Q2 2023 Hello Group Inc Earnings Call
Speaker 1: Ladies and gentlemen, thank you for standing by and welcome to Second Quarter 2023 Hello Group Inc. Earnings Conference Call. All participants- words
Ladies and gentlemen, thank you for standing by and welcome to second quarter 2023, Hello Group, Inc Earnings Conference call.
All participants are in a listen only mode there.
Speaker 1: There will be a presentation followed by a question and answer session.
There will be a presentation, followed by a question and answer session.
Speaker 1: If you wish to ask a question, you will need to press the star key followed by the number 1 on your telephone keypad. Please note this conference is being recorded.
If you wish to ask a question you will need to press the Starkey followed by the number one on your telephone keypad.
Please note this conference is being recorded today.
Speaker 1: I would now like to hand the conference over to your first speaker today, Ms. Ashley Jing. Thank you. Please go ahead.
I would now like to hand, the conference over to your first speaker today Ms. Ashley Jim. Thank you. Please go ahead ma'am.
Good morning, and good evening, everyone. Thank you for joining us today for Hello Group's second quarter 223 earnings Conference call. The company's results were released earlier today and available on the company's IR website.
Speaker 2: Good morning and good evening, everyone. Thank you for joining us today for Hello Group second quarter 2023. And this conference call. The company's results were released earlier today and available on the company's website.
Speaker 2: On the call today, I'm Mr. Tang Yan, CEO of the company. Mr. Jiang Si-Tuan, CEO of the company, and Mr. Honghui, CEO of the company. We discuss the company's business operations and highlights, as well as the financials and guidance. It will be available to answer your questions during the Q&A session that follows.
On the call today are Mr. Tang Yan do you all of the company.
Dosage, one C O O off the company and me some weak Seattle off the company.
When he discusses the company's business operations and highlights as well as the financials and guidance.
We'll be available to answer your questions during the Q&A session that follows.
Speaker 2: Before we begin, I would like to remind you that this call may contain a forward-looking statement made under the Safe Harbor provision of the Private Security Education Reform Act of 1995.
Before we begin I would like to remind you that this call may contain forward looking statements made under the safe Harbor provision of the private Securities Litigation Reform Act of 1995.
Speaker 2: Such statements are based on management's current expectations and current market and operating conditions, and relate to events that involve no 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 statement.
Statements are based on management's current expectations on current market and operating conditions and relate to events that involve known 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 majority from those in the forward looking statements.
Speaker 2: Further information regarding this and other risks and certain needs 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 for looping statements as a result of new information, you can event or otherwise, except as required under law. I'll now pass the call over to our CEO , Mr. Tang Yan.
Well the information regarding this and other risks uncertainties and factors is included in the company's filings with the U S Securities and Exchange Commission. The company does not undertake any obligation to update any forward looking statements as a result of new information future events or otherwise.
As required under law.
Now I'll pass the call over to our CEO , Mr Tang yen.
Tony.
Sure.
Speaker 3: Hello, everyone. Thank you for today's call.
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Speaker 3: No matter from the financial indicators or the implementation of various strategic key points, we have achieved very good results.
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Hello, everyone. Thank you for joining our conference call.
Speaker 2: Hello everyone, thank you for joining our conference call. We delivered solid results in the second quarter with strong financial performance and good progress on execution of various strategic priorities. Before we go into details, I would like to introduce our COO, Ms. Xiang-Ci Cixuan, who rejoined the company last year. She will be the one to review our call to be performance today. With that, I'll turn the call over to her. Hello, everyone.
Solid results in the second quarter with strong financial performance and good progress on the execution of various strategic priorities before going into details I would like to introduce L. C. O O B jumped six which one will be joined the company last year, you'll be the ones, who review I'll call Jimmy performance today with that I'll turn the call over to <unk>.
Uh huh.
Hello, everyone.
It's my pleasure to join today's conference call.
Speaker 4: We celebrated Loma's Charles M. luxury in the early August .
We celebrate at normal Charles and Wuxi.
In August .
Speaker 4: As a founding team member, it is a great pleasure to see how Momo over the past 10 plus years has grown from a single function app to a multi-brand holistic company with a presence in several countries and regions.
As a founding team member is a great pleasure to see how low over the past 10, plus years has grown from a single function.
Multi brands listed company with a presence in several countries and regions.
Speaker 4: It is a great honor to return to the Holobu family and welcome to the next decade of the social era with old and new colleagues.
Yeah, It's a great honor to return to the hope of family and the wildcard is the next decade of the social era with old and new colleagues.
Now I will walk you through the details.
Speaker 4: Next, I will walk you through the details of the second quarter.
Second quarter.
Speaker 4: So I will start with the three overview of our financial performance.
So I'll start with the police overview.
National performance.
Speaker 4: For the 2nd quarter of 2023, total group revenue was $3.14 billion on the top 1% year-over-year and 11% sequentially, exceeding our earlier guidance.
For the second quarter of Sarnia, 23, Oh group revenue of $3 4 million RMB, 1% year over year and 11% sequentially.
I've seen it in our earlier guidance.
Speaker 4: In Q2, we delivered the first year on year growth since the beginning of the pandemic three years ago.
In Q2, we delivered the first year on year growth.
Beginning of the pandemic.
Speaker 4: mainly due to the civilization and recovery of most cash cow business.
Mainly due to the stabilization and recovery of most cash cow business.
Speaker 4: Adjusted operating income with $7.99 million R.B. A substantial increase of our $53% from Q2 last year and up 37 to 10 quarter over quarter.
Adjusted operating income was 709 million RMB.
Substantial increase.
Oh for 53% from two two last year.
37% quarter over quarter.
Speaker 4: With a margin of 22.6% up to 8% year over year and 4% quarter over quarter.
There's a margin of 22 Wednesday.
Eight percentage point year over year, and four percentage points quarter over quarter.
Speaker 4: The significant year-on-year improvement in profitability was mainly due to time-to-time working events.
And the Michigan year on year improvement in profitability was mainly due to timing.
You bet.
The stable performance of monarch has tall dismal.
Speaker 4: the stateable performance of moment cash power business and our effective cost control initiative.
Active cost control initiatives.
Speaker 4: and sequential improvements in profitability was mainly uncontrollable to the increased in momo's profits.
The sequential improvement in profitability was mainly attributable to the increase in almost profit.
Speaker 4: The total revenue from the normal app and then a low new app was 2.82 billion RMB but 1% year over year and 12% the consumers.
Well no revenues from the mobile App and Standalone, New App was 2.82 million RMB, 1% year over year and 12% sequentially.
Speaker 4: and adjusted operating income with 777 million RMB.
Adjusted operating income was 777 million RMB.
Speaker 4: 60% year over year and significant increase of 34% quarter over quarter with a margin of 24%.
60% year over year.
An increase of 34 this.
Quarter over quarter with a margin of 24%.
Speaker 4: up three percentage points there are clear and four percentage points for the over quarter.
Three percentage point, yeah, it's four percentage points quarter over quarter.
Speaker 4: We are very pleased to see that Momo as our cash confidence has maintained stable and strong productivity after over the decade of operation.
We are very pleased to see that normal as our cash consciousness has maintained stable and strong productivity after over a decade of operation.
Speaker 4: Total revenue from Tan Tan came in at 321 million RMB, down 3% year over year, up 4% realized through Ta Tan Heer this a
Total revenue from China came in at <unk>.
21 million RMB down 3% year over year.
4% quarter over quarter.
Speaker 4: and then deliver its first operating process at the beginning of the year and manage to improve its profitability in the second quarter.
Sometimes deliver its first operating profit.
This year.
And then is to improve profitability in the second quarter.
Speaker 4: Adjusted operating income for 10 pounds for the quarter was 31.89 million RMB, representing a margin of 10% compared with adjusted operating loss of 119 million RMB in Q2 last year and adjusted operating income of 14.48 million RMB in the previous quarter.
Adjusted operating income for telecom for the call.
Water was 30 189.
It's really an army representing a margin of 10% compared with Justin.
Operating loss of 119 million RMB in Q2 last year and the justice.
Hum.
14, 148 million RMB in the previous quarter.
Now I will discuss our progress.
Speaker 4: Now I will discuss our progress against our strategic priorities in this three business life, MoMo, Chan Chan and the new endeavors.
Ms. Alison T J priority is new to me.
Business night.
Mobile taobao and the new endeavor.
Speaker 4: Starting with the Momo app, which is at the regulatory mature stage. I will go for Momo. This year is to keep the user at very low scale stable, continue to optimize cloud structure and maintain the productivity of cash cloud business. Since the beginning of the year, our team has made good progress in optimizing product operations.
Starting with the mobile App, which is a voluntary mix.
Well stage.
So for Momo.
And here is to choose to use it at very low scale and stable.
As you know to optimize cost structure and maintain the productivity of cash cow business.
Since the beginning of the year our team has made good progress in optimizing product operation.
Speaker 4: introducing new monetization features and improve cache unitization and fast efficiency.
Introducing my new monetization features.
The improved cash position.
Cash efficiency.
Speaker 4: that have been expected financial performance and studies recovery in use of scale as well as quantitative results. Now I want you to see the details.
Other than expected financial performance and study currently useless Gal.
Hum.
With that now I'll walk you through that.
Firstly.
Speaker 4: Firstly, on the product and operational front
On the product and operational plan.
Speaker 4: Since the beginning of the year, our focus on product operation has been stabilized. The user's face and improved monetization efficiency.
Since the beginning of the year, our focus on product operation has been stabilized user base and improve monetization efficiency.
Speaker 4: the core of our efforts to vote around providing more timely social interactions and enriching content supply.
Of course, our efforts around providing more timely social interaction and enriching content supply.
Speaker 4: On channel point, we have the two-jet-lead focus on assessing channel ROI as well as our usual live-time relics or LTV.
On the channel front, we have the Chi Jamie it's focused on assessing channel all I as well as our user lifetime value or a T V.
Speaker 4: driven by the grand efforts of product and operations.
And then are the joint effort.
Product and operation.
Speaker 4: The recovery transfer of fusion and retention after the Chinese New Year continues in the second quarter.
And we encourage sensor fusion and retention after the Chinese new year.
Yes.
Quota.
Speaker 4: Almost next day retention rate has returned to its pre-pandemic level.
And then any retention rate has returned to its pre hired that Mick Lovell.
Speaker 4: which is the main reason for the continuous wrap in use of face-
Which is the main reason in Florida continue rabbit and use them right.
Speaker 4: The number of normal paying users increased by $100,000 to $7.9 million from the previous court.
The number of paying users increased by 100000 to seven 9 million.
Previous quarter.
Speaker 4: The study growth in paying users has proven that the poor value of normal at the show's role product remains strong.
Steady growth in paying users has proven that our core values of normal at the show so far that remains strong.
Speaker 4: With our focus on user acquisition, tilted towards high quality users, our overall user quality has been gradually improving, which lays a solid foundation for the cash company.
With our focus on user acquisition.
Churches, Siobhan high quality users all over or use of quality has been gradually improving.
Which lays a solid foundation for the cash company.
He is productivity.
As I mentioned last quarter.
Speaker 4: As Tonya mentioned last quarter, since the moment is a friend with a history of more than a decade, our current strategic power ority is to stabilize years of scale.
Or is a firm with a history of more than a decade.
Currently the T. J have already is just stabilized years of scale.
Speaker 4: Likewise, COM Def mundafigir
Tonight's call.
Sure.
Sure productivity.
Speaker 4: We select such a priority at the KPI level. I was focused passion from driving the growth of Momo user's gals to pursuing profitable user growth.
With slack such virology at the CPI level.
Our focus has shifted.
Driving the growth of mobile use this Dallas chip assuming crossing the volt.
Yeah.
In the U S.
Speaker 4: U therefore is no longer the most meaningful operational matxup for in U.
Therefore is no longer the most meaningful operational matches for investors.
Speaker 4: Therefore, we have decided to no longer disclose any of your data on the quarterly basis.
Therefore, we have decided to no longer disclose them in your data on a quarterly basis.
Speaker 4: And there is an overcome change in our use buffet.
Yes, there is something that's going to change and that we're used to.
We believe that investors should focus on the number of paying users when you Sally team almost over a scalp and operation.
Speaker 4: We believe that investors should rather focus on the number of paying users when evaluating almost over our scale and operating performance.
Operating performance.
Speaker 4: Now let's go through the productivity of our Momo Cash Cloud business.
Now, let's go through the productivity of our normal cash cow business.
Speaker 4: In the second quarter, no more July streaming revenue was $1.14 billion R&B, up 2% year over year and 12% to clean for this.
And in the second quarter, almost lobster named Robert It was 124, who really in RMB.
But then year over year and 12% sequentially.
The revenue growth was mainly due to significant increase in the number of coal.
Speaker 4: The revenue growth was mainly due to the significant increase in the number of top hobo users.
Oh I'll use it.
Speaker 4: for going to buy new operational events and gamified features.
