Q4 2022 Hello Group Inc Earnings Call

March 16, 2023

Speaker 1: Yeah.

Speaker 2: Ladies and gentlemen, thank you for standing by, and welcome to fourth quarter and fiscal year 2022 Hello Group, Inc. earnings conference call. All participants are in a listen-only mode. There will be a presentation followed by a question and answer session.

Speaker 2: If you wish to ask a question, you will need to press the star key followed by the number one on your telephone keypad.

Speaker 2: Please note that the conference is being recorded. I would now like to hand the conference over to your first speaker today, Ms. Ashley Jean. Thank you. Please go ahead, ma'am.

Speaker 3: Thank you operator. Good morning and good evening everyone. Thank you for joining us today for HelloGroup's fourth quarter and fiscal 2022 earnings conference call. The company's results were released earlier today and available on the company's IR website. On the call today, I'm Mr. Tang Yan, CEO of the company and Ms. Peng Hui, CFO of the company.

Speaker 3: They will discuss the company's business operations and highlights, as well as the financials and guidance. They will both be 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 four looking statements made under the Safe Harbor provision of the Private Security Certification Reform Act of 1995. iPhone 3 Pro is a Grade 5 Consumer gland board. legions of people know about this party.

Speaker 3: Such statements are based on management's current expectations and current market and operating conditions and relate to events that involve no or unknown risks, uncertainties and 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 or achievements to differ materially from those in the forward-looking statements.

Speaker 3: Further information regarding this and other risks, uncertainties and factors is included in the company's findings 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 for the event or otherwise, except as required under law.

Speaker 3: I will now pass the call over to our CEO , Mr. Tang Yan.

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Speaker 4: If you liked our video, then please press like and subscribe. We have not released any releases orranes, and our clear aliumwarming of the releases is released today. And thanks for your participation. See you in the next video. Thank you for your attention.

Speaker 3: Hello, everyone, thank you for joining our call. 2022 was an extremely challenging year for many Chinese companies as the COVID resurgence brought a lot of uncertainties to the overall business environment.

Speaker 3: However, I'm pleased to see that our team withstood external pressures by timely adjusting strategic priorities and corresponding execution plans in the second half of the year with flexible product and operational measures. Despite the challenges, we delivered solid financial results for shareholders.

Speaker 3: enabling us to conclude the year on a satisfactory note. I will first review the main operating and business results in the fourth quarter and fiscal year 2022, and then I will outline our strategic priorities for fiscal 2023.

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Speaker 3: I will start with a brief overview of our financial performance. For the fourth quarter of 2022, total revenue was 3.21 billion renminbi, down 13% year-over-year and 1% quarter-over-quarter. Adjusted operating income was 499 million renminbi with a margin of 16%.

Speaker 3: Total revenue from MoMo app and standalone new app was 2.870 Nmb, down 11% year-over year and 1% quarter of a quarter. And adjusted operating income was 514 Nmb, down 21% year-over year and 20% quarter of a quarter, with a margin of 18%.

Speaker 3: Total revenue from Tantan came in at 347 million RMB, down 21% year over year, but up 2% quarter. Adjusted operating loss was significantly narrowed to 15.17 million RMB from 140 million RMB in a same quarter of last year. On a sequential basis.

Speaker 3: are just yet operating laws continue to narrow further despite an increase in the year and seasonal expenses. I'm pleased with the progress that can have made in improving cost efficiency in the second half of the year.

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Speaker 3: For fiscal 2022, total group revenue was 12.7 billion MMB compared with 14.6 billion MMB in 2021. Adjusted operating income was 2.03 billion MMB with a margin of 16% compared with 2.59 billion MMB in 2021.

Speaker 3: The decrease in total revenue and adjusted operating income was mainly due to the significant pressure on both normal and tantan caused by COVID-related factors and regulatory factors.

Speaker 3: We adjusted some of our strategic priorities mid-year, focusing on cost reduction and efficiency improvement, to mitigate the negative impact of external factors on our bottom line.

Speaker 3: Total revenue from the normal app and standalone apps for fiscal year 2022 was 11.3 billion renminbi, down 10% from last year. The decrease was due to the decline in normal revenue, while the standalone apps maintained rapid growth momentum from a high base in 2021.

Speaker 3: Adjusted operating income was 2.36 billion RMB in 2022 with a margin of 21%. Compare with 2.92 billion RMB in 2021 with a margin of 23%. Handtank's total revenue was 1.37 billion RMB down 33% from 2021.

Speaker 3: Adjusted operating loss was 330 million RMB compared with 337 million RMB in 2022. Sorry, 2021. Although revenue declined from last year due to the impact of the pandemic and the reduction in channel investment.

Speaker 3: Tantan's adjusted our plan last narrowed as a result of our initiatives to reduce cost and improve efficiency starting in July . Bottom line performance improved significantly in the latter half of the year, laying a solid foundation for Tantan to achieve break even in fiscal 2023.

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Speaker 3: Now, I'll discuss the execution of our strategic priorities in 2022. At the beginning of the year, we set separate goals for Momo, Tanta, and our new standalone apps, given the different business cycles. For the Momo app, the product with the largest user base and most mature commercial experience in our brand portfolio.

Speaker 3: Its main goal was to maintain a stable user base with a limited marketing budget and seek growth opportunities on top of that, while ensuring the cash cow business remains stable. Although many uncertainties surrounding the COVID and regulatory environment last year resulted in a relatively large gap between that goal and actual results.

Speaker 3: I'm pleased to see that, in response to the external challenges, our team timely mitigated the decline in profit by reducing cost and improving efficiency.

Speaker 3: This has laid a solid foundation for our cash cow business to turn to a growth trajectory once the external environment improves this year.

Speaker 3: Tanta's goal was to deliver solid user growth by improving marketing efficiency and the quality experience. Tanta's goal was to deliver solid user growth by improving marketing efficiency and the

Speaker 3: However, the COVID situation continued to deteriorate from the beginning of the year and largely affected user-stating sentiment and their propensity to pay for body-wide services, resulting in a significant decline in channel ROI. Therefore, we decided to adjust the 10 times strategic goals in the second half of the year to focus on narrowing net loss by reducing low-efficiency channel marketing spend and accelerating volunteer hours, and also holdingbars for weeping 3,300 ext PayV sensor engineer David On N

Speaker 3: and businesses, our goal was to continue to enrich our product portfolio and push the boundaries beyond MoMA and TanTan. We made steady progress on this front in 2022. Next, I'll walk you through the details.

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Speaker 3: The main pressure came from the increasingly tightened COVID containment measures throughout the year.

Speaker 3: as well as the COVID infection surge in many regions in China after the removal of the zero-COVID policy in December . In the fourth quarter, MoMo had 94.6 million monthly actives, down 13% sequentially.

Speaker 3: The rapid spread of COVID led to a significant decline in organic traffic and retention. For ROI considerations, our team scaled back investments in channels timely to reduce unnecessary spending during the peak of the pandemic. The decline in MAU caused the number of paying users to decrease by 600,000 to 7.8 million in the fourth quarter.

Speaker 3: In 2022, to improve marketing efficiency, our team continued to optimize channel strategy and shifted our user acquisition focus from MAUs to paying users. The improvement in channel marketing efficiency mitigated our financial pressure in the challenging environment.

Speaker 3: and had a positive impact on ensuring the stability of our cash cow business.

Speaker 3: With users' social sentiment gradually recovering after the Chinese New Year, MAUs started to continuously trend upward and have bounced back to the same level as Q3 last year. Meanwhile, users' time spent surpassed its peak level in 2022.

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Speaker 3: Now, I'll discuss progress we made regarding the priorities of ensuring our cash cow business remains stable. In 2022, multiple external factors brought severe challenges to Momo App Top Line, particularly the live streaming business.

Speaker 3: The incremental revenue contributed by the new standalone apps to MOMO segment VASTline partially elevated the pressure from MOMO apps. For fiscal 2022, the revenue ratio of VAST and livestreaming increased by 22 percentage points from the previous year to 87%.

Speaker 3: Our team leveraged VaaS use cases to unleash the spending potential of long-tail users, which created a more balanced revenue structure.

Speaker 3: to unleash the spending potential of long-tail users, which created a more balanced revenue structure.

