Q3 2023 Hello Group Inc Earnings Call

Ladies and gentlemen, thank you for standing by and welcome to third quarter 2023, Hello Group, Inc Earnings Conference call.

Speaker 1: Ladies and gentlemen, thank you for standing by and welcome to the third quarter 2023 Hello Group Inc. Gardens Conference call.

All participants are in a listen only mode it'll.

Speaker 1: All participants are in a listen-only mode. There will be a presentation followed by a question and answer session.

There'll 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 one on your telephone keypad. Please note, this conference is

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, ma'am. MS. JING

I would now like to hand, the conference over to your first speaker today Ms actually Jim. Thank you. Please go ahead ma'am.

Thank you operator.

Speaker 2: Good morning and good evening everyone. Thank you for joining us today for Hello Group's third quarter 2023 earnings conference call. The company's results were released earlier today and are available on the company's IR website.

Good morning, and good evening, everyone. Some people call yesterday for Hello Group's third quarter 2023 earnings Conference call. The company's results were released earlier today and are available on the company's IR website on the call today are Mr. Tong Yang CEO of the company Mr. Joseph Tung CFO of the company I mean totally Seattle off the company.

Speaker 2: On the call today are Mr. Tang Yan, CEO of the company, Ms. Jiang Sichuan, CEO of the company, and Ms. Peng Hui, CEO of the company. They will discuss the company's business operations and highlights, as well as the financials and guidance.

I'll discuss the company's business operations and highlights as well as the financials on guidance. It will all be available to answer your questions. During the Q&A session that follows.

Speaker 2: They will all 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 four looking statements made under the Safe Harbor provision of the Private Securities Litigation 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 expectation and current market and operating conditions, and relate to events that involve known or unknown risks, uncertainties, and other factors.

Such statements are based on management's current expectation on current market and operating conditions and relate to events that involve known or unknown risks uncertainties and other factors all of which are difficult to predict on 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.

Speaker 2: all of which are difficult to predict and many of which are beyond a company's control, which may cause a company's actual results, performance, or achievements to differ materially from those in the forward-looking statement.

Statements.

Speaker 2: Further information regarding this and other risks, uncertainties, and factors is included in the company's findings with the U.S. Securities and Exchange Commission. The company does not undertake any obligation to update any forward-looking statements as a result of new information, future event or otherwise, except as required under law. I will now pass the call over to our COO, Ms. Jiang Sichuan.

Further information regarding this and other risks uncertainties and factors is included in the company's filings with the U S Securities and Exchange Commission. The company does not undertake any obligation to update any forward looking statements as a result of new information future events or otherwise, except as required under law I will now pass the call over to al.

Ms Johnson.

Yes.

Speaker 3: Hello, everyone. Thank you for joining our call. We are pleased to report strong financial results for the third quarter and study progress on various strategic priorities across all businesses.

Hello, everyone. Thank you for joining our call.

We are pleased to report strong financial results for the first quarter and study progress on various strategic priority across all business Tonight.

Speaker 3: I will now walk you through the details of our work for the quarter and...

I will now walk you through the details of our work for the quarter end.

Speaker 3: Together with Tong Yan and Kathy, take questions in the Q&A session.

Together with Tony and Cathy take questions in the Q&A session that follows.

Speaker 3: I will start with a brief overview of our financial performance.

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

Speaker 3: Total group revenue was 3.04 billion RMB, down 6% year-over-year and 3% sequentially, exceeding our pre-election goal.

Total group revenue was 3.04 billion RMB down 6% year over year and 3% sequentially.

Excluding our previous guidance.

Speaker 3: The main reasons for the decline in revenue were the consumption softly caused by the softer economy and product adjustments we made to maintain a healthy community ecosystem.

The main reason for the decline in revenue, whereas the consumption suddenly caused by the softer economy and product adjustments, we make to maintaining a healthy community ecosystem.

Speaker 3: Adjusted operating income with 681 million RMB.

Adjusted operating income was 681 million RMB.

Speaker 3: up 30% year over year but down 4% sequentially.

Up 30% year over year.

Around four 4% sequentially.

Speaker 3: Profit margin was 22.4%, up 3.7 percentage point year over year, and down slightly, 0.2 percentage point quarter over quarter.

Profit margin was 22, 4%, a 3.7 percentage point year over year and down slightly due upon two percentage point quarter over quarter.

Speaker 3: Compared to the same period for last year, adjusted operating product increased significantly despite lower revenue.

Compared to the same period last year adjusted operating profit increased participating despite lower revenue.

Speaker 3: This improvement was driven by our effective cost optimization and efficiency improvement initiatives.

This improvement was driven by our effective cost optimization and efficiency improvement initiatives.

Speaker 3: which turned 10-10 profitable compared to a year ago.

Which trend [laughter] unprofitable compared to a year ago.

Speaker 3: as well as supported the stable productivity of Momocache cows this year.

As well as supported the stable productivity of Momo cash consciousness.

Speaker 3: Total revenue from the Tantan app, oh, from the Momo app and Sanilo New app was 2.74 billion RMB, down 5% year-over-year and 3% sequential.

Two tumor from the tenant Oh from pneumonia and spend on our new App was two 174 billion RMB down 5% year over year and 3% sequentially.

Speaker 3: Adjusted operating income with 675 million RMB up 4% year over year and down slightly 1% quarter over quarter with a margin of 24.6%

Adjusted operating income was 675 million RMB up 4% year over year, and down slightly 1% quarter over quarter with a margin of 24, 6%.

Speaker 3: up 2.2 percentage point year over year and 0.4 percentage point quarter over quarter.

Oh, 2.2 percentage point year over year, and one four percentage points quarter over quarter.

Speaker 3: Profit margin improved despite the decline in revenue, primarily due to our team's solid ability to control costs and expenses.

Profit margin improved despite the decline in revenue, primarily due to our team's solid ability to control costs and expenses.

Speaker 3: Total revenue from Tantan came in at 295 million RMB, down 40% year over year and 8% sequentially.

Total rose from 10 time came in at 295 million RMB.

140% year over year and 8% sequentially.

Speaker 3: mainly due to our reduction in channel investment combined with our anti-spam initiative, resulting in a drop in our usability.

Mainly due to our reduction in China investment combined with our M T phone initiatives.

Celgene and a drop in our user base.

Speaker 3: Thanks to improvements in staff and channel marketing efficiency.

So once you improvements in staff and channel marketing efficiency.

Speaker 4: Tantan achieved an adjusted operating income of 27.6 million RMB in the third quarter with a margin

<unk> achieved an adjusted operating income of 27 6 million RMB in the third quarter.

With a margin of 9%.

Speaker 4: The adjusted operating loss in Q3 last year was 38.3 million RMB and adjusted operating income in the previous quarter was 31.9 million RMB.

Adjusted operating income operating loss in Q3 of last year. It was $38 3 million RMB and adjusted operating income in the previous quarter was 31 9 million RMB.

Speaker 4: Now I will discuss the progress we make against our strategic priorities and future development plans for Momo, Tauntaun, and the new endeavors, starting with

Now I will discuss the progress we've made against our strategic priorities and future development plans for Momo, Samsung and the new endeavors.

Starting with some extra normal.

Speaker 3: Our goal for MoMo is to keep the user and revenue scale stable, continue to optimize cost structure, and maintain the productivity of the cash cow business. To achieve this goal, our team has focused on two aspects.

I will go for Momo is to keep the user and revenue scout stable continue to optimize cost structure and maintain the productivity of the cash cow business.

To achieve this goal.

Our team has focused on two aspects.

Part of our operation.

And expenses.

Speaker 3: First, we mitigated revenue pressure from the external environment by continuously optimizing product operation and introducing new monetization features.

First we mitigated pressure.

Pressure from the external environment by continuously optimizing product operation and you shouldn't do seem new monetization features.

Speaker 3: Second, we maintain broadly stable profit margin by improving cash unitization and staff efficiency.

Second we maintain broadly stable profit margin by improving cash unit cessation and stuff inefficiency.

Speaker 3: The group's better-than-expected financial performance in Q3 was mainly due to the better-than-expected financial performance of the MOMO app.

The group's better than expected financial performance in Q3 was mainly due to the better than expected financial performance of the mobile App.

No.

Your food or detail.

Speaker 3: Firstly, on the product and operational front, our focus on product operation this year has been stabilized as user-based and improved monetization efficiency.

Firstly on the part of an operational front, our focus I'm proud of operation. This year has been stabilized of user base and improved monetization efficiency.

Speaker 4: while focusing on providing timely social experience and enriching content support.

While focusing on providing timely social experience and then a breaching constant supply.

Speaker 3: our product team further integrated user products and consumer products to improve the overall monetization efficiency of the platform.

Our product team, Florida.

Integrated user partner and consumer products to improve the overall monetization efficiency of the platform.

Speaker 4: On the channel side, the continuous improvement in user acquisition efficiency provides an effective way to maintain the stable of the user base under the strategy of cost optimization and efficiency improvement. Thanks to low.

On the channel side, the continuous improvement in user acquisition efficiency provides a effective way to maintain the stable of their user base under the strategy of cost optimization and efficiency improvement.

Thanks to lower unit acquisition cost.

Speaker 4: we acquire 40% more new users on a slightly lower channel investment year over year.

