Q3 2024 Hello Group Inc Earnings Call
And the salt and spending softness among top cool or uses a meet the weak macro economy.
To mitigate the revenue pressure.
I was really to focus on introducing innovative features to improve the product experience well meet our long term users.
Meanwhile, we stepped up our live streaming promotion effort in the nearby people and the nearby whole features.
Rich with Celgene and the study increase in live streaming penetration and paying ratio.
The reception in high price competition events and Y with the increase in South, Florida, driven showroom.
Costumes, and PK prompts that do not require any revenue sharing.
Resulting in a slight sequential decrease in the revenue sharing ratio.
Which play a positive royalty and stabilizing the profit level of the cash pile of business.
Revenue from value added services.
Coding times on totaled 122 billion RMB down 6% year over year.
1% sequentially.
Why is revenue from the mobile App was 828 million RMB.
Down 17% year over year and 3% sequentially.
Revenue for him to stand alone App was 391 million RMB.
Speaker Change: A 32% year over year in terms of sensor Christian.
Speaker Change: Yeah Leo declines in mobile App last seven year was mainly due to our proactive thought up and operational it was just meant to mitigate regulatory risk and buy.
Speaker Change: With the impact of spending softness I think the weak macro economy.
Speaker Change: In Q3.
Speaker Change: Our product teams more chat room in the nearby feature.
Speaker Change: And you know why people features applying new algorithms to improve penetration.
Speaker Change: On the operational front reorganize operational activities that tie into holidays and festival to food consumer sentiment.
Speaker Change: In addition to transitional audio features.
Speaker Change: The continued introducing new white space game, if I play such a really adds and matching puzzle game in chat room.
Speaker Change: Oh, you data shows that the retention of the new mini game of life features.
Speaker Change: Other than the average retention of Chatham.
Speaker Change: We expect a full rollout of this new features will help increase user.
Speaker Change: User engagement rate.
Speaker Change: Hum.
Speaker Change: First on user trends and financial performance.
Speaker Change: Since the acquisition of 10 times, the number of organic new user has shown a long term downward trend due to the need for new friends and in that setting.
Speaker Change: And user growth was largely dependent on acquisition in China.
Speaker Change: Those are all I owe into China investment reduction and cost control strategy over the past two years has effectively driven sometimes your trees profitable our profitability.
Speaker Change: It also have putting much pressure on tons out user base.
Speaker Change: The panel upgrades Relaunching tier two aims to explore effective solution to improve the core dating experience and increase user retention.
Speaker Change: However, the upgrade is due in early stage and is well, yes in Michigan they impact at all overall user retention.
Speaker Change: Due to the combination of said ballpark to use if they have not yet stabilized.
Speaker Change: And then you decreased five 7% sequentially to Charles familiar in September.
Speaker Change: So the end of Q3.
Speaker Change: <unk> had 940000 paying users and 60000.
Speaker Change: Sequentially, mainly due to the decline does that mean you have a short term impact of the plant upgrades on new user paying conversion.
Speaker Change: Turning to tons out of a financial.
What is the total revenue was 212 million RMB 80, 228% year over year and 9% sequentially.
Speaker Change: Yeah, we had a decrease was due to the declines in your payers.
Speaker Change: Yeah, So who opted for me, but I.
Speaker Change: That'd be true of our live streaming business is free and it took only about mi continued to emphasize life's journey.
Speaker Change: Wow has low correlation with the dating experience.
Speaker Change: Meanwhile, the west team drove too so that's.
Speaker Change: We are he and black gold membership, Florida.
Speaker Change: That's providing members paying features and without redesigning the guys and never says on page experience.
Speaker Change: Which drove a slight increase in content over all our people.
Speaker Change: Partially alleviated revenue pressure.
Speaker Change: It's a critical doesn't know decrease was mainly due to the decrease in payors and slightly lower our people due to the impact of live streaming business.
Speaker Change: Mhm services business life.
Speaker Change: Seven it was 137 million RMB.
Speaker Change: 19% year over year and 2% sequentially.
Speaker Change: Well it loves roaming revenue was 66 point 55 familiarity.
Speaker Change: It's 45%.
Speaker Change: Over a year and 20% education.
Speaker Change: Now moving to our first home pans out of Florida, and user acquisition and the challenges we face.
Speaker Change: That's one of the marketing and user acquisition right.
Speaker Change: Sure just to continuously.
Speaker Change: Continues decline in organic traffic caused by yourself and adequate Brent exposure.
Speaker Change: In quarter three.
Speaker Change: Our marketing team selected online and offline events that are popular among young men and women and all goodness savviest marketing activities at the controllable costs to pull more tonnes on brand awareness.
Speaker Change: For example, we set up interactive booth at music festivals.
Speaker Change: Which felipe.
Speaker Change: It was the most affected very to reach young people are flying and guide them sometime to sports and music well saving experience.
Speaker Change: You can buy online community to be these in parallel is the marketing shoot.
Speaker Change: Fran and food.
Speaker Change: At the same time, we did.
Speaker Change: Continues to accumulate influences equal.
Speaker Change: And optimized China investment strategy.
Speaker Change: The Saudi in Michigan.
Speaker Change: Chris show a reduction in average Hell I'll use of acquisition costs.
Speaker Change: In terms of channel, we continue to reduce the investment phase hour in Florida, who do.
Speaker Change: Costs for the transition of our channels, such as fees and App store.
Speaker Change: This coupled with increased investments in Carolina channel.
Speaker Change: The most competitive user acquisition cost.
Speaker Change: And that's the good news is unit acquisition costs quarter over quarter.