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Speaker 3: One month's livestreaming revenue was 1.56 billion renminbi for the fourth quarter, down 20% year-over-year, but up 3% sequentially. For fiscal 2022, revenue from livestreaming totaled 5.97 billion renminbi, down 20% year-over-year.

Speaker 3: In 2022, the pressure on live streaming revenue mainly came from two factors. Number one, the market had wings and spending softness as a result of the pandemic. And number two, product adjustments were made in Q2 to meet regulatory requirements.

Speaker 3: In the second half of the year, our live streaming team introduced new features targeting high-paying users to improve their product experience. And the expansion in the number of top cohort users drove continuous growth in live streaming revenue.

Speaker 3: In December , a large number of broadcasters suspended work due to a high infection rate after the reopening, causing severe short-term disruptions to the supply side and revenue growth.

Speaker 3: However, the incremental revenue from the year-end competition in November provided strong support for the live streaming revenue to grow sequentially in Q4.

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Speaker 3: In 2022, our live streaming team gradually shifted the operational focus from revenue growth to profitable growth, and controlled costs by adjusting the operational policy and design of the GIMI-FI features.

Speaker 3: With this guideline in mind, we introduced some cost-saving designs to the year-end competition events. This partially reduced the pressure of large-scale events on the gross profit margin.

Speaker 3: The sequential dip in GP margin in Q4-22 was milder than in the same period last year.

Speaker 3: The overall revenue sharing policy and supply side ecosystem remains stable throughout the year.

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Speaker 3: With regards to VARs, revenue from value-added services excluding TanTan totaled 1.27 billion renminbi for the fourth quarter, up 2% year-over-year and down 5% sequentially. The year-over-year growth was entirely attributable to the incremental revenue from the new standalone app.

Speaker 3: In the fourth quarter, vast revenue from the MoonWap totaled 1.04 billion yen per billion in B, down 9% both Yang, Ye, and quarter over quarter. Remaining from the standalone apps was 220 million yen per billion, up 129% year over Ye, and 15% sequentially.

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Speaker 3: The total revenue from the MoMo app decreased 2% year-over-year to 4.45 billion RMB.

Speaker 3: due to the continuous pressure from COVID. Normal ad-vast revenue was considerably lower than our expectation at the beginning of 2022. In order to offset this revenue decline, our team pushed harder on monetization of new apps, driving revenue from these new apps collectively to increase 143% year-over-year.

Speaker 3: to 737 million MMB. As COVID control measures became increasingly strict in 2022, social use cases with higher conversion of online to offline activities bore significant pressure on both traffic and revenue fronts.

Speaker 3: For example, users' enthusiasm on virtual gifts consumption in interest groups and in greetings from the nearby people list significantly weakened compared with before the strict COVID control measures were implemented.

Speaker 3: Revenue from membership subscriptions also declined because this service represents paying features designed to increase users' efficiency to make new connections that they can potentially meet offline.

Speaker 3: In contrast, the audio and video-based social entertainment experiences with less LBS attributes were able to effectively offset the impact of COVID on traffic and users' propensity to pay and drove steady revenue growth in 2022 by leveraging innovative products and features.

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Speaker 4: If you have any questions, please leave them in the comments. If you have any questions, please leave them in the comments.

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Speaker 3: With respect to Tantan, I'll start with user trends and overall financials. In response to the business and financial impacts on Tantan caused by the escalating pandemic control measures since the beginning of the year, the management decided to pursue a cost control strategy in the second half of the year.

Speaker 3: to narrow TANTA's net loss by reducing marketing spend and cutting investments in channels and methods with low ROI. Since the removal of the zero COVID policy in early December , many regions across the country experienced a surge in COVID infections, which put a lot of pressure on user traffic. Compounded by the reduction in channel investment,

Speaker 3: China's overall MAU decreased 12% quarter over quarter to 18.4 million in December , down 26% from June before we initiated cost controls.

Speaker 3: The number of pain users was 1.7 million, down 300,000 sequentially, mainly due to the decline in both MAU and pain conversion amid the fast-growing COVID infections.

Speaker 3: As infection gradually eased off after the Chinese New Year, traffic started to resume growth. DAU in early March has recovered to the level before the pandemic outbreak in December last year.

Speaker 3: east of after the Chinese New Year, traffic started to resume growth. DAU in early March has recovered to the level before the pandemic outbreak in December last year.

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Speaker 3: Now, I'll briefly review Tengen's financial performance. Total revenue for the fourth quarter was 347 million renminbi, down 21% year-over-year, but up 2% sequentially.

Speaker 3: The year-over-year decrease was mainly due to the decline in the number of paying users. The sequential growth was due to the improvement in the RP pool driven by live streaming and the new premium BlackGold membership service, which upset the pressure on revenue caused by the decline in paying users.

Speaker 3: BAT's revenue was 184 million, and it means the down 9% sequentially.

Speaker 3: Although the sales of new membership services played a positive role in improving bus RP pool, the increase couldn't fully offset the pressure from paying user decline because membership revenue is highly correlated with the number of paying users.

Speaker 3: On the other hand, the live streaming business, which is more sensitive to revenue-oriented operational efforts, our team was able to drive significant AFI-BOO growth through product improvements and new features. As a result, live streaming revenue for the fourth quarter was up 17% sequentially to 163 million RMB.

Speaker 4: About Daily shoutouts. Ask questions or emails. Everyone and everyone. Thank you for watching.

Speaker 4: If you are interested in learning more about Chinese language, please visit our website. If you are interested in learning more about Chinese language, please visit our website.

Speaker 3: For fiscal year 2022, TANTA's total revenue was 1.37 billion MND, down 33% year-over-year, mainly due to the decrease in paying-use accounts resulting from COVID and our initiative to reduce China investments.

Speaker 3: Last revenue in 2022 was 824 million YMMB, down 27% year-over-year. And live streaming revenue was 544 million YMMB, down 40% year-over-year.

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Speaker 3: Tendants adjusted net loss for fiscal year 2022 was 306 million MMB compared with 337 million MMB in 2021. Although the net loss in 2022 was still relatively large, adjusted net loss was substantially narrowed in the latter half of the year, thanks to our effective strategy to control costs and optimize channel investments.

Speaker 3: The average quarterly adjusted net loss significantly improved from 114 million renminbi in the first half of the year to 14 million renminbi in the second half. And the efficiency of resource investments greatly improved.

Speaker 3: The adjusted net loss significantly improved from 114 million renminbi in the first half of the year to 14 million renminbi in the second half. And the efficiency of resource investments greatly improved. Charm Wonder Embarrassment

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Now, let's look at the progress Tan-tang has made against these strategic priorities.

The strategic goal we set at the beginning of the year before the pandemic situation deteriorated was to deliver solid user growth by improving marketing efficiency and quality experience.

However, during the second quarter, Python COVID control matters had a severe negative impact on user retention and paying conversion. New user retention and paying conversion are key indicators that determine our TV and channel ROI. The significant decline in both matrix led to a negative cycle where the more user we acquired, the greater the financial loss. Growing the user base without making a profit.

not only makes no economic sense, but is also unsustainable. In response to the uncertainties created by the pandemic, in the second half of the year, we adopted a more prudent marketing strategy rather than grow at the expenses or bottom line.

We reduced the spending in low-efficiency channels to narrow net loss. At the same time, we continue to focus on improving user retention and output growth through algorithm, product innovation, and new non-membership vast features.

Once our item is positive, we will reinvest the profit into marketing to create a self-sustaining growth cycle.

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Thank you for your attention.

Next, let's look at the progress we've made in terms of improving user appreciation efficiency and enhancing retention at NAPU. Firstly, on the channel front, since the beginning of the year, our team continues to improve channel efficiency by optimizing ad materials and adjusting the proportion of new users and domain users.

Therefore, although the large-scale outbreak of the pandemic in December led to a larger than expected decline in user base, the key user acquisition indicators such as the unit acquisition cost, retention and new user R-Pool have all improved to varying degrees compared with the previous year. For more information network data on advanced CFI Research Card, visit short dec Dave's report.

The average unit acquisition cost for fiscal year 2022 was down nearly 20% year-on-year. And especially in Q4, user acquisition cost was down 50% from the year-ago period. And new user output increased by more than 40%. Compared with the previous year, the average user age tended to be younger.

and the proportion of new female users remained at a satisfactory level. Our team maintained the stability of the user experience and of the platform ecosystem, despite the deteriorating pandemic situation and the decline in new users, resulting from the channel investment reduction.