And by new operational events and emphasized feature.
Speaker 4: and the increase in high paying users, growth overall, our people grow.
The increase in high paying user growth over all our people go.
Speaker 4: In the second quarter, the revenue sharing Horitio of live streaming was lower than the previous quarter, mainly because in Q1, we offer a one-off incentive to broadcast this to resume live shows after the Chinese media.
In the second quarter.
The revenue sharing ratio of live streaming or slower than the previous quarter, mainly because in Q1, we offer a one off incentive share.
Broadcast is doing.
This.
Slide shows after the Chinese new year.
Speaker 4: As the supply side, we remain stable. We believe the current, revenue sharing policy is effective enough to intensify the cost. There is no significant structure adjustment is needed.
As the supply side remain stable, we believe the current marine new sharing policy.
Effective enough to incentivize broadcasters, there was no significant structure adjustment as needed.
In the second quarter last revenue, excluding pontoon totaled 1.33.
Speaker 4: In the second quarter, Wasp revenue, excluding Canton, total 1.33 billion RMB, up 1% year-over-year and 11% sequentially.
Alien RMB up 1% year over year and 11% sequentially.
Speaker 4: What's the revenue from the Momo ad total 1.07 billion RMB, up 6% year over year and up 10% quarter over quarter.
Why is the revenue from the more at total 1.07 million RMB.
6% year over year and Oh.
That's up 10% quarter over quarter.
Speaker 4: While revenue from the SEMalong app was 262 million RMB, of 44% year over year, and 60% the consulate. The main reason for the year on year declined in Momo Rath's revenue is that the number of paying users had yet to recover to the level in the same period of last year.
While revenue from the Standalone, App was 262 million RMB or 44% year over year and 60% consistently.
The main reasons for the year on year decline in mobile revenue is that the number of paying users has yet to recover to the level in the same period of last year.
Speaker 4: Meanwhile, app people improved significantly from a year ago, partially offset the revenue pressure from the decline in paying users.
Meanwhile, our pizza, who improved significantly from a year ago.
Partially offset the revenue pressure from the decline in paying users.
The sequential improvement in normalized revenue was driven by the increase in both our people and paying user accounts.
Speaker 4: The sequential improvement in normal Wazarini was driven by the increase in both citywatch focus in choice.
Since the beginning of the year our team has in integrating use our product.
Speaker 4: Since the beginning of the year, our team has been integrating user products with commercial products to improve monetization efficiency.
Was commercial products.
True.
Susan efficiency.
For example.
Speaker 4: We added access to the chat room experience in several features, such as nearby people hand post. This can not only improve our user experience, also increase the penetration of paying features and similarly, uses expanding behavior.
We added access to the chat room experience.
With features.
It shows me nearby people and post this can not only improve our <unk>.
There is also increased the penetration of paying features.
And similarly users spending behavior.
The expansion of new entry points combined with optimizing the recommendation algorithm drove studies the crucial growth of audio and video based social entertainment experience, which enjoy higher option pool.
Speaker 4: The extension of new entry points combined was optimizing the recommendation algorithm drove studies, the financial growth of audio and video based social and the team and experience, which endured higher api groups. So let's...
Unknown Executive: Ladies and gentlemen, thank you for standing by and welcome to 2nd quarter 2023 Hello Group Inc. Earning Conference Call. All participants are in a listen only mode.
So less busy.
The old content control much.
Speaker 4: Our future goal for Tan Tan is to achieve overall break evens for a year and develop products and monetization models that are suitable for the Asian dating culture.
Hours, the Teeter Gulf War tension is to achieve overall breakeven for the year and that hurt us and monetization models that are suitable for the Asian dating culture.
Unknown Executive: There will be a presentation followed by a question and answer session. If you wish to ask a question, you will need to press the star key followed by the number one on your telephone keypad. Please note, this conference is being recorded today.
Speaker 4: in order to pursue suitable and sustainable growth on the back of the positive business cycle.
In order to pursue suitable sustainable growth on the back of the positive.
Ashley Jing: I would now like to hand a conference over to your first speaker today, Ms. Ashley Jing. Thank you. Please go ahead, ma'am. Good morning and good evening, everyone. Thank you for joining us today for Hello Group 2nd quarter 2023, a new conference call. The conference results were reduced the earlier today and available on the company's IR website.
In a cycle.
Speaker 4: At the beginning of the year, we achieved the first step of our strategic goal, which is to break even. However, in terms of user growth, we still need to make further breakthrough on both user and commercial product funds.
At the beginning of the year, we achieved the first half off hours the Chi gicquel wishes to breakeven however.
However in terms of user growth, we still need to make further breakthrough on both user and commercial product fun.
Ashley Jing: On the call today, I'm Mr. Tang Yan, CEO of the company, Ms. Zhang Sichuan, COO of the company, and Ms. Peng Hui, CFO of the company. We discuss the company's business operations and highlights as well as the financials and guidance. It will be available to answer your questions during the Q&A session that follows.
Speaker 4: As mentioned last quarter, Pantons use a phrase gradually recover after the Chinese New Year's draft. However, entering spring with the recovery in user activity after the pandemic, as well as the adjustment of user registration process.
As mentioned last quarter <unk> raised gradually recover after the Chinese new year trough.
However, entering spring with a recovery in user activity after the pandemic as well as the adjustment of user registration process.
Ashley Jing: Before we begin, I would like to remind you that this call may contain four looking statements made under the same proper provision of the Private Security Dutigation Reform Act of 1995. Such statements are based on management's current expectations and current market and operating conditions and related events that involve known risks and certainties and other factors, call 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 four looking statements.
Speaker 4: Contents were attacked by large scale stemming activities, which became the main issue that played us in the second quarter.
One was attacked by large scale spamming activities, which became the main issues that plagued us in the second quarter.
Speaker 4: In order to maintain a healthy and stable dating ecosystem, we launched a stringent anti-span campaign, which resulted in an 11% decrease in MAUs to 70.3 million in June compared to March.
In order to maintain a healthy and stable dating ecosystem.
We launch a stringent N cheese and campaign, which without it.
In an 11% decrease in our may use choose 17.3 million in June compared to March.
Ashley Jing: For the 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 four looking statements as a result of new information to the events or otherwise, except as required under law.
Speaker 4: As of the end of Q2, front-hand had 1.4 million paying users, a net decrease of 200,000 from the previous quarter. The decrease was due to...
As of the end of Q2, <unk> had one 4 million paying users a net increase of 200000 from the previous quarter.
Yan Tang: Now, pass the call over to our CEO, Mr. Tang Yan. [inaudible] Hello, everyone. [inaudible] This is my pleasure to join today's conference call.
The decrease was due to the declines in Houston.
Speaker 4: Whereas paying conversion would remain stable sequentially.
But as paying commercial remain stable principally.
Speaker 4: So now moving on to Pantant Financial. Total revenue from the second quarter was 321 million RMB. Downs 3% year over year, but up 4% the consulate.
So now moving on to <unk> Financial Corp.
Total revenue for the second quarter was 321 million RMB.
<unk>, 3% year over year, but oh.
4% sequentially.
Speaker 4: During last 18 months of those, although turned out to use the base a number of paying users declined on a large scale due to the factors such as the pandemic, marketing and read section, and anti-send initiatives.
During the last 18 months or so although turn times user base and number of paying users declined on a large scale due to the factors such as the pandemic marketing spend reception M N cheese and initiatives.
Speaker 4: platform has experienced a quite limited decrease in revenue.
Platform has experienced a cry limited increase in revenue.
Speaker 4: due to the team's efforts to improve Apple.
You choose the team's efforts to improve our cool.
Speaker 4: The second quarter, in the second quarter, last revenue was 170 million RMB, 1% to crimp the lake.
The second quarter.
In the second quarter last revenue was 170 million RMB.
1% principally.
Speaker 4: Live streaming revenue was 145 million RMB, up 4% quarter over quarter.
Live streaming wherein there was 145 million RMB.
4% quarter over quarter.
Speaker 4: At the same time, we continue to optimize costs and expenses related to staff and influence
At the same time, we continue to optimize cost and expenses related to staff and influence structure.
Yan Tang: We celebrated Momo's 12th anniversary in the early August. As a founding team member, it is the great pleasure to see how Momo, over the past 10 years, has grown from a single function app to a multi-brand solicit company with a presence in several countries and regions. It is a great honor to return to the Hello Pro Family and welcome the next decade of the social era with old and new colleagues. Next, I will walk you through the details of the second quarter.
Speaker 4: We're starting in a sequential growth of operating income to 31.89 million RMB.
There's nothing in our opinion, a sequential growth of operating income to.
So do you 1.89 million RMB.
Ah now I would like to share our progress again has to teach a priority during the quarter.
Speaker 4: Now I would like to share our progress again on the strategic priority during the quarter.
Speaker 4: So since the beginning of the year, our team has delivered good results with respect to our strategic priority of achieving great events. So this is primarily due to our efforts in both marketing and monetization. So firstly, on.
So since the beginning of the year our team has delivered good results.
With all this extra hours a T shirt priority of achieving break even.
This is primarily due to our at first thing both marketing and monetization.
Yan Tang: I will start with a brief overview of our financial performance. For the second quarter of 2023, Momo's revenue was 3.14 billion on base, up 1 to 10 years over the year and 11 to 10 sequentially. I have seen in our earlier guidance. In 2002, we delivered the first year on your growth since the beginning of the pandemic three years ago. May you do to the civilisation and recovery of Momo's cash-tow business.
So firstly on the marketing front.
Speaker 4: In the second quarter, channel competition incentivized due to the impact of the E-commerce shopping festival in June , resulting in a quarter on quarter increase in unit acquisition costs.
In the second quarter.
China competition intensifies.
In a sense of ours due to the impact of E Commerce shopping festival in June .
We're starting in a quarter on quarter increase in unit acquisition costs are.
Speaker 4: Our team tried to limit the increase in units.
Our team tried to limit the increase in Union station.
Hi adjustments are trying those structure and awarding channel competition during peak times.
Speaker 4: by adjustments of channel structure and awarding channel competition during pick times.
Yan Tang: Adjusted operating income with 700 and 9 million R.B, as substantial increase of our 53% from Q2 last year and up 37 to 10 quarter over quarter. With a margin of 22.6% up to 8 to 10 each point year over year and 4 to 10 each point quarter over quarter. The significant year on year improvement in profitability was mainly due to time time working even. The sustainable performance of Momo cash-tow business and our effective cost control initiatives.
Speaker 4: So thanks to our optimization of our channel strategy and the data CVS system, our new app will increase significantly from the previous quarters.
Thanks to our optimization of our China strategy and has laid a feedback system, our new absolute increase significantly from the previous quarter.
Speaker 4: The channel how I remain stable despite the sequential increase in unit acquisition costs.
The channel all I remain stable, despite the sequential increasing unit acquisition cost.
Speaker 4: On a year over year basis in Q2, 20, 23 units, user acquisition costs increased by almost 50%. And new users actually increased by almost 60%.
On a year over year basis in Q2, 2023.
User acquisition costs decreased by almost 50%.
And new users absolutely increased by almost 60%.
Yan Tang: The financial improvement in profitability was mainly contributing to the increase in Momo's profit. Momo's revenue from the Momo app and sent a new app was 2.82 billion R.B, up 1 to 10 year over year and 12 to 10 sequentially. Adjusted operating income with 777 million R.B. Up to 60% year over year and the significant increase of 34% quarter over quarter with a margin of 24%. Up to 3% to 10 each point year over year and 4% to 10 each point quarter over quarter.
Speaker 4: In the second half of the year, we will continue to focus on improving user acquisition efficiency.
The second half of the year, we will continue to focus on improving user acquisition efficiency.
The plan is to continue to closely monitor channel I am just trying to in a restaurant it accordingly.
Speaker 4: The plan is to continue to closely monitor channel R.I. and the guest channel investments accordingly.
Speaker 4: In addition, we will further improve resource utilization by carefully selecting the kill hours we work with and optimizing advertising materials.
In addition, we will further improve resource.
Union Association I passed really selecting the two hours, we work with and optimizing advertising materials.
On a on the monetization front, our commercial product team has delivered this out over the past few years yeah.
Speaker 4: On on the monetization front, our commercial product team has delivered good results over the past
Speaker 4: I think that it's just been paying experience and launching new paying features.
Yan Tang: We are very pleased to see that Momo as our cash confidence has maintained stable and strong productivity after over the decade of operation. Total revenue from time time came in at 321 million R.B, down 3% year over year but up 4% quarter over quarter. Time to deliver its first operating process at the beginning of the year and manage to improve its profitability in the second quarter. The Justice Operating Income for Time Hunt for the quarter was 31.9 million RMB. Representing a margin of 10% compared with the justice operating loss of 119 million RMB in Q2 last year and the justice operating income of 14.448 million RMB in the previous quarter.
Same day, it's just being paying experience and lunching new paying feature.
Speaker 4: Temperature Allah
Continuously driving Apple Grove.