We acquired 40% more new users on the slightly lower channel and that's why year over year.

Speaker 4: In Q3, the number of active users declined slightly, quarter over quarter, due to the start of school year, and WASP product is just

In Q3, the number of active user declined slightly quarter over quarter due to the start of school year.

I was proud of it doesn't work.

Speaker 4: but the extent of the decline was less than a year ago.

But the extent of the decline was less than a year ago.

Speaker 4: on a year-over-year basis, the total user scale was still slightly lower, but the gap has never significantly compared to the first half of the year.

On a year over year spaces.

Total use Cisco with two slightly lower but the gap has narrowed significantly compared to the first half of the year.

Speaker 4: In quarter 3, the number of Momo paying users decreased by 100,000 to 7.8 million from the previous quarter.

In quarter three the number of mobile paying users decreased by 100000 to 7.8 million from the previous quarter.

Speaker 4: mainly due to the policy adjustment in WASP membership, which results in a decline in the number of WASP paying users.

Mainly due to the policy adjustment in last membership.

This out in a declined in the number of paying users.

Speaker 3: Now, let's go through the productivity of our Momo Cash Cloud.

Now, let's go through the productivity of our normal cash cow business.

Speaker 3: In the third quarter, MoMA's live streaming revenue was 1.41 billion RMB.

In the first quarter almost a live streaming revenue was one point 41 billion RMB.

Speaker 3: down 7% year-over-year and 2% sequentially.

Down 7% year over year and 2% sequentially.

Speaker 4: The pressure on revenue mainly came from a software company.

The pressure on revenue mainly came from a softer.

Consumer sentiment.

Speaker 4: considering the current macroeconomic environment.

Considering the current macro economic in Ireland.

Speaker 4: Our team decided to reduce revenue-oriented competition advantage.

Our team decided to reduce revenue oriented competition events.

Speaker 4: Meanwhile, on the product front, we have launched new interactive gamified features that enable us to keep the number of core paying users relatively low.

Meanwhile, on the products and we have launched new interactive gambling five features that enable us to keep the number of co pay users are relatively stable.

Speaker 4: The launch of interactive gaming-by-features had not only improved the paying user experience of middle and long-term cohort users, which plays a positive role in stabilizing live-streaming user engagement.

The launch of interactive excuse me by feature not only improves the paying user experience.

Mito and long town co who uses.

Which plays a positive role in.

Stabilizing live streaming user engagement.

Speaker 4: but has also created new revenue streams for long-tail broadcasters in a traditional showroom live-streaming business.

It has also created new revenue stream for launch how forecasters in the transitional showroom live streaming business.

Speaker 4: In the first quarter, the revenue sharing ratio of live streaming decreased slightly quarter over quarter.

In the first quarter, so that they're sharing ratio.

Live streaming decreased slightly quarter over quarter.

Speaker 4: mainly due to the reduction in event-related bonds.

Mainly due to the reduction in event related bonuses.

Speaker 4: User-oriented operational efforts led to a slight decrease in the proportion of revenue contributed by talent agencies.

User oriented.

Operational efforts led to a slight decrease in the proportion of revenue contributed by talent agencies.

Speaker 4: but engagement of the supply side remains stable.

Integration of the supply side me stable.

In the third quarter.

Speaker 4: In the third quarter, Roth's revenue, excluding TomTom, totaled 1.3 billion RMB, down 3% year-over-year and 2% sequentially.

<unk> revenue, excluding <unk> totaled $1 3 billion RMB.

One 3% year over year and 2% sequentially.

Speaker 4: The gross value from the Momo app totaled 1 billion RMB, down 12% year-over-year and 6% quarter-over-quarter.

Well I'll start from the mobile App totaled 1 billion RMB down.

Down, 12% year over year, and 6% quarter over quarter.

Speaker 4: Revenue from the standalone app was 295 million RMB. The year-over-year growth accelerated to 51%, and revenue was up 30% sequentially.

Where are you from the Standalone as well.

It was 295 million RMB.

A year over year growth.

And Oh Senate races to the two 1% and revenue was up 30% sequentially.

Speaker 4: The decrease in MOMO RAS revenue was mainly due to our proactive product adjustment to improve the overall ecosystem and the impact of macroeconomy on consumer sentiment.

The decrease in mobile revenue was mainly due to our proactive pardon Justin.

To improve the overall ecosystem and impact of macro economy and consumer sentiment.

Speaker 3: As I mentioned earlier about our user product.

As I mentioned earlier about our user products.

Speaker 3: In order to improve the monetization efficiency of the Momo app, we have

In order to improve the monetization efficiency of Nomura.

We have in budget asset to pay experience and for example, nearby people and some are the nonpaying features.

Speaker 4: to pay experience in, for example, nearby people. And some other non-paying features.

Speaker 3: The income in DAU and the pay-in ratio of audio and video-based VAS experience particularly mitigated the pressure.

The income M D U N the paying ratio of audio and redo base loss experience.

Particularly mitigated the pressure.

Speaker 3: on revenue caused by product adjustment and the external environment.

Revenue caused by product adjustments and ex town no I haven't.

Yeah.

Speaker 4: The overall brass avenue sharing ratio decreased slightly quarter over quarter.

The over or glass revenue sharing ratio decreased slightly.

Over quarter.

Speaker 4: are primarily due to this continuation of lower growth margin features following our ecosystem adjustment.

Primarily due to the discontinuation of lower gross margin features following our ecosystem adjustments.

Speaker 3: This shift in the product may contribute positively to an improvement in vast growth margin.

This shift in the product mix contribute.

Also for me choose an improvement in lost gross margin.

No less than 10 times performance.

Speaker 4: Our strategic goal for Trong Thanh is to achieve overall break-evens from the year and develop product and monetization models that are suitable for the Asian dating culture in order to pursue sustainable growth on the back of a positive business cycle.

I was a teacher Gulf War time time is to achieve overall breakeven.

A year and develop product and monetization models, that's suitable for the Asian dating culture in order to pursue the sustainable growth on the back of a positive there's gonna cycle.

Speaker 4: Over the past year, Tantan has made solid progress in reducing low-efficiency channel marketing spend to retrieve break-even.

Over the past year, sometimes has some nice solid progress in reducing low efficiency channel marketing plans to achieve breakeven.

Speaker 4: It delivered first operating profit at the beginning of this year and maintained profitability in Q3 despite lower revenue.

Is deliver first operating profit at the beginning of this year and maintained profitability in Q3, despite lower revenue.

Speaker 4: However, we still have a long way to go in achieving our strategic goals.

However, we still have a long way to go in achieving our strategic goals of sustainable growth on the back of positive business cycle.

Speaker 3: of sustainable growth on the back of positive business cycles.

Speaker 4: The underlying reason is that we have yet to make breakthroughs in the development of products and monetization models that are suitable for the Asian dating culture.

The underlying reason is that we have yet to make fresh food.

All over Florida, and monetization models, that's suitable for the Asian dating culture.

Speaker 4: The ongoing anti-spam campaign started this spring, coupled with the seasonal impact of the new school year put notable pressure on Tantan's user base in September .

The ongoing anti spam campaigns started this spring coupled with the seasonal impact of the new school year, putting inevitable PRASM on content user base in September.

Speaker 4: MAU decreased 9% sequentially to 15.5%.

And we use decreased 9% sequentially to 15.7 million.

Speaker 4: As of the end of Q3, Tantan has 1.4 million paying users. Despite a decrease in overall user base,

As of the end of Q3 10 ton has 1.4 million paying users.

Despite a decrease in over or user base, the paying user count do it may staples internationally.

Speaker 4: primarily due to our commercial product teams' efforts.

Primarily due to our commercial product teams effort to improve user experience and the higher stickiness of the group compared to non paying users.

Speaker 4: to improve user paying experience and a higher stickiness of the group compared to non-paying users.

Speaker 4: The total revenue for the third quarter was 295 million RMB, down 40% year-over-year and 8% sequentially.

Total revenue for the first quarter was 295 million RMB down 40% year over year and 8% sequentially.

The year over year decrease was solely contribute to a reduction in the number of paying users.

Speaker 4: The year-over-year decrease was solely contributed to a reduction in the number of paying users caused by decline of overall user base.

Thus by decline of overall user base.

Speaker 4: Thanks to improvement in both products and channels, our people increased by 20% from a year ago.

Thanks to improvement in gross product in China.

People increased by 20% from a year ago.

Speaker 4: which partially offset the revenue loss from the decline in paying youth.

Which particularly offset the revenue loss from the decline in paying users.

Speaker 4: The consequential decrease in revenue was mainly due to a significant impact of software

The sequential decrease in revenue was mainly due to significant impact of softer.

Speaker 4: macroeconomy on the streaming, live streaming business.

Macro economy on the streaming live streaming business.

Additionally.

Speaker 4: Policy adjustments on automatic renewal by the Ministry of Industry and Information Technology have some impact on vast membership subscription revenues.

The policy adjustment, an automatic renewal by the Ministry of industry and information technology has some impact on vast membership subscription revenue.

Speaker 4: However, Tangtang's growth margin was up by nearly four percentage point year over year and one percentage point quarter over quarter, driven by the greater revenue contribution of one business, which carries a growth harness.

However, gross margin was up by nearly four percentage point year over year, and one percentage point quarter over quarter, driven by the greater revenue contribution of the watch business.

