Q1 2023 Hello Group Inc. Earnings Call
Ladies and gentlemen, thank you for standing by and welcome to the first quarter 2023 Hello Group Inc. Earnings Conference call.
Please note the conference is being recorded today.
I would now like to hand the conference over to your first speaker today, Ms Ashley Jing. Thank you. Please go ahead, ma'am.
Thank you, operator. Good morning and good evening, everyone. Thank you for joining us today for Hologroup's first quarter 2023 earnings conference call. The company's results were released earlier today and are available on the company's IR website. On the call today, I'm Mr. Tang Yan, CEO of the company. I'm Ms. Peng Gui, 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 column contains forward-looking statements made under the Safe Hubbell provision of the Private Securities Litigation Reform Act of 1995. For more information, visit www.safehubbell.com
Such statements are based on management's current expectations and current market and operating conditions and relate to events that you own, know or unknown risks and certain recent 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 statement.
Further information regarding this and other risks and certainties and factors is included in the company's findings with the US Securities and Exchange Commission.
The company does not undertake any obligation to update any forward-looking statement as a result of new information, future events or otherwise, except as required under law. I will now pass the call over to our CEO , Mr. Tang Yan.
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Hello everyone, thank you for joining our call. We delivered solid results in the first quarter, laying a good foundation for our business development in the post-apandemic era. Now, our review of the progress is made in each business line since the beginning of the year and our future development plans.
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I will start with a brief overview of our financial performance. For the first quarter of 2023, Toto-Bit Red Bullin was 2.82 billion yen per week, down 10% from the same period last year, and 12% sequentially.
Hotline performance came in better than our expectations, as the year-on-year decline in revenue narrowed compared to the previous quarter.
Adjusted operating income was 518 million renminbi, up 12% from Q1 last year and 4% sequentially, with a margin of 18%, up 4% point year-on-year and 3% quarter-over-quarter. Profitability improved despite the downward pressure on top line, mainly due to TANF breakeven, which relieved
Relief pressure on the group's profile level, as well as the solid cost control on the cash cow business round.
Total revenue from the MOMO app and standalone new apps was $2.51 billion MMB, down 10% year-over-year, and 12% over quarter.
The adjusted operating income was 503 million RMB, down 19% year-over-year, or a slight decrease of 2% from the private quarter, with the margin of 20%.
Total revenue from TanTan came in at 309 million renminbi, down 12% year-over-year and 11% quarter-over-quarter.
in response to the many uncertainties surrounding the pandemic and its impact on the economy. We initiated a cost control strategy in the second half of last year to reduce low efficiency channel marketing spend in order to narrow time-tense net loss.
As a result, in Q1, TANTA delivered its first quarterly profit at the operating level since its inception.
With an adjusted operating income of 14.48 million ruby, representing the margin of 5%. Compact with an adjusted operating loss of 158 million ruby in the same period of last year.
I'm very pleased with Tantan's team's ability to execute and improve cost-efficiency over the past few quarters.
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At the end of last year, we completed the alignment of our overall organizational structure and divided more more pentat and the new endeavors into three relatively independent business segments. This lifecycle-based management approach makes it easier for us to devise and execute different strategic priorities for products at different stage of their respective lifecycle.
allowing our product teams to focus effectively on the integration and balance of user experience and monetization to better unleash the long-term product and commercial value of each app.
On the March earnings call, I outline our strategic priorities for 2023 across our businesses.
For the mature mobile app, our goal is to keep the user and revenue scale stable, continue to optimize cost structure and maintain the productivity of the cash cow business. For tantan, our goal is to achieve over-office even for the year and develop products and monetization models that are suitable for the Asian dating culture.
in order to produce sustainable growth on the back of a positive decision cycle.
which respects to new products. We will enrich our product portfolio, which the boundaries beyond more money and time and develop long-term growth engine.
Now, I'll walk you through the details.
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For the mature model app, in order to ensure that the cash cow business remains stable, we must optimize product operation and introduce new monetization features, as well as improve cash utilization and personal efficiency. Almost better than expected financial performance in the first quarter is a good demonstration of our team's execution and disabilities on those strategic priorities.