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In terms of improving our pool's new product experiences, we have clarified two important directions. First, for user products, we need to explore effective social experiences beyond the swipe and match features. Second, for commercial products, we need to explore effective social experiences beyond the swipe and match features. Second, for commercial products, we need to explore effective social experiences beyond the swipe and match features.

we need to introduce non-membership vast paying models to improve per user revenue. During the year of 2022, we made a few important optimizations to the chat room experience, which have played a positive role in improving retention and the time span of female users and of those who are reluctant to show their real photos.

At the same time, as a consumer experience based on virtual gifting, Chartroom can also effectively unleash the spending potential of different cohorts of users when it comes to monetization.

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In 2022, in addition to exploring non-membership vast features, our team also continues to dig deeper in the direction of membership subscriptions. In the second half of the year, we launched a high-end BlackGold membership service on top of that VIP.

This was immediately well received by high spending cohorts, making a positive impact on our people expansion.

immediately well received by high spending cohorts making a positive impact on RPPU expansion.

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For the new standalone apps, financials of the profit-oriented VAS and gaming apps are consolidated under MOMOS P&L in our segment reporting. In the fourth quarter, revenue from the standalone apps totaled 229 million MMB doubled from the year-go period and up 13% sequentially. For fiscal 2022, total revenue of our new endeavors was 791 million MMB up nearly 150% year-over-year.

All standalone social apps have started to contribute to the group's profits this year while delivering rapid top-line growth. We expect the three standalone apps to continuously contribute meaningful revenue and profit to the group.

and we hope to see you again soon. Thank you for your attention. Thank you for your attention.

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In addition to profit-oriented products, we made breakthroughs in non-RY-oriented products for the first time in 2022. At the beginning of the year, we took the opportunity of the generational transaction to launch the first large DAU product targeting Gen Z and Gen Alpha users, and the user base quickly reached a considerable level. This confirms our team's competitive advantage in discovering new markets and saving new opportunities.

Thank you for your attention.

So, if you have any questions, please feel free to contact me.

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We will continue to work on the future of the business. Thank you for your attention. This concludes our business updates. Now, I will briefly go through our strategic priorities for 2023. Firstly, for the Mature Momo app, our goal is to keep the users' and revenue scale stable and continue to optimize on-cost structure and maintain the productivity of the cash-power business. To achieve this goal, we will continue to optimize product operation and introduce new monetization features.

We will enrich our product portfolio, push the boundaries beyond MoMo and TanTan, and develop long-term growth engines. Specifically, our plan for our UI-oriented standalone apps is to continue to scale up profit and to contribute more incremental revenue and profit to the group top line and bottom line. In addition, we will further explore opportunities for more than 20 years to come.

for large DAU products to open up a new growth path.

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and the amount of cash that we have received from the US dollar. Lastly, I would like to conclude by announcing that our board has declared a special cash dividend in the amount of US$0.72 per ADS.

Whatever decision we make in terms of driving organic growth, business growth, identifying decent investment opportunities, or paying back shareholders with dividends or in the form of equity buyback, the fundamental principle of our capital allocation strategy is to create long-term value for our shareholders. I would like to thank you all for your faith in us.

Now, let me pass the call over to Kathy for financial review. Thanks, Tongzong and Ashley. Hello everyone, thank you for joining our conference call today. Now let me briefly take you through the financial review.

Total revenue for the fourth quarter of 2022 was 3.21 billion RMB, down 13% year on year and less than 1% quarter on quarter. non-GAAP net income attributable to the company was 487.9 million RMB.

excluding the impact of accrued income tax expenses on the undistributed earnings, which were not on a comparable basis for the two periods. non-GAAP net income in the fourth quarter of 2022 was up 8% from the year-over period, despite the top-line decrease as a result of our cost control efforts.

Looking into the key revenue line items for the quarter. Firstly, online broadcasting. Total revenue from live broadcasting business for the fourth quarter of 2022 was 1.72 billion RMB, down 20% young year but up 4% quarter over quarter. Mobile apps live broadcasting revenue totaled 1.56 billion RMB for the quarter.

amounted to 162.9 million renminbi, down 19% from Q4 last year, but up 17% from the previous quarter. The year-over-year decrease was mainly due to the negative impact of the pandemic and reduced channel investment, resulting in a significant decrease in the paying user count. The sequential increase was driven by R2 growth thanks to our...

quarter of 2022, a 2% increase year-on-year but down 5% sequentially.

The year-over-year growth was driven by incremental revenue contributed by the standalone new applications. The sequential decrease was due to pressure on mobile app LBS-related features caused by the deteriorating COVID situation in China in Q4-22. China's validated service revenue amounted to RMB $180,000 in 2018.

3.8 million, down 22% from Q4 last year and 9% from the previous quarter. The decrease was due to the pressure on Tonton's annual use and paying conversion caused by the COVID-related factors, as well as the reduction on marketing spend.

non-GAAP cost of revenue for the fourth quarter of 2022 was 1.91 billion RMB compared to 2.19 billion for the same period last year. non-GAAP gross margin for the quarter was 40.4 percent, same as the year ago period and down 1.3 percent from last quarter.

mainly due to the incremental expense in connection with the year-end competition event for live streaming. non-GAAP R&D expenses for the fourth quarter was 250.5 million RMB, compared to 279.7 million RMB for the same period last year.

or 10% decrease while Y. The decrease was due to continuous optimization in personnel costs since the beginning of the year. non-GAAP R&D expenses as a percentage of revenue remained stable at 8% from the year-ago period. We ended the quarter with $1,716.

five total employees of which 459 are from Tonton, compared to 2,051 total employees of which 552 from Tonton a year ago. The R&D personnel as a percentage of total employees for the group was 63% compared with 62% Q4.

same through last year. The significant year-over-year decrease, both in terms of absolute or in the amount, and as a percentage of revenue, was primarily attributable to Tanta's shift in marketing strategy to cut spending on low-efficiency approaches in order to take care of ROI, and to a lesser degree, reduction of more of marketing spend amid a pandemic outbreak.

non-GAAP G&A expenses was 84.9 million RMB for the fourth quarter of 2022 compared to 89.4 million RMB for the same period last year, representing 3% and 2% of total revenue respectively. Now, briefly on other operating laws.

Other operating income slash loss item. Other operating loss for the quarter was 65.2 million renminbi, compared to an income of 38.6 million renminbi for the same period last year. In Q4 2022, we accrued 92.9 million renminbi of potential loss.

related to a MoMo user's alleged illegal activity and embezzlement of funds, which was recharged and consumed on MoMo platform. There is no suspected or alleged wrongdoing on the part of the group. The 92.9 million renminbi involved in the case is recorded as restricted cash on our balance sheet.

Until the ruling of the court is announced, we won't know for sure whether the fund will be ultimately released or instead drawn from our account to compensate a plaintiff in the case. However, for conservative purposes, we've decided to take the item into our P&L as an operating loss in Q4 2022. Other operating loss caused by the accrued amount was partially offset by a couple of income items.

quarter. non-GAAP OPACs as a percentage of total revenue was 23%, a decrease from 28% for Q4 2021 and 24% from last quarter. non-GAAP operating expenses on a year-over-year basis decreased by 25%.

The decrease in both absolute R&D amount and as a percentage of revenue for OPACs was mainly due to the reduction in social marketing expenses and to a lesser degree, optimization in personnel costs. non-GAAP operating expenses decreased 4% sequentially.

This is attributable to the decrease in marketing expenses, which offset the increase in seasonal expenses such as year-end bonus.

Now, briefly on income tax expenses. Total income tax expenses was 110.3 million RMB for the quarter, with an expected tax rate of 19%. In Q4, a company accrued withholding tax income of 39.7 million RMB.

which is 10% of the undistributed profit generated by our roll fee. Without withholding tax, our estimated non-GAAP effective tax rate was around 12% in the fourth quarter. Now turning to balance sheets and cash flow items, as of December 31st, do we see aPA F

2022, whole groups cash, cash equivalents, short-term deposits, long-term deposits, short-term investments and restricted cash totaled 13.4 billion RMB compared to 15.71 billion RMB as of December 31, 2021. The decrease was due to a number of cash flow items including our cash dividend payments earned,crLou!"

repurchase of the company's convertible notes, repurchase of the company's equity under the ongoing buyback program, and payment to Chinese tax authorities to repatch rate cash from Wofy in China to our offshore entity.