Which carries a higher gross margin.

Speaker 4: As I mentioned at the beginning, the decline in users and revenue of Tantan has mainly attributed to our initiative in cost optimization and efficiency improvement.

As I mentioned at the beginning the decline in users and revenue uptime has mainly attributed.

Through our initiatives and cost optimization and efficiency improvement.

Speaker 4: in terms of improving staff efficiency.

In terms of improving staff efficiency, we have continued to reduce features and operational activities that cannot provide high quality user experience.

Speaker 4: we have continued to reduce features and operational activities that cannot provide high quality user experience and incremental revenue and realigned human resource accordingly. In terms of

And incremental revenue and we aligned human resource accordingly.

In terms of improving marketing efficiency, we have continued to reduce unit acquisition costs and further cut marketing expenses that cannot try to generate positive all eyes.

Speaker 4: We have continued to reduce unit acquisition costs and further cut marketing expenses that cannot generate positive ROI.

Speaker 4: Although this approach has resulted in a reduction in the number of users and revenue.

Although this approach has resulted in a reduction in the number of users and revenue.

Speaker 4: The cost optimization strategy has brought greater benefit to our bottom line as the market spend that we cut were ROI negative.

Cost optimization strategy has stopped greater benefit to our bottom line as the market then that would come or all I needed.

Speaker 4: And this is why, despite lower revenue, Tantan still achieve an adjusted operating income of 27.58 million RMB in the third quarter.

This is why despite lower revenue 10 times to achieve just that.

Operating income of 27 point of 58 million RMB if at all in.

In the first quarter.

Speaker 4: So now, I would like to walk you through the details of TimeHouse Progress on the channel.

So now I would like to walk you through the teeth out of time has progressed.

On the channel and product for them.

Speaker 4: Firstly, on the marketing front, the unit acquisition cost of App Store increased sequentially in the third quarter due to the decline on its own traffic.

Firstly on the on the marketing front.

The acquisition cost of App store.

Increase.

Crucially in the third quarter due to the client on its own traffic.

Speaker 4: Our team timely adjusted the proportion of investment across different channels in order to acquire more users, while controlling the increase in unit acquisition costs to low single digits and crucial.

Our team timely addresses the propulsion of investment across different channels in order to acquire more users while controlling the increase in unit acquisition costs, So low single digits and crucially.

Speaker 4: On the product and operational front, the biggest achievement in the third quarter is that we managed

On the product and operational fronts.

Biggest achievement in the third quarter is that we manage to maintain spamming activity to a low level, Mississippi and therefore the community.

Speaker 3: to maintain famine activity to a low level significantly. And therefore, the community returned to normal.

<unk> returned to normal.

Yeah.

Speaker 4: Our product team emphasizes guidance of real-person authentication on the Swipe & Match homepage.

I promised him empathize.

Garden of real person authentication on to sweat and match homepage.

Speaker 4: increase in view person authentication rates positively contribute to the improvement of the community ecosystem.

The increase in view person authentication rates positively contribute to the improvement of the community ecosystem.

In terms of commercial product.

Speaker 4: On top of the basic monthly membership service, we launched a variety of pay-as-you-go privileges.

On top of the basic math.

Membership service with launch of a variety of pay as you go privilege that aim to increase exposure and improve matching efficiency.

Speaker 4: that aim to increase exposure and improve matching efficiency.

Speaker 4: As a result, our vast app people continue to grow, both on a year-over-year and a sequential basis, largely offsetting the impact of user decisions.

As a result.

Our revised our people continue to grow on both on a year over a year and a sequential basis.

Largely offset the impact of user declined on lost revenue.

Speaker 4: However, due to the lack of breakthrough in user products,

However, due to the lack of bricks for end user products.

Speaker 4: Our user retention, unfortunately, has not yet been stable, but is steadily improving.

Our user retention, unfortunately have not yet seen staple faithfully and crews.

Additionally.

Speaker 4: Additionally, the outbreak of spamming activities combined with softer spamming among live streaming users led to a decline in channel ROI.

The outbreak of Miami activities combined with a softer spending among live streaming users led to a decline in China.

Speaker 4: Therefore, our team's execution for the rest of this year has been focusing on further reducing costs and channel investment.

Therefore, our teams execution for the rest of this year has been focusing on further research of reducing cost and channel investments.

Speaker 4: Relocating excess human resources to new endeavors and driving APU growth through new product features on the basis of operational efficiency improvement until ROI turns positive.

Relocating exceed access our human resources to new endeavors, and driving absolute well through a new product features on the basis of operational efficiency improvement onto I tunes positive.

Lastly in terms of her new endeavors.

Speaker 4: Our goal is to enrich our product portfolio, push the boundary beyond normal and tantam. The developed long-term.

We'll go is to enrich our product portfolio push the boundary beyond normal in town.

Because if I look long term growth engine.

Speaker 4: In the third quarter, total revenue of the new act

In the first quarter total revenue of the new apps.

Speaker 4: included social and games products with 302 million RMB, up 49% year over year and 50% sequentially.

And kudos, social and games product with 302 million RMB.

49% year over year and 15% sequentially.

Speaker 4: Among them was my revenue of domestic and overseas social products was 295 million RMB.

Among them was my weapon you all still makes it an overseas social product was 295 million RMB.

Speaker 4: of 51% year-over-year and 30% sequentially.

51% year over year and 30% sequentially.

Speaker 4: For domestic apps, given their relatively mature stage, the operational focus on our team is to control costs and expenses while pushing harder on monetization.

For the music App.

Given that relatively mature stage the operational focus on our team is to control costs and expenses, while pushing harder on monetization.

Speaker 4: so that profit can grow in line with revenue. Now, in terms of our overseas business.

So that profit can grow in line with revenue.

Now in terms of our overseas business.

As to our border markets face.

Speaker 4: Revenue in the first quarter continued to grow rapidly from a higher base.

Revenue in the third quarter continued to grow rapidly from a higher fee.

The introduction of our new features together with our paying user focused acquisition strategy play.

Speaker 4: The introduction of new features together with our paying user focus acquisition strategy play a pivotal role in driving revenue growth.

Pivotal road in driving revenue growth.

Speaker 4: in Turkey which accounts for a substantial portion of overseas market revenue.

In Turkey, which accounts for a substantial portion of oversea market revenue.

The Michigan.

Speaker 4: Currency fluctuation during the quarter impacts revenue and exerts pressure on growth margins.

Currency fluctuations during the quarter impacted revenue and if there's any pressure on gross margin.

Speaker 4: To protect profits, our team reduced channel investment in a timely manner.

To protect process, our team reduced channel investments in a timely matter.

Speaker 4: resulting in continued sequential growth of operating income.

Resulting in continued sequential growth of operating income.

Speaker 4: At the moment, we have mitigated some of the problems affected the profitability level of overseas business.

At the moment, we have mitigated some of the problems affected the profitability level.

Overseas business.

Speaker 4: and it is expected that it will deliver better sequential performance in both revenue and profit at the end of the year.

And as expected that it will deliver a better sequential performance in blue.

Menu and profit yeah at the end of the year.

Speaker 4: So this concludes my remarks, now I will pass the call over to Kathy for the financial review.

So this concludes my remarks, now I will pass the call over to Pepe for the financials with you.

Cathy please.

[noise] think of sick.

Speaker 5: Thank you, Sieg.

Hello, everyone and thank you for joining our conference call today.

Speaker 5: Hello, everyone. Thank you for joining our conference call today. Now, let me briefly take you through.

Now let me briefly take you through the financial review.

Speaker 5: Total revenue for the third quarter 2023 came in better than our previous expectation at 3.04 billion renminbi, down 6% year-over-year and 3% quarter-over-quarter.

Total revenue for the third quarter of 2020 came in better than our previous expectation of 3.04 billion renminbi down 6% year over year and 3% quarter over quarter.

Speaker 5: non-GAAP net income attributable to the company was R605.9 million, up 13% year-on-year, but down 4% from the previous quarter.

non-GAAP net income attributable to the company was $605 9 million renminbi.

13% year on year, but down 4% from the previous quarter.

Speaker 5: Net income significantly outperformed our expectation mainly due to two factors.

Net income significantly outperformed our expectation mainly due to two factors.

Speaker 6: One, number one, better-than-expected top-line performance, and number two, our continuous cost control efforts resulted in better-than-expected profitability for both Momo and Tantan.

One number one better than expected top line performance and number two our continuous cost control efforts resulted in better than expected profitability for both mobile and Tata.

Speaker 6: Net income continued to grow on a year-over-year basis despite lower revenue, thanks to our effective cost optimization and efficiency improvement initiatives, which enabled us to maintain the stability of MoMo Cash Cow business, turn Tantan profitable, as well as support the development of new endeavors. Now let me walk you through the details.

Net income continued to grow on a year over year basis, Despite lower revenue, thanks to our effective cost optimization and efficiency improvement initiatives, which enabled us to maintain the stability of more more cashcall business turn sometime profitable as well as supporting the development of new <unk>.

Douglas.

Now, let me walk you through the details.

Looking into the key revenue line items for the quarter Firstly, our library casting total revenue for LIBOR casting business for the third quarter of 2023 was 1.53 billion renminbi down 8% year over year and 4% quarter over quarter.