Although revenue from the Moomo app declined year-on-year due to multiple external pressures, the new standalone apps continued their rapid growth momentum, partially offsetting the pressure on Moomo app.
The incremental revenue contributed by the new standalone apps to more more value-added service line resulted in an increase in the revenue ratio of last and live streaming from an average of 87% last year to 93% in the?.grouping digital and digital health feedbacks has further taught folks about digital looking
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In the first quarter, more Muslim streaming revenues 1.29 billion in B down 13% year of a year and 700% sequentially. The year of a year decrease was mainly due to the pandemic and product adjustments to comply with regulatory requirements in the second quarter last year. The quota of a quarter decline was due to the severe impact of COVID-19.
Infection surge on the supply side at the end of last year coupled with negative Chinese New Year's Infection surge on the supply side at the end of last year.
The financial performance of the live streaming business in Q1 turned out to be better than expected, with the lower sequential revenue declined than in the same period last year, mainly due to incremental revenue from operational events and a rebound in organic revenue brought about by broader upgrades.
In order to stimulate supply-side recovery, we offered incentives to broadcasters to resume the live shows. The related incremental costs were offset by the reduction in competition event costs. The revenue share ratio in the first quarter was relatively stable compared to the previous quarter.
By March, the supply side had almost recovered to its level before the COVID infection spike at the end of last year.
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In the third quarter, last revenue is green in 10 times totaled 1.19 million yuan per day, down 5% over year and 6% sequentially. Last revenue from the MoMA app totaled 969 million yuan per day, down 14% over year and 7% over quarter.
Well, revenue from the standalone app was 225 million people up 66% year-over-year and slightly coincidentally.
The decline in mobile bus was mainly due to the severe impact of COVID on traffic and users' propensity to pay for bus. Combined with the negativity of analogies, the decline in mobile bus was mainly due to
trying more of us was mainly due to the severe impact of COVID on traffic and use of propensity to pay for us. Combining with the negative acid analogy in order to
To mitigate the negative impact of external factors on the paying user account and RP pool, we launched the same events around the Chinese New Year holiday in our traditional virtual gifting social use cases and tried to maintain a stable revenue scale in the off season.
In audio and video-based social entertainment experiences, we optimize the supply side to bring revenue back to a growth track soon after the Chinese New Year. In late March, we introduced a new multiplayer interactive feature in the chat room. And the initial data shows that it has a notable effect on improving our people.
audio and video-based social entertainment experiences, we optimize the supply side to bring revenue back to a growth track soon after the Chinese New Year. In late March, we introduced a new multiplayer interactive feature in the chat room. And the initial data shows that it has a notable effect on improving our people.???? profile reactions.
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In terms of our user base and operating matrix, after the removal of the zero COVID policy in December last year, and the year was severely hit by the large-scale infection search over a sharp year and a time.
After COVID cases picked in January , MOUs in various regions gradually picked up, but the recovery was negatively impacted by Chinese New Year. During the holiday, MOUs fell to an autumn low for the same period.
However, I may use an engagement rebonded rapidly after the holiday, and the effent and curation of the recovery will better than previous years, and the short recovery period before the holiday.
In March, MOUs increased 13% sequentially to $106.5 million close to the level in September last year.
Channel marketing unit acquisition cost decreased by nearly 10% from a year ago.
Thanks to our continuous efforts to optimize user acquisition strategy to enhance efficiency.
which enabled us to obtain a relatively stable user scale with lower investment in channels. The improvement in capital utilization efficiency has played a positive role in holding up movements over our profit level.
In Q1, more than 7.8 million paying users. Flags sequentially, the COVID spike at the Chinese New Year holiday had a severe negative impact, particularly on the demand from long-tailed-wav users.
After the holiday, people's lives returned to normal and uses consumption sentiment also began to recover.
However, the relatively large decrease in the number of pain users in the first half of the quarter drag down the average for the entire quarter.
In terms of various uses in gauge minimum matrix, the transient uses in gauge minimum attention at the beginning of the year is consistent with that of MAUs.
After injuring the rebound period, use cases with strong LBS attributes, which were hit hard by the pandemic, recovered particularly well.
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As a mature woman with more than a decade of history, more and more earlier has she experienced a rapid use of growth.