Net cash provided by operating activities in the fourth quarter 2022 was 539 million in renminbi compared to renminbi 666 million in the fourth quarter of 2021.

Lastly, on business outlook, we estimated our first quarter revenue to come in the range from 2.65 billion renminbi to 2.75 billion renminbi, representing a decrease of 15.8% to 12.6% year on year.

or a decrease of 17.5% to 14.4% quarter over quarter. For Q1 2023, on a sequential basis, we expect the total revenue from both Momo and Tan Tan to decline mid-teens due to the infection surge after reopen, coupled with the Chinese New Year negative seasonality.

Please be mindful that this forecast represents the company's current and preliminary view on the market and operating conditions which are subject to changes.

That concluded our prepared portion of today's discussion. With that, let me turn the call back to Ashley to start Q&A, Ashley, please. Thanks. Just a quick reminder before we take the questions, please ask your questions in Chinese and followed by English translation by yourself. operator, we're ready for questions. Thank you.

And that concluded our prepared portion of today's discussion. With that, let me turn the call back to Ashley to start Q&A. Ashley, please. Thanks. Just a quick reminder before we take the questions, please ask your questions in Chinese and followed by English translation by yourself. Operator, we're ready for questions. Thank you. Awesome, thank you.

Thank you. If you wish to ask a question, please press star then 1 on your telephone and wait for your name to be announced. If you wish to cancel your request, please press star then 2. If you're on a speakerphone, please pick up the handset to ask your question. Our first question today comes from Leo Chang with Deutsche Bank. Please go ahead. Hello, everyone. My name iscr. I was born in China and I want to submit my question of interest to you at youth, higher education. Thank you. If I might go to the sub tank screen… I see any adult. Can anybody hear me? Yes, we can hear you. Please hold your voice. Okay. Okay. Okay.

Thank you management for taking my question. My question is regarding to the Momo app. As the offline activities resume normalization.

Can management share the latest user and revenue recovery trends of the Momo app? Additionally, what is the target of Momo's revenue in 2023?

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receive a lot of comments, but only 100 to 120 organizations can participate to connect the e-commerce marketing team to taskedshock grass fans. It's a lot of great information to continue learning what the quality of news is all about Thank you.

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So as I mentioned earlier, the reopening in early December severely affected our user base in a short period of time, resulting in a sharp sequential decline, MAU Q4. In early January , after the infection rate reached its peak in many regions, mainly in the northern part of China, local users started to gradually come back as the pandemic subsided.

However, the recovery trend was interrupted by the traditional low seasonality of Chinese New Year when people started to return to their hometowns in mid-January to get ready for the holiday celebration. But DAU rebounded rapidly in early February after the Chinese New Year trial.

and the growth rate was actually significantly higher than that in early January . And it was also better than our previous expectations.

Currently, One More user base has rebounded to the same level as the end of summer holiday last year. In terms of operation strategy, One More app will remain focused on the ecosystem and product experience.

We will continue to take a conservative approach in terms of event operation and competition arrangements. That means we will prioritize stabilizing profit over driving non-profitable revenue growth.

And I will leave it to Cassie for financial details.

Thank you.

Sure. Let me briefly share what we can say at this point about that good old question.

It was before the regulatory changes in May, regulatory changes that happened in May 2022, that sort of made a prior Q1 sort of a tough con for us. On top of that, I suspect that not having full visibility into the macro conditions for the rest of the year is still weighing on the mind of some of our high paying users. At least that's the general sentiment that we are getting from talking to a portion of our top spenders.

We'll see if the sentiment gets better over time as the year progresses and more stimulating policies get released. So that's Q1. Looking out to Q2 onwards, we are definitely going to see quarter over quarter increase as both traffic and the whole economy continues to recover from the past three years of COVID restrictions. For more information, visit www.fema.gov

Plus it looks like that the fluid regulatory situation that had been hanging over the sector over the past two to three years is going to is also going to see some stabilization from for the coming few quarters. The only uncertainty is I would say is the is how strong the macro gas as we move deeper into the...

Another factor here was related to Sochil, which was heavily impacted in Q1 due to the Turkey earthquake, as well as the heavy depreciation of the Egyptian pound against US dollar. Some of our payment channels in Egypt was actually suspended by local authorities due to that reason.

We are currently shifting the Boston marketing dollars as well as some of the other resources to other Gulf countries where the growth momentum remains quite strong. Overall, we expect better added service to continue to grow this year, with the second half being substantially stronger than the first half due to the aforementioned several factors. So if you put...

you know, all these different pieces together, I guess, for the X10-10 part, we're going to probably see continuous quarter-over-quarter improvement throughout this year driven by the gradual recovery as well as the strong momentum that's coming from the smaller new apps. How fast the top line may ramp up throughout the year is really going to, as I said, heavily depend on the macro conditions.

So I hope that sort of answers your question. Maybe back to Ashley to take a few questions. Operator, let's take the second question, please. The next question comes from Thomas Tom with Jefferies. Please go ahead. Just a few backhand again on the47th question, please.

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Thanks, management, for taking my question. My question is about Canton. Can management share about the latest user trends as well as the outlook for China-China free revenue and profitability? On the other hand, in terms of the revenue scale, can management share about the trend...

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TAN-TAN user base showed a similar trend to normal, falling sharply during the surge of the infection and falling out after the Chinese New Year. Currently, DAU has rebounded to the same level as November last year. Whether or not we can continue to grow from that the terrifying COVID-19 vaccine continues to Dave.

It depends on if we can see continuous improvement in product experience and user retention, as well as our ability to introduce new pain features that can effectively improve channel ROI.

I don't think the pursue of user growth at the expenses of profit, like in the past year or two, is still a viable model. So what we need is revenue growth that can generate profits.

We will resume China investment to accelerate user growth if there is a significant improvement in ROI. And investors are putting to be a bit patient with us on this front.

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So, in terms of revenue growth, revenue growth is likely to come earlier and faster than user growth. And because both BlackGold membership and the chatroom experience actually build on

and both features play a positive role in enhancing user experience and retention. So therefore, even if user scale remains at the current level, it will continue to grow sequentially from Q1. And as for chat room experience, we will focus on refining the product and operations for now, so we don't expect the chat room to bring a large amount of revenue this year. But however, we have full confidence in the monetization model and revenue potential of the chat room experience.

I will let Cassie talk about the bottom line. OK, about Tan Tan's bottom line. Well, if you look at the trajectory of the non-GAAP operating loss in 2022, you can see that we've been consistently narrowing down the operating loss quarter over quarter.

looking at a positive bottom line for Tonton toward back half of the year if not earlier this year. The other thing worth calling out here is that as Tanya mentioned as long as marketing ROI remains positive we won't focus too much on growing the bottom line margins at this point for Tonton because

there are still a great deal of growth opportunities for dating products in the China market. Instead, we could let part of the profit flow back into marketing to drive sustainable user growth as well as offline growth. That's what we meant by, you know, getting into a positive cycle, which is the most important strategic priority for Tan Tan this year. So, operator, next question, please.

The next question is from Luwei Zhang with CICC. Please go ahead. Thanks, Manjing, for taking my question. My question is about the new applications. Please go ahead and ask your question.

Could Mike Meng share more color on the strategies and revenue expectations of new FSPs here? Thanks. Hello, everyone, that is a family reference in the form of the expectations for future haha structures and GDP.

Thank you for your attention.

I first start by asking Mr. et al. for some information on how the Thank you.

In 2022, ROI-oriented new products turned profitable, with revenues up nearly 150% from 2021. Our goal for this app this year is to further scale up revenue and profit.

For the domestic apps which are at a more mature stage, the user base is relatively stable at the moment. So we will continue to expand profits by driving RP pool and margins. For the overseas apps which are facing a much broader market space, our goal is to expand new revenue markets on top of deepening the existing territory.

Turkish and Egyptian markets may be affected to some extent this year, but overall we see strong revenue and profit growth opportunities for social apps in the mainland market. We'll continue to make efforts in this direction.