Speaker 6: Looking into the key revenue line items for the quarter. Firstly, on live broadcasting, total revenue for live broadcasting business for the third quarter of 2023 was 1.53 billion renminbi, down 8% year over year and 4% quarter over quarter.

Got it.

Speaker 6: The decrease was mainly due to a soft consumer sentiment in the current macro environment.

The decrease was mainly due to a soft consumer sentiment in the current macro environment.

Speaker 6: And to a lesser degree, Tantan pivoting away from the live streaming service, which we deem is not the priority for Tantan at this point for the dating business.

And to a lesser degree tom-tom pivoting away from the live streaming service, which we deem is not the priority for tanta at this point for the dating business.

Speaker 6: Momo App live broadcasting revenue totaled 1.41 billion RMB for the quarter, down 7% year-over-year and 2% quarter-over-quarter. Tantan's live broadcasting revenue amounted to 120.0 million RMB, down 14% from Q3 last year and 17% from the previous quarter.

Mamba Applegate Ah well more app lifeblood casting revenue totaled 1.41 billion renminbi for the quarter down 7% year over year, and 2% quarter over quarter potash LIBOR hosting revenue amounted to 120 points, you know a million of them and be down 14% from Q3 last year.

17% from the previous quarter.

Speaker 6: Revenue from value-added service for the third quarter of 2023 was 1.47 billion renminbi, down 5% from Q3 last year and 2% sequentially.

Revenue from value added service for the third quarter of 2023 was 1.47 billion renminbi down 5% from Q3 last year and 2% sequentially revenue from value added service on an ex <unk> basis was 1.30 billion renminbi in the third quarter of 2023.

Speaker 6: Revenue from value-added service on an ex-tantan basis was 1.30 billion renminbi in the third quarter of 2023, down 3% year-on-year and 2% sequentially. The decrease in mobile app value-added service was due to our proactive product adjustments as well as the impact of macroeconomy on consumer sentiment.

Down 3% year on year, and 2% sequentially. The decrease in Mumbai outside of out of service was due to a create a proactive product adjustments as well as the impact of macro economy on consumer sentiment.

Speaker 6: However, the downward pressure on MoMA value-added service revenue was largely offset by the growth of standalone new ads.

However, the downward pressure on mobile value added service revenue was largely offset by the growth of Standalone new apps pumped.

Speaker 6: Tantan's value-added service revenue amounted to RMB 168.4 million, down 16% from Q3 last year and 1% from the previous quarter. The decrease was due to the decline in paying users, which was in turn an outcome of us scaling back from the low efficiency marketing spend.

Pampas value added service revenue amounted to renminbi, $168 4 million down 16% from Q3 last year and 1% from the previous quarter. The decrease was due to the decline in paying users, which was in turn an outcome of us scaling back from the low efficiency marketing spend.

Speaker 6: However, the downward pressure was partially offset by the growth in RPPU driven by commercial product efforts.

However, the downward pressure was partially offset by the growth in our people driven by commercial products efforts.

Speaker 6: Now turning to cost and expenses, non-GAAP cost of revenue for the third quarter of 2023 was 1.77 billion renminbi compared to 1.88 billion for the same period last year. non-GAAP gross margin for the quarter was 41.8%.

Now turning to costs and expenses non-GAAP cost of revenue for the third quarter of 2023 was $1 77 billion renminbi compared compared to 1.88 billion for the same period last year.

non-GAAP gross margin for the quarter was 41, 8%.

Speaker 6: Gross margin remained relatively stable compared to the same period last year and the previous quarter. non-GAAP R&D expenses for the third quarter was 186.7 million RMB compared to 223.4 million RMB for the same period last year, or a 16% decrease YOY. The decrease was due to the continuous optimization in personnel costs.

Gross margin remained relatively stable compared to the same period last year and the previous quarter.

non-GAAP R&D expenses for the third quarter was $186 7 million reminbi compared to $223 4 million will indeed for the same period last year.

Or a 16% decrease Y O y.

The decrease was due to the continuous optimization and personnel costs.

Speaker 6: non-GAAP R&D expenses as a percentage of revenue were 6.1% compared with 6.9% Q3 last year.

non-GAAP R&D expenses as a percentage of revenue was six 1% compared with six 9% Q3 last year.

We ended the quarter with 1410 total employees of which 314 are from Tata compared to 1750 50 total employees.

Which 479 from a year ago.

The R&D personnel as a percentage of total employees for the group was 64% compared with 62% to three last year.

non-GAAP social marketing expenses for the third quarter was 300.

Speaker 6: and 68.1 million RMB, or 12.1% of total revenue, compared to.

And $68 1 million renminbi, or 12 point, 12.1% of total revenue compared to two <unk> compared to $458 6 million renminbi or 14, 2% of the total revenue for the same period last year.

Speaker 6: compared to 458.6 million renminbi, or 14.2% of the total revenue for the same period last year. The significant year-over-year decrease, both in terms of absolute renminbi 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, Mengmeng's strategy to trim low-efficiency channel marketing spans.

And if it can year over year decrease spoke in terms of absolute renminbi amount and as a percentage of revenue was primarily attributable to a 10 times shifting marketing strategy to control costs and focus on channel or why and to a lesser degree almost strategy to trim low efficiency channel marketing staff.

Speaker 6: non-GAAP G&A expenses were 76.5 million RMB for the third quarter 2023 compared to 82.6 million RMB for the same quarter last year. G&A expenses as a percentage of total revenue remained largely stable at around 2.5% compared to Q3 last year.

non-GAAP G&A expenses was $76 5 million rooming before the third quarter 2023, compared to $82 6 million and then be it for the same quarter last year G&A expenses as a percentage of total revenue remained largely stable at around two 5% compared to Q3 last year.

Speaker 6: non-GAAP operating income was 681.2 million RMB, up 13% from Q3 2022, but down 4% from the previous quarter. non-GAAP operating margin for the quarter was 22.4%, up 3.7%.

non-GAAP operating income was $681 2 million renminbi up 13% from Q3, 2022 but down 4% from the previous quarter non-GAAP operating margin for the quarter was 22, 4% a 3.7% Chris.

Speaker 6: percentage points from the same period last year, but slightly down 0.2 percentage points from the previous quarter. non-GAAP operating expenses as a percentage of total revenue was 20.7%, a decrease from 23.6% in Q3 2022, but slightly up from 20.2% in Q2 this year.

<unk> points from the same period last year, a slightly down 0.2 percentage points from the previous quarter non-GAAP operating expenses as a percentage of total revenue was 27% a decrease from 23, 6% in Q3 2022 are slightly up from 22%.

In Q2, this year non-GAAP expenses in absolute RMB amount decreased 17% Youll you every year over year. This was due to reduction in sales and marketing expenses and optimization and personnel costs.

Speaker 6: non-GAAP expenses in absolute RMB amount decreased 17% year-over-year.

Speaker 6: This was due to reduction in sales and marketing expenses and optimization in personnel costs. Now, briefly,

Now I'll briefly on income tax expenses.

Speaker 6: Total income tax expenses was 158.1 million RMB for the quarter, with an effective tax rate of 21%. In Q3, the company accrued withholding income tax of 47.9 million RMB, which is 10% of undistributed profit generated by our row fee. Without withholding tax, our estimated non-GAAP effective tax rate was around 15% in the third quarter.

Total income tax expenses was $158 1 million renminbi for the quarter.

With an effective tax rate of 21% in Q3, the company accrued withholding income tax of 47 9 million in India, which is 10% of undistributed profit generated by our Wuxi.

Without really putting parts our estimated non-GAAP effective tax rate was around 15% in the third quarter.

Now turning to balance sheet and cash flow items.

Speaker 6: As of September 30, 2023, Hello Group's cash, cash equivalents, short-term deposits, long-term deposits, short-term investments, and restricted cash totaled 13.64 billion RMB compared to 13.40 billion RMB as of December 31, 2022. Net cash provided by operating activities in the third quarter of 2023 was 582.5 million RMB.

As of September 30th 2023, Hello groups cash cash equivalents short term deposits long term deposits short term investments and restricted cash totaled 13.64 billion renminbi compared with 13.40 billion renminbi as of December 31st 2022.

Net cash provided by operating activities in the third quarter 2023 was 582.

<unk> 5 million of them and B.

Lastly on business outlook.

Speaker 6: We estimate the group's fourth quarter revenue to come in the range from 2.9 billion RMB to 3.0 billion RMB, representing a decrease of 7.9% to 6.6% year-on-year.

We estimate the group's fourth quarter revenue to come in the range from $2 9 billion and indeed to 3.3 0.0 go in renminbi, representing a decrease of seven 9% to six 6% year on year.

Speaker 6: or a decrease of 4.7% to 1.4% quarter over quarter.

Or a decrease of 4.7% to one 4% quarter over quarter.

Speaker 6: At segment level for Q3 2023, on a sequential basis, we accept more and more revenue to decrease mid to low single digit. The decrease was primarily due to the pressure on value-added service from the product adjustment we made in mid Q3, which will have a full quarter impact in Q4. And to a lesser degree, the macro impact on the overall spending center.

Secondly level for Q3 2023 on a sequential basis, we accept more revenue to decrease mid to low single digit. The decrease was primarily due primarily due to the pressure off out of out of service from the heart of the adjustment. We made in late Q3, which will have a full quarter impact in Q4 and two.