Therefore, we acquire more users we felt like sequential decrease in total channel investment.
Speaker Change: The floor, you unit acquisition costs, and a slightly higher new use of alcohol.
Speaker Change: Although tunnel or has not turned slightly positive we have things that it frees up the improvement year over year and quarters.
Speaker Change: Next I'll update you on townhouse product and operation.
Speaker Change: In court a true based on the results fuses Saturday.
Speaker Change: We initially part of upgrades, you're just you're a major problem that may ease of fears that spirit is that unrealistic.
First surgeons, yes, anja authenticity of user identity and to lack of funds to chat after matching.
Just the first issue such as Florida picture looking too good to be true limited information that like where you live references.
And if it's sufficient a real person verification.
Speaker Change: Our product team has increased the proportion of high quality profile on the platform by providing for them to even coverage usage enriched that pulls out information and.
Speaker Change: And guiding uses in sourcing suitable profile picture.
Speaker Change: Meanwhile, we offer reward such as extra what she uses who completed their real person have application to them.
Speaker Change: Increase the overall personal vacation right.
Speaker Change: Regarding the lack of response to chapter two matching.
Speaker Change: Previously, we just library increase our exposure some hardcore Archie active users and I read them to improve the experience of some users who don't get matching opportunity.
Speaker Change: Sure.
Speaker Change: This approach increase the number of matches.
Speaker Change: Unfortunately, you saw that in many matches that did not convert to chat.
Speaker Change: This quarter, we reduced matching hum search.
Speaker Change: Kind of the attrition in our algorithm to address the issue of some female uses not chatting after matching because they have too many matches.
At the parent level, we tested several features aimed at improving the response rate such as Jim Shaw a lot flatter.
Richard: Richard a lot of users directly to deliver a message to our favorite person every once in a while.
Richard: Improving interactive qualities for this unit outage.
Richard: That's a serious of products Charles to pay to play a positive role in improving the response rate.
Richard: But upgrades has not.
Richard: Matching quantity and encourage more in that conversation.
Richard: However, the sharpton.
Richard: This has a negative impact on sometimes the original business model.
Phil: Sure Phil.
Speaker Change: <unk> looked at picture right.
Speaker Change: Page or increase matching up.
Speaker Change: The declines in new user paying conversion with one of the reason for the sequential decrease in Canada is paying users.
Speaker Change: However, we believe that providing a good partner experience improve user retention and drive organic user growth is the foundation of Samsung to achieve long term.
Speaker Change: Favorable revenue and profit schools.
We need to drive user growth phase profit ability to sustain the long term possible it's a cycle.
Speaker Change: Lastly in terms of new endeavor.
Speaker Change: In Q3, the total revenue of the new apps reached 408 10 million RMB.
Speaker Change: And etcetera raise the growth rate of 41% year over year and 17, because that's the question.
Speaker Change: Mainly driven by our overseas business.
So true seven year in Q3 achieved as far as sequential growth over the past year.
Speaker Change: And by improvements in our operational efficiency.
Speaker Change: In Q3 on our management Quebrada <unk>, Samsung Beijing headquarter visited several key go to market.
They work with local teams to analyze user feedbacks and optimize product and technical solutions.
Speaker Change: We optimize agency forecast as payment and compensation system and strengthening our friendly fast decision making power.
Speaker Change: Named a walk morale.
Speaker Change: We also optimized the channel strategy, well paying user school paying ratio and the number of paying users.
Our people increased significantly quarter over quarter driven by various factors.
Such as introducing new virtual gifts.
Gameplay enhancements and product design improvements.
Speaker Change: Together the improvement seen in paying users and our people drive rabbits to see sequential revenue growth.
Speaker Change: In Q3, we strengthened our supply side cooperation with new agencies and increase its members and broadcasters.
Speaker Change: We should also play a positive role in driving revenue as well.
Speaker Change: With the gradual expansion of the business butchers revenue sharing ratio has trended slightly upward since the beginning of the year.
Speaker Change: Mainly because the while it's very low margin business.
Speaker Change: Including the Turkish market and the Muni and you should use life streaming business.
Speaker Change: Growth much faster than the overall, our overall oversea market.
Speaker Change: Our team has oh, that's usually a liberated the pressure on GP margin caused by the increase in revenue sharing ratio by optimizing top of China of course.
Speaker Change: Combined with our all our oriented user acquisition strategy.
Hang on to enjoy operational leverage and faster profit growth. Despite the increase in China, where investment.
Speaker Change: Yeah.
Speaker Change: In Q3, we made good progress in enhancing the localization progress in extending the voice features to live streaming.
Speaker Change: The growth in users and financial metrics, that's well reflected a key reason expert.
Speaker Change: We believe that continuously strengthening look Hawaii.
Speaker Change: Operation and improving user insight and experience with.
Speaker Change: Can bring continuous gloves are so true and arda overseas product in the Mena region.
Speaker Change: We will commit more firmly to overseas business in the future.
Speaker Change: This concludes my remarks.
Speaker Change: Now, let me pass the call to Cathy or does that national video.
Speaker Change: Caffeine.
Speaker Change: [noise] call everyone. Thank you for joining our conference call today now let me briefly take you through a financial review.
Speaker Change: Total revenue for the third quarter 2024 was 2.67 billion renminbi down 12% year on year, and a slight decrease of 0.6% quarter on quarter non.
Speaker Change: non-GAAP net income attributable to the company was 409 90, $493 3 million and then be down 19% year on year, but up 10% from the last quarter.