Speaker 4: The Blackboard membership service launched at the end of last year and played a positive role in driving Apple growth.
The black vote membership service launch at the end of last year and play a positive role in driving absolute growth.
Speaker 4: In the second quarter, our product team increased the exposure of the Black Gold Privage Service and added a premium privilege package, which effectively drove further absolute growth.
In the second quarter.
Our product team increased exposure.
The black Oak previous just love Us and added a premier privileged package, which effectively drove for the absolute growth.
Speaker 4: In the past year, Tantan's Optipro has continued to increase all significantly as we provided more new paying features that can effectively improve matching efficiency and enhance user-stating experience.
In the past year, sometimes I Pru has continued to increase.
Significantly as we provided more new paying features that can effectively improved matching its just nationally and enhance users eating experience.
Speaker 4: Moving forward, we will follow the path by adding new used cases while increasing the exposure of commercial products.
Moving forward, we will follow the path of adding new use cases.
Increasing exposure of commercial product.
Yan Tang: Now I will discuss our progress against our strategic priorities in this three business life, Momo Town Town and the new endeavors. Starting with the Momo app which is as a regulatory mutual stage. I will go for Momo. This year is to keep the user at very low scale stable. Continue to optimize called structure and maintain the productivity of cash card business. Since the beginning of the year, our team has made good progress in optimizing product operations.
For example, introducing exclusive privilege for female members.
Speaker 4: For example, introducing exclusive privilege for female members.
Speaker 4: providing female users with high quality metrics and non-interference options.
Writing a female users with high quality matches and non interfering auction.
Speaker 4: Meanwhile, we will optimize the match-check algorithms, matching algorithms for members based on user feedback and improve the post-sus experience for members to drive in renewable rates.
Meanwhile, we will optimize the matching algorithm matching algorithm for members based on user feedback and improve the post that experience for our members to drive for Newton with New World right.
Speaker 4: So all of all, in the first half of the year, our team has made good progress in improving user the acquisitions, efficiency, and driving our people growth.
Or in the first half of the year.
Yan Tang: Interesting when new monetization features and improved cash unitization and tax efficiency. I think an expected financial performance and studies recovery in user scale as well as quantitative results. Now I will use the details. Firstly, on the product and operational front, since the beginning of the year, our focus on product operations has been stabilized to use the space and improve monetization efficiency. The court of our efforts were both around providing more timely social interactions and enriching content supply.
Team has to make good progress in improving user acquisition efficiency and driving our people growth.
Speaker 4: We are happy to see that the decrease in cost and increase in Apple able to achieve great even. However, we have to admit that we haven't made any substantial breakthrough in terms of user growth or any significant innovation in commercial products.
We are happy to see that the decrease in cost and an increase in Apple pay both times, having to achieve breakeven. However, we have to admit that we haven't made any substantial breakthrough in terms of user growth or any sinister.
And innovation and commercial products.
Speaker 4: Such breakthrough on product innovations is the key for turn time to drive a positive business cycle and achieve sustainable growth.
Such breakthrough on product innovations is the chief of ton hand to drive positive business cycle and achieve sustainable growth.
Speaker 4: During the second quarter, the outbreak of spamming activities on Canton created a serious negative impact on the ecosystem. So our product team had to focus its main efforts on the anti-spam campaign.
During the second quarter.
Yan Tang: On the channel point, we have the two-jitly focus on assessing channel ROI, as well as our users' live bandwidth or LTV. First, by the joint efforts of Prada and operations. The recovery trends of user and retention after the Chinese New Year, continue in the second quarter. Momo's next day retention rate has returned to its pre-pidemic level, which is the main reason for the continued rev in user space. The number of Momo's paying users increased by $100,000 to $7.9 million from the previous quarter.
The outbreak of Ami activities on a ton ton created eras, Maggie this new pad on the equal system.
So our product team had two fold because excuse me afterwards.
M P's and campaign.
Speaker 4: In quarter two, we started testing some product experience to improve female users' engagement and retention. However, based on our preliminary data feedback, this product still needs further interaction.
In quarter, two we started testing some product experience to ensure female user.
Innovation and retention.
However, based on our preliminary data pretty bad it's just part of doing this further.
In duration.
Speaker 4: In the second half of the year, our product operation team will continue to optimize the corporate life and match the catamisms and export our social experience to improve user The Transband and female user retention.
You know the second half of the year, our part our operations team will continue to optimize the core life and match, Mccannon, newsrooms and or art or social.
Yan Tang: The study growth in paying users has proven that the core value of Momo at the show's role product remains strong. With our focus on user acquisition, we have chosen to vote high quality users. Our overall user quality has been gradually improving, which lays a solid foundation for the cash capacity. The main gain is productivity.
To improve user time spend and female user retention.
Speaker 4: Lastly, in terms of our new endeavors,
Lastly in terms of our new endeavors.
Speaker 4: The goal here is to enrich our product portfolio, push the boundaries beyond Momo and Tantan and deliver long-term growth engine for the group.
So here is to enrich our product portfolio push the boundaries.
Momo and Tanger.
And deliver long term growth engine for the group.
Yan Tang: As Tonya mentioned last quarter, since Momo is a friend with the history of more than a decade, our current strategic power ority is to stabilize years of scale, optimize cost, and ensure its commercial productivity. We flag such a priority at the KPI level, our focus has shift from driving the growth of Momo users' gals to pursuing profitable user growth, and may use, therefore, is no longer the most meaningful operational metric for investors, therefore we have decided to no longer have this close M&U data on a quarterly basis, unless there is a significant change in our user base.
And the second quarter.
Speaker 4: The total revenue for the profit oriented spend along apps including domestic and overseas social and games product was 264 million R&D. 33% year over year and 60% is the currency.
The total revenues for all of the profit O N Standalone apps.
Including domestic and overseas social.
Games product was 264 million RMB.
Oh, 33% year over year and 16% sequentially.
Speaker 4: The new of the mistake product was back on as the commercial growth track after the Chinese New Year's top.
Sure and you are still mixed the paradox was back on another sequential growth track after the Chinese new year trough.
Speaker 4: Every new growth in overseas social product, temporaries throughout at the beginning of the year go to the earthquake impact in Turkey and the evaluation of Egyptian current.
Every new growth and oversee show show product temporary used to go out at the beginning of the year due to the earthquake impact in Turkey and the U.
Our valuation of Egyptian currency.
Speaker 4: In the second quarter, consumer sentiment in Turkey recover.
In the second quarter.
Consumer sentiment in Turkey recover.
Yan Tang: We believe that investors should rather focus on the number of paying users when evaluating Momo's overall scale and operation operating performance. Now, let's go through the productivity of our Momo cash card business. In the second quarter, Momo's last dream in revenue was 1.4 billion R&B, up 2% year over year, and 12% to clean fully. The revenue growth was mainly due to a significant increase in the number of top Momo users, driven by new operational events and gamified features, and the increase in high paying users growth over all our people growth.
Howard Tam shifts as Mark has Vogel from Egypt.
Speaker 4: Our team shifts its market focus from Egypt to several affluent Middle Eastern markets.
It is narrow.
Absolutely middle Eastern markets.
Speaker 4: With the combined efforts of product and channel teams, the number of paying users of all of these social products increased rapidly, which led to our significant and the potential increase in revenue.
With the combined efforts of product and channel teams the number of paying users of oversee a social product.
Increased rapidly, which that true are significant potential increase in revenue.
Speaker 4: In addition, our team optimized overall revenue sharing Horatio and revised cost and
In addition, our team optimized the over or.
Revenue sharing ratio and a revised costs and.
Speaker 4: and items by fine training operations.
Spanish items I find training operation.
Thanks to operating leverage and net margin improved sequentially.
Speaker 4: Thanks to operating leverage, and that margin improved sequentially. As a result,
And so that's all in.
Yan Tang: In the second quarter, the revenue sharing ratio of live streaming was lower than the previous quarter, mainly because in Q1, we offer a one-off incentive to broadcast it to resume live shows after the Chinese New Year. As the supply side with main stable, we believe the current revenue sharing policy is effective enough to intensify all pastures. There is no significant structure adjustment is needed. In the second quarter, last revenue, excluding downtown, total 1.3 trillion R&B, up 1% year over year, and 11% to clean fully.
Speaker 4: And that income grew much faster than very new.
Net income grew much faster than revenue.
Speaker 4: As we dive deeper into the overseas market, we realize that the Middle East and the emerging North Africa markets do have much room for growth.
As we dive deeper into the overseas market we.
Realize that the middle East and emerging North Africa markets do have much room for growth.
And four in second quarter why are we increased our investment in assist a paradox true dive rats rabbits revenue and profit growth. We also test is narrow and knew all I owe oriented.
Speaker 4: Therefore, in second quarter, while we increase our investment in the system products to dive rap, rap, revenues, and profit growth, we also test this narrow new RIO-oriented product in the new...
That doesn't mean that area.
Speaker 4: We'll try to replicate our success so far in our oversee extension to both our use of base further.
We've tried to replicate our success so far in our overseas expansion to both our user base further.
Speaker 4: with our expertise in attracting users through social and retrieval and monetizing through well-edited service. We are hopeful that these new products will contribute sizable, ever-renews and profits to the group in a foreseeable future.
With our expertise in attracting users there's sosoka attributes.
Yan Tang: Last revenue from the Momo Act total, 1.07 trillion R&B, up 6% year over year, and up 10% quarter over quarter. While revenue from the Sennelong Act was 262 million R&B, up 44% year over year, and 60% to clean fully. The main reason for the year on year declines in Momo Act's revenue is that the number of paying users had yet to recover to the level in the same period of last year.
[noise] attributes and monetizing through value added service.
I'm hopeful that this new product will contribute sizable ever knew and profit to the group in the foreseeable future.
Yeah.
Speaker 4: This concludes my remarks. Now, I will pass the call over to Peppy for the financial review. Peppy, please.
This concludes my remarks.
Now I will pass the call over to Kathy.
For the financial review.
Cathy please.
[noise] Oh actually is good hello, everyone. Thank.
Speaker 4: Thank you, <expletive> . Hello, everyone. Thank you for joining our conference call today. Now let me briefly take you through the financial review.
Yan Tang: Now, our people improve significantly from a year ago, partially of the revenue pressure from the decline in paying users. The financial improvement in Momo Rath's revenue was driven by the increase in both our people and paying user count. Since the beginning of the year, our team has been integrating user products with commercial products to improve monetization efficiency. For example, we added access to the chatroom experience in several features such as nearby people and posts, this can not only improve our user experience, also increase the penetration of paying features and similar uses and behavior. The extension of new entry points combined with optimizing the recommendation algorithm drove studies, the financial growth of audio and video based social and the team's experience which enjoyed higher people.
Thank you for joining our conference call today now let me briefly take you through the financial with you.
Speaker 2: Code Revenue for the second quarter 2023 came in better than our previous expectation at 3.14 billion RMD. Up 1% young year and 11% quarter over quarter
Total revenue for the second quarter 2023 came in better than our previous expectation of 3.14 billion renminbi up 1% year on year and 11% quarter over quarter.
Speaker 2: non-GAAP net income attributable to the company was 632.1 million RMB, up 36% young year and 34% from the previous quarter.
non-GAAP net income attributable to the company was $632 1 million of them and beat up 36% year on year and 34% from the previous quarter.
Speaker 2: The better than expected bottom line performance was the triple-blow to the outperformance of the top line, as well as our continuous cost control efforts, which led to improvement in both Momo and Tampant's profitability.
The better than expected bottom line performance was attributable to the outperformance of the top line as well as our continuous cost control efforts, which led to an improvement in both mobile and sometimes profitability.
We are proud that after three years of pandemic, we emerged on the other side with a very healthy and solid cash cow business and at the same time stronger capability of managing new business endeavors to drive future growth, while delivering decent profits to the shareholders.
Speaker 2: We are proud that after three years of pandemic, we emerged on the other side with a very healthy and solid cash-cow business. And at the same time, stronger capability of managing new business endeavors to drive future growth while delivering decent profits to the shareholders. Now let me walk.
Now, let me walk you through the details.
Speaker 2: Looking into the key revenue line items for the quarter, firstly, a live broadcasting.
Looking into the key revenue line items for the quarter, Firstly, our library casting.
Speaker 2: Total revenue from live broadcasting business for the second quarter of 2023 was 1.59 billion ruby indeed. Up 5% year over year and 11% quarter over quarter.
Total revenue from live broadcasting business for the second quarter of 2023 was 159 billion renminbi.
Yan Tang: So, let's reveal Tantan's performance. Our strategic goal for Tantan is to achieve overall break even 40 years and develop product and monetization models that are suitable for the Asian dating culture. In order to pursue suitable, a subcendible growth on the back of the positive business cycle.
Up 5% year over year, and 11% quarter over quarter.
Speaker 2: Momawa, at live broadcasting revenue totaled 1.44 billion RMD for the quarter of 3% year of year and 12% quarter of a quarter.