Lesser degree the macro impact on the overall spending sentiment.

Speaker 6: Considering the external environment, we've decided to call back on the incentive to the agency-driven year-end competition event.

Considering the external environment, we've decided to cut back on the incentives to the agency driven year round of competition. That's therefore revenue contribution from year end competition event will be quite limited on.

Speaker 6: Therefore, revenue contribution from year-end competition events will be quite limited.

Speaker 6: On the Tantan side, we expect revenue to decrease in low teens, primarily due to us pivoting away from live streaming business in Tantan, and to a lesser extent, the product adjustments were made to comply with a new policy rolled out by MIIT, which will have some negative impact on membership renewal revenue.

On the pumping side, we expect revenue to decrease in low teens, primarily due to us pivoting away from live streaming business in tough times and to a lesser extent the product adjustments were made to comply with the new policy rolled out by I I T <unk>, which will have some negative impact on membership renewal revenue.

[noise] Creeps me mindful that this forecast represents the company's current and preliminary view on the market and operational conditions, which are subject to changes.

Speaker 6: Please be mindful that this forecast represents the company's current and preliminary view on the market and operational conditions, which are subject to change

Speaker 6: That concluded the prepare portion of today's discussion. With that, let me turn the call back to Ashley to start Q&A. Ashley, please. Thank you.

That concluded our prepared portion of today's discussion with that let me turn the call back to actually to start counting actually please.

Speaker 2: Just a quick reminder before we start taking the questions, for those who can speak Chinese, please ask your questions in Chinese first and followed by an English translation by yourself. Thank you. And we're ready for questions.

Just a quick reminder, before we all start to do a question on flow through from kind of speak Chinese. Please ask your questions in Chinese and followed by English translation by yourself. Thank you.

And we're ready for questions operator.

Speaker 1: Thank you. If you wish to ask a question, please press star 1 on your telephone and wait for your name to be announced.

Thank you.

You wish to ask a question. Please press star one on your telephone and wait for your name to be announced.

Speaker 1: If you wish to cancel your request, please press star then 2.

If you wish to cancel your request. Please press Star then two.

Speaker 1: If you are on a speakerphone, please pick up the handset to ask your question.

If you're on a speakerphone please pick up the handset to ask your question.

The first question today comes from Leo Chiang with Deutsche Bank. Please go ahead.

Speaker 1: The first question today comes from Liu Shang with Deutsche Bank. Please go ahead.

Speaker 7: Hi, Guan Yichen, good evening. Thank you for accepting my question and congratulating Quarter's strong performance. My question is about exploration. Can Guan Yichen share with us the outlook for next year in terms of user size and finance? Thank you.

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Speaker 7: I'll transmit myself. So, hi, management. Thanks for taking my question. And congratulations on the strong results. My question is on the Tantan side. Can management share the outlook of Tantan's user skill and financial outlook in 2024? Thank you.

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Speaker 8: Let me answer this question. As mentioned in his speech, the biggest gain of Tentan this year is that it achieves a macro balance in terms of operations under the strategy of cutting costs and controlling costs.

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Speaker 8: This is a result of the joint efforts of multiple teams, such as product promotion, upgrade of RPUs, efficiency distribution of ROI channels and personnel, and continuous improvement. As for the product level,

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Speaker 8: On the basis of the traditional monthly payment model, WAAS members have increased the single-payment special rights function such as accelerating matching and matching efficiency. This has helped to promote the growth of WAAS RP-POO. While the channel team is controlling the unit customer cost, with a limited budget, to test the payment orientation of the customer material, to improve the channel R-POO and customer ROI, and explore new and effective ways.

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Speaker 8: Due to the outbreak of SPAM, a large part of the product team's energy is concentrated in the work of fighting the black market and maintaining the ecological balance of the community.

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Speaker 8: In this case, we transfer some of the technical personnel of the area to the R&D and operation work of supporting new business, in order to improve the efficiency of the overall staff. Although the current community ecology has returned to normal, but due to the delay in our live income, which caused a decline in the rp pool, resulting in a phase-by-phase regression of the overall channel ROI. Therefore, we cut some of the channel budget of ROI as negative, and cut some of the channel budget.

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Speaker 8: The recovery of the user scale will cause a certain amount of pressure. However, we believe that the bottom line is to balance profit and loss, to explore ways to improve user flow and revenue, and to achieve user growth by reducing costs. This is a healthier and more sustainable business model. Therefore, our product and channel strategy for 2024 will continue the current strategic thinking. As for the revenue forecast, let's start with Cassie.

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Speaker 2: Let me translate first. So as Sik mentioned earlier, Tantan's biggest progress this year was to achieve a break-even at the operational level and our effective cost optimization and efficiency improvement initiatives.

Let me translate for them. So as I think mentioned earlier kind of do just a progress. This year was to achieve a breakeven at the operational level I know you talked to your full cost optimization and efficiency improvement initiatives.

Speaker 2: This is the result of the joint efforts of several teams that delivered, among others, product-driven RPP growth and continuous improvement in channel ROI and staff allocation efficiency.

This is the result of the drawing I phones off off several teams that do you live out among others put up driven all people growth and continuous improvement in channel all eye on stuff allocation efficiency.

On the product front on top of the basic pay monthly membership subscription service, we launched a variety of a pay as you go a privileges such as accelerated matching which is called jostled paid leading Chinese so there's kind of a special privileges our increased exposure and improve.

Speaker 2: on top of the basic pay monthly membership subscription service.

Speaker 2: We launched a variety of pay-as-you-go privileges, such as accelerated matching, which is called jiazuo peidui in Chinese. So this kind of special privileges increase the exposure and improve the matching efficiency, thereby driving vast RPP growth.

The matching efficiency, thereby driving a boss option for growth. So on the channel front, our team controlled unit acquisition cost while at the same time has been trying to testing paying features oriented marketing materials with a limited budget to explore new ways.

Speaker 2: So on the channel front, our team-controlled unit acquisition cost well, at the same time has been trying to testing paying features-oriented marketing materials with a limited budget to explore new ways to improve our pool and channel ROI.

To improve our pool and our channel our life.

Speaker 2: Due to the outbreak of the spamming activities this year, our product team had to devote a large part of their efforts to anti-spam and maintaining a healthy ecosystem. In this case, we have reallocated excess R&D staff to support the development and operation of new endeavors to improve the overall staff utilization efficiency.

Due to the outbreak also spamming activities. This year a product team had to devote a large part of the offers to our anti spam and maintaining a healthy ecosystem.

In this case, we have reallocated excess R&D staff to support the development and operation of new and demos to improve the overall, our staff utilization and efficiency.

Speaker 2: Although the community ecosystem currently has returned to normal, the decline in RPPU due to weak live streaming revenue has led to a temporary reduction in the overall China ROI.

Although the community equal system currently has a return to a normal the decline you occupy due to a weak a live streaming revenue has led to a temporary reduction in the overall, China all I.

Speaker 2: Therefore, we cut investment in channels with negative ROI. The reduction in marketing expenses put some pressure on the recovery of the user scale.

Therefore, we caught investment in channels with now that you've all why the reduction in marketing expenses I'll put some pressure on the recovery off the use of scale and but we believe that compared with our approach of pursuing user growth regardless of course being able to improve user retention on baas revenue on top.

Speaker 2: But we believe that compared with the approach of pursuing user growth regardless of cost.

Speaker 2: Being able to improve user retention and vast revenue on top of breakeven is a healthier and more sustainable business model.

I'll fall break even is a healthier and more sustainable business model, Therefore, all product and channel strategies IMO 'twenty 'twenty fall woke her own wishes all current approach.

Speaker 2: Therefore, our product and channel strategies in 2024 will carry on with this current approach.

Speaker 2: In terms of revenue related question, I'll leave it.

Oh in terms of a revenue related Oh question I'll leave it to Cathy.

Speaker 9: Okay.

<unk>.

Okay.

Hi.

Speaker 6: I've been very optimistic about Tantan and I continue to be so despite all the arduous journey that Tantan has been through since 2019. The reason for my optimism is quite simple.

Ah I think very optimistic about 10 times and I continue to be so despite all the arduous journey that kantar has been through since 2019.

The reason for my optimism is quite simple.

Speaker 6: Chinese users have genuine demand for dating applications to help them discover romantic relationships which they can bring to their real life. And that demand is currently underserved.

Chinese new Chinese users have genuine demand for dating applications to help them discover romantic relationships, which they can bring to their real life.

And that demand is currently underserved, although sometimes is not doing as good a job as we excited too it's still undoubtedly the biggest and most effective and also the most relentless player in serving that demand in China.

Speaker 6: Although Tantan is not doing as good a job as we expect it to, it's still undoubtedly the biggest and most effective and also the most relentless player in serving that demand in China market today. As long as that is still the case, we believe the revenue and profit potential remains there for us to cultivate.

Market today as long as that is still the case, we believe the revenue and the profit potential remains there for us to cultivate a that's why I remain very optimistic about a you know a 10 times long term potential in revenue and profit.

Speaker 6: That's why I remain very optimistic about Tantan's long-term potential in revenue and profit. I think it's just a matter of continuing to stick to that goal and finding the right formula for the Asian user in the dating space.