Speaker Change: Looking into the key revenue items for Q3.
Firstly on live broadcasting total revenue from LIBOR casting business for the third quarter of 'twenty 'twenty, four was 1.29 billion renminbi down 16% year over year and 1% quarter over quarter.
Speaker Change: The year over year decrease was largely attributable to a decline in the core Momo live streaming business and to a lesser extent a decrease in content.
Speaker Change: The sequential decrease was due to the decline in terms of live streaming, whereas normal remained relatively stable.
Speaker Change: In terms of segments well more live broadcasting revenue totaled 1.22 billion in India for the quarter down 14% year over year and flat from last quarter.
Speaker Change: The year over year decrease was due to our proactive product and operational adjustments to scale back from revenue oriented competition Ya man and a soft spending sentiment amidst a weak macro economy.
Speaker Change: Times live broadcasting revenue amounted to $66 6 million going to be down 45% year over year, and 20% quarter over quarter. The decrease was due to our strategic decision to deemphasize the less data centric service.
Speaker Change: Revenue from the value added services for the third quarter of 2024, with 1.36 billion of them and be down 8% from Q3 last year, but up 1% sequentially. The year over year decrease was due to a decline in both mobile and Tata. However, the growth of the Standalone U S partially offset the downward.
Speaker Change: Revenue pressure.
Speaker Change: The sequential growth of value added service revenue was driven by the growth in new endeavors revenue from Vas on an ex <unk> basis was $1. Two 2 billion and then be in a third quarter of 2024 down 6% from Q3 last year, but up 1% from the previous quarter.
Speaker Change: One more apps Vas revenue decreased 17% from Q3 last year due to our proactive product adjustments to manage regulatory risk as well as a weak spanning sentiment and.
Speaker Change: Down 3% sequentially due to our continued product adjustment to deemphasize agency dominated any thought damnify to play.
Revenue from the Standalone, new apps, which is consolidated in more assignment on P&L continue to grow both on a year over year and quarter over quarter basis, driven by the improvement of overseas business.
Speaker Change: Sometimes batch revenue amounted to a renminbi $137 2 million down 19% year over year and 2% sequentially. The decrease was due to a decline in paying users which was in turn due to a decline in your user base in the short term impact of the user interface upgrade on paying conversion.
Speaker Change: Now turning to costs and expenses non-GAAP cost of revenue for the third quarter of 2024 was 1.62 billion renminbi compared to 1.77 billion for the same period last year.
Speaker Change: non-GAAP gross margin for the quarter was 39, 4% down two percentage.
Speaker Change: Percentage, but down 2% percentage points from the same from the year ago period.
Speaker Change: The year over year decrease was due to several different factors number one higher payout ratio, which was further due to two factors oversee business, becoming a bigger percentage of total well Barry a higher payout ratio and to a lesser degree higher payoffs are a normal the old cashcall business to better incentivize the agencies.
Speaker Change: In view of a downward pressure trend.
Speaker Change: If a downward revenue trends number to deleverage where infrastructure and personnel and other relatively fixed costs and pick up a higher percentage of revenues.
Speaker Change: Number three payment channel costs represent a higher percentage of total revenues as your revenue mix shifts towards overseas business, where channel fees as a percentage of revenues.
Speaker Change: <unk> are much higher than those from domestic business.
Speaker Change: non-GAAP R&D expenses for the third quarter was $185 4 million gonna be compared to $186 7 million of them in before the same through last year or a 1% decrease year over year. The decrease was due to a continuous optimization and personnel and infrastructure costs.
Speaker Change: non-GAAP R&D expenses as a percentage of revenue was 7% compared with 6% from the year ago period.
We ended the quarter with 1355 total employees of which 280 or from Kantar compared to 1410 total employees of which 314 for I'm talking about a year ago.
Speaker Change: The R&D personnel as a percentage of total employees for the group was 16, 1% compared with 64, 4% Q3 last year.
Speaker Change: non-GAAP sales and marketing expenses for the third quarter was $350 1 million of them N b or 13% of total revenue compared to $368 1 million in b or 12% of total revenue for the same period last year.
Speaker Change: Marketing expenses decreased 5% year on year in absolute renminbi amount.
non-GAAP G&A expenses was $85 2 million of them in before the third quarter of 2024 compared to $76 5 million of them and be for the same period last year, both representing roughly 3% of total revenue.
Speaker Change: non-GAAP operating income was $454 7 million of them and be a decrease of 33% from Q3 twice right three down 5% from the previous quarter non-GAAP operating margin for the quarter was 17% down 5.4 percentage points from same period from the same period.
Speaker Change: Last year, and 0.3 percentage points from the previous quarter non-GAAP Opex as a percentage of total revenue was 23% an increase from 21%.
Speaker Change: For Q3, 'twenty three are flat from Q2 this year.
Speaker Change: Now briefly on income tax expenses total income tax expense was $95 3 million of them and be it for the quarter.
Speaker Change: But with an effective tax rate of 17% in Q3, the company accrued withholding income tax of $15 2 million in B, which is 5% of undistributed profit generated by our wealthy.
Without the withholding tax our estimated non-GAAP effective tax rate was around 14% in the third quarter.
Speaker Change: Now turning to balance sheet and cash flow items.
Speaker Change: As of September.
Speaker Change: September 30th twice for Hello groups cache caching quote equivalents short term deposits long term deposits and short term investments and restricted cash totaled 14 point 0.7, 8 billion and then be compared to $13. Four 8 billion renminbi as of December 31, 23.
Speaker Change: Net cash provided by operating activities in the third quarter 2024 was 341.0 million renminbi.