Mobile App live broadcasting revenue totaled 1.44 billion in India for the quarter up 3% year over year, and 12% quarter over quarter.
The increase was driven by an increase in the number of high paying users, which in turn drove overall our people who grows.
Speaker 2: The increase was driven by an increase in the number of high-paying users which in turn drove over our RPP growth.
Yan Tang: At the beginning of the year, we achieved the first step of our strategic goal, which is to break even. However, in terms of user growth, we still need to make further breakthrough on both user and commercial product funds. As mentioned last quarter, Tantan's user raised gradually with cover after the Chinese New Year's cost, however entering spring with the recovery in user activity after the pandemic, as well as the adjustment of user registration process.
Sometimes I broke hosting revenue amounted to 140.
Speaker 2: Comprehensive library casting revenue amounted to 145.2 million ruby in D. A 25% from Q2 last year and 4% from the previous quarter.
A 5.2 million renminbi up 25% from Q2 last year and 4% from the previous quarter.
Speaker 2: Remini from Saturday Service for the second quarter of 2023 was 1.5 zero billion RMB. Down to percent from two to last year, but up 10 percent sequentially.
Revenue from Saturday service for the second quarter of 2023 was 150 billion renminbi.
<unk>, 2% from Q2 last year, but up 10% sequentially.
Speaker 2: Revenue from VAS on an X-Tem-Tem basis was 1.33 billion in the second quarter of 2023, of 1% young year and 11% sequentially.
Revenue from Vas on an X 10, Palmaceous was 1.33 billion and indeed in the second quarter of 2023 up 1% year on year and 11% sequentially.
Yan Tang: Tantan was attacked by large scale stemming activities, which became the main issue that played us in the second quarter. In order to maintain a healthy and stable dating ecosystem, we launched a stringent anti-span campaign, which resulted in an 11% decrease in MAUs to 17.3 million in June compared to March. As of the end of Q2, Tantan had 1.4 million paying users, a net decrease of 200,000 from the previous quarter. The decrease was due to the declining news updates, whereas paying commercial with main stable the crystaline.
Mobile App Vas revenue decrease from a year ago due to a decrease of paying user count. However, the downward pressure was completely offset by the growth of Standalone, new applications, which led to a slight year over year increase in value added service revenue on an ex compound basis.
Speaker 2: Momo asked vast revenue decrease from the year ago due to a decrease of paying user count. However, the downward pressure was completely offset by the growth of standalone new applications, which led to a slight year-over-year increase in value added service revenue on an X-Temperum basis.
Speaker 2: The sequential growth was primarily attributable to the seasonal recovery of mobile apps that had a service business, as well as the continuous growth of the new application.
The sequential growth was primarily attributable to the seasonal recovery of mobile apps that are out of service business as well as the continuous growth of the new applications.
Speaker 2: The POTAT value added service revenue amounted to RIND, $100.2 million, $2.21% from 2 to last year, but up 1% from the previous quarter.
Contract value added service revenue amounted to RMB 172 million down 21% from Q2 last year, but up 1% from the previous quarter.
Speaker 2: The young year decrease was due to the decline in paying users. However, the thermal pressure on data-added service revenue was partially offset by the growth in RPPU driven by commercial product efforts.
The year on year decrease was due to the decline in paying users. However, the downward pressure on value added service revenue was partially offset by the growth in our people driven by commercial product efforts.
Now turning to costs and expenses.
Speaker 2: Non-GAP cost of revenue for the second quarter of 2023 was 1.82 billion RMB, compared to 1.79 billion for the same period last year. Non-GAP cost margin for the quarter was 42.1%, found slightly by 0.4% from the year ago period, but up 1.1% from the last quarter.
Yan Tang: So now moving on to content financial. Total revenue from the second quarter was 321 million RMB, down 3% year over year, but up 4% the crystaline. During the last 18 months ago, although content user based a number of paying users declined on a large scale due to the factors, such as the pandemic, marketing and reduction and anti-send initiatives. The platform has experienced a quite limited decrease in revenue due to the team's efforts to improve Apple.
non-GAAP cost of revenue for the second quarter of 2023 was 182 billion renminbi compared to 1.79 billion for the same period last year non.
non-GAAP gross margin for the quarter was 42, 1%.
I'm slightly by 0.4% from the year ago period, but up one 1% from the last quarter.
Speaker 2: The sequential increase was due to the discontinuation of one-off incentives in Q1 provided to live streamers after the Chinese New Year to speed up supply side recovery.
The sequential increase was due to the discontinuation of one off incentives in Q1 provided to live streamers after the Chinese new year to speed up supply side recovery.
Speaker 2: Non-GAP R&D expenses for the second quarter was 200.8 million RMD compared to 214.3 million RMD for the same pure last year. Or is.
non-GAAP R&D expenses for the second quarter was 200.8 million are going to be compared to $214 3 million of them N V.
For the same period last year.
Or a 6% decrease year over year.
Yan Tang: The second quarter, in the second quarter, last revenue was 170 million RMB, up 1% the crystaline. Live streaming revenue was 145 million RMB, up 4% quarter over quarter. At the same time, we continue to optimize costs and expenses related to staff and influence structure, resulting in a sequential growth of operating income to 31.89 million RMB.
Speaker 2: The decrease was due to the continuous optimization in personnel costs.
The decrease was due to the continuous optimization and personnel costs.
Speaker 2: Not that aren't these instances as a percentage of revenue was 6.4% compared with 6.9% due to last year.
R&D expenses as a percentage of revenue was six 4% compared with 6.9% Q2 last year.
Speaker 2: We ended the quarter with 1,470 total employees, of which 339 are from Tantan. Compared to 1,825 total employees, of which 516 are from Tantan a year ago.
We ended the quarter with 1470 total employees of which 339 are from <unk>.
Compared to 1825 total employees of which 516 from 10 times a year ago.
Speaker 2: The R&D personnel as a percentage of total employee for the group was 63% compared with 61% due to last year.
The R&D personnel as a percentage of total employees for the group was was 63% compared with 61% in Q2 last year.
Yan Tang: Now I would like to share our progress again, content strategic priority during the quarter. Since the beginning of the year, our team has delivered good results with sector hours, strategic priority of achieving growth even. This is primary due to our efforts in both marketing and monetization. So firstly, on the marketing front, in the second quarter, channel competition incentivized due to the impact of the e-commerce shopping festival in June, resulting in a quarter-on-quarter increase in unit acquisition costs.
non-GAAP sales and marketing expenses for the second quarter was $349 7 million renminbi or 11, 1% of total revenue compared to 600, and a 1 million renminbi or 19.3% of total revenue for the same period last year.
Speaker 2: Non-Gap sales and marketing expenses for the second quarter was 349.7 million RMD or 11.1% of total revenue compared to 600 and 1 million RMD or 19.3% of total revenue for the same period last year.
Speaker 2: The significant year-over-year decrease both in terms of absolute, remained the amount and as the percentage of revenue was primarily attributable to content shifts in marketing strategy to control costs and focus on channel ROI. And to a lesser degree, more more strategy to trim low efficiency channel marketing spend.
The significant year over year decrease both in terms of absolute renminbi amount and is it a sense citric revenue was primarily attributable to sometimes shift in marketing strategy to control cost and focus on channel our ROI.
And to a lesser degree almost strategy to dream low efficiency channel marketing spend.
Speaker 2: Non-GAPGN8 expenses was 83.2 million RMB for the second quarter of 2023 compared to 82.6 million RMB for the same quarter last year.
non-GAAP G&A expenses was 83.2 million renminbi for the second quarter 2023, compared with $82 6 million Roman V for the same quarter last year.
Yan Tang: Our team tried to limit the increased in unit acquisition costs by adjusting the channel structure and awarding channel competition during peak times. So thanks to our optimization of our channel strategy and the data feedback system, our new app will increase significantly from the previous quarter. The channel, how I may stable despite the sequential increase in unit acquisition costs. On a year-over-year basis in 2223 units, user acquisition costs increased by almost 50 percent, and new users' app will increase by almost 60 percent.
Speaker 2: GNA expenses as a percentage of total revenue remains stable at 2.7% from the year ago period.
G&A expenses as a percentage of total revenue remained stable at 2.7% from the year ago period.
non-GAAP operating income was $708 8 million of them and be a significant increase of 53% from Q2, 2022 and up 37% from the previous quarter.
Speaker 2: Non-gap operating income was $7808.8 million a day, a significant increase of 53% from 2 to 2022, and up 37% from the previous quarter.
Speaker 2: Non-gap operating margin for the quarter was 22.6% of 7.7% points from the same period last year and 4.2% points from the previous quarter.
non-GAAP operating margin for the quarter was 22, 6% up 7.7 percentage points from the same period last year and 4.2 percentage points from the previous quarter.
Speaker 2: Non-GAP operating expenses as a percentage of total revenue was 20.2%. But decreased from 28.8% in Q2 2022 and down from 23.9% in Q1 this year.
non-GAAP operating expenses as a percentage of total revenue was 20.2% a decrease from 28, 8% in Q2, 2022 and down from 23, 9% in Q1 this year.
Yan Tang: In the second half of the year, we will continue to focus on improving user acquisition efficiency. The plan is to continue to closely monitor channel ROI and adjust channel investment accordingly. In addition, we will further improve resource utilization by carefully selecting the kill hours we work with and optimizing advertising materials. On the monetization front, our commercial product team has delivered good results over the past years and optimizing the existing paying experience and launching new paying features.
Speaker 2: Non-cap expenses in absolute, remained amount decreased 29.3% young year.
non-GAAP expenses in absolute amount decreased 29, 3% year on year.
Speaker 2: This was mainly due to a reduction in silica marketing expenses and to a lesser degree optimization in personnel and infrastructure costs. Thanks.
This was mainly due to a reduction in short term marketing expenses and to a lesser degree optimization in personnel and infrastructure costs.
Now I'll briefly on income tax expenses totaled.
Speaker 2: Total income tax expense was 166.0 million RMB for the quarter with an effective tax rate of 20%.
Total income tax expense was 166.0 millions I mean do you for the quarter with an effective tax rate of 20%.
Speaker 2: In two two, the company accrued with holding income tax of 48.1 million RMB, which is 10% of undistributed profit generated by our wealthy.
In Q2, the company accrued withholding income tax of $48 1 million room, and D, which is 10% of undistributed profit generated by our royalty.
Speaker 2: Without withholding tax, our estimated non-gap effective tax rate was around 14% in the second quarter. Now, I'm turning to about...
Without a withholding tax our estimated non-GAAP effective tax rate was around 14% in the second quarter.
Yan Tang: Continuously, driving Apple Grove. The Blackbow membership service launched at the end of last year and played a positive role in driving Apple Grove. In the second quarter, our product team increased the exposure of the Blackbow privilege service and added a premium privilege package which effectively drove further Apple Grove. In the past year, Thomas Optipro has continued to increase our significantly as we provided more new paying features that can effectively improve matching efficiency and enhance user dating experience.
Now turning to balance sheet and cash flow items.
Speaker 2: As of June 30th, 2023, Hado Group's cash equivalence short-term deposits, long-term deposits, short-term investments, and restricted cash total of 11.27 billion RMB, compared to 17.40 billion RMB, as of December 31st, 2022.
As of June 30th 2023, Hello group's cash cash equivalents short term deposits long term deposits and short term investments and restricted cash totaled 11.27 billion renminbi compared to $17 four zero billion renminbi.
As of December 31, 2022.
Speaker 2: In Q2, we paid an equivalent of 937 million R&D cash dividends to our shareholders. And in late June , we've prepared an equivalent of 2.26 billion R&D cash to repurchase our convertible senior notes, which was settled in early July .
In Q2, we paid any equivalent of 937 million renminbi cash dividend to our shareholders and in late June we prepaid an equivalent of 2.26 billion renminbi cash to repurchase our convertible senior notes, which was settled in early July .
Speaker 2: Netcash provided by operating activities in the second quarter of 2023 was 828 million early in mimbines.
Net cash provided by operating activities in the second quarter of 2023 was 828 million of them go Mindy.
Yan Tang: Moving forward, we will follow the path by adding new use cases while increasing the exposure of commercial products. For example, introducing exclusive privilege for female members providing female users with high quality matches and non-interference options. Meanwhile, we will optimize the matchmaking algorithms, matching algorithms for members based on user feedback and improve the post-house experience for members to drive new rules. The overall, in the first half of the year, our team has made good progress in improving user acquisitions, efficiency, and driving Apple Grove. We are happy to see that this increase in cost and increase in Apple will turn on to achieve great even.
Lastly, our business outlook.
Speaker 2: Before we give out the numbers, let me spend a few minutes talking about a few things that are expected to have impact on our top line performance in the near term.
Before we give out the numbers, let me spend a few minutes talking about a few things that are expected to have impact on our top line performance in the near term.
Yeah.