In addition to the RY-oriented products that focus on revenue and profits, we will continue to invest and explore opportunities in DAO-oriented products. And in fact, in addition to TTA, we have several DAO-oriented products in the pipeline currently in beta.

will continue to be a key goal this year. Could management share more color on the cost control strategy and the overall margin track this year? Thanks.

a key goal this year. Could management share more color on the cost control strategy and the overall margin trend this year? Thanks.

Sure, sure. I guess that's for me. For growth profit margin, the biggest driving force here is the payout ratio. I remember someone asked that question last quarter as well. Actually, probably every quarter we all face this good old question. My answer remains pretty consistent with what I said at that time last quarter, which is that the supply side factors are at this moment pretty stable.

expenses, marketing costs, as well as infrastructure spending. We just finished the annual budgeting cycle and it seems that we still have some room to further improve the efficiency across all those spending areas. So investors can expect the operating expenses to further shrink down in a pretty meaningful way this year. They will be really blessed with the samecend inquest we received in our last few years.

And with top-line trend improving as the year progresses, both bottom-line and bottom-line margins are gonna improve as well. So I'm trying to sort of put things into...

a nutshell, if you look at the top line and the OPAC trends that I mentioned earlier and try to think about how the overall math works this year, there are probably two key takeaways. One is that top line-wise, 2023 is going to see continuous quarter-over-quarter improvement driven by the overall COVID recovery as well as the...

as well as the strong growth momentum coming from the smaller new applications. And the second takeaway is that we're going to continue to optimize on costs and expenses. So bottom line is going to see pretty meaningful growth on a year-over-year basis, especially in the second half of the year. So that's basically the overall financial picture that I can lay out at this point. I have visibility to lay out at this point.

That does conclude our conference for today. Thank you for participating. You may now disconnect.

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Ladies and gentlemen, thank you for standing by and welcome to fourth quarter and fiscal year 2022 Hello Group Inc. earnings conference call. All participants 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 key.

The company's results were released earlier today and are available on the company's IR website. On the call today are Mr. Tang Yan, CEO of the company, and Ms. Peng Hui, CFO of the company. They will discuss the company's business operations and highlights, as well as the financials and guidance. They will both be 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 Security Solidification Reform Act of 1995. Such statements are based on management's current expectations and current market and operating conditions, and relate to events that involve known or unknown risks, uncertainties, and 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, or achievements to differ materially from those in forward-looking statements.

Further information regarding this and other risks, uncertainties and factors is included in the company's findings 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 for the events or otherwise, except as required under law. I will now pass the call over to our CEO , Mr. Tang Yan.

Thank you.

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We hope to see you in the next year's 2021 year. Thank you for your attention. Hello everyone. Thank you for joining our call. 2022 was an extremely challenging year for many Chinese companies as the COVID resurgence brought a lot of uncertainties to the overall business environment. However, I'm pleased to see that our team withstood external pressures by timely adjusting strategic priorities and corresponding execution plans in the second half of the year.

with flexible product and operational measures. Despite the challenges, we delivered solid financial results for shareholders, enabling us to conclude the year on a satisfactory note. I will first review the main operating and business results in the fourth quarter and fiscal year 2022, and then I will outline our strategic priorities for fiscal 2023.

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bringing both European countries to the south and also inappropriate countries Mr. Huambikang, please be right there in the muted Choice Line If you like, makes no receiving Bitcoin news, See you next time.

I will start with a brief overview of our financial performance. For the fourth quarter of 2022, total revenue was 3.21 billion renminbi, down 13% year-over-year and 1% quarter-over-quarter. Adjusted operating income was 499 million renminbi with a margin of 16%.

Total revenue from normal app and standalone new app was 2.87 billion renminbi, down 11% year over year and 1% quarter over quarter. And adjusted operating income was 514 million renminbi, down 21% year over year and 20% quarter over quarter, with a margin of 18%. Total revenue from TanTan came in at 347 million renminbi, down 21% year over year, but up 2% quarter over quarter.

Adjusted operating loss was significantly narrowed to 15.17 mMB from 140 mMB in the same quarter of last year. On a sequential basis, adjusted operating loss continued to narrow further despite an increase in the year-end seasonal expenses. I'm pleased with the progress that Tanta made in improving cost efficiency in the second half of the year.

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For fiscal 2022, total revenue was 12.7 billion renminbi compared with 14.6 billion renminbi in 2021. Adjusted operating income was 2.03 billion renminbi with a margin of 16% compared with 2.59 billion renminbi in 2021. The decrease in total revenue and adjusted operating income was mainly due to the significant pressure on both normal and tangtang caused by COVID-related factors.

and regulatory factors. We adjusted some of our strategic priorities mid-year, focusing on cost reduction and efficiency improvement, to mitigate the negative impact of external factors on our bottom line.

Total revenue from the normal app and standalone apps for fiscal year 2022 was 11.3 billion renminbi, down 10% from last year. The decrease was due to the decline in normal revenue, while the standalone apps maintained rapid growth momentum from a high base in 2021. Adjusted operating income was 2.36 billion renminbi in 2022, with a margin of 21%.

compared with 2.92 million MMB in 2021 with a margin of 23%. Pentance total revenue was 1.37 million MMB, down 33% from 2021. Adjusted operating loss was 330 million MMB, compared with 337 million MMB in 2021. Although revenue declined from last year due to the impact of the pandemic and the reduction in channel investments,

Tintan's adjusted operating loss narrowed as a result of our initiative to reduce cost and improve efficiency starting in July . Bottom line performance improved significantly in the latter half of the year, laying a solid foundation for Tintan to achieve break-even in fiscal 2023.

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ensuring the cash cow business remains stable. Although many uncertainties surrounding the COVID and regulatory environment last year resulted in a relatively large gap between that goal and actual results. I'm pleased to see that in response to the external challenges, our team timely mitigated the decline in profit by reducing cost and improving efficiency.

This has laid a solid foundation for our cash cow business to turn to a growth trajectory once the external environment improves this year. Tanta's goal was to deliver solid user growth by improving marketing efficiency and the quality of experience. However, the COVID situation continued to deteriorate from the beginning of the year and largely affected user savings sentiment and their propensity to pay for body-wide services, resulting in a significant decline in channel ROI. Therefore, we decided to adjust Tanta's strategic goals in the second half of the year.

to focus on narrowing net loss by reducing low efficiency channel marketing spend and accelerating our efforts to develop product and monetization models that are suitable for the Asian dating culture in order to pursue profitable growth. TANF's financial performance in the past two quarters has clearly demonstrated the importance of our strategic adjustments and our team's strong execution ability.

With respect to the new products and businesses, our goal was to continue to enrich our product portfolio and push the boundaries beyond MoMA and TanTan. We made steady progress on this front in 2022. Next, I will walk you through the details.

to understand using really fast and mentally creating energy tools for the energy energy our energy plant is talked about and that led to the development of around homes to permits. This year our technology Thank you very much for your time.

If you have any questions, please leave them in the comments.

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If you have any questions or comments, please feel free to contact me.

And that concludes the session. Welcome to scientific studyirenium, the Miaoselves Science Special. Before I try to work out the coverage, I want to therefore, the opportunity to meet the clamor points of our Erbil touchscreen. Generally speaking, the

Firstly, regarding HOMO-App user growth and key operating metrics, in 2022, user traffic and engagement level faced more severe challenges in comparison with the previous year. The main pressure came from the increasingly tightened COVID containment measures throughout the year, as well as the COVID infection surge in many regions in China after the removal of the deal.

scaled-back investments in channels timely to reduce unnecessary spending during the peak of the pandemic.

The decline in MAU caused the number of paying users to decrease by 600,000 to 7.8 million in the fourth quarter. In 2022, to improve marketing efficiency, our team continued to optimize channel strategy and shifted our user acquisition focus from MAUs to paying users. The improvement in channel marketing efficiency mitigated our financial pressure in the channel

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Now I'll discuss progress we made regarding the priorities of insuring our cash cow business remains stable. In 2022, multiple external factors brought severe challenges to Momo App Top Line particularly the live streaming business.

The incremental revenue contributed by the new standalone apps to MOMO segment VASTline partially elevated the pressure from MOMO app. For fiscal 2022, the revenue ratio of VAST and live streaming increased by 22 percentage points from the previous year to 87%. Our team leveraged VAST use cases to unleash the spending potential of long-tail users.

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doubles direction form. Once live-streaming revenue was 1.56 billion, for the fourth quarter, down 20% year-over-year, but up three percent sequentially. For fiscal 2022, revenue from live-streaming total's 5.97 billion, 20% year-over-year.