However, our current strategic priority is to control costs and maintain stability of the user scale.
Our overall strategy for this cash cow in 2023 is to focus on our eye, reducing investments in low-out TV channels to drive profitable growth rather than blindly chasing and profitable user growth.
Consequently, in comparison with penguins, I mean you will no longer be the most meaningful operational matrix for investors, and thus does not need to be tracked on a quarterly basis.
Therefore, we have decided to stop disclosing our menu data on a quarterly basis from Q2 onwards.
unless there are significant changes in our user base.
We suggest that investors focus on the trend in paying user when looking at more more users' metrics.
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At the beginning of the year, our use of base was severely affected by internal and external factors, such as the pandemic, Chinese and the continuous reduction in channel investment.
Traffic started to recover gradually after the Chinese New Year. In March, MOUs increased the 6% sequentially to 19.5 minutes. The growth was mainly due to the continued recovery in organic traffic after the external pressure eased up.
into restraint. As users dating sentiment came back rapidly, we've been seeing an outbreak in standing activities on TANHAN, threatening the health of the dating ecosystem.
Therefore, we've launched a heavy-fisted anti-stand campaign, which has caused the users' come to go down from the March level. However, overall speaking, we believe that the past more than three years downward trend in the EU caused by the pandemic and scale-back in marketing has gradually bottomed out.
We may see some small fluctuations from the current level, but overall speaking, if marketing spend stays at the Q1 level, our user base should remain stable around 18 minutes.
Our next step plan is to further improve channel efficiency while increasing our pool and retention through product innovation in order to sustainably improve ROI and drive Tantan into a stable positive business cycle and pursue user growth from that.
As of the end of Q1, Pan Han's paying use account was 1.6 million, a decrease of 100,000 from the private quarter, mainly due to the pandemic and Chinese New Year, which led to soft consumer demand in the first half of the quarter.
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Now, our briefly review time and financial performance. Total revenue for the first quarter was 309 million a week, down health, for daily over 10, and 11% sequentially. Although the pandemic and reduction in channel investment cost us significant yield with your decline and may you and paying users.
By 24% and 33% respectively. The increase in not be poor brought about by product and paying experience upgrades have partially offset the impact of the decline in the paying use account on avenue. Unrevenue.
The sequential decline in revenue was due to the surface the user demand cost by the COVID infection search at the beginning of the year and Chinese New Year.
OCE number of ping users and RP pool declined compared with Q4 last year. Last revenue was 168 million RMB down 9% sequentially. Life's 311 was 140 million RMB down 14% QtB. However,
It's good to see that our efforts to reduce cost and increase ROI or paying off. The efficiency of capital utilization in terms of personnel and marketing was substantially improved.
And union opposition costs continue to decrease significantly with the improvement in capital utilization efficiency and further optimization in channel investment, even though revenue fell temporarily due to external factors, tantaractivity's first-ever quarterly profit at the operating level.
A good stop for achieving strategic goals for the year.
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For 10 times, our strategic goal is to achieve break even for the year and develop product and monetization models that are suitable for the Asian-Legend culture in order to pursue sustainable growth on the back of a positive business cycle. To achieve this, we will be pursuing hard on both marketing and product trends.
Now, let me brief you on the specific work our team has done in these areas and our execution plan going forward.
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Firstly, on the channel front, one of our strategic priorities in the second half of last year was to cut down investments in low-hour marketing channels and improve user acquisition efficiency. This was the key factor for time-time to achieve operating profit this quarter.
Given the multiple external challenges at the beginning of the year, which had a significant impact on the users' staging sentiment and when it needs to pay, we further reduced tenants' channel marketing funds and focused our efforts on refining our operations, such as adjusting channel strategies to reach high-quality users more efficiently.
and optimizing our onboarding experience to lower entry-level barriers for new users. Our data shows that this new initiatives have contributed to the improvement in DAU. In the first quarter, unit appreciation costs the decrease significantly, both young, year, and sequentially. Channel I improved significantly after the low points in December last year.
and form the self-sustaining cycle.
I may you also stabilize after period of decline. In other words, Tantan has become a sustainable profitable business based on his current user base.