Speaker 2: For the second quarter of 2023, revenues from Momo segment or on an X-Tantham basis totaled 2.82 billion RMD, up 1.3% year-rear. This was the first positive quarter for Momo on a YY basis since the beginning of COVID in early 2020.
For the second quarter of 2023 revenues from more segment or on an ex <unk> basis totaled 2.82 billion renminbi up 1.3% year over year.
This was the first positive quarter for more on a Y O Y basis since the beginning of Covid in early 2020.
Speaker 2: On the one hand, we're happy to see that a cash-tile business showed remarkable resilience on the back of strong platform fundamentals. On the other hand, we remain cautious about the operating environment we're in.
On the one hand, we are happy to see that a cash cow business showed remarkable resilience on the back of strong popcorn fundamentals.
On the other hand, we remain cautious about the operating environment we're in.
Speaker 2: As you guys can probably feel, NACR rebound is not turning out as promising as we had hoped at the beginning of the year.
And you guys can probably feel natural rebound is not turning out as promising as we had hoped at the beginning of the year.
Speaker 2: especially as we entered into Q3, we've got a clear sense that a standing sentiment is softened.
Especially as we entered into Q3, we've got a clear sense that is spending sentiment is softening.
Speaker 2: In addition, starting mid Q3, we have also been making product adjustments to make sure that our ecosystem stays healthy.
Yan Tang: However, we have to admit that we have to make any substantial breakthrough in terms of user growth or any significant innovation in commercial products. Such breakthrough on product innovations is the key for time time to drive a positive business cycle and achieve sustainable growth.
In addition, starting mid Q3, we have also been making product adjustments to make sure that our ecosystem stays healthy.
Speaker 2: Some of the adjustments have negative impact on the top line performance, the small, less, not-to-added service in the short run.
Some of the adjustments have negative impact on the topline performance that's almost none of that is service in the short run.
Speaker 2: All of these factors are expected to cause revenues for more segments for 2-3 to decrease on a sequential basis.
All of these factors are expected to cause revenues for mobile check meant for Q3, the decrease on a sequential basis.
Yan Tang: During the second quarter, the outbreak of spamming activities on tantan created a serious negative impact on the ecosystem. So our product team had to focus its main efforts on the NTSM campaign. In quarter two, we started testing some product experience to improve female users' engagement and retention. However, based on our preliminary data feedback, this product still needs further interactions. In the second half of the year, our product operation team will continue to optimize the corporate life and match the catatism and export other social experience to improve user transfer and female user retention.
For ton ton in June we made some product adjustments to comply with the new policy rolled out by M. I T E.
Speaker 2: For Tantan, in June , we made some product adjustments to comply with the new policy rolled out by MIIT in Q2, which poses a negative impact on the renewal rate of the membership service.
Q2, which poses a negative impact on the renewal rate of the membership service.
Speaker 2: This will likely cause tantrums revenue to see a sequential decrease from Q2 as well.
This will likely cause sometimes revenue to see a sequential decrease from Q2 as well.
Yeah.
Speaker 2: To be more specific, we estimated the group's third quarter revenues to come in the range from 2.9 billion RMD to 3.0 billion RMD, representing a decrease of 10.3% to 7.2% a year, or a decrease of 7.6% to 4.4% quarter over quarter.
To be more specific.
Estimated the group's third quarter revenues to come in the range from $2 9 billion Renminbi to 3.0 billion renminbi, representing a decrease of 10.3% to seven 2% year on year or a decrease of seven 6% to 4.4% quarter over quarter.
Speaker 2: A segment level for Q3 2023 on a sequential basis respect more and more revenue to decrease around mid single digit and pattern revenue to decrease in TN.
Our segment level for Q3, 2023 on a sequential basis, we expect minimal revenue to decrease around mid single digit and plus our revenue to decrease in cans.
Speaker 2: Please, be mindful that this forecast represents the company's current and preliminary view on the market and operational conditions, which are subject to changes.
Please be mindful that this forecast represents the company's current and preliminary view on the market and operational conditions, which are subject to changes.
Yan Tang: Lastly, in terms of our new endeavors, the goal here is to enrich our product portfolio, push the boundaries beyond Momo and tantan and deliver long-term growth engines for the group. In the second quarter, the total revenue for the profit oriented span among apps including domestic and overseas social and games product was 264 million RMB, up 33 percent year over 60 percent sequentially. The revenue of the mixed-day product was back on as the financial growth track after the Chinese New Year top.
That concluded the prepared portion of today's discussion with that let me turn the call back to Ashley to start Q&A actually please.
Speaker 2: 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.
Speaker 2: Just look with reminder before we take questions. For those who can speak Chinese, please ask your questions in Chinese first, followed by English translation by yourself. I'll be there with ready for questions please. Thank you. If you wish to ask your questions, please press stop.
Just two quick reminders before we take questions because those who can speak Chinese. Please ask your questions in Chinese close followed by English translation by yourself.
Operator, we're ready for questions. Please.
Thank you.
If you wish to ask a question. Please press star one on your telephone.
You know.
If you wish to cancel your request please press star two.
If you're honest speaker phone please pick up the handset before asking your question.
The first question today comes from Thomas Chong with Jefferies. Please go ahead.
Yan Tang: The revenue growth in overseas social products temporarily slowed at the beginning of the year due to the earthquake impact in Turkey and the evaluation of Egyptian currency. In the second quarter, consumer sentiment in Turkey recover how a team shift as the market focused on Egypt to several affluent middle eastern markets. With the combined efforts of product and channel teams, the number of paying users of overseas social products increased rapidly which led to a significant potential increase in revenue.
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Speaker 5: Thank you. Thanks, management for taking my question. My question is on co-abobo.
Speaker 5: The first part is about the user recovery trend as well as the outlook. And the second is regarding
First part is about the user of the couple of the trend as well as the outlook and the second is regarding the.
Speaker 5: the MACQO house is going to impact live streaming and the PAS. And the first part is about our second half, a core more, more revenue expectation. Thank you.
Yan Tang: In addition, our team optimized overall revenue sharing, Horatio and revised costs and expense items by fine training operations. Thanks to operating leverage, the net margin improved sequentially. As the result, the net income grew much faster than the revenue. As we dive deeper into the overseas market, we realize that the middle east and the emerging North Africa market still have much room for growth. F4 in second quarter, while we increase our investment in assistive products to dive rabbit revenues and profit growth, we also test this several new ROI oriented products in the MENA area.
The macro how's it going to impact life streaming and P. A M and the first part is about our second half our core more buffer Neil expectation. Thank you.
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Yan Tang: We try to replicate our success so far in our oversee extension to growth of our user base further. With our expertise in attracting users, there's so-so tributes and monetizing through value addict service. We are hopeful that these new products will contribute sizable, ever-renews and profits to the group in a foreseeable future.
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Hui Peng: This concludes my remarks. Now, I will pass the call over to Peppy for the financial review. Peppy, please. Thank you. Hello, everyone. Thank you for joining our conference call today. Now, let me briefly take you through the financial review. Code revenue for the second quarter 2023 came in better than our previous expectation as 3.14 billion RMB, up 1% young year and 11% quarter over quarter. Non-gap net income attributable to the company was 632.1 million RMB, up 36% young year and 34% from the previous quarter.
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Speaker 2: As I mentioned in my prepaid remarks, the strategic priority for the MUMO app this year is to keep the user-based able and increase the productivity of the cash cow business.
As I mentioned in my prepared remarks, the strategic card priority for the moment. This year is to keep their user base stable and increase the productivity of the cash cow business.
Speaker 2: The team's mandate is to devise and execute product and tenon strategies with the idea to accomplish this goal.
Team's mandate is to devise and execute put out I'm trying to what strategies are with idea to accomplish this goal.
Speaker 2: On the product front, we integrated user products with commercial products to continue to introduce new features at for city-take, timely social interactions and improve relationship building.
On the product front, we integrated our use of products with commercial products to continue to introduce new features that's supposed to take timely social interactions and improve relationship duty.
Speaker 2: In addition, users can further enhance their social experience by paying for battery-radiated services. On the back end, we continue to optimize the content recommendation algorithm, so we can create a better community atmosphere and deliver more value for female users and those who are seeking for emotional companionships.
In addition, the user's confirming your homes are there socially theatres by paying full body radio services on the backend we continue to optimize the content recommendation algorithm. So we can create a better community atmosphere and deliver more value for female users and those who are seeking.
Hui Peng: The better than expected bottom line performance was attributable to the outperformance of the top line as well as our continuous cost control efforts, which led to improvement in both Momo and sometimes profitability. We are proud that after three years of pandemic, we emerged on the other side with a very healthy and solid cash cow business and at the same time stronger capability of managing new business endeavors to drive future growth while delivering decent profits to the shareholders.
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Speaker 2: And the enhancement in product experience has played a positive role in improving user retention. And therefore, even with reduction in channel investment versus a year ago, the user base continue to grow steadily after the 10 years in New Year's Trial.
Huntsman in Portola Springs has played a positive role in improving user retention.
Therefore, you were with reduction of internal investment versus a year ago. The user base continued to grow steadily after the Chinese new year trials.
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Hui Peng: Now, let me walk you through the details. Looking into the key revenue line items for the quarter, firstly, on live broadcasting. Code revenue from live broadcasting business for the second quarter of 2023 was 1.59 billion RMB, up 5% year over year and 11% quarter over quarter. Momo at live broadcasting revenue totaled 1.44 billion RMB for the quarter, up 3% year over year and 12% quarter over quarter. The increase was driven by an increase in the number of high-paying users which in turn drove over our RPP growth.
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Speaker 2: Although MoonMot's user growth and engagement level performed a three-while soda this year, will remain operational focus on keeping the number of pain users at a healthy and stable level rather than the excessive pursuit of MAUs. Because the pain users are the fundamental basis for maintaining the high productivity of the cash cow.
Although almost all use of roads in the basement level performed pretty well so far this year, where we'll remain operational focus.
Keeping the number of paying users are the healthy stable level, rather than the excessive pursuit also may use because the paying users are the fundamental basis for maintaining the high productivity off the cash cow business.
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Hui Peng: Compant live broadcasting revenue amounted to 145.2 million RMB, up 25% from Q2 last year and 4% from the previous quarter, revenue from Saturday service for the second quarter of 2023 was 1.50 billion RMB, down 2% from Q2 last year but up 10% sequentially. Revenue from Vass on an X-Tong-Tong basis was 1.33 billion RMB in the second quarter of 2023 of 1% young year and 11% sequentially. Momo asked Vass revenue decrease from the year ago due to a decrease of paying user count.
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Speaker 4: In terms of consumer sentiment, we thought that the users' social and consumption demands are to pick up after the Chinese New Year.
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Hui Peng: However, the downward pressure was completely offset by the growth of standalone new applications, which led to a slight year over year increase in value added service revenue on an X-Tong-Tong basis. The sequential growth was primarily attributable to the seasonal recovery of Momo app value added service business as well as the continuous growth of the new applications. Tong-Tong-Tong-Tong value added service revenue amounted to RMB 170.2 million, down 21% from 2 to last year, but up 1% from the previous quarter.
In terms of consumer sentiment all with all of that.
Use of social on consumption demand started to pick up after the Chinese new year.
Speaker 2: our better than expected user matrix and financial performance in the first half of the year are solid evidence of this.
Oh, I said I expected use of matrix M financial performance in the first half of the year are solid evidence of this.
Speaker 2: However since enduring Q3 almost clock revenue started to soften compared with the second quarter And there are two reasons for this
However, since enduring two three almost call revenue was topics was soft when compared with the second quarter.
There are two reasons for this.
Speaker 2: One is the weakening of consumer sentiment caused by the over-or-marker environment. And the other is that we took the initiatives to make a round off relatively large, a round off large production adjustments in late August to further ensure the healthy equalcy.
One is the weakening of our consumer sentiment caused by the overall macro environment.
Hui Peng: The young year decrease was due to the decline in paying users. However, the downward pressure on value added service revenue was partially offset by the growth in RPPU driven by commercial product efforts. Now, turning to cost and expenses. Non-gap cost of revenue for the second quarter of 2023 was 1.82 billion RMB compared to 1.79 billion for the same period last year. Non-gap cost margin for the quarter was 42.1%, down slightly by 0.4% from the year ago period, but up 1.1% from the last quarter.
The other is thought to all we took the initiative to make a round off relatively large oh.
Large production that Guzman.
Late August to further ensure a healthy ecosystem.
Speaker 2: And for the questions related to revenues, Cassie will pick that.??
And for the questions are related to revenues because he will take that.
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Speaker 6: Now briefly on the revenue outlook for MoMA. As you guys can see, we had a pretty good first half of the year, due to the post-COVID recovery, as well as the fact that the team has been doing a good job on the product and operational side.
No now briefly on the.
Revenue outlooks for for mobile.
You guys can see we had a pretty good first half of the year due to the post COVID-19 recovery.