In 2022, the pressure on livestreaming revenue mainly came from two factors. Number one, the market had wings and spending softness as a result of the pandemic. And number two, product adjustments were made in Q2 to meet regulatory requirements. In the second half of the year, our livestreaming team introduced new features targeting high-paying users to improve their product experience. And the expansion in the number of top cohort users drove continuous growth in livestreaming revenue. In December , a large number of broadcasters...

suspended work due to high infection rate after the reopening, causing severe short-term disruptions to the supply side and revenue growth. However, the incremental revenue from the year-end competition in November provided strong support for the live streaming revenue to grow sequentially in Q4.

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and the digital market and the digital market. In 2022, our live streaming team gradually shifted the operational focus from revenue growth to profitable growth and controlled costs by adjusting the operational policy and design of the Gameify features. With this guideline in mind, we introduced some cost saving designs to the year-end competition event.

This partially reduced the pressure of large scale events on the gross profit margin. The sequential dip in GP margin in Q4-22 was milder than in the same period last year. The overall revenue sharing policy and supply-side ecosystem remain stable throughout the year.

The growth of the TSE is a significant increase in the value added services. The TSE is a significant increase in the value added services. With regards to VAS, revenue from value added services excluding TanTan totaled 1.27 billion yuan for the fourth quarter, up 2% year-over-year and down 5% sequentially. The year-over-year growth was entirely attributable to the incremental revenue from the new standalone apps.

In the fourth quarter, vast revenue from the MoMo app totaled 1.04 billion renminbi, down 9% both year-on-year and quarter-over-quarter. Revenue from the standalone apps was 220 million renminbi, up 129% year-over-year and 15% sequentially. Within the state of MoMo, our current product is 1. album, as shown byumblr as before.

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For fiscal year 2022, revenue from value-added services, excluding Canton, totaled 5.18 billion renminbi, up 7% year-over-year. Vast revenue from the MoMo app decreased 2% year-over-year to 4.45 billion renminbi due to the continuous pressure from COVID.

normal advanced revenue was considerably lower than our expectation at the beginning of 2022. In order to offset this revenue decline, our team pushed harder on monetization of new apps, driving revenue from these new apps collectively to increase 143% year-over-year to 737 million D.

As COVID control measures became increasingly strict in 2022, social use cases with higher conversion of online to offline activities bore significant pressure on both traffic and revenue fronts. For example, users' enthusiasm on virtual gifts consumption in interest groups and in greetings from the nearby people list significantly weakened compared with before the strict COVID control measures were implemented.

Revenue from membership subscriptions also declined because this service represents paying features designed to increase users' efficiency to make new connections that they can potentially need offline. In contrast, the audio and video-based social entertainment experiences with less LBS attributes were able to effectively offset the impact of COVID on traffic and users' propensity to pay, and drove steady revenue growth in 2022 by leveraging innovative product and features to improve the quality of the service.

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In response to the business and financial impacts on Canton caused by the escalating pandemic control measures since the beginning of the year, the management decided to pursue a cost control strategy in the second half to narrow Canton's net loss by reducing marketing spend and cutting investments in channels and methods with low ROI. Since the removal of the zero COVID policy in early December , many regions across the country experienced a surge in COVID infections, which put a lot of pressure on user traffic. Compounded by the reduction in channel investments, Canada's overall MAU decreased 12% quarter to 18.4 million.

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Now I'll briefly review tlegda financial performance. Total revenue for the fourth quarter was 347 million left, down 21% year over year but up 2% sequentially. The year over year decreased was mainly due to the decline in the number of paying users.

The sequential growth was due to the improvement in RP pool driven by livestreaming and the new premium BlackGold membership service, which offset the pressure on revenue caused by the decline in paying users. VAS revenue was 184 million ZMV, down 9% sequentially. Although the sales of new membership service played a positive role in improving VAS RP pool, the increase couldn't fully offset the pressure from paying user decline, because membership revenue is highly correlated with the number of paying users.

The live streaming business, which is more sensitive to revenue oriented operational efforts, our team was able to drive significant RPPU growth through product improvements and new features. As a result, live streaming revenue for the fourth quarter was up 17% sequentially to 163 million renminbi. The live streaming business, which is more sensitive to revenue oriented operational efforts, our team was able to drive significant RPPU growth through product improvements and new features. As a result, live streaming revenue for the fourth quarter was up 17% sequentially to 163 million renminbi.

For fiscal year 2022, 10 times total revenue was 1.37 billion YMMB, down 33% year-over-year, mainly due to the decrease in paying-use accounts resulting from COVID and our initiative to reduce channel investments. Last revenue in 2022 was 824 million YMMB, down 27% year-over-year, and live-streaming revenue was 544 million YMMB, down 40% year-over-year.

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intell,hamingthis, knifeitude Nirvana with W3M3, hPaeningfusion, 4. procedures, Jesse Lin withWork, stronghold Tandon's adjusted net loss for fiscal year 2022 was 306 million MMB compared with 337 MMB in 2021.

Although the net loss in 2022 was still relatively large, adjusted net loss was substantially narrowed in the latter half of the year, thanks to our effective strategy to control costs and optimize channel investments. The average quarterly adjusted net loss significantly improved from 114 million renminbi in the first half of the year to 14 million renminbi in the second half, and the efficiency of results investments greatly improved.

in 2022 was still relatively large, adjusted net loss was substantially narrowed in the latter half of the year, thanks to our effective strategy to control costs and optimize channel investments. The average quarterly adjusted net loss significantly improved from 114 million renminbi in the first half of the year to 14 million renminbi in the second half, and the efficiency of result investments greatly improved.

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Now, let's look at the progress Penta has made against its strategic priorities. The strategic goal we set at the beginning of the year before the pandemic situation deteriorated was to deliver solid user growth by improving marketing efficiency and coordinating experience.

However, during the second quarter, tightened COVID control measures had a severe negative impact on user retention and paying conversion. User retention and paying conversion are key indicators that determine LTV and channel ROI. The significant decline in both metrics led to a negative third cycle where the more users we acquired, the greater the financial loss. Growing the user base without making a profit not only makes no economic sense, but also reduces their digital reversal rates starting at $ unrealisticait no Indian Futures £ $ 2018 Texas The Americancy

but it's also unsustainable. In response to the uncertainties created by the pandemic, in the second half of the year, we adopted a more prudent marketing strategy rather than grow at the expenses of bottom line. We reduced the spending in low-efficiency channels to narrow net loss. At the same time, we continue to focus on improving user retention and RPU growth through algorithm, product innovation, and new non-membership vast features. Once RY turns positive, we will reinvest the profit into marketing to create a self-sustaining growth cycle.

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New user acquisition indicators such as the unit acquisition cost, retention and new user R-Pool have all improved to varying degrees compared with the previous year. The average unit acquisition cost for fiscal year 2022 was down nearly 20% year on year and especially in Q4 user acquisition cost was down 50% from the year ago period.

and new user output increased by more than 40%. Compared with the previous year, the average user age tended to be younger, and the proportion of new female users remained at a satisfactory level. Our team maintained the stability of the user experience and of the platform ecosystem, despite the deteriorating pandemic situation and the decline in new users, resulting from the channel investment reduction. Thank you for your attention.

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In terms of improving our pool through new product experiences, we have clarified two important directions. First, for user products, we need to explore effective social experiences beyond the swipe and match features. Second, for commercial products, we need to introduce non-membership vast paying models to improve per user revenue.

During the year of 2022, we made a few important optimizations to the chat room experience, which have played a positive role in improving retention and the time span of female users and of those who are reluctant to show their real photos. At the same time, as a consumer experience based on virtual gifting, chat room can also effectively unleash the spending potential of different cohorts of users when it comes to monetization. Thank you for your attention.

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In 2022, in addition to exploring non-membership vast features, our team also continued to dig deeper in the direction of membership subscriptions. In the second half of the year, we launched a high-end BlackGold membership service on top of the SVP. This was immediately well received by a high-spending cohort.

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I'll review the progress we made with our new endeavors. For the new standalone apps, financials of the profit-oriented vast and gaming apps are consolidated under MOMOS P&L in our segment reporting. In the fourth quarter, revenue from the standalone apps totaled 229 million MMB doubled from the year-go period and up 13% sequentially. Friends, thank you for joining us today.