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However, our expectations for more more goes far beyond this. Despite the strategic adjustments we have made over the past year, sometimes long-term growth remains unchanged. As he faces a big market that consists of hundreds of millions of users with genuine fating demands that are currently under serve, at his peak, hundreds of users' base would almost half the size of more months. However, the reason is,
due to the impact of COVID and our overly conservative product development strategy can have used the basic lines substantially.
The whole point of adjusting our strategic goal is to resume time as user and revenue growth without incurring losses.
In the first quarter, we achieved the first step of our strategic goal, which is to achieve free-keeping. The next step for us is to address the under-deserved user needs through product innovations and leverage new product experience to improve our food and drive user and revenue growth.
This is what we mean by driving sustainable growth on the back of a positive business cycle.
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We have clarified two important directions on this front. So for use the product, we need to create social experiences the youngest life and match features.
Second, for commercial products, we need to introduce new, new, well-paying models with more flexibility to improve our improve.
In the first quarter, we're trying to prioritize diverting users who are reluctant to swipe to contemplate the use cases, such as the post. These help those who are not very good at talking to strangers out of nowhere to get more timely interactive opportunities by commenting on posts, thereby increasing their positive social feedback. In terms of monetization.
We believe there's a lot of room for Apple Improvement.
But we don't think our world should come from building excessive paywars for members, memberships, or life streaming, as we did a couple of years ago. Since last year, we have taken the new approach to monetization that can enhance staging experience.
In January , we upgraded our and reprised our high and black gold membership service, which we launched at the end of last year.
Since then, we've attracted a group of high-paying users that we couldn't reach before. The adjustment of the Black O-Membership Service drove our output to a record high during the Chinese New Year holiday period.
which normally is the low season for our business and supported our daily revenue against the seasonality with this incremental revenue. In terms of non-membership vast futures, we continued to increase the penetration ratio of our terrarium experience through continued product refinement.
If the Black Go membership service, chatroom and other new last product can deliver significant Apple growth and effectively improve channel ROI, then we will invest our profit in user operation to drive further user growth and revenue.
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Lastly, I will review the progress was made against our strategic priorities of enriching product portfolio and developing long-term growth engines. engines. Our plan for our RYAN-HIT standalone hubs is to continue to scale up
which were negatively impacted by the pandemic and Chinese New Year. Over the social app with the largest revenue scale and at the stage of rapid growth experience the temporary revenue growth slowdown due to multiple short-term negative factors factors such as the reduction of social entertainment activities doing Ramadan.
that are less affected by the above-formation factors. The proportion of revenue from this market increased steadily while channel hour I attended upward, laying a good foundation for rapid revenue and profit growth this year. With continuous product iteration and cost optimization, we expect both domestic and overseas apps to contribute more incremental profit.
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This concludes my remarks. Now let me pass the call over to passing for financial review. Thank you. Thanks. Uh, Tonko 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 first quarter of 2023 came in better than our previous expectation at $2.82 billion RMB, down 10% year-on-year and 12% quarter-on-quarter. non-GAAP net income attributable to the company was $471.9 million RMB.
Up 18% from the year ago period, despite the top line decrease, were down 3% from the previous quarter. The better than expected bottom line performance was attributable to our continuous cost control efforts, which led to tantas for a key pin and improvement in almost profitability. Looking into the key revenue line items for the quarter.
Firstly, on the library casting. Total revenue from library casting business for the first quarter of 2023 was 1.43 billion RMB, down 11% young year, and 17% quarter over quarter.
Small more app life broadcasting revenue total 1.29 billion in B for the quarter down 13% year over year and 17% quarter over quarter. The year of year decrease was due to the pressure caused by the COVID infection surge and regulatory factors. The sequential decrease was mainly due to COVID coupled with negative.
strategy to focus on user experience and retention. The sequential decrease was due to the pandemic and negative seasonality. Revenue from Value Added Service for the first quarter of 2023 was 1.36 billion room in B, down 8% from 2-1 last year and 6% sequentially. Revenue from Value Added Service on an X-Tem-Tem basis was 1.0.
and users' propensity to pay for that added service.
The year-over-year decrease was largely offset by incremental revenue contributed by the standalone new applications.