As well as the fact that the team has been doing a good job on the product and operational side. However, as seek mentioned moving as we moving as we move deeper into the year by monitoring the daily grossing it also.
Hui Peng: The sequential increase was due to the discontinuation of one off the incentives in Q1 provided to live streamers after the Chinese New Year to speed up supply side recovery. Non-gap R&D expenses for the second quarter was 200.8 million RMB compared to 214.3 million RMB for the same period last year or a 6% decrease year over year. The decrease was due to the continuous optimization in personnel costs. Non-gap R&D expenses as a percentage of revenue was 6.4% compared with 6.9% due to last year.
Speaker 6: However, as SIG mentioned, moving as we move deeper into the year, by monitoring the data growth thing and also...
Speaker 6: from some of the anecdotal conversations with our VIPs, we can see all that a consumer sentiment is obviously weakening, possibly due to the macro not turning out to be as promising as people had hoped earlier in the year.
Some of the anecdotal conversations with our V. I teach we can feel that the consumer sentiment is is obviously weakening possibly due to the macro not turning out to be as promising as people had hoped earlier in the year.
Speaker 6: And the other factor that we have to take into consideration is that we've been making some...
And the other factor.
That we have to take into consideration is that we've.
We've been making some product adjustments on the value added services side to make sure that the that momo's social ecosystem stays healthy and such adjustments involved temporary suspension of some of the products and services. We previously offered on the Momo platform as such suspension is expected to.
Speaker 6: product adjustments on the variatus service side to make sure that the that momos social ecosystem stays healthy.
Hui Peng: We ended the quarter with 1,470 total employees of which 339 are from Tantan, compared to 1,825 total employees of which 516 from Tantan a year ago. The R&D personnel as a percentage of total employee for the group was 63% compared with 61% due to last year. Non-gap sales and marketing expenses for the second quarter was 349.7 million RMB or 11.1% of total revenue compared to 611 million RMB or 19.3% of total revenue for the same period last year.
Speaker 6: and such adjustments involve temporary suspension of...
Speaker 6: some of the products and services we previously offered on the mobile platform. Such suspension is expected to have partial impact on Q3 and full impact from Q4 onwards.
You have partial impact on Q3, a full impact from Q4 onwards, because the adjustments and suspension took place toward late August timeframe.
Speaker 6: because the adjustments and suspension took place toward late all this time frame. And due to those two factors, one at the macro level and the other one on the product front, our previous view that
Due to those two factors one at a macro level and the other one on the product front, our previous view that.
Speaker 6: I remember saying on our last journey to Cognet, the second half of the year is likely to see continuous improvement from the first half.
I remember a saying on our last earnings call that the second half of the euro is likely to.
To see continuous improvement from the first half that view.
Hui Peng: The significant year over year decreased both in terms of absolute RMB amount and as a percentage of revenue was primarily attributable to Tantan's shift in marketing strategy to control costs and focus on channel ROI and to a lesser degree more more strategy to trim low efficiency channel marketing spend. Non-Gap GN-A expenses was 83.2 million RMB for the second quarter of 2023 compared to 82.6 million RMB for the same quarter last year.
Speaker 6: That view at this point of time obviously seemed a little bit too optimistic. As you guys can see from our guidance, we are seeing Q3 to show us the quenching of the client by mid single digits. Q4 is at this point of time still a little bit far out to see because a lot of it will depend on how micro eventually is gonna play out.
At this point of time, obviously seemed a little bit too optimistic as you guys can see from our guidance. We are seeing Q3 to show a sequential decline by a mid single digit.
Q4 is a at this point of time still a little bit far out to sea because a lot of it will depend on how micro eventually is going to play out but if the macro stays away. It is I think it is possible that.
Speaker 6: but yes, the macro stays the way it is.
Speaker 6: I think it is possible that we can see a flatish quarter in Q4, from Q3. As you guys know, Q4 is usually a very strong season due to the year end competition events. But the full quarter impact from the product adjustments that I just mentioned on the last side could eat in some of the incremental revenue from the year end competition.
Hui Peng: GN-A expenses as a percentage of total revenue remained stable at 2.7% from the year ago period. Non-Gap operating income was 708.8 million RMB a significant increase of 53% from 2222 and up 37% from the previous quarter. Non-Gap operating margin for the quarter was 22.6% of 7.7% from the same period last year and 4.2% from the previous quarter. Non-Gap operating expenses as a percentage of total revenue was 20.2% but decreased from 28.8% in 2222 and down from 23.9% into 1 this year.
You know, we can see a flattish quarter from AR in Q4 from Q3 as you guys know Q4 is usually a very strong season due to the year end competition events, but a full quarter impact from the product adjustments that I just mentioned on them.
Mass side could eat in some of the incremental revenue from the year end competition off.
Speaker 6: Also, we think it's possible that the overall long holiday this year could have a bigger negative impact on us because more people could be traveling due to the reopen instead of paying not online using the social entertainment services that we offer. So again,
So we think it's possible that the October long holiday this year could have a bigger negative impact on us.
Because more people could be traveling due to the reopening instead of paying knowledge online using the social entertainment services that we offer.
So again.
Speaker 6: At this point of time, I do not really have enough visibility to be very prescriptive about Q4, but if you ask our view at this point of time, we'd rather stay on the conservative side for the whole second half of the year. I hope that helps.
This point of time, I do not really have enough visibility to be very prescriptive about our Q4, but if you ask our view at this point of time, our we'd rather stay on the conservative side for the whole second half of the year I hope that helps.
Hui Peng: Non-Gap expenses in absolute revenue amount decreased 29.3% young year. This was mainly due to a reduction in total marketing expenses and to a lesser degree optimization in personnel and infrastructure costs. Now briefly on income tax expenses. Total income tax expense was 166.0 million RMB for the quarter with an effective tax rate of 20%. In 22, the company accrued withholding income tax of 48.1 million RMB which is 10% of undistributed profit generated by our wealthy.
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Speaker 7: I'll predict next question.
Yeah, Operator next question please.
The next question comes from Rafael Shin with E O C. I research. Please go ahead.
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Hui Peng: Without withholding tax our estimated non-Gap effective tax rate was around 14% in the second quarter. Now according to balance sheet and cash flow items. As of June 30, 2023, how do groups cash equivalents short-term deposits, long-term deposits, short-term investments and restricted cash total of 11.27 billion RMB compared to 17.400 billion RMB as of December 31, 2022. In 22, we paid an equivalent of 937 million RMB cash dividends to our shareholders and in late June we paid 18.2 million RMB.
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Speaker 5: us new apps. Now, the last one for me, we'll give you a very interesting last year, five or five years from the last year, I'll define you now. Thanks management for taking my question. My question regarding our new apps. Firstly, could the management share the latest updates, especially still chill? Also, could we have some insights on whether it's a company has other new apps or products to share? Lastly, could we have any revenue guidance of new apps in the second half of this year or 2024? Thank you.
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Lastly, we have any revenue guidance of you asking a second half of this year or two southern tide before thank you.
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Hui Peng: Net cash provided by operating activities in the second quarter of 2023 was 828 million RMB. Lastly, on business outlook. Before we give out the numbers, let me spend a few minutes talking about a few things that are expected to have impact on our top line performance in the near term. For the second quarter of 2023, revenues from our Momo segment or on an ex-Tantham basis totaled 2.82 billion RMB of 1.3% year-year.
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Hui Peng: This was the first positive quarter for Momo on a YY basis since the beginning of COVID in early 2020. On the one hand, we are happy to see that a cash-tow business shows remarkable resilience on the back of strong platform fundamentals. On the other hand, we remain cautious about the operating environment we are in. As you guys can probably feel, macro rebound is not turning out as promising as we had hoped at the beginning of the year.
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In in terms of new endeavors.
Speaker 2: In terms of new endeavors, our domestic apps, which launched relatively early, have now entered a rather mature stage in terms of product format and user scale.
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Hui Peng: Especially as we entered into Q3, we've got a clear sense that the spending sentiment is softening. In addition, starting mid Q3, we have also been making product adjustments to make sure that our ecosystem stays healthy. Some of the adjustments have negative impacts on the top line performance of Momo's nano added service in the short run. All of these factors are expected to cause revenues for Momo segment for Q3 to decrease on a sequential basis.
Speaker 2: And for these apps, our team's current focus is on continuously exploring monetization opportunities and optimizing the car structure and promoting the steady growth of our profit scale.
For these ops team's current focus is only continuously exploring monetization opportunities and optimizing the cost structure and are promoting the studied growth all saw profit scale.
Speaker 2: And as for the overseas business, with the greatest and most promising potential, as I mentioned earlier, although user and revenue growth that temporarily slowed down at the beginning of the year due to some external factors.
And as for the overseas business with a great taste and most promising potential as I mentioned earlier, although user and revenue growth are temporary the slowdown at the beginning of the year due to some external factors.
Hui Peng: For Canton, in June, we made some product adjustments to comply with the new policy rolled out by MIIT in Q2, which poses a negative impact on the renewal rate of the membership service. This will likely cause Canton's revenue to see a sequential decrease from Q2 as well. To be more specific, we estimated the group's third quarter revenues to come in the range from 2.9 billion RMD to 3.0 billion RMD, representing a decrease of 10.3 percent to 7.2 percent a year, or a decrease of 7.6 percent to 4.4 percent quarter of a quarter.
Speaker 2: The over-disk business operational and financial nature actually resumed satisfactory growth trend in due two. Thanks to the timely adjustment, our team made in shifting marketing focus.
On the overseas business operational and financial matrix actually all resumed oh satisfactory growth trend in Q2, all thanks to the timely adjustments our team made in shifting marketing our market focus.
Speaker 2: While digging deeper into mature markets and exploring opportunities for revenue extensions in new markets, we also optimized the revenue sharing policy in favor of our GT margin as we build on our brand power and industry influence. And that is why if you look at social profit growth rate and it went much faster than its revenue growth rate level.
While digging deeper into a mature market and exploring opportunities for revenue expansion into new markets. We also optimized our revenue sharing policy you can say the all five GP margin.
We viewed on all brown power and our industry influence and that is why if you look at social so all the profit.
Growth rate on the one much faster than these are revenue I'll close rate level.
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Hui Peng: At segment level for Q3, 2023, on a sequential basis, we expect Momo revenue to decrease around mid single digit and Canton revenue to decrease in teens. Please be mindful that this forecast represents the company's current and preliminary view on the market and operational conditions which are subject to changes.
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Unknown Executive: That concluded the prepared portion of today's discussion.
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Ashley Jing: With that, let me turn the call back to Ashley to start Q&A.
Ashley Jing: Ashley, please. Just a quick reminder before we take questions. For those who can speak Chinese, please ask your questions in Chinese first, followed by English translation by yourself.
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Unknown Executive: Operator, we're ready for questions, please. Thank you. If you wish to ask your questions, please press star one on your telephone.
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Unknown Executive: If you wish to careful your question, please press star two. If you are on a speaker phone, please pick up the handset before asking your questions.
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Thomas Chong: The first question today comes from Thomas Chong with Jeffrey. Please go ahead. Through Q&A Momo, the G-Bo, and V-A-S, the impact.
We have recently you saw on the overseas business units and has launched several new products. The overseas Oh, Oh here is to further develop existing products, while more effectively replicating our successful overseas.
Speaker 9: We have recently set up an overseas business unit and has launched several new products overseas. Our goal here is to further develop existing products while more effectively replicating our successful overseas experience in new vertical markets.
He runs in new vertical market.
Speaker 2: The world will start making tunnel investments once user matrix are reached a satisfactory level.
Well stop making China investments once use of matrix or reach a satisfactory level. In fact, we have started trial marketing in selective regions I'll focus this year will be on optimizing products from a product form according to user feedback rather than engaging in large scale use.
Thomas Chong: The last question is about the Q&A Momo. Thanks, management for taking my question. My question is on Q&A Momo. The first part is about the user recovery trend as well as the outlook, and the second is regarding the macro. How is it going to impact live streaming and V-A-S? The first part is about our second half, Q&A Momo, our revenue expectation.
Speaker 2: In fact, we have started trial marketing in selective regions.
Speaker 2: Our focus this year will be on optimizing products from products from, according to user feedback, rather than engaging in large scale user acquisition and monetization. However, given that all of your products in the Middle East are our oriented app. So we have a strict requirements for the financial, a return of financial performance of the product iteration and operation.
The acquisition and monetization however, given that all of your products in the middle East to all all of our young kids off.
So we have a strict requirements for the financial return on financial performance of the product iteration and the operations are hopefully these apps can make some real contribution to our top line next year.
Speaker 2: Hopefully these apps can make some real contribution to our top line next year.
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Yan Tang: Thank you. I'm coming back to the topic. I was just in the middle of the research. Momo's main focus this year was to maintain the high-ranking health care system. [inaudible][inaudible] value added is that we've been making some products on the value added is that we've been making some products on the value added is that we've been making some products on the value added is that I remember saying our last journey is called that the second half of the year is likely to see continuous improvement from the first half.