Total revenue of our new endeavors was 791 million renminbi, up nearly 150% year-over-year. All standalone social apps have started to contribute to the group's profit this year while delivering rapid top-line growth. We expect the three standalone apps to continuously contribute meaningful revenue and profit to the group.

In addition to profit-oriented products, we made breakthroughs in non-RY-oriented products for the first time in 2022. At the beginning of the year, we took the opportunity of the generational transaction to launch the first large DAU product targeting GenZ and GenAlpha users, and the user base quickly reached a considerable level. This confirms our team's competitive advantage in discovering new markets and receiving new opportunities in the social space.

Going forward, we will accelerate the pace of new products exploration based on trial and error, and strive to provide better social products for users of different ages and with different needs.

So, if you have any questions, please feel free to contact me. If you have any questions, please feel free to contact me.

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This concludes our business updates. Now, I will briefly go through our strategic priorities for 2023. Firstly, for the mature mobile app, our goal is to keep the users' and revenue scale stable and continue to optimize on cost structure and maintain the productivity of the cash cow business. To achieve this goal, we will continue to optimize product operation and increase the productivity of the product.

incremental revenue and profit to the group top line and bottom line. In addition, we'll further explore opportunities for large DAU products to open up a new growth path.

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approximately $137 million or 50% of the net income attributable to HoloGroup Inc. in 2022. Investors who have been following us long enough will know that this is the fifth consecutive year that we have shared the fruit of our work with our shareholders.

whatever decision we make in terms of driving organic growth, business growth, identifying decent investment opportunities or paying back shareholders with dividends or in the form of equity buyback.

The fundamental principle of our capital allocation strategy is to create long-term value for our shareholders. I would like to thank you all for your faith in us. Now, let me pass the call over to Kathy for financial review.

Hello everyone, thank you for joining our conference call today. Now let me briefly take you through the financial review. Total revenue for the fourth quarter of 2022 was 3.21 billion RMB, down 13% year on year and less than 1% quarter on quarter. non-GAAP net income attributable to the company was 487.9 million RMB, excluding the impact of a crude oil spill in the U.S.

income tax expenses on the undistributed earnings, which were not on a comparable basis for the two periods. non-GAAP net income in the fourth quarter of 2022 was up 8% from the year-over period, despite the top-line decrease as a result of our cost control efforts. Looking into the key revenue line items for the quarter. Firstly, online broadcasting. Total revenue from live broadcasting business for the fourth quarter of 2022 was 1.72 billion RMB, down 20% young year, but up 4% quarter-over-quarter. Mobile app live broadcasting revenue totaled 1.56 billion RMB for the quarter, down 20% young year, but up 3% quarter-over-quarter.

The year-over-year decrease was due to the pressure caused by the COVID and regulatory factors. The sequential growth was mainly attributable to the incremental revenue generated by the year-end competition event. Tom-Tom's slide broadcasting revenue amounted to 162.9 million renminbi, down 19% from Q4 last year, but up 17% from the previous quarter. The year-over-year decrease was mainly due to the negative impact of the pandemic and reduced channel investment, resulting in a significant decrease in the paying user count. The sequential increase was driven by our true growth thanks to our product.

pressure on Momo app LBS related features caused by the deteriorating COVID situation in China in Q4'22. Tannan's value-added service revenue amounted to maybe a $183.8 million, down 22% from Q4 last year and 9% from the previous quarter.

The decrease was due to the pressure on contents and the use and paying conversion caused by the COVID-related factors as well as the reduction on marketing spend. non-GAAP cost of revenue for the fourth quarter of 2022 was 1.91 billion renminbi compared to 2.19 billion for the same period last year. The net gross margin for the quarter was 40.4%.

Same as the year-ago period and down 1.3% from last quarter, mainly due to the incremental expense in connection with the year-end competition event for live streaming. non-GAAP R&D expenses for the fourth quarter was 250.5 million RMB compared to 279.7 million RMB for the same period last year, or 10% decrease YOY. The decrease was due to continuous optimization in personnel costs since the beginning of the year. non-GAAP R&D expenses as a percentage of revenue remained stable at 8% from the year-ago period.

We ended the quarter with 1,705 total employees, of which 459 are from Tan Tan, compared to 2,051 total employees, of which 552 from Tan Tan a year ago. The R&D personnel as a percentage of total employees for the group was 63% compared with 62% Q4 last year. non-GAAP sales and marketing expenses for the fourth quarter was 398.6 million RMB, or 12% of total revenue, compared to 648.6 million RMB, or 18% of total revenue for the same year.

The significant year-over-year decrease, both in terms of absolute renminbi amount and as a percentage of revenue, was primarily attributable to Tampan's shift in marketing strategy to cut spending on low-efficiency approaches in order to take care of ROI and to a lesser degree, reduction of more most marketing spend amid a pandemic outbreak. Long-dip GNA expenses was $84.9 million renminbi for the fourth quarter of 2022 compared to $89.4 million renminbi for the same period last year, representing 3% and 2% of total revenue, respectively.

Now briefly on other operating income slash loss items. Other operating loss for the quarter was 65.2 million RMB compared to an income of 38.6 million RMB for the same period last year. In Q4 2022, we accrued 92.9 million RMB of potential loss related to Omo-Mo users' alleged illegal activity and embezzlement of funds, which was recharged and consumed on Omo platform. There is no suspected or alleged wrongdoing on the part of the group. The 92.9 million RMB of potential loss related to Omo platform was $2.9 million.

million renminbi involved in the case is recorded as restricted cash on our balance sheet. Until the ruling of the court is announced, we won't know for sure whether the fund will be ultimately released or instead drawn from our account to compensate a plaintiff in the case. However, for conservative purpose, we've decided to take the item into our P&L as an operating loss in Q4 2022. Other operating loss caused by the accrued amount was partially offset by a couple of income items.

non-GAAP operating income was 499.2 million RMB, a decrease of 2% from Q4 2021, and 18% from the previous quarter. non-GAAP operating margin for the quarter was 16%, up two percentage points from the same period last year, but down three percentage points from the previous quarter. non-GAAP OPACs as a percentage of total revenue was 23%, a decrease from 28% from Q4 2021,

for Q4 2021 and 24% from last quarter. non-GAAP operating expenses on a year-over-year basis decreased 28%. The decrease in both absolute RMB amount and as a percentage of revenue for OPACs was mainly due to the reduction in social marketing expenses and to a lesser degree, optimization in personnel costs. non-GAAP operating expenses decreased 4% sequentially. This is attributable to the decrease in marketing expenses which offset the increase in seasonal expense.

tax rate was around 12% in the fourth quarter. Now turning to balance sheets and cash flow items. As of December 31, 2022, whole groups cash, cash equivalents, short-term deposits, long-term deposits, short-term investments, and restricted cash totaled 13.4 billion in the state of secure andbuilt markets excuse me

and payment to Chinese tax authorities to re-patch raid cash from a wolfie in China to our offshore entity. Net cash provided by operating activities in the fourth quarter of 2022 was 539 million renminbi compared to renminbi 666 million in the fourth quarter of 2021.

Lastly, on business outlook, we estimated our first quarter revenue to come in the range from 2.65 billion RMB to 2.75 billion RMB, representing a decrease of 15.8% to 12.6% year on year, or a decrease of 17.5% to 14.4% quarter over quarter. For Q1 2023, on a sequential basis,

We expect the total revenue from both Momo and Tan Tan to decline mid-teens due to the infection surge after reopen, coupled with the Chinese New Year negative seasonality. Please be mindful that this forecast represents the company's current and preliminary view on the market and operating conditions which are subject to changes. That concluded our prepared portion of today's discussion. With that, let me turn the call back to Ashley to start Q&A. Ashley, please. Thanks.

Just a quick reminder before we take the questions, please ask your questions in Chinese and followed by English translation by yourself. Operator, we're ready for questions. Thank you. Thank you. If you wish to ask a question, please press star then one on your telephone and wait for your name to be announced. If you wish to cancel your request, please press star then two. If you're on a speakerphone, please pick up the handset to ask your question. Our first question today comes from Leo Chang with Deutsche Bank. Please go ahead. Hello, everyone.

Thank you management for taking my question. My question is regarding to the Momo app. As the offline activities resume normalization, can management share the latest user and revenue recovery trend of the Momo app? Additionally, what is the target of more revenue in 2023?