Pantas Validad is service revenue amounted to RIM&B 167.9 million down 25% from Q1 last year and 9% from previous quarter. The decrease was mainly due to the COVID-related factors as well as the reduction on marketing spend. ??Du potolis earlier April 18 and 20anium St ? ??
The young year decrease was mainly due to the one-off incentives that we provided to live streaming broadcasters to stimulate supply side recovery after the pandemic surge. The sequential increase in non-Gap Girls Margin was attributable to the reduction in the costs related to the year-end competition event in the previous quarter.
NON-GAP R&D expenses for the first quarter was 214 million ruby, compared to 229.2 million ruby for the same period last year, or a 6% decrease year over year.
The decrease was due to the continuous optimization in personnel cost, in personnel cost.
non-GAAP R&D expenses as a percentage of revenue remained relatively stable at below 8%. We ended the quarter with 1,533 total employees, of which 374 are from Tompkins.
compared to 1936 total employees of which 563 from Tantan a year ago. The R&B personnel as a percentage of total employees for the group was 63% compared with 61% to one last year.
Non-Gap SOTA marketing expenses for the first quarter was 372.0 million RIMINB or 17% of total revenue, compared to 578.0 million RIMINB or 18% of total revenue for the same period last year. The significant year-to-year decrease both in terms of absolute R&B amount.
and as the percentage of revenue was primarily attributable to Tan Tan's shift in marketing strategy to control costs and focus on channel ROI.
Mobile sales and marketing expenses remained stable from the year ago period. However, with Mobile's marketing spend, our team trained low efficiency channel marketing spend and used the savings for mobile live streaming year and GALA, which did not happen last year due to COVID control measures.
NONGAP GNA expenses was $88.4 million in revenue for the first quarter of 2023, compared to $85.9 million in revenue for the same period last year. GNA expenses as a percentage of total revenue remained stable at 3% from the year-go period. NONGAP operating income was $517.8 million in revenue.
an increase of 12% from Q1 2022, and up 4% from the previous quarter. NONGAP operating margin for the quarter was 18.4%, up 4% is points from the same pre-lash year and 3% points from the previous quarter. NONGAP operating expenses as a percentage of total revenue was 24%, a decrease from 28% into 1222, but slightly up from 20 to 12.
degree optimization and personnel costs.
Now, briefly on income tax expenses. Total income tax expenses was 122.6 million RMB for the quarter with an effective tax rate of 20%. You can think the Jarrod
In Q1, the company accrued with holding income tax of 34.5 million RMB, which is 10% of undistributed profit generated by our wealthy.
Without the withholding tax, our estimated non-gab-effective tax rate was around 15% in the first quarter. Now, I'm trying to balance sheet and cash roll items. As of March 31, 2023, Holo Group's cash cash equivalence short-term deposits, long-term deposits, short-term investments, and restricted cash totaled
13.35 billion RMB compared to 13.40 billion RMB as of December 31st, 2022.
Net cash provided by operating activities in the first quarter of 2023 was 461 million in the B, which was in line with net profit. Lastly, on business outlook.
We estimated our second quarter revenue to come in the range from 3.0 billion R&D to 3.1 billion R&D, representing a decrease of 3.5% to 0.3% year over year, or an increase of 6.4% to 10% quarter on quarter.
At segment level, for Q1 2023, on a sequential basis, we expect normal revenue to grow high single digit and time-time revenue to grow low single digit.
Please be mindful that this forecast represents the company's current and preliminary review on the market and operational conditions, which are subject to changes.
That concluded the prepared portion of today's discussion. With that, let me turn the call back to Ashley to start Q&A. Ashley, please. Hi, operator. We are ready to take questions. And just a quick reminder for those who are taking questions, please ask your questions in Chinese and followed by your English translation by yourself. Thanks.
Thank you. If you wish to ask a question, please press star one on your telephone and wait for your name to be announced. If you wish to cancel your request, please press star two. If you're on a speaker phone, please pick up the handset to ask your question. Your first question comes from Xiuzing Zhang with CICC.
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In terms of financials, Tentan delivers the first quarterly profit at the operating level. What's your outlook for Tentan G23, a revenue and the profit glitch? Thank you.