Speaker Change: Lastly on business outlook, we estimated our fourth quarter revenue to come in the range from 2.56 billion Renminbi, two 2.66 billion renminbi.
Speaker Change: Representing a decrease of 14.7% to 11, 4% year on year or a decrease of 4.3% to 0.5% quarter over quarter.
Speaker Change: Segment level for Q3 for Q4 24 on a sequential basis, we expect mobile revenue to decrease mid to low single digit.
On the <unk> side, we expect revenue to decrease low single digit pace.
Speaker Change: Please be mindful that this forecast represents the company's current and preliminary view on the market and operational conditions, which are subject to changes.
Speaker Change: That concluded our prepared portion of today's discussion with that let me turn the call back to Ashley to start kidding actually please.
Ashley: Thank you.
Ashley: Just two quick reminders before we just ask question, so those who can speak.
Ashley: Chinese please ask your questions in Chinese first followed by pound.
Ashley: Our English installation by yourself and please also limit the number of questions to one to two so we can take more people.
Ashley: Okay. So operator, we're ready for questions. Thank you.
Speaker Change: Thank you if you wish to ask a question. Please press star one on your telephone and wait for your name to be announced if you wish to cancel your request. Please press star two.
If you're on a speakerphone please pick up the handset to ask your question.
Speaker Change: Your first question comes from Rafael Chen from but she research. Please go ahead.
Speaker Change: Oh excuse me I'm glad you kind of just I wonder if you weren't gosh why did he turns out probably I'm trying to I'm curious why you work with genius in concert quieter.
Sean you talked we don't franchise, so you're going to use will go with us yet.
Speaker Change: Full think Shanghai why are you wishing her so she thought even a quibble with you since you do convenience with Samsung.
Speaker Change: I will translate myself. Thanks for taking my question Congrats on a strong growth momentum of overseas business could management share the main contributors driving to overpay speaking squirrel quota.
Speaker Change: So we have the latest revenue and a coffee makers for the overseas and the growth outlook for the fourth quarter and the Tucson and twenty-five cheers.
Speaker Change: Oh sure.
Speaker Change: Somebody else high Y ear will probably be the initial view of minions would've shown much Julia it's sue them.
Speaker Change: Are you from your question I'm not sure. It will change so just help me on Koala console, Michigan.
Speaker Change: No. It wasn't when we send you do so shouldn't Joshua Zins awesome.
Speaker Change: Do you see them very well.
Speaker Change: When your wallet Quad children's Linda you've got quite a bit from that.
Speaker Change: Two songs Houston, the social country to show.
Speaker Change: She is somebody that wants a time machine for a minute you it's a true uhm.
Speaker Change: Two you have a good holiday months.
Speaker Change: Ah patient trio Oh sure.
Speaker Change: Oh, sure truthfully, broccoli, but doing well yoshi.
Joshua Zins: Joshua Gunky Gucci.
Joshua Zins: So it's really itchy dollar share and Jim that you just won.
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Joshua Zins: Oh sure so anybody wishes to they don't even talk to what Bobby attrition, but.
Joshua Zins: Trade don't so Luke do you should've things up.
Speaker Change: Okay, Let me translate.
Speaker Change: The sequential gross of all overseas business in the first half of the year was slower than we had anticipated at the beginning of 'twenty 'twenty four primarily due to the need to address many areas for improvement in local operations, which required more time than we thought.
Speaker Change: Revenue growth accelerated in the third quarter. Thanks to the optimization of cross border personnel management as a result, the operational efficiency of the socio team got a significantly improved and our.
Speaker Change: Our strategy of empowering local staff and product operations will help us.
Speaker Change: To address the unique social preferences and needs of users from different cultural backgrounds.
Speaker Change: By leveraging the strengths of our local team will have been able to strengthen cooperation with the local supply side.
Speaker Change: With the rapid growth of our overseas business our operational our marquee is unreadable are also becoming more diverse.
Speaker Change: Therefore, we will continue to optimize cross border management establish offices in key market recruit more local talent and drive continuous growth in revenue and profit through robust focus on localization.
Speaker Change: Macquarie you essentially you so long to lead a Schneider stitching a sedan argue that maybe.
Speaker Change: She's only old patterns or do a tissue ledger so true.
Speaker Change: So time will tell us a little bit noise in cold water contact.
Speaker Change: But it shouldn't be so little things on the Battle zone shoes.
Speaker Change: Let me say the Olympics, if all you're going to need a charger no G. So true junk with social questions Linda.
Speaker Change: Oh sure I mean, what I'm, calling the overlaps Mingo junction Roseville, Minnesota question with hands on sheet.
She also saying it could be England.
Speaker Change: Hi, well you called out a day now so how do you you didn't send those out and people are more much was asked a little shop, while it's also not even trickle. So.
As you saw well minimum weight meaningful ginger Hudson too.
Speaker Change: <unk> should be ashamed of what are your wishes.
Speaker Change: Where are you with the following cogent Hudson's aren't losing to someday intrusion.
Speaker Change: Let's use a woman.
Speaker Change: So Jonathan feel museum, the Tommy how are you doing.
Speaker Change: So there's only so much union she tends to me and to show you the new Hertz regime.
Total Dol, how about you would've towards that target in Belgium.
Speaker Change: The movie light how about you will do it you tend to sort of how do you jump with Barclay confirmatory that's wrong.
Speaker Change: So does that mean you enjoy your cause I'm sure she's a teacher.
Speaker Change: So that's how we choose the one that you watch every place of it.
Let me translate first.