It is.

It's just a matter of continuing to stick to that goal and finding the right formula for it you know are the Asian user in the dating space.

Speaker 6: As far as next year is concerned, there are several things I can share at this point. First of all, we're going to refocus on the dating aspect of the applications, meaning that we're going to continue to pivot away from some of the peripheral features, such as the live streaming showroom business. Live streaming currently bring in.

As far as next year is concerned there.

There are several things I can share at this 0.1st of all we are going to refocus on the dating aspect of the applications, meaning that we're going to continue to pivot away from some of the peripheral features such as the life streaming showroom business.

Live streaming currently bring in a little bit less than 1 million per day in terms of closing 30, grossing so as we continue to downsize that service I think top line could be pressured however, as likes you mean, theres, a 20 something percent gross margin and consumed.

Speaker 6: a little bit less than 1 million yuan per day in terms of grossing, daily grossing. So as we continue to downsize that service

Speaker 6: I think top line could be pressured, however.

Speaker 6: As live streaming bears a 20-something percent growth margin and consumes a lot of operational human resources, downsizing live streaming would have minimal or even positive impact on the bottom line.

A lot of operational human resources downsizing, our lifestream would have minimal or even positive impact on the bottom line.

Speaker 6: However, the fact that Tantan has built a pretty sizable customer base for live streaming show business.

However, the fact that Kantar has built a pretty sizable customer base for live streaming show business.

Speaker 6: uh, shows that it's users, ten times users actually have sufficient spending power to support a much higher R2.

Shows that its users 10 times users actually have sufficient spanning power to support a much higher or to the biggest priority for next year for the team is to build the right product and services to unleash that our pool potential and unlike live streaming the new product and services that we're gonna be.

Speaker 6: The biggest priority for next year for the team is to build the right product and services to unleash that R2 potential.

Speaker 6: And unlike live streaming, the new product and services that we're going to build should contribute positively to the dating aspect of the application of the Tantan platform. If we are successful in doing so, that could push our eye from negative to positive and the positive growth cycle will start to form on Tantan. Currently, we are working on several new features in the pipeline to be launched.

Build should contribute positively to the dating aspect of the application of the Towne platform. If we are successful in doing so that could push our eye from negative to positive and and the positive growth cycle will start to form on a compound. Currently we are working on several new features in the pipeline to a b.

Speaker 6: you know, next year, we'll see whether any of them works as the year progresses.

Launched you know next year, we'll see whether any of them works as the year progresses.

Speaker 6: Meanwhile, of course, we are going to continue to optimize the key cost items such as personnel and marketing. One thing we know for sure is that cost efficiency will continue to improve. So although we cannot pin down a revenue target now for next year, we are very optimistic that the profitability is going to continue to see improvement in 2024. So these are the things that I could share for Tata's financial outlook next year.

Meanwhile of course, we're going to continue to optimize our the key cost items, such as personnel and marketing one thing. We know for sure is that cost efficiency will continue to improve so although we cannot pin down our revenue target now for next year, we're very optimistic that our profitability is growing.

To continue to see improvement in 2020 for so these are the things that I could share for penthouse financial outlook next year.

Speaker 6: I'm handing back to Ashby for more questions. Operator, next question, please.

Yeah, I'm handing back to Kashi for automobiles.

Operator next question please.

The next question comes from Sean Lee Chang Kwon the ICC. Please go ahead.

Speaker 1: The next question comes from Zhang Xueqing from CICC. Please go ahead.

Speaker 10: Thank you, Wang Yichen. Congratulations on your record-breaking performance this quarter. My question is about the new business. Can you share more details about the new business and your expectation of revenue and income in 2024? Thank you. Thanks, management, for taking my question. Congratulations on the strong culture. My question is about our new app.

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Speaker 10: Could the management share more latest updates on the new apps? And do we have any revenue and profit guidance of new apps in 2022, 2024? Thank you.

And do we have a knee revenue and profit guidance off new apps aimed huntington to attend your 94. Thank you.

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Speaker 8: Since the introduction of a few independent apps with revenue and profits in 2019, these products for vertical and overseas social markets have made visible financial contributions to the group.

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Speaker 8: In 2022, due to the pressure from the pandemic, in order to keep the company's WAX revenue stable, the new business team increased the commercialization rate of independent apps. As a result, the new business revenue in 2022 doubled to 1.5 times in the previous year. The increase in revenue not only made up for the gap between exploration and WAX revenue, but also led to the growth of the company's overall WAX revenue under the influence of multiple benefits.

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Speaker 8: While increasing user and income, we also have excellent control over costs. This is due to the leverage effect of increasing income.

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Speaker 8: The new business requirements for this year are continuous growth in revenue and profits. By introducing new payment methods, the product set will increase the pay rate and RPV. The new business requirements for the Group of Three are continuous growth in revenue and profits.

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Speaker 8: Last year, the number of Chinese-Americans increased by nearly 10%. This year, the number of Chinese-Americans will exceed two-digit.

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Speaker 8: The operation team adjusted the expenses based on the growth of revenue and the change of R&D channels to ensure that revenue and profits are achieved in a common way.

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Speaker 8: Since the beginning of the year, the profit level has steadily improved. This is the fastest and most profitable overseas business.

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Speaker 8: We plan to replicate some of the domestic products that have proven to be beneficial to users' experience and income into overseas products by increasing the number of RPs and promoting the further growth of flow. In terms of channels, we focus on high-paying and potentially high-quality users in rich countries. Through commercialization, we have improved the flow of high-paying groups. As long as the supply chain is stable,

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Speaker 8: to increase the overall profit margin. It is expected that the profit growth rate of the new business this year will be much higher than the income growth rate. At present, there are still some apps in the new business that are in the test stage and have not yet produced substantial income. It is expected that after the product status adjustment is in place,

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Speaker 8: to further support the growth of this income. We can talk about the specific income and profit expectations at the beginning.

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Let me translate for him.

Speaker 2: Starting from 2019, our incubator launched several revenue and profit-oriented stand-alone apps targeting vertical social segments and overseas markets. And these apps have begun to gradually contribute to the

Starting from 2019, our incubator launched of several revenue and profit oriented standalone apps targeting vertical social segments on overseas market and this ops has began to gradually contribute to the group financials.

Speaker 2: In 2022, for example, under the revenue pressure brought by the pandemic, we pushed a little bit harder on the modernization efforts for these new standalone apps in order to keep the group level's vast revenue stable. And as a result, revenue from these new endeavors in 2022 increased around one and a half times compared with the previous year.

In 2022 for example, under the revenue pressure brought by the pandemic, we pushed a little bit harder on the monetization efforts for this new Standalone apps, you know Aldo to keep the group levels all lost revenue stable.

And as a result.

Revenue from this Union Davos E 2022 increased around one half times compared with the previous year.

Speaker 2: The incremental revenue not only offsets the decline in VAS revenue from MOMO and TANTAN, but also drove a slight increase in our group's VAS revenue, despite several unfavorable external factors.

The incremental revenue not only offsets the decline in lost revenue from more one time time, but also drove a slight increase in our groups are vast revenue. Despite several unfavorable external factors.

Speaker 2: Our team did a good job in controlling expenses while driving users and revenue growth. So we could enjoy operating leverage and achieve sustained profitability for the three small apps last year.

Our team did a good job in controlling our expenses, while driving users and revenue growth. So we could even drive operating leverage and achieve sustained profitability for those three small acts last year.

Speaker 2: And our goal for the new endeavors this year has been to continue to grow our revenue and profit.

And I'll go for then you are in Davos. This year has been to continue to grow our revenue and profit.

Speaker 2: And on the product front, we launched new paying features to increase paying ratio and RP pool. And in the first nine months of the year, the contribution of this new endeavor to the group's top line increased to high single digits from mid-single digits last year.

On the product front.

We launched a new paying features to increase our paying ratio and all our people are you. The first nine months after yes.

Contribution off these are new in Dallas to the groups, our topline increased due to high single digits from mid single digits last year.

Speaker 2: And we expect this contribution to be in the double digits next year.

We expect this contribution to be in the double digits next year.

Speaker 2: Our team adjusted various expenses based on revenue growth and channel ROI to ensure the profit will grow together with revenue.

Our team adjusted various expenses are based on revenue growth and China, All lie to you and show the profit well will grow together with our revenue.

Speaker 2: Since New Endeavors collectively achieved a break-even at the beginning of last year, the profits have continued to improve steadily.

Since you Ian Douglas collectively achieved a breakeven at the beginning of last year.

The profit the profits have all continue to improve steadily.

Speaker 2: In the overseas business, which is growing revenue and profit faster and has greater growth potential, we plan to replicate in this app some gamified features that have proven to be beneficial to user experience and monetization in our domestic products.

In the overseas business, which is a growing revenue and profit foster.

And has greater growth potential we plan to replicate this replicate in this apps. Some give me five features that have proven to be a beneficial to user experience and monetization in our domestic products.

Speaker 2: and further drive revenue growth by increasing RP pool. On the channel front, we will continue to focus on high-quality users with paying potential in the affluent markets and improve the retention of high-paying users through monetization innovation.

And further drive revenue growth by increasing RP pool.

On the channel front, we will continue to focus on high quality users, we saw paying potential in the affluent market and improve retention of high paying users through modernization and innovation.