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Time has been a statement since the beginning of the year that it delivered its first ever quarterly profit at the operating level.
channel ROI turned positive and user scale has bottomed out. We need to further improve the marginal contribution rate of the new users in order to achieve effective user growth from the current level onwards. Therefore, our next step is to increase our pull through new VAR features.
and at the same time further reduce unit acquisition cost through technical means to drive ROI growth through both product and channel efforts.
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In terms of our goal to increase RPU, we have actually made some pretty good progress, except for the low seasonality in the first quarter. Tentants RPU has actually been turning up sequentially since the beginning of 2022. The drivers behind this include improvements in the basic paying experience.
and the launch of new paying features such as the Black Gold membership service and the chat room and so on.
Now, we'll begin introduction of thePA-2 software, only used by cl drinks.
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Regarding the chat room, we have also made some pretty good progress on the product front since the beginning of the year. We do not want to get too aggressive on the monetization for the time being because the product is not quite yet where we want it to be and we're not limiting ourselves to this specific paying experience.
In addition to the chatroom, we are also testing other new product features to drive our after growth that will be launched in the second half of the year.
So, Yuqi, can you tell me the question? I'll answer that one. Yeah, so for the conference revenue, I guess, the conference revenue will be driven by both user growth and RQ growth. As Tanya mentioned,
Just now we expect R2, time has R2 to keep improving as we wrote out more that added service experience in the second half of the year. And if we can get to a satisfactory level in terms of marketing RRI, we are gonna push the marketing button a bit hotter.
then we're going to see user growth kicking in as another leg of the growth engine. But before we actually see that second leg kicking in, I would lean on the conservative end and assume, make a high single digit quarter over quarter growth, top line growth for Tonton from Q2 onwards.
So that's revenue, I guess the question covers the profitability outlook as we move deeper into the year as well. On that front, I guess I would say, you know, the bottom line will stay relatively stable around Q1's level as well.
If, like I said, if marketing R.I. improved in a significant way, top line and gross profit obviously would be higher. But instead of letting it flow straight to the bottom line, we would likely invest a good portion of that into marketing to build future driver and expand market share.
So I hope that answers your question. That's it. I'll read the next question please.
Thank you. Your next question comes from Rafael Chen with B O C I. Please go ahead.
I'll try to explain myself, thanks management for this in my questions. I've found a strong quarter. Firstly, could maintenance years and all ages update on the development of time-type overseas business? Secondly, could maintenance years of insight on the latest updates of our issues?
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Our most promising overseas product currently is so-tale. Since we decided on the product direction, which is to focus on social and targeted the Middle East market in 2021.
Sochio has been experiencing rapid growth in terms of users, revenue and profit. And despite encountered some unexpected events in the first quarter such as the Turkish earthquake and the Egyptian currency devaluation, Sochio has actually shown good resilience and continued a growth.
Revenue in the Turkish market has actually started to recover. And as we temporarily shifted marketing dollars away from the bulk mentioned affected markets, we saw good potential for growth in emerging markets, such as North Africa and also in the Middle East, which is social, traditional, strong.
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As for Tantan's overseas development, we have been making some experiments in Indonesia and some other Southeast Asian countries for over a year.
Maybe because our localized operations not quite good enough yet, we haven't found a way to scale up profit. And we need more time to figure this out.
However, we will stick to our current strategy of pursuing profitable growth. In other words, we will not rush to increase marketing investments without a significant positive ROI. Instead, we will continue to explore ways to scale our profits while maintaining break-even.
If you have any questions, please feel free to contact me.
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The most promising app amongst our new endeavors is actually our overseas social product, Sochio. In the recent years, many Chinese internet companies have launched products overseas. And the success of Sochio has actually shown that social apps have quite considerable advantage in the overseas market. As a company that started with social products, our team has actually accumulated very intensive experiences in terms of user products and monetization.
To expand our users' coverage and generate more substantial profits. We have recently been actually experimenting with several new products and we'll update you in the new halftring C or such. Take a phand he ction that only found that timeamp in the Shell in TRI into the time Ind that in ch? Jm. Since judging she ensure who don't produ not AL.