Speaker Change: So in the third quarter total revenue off the new apps reached close to 220, you mean agate movie with a socio contributing 62 70 per cent. A soldier has now so passes revenues go off time time and its revenue in the third quarter was up more than 50% year on year and as we are strong.
Speaker Change: And our localized operation capabilities, we expect social to continue to grow rapidly next year.
Speaker Change: Meanwhile, we expect our other two middle eastern ops to walk into a rapid oh into a period of rapid revenue growth and a possibly breakeven next year.
Speaker Change: The incremental revenue and profit generated by our overseas business, partially offset the decline in revenue and profits from the mobile App, we believe that comport with our domestic business, we shall face many uncertainties such as the macroeconomic and regulatory issues the gross potential.
Speaker Change: Trajectory I'll follow overseas business are relatively clear.
Speaker Change: This is particularly true in the social field, where we have distinct products and our operational advantages.
Speaker Change: That's why we have prioritized the allocation of human and financial resources to the operation on expansion of our overseas business. The reason yes.
Speaker Change: We believe that our or was this business will play an increasingly significant role in driving the group's revenue and profit in the future, which will be clearly reflected next year.
Speaker Change: As for the financial outlook, I would even got too crazy cheap.
Speaker Change: Okay, let's see outlook.
Speaker Change: In our Q4 guidance, we are we are assuming social to grow.
Speaker Change: <unk>.
Speaker Change: Probably by 40 plus percent ish percent year over year.
Speaker Change: That would close out 2024 with a year over year growth rate of close to 50%.
As the apt gets bigger obviously the growth rate could slow down a little bit.
Speaker Change: However, our to our other social entertainment apps in the Middle East North Africa area have been ramping up rapidly recently, we do expect these to ask to start bearing fruits and contributing to the bottom line in contributing to both the topline and bottom line.
Speaker Change: A meaningful way in 2020 five with these three oversee apps. We believe oversee revenues will continue to grow a pretty fast and hopefully could accelerate its growth rate next year.
Speaker Change: The other thing worth mentioning is that if you look at the way we manage our overseas business. We are not pursuing just topline growth at the expense of bottom line. We are we.
Speaker Change: We always want what we call a profitable growth that means next year as oversee as continuing to grow at top line bottom line performance for these three apps are going to continue to improve as well hopefully that answers. Your question I'm handing back to Ashley for next question.
Speaker Change: Operator next question please.
Speaker Change: Thank you. Your next question comes from Jenny Wang from UBS. Please go ahead.
Speaker Change: And he said look why don't you tell it to you on quite a nice short term going to want and send it to Vishal are you feeling good about you all know the when he or she Guangzhou.
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Speaker Change: People don't be shy always wait till they get then up to ship. It gives all of them will go to come back to a more multiple time Glu with me. This evening are you without a need for the branch had told me collection.
Speaker Change: So let me translate by.
I myself went.
Speaker Change: For taking my question and congrats on the quarter without.
Speaker Change: My question is regarding the outlook for our pack Cashcall business. So called normal has to be on a going pulled up adjustments for years things and also the colder last year could you. Please share with these adjustments will continue going forward.
Speaker Change: Well, we must be ever coupling gel was suppose quote unquote or any of that yet.
Speaker Change: How should we view the pulp vegetables, it's sometimes been a tale with Cashcall cashcall business going forward. So thank you.
Speaker Change: I'm showing there are no woman, Cindy Sanborn, who watched the Mississippian challenging San Carlos.
Speaker Change: Well, that's what I'm gonna be honest the chunk DSO about showing the first quarter.
Speaker Change: So Andrew it's how it should be all sorts of names in the yard.
Speaker Change: Until you chunk to you. So that you don't do wish in Januvia, which comes all conjunction common theme to citizens.
Speaker Change: Yeah.
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Speaker Change: So it's a four year life. So you always have a name to Cindy and delight, our Sunday only let's say you want M. B junk Lee you talked you shouldn't.
Speaker Change: Oh gosh, the use of consultants right.
Speaker Change: Well there is always how do we ship engage without it sounds you have one for you.
Speaker Change: G whether you'll have to come to you. So you said you do well so she tells individual.
Speaker Change: Okay. So last year, we implemented operational adjustments to our live streaming and audio and video based of Aussie experiences with a focus on reducing revenue oriented competition events and although this impacted our financial performance and he has played a positive role in reducing revenue.
Speaker Change: Concentration on creating a more stable in the house, yeah, social ecosystem for our cash cow business. So we remain committed to this operational strategy in the fourth quarter and further de emphasizing high revenue competition months mm for the life streaming business.
Speaker Change: This means that the incremental revenue from the year end competition event will be a very limited compared to the previous years and in the audio and video based of off experiences. We believe there is still room for further optimization of some agents and agency dominant AR use cases and get them.
Lee.
Speaker Change: So we will continue to fine tune all accretion in the fourth quarter.
Speaker Change: Oh, I'm, sorry, six years ago, where the new pool.
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Speaker Change: Was it sounds you're enjoying chop out Michelle.
Speaker Change: With us on how how do you do trade Sheila sure sure who'd won Hello Ghansham.
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Speaker Change: That's true.
Speaker Change: As I've mentioned earlier, you know order to offset the decline in revenue from competition event. We have increased the monetization of a me too long tailed paying users in live streaming and value added services are experiences. So we rolled out more interactive features and content.
Notable for this all kind of a cohort of users and increasing the penetration on paying ratio, while driving steady growth in organic revenue. So all primary operational focus in the current macro economy and regulatory environment is doing in house all of our platforms ability to come.