Speaker 2: We will slightly lower the revenue sharing ratio to improve growth margin based on a stable supply. Profit from the new endeavours

We will slightly lower the revenue sharing ratio to improve gross margin based on a stable supply.

Profits from the new endeavors.

Speaker 2: is expected to grow much faster than revenue this year.

Usually expected to grow much faster than revenue this year.

Speaker 2: Currently, there are some new apps that are being tested and have not yet generated meaningful revenues.

Currently the awesome, new apps that are being tested and have not yet generated meaningful revenues.

Speaker 2: we expect them to further support revenue growth once these product formats are stabilized.

We expect them to further support revenue growth once all this product formats have stabilized.

Speaker 2: And for the specific revenue and profit guidance, I will leave it to Cassie.

The specific revenue and profit guidance I'll leave it to Cathy.

Okay.

Sure.

Speaker 6: That was already a pretty thorough description of our strategy to the new apps and the achievement we've made.

That was.

That was already a pretty thorough description of our strategy of our strategy to the new apps in the achievements we've made under those strategies.

Speaker 6: For financial outlook, as you understand,

Our financial outlook as you understand it.

Yeah.

Speaker 6: little bit too early to talk about the numbers now in December , but there are a couple of things we see happening next year which I can share to help you understand how the new apps are going to contribute to the P&L.

I'm a little bit too early to talk about the numbers now in December but there are a couple of things. We see happening next year are we tracking show to help you understand how the new apps are going to contribute to the P&L in 2024.

Speaker 6: First of all, SoChill, which is the social app that we run in the Middle East and North Africa area, that app is going to continue to grow pretty rapidly next year. The driver will come from three directions. One is...

First of all so chill, which is the social app that.

That we won in the Middle East and North Africa area is going to that App is going to continue to grow pretty rapidly not sure. The driver will come from three directions. One is the continuous penetration into the existing markets by beefing up local operations and.

Speaker 6: penetration into the existing markets by beefing up local operations and providing better customer

Providing better customer service Salon.

Compare with our peers, we believe we still have potential in driving further user and ARPA growth in those markets.

Speaker 6: Compared with our peers, we believe we still have potential in driving further user and output growth in those markets.

Speaker 6: The second direction of growth is that, as Sik and Tangyan mentioned just now, we are now mainly providing the peer-to-peer social entertainment on Sochio, and we expect to launch new features and services such as live streaming.

The second direction of groceries that.

As you can tell me I mentioned, just now we are now, namely providing the peer to peer social entertainment also cheol and we expect to launch new features and services such as live streaming that obviously can help us increase to our share and our two as well.

Speaker 6: That obviously can help us increase the share and ARPU as well.

Speaker 6: And thirdly, we're also looking at some other markets that we might be able to penetrate in, but as competition is already pretty intensive elsewhere in the GCC region, in the Gulf.

And certainly we are also looking at some other markets that we might be able to penetrate in but as competition is already pretty intensive elsewhere in the GCC region the Gulf countries.

Speaker 6: this third strategy will be more of an uphill battle, but we'll see how it plays out.

Our strategy will be more of an uphill battle, but we'll see how it plays out.

Overall.

Speaker 6: you know, for Sochio and also the other.

You know for social and also the other two smaller apps in China.

Speaker 6: two smaller apps in China should continue to grow quite rapidly next year. This year, these three apps grew 50-something percent year-over-year and are on track to bring in somewhere between 1.1 to 1.2 billion yuan in top line and more than 100 million yuan at bottom line. Next year, the top line could slow down a little bit, the growth could slow down a little bit, but profit growth should be quite impressive as the operating leverage manifests.

You know should continue to grow quite rapidly next year. This year. These three apps grew 15 something percent year over year and are on track to bring in somewhere between one one to one point to a billion won in top line and more than 100 million at bottom line next year, the topline could slow.

Down a little bit the growth could slow down a little bit of profit growth should be quite impressive as to operating leverage manifests itself.

That that's that's my answer to the finish I'll look for it.

Speaker 11: that.

Speaker 2: In the interest of time, let's just take one last question. Operator, we're ready. Thank you.

Actually right.

In the interest of time, let's just take one last question.

Operator, we're ready thank you.

Speaker 1: The next question comes from Thomas Chong with Jeffreys. Please go ahead.

The next question comes from Thomas Chong with Jefferies. Please go ahead.

Speaker 8: Good evening. Thank you for accepting my question. My question is about MoMo. Can you share with us your plans for 2027 and your expectations for revenue? The second question is about...

So Tom I guess all of its human Oh, well, they're going to issue one more time, but what is unclear.

I think I've seen in that time in China.

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Speaker 8: ???????,??,???????? Thanks, management, for taking my questions. My first question is about CoreMomo. Can management comment about the 2024 product strategies, as well as the revenue outlook? And my second question is about shareholders' return. Can management comment about the thoughts on share repurchase and dividends?

We don't do well.

Oh, So you can go see that.

My.

Thanks management for taking my questions. My first question is about I'll call. It normal Oh, okay, well determine our comments about the tonnage on this for a product strategy as well.

I'll ask you about the neo outlook and my second question is about shareholders. We plan can management comment about the Pos on shabby pace.

Thank.

Thank you.

Yeah.

Speaker 8: OK, let me answer the question about the product planning and revenue expectations of Moomoo's main battle. Let's start with the revenue expectations, including the shareholding value repurchase, which may be a good start.

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Speaker 8: In the next few years, we will be focusing on the strategic positioning of the mature business of the city. Therefore, all the implementation plans of the user products, commercial products and channel teams will be focused on this strategic goal.

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Speaker 8: You know, know M father, the the Union, my chargech out hold to the susi ated out Hun.

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Speaker 8: And commercial product teams can access live streaming and chat rooms in these free scenarios. This not only highlights the product value of silent socializing and instantization, but also enhances the penetration rate of paid scenarios and platform transformation capabilities.

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You can probably the passionately.

Speaker 8: While the Huoke team has a clear target of paying users, they have also strengthened their cooperation with the commercial product team, thereby improving the platform's ability to access users.

So I'm sure that some people familiar with where there's a couple of them will be able to come to judge how much was telling us how many political as well so actually you're simply not there.

Do you work with us in Germany.

Just thought I'd ask what you said.

Speaker 8: Promote Hawaii's continued improvement in customer service, so that we can maintain a stable user base by constantly reducing market budgets.

Oh cool alright, so should I say well don't.

That will give us the time you sign language.

I think it will be more let's say double digit.

Speaker 8: This will have a positive effect on the overall profit level of MoMo. In 2024, MoMo's product and channel planning will continue to be carried out according to the current thinking. As for revenue expectations, let's start with Kaci.

So does she said one more thing.

And she'd I'll, let William Doyle Oligosemy almost was under some king which was I believe Oh quick introduction does sort of choose pushing shashi.

So really cheap.

Chris It up with us.

So let me translate for us.

Speaker 2: Our goal for the mature mobile app for now and for the next few years is to keep the users and the revenue scale stable and continue to optimize the cost structure and maintain the productivity of this cash cow business.

I'll go for the mature mobile App for now and for the next few years is to keep the uses and a revenue scale is stable.

We continue to optimize the cost structure and maintain the productivity of these saw cashcall business.

Speaker 2: Therefore, our execution plans for our products, user products, commercial products, and channel efforts are all focused on this strategic goal.

Therefore, all execution plans for all products, our user products commercial products and our channel efforts are all focused on this strategic goal.

Speaker 2: And for example, this year our user product team added a navigation bar for flash chat on the homepage to direct users to matching based real-time voice or text chatting experiences such as Yuyinlianlai and Qiaoqiao.

For example, this year I'll use a product team added on navigation bar for Flash Hot on the homepage to a direct to use us to match a matching based a real time voice or text chatting experiences such as South Korea, India Nyhan Ciao Ciao.

Speaker 2: And our commercial product teams embedded paying features, such as live streaming or chat room, into these experiences.

And Oh commercial product teams.

Embedded paying features such as a live streaming our chatroom into these AR experiences.

Speaker 2: This design not only highlights the timely social value of the mobile app, but also increases the penetration rate of paying features and the monetization potential of the platform.

This design not only highlights the timely social value off the mobile app, but also increases the penetration rate of our paying features and the monetization potential off the platform.

Speaker 2: Our user acquisition team has fine-tuned its focus on paying users and has strengthened cooperation with the commercial product team to better accommodate users from the channels.

Our user acquisition team has all fine tuned our yourself focus on paying users and has a stranger strengthened cooperation with Oh commercial product team to better accommodate use us off from the channels.

Speaker 2: And the resulting ARPU growth has supported the continued improvement in channel ROI, enabling us to maintain a stable user scale and solid social fundamentals with a continuously decreasing marketing budget, which plays a positive role in improving Moomoo's overall profit.

And the resulting ARPA growth has supported the continued improvement in China alloy, enabling us to maintain a stable user scale and a solid all social fundamentals with our continuously decreasing marketing budget, which plays a poverty rowing improving almost overall profit.

Speaker 2: In 2024, we will continue to execute this strategy for the Momo product and channels in terms of financial.

In 2024, we will continue to execute this strategy for the mobile product and channels.

In terms of financials, so I'll leave it to Cathy.

