enrich our product portfolio and push the boundaries beyond one one time that we made steady progress on this front this quarter.

Next I'll discuss the progress we made with our formation of a strategic priorities and all seem to pass.

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Firstly regarding mobile App user growth out of key operating matrix, well more had $108 8 million monthly active this quarter down 2% sequentially.

The lack of impact of pandemic control my just pressure the overall open social sentiment throughout Q3.

The situation wasn't starting in the middle of the quarter, resulting in a sequential decline organic traffic retention and uses propensity to pay in terms of China marketing in order to control costs and meet the pandemic, we're scaling back investments in channels with loading collection unless satisfactory advertising until <unk>.

A limited marketing budget towards channels with high alloy.

Handoff paying users for the quarter was $8 4 million down from $8 6 million in Q2 the.

The 200000 sequential decrease was mainly due to the decline in use.

Conversion remains stable thanks to our teams timely adjustments user acquisition strategy, focusing on high alloy channels I'm paying collection.

Continues patent expiring.

Experience optimization of collateral features.

This laid a solid foundation for our cash cow business to remain stable.

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Now I'll discuss progress we made regarding the priority also enjoying the cashcall business remains stable.

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<unk> rose sequentially and profit margins stayed largely stable thanks to our team's efforts to adjust the product and operational strategies in a timely manner. Our team managed to drive gross profit increase along.

With revenue growth against the challenging external environment with the Covid and discretionary spending softness this demonstrate our strong adaptability and execution skills.

Thank you.

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Almost like streaming revenue was 1.5 to be they're going to be for the third quarter down 21% year over year, but up 8% sequentially. The year over year decrease was mainly due to COVID-19 and regulatory factors.

Rental growth was mainly attributable to the increase in the number of high paying users driven by promotional events poverty meet to a high quahog users and designated broadcast a recommendation algorithm, which effectively how's the priorities after rather than groups.

Our operation team controlled revenue sharing costs by adjusting the bank policy and these I asked him. If I features so that gross profit margin stayed relatively stable well revenue increased sequentially generating gross profit accretive revenue growth.

Our ecosystem remained healthy and stable as we optimize the recommendation algorithm for different call how the whole house up users driving sequential growth in live streaming media use on the supply side, the number of high quality talent grew significantly quarter over quarter.

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With regards to loss revenue from value added services, excluding contract totaled one three for D&A and then before the third quarter up 6% year over year or 1% sequentially.

All incremental revenue from our new endeavors.

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Oh incremental revenue came from our new endeavors loss revenue from the name of laughs totaled $1, one faulty they're gonna be down 3% year over year and flat sequentially revenue from the U S was 196 million will be up 147% year over year and 8% sequentially.

I will provide an overall update for you in that was later, but for now I'll focus on hold last loss business.

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For loss within the warm up Q3 has seen colby situation deteriorating on lockdown and they're just getting increasingly stringent as a result user traffic and engagement level of highly RBS related features such as the interest group and offline gathering or particularly depressed by the pandemic control measures in Q3.

This was reflected learned the relatively long.