Speaker Change: My date mid to long tail users and expand are there revenue scale.
Speaker Change: No single Union that tells them more Hudson tailor them to send her thoughts.
I bought a pizza on the main use of assembly.
Speaker Change: Well the way we munitions you knew you would've been in touch with us or they go down how did you treat you as soon as if I'm in the tissue, Chris Cooper change.
Speaker Change:
Speaker Change: After about a year off of just months Ah, we don't quite satisfied with the overall count on an ecosystem off the mobile App I believe this has laid a solid foundation for us to maintain the productivity of the Cashcall business next year.
Speaker Change: I saw the specific financial outlook I would even thought to Casey.
Speaker Change: Okay.
Speaker Change: Before I talk about 2020 five.
Speaker Change: Perhaps let me first quickly review the way we've been managing to a proud the way how we are managing the productivity of the cash cow business throughout last year, and then point toward a direction as we move toward next year.
Speaker Change: The biggest theme of a 'twenty 'twenty four for the cash cow was to deemphasize the promotional sash stimulating our agency driven events in order to improve the healthiness of our ecosystem.
Speaker Change: View of the current macro environment, both from a regulatory and from an economic point of view as we took different steps to enable such operational changes the revenue has been gradually coming down.
Speaker Change: So in order to maintain the product TVD of the Cashcall business.
Speaker Change: We have also been taking measures to control spending.
Speaker Change: Control spanning more tightly at the beginning of 'twenty 'twenty four the original plan was to put.
Speaker Change: Put all the adjustments into Q1 and make the revenue impact one off.
Speaker Change: However, as it as we move deeper into the year. It turned out that we did a pretty good job in cost control and that's over delivered in terms of profit as a result, the team decided to take this opportunity to continuing to put in additional adjustment measures.
Speaker Change: Go back on bonus driven promotional events in the second half.
And in turn we saw the top line of the Cashcall business continuing to trend downward throughout 2025 from Q2 onwards.
Speaker Change: With that in mind looking out to 2025.
Speaker Change: First of all I won't be able to talk about next year and very quantitative terms before we finalize the financial planning next year early next year.
Speaker Change: But as in previous years, there are several points to share.
Speaker Change: To help you think about the performance of the Cashcall at least trend wise for the coming few quarters.
Speaker Change: It's telling you is first of all as Tony is that after a year of pretty significant operational adjustments at the expensive topline. We feel we now feel pretty good on the ecosystem front and therefore currently we do not see additional adjustments need it for next year. If you think about you know.
Speaker Change: What that translates into top line performance next year, how that translate into top line performance next year Q1, more and more is to I'm trying to try five one more is are still gonna see seasonality, which would cause a sequential decline and then Q2, there will be a seasonal bounce back.
Speaker Change: Since we do not expect any deliberate operational efforts to monetize.
Speaker Change: Next year, how significant the bounce back in Q2, 2025 will really depend on macroeconomic factor that would place substantially into the consumer spending sentiment on our platform.
Speaker Change: So if you put all these analysis together, what we can come down to is that because the revenue because the revenue has been trending downwards in the second half of 'twenty 'twenty four next year in terms of year over year, a year over year comparison its.
Speaker Change: Quite likely that Cashcall will continue to see revenue decline on a year over year basis in 'twenty 'twenty four if you throw in the midpoint of our Q4 guidance it looks like that the more and more segments.
Speaker Change: Which by the way include that are both a cash cow business and oversee S. A that whole more segment well like fee.
Speaker Change: You'll see a revenue decline.
Speaker Change: In the low teens.
Kind of a range that reflects both volunteer demonetization efforts on regulatory concerns and macro headwinds for 2025, because on the regulatory side. It seems that we are now in a pretty safe twice and the oversea Italians.
Speaker Change: Is that a little bit earlier, the oversea growth will continue to push the top line up from all my segment, assuming macro status quo continues the Y O Y decrease should see significantly narrow from what we saw in twice right for them.
Speaker Change:
Speaker Change: But of course, assuming macro a status quo is going to continue is kind of a big assumption, we'll see how things play out next year.
Speaker Change: But of course, even assuming a substantial narrowed down in worldwide decrease ratio in absolute dollar amount the cash call me still face a pretty significant topline decreasing 12 24. So we're going to have to see what we can do on cost control a front to mitigate impact on bottom line.
Speaker Change: On that specific point I shall have more color to share as we finish our financial planning at the beginning of 'twenty 'twenty four are when we have our Q4 earnings call early next year.
Speaker Change: So that's basically the color that I can give on the productivity of the Cashcall now back to Ashley for next question.
Speaker Change: Next question.
Speaker Change: Thank you. Your next question comes from Thomas Chong from Jefferies. Please go ahead.
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Speaker Change: It's all just laid out we said you'll kind of holiday you should find much E G.
Speaker Change: Oh Gee.
Speaker Change: You guys are trading cheap woman in gossip would you try and quantify what you can do it and data center.
Speaker Change: Hey, Jay.
Speaker Change: Good evening, Thanks management.
Speaker Change: Taking my question. My question is about 10 times.
Speaker Change: Just more management mentioned in prepared remarks that they have that nice updates to our product offerings, but also a highlight.
Speaker Change: But in part.
Speaker Change: Yet to be seen as a test on the news on the pension side and also we are seeing with our scale and button you'll be amazed.
Speaker Change: <unk>.
Speaker Change: My question is about which part of Ibs also abuses management guests more positive how long does it take about upgrades and the timeline and how should we think about upon climbed two four and change on a five oh look thank you.