We hope you have a great time. If you have any questions, please write them in the comments. We will be happy to answer them. We hope you have a good time. We hope you have a wonderful time. We hope you will be able to do your best. We hope you will be able to do your best. We hope you have a great time.
Since the end of last year, we tightened our channel budget for TTA and focused on campus marketing. And this is because we found that this product is particularly suitable to enhance intimacy and fun interactions amongst young people in universities. How come you're thinking that?
We have several other DAU-oriented products in our pipeline, but they're still at quite early stage, and we will update you when we have more data. I think that answers your question, Raf. Maybe let's move to the next question. Thank you. Your next question comes from Thomas Chong with Jefferies. Please go ahead.padings are available on Sergeant Daveura's website.
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The growth momentum was stronger than in previous years. Although the growth rate slowed down in May, but it still is showing a slight upward trend, we have very pleased to see that more or less mature brands can achieve this current use of the trend and driven by the recovery of the organic use despite the reduction in a channel investment. We face theiba one last step.
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And on the other hand, our product team has made many innovations this year, such as providing users with more timely interactive experiences. The penetration ratio of our content and emotional sharing use cases, such as the post and the mini-verse, has actually increased significantly. I must say that the use engagement and financial performance of the MoMA app has positively surprised me in 2023. This proves the strong mortality of MoMA's brand influence, product form and social ecosystem, which also gives our team more confidence to maintain the study product build.
productivity of this cash cow business. This is Kathy. I guess I'll take the financial part of the question. I believe the first part of the question is revenue outlook for the cash cow for the ex-time part and then the profitability outlook for the whole group. For mobile's top line outlook or
More broadly, the ex-ten-ten part, as you can see from our Q2 guidance, the second quarter top line is showing a pretty nice and healthy quarter-over-quarter growth. The driving forces here came mainly from two directions.
One is the overall post-COVID recovery, both in terms of social sentiment and in terms of the consumer spending. The other driving factor is, of course, the growth momentum from the new applications, with the overseas market being particularly strong and resilient.
So that's Q2. Looking beyond that into the rest of the year, I believe top-line performance will continue to be dependent on these two driving forces. Currently, we are still gaining pretty strong traction in the MENA area, and there are a number of other driving forces that are still in the MENA area.
other markets that we are trying, that we are eyeing on, and they try expanding into as the year progresses. So that card should continue to drive the overall top line. The other factor which is China's macro
I guess we're seeing more of a mixed picture here. A lot of it will depend on consumer confidence, especially the financial condition of the wealthier private business owners, how they may perceive their future economic.
how they may perceive the future economic trends. Now it looks like that Chinese government is pretty determined to make things work on that front, so we remain cautiously optimistic on the macro side as well.
And the other factor that we should consider as far as modeling is concerned is that, as we head into the second half of this year, the con is gonna become much easier. So if we consider all those factors, we have a good level of optimism that we should exit the year with a mid to high single digit Euro-V growth for the X-Tentan part. And that should lay a pretty good foundation for the year 2024. So that's the top line I'll look for the X-Tentan part. Bottom line wise, I think this is a question for the whole group.
profit margin will also stay relatively stable. So I guess what investors can do is to use Q1's gross profit margin to model out the rest of the year. The changing revenue mix quarter over quarter may move the margin within a narrow range, but I would say that roughly speaking, Q1 is a good reference point to use. With respect to operating expenses, Q1, we did a pretty good job of
spend a little bit more. So it's possible that you're going to see a slight trend up in both R&D and marketing expenses. But again, if that does happen, as the year progresses, it should come with good ROI and that's bigger profit as well.
And maybe just a bit more color on the operating margin. I think on a non-gap basis, we were at 18 something percent in Q1 on non-gap basis due to onwards with revenue repping up and cost control on the right track.
we would start seeing operating leverage probably for the first time in the recent couple of years, as I can remember. It looks like that we can get back, there's a good chance that we can get back to the 20 something percent range in the second half in terms of non-GAAP .
operating margin at a group level. I think that's a healthy bottom line margin range for the business profile that we currently have. So that's the thing that I can share at this point based on the visibility that we have. I'll get back to Ashley for more questions if we still have time.
Thank you for participating, you may now disconnect.
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