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Speaker 2: As for other new products, after Tang Yan returned to the management team, our investment in research and development of new products and businesses has greatly increased.
As far other new put off off the tongue angry tend to the management team.
Investment in our research and development of new products and businesses has greatly increased.
Speaker 2: Although the current demand in the consumer internet industry is very saturated, we believe that each generation of young people will have different social needs and preferences.
Although the current demand in the consumer Internet industry is a very saturated we.
We believe that each generation of young people will have different social needs and preferences.
Speaker 2: This is our challenge and also our greatest opportunity.
This is our challenge and also our greatest opportunity.
Speaker 2: We have been working in this field for more than 12 years, and we have accumulated a lot of successful experiences and lessons learned without strong capital and talent pool. I'm confident that through self-research and investment, we will continue to consolidate our leading position in the social field and explore new roles opportunities.
We have been working in this field for more than half, yes, I mean, we have accumulated a lot of our successful experiences and our lessons learned.
With our strong capital and talent pool, I'm confident that through self research and investment, but we'll continue to work consolidated our leading position in the social field and explore new rose opportunities.
Speaker 7: Okay, let me, it was just Kathy. Let me give some give you some color on the sides of the revenue from the new ads.
Okay.
Okay, Let me.
This is Kathy let me give him some give you some color on the AR side.
The revenue from the new ACH a to b.
Speaker 6: To be clear, the revenues from the new applications is currently reported within the VALOA data service line under Momo segment. For example, in the second quarter of 2023, VALOA data service revenue on an X-con-con basis was 1.3, around 1.3 billion in the roughly 20% of which came from the new applications.
To be clear.
The revenues from the new applications is currently reported within the value added service lines are under more segment. For example in the second quarter of 2023, a value added service revenue on an ex <unk> basis was 1.3 around $1 3 billion of M D.
Roughly 20% of which came from the new applications.
Speaker 6: As social continues to game momentum, this year that 20% new piece within the Madad is service line could grow, I think, around 50% on a year-over-year basis.
Ah so chill.
Pews to gain momentum this year that are 20% new piece within the matter of added service line should grow.
I think around 50% on a year over year basis.
Speaker 6: such top line. The other thing worth noting is the top line growth that I just mentioned also comes with margin improvement. So bottom line is growing even faster than top line.
Such top line and the other thing worth noting is the topline growth that I. Just mentioned are also comes with a margin improvement. So bottom line is growing even faster than top line.
With regards to the outlook about next year and next year.
Speaker 6: With regards to the outlook about next year, next year, I think in late August this year is still a little bit too far for me to see, but trend wise, I guess, so chill is gonna continue to grow at a decent pace.
And I think in in late August this year is a still a little bit too far to for me to see a trend wise Ah I guess social is going to continue to grow at a decent pace driven mainly by new product launches and also.
Speaker 6: driven mainly by new product launches and also some of the new regions that we're pushing into at this point of time.
You know some of the new regions that we're pushing into at this point of time.
Speaker 6: And the other growth driver, potential growth driver for this new piece with the Empata Addest Service is the new applications that we launched this year as SIX just mentioned. Hopefully next year some of these new endeavors is going to start bearing fruits on the top line front. So that's my answer to the two.
And the other growth driver a potential growth driver for this new piece within Colorado service is are the new applications that we launched this year as our six just mentioned hopefully next year. Some of these new endeavors, it's going to start bearing fruit on the top of my front.
So that's that's my I'm sure to choosy.
Suddenly all the questions.
Speaker 2: So let's move on to the next question. Please operator.
Oh, let's move onto the next question. Please operator.
The next question is from Cheng Cheng with D I B.
Go ahead.
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Speaker 2: Handan has made good progress in improving channel ROI and ARPU over the past year, achieving breakeven head-off schedule at the beginning of the year. Our next goal is to drive significant growth in ARPU and retention in order to create a positive positive business cycle and deliver sustainable growth.
How about has made good progress in improving channel all I and are often over the past year, achieving breakeven in the heart of a schedule at the beginning of the year. Our next goal is to drive significant growth in op, who I retention in order to create a positive piece of news cycle and deliver.
Sustainable growth.
Speaker 2: However, it's not that easy to get as you require us to make more substantial progress in both user and commercial products. Although we haven't yet found a breakthrough point for this, as the team has achieved the breakeven.
However, it's not that easy to get I thought you requires us to make more substantial progress in both user and commercial products.
Although we haven't yet found a breakthrough point for this as the team has achieved a breakeven we have enough patience and confidence to continue exploring products are making kind of on.
Speaker 2: We have enough patience and confidence to continue our exploring products, and making hand-hand and more effective dating app for users and creating more value to share holders.
A more effective dating app for use us on creating more value to shareholders and for the financial questions I wouldn't read too.
Yan Tang: That view at this point of time, obviously, seemed a little bit too optimistic. As you guys can see from our guidance, we are seeing Q3 to show a sequential decline by mid single digits. Q4 is at this point of time still a little bit far out to see because a lot of it will depend on how micro eventually is going to play out. But if the macro stays the way it is, I think it is possible that, you know, we can see a flatish quarter, you know, in Q4, from Q3.
Speaker 2: And for the financial questions, I will leave it to you.
Speaker 7: Before I talk about the financial outlook for content maybe just one quick point at to what
Okay.
Before I talk about the financial outlook for Kantar, maybe just one quick point to add too wide.
Speaker 6: and say just said about users. I believe a big part of content team's effort.
So you just said about users I believe are a big part of sometimes team's effort for the rest of the year will be on clean you are cleaning up spammers and you know putting in a more comprehensive system to make sure. We keep these actors off the platform.
Speaker 6: For the rest of the year, we'll be on cleaning up spammers and, you know, putting in a more comprehensive system to make sure we keep these ad actors off the platform. This is crucial for us to deliver the right kind of user experience work.
Yan Tang: As you guys know, Q4 is usually a very strong season due to the year end competition events, but a full quarter impact from the product adjustments that I just mentioned on the last side could eat in some of the incremental revenue from the year end competitions. Also, we think it is possible that over a long holiday this year could have a bigger negative impact on us, because more people could be traveling due to the reopen instead of paying out online using the social entertainment services that we offer.
This is crucial for us to deliver the right kind of user experience work for a bidding platform other than that are the team is also going to be pushing harder on new products.
Speaker 6: for the dating platform. Other than that, the team is also going to be pushing harder on new products.
Speaker 6: experiments. I'm pushing harder. What I mean is is probably time to pry out whatever that we believe is worth trying without worrying too much about short-term fluctuations in user accounts. With that in mind It's hard for me at this point to put down a definitive number for tantas MAU for the coming couple of months
Jeremy it's pushing harder what I need is a is probably the time to try out whatever that we believe it's worth trying without worrying too much about short term saturation user accounts with that in mind.
It's hard for me at this point to put out a definitive number for content and thank you for the coming couple of months.
Yan Tang: So again, at this point of time, I do not really have enough visibility to be very prescriptive about Q4, but if you ask our view at this point of time, we would rather stay on the conservative side for the whole second half of the year.
Speaker 6: I think Q3 is going to be a period where the team allows bigger room for trial and error.
But I think our Q3 is going to be a period.
Where the team allows igo and for a trial and error.
Speaker 6: So I think that's the reason why we would rather defer that question on user target to next quarter. I then we should have enough.
So I think that's the reason why we would rather defer that question Oh user targets to next quarter.
Unknown Executive: I hope that helps.
Then we should have enough.
Speaker 6: visibility to give you guys a user target for the near term. That's the question on the user front for Tantan. With respect to financial outlook for the back half for Tantan. I think for two, three guidance, we are modeling in sequential decrease from high single digit to low teen.
The visibility to give you guys a user targeted for the near term. So that's the question on the user front for ton time.
Rafael Chen: Next question comes from Rafael Chen with B.O.C.I, research. Please go ahead. Thank you, Rafael Chen, for your question.
With respect to financial outlook for the back half a ton ton.
I think for Q3 guidance, we are modeling in a sequential decrease from high single digit to low teens.
Rafael Chen: My question is about the new experience. First of all, I would like to share with you the experience of the new experience. In fact, I would like to share with you some details of the new product. Because the company that I mentioned on the course of the year, I would like to share with you some new apps. Finally, I would like to share with you the experience of the new experience. I would like to thank you for taking my question.
Speaker 6: That's largely reflecting the macro impact on live streaming and to a lesser degree.
That's largely reflecting the macro impact on live streaming and to a lesser degree.
Speaker 6: The product adjustment has directed by MIIT, which I mentioned in my prepared remarks. And that's going to have a negative impact on the renewal rate of Tantant membership service. On the other hand, the team is also working on new features to continue to drive the ARP2, which will be able to counter some of those negative factors.
The product adjustments at as directed by MRI, I T, a which I mentioned on.
My prepared in my prepared remarks.
And that's going to have a negative impact on the renewal rate of content membership service on the other hand. The team is also working on new features to continue to drive the arb to.
Rafael Chen: My question is regarding our new apps. Firstly, could the management share the latest updates, especially still chill? Also, could we have some insights on whether the company has other new apps or products to share? Lastly, could we have any revenue guidance of new apps in the second half of this year or 2022? Thank you.
Which will be able to counter some of those negative factors. So overall, we do see some downward pressure in the second half.
Speaker 6: So overall, we do see some downward pressure in the second half of the year on top line, but how exactly sometimes revenue may trend.
The year on top line, but how exactly 10 times revenue may trend, especially as we entered into into Q4 will depend on how good a job our team can deliver in driving they are too.
Yan Tang: [inaudible] In terms of new endeavors, our domestic apps, which launched relatively early, have now entered a rather mature stage in terms of product format and user scale. And for these apps, our team's current focus is on continuously exploring monetization opportunities and optimizing the car structure and promoting the steady growth of our profit scale. And as for the overtuse business with the greatest and most promising potential, as I mentioned earlier, although user and revenue growth temporarily slowed down at the beginning of the year due to some external factors, the overtuse business operational and financial matrix actually resumed a satisfactory growth trend in due to thanks to the timely adjustment our team made in shifting marketing market focus.
Speaker 6: especially as we enter into Q4, what depends on how good a job our team can deliver in driving the R2.
Speaker 6: It's a short question about bottom line. We'll know. We'll know. There's about a ton of bottom line. OK. We'll do it with parts to a ton of bottom line where
It is short question about bottom line with no joke there there's about a 10 in Baltimore, Okay with the with regards to our tenants bottom line, where we're.
Speaker 6: still seeing opportunities to continue to optimize on important lie items such as personnel and marketing, depending on the pace of such optimization, bottom lie.
Still seeing opportunities to continue to optimize on.
The important line items, such as personnel and marketing depending on the pace of such optimization bottom line.
Speaker 6: In the second half, should stay around breaking even level or slightly better than that.
In the second half it should stay around breaking a breakeven level or slightly better than that.
Speaker 6: I'm not going to ask you that. It looks good to see you. Alfreda, thank you. You need your pitch should be that I asked you.
I'll hand back to Ashley next.
Next question please operator.
Sure.
Okay.
One of my son with J P. Morgan. Please go ahead.
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Speaker 5: Thanks management for thinking about questions. My question is about profit modules. The growth profit side is very room for the use of live streaming revenue share. The OK side is their potential for further narrowing the OPEC's. Last lady, could you give us an idea of the expected scale of the investment for the new app and overseas business expansion? Thank you.
Thanks management for taking my question. My question is all about profit margins on the gross profit side is there room for that.
Live streaming revenue share on the <unk> side is there potential for further.
Lastly, could you give us an idea off the back.
The scale of the Weizmann for those new apps and overseas business expansion. Thank you.
Okay.
Speaker 7: Here, I'm hearing several pieces of the question, first see on growth margin and overall payout structure.
Yeah, I'm hearing a several pieces of the question firstly on gross margin overall payout.
Structure.
Speaker 6: I think on the prior earnings cause, we've said that currently you are seeing the supply side of the life streaming ecosystem at a pretty stable.
I think on on the prior earnings calls we've said that you know currently you are seeing the supply side of the life shrinking ecosystem are at a pretty stable state, meaning that yes, there is still competition.
Speaker 6: meaning that yes, there is still competition for the high quality performers, but overall, we think market is much more stable compared to a year ago, two years ago, where some of the bigger platforms are, you know, were very aggressive in competing with us for high quality performers. So with that in mind, I think right now, you know, the overall payout structure that we offer on mobile platforms should stay relatively stable, meaning that a payout ratio should also stay at a relatively stable level as well. I think the question, if I get it correctly, is asking about whether there is room to maybe lower the payout ratio to the broadcasters, although we do not see competition as intense as it was like two years ago.
Yan Tang: While digging deeper into mature markets and exploring opportunities for revenue extensions in new markets, we also optimized the revenue sharing policy in favor of our GT margin as we build on our brand power and industry influence. That is why if you look at social profit growth rate and it went much faster than its revenue or growth rate level. In the middle of the market, we are all R.I, leaders in the market. In this way, the market will also have a relatively strict income requirement. I hope that in the future, we will be able to achieve more success in the future in the future.