Speaker Change: Oh, I'm, sorry go into with genomic weight out of Shaanxi them.
Speaker Change: And on the mobile should Houston Cushing.
Speaker Change: Yes.
Speaker Change: <unk> zone, Jimmy go Gosh water soluble Shanghai returned its Enzo normal chimera tenant because I'm guilty of especially the ones.
Speaker Change: Do you guys attempt from India.
Speaker Change: You go sooner, meaning that you're going to have substantial sarnia motion from India.
Speaker Change: I'm going to use I mean, they wouldn't you should potentially be you Julie I would tend to fidelity.
Speaker Change: So as you know who you are with us and so I wouldn't assume that switchover, sometimes tend to yourself do you with what I saw two thousands a month with him in the future.
Speaker Change: This is the time people watch what do.
Speaker Change: You do it.
Speaker Change: So it just depends on the pendulum that that would have been well go with Washington.
Speaker Change: So why should you Lisa Lindsay.
Speaker Change: Well enjoy the b shoot.
Speaker Change: All shale a lot of time getting the whole kit.
Speaker Change: Can you address them yeah in Washington, do in Foodservice I am wishing you all types of issues.
Speaker Change: Okay. Let me give you a more details regarding your question.
Speaker Change: Hum Turndown scull of is to continuing to improve the quality of the experience and build an efficient business model that drives profitable growth and currently 10 time needs to address two issues.
Speaker Change: One is the product experience and the other is our business model. So in terms of our product.
Speaker Change: Users feel the experience you saw unrealistic and chat interaction after matching is quite low and therefore, although users have a real strong demand for dating but sometimes cannot really meets the needs of our money off all users and the second issue is.
Speaker Change: Insufficient branding on low organic traffic, which makes union acquisition cost too high to form a positive piece of news cycle to achieve profitable growth. So we believe that we must first improve the product experience to a reasonable level and then develop a new sustainable business model.
It's a woman Portugal that lets you do did you realize that you do eventual which is once you drill down, especially the younger T. LNG, Let me know.
Speaker Change: Qualcomm appreciate I'm sure Barton sugar being aggressive pubic hope.
Speaker Change: Now what you can.
Speaker Change: <unk> will use all the tools.
So don't you shouldn't she chose the simple job, especially women.
Speaker Change: So youll just see all that's M b shoot Tallish agenda just for you.
Speaker Change: One senses incidents in the U S.
Speaker Change: So why are the leap <unk> and the new those independent sources.
Speaker Change: <unk> I'm not familiar with would be favorably on who it was.
Speaker Change: Shanda yoga machines that will meet Lindsey, who you freedom foods Jim.
Speaker Change: Sure.
Speaker Change: Okay.
Speaker Change: But I'm not sure I'm sorry, its initial introduction to the gym.
This is <unk> from here.
Speaker Change: Oh sure.
Speaker Change: Consumption, so sure that pendulum little innovations added functionality this into the future.
Speaker Change: So over the past two quarters and are for the next quarter or two we have focused on will continue to focus on addressing two user experience issues.
Speaker Change: One is use this uncertainty about the authenticity of the matches our identity and the other is the lack of a response to chad's posed to matching.
Speaker Change: Our team encouraged to use us to enrich the profile information and guide them when choosing the proposed style for their profile pictures and these athletes significantly increased as a propulsion all saw high quality profiles on our platform.
Speaker Change: To effectively increase the overall real person verification right, we often rewards such as the extra swipes Oh, two users who completed the real person verification process previously paying users had a clear advantage over non paying users in terms of our product experience.
Speaker Change: Moving forward our goal is to give all verified it uses a distinct to use a b runs our advantage over those on Nam everybody uses and to encourage more users to complete the verification process.
Speaker Change: While we have made significant progress in terms of user identity authenticity, we still need to do more to improve tracking drags your rates in the long time. Unfortunately E. We feel that the current approach is on the right track.
Speaker Change: Yeah.
Speaker Change: Guidelines. So again, so it should have been to you Mr.
Speaker Change: I know you sound Shan Shan business it.
Speaker Change: It seems that all went into somebody into it but Linda guideline James Ginger.
Speaker Change: We plan to have all testing underway by the end of the year and wrap up this round off of upgrades in the first half also next year.
Speaker Change: Mhm human hands on with Shanghai film Group out in some of your big assumptions on <unk>.
Speaker Change: Michelle Jones I realize the language you do high concludes tissue.
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Speaker Change: So you can show me Bob used to say it depends on just real quick you guys took this essentially gone that's Houston.
Speaker Change: The Shanghai <unk> put to Houston.
Speaker Change: Total distinguish out yeah wage agenda Penguin.
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Speaker Change: I'm being told them well with George Holm competitor, who she since I know that you guys Enzo.
Speaker Change: Turning to your example done the pencil Chongqing Xi'an creates all about Houston.
Speaker Change: Put a pencil on what Josh I don't know who to Endo <unk> G. Well do you. Please just talk about what's in there.
Speaker Change: We've been mindful of the future well hopefully that's if I remember well.
The other countries.
Speaker Change: So sometime hasn't enjoyed a positive cycle yet we expect the decline in our users and revenue to continue for the next two quarters until.
Speaker Change: And to drive a townhouse recovery. He has some thoughts first our by improving time times basic dating experience and especially our user identity Ah authenticity, we expect user base to gradually stabilize even without increasing marketing investment.
Speaker Change: And secondly, after essential product adjustments are made we will invest more in branding initiatives to drive organic traffic.