Speaker 6: Okay, after this earnings call, our job will move forward to putting together the financial plan for...

[noise] Okay. After after this earnings call are our job will move forward to putting together the financial plan for.

Speaker 6: for next year, before that plan comes together, it's hard for me to talk about the outlook in a very quantitative way. However, same as in the past, as we approach the end of the year, there are several trends that we can talk about to help you think about how the different line items may move heading into next year.

For next year.

Before that before that plan comes together, it's hard for me to talk about the outlook and a very quantitative way. However.

Same as in the past as we approached the end of the year. There are several trends that we can talk about to help you think about how the different line items.

You know heading into next year.

Speaker 6: As many of the investors know, Momo is a brand that has been around for more than 12 years.

As many of the lessors know mobile as a brand that has been around for more than 12 years in terms of monetization being 12 years old has both advantages.

Speaker 6: In terms of modernization, being 12 years old has both advantages and disadvantages.

Speaker 6: disadvantages. The biggest disadvantage here, obviously, is that it's already pretty mature in terms of user penetration and also deeply monetized in terms of R2. That will make the business more cyclical to the macro and the regulatory environment.

Disadvantages the biggest disadvantage here.

Obviously, it is that its already pretty mature in terms of user penetration and.

Also deeply monetizing tons of all too that will make the business more cyclical to the macro and the regulatory environment. So next year, we continue to see macro and regulation is two biggest factors that are going to move the more mall business, either upward or down macro wise I guess everybody.

Speaker 6: So next year, we continue to see macro and regulation as two biggest factors that are going to move the mobile business either upward or down.

Speaker 6: macro wise, I guess everybody has his or her own estimation. So I don't

He has his or her own estimation, so I don't see.

Speaker 6: think I know better than investors do in this space.

I know better than investors do in this space regulatory front are you guys.

Speaker 6: regulatory front, you know, as you can see within the

As you can see with them very prudent and conservative in making sure. We stay compliant that's why in the past few quarters. If you look at our performance we have clearly been more stable than most of our peers in the social entertainment space I guess that will continue to be the case next year that said in view of the overall.

Speaker 6: very prudent and conservative in making sure we stay compliant. That's why in the past few quarters, if you look at our performance, we have clearly been more stable than most of our peers in the social entertainment space. I guess that will continue to be the case next year. That said, in view of the overall environment that we face today, what we need to do is to focus more on profitable user and revenue growth instead of pursuing top line growth at all costs.

And that we face today, what we need to do is to focus more on profitable use of high revenue growth instead of pursuing top line growth at all costs.

Speaker 6: During the past few quarters, we've been scaling back from some of the user.

During the past few quarters, we've been scaling back from some of the user.

Speaker 6: and revenue endeavors that generate limited or sometimes even negative margins. For example,

And revenue endeavors that generate limited or sometimes even negative margins for example.

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Speaker 6: You can see in this year's year-end competition event, we further cut the incentive for agency-driven promotional events. These competitions are not particularly helpful in building a healthy social ecosystem and thus post-regulatory risks in today's environment.

You can see in this year's year end competition event, we further cut the incentive for agency driven promotional events.

Competitions are not particularly helpful. In building a healthy social ecosystem and that's post regulatory risks in today's environment. In addition, although the agency driven events would create a spike in revenue, but they usually hurt margins and sometimes even three negative profit. So in this Q4.

Speaker 6: In addition, although the agency-driven events would create a spike in revenue, but they usually hurt margins and sometimes even bring negative profits. So in this Q4, what you're going to see is that the incremental revenue coming from year-end competition is going to significantly shrink down. However, as the extra promotional costs and spending also substantially went down, profit impact is actually quite limited.

Or what you're going to see is that the incremental revenue coming from the euro and the competition is going to significantly shrink down however, as the extra promotional costs and spending also substantially went down profit impact is actually quite limited. That's why although we are guiding a as you can see in our guidance.

Speaker 6: That's why, although we're guiding, as you can see in our guidance, we're guiding Q4 to show a mid to high single-digit percentage year-over-year revenue decline for core MOMA. Bottom line for the core could see a high single-digit year-over-year improvement. Such an overall trend of focusing on bottom line will continue to be the case next year. Um, now.

We're guiding Q4 to show a mid to high single digit percentage year over year revenue the pie.

Our core mobile our bottom line for the core could see a high single digit year over year, you've proven such an overall trend of focusing on bottom line, but well continue to be the case next year.

Now I'm going to.

Speaker 6: You know, I wanted to spend a few minutes talking about the good thing about being a 12 years old application over, you know, those 12 years. Momo has built up a strong brand loyalty as the go to place if you want to be around people discover.

I wanted to spend a few minutes talking about the good thing about being a 12 years old application or you know that.

12 years mobile has built up a strong brand loyalty as the go to place if you want to be around people discover some new friends and have fun and meaningful interactions with with people you do not own.

Speaker 6: some new friends and have fun and meaningful interactions with

Speaker 6: people you do not already know. And that brand loyalty allowed Momo to be able to navigate safely through the three years of pandemic and emerge on the other side with solid fundamentals and remarkable resilience. Looking into next year, I think Momo is going to continue to benefit from that stable and loyal user base.

And that brand loyalty allowed more to be able to navigate safely through the three years of pandemic and emerge on the other side with solid fundamentals a remarkable resilience looking into next year I think normal age going to continues to benefit from the stable from that stable and loyal user base.

Speaker 6: What that means, as far as P&L is concerned, is that we're going to be able to maintain the scale of users and revenue, and at the same time, continue to optimize on personnel and user acquisition costs.

What that means as far as P&L is concerned is that we're going to be able to maintain the scale of users and revenue and at the same time continuing to optimize on personnel and user acquisition costs.

Speaker 6: So that naturally leads to the question on profitability of the cash cow business. Looking out to next year, we expect gross margin to continue to be stable, as is the case throughout this year.

So that leads to that naturally leads to the question on profitability.

The Cashcall business looking out to next year, we expect gross margin to continue to be stable as is the case for as is the case throughout this year.

With respect to operating expenses for the reason that I just mentioned, we have a good opportunity to further cut the OPEC style with continuous efforts to improve cost efficiency.

So if you put these are different things together in a nutshell I'm pretty optimistic that we'll be doing a decent job in maintaining the prod a product activity of the cashcall business.

Speaker 6: There was a question on cash use. OK. I guess it's really a question of how does the company utilize its cash and allocate its capital resources. I've said before that there are three priorities for the company in terms of capital allocation. Number one is, of course, to reinvest.

There was a question on cashes okay.

I guess, it's really a question of how how does the company utilize this cash in a you know a allocate our capital resources I've said before that there are three priorities are for the company in terms of capital allocation number one is of course to reinvest.

Speaker 6: back into the business for organic growth and the second priority

Back into the business for organic growth in the second priority is you know if they are a good strategic investment opportunities that could help us grow.

Speaker 6: If there are good strategic investment opportunities that could help us grow beyond what we can achieve organically, we would go for those strategic opportunities and we prefer to use cash rather than through a stock deal. And the third priority is if we have excess cash as we, you know, as we move forward.

Beyond what we can achieve organically we would go for those strategic opportunities are.

And we prefer to use cash rather than Ah Ah Ah you know us through a stock deal.

And the third priority is if we have excess cash as as we you know as has been the situation in the past we would return the excess cash to the shareholders in the form of either cash dividends or share repurchase we have.

Speaker 6: as has been the situation in the past, we would return the excess cash to the shareholders in the form of either cash dividends or share repurchase. We have.

Speaker 6: a ongoing repurchase plan of 200 million. Under that plan, I think so far we've brought back, we've bought back

A ongoing repurchase plan of 200 million under that plan.

Think so far we've brought back we've bought back Uh huh.

Speaker 6: slightly under 90 million US dollar worth of shares. So under that plan, we still have 110 million to go. We will continue to take advantage of the undervalued share price and make good use of our excess cash to enhance shareholder value. In terms of dividend, we have distributed

Slightly under 90 million U S dollar worth of our shares.

So under that plan, we still have 110 million to go we will continue to take advantage of the under valued share price and make good use of our excess cash to enhance shareholder value in terms of dividends we have distributed.

Speaker 6: special dividend five years in a row, starting from the year, I think, 2019. This, in a way, has proven our sincerity in sharing the fruit of our work with shareholders.

Special dividend five years in a row the starting from the your Ah I think 2019. This is a there's a in a way has proven our sincerity and sharing the fruit of our work with shareholders unless we have an opportunity to.

Speaker 6: Unless we have an opportunity to either reinvest our cash to drive organic business growth or through strategic investments.

Either we invest our cash to you know drive organic business growth or through strategic investments I think we're going to continue to return cash to shareholders in the form of cash dividends.

Speaker 6: I think we're going to continue to return cash to shareholders in the form of cash dividends.

Speaker 2: I guess that's the end of this conference call. I'm handing back to Ashley for closing remarks. Thank you all for your time. And I think that's it for the quarter. We'll see you next year. Thank you. Bye.

Yes that that's the end of this conference call I'm handing back to Ashley for closing remarks.

Thank you all for your time and I think that's it for the quarter. We will see you next year. Thank you.

Yeah.

Speaker 1: Thank you for participating in today's conference. You may now disconnect.

Thank you for participating in today's conference you may now disconnect.

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