For the high quality performers, but overall, we think market is a much more stable compared to a year ago or two years ago, where some of the bigger.
Platform is our you know were very aggressive in competing with us for high quality performers. So.
With that in mind, I think I'm right now.
You know the overall payout structure that we offer a mobile platform or should stay relatively stable, meaning that the payout ratio should also stay at a relatively stable level as well I think the question if I get it correctly is asking about whether there is room to maybe lower.
Our payout ratio to the to the broadcasters, although we do not see competition as intense as it was like two years ago.
Speaker 6: I do not think it's appropriate to lower the payout to agencies or breakfast either because
I do not Ah I do not think it's appropriate to lower the payout to agencies or blackout.
Either because.
Speaker 6: It's true that from the press, sometimes we hear stories about some broadcasters.
It's true that.
You know from the press, sometimes we hear stories about some broadcasters.
Speaker 6: you know, making a lot of money. If there are such outliers, like some of the top of the pyramid streamers making huge sum of money, but these are not the average. These are the outliers. You can look at the average level of income that broadcasters make. You can look at the margins of some of our, even some of our tops.
So making a lot of money there are such outliers like some of the top of the pyramid streamers are making a huge sum of money, but are these are not the average. These are the outliers you could look at the average level of income that broadcasters make if you look at the margins of some of our even some apart.
Speaker 6: you know, perform our agencies. It's very low. So, you know, if you want them to work hard in the ecosystem.
Yan Tang: We have recently set up an overtuse business unit and have launched several new products overseas. Our goal here is to further develop existing products while more effectively replicating our successful overtuse experience in new vertical markets. We will start making trend investments once user matrix reach a satisfactory level. In fact, we have started trial marketing in selective regions. Our focus this year will be on optimizing products from a product form according to user feedback rather than engaging in large scale user acquisition and monetization.
Talks are you know performer agencies, it's very low.
So you know if you want them to work hard.
In the ecosystem, if you want them to our enough money to care about our improving the content. This is probably not the right time for us to lower the payout ratio.
Speaker 6: you want them to earn enough money to care about improving the content.
Speaker 6: This is probably not the right time for us to lower the pay-out racial either. So that's my answer to the pay-out question I think. Right now we would rather let the status quo continue.
Either so that's my answer to the to the payout question I think right now we would rather you know let the status quo continue.
Speaker 6: So that's a growth margin. My answer to the growth margin for this year, I think it would stay more or less the same as we saw in last year. Maybe it could swing a little bit.
So that's a gross margin my answer to the gross margin.
So this year I think it would stay more or less the same as we saw.
Yan Tang: However, given that, all of new products in the Middle East are our oriented apps. So we have strict requirements for the financial or return of financial performance of the product iteration and operations. Hopefully, these apps can make some real contribution to our top line next year.
And last year, maybe it could swing a little bit.
Speaker 6: because of the changing revenue mix.
Because of the changing revenue mix, but you know more or less it would stay a quite stable versus.
Speaker 6: you know, more or less it would stay quite stable versus last year. For operating margin, I think in due to, for the, for X10 time part, operating margin on adjusted basis, go back to 2020, 24 or 25 percent on non-gap basis.
Just last year.
For operating margin I think in Q2 are for the Forex Telecom part operating margin on adjusted basis I'll go back to a 20 2024, 25% a non-GAAP basis.
Yan Tang: [inaudible] And the other growth striver, potential growth striver for this new piece with the Empathad Added Service is the new applications that we launched this year, as Sichuan mentioned. Hopefully next year some of these new endeavors is going to start bearing fruits on the top line front. So that's my answer to bring you all the questions.
Speaker 6: I think as we move into the second half of the year with some pressure on top line, it's possible that we could see.
I think as we move into the second half of the year with you know some pressure on top line, it's possible that we could see non.
Speaker 6: non-gab operating margin on an X-Tem-T basis to give a little bit from two-two-level. But as I said, we're also working very hard to continue to optimize the personnel cost as well as the marketing. And we're still seeing pretty decent room for us to continue to improve on those optimizations front. So I think, you know,
non-GAAP operating margin on an ex cat basis to dip a little bit from Q2's level, but as I said, we're also working very hard to continue to optimize our you know the personnel cost as well as the marketing and we're still seeing a pretty decent room for us to continue to.
To improve on those optimization front, so I think you know.
Speaker 6: In any case, we're going to exit 2023, with a adjusted operating margin safely above 20%. That's my view for the X1010 part. Tentality talked about the overall bottom line. I'll look for content, so I won't repeat here. I think the last question is perhaps on management thinking about
In any case, we're going to exit 2023.
You know with a adjusted operating margin safely above 20%.
That's my view for the X 10 Town Park, Pat I already talked about the overall bottom line I'll look for content. So I won't repeat here I think the last question is perhaps on management's thinking about the extent insurers needed for overseas expansion.
Speaker 6: The expenditures needed for Overseas expansion. As SIC mentioned, the new endeavors that we just launched in the Middle East, North Africa area, all of these are RRI oriented.
<expletive> mentioned, the new endeavors that we just launched in the Middle East North Africa area. All of these are our ROI oriented.
Speaker 6: sort of the initiatives. This year, I think the focus will be on getting the product right, getting the user experience right and building up the infrastructure, Zembek and needed to grow the business. And when time is right, we're going to put in some marketing dollars to build the initial user base. So overall, I would say
Sort of initiatives.
This year I think the focus will be on getting the product right getting the user experience right and building up the infrastructure and pack and needed to.
Grow the business and when time is right we're going to put in some you know marketing dollars to build the initial user base.
So overall I would say.
Speaker 6: The rest of the year would be an investment period for these new applications. But all, you know, I think we're talking about, it's a count personnel and marketing daughters all in, we're talking about.
The rest of the year would be an investment period for these new applications.
But all in all I think we are talking about if a count personnel and marketing dollars. All in we're talking about maybe 20 to 30 million renminbi in total for the rest of the year for these new applications and next year. They should start to see we should start to see revenue coming in from these new applications for so chill.
Speaker 6: maybe 20 to 30 million, remember in total for the rest of the year for these new applications and next year they should start to see, we should start to see revenue coming in from these new applications. For so chill, like I said, you know it's already in a state where it's generating...
Like I said you know its already are in a stage, where AR is generating a bottom line profit faster than it is generating a revenue. So you don't have to worry about are the growth of social creating a drag on the bottom line and so that's my overall answer to your.
Speaker 6: bottom line profit faster than is generating revenues. So you don't have to worry about the growth of social creating a drag on the bottom line. And so that's my overall answer to your question about margins.
A question about margins.
Speaker 9: So I think that's it for today and thank you guys for participating and we'll see you next quarter.
So I think that's it for today and thank you guys for participating on we'll see you next quarter.
Yeah.
Thank you, ladies and gentlemen that does conclude our conference for today. Thank you for participating you may now disconnect.
Yeah.
Okay.
[noise].
Xueqing Zhang: So let's move on to the next question, please operator. The next question comes from Xueqing Zhang with CICC. Please go ahead. Thank you. I have a question for you. I would like to ask you a question from the audience. First of all, I would like to ask you a question from the audience. Is there any information that you can share with us? I would like to take a look. Let's see how it looks like in the beginning of the year. [inaudible] Thank you. Thank you. Okay.
Yan Tang: Before I talk about the financial outlook for content, maybe just one quick point at to what SIG just said about users. I believe a big part of content team's effort for the rest of the year will be on cleaning up spammers and, you know, putting in a more comprehensive system to make sure we keep these ad actors off the platform. This is crucial for us to deliver the right kind of user experience work for a dating platform.
Yan Tang: Other than that, the team is also going to be pushing harder on new product experiments. By pushing harder, what I mean is it's probably time to pry out whatever that we believe is worth trying without worrying too much about short-term fluctuations in user accounts. With that in mind, it's hard for me at this point to put down a definitive number for content's MAU for the coming couple of months. I think Q3 is going to be a period where the team allows bigger room for trial and error.
Yan Tang: So I think that's the reason why we would rather defer that question on user targets to next quarter. By then we should have enough visibility to give you guys a user target for the near term. So that's the question on the user front for tantan.
Yan Tang: With respect to financial outlook for the back half for tantan. I think for Q3 guidance, we are modeling in sequential decrease from high single digit to low teams. That's largely reflecting the macro impact on live streaming and to a lesser degree, the product adjustment as directed by MIT, which I mentioned on my in my prepare remarks. And that's going to have a negative impact on the renewal rate of tantan membership service.
Yan Tang: On the other hand, the team is also working on new features to continue to drive the R2, which will be able to counter some of those negative factors. So overall, we do see some downward pressure in the second half of the year on top line, but how exactly tantan revenue may trend, especially as we entered into Q4 will depend on how good a job our team can deliver in driving the R2.
Yan Tang: It's sort of question about bottom line we know. Okay, with regards to tantan's bottom line, we're still seeing opportunities to continue to optimize on important line items such as personnel and marketing, depending on the pace of such optimization bottom line in the second half should stay around breaking breakeven level or slightly better than that. I'm not going to ask you guys. There's no question please, Alfredo, do you need it?
Unknown Executive: It should be the last question.
Yan Tang: The next question. Yeah, follow up with Sun. We'll see for again. Please go ahead. Thanks management for taking the questions. My question is about profit margins. The growth profit side is very room for the use of live streaming revenue share. The old key side is their potential for further narrowing the old packs. Lastly, could you give us an idea of the expected scale of the investment for the new apps and overseas business expansion?
Yan Tang: Thank you. Yeah, I'm hearing several pieces of the question. Firstly, on growth margin and overall payout structure. I think on the prior earnings cause, we've said that currently you are seeing the supply side of the live streaming ecosystem at a free stable state, meaning that yes, there is still competition for the high quality performers, but overall we think market is much more stable compared to a year ago or two years ago where some of the bigger platforms were very aggressive in competing with us for high quality performers.
Yan Tang: So with that in mind, I think right now the overall payout structure that we offer on mobile platform should stay relatively stable, meaning that a payout ratio should also stay at a relatively stable level as well. I think the question, if I get it correctly, is asking about whether there is room to maybe lower the payout ratio to the broadcasters. Although we do not see competition as intense as it was like two years ago, I do not think it's appropriate to lower the payout to agencies or broadcasters either because it's true that from the press sometimes we hear stories about some broadcasters making a lot of money.
Yan Tang: There are such outliers, like some of the top of the pyramid streamers making huge sum of money. But these are not the average, these are the outliers, if you look at the average level of income that broadcasters make, if you look at the margins of even some of our top performer agencies, it's very low. So if you want them to work hard in the ecosystem, if you want them to earn enough money to care about improving the content, this is probably not the right time for us to lower the payout ratio either.
Yan Tang: So that's my answer to the payout question, I think, right now we would rather let the status quo continue. So that's growth margin, my answer to the growth margin. For this year I think it would stay more or less the same as we saw in last year, maybe it could swing a little bit because of the changing revenue mix, but more or less it would stay quite stable versus last year. For operating margin, I think in due to for the for accident time part, operating margin on adjusted basis, go back to 2020, 24, 25% on non gap basis.
Yan Tang: I think as we move into the second half of the year with some pressure on top line, it's possible that we could see non gap operating margin on an extended basis to give a little bit from Q2 level. But as I said, we're also working very hard to continue to optimize the personnel cost as well as the marketing and we're still seeing pretty decent room for us to continue to improve on those optimizations front.
Yan Tang: So I think, you know, in any case, we're going to exit 2023, you know, with a adjusted operating margin safely above 20%. That's my view for the X1010 part. I've already talked about the overall bottom line. I'll look for content.
Yan Tang: So I won't repeat here. I think the last question is perhaps on management thinking about the expenditures needed for overseas expansion. I think mentioned the new endeavors that we just launched in the Middle East North Africa area, all of these are RRI oriented sort of the initiatives. This year, I think the focus will be on getting the product right, getting the user experience right and building up the infrastructures and back and needed to grow the business.
Yan Tang: And when time is right, we're going to put in some, you know, marketing dollars to build the initial user base. So overall, I would say the rest of the year would be an investment period for these new applications. But all, you know, I think we're talking about, if we'll count personnel and marketing dollars all in, we're talking about maybe 20 to 30 million, remember, in total for the rest of the year for these new applications.
Yan Tang: And next year, they should start to see, we should start to see revenue coming in from these new applications for so chill. Like I said, you know, it's already in a state where it's generating bottom line profit faster than it's generating revenues. So you don't have to worry about the growth of social creating a drag on the bottom line. And so that's my overall answer to your question about margins.
Unknown Executive: So I think that's it for today and thank you guys for participating and we'll see you next quarter.
Unknown Executive: Thank you ladies and gentlemen, that does conclude our conference for today. Thank you for participating, you may now disconnect.