Speaker Change: Third we will continue to explore and develop innovative product features that improve user experience, while identifying value added products that increase our pool.
Speaker Change: China's stayed in the market is very large we saw significant unmet needs.
Speaker Change: We will continue to explore all this space to capture growth opportunities.
Do you go from you know him as a content.
Huntsman Shan lymphoid tissue liver.
Speaker Change: Tell me it boils on 10 times, that's a shuttle associated accretion.
Because she's here, that's I wouldn't use yogurt.
Speaker Change: Regarding the bottom line, we will not pursue a profit before tax into a positive piece of cycle.
Speaker Change: But we will not let kind of fall into a continuous losses again, Oh asked for detailed financials I will lead off okay.
Speaker Change: Uh huh.
Speaker Change: With.
Speaker Change: With regards to financial performance.
Speaker Change: The simple answer is that the top line is likely to continue to trend down sequentially due to two reasons. The first one is as Tony had mentioned just now contact has not reached a self sustaining positive business cycle, yet user number is still trending down.
Speaker Change: The second reason is that although there is still room to pull up the ARP, who the focus at this point is to get the dating experience right and therefore, we do not want to put too much pressure on the team. So they wont, let monetization getting the way when consumer experiences the most crucial priority.
Speaker Change: With regards to profits this year our content is on track to achieve our I think 50 million renminbi plus minus in terms of segment profit. However, the bottom line has also been trending down slightly throughout the year due to the topline pressure.
Speaker Change: So before we reach.
Speaker Change: I would say that before we reached the tipping point on top line performance, we do need to take some steps to cut down on our costs and expenses front, so that contact will slide back to loss.
That's one of our one of the key priorities for our financial planning for content 2025 Ah.
Speaker Change: And I think on that and I'm going to have more details for you on our next earnings call. When we finished planning for 2025.
Speaker Change: Back to Ashley.
Speaker Change: It makes a lot of time, let's take one last question before we Claudia today all pre defeat.
Speaker Change: Thank you. Your final question comes from Ching Chang from C. I C. C. Please go ahead.
Speaker Change: You can't go any transitional or the smell it a bunch of clients who don't quite.
So it sounds like you're still Hong Kong's Felicia Cheyenne goodness, you're dealing especially doing Chuck on the collar. So you saw challenging and also home to watch answer why the hotline know quite well I'm going to ask what you're changing galata, you don't even making the sharp well it seemed that you seen John though if I go too far on unknown young children or adults niche hi Shang.
Speaker Change: But I'll tell you I'm, making up a little.
Speaker Change: Andrew Mackenzie also taught me.
Speaker Change: Oh man I don't want to tell you something when it goes to the whole should definitely golf on meal shipments.
Speaker Change: Hi, Thanks management for taking my question My question about shareholder tennis, Firstly regarding dividends. The company has that are called off a six Oh excuse me, yes of special dividend. So, let's say I'll give you some plans for this year. Additionally regarding share buybacks the company has.
<unk> bought back nearly.
150 million on a year to date, so the current buyback program, which will expire in the middle of October 26 had less than <unk> 15.
Speaker Change: 15 million koto.
Speaker Change: Current pays off of purchase we expect that this program will be because asked you about 2025, so what's our plan for the shop at <unk>. Thank you.
Speaker Change: Okay.
Speaker Change: Okay I'll take that question.
Speaker Change: And as you correctly pointed out are.
During the past 12 months, we've bought back more than I think 100 and more than $150 million worth of one more shares and paid around $100 million in cash dividends.
Yeah.
For me I really look at both approaches.
Speaker Change: Being cash dividend and buyback.
Speaker Change: As ways to enhance shareholder value.
Speaker Change: Sometimes one works better than the other.
Speaker Change: If you take our Q3 balance sheet number and do a quick math are we are you you would be looking at somewhere around $8 $7 per share in that cash are.
Speaker Change: And that's a growing number as we continue to make profit and yet our.
Speaker Change: Our stock is trading at I believe below $7 per share are at this point.
Speaker Change: I would say in view.
Speaker Change: Such as significant undervaluation.
Speaker Change: We should give buyback bigger priority.
Speaker Change: In comparison with with.
Speaker Change: Uh huh.
Cash dividends.
Speaker Change: However, how much we could buyback is limited to a number of factors the biggest of which is the liquidity out there in the market. If you look at the past couple of quarters, our repurchase has been running at.
Speaker Change: I'm from.
Speaker Change: $30 million per quarter to around $60 million per quarter.
Speaker Change: With the limited liquidity, we have it's hard to exceed that kind of run rate in terms of how much we buyback a that means.
Speaker Change: We it's quite likely that we may continue to have excess cash on top of buyback.
Speaker Change: Is that are you know.
Speaker Change: Continue to be the case, we will certainly continue to consider our cash dividend as an additional way to return cash to the shareholders. So we can't share all prosperity.
Speaker Change: The other question you have is.
Speaker Change: <unk> will be a real problem at the core of our rates will probably use up the repurchase are already authorized by the board of directors are but I think we're not limited to that cap it.
Speaker Change: It is a you know the current program you know Ah is use up well.
Speaker Change: I'm sure that the board of directors will continue to make decisions that are it makes sense in terms of enhancing shareholder value. So that's what I can say at this point.
Maybe back to actually to conclude the call. Okay, well, thank everyone for participating the call and I think that's going to be the end of it and we will see you next year. Thank you.
Speaker Change: Thank you that does conclude our conference for today. Thank you for participating you may now disconnect.
Speaker Change: Yes.
Okay.
Speaker Change: Okay.
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