Hello Group Inc. Announces Unaudited Financial Results for the First Quarter of 2025

Hello Group's Q1 2025 results show a mixed performance: overall net revenues declined 1.5% year-over-year to RMB2,520.8 million, while overseas revenues surged 71.9% to RMB414.6 million. Net income attributable to Hello Group Inc. significantly increased to RMB358.0 million from RMB5.2 million in Q1 2024, and non-GAAP net income also saw substantial growth. However, monthly active users on the Tantan app decreased to 10.7 million, and total paying users for both Momo and Tantan apps also declined, indicating potential challenges in user engagement.

Analysis

Hello Group Inc. (MOMO) reported a complex financial landscape for Q1 2025, with total net revenues declining 1.5% year-over-year to RMB2,520.8 million. Despite this top-line softness, net income attributable to Hello Group Inc. surged to RMB358.0 million from RMB5.2 million in Q1 2024, and non-GAAP net income rose to RMB403.8 million from RMB59.9 million. This dramatic improvement in net income was substantially influenced by a significant reduction in income tax expenses, which fell to RMB70.4 million from RMB557.6 million in the prior-year period, as income from operations decreased to RMB299.5 million from RMB460.3 million (GAAP) and non-GAAP income from operations also declined to RMB345.3 million from RMB515.0 million. A bright spot in revenue was the 71.9% YoY growth in overseas net revenues to RMB414.6 million, contrasting with a decline in Chinese mainland revenues from RMB2,319.2 million to RMB2,106.2 million. However, these financial results were accompanied by a continued contraction in user engagement: Tantan's Monthly Active Users dropped to 10.7 million in March 2025 from 13.7 million in March 2024, Momo app's paying users fell to 4.2 million from 7.1 million, and Tantan's paying users decreased to 0.8 million from 1.1 million. The company has also reorganized its structure, consolidating Momo, Tantan, and QOOL into a single reporting segment, and continued its capital return initiatives through a special cash dividend and share repurchases totaling 47.8 million ADSs as of June 5, 2025. An outlook for Q2 2025 revenue has been provided, though specific figures were not detailed in this release.

Key Decisions for Investors

• Investors should scrutinize the sustainability of the reported net income surge, given it was largely driven by a substantial decrease in income tax expenses rather than improved operating income, which actually declined year-over-year.
• The robust 71.9% growth in overseas revenue is a critical positive signal, but its ability to offset declining domestic revenues and contracting user metrics, such as Tantan's MAU falling to 10.7 million and Momo's paying users decreasing to 4.2 million, requires careful ongoing assessment.
• Evaluate the long-term efficacy of the new single-segment strategy in potentially revitalizing user growth and monetization across Hello Group's platforms.
• While capital return programs like special dividends and share repurchases are shareholder-friendly, these should be weighed against the underlying operational challenges evidenced by the declining user base and reduced income from operations.