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please ask for help. Any questions, please call Ira Women. Please call shacklingf wheel. She writes to her kids. Let me translate first.

So as I mentioned earlier, the reopening in early December severely affected our user base in a short period of time, resulting in a sharp sequential decline, MAU, in Q4. In early January , after the infection rate reached its peak in many regions, mainly in the northern part of China, local users started to gradually come back as the pandemic subsided. However, the recovery trend was interrupted by the traditional low seasonality of Chinese New Year.

when people started to return to their hometowns in mid-January to get ready for the holiday celebration. The DAU rebounded rapidly in early February after the Chinese New Year trial, and the growth rate was actually significantly higher than that in early January , and it was also better than our previous expectations. And currently, MoMA user base has rebounded to the same level as the end of summer holiday last year. In terms of operation strategy, MoMA app will remain focused on the ecosystem and product experience. We will continue to take a conservative approach in terms of event operation and competition arrangements.

That means we will prioritize stabilizing profit over driving non-profitable revenue growth. And I will leave it to Cassie for financial details. Let me briefly share what we can say at this point about that good old question.

will prioritize stabilizing profit over driving non-profitable revenue growth. And I will leave it to Cassie for financial details. Sure, let me briefly share what we can say at this point about that good old question.

For Q1, as you can see from our guidance, normal live streaming is going to see mid to high teens decrease from last year. The biggest reason here is that last Q1 was relatively a high base, because if you remember correctly, it was before the regulatory changes in May, regulatory changes that happened in May 2022. That sort of made the prior Q1 sort of a tough con for us. On top of that, I suspect that not having full visibility into the macro conditions for the rest of the year is still weighing on the mind of some of our high-pitched...

to three years is also going to see some stabilization for the coming few quarters. The only uncertainty is how strong the macro gets as we move deeper into the year because that's really going to determine the

a spanning sentiment of the top of the pyramid users for live streaming. For better added service, Q1 this year is also a bit tough due to the January trough related to China's re-open infection surge. Another factor here was related to Sochio, which was heavily impacted in Q1 due to the Turkey earthquake as well as the heavy depreciation of the Egyptian pound against US dollar.

Some of our payment channels in Egypt was actually suspended by local authorities due to that reason. We are currently shifting the Boston marketing dollars as well as some of the other resources to other growth countries where the growth momentum remains quite strong. Overall, we expect better added service to continue to grow this year with the second half being substantially stronger than the first half due to the aforementioned several factors. So if you put all these different pieces together, I guess for the ex-ten-ten part, we're going to probably see continuous quarter-over-quarter improvements throughout this year driven by these Such Realization

Thank you for taking my question. My question is about Pantone.

Can management share about the latest user trend as well as the outlook for 2023 revenue and profitability? On the other hand, in terms of the revenue scale, can management share about the trend in 2023? Thank you.

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But after this discussion, I think we will continue to work with China. The wartime user base showed a similar trend to MoMo, falling sharply during the surge of the infection and falling out after the Chinese new year. And currently the EU has rebalanced to the same level as November last year. Whether or not we can continue to grow from that and at what pace, Thank you.

It depends on if we can see continuous improvement in product experience and user retention, as well as our ability to introduce new paying features that can effectively improve channel ROI. I don't think the pursuit of user growth at the expenses of profits, like in the past year or two, is still a viable model. So what we need is revenue growth that can generate profits. We will resume channel investment to accelerate user growth if there is a significant improvement in ROI, and investors are putting to be a bit patient with us on this front.

continuous improvement in product experience and user retention, as well as our ability to introduce new paying features that can effectively improve channel ROI. I don't think the pursue of user growth at the expenses of profits like in the past year or two is still a viable model. So what we need is revenue growth that can generate profits. So we'll resume channel investment to accelerate user growth if there is a significant improvement in ROI and investors are putting to be a bit patient with us on this front.

So in terms of revenue growth, revenue growth is likely to come earlier and faster than user growth. And because both BlackGold membership and the chatroom experience actually build on well-established modernization models and both features play a positive role in enhancing user experience and retention.

So therefore, even if user scale remains at the current level, blackboard will continue to grow sequentially from Q1. And as for chat room experience, we will focus on refining products and operations for now, so we don't expect the chat room to bring a large amount of revenue this year. But however, we have full confidence in the monetization model and revenue potential of the chat room experience. I will let Cassie talk about the bottom line. Okay, about Tan Tan's bottom line. Well, if you look at the trajectory of the non-GAAP operating loss in...

2022, you can see that we've been consistently narrowing down the operating loss quarter over quarter throughout the year. In Q4, non-GAAP operating loss was already at 15 million renminbi kind of run rate. We expect that narrowing trend, overall narrowing trend to continue into this year, into 2023, which means that we should be looking at a positive bottom line for Tonton toward back half of the year, if not earlier this year. The other thing worth calling out here is that, as Tanya mentioned, as long as marketing ROI remains positive, we won't focus too much on growing the bottom line margins at this point.

for Tan Tan because there are still a great deal of growth opportunities for dating products in the China market. Instead, we could let part of the profit flow back into marketing to drive sustainable user growth as well as top-line growth. That's what we meant by getting into a positive cycle, which is the most important strategic priority for Tan Tan this year.

So, operator, next question, please. The next question is from Luwei Zhang with CICC. Please go ahead. Thanks for taking my question. My question is about new applications. Could much more color on the strategies and revenue expectation of new applications? Thanks.

twent you our au machine hand ingthe AR aria' some family judging Don pay. Well, how a tremendous, unique earning thanania something also. So even's up she T or some ch you know who didn't get way tun go H are people who do you tr only way more. sus up Hi wr somethingpt a you may in Ju on quarters, some in also how the ches out it E twards.

we see strong revenue and profit growth opportunities for social apps in the mainland market. We'll continue to make efforts in this direction. In addition to the ROI-oriented products that focus on revenue and profits, we will continue to invest and explore opportunities in DAO-oriented products. And in fact, in addition to TTA, we have several DAO-oriented products in the pipeline currently in beta.

We will share more information with the investor community as we accumulate more data. Operator, do we have any more questions on the queue? Yes, we have one more from Henry Sun with JP Morgan. Please go ahead. Thanks management for taking that question. My question is about the margin. As you mentioned, the prepared remarks on optimizing costs will continue to be a key goal this year. Could management share more color on the cost control strategy and the overall margin track this year? Thanks.

I guess that's for me. For growth, profit margin, the biggest driving force here is the payout ratio. I remember someone asked that question last quarter as well. Actually, probably every quarter we all face this good old question. My answer remains pretty consistent with what I said at that time last quarter, which is that the supply side factors are at this moment pretty stable. That means payout is going to remain largely stable as well.

different business hours, there are different margin profiles. So revenue mix is always going to be another variable in the equation you should consider when modeling out the GP margin. So that's the GP margin line. Moving down that line, last year we did a pretty good job in optimizing the key operating expenses items such as personnel expenses, marketing costs, as well as infrastructure spending. We just finished the annual budgeting cycle.

And it seems that we still have some room to further improve the efficiency across all those spending areas. So investors can expect the operating expenses to further shrink down in a pretty meaningful way this year. And with top-line trend improving as the year progresses, both bottom line and bottom line margins are going to improve as well. So I'm trying to sort of put things into a nutshell. If you look at the top line and the OPEX trends that I mentioned earlier and try to think about how the

math, overall math works this year, there are probably two key takeaways. One is that top-line-wise, 2023 is going to see continuous quarter-over-quarter improvements driven by the overall COVID recovery as well as the strong growth momentum coming from the smaller new applications. And the second takeaway is that we're going to continue to optimize our costs and expenses. So bottom line is going to see pretty meaningful growth on a year-over-year basis, especially in the second half of the year. So that's basically the overall financial picture that I can lay out at this point. I have visibility to lay out at this point. So other income stakeholders and other S&P areas, ok…

I guess we'll have to wait and see as the year progresses. I guess for the interest of time, that's going to be the last question that we take. I'll hand back to Ashley for closing remarks. Thank you. Thank you everyone for participating in our call, and we'll see you next quarter. Have a good night and good morning. Bye. That does conclude our conference for today. Thank you for participating.

Q4 2022 Hello Group Inc Earnings Call

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