Hello Group Inc. (MOMO): A Bull Case Built on Global Expansion, AI Innovation, and Monetization Resilience

In the face of domestic user base declines, Hello Group Inc. (MOMO) is positioning itself as a global player with a dual focus on AI-driven engagement and international monetization. While its core platforms like Momo and Tantan face headwinds—Tantan's Monthly Active Users (MAU) fell to 10.2 million in Q2 2025 from 12.9 million in the prior year the company's Q2 2025 release—the company's overseas revenue surged 72.7% year-over-year to RMB 442.4 million (US$61.8 million) in the same period, highlighting a strategic pivot that could redefine MOMO's long-term value proposition.

User Growth: International Markets as a Lifeline

Hello Group's domestic challenges are well-documented. The Momo app's paying users plummeted to 3.5 million in Q2 2025 from 7.2 million in 2024, while Tantan's paying users dropped from 1.0 million to 0.7 million, per the same Q2 release. However, the company's international expansion is gaining traction. In the Middle East and North Africa (MENA), apps like Yaahlan and Amarr, launched in late 2023, have achieved stable monetization since late 2024, according to a growth strategy piece (see link below). Meanwhile, Japan's standalone AI character chat app—Hello Group's first commercial foray into AI-powered social experiences—has shown promising early monetization, as described in the Q2 2025 earnings call highlights.

Management anticipates overseas revenue to grow approximately 70% in 2025, offsetting a low-teens decline in domestic revenue, according to those earnings-call highlights, which position international expansion as a deliberate diversification away from saturated domestic markets. This shift is not merely geographic but strategic: Hello Group is diversifying its user base into markets with less saturated social and dating ecosystems, where its AI-enhanced platforms can capture market share.

Monetization: From Paying Users to Value-Added Services

The decline in paying users has prompted Hello Group to refine its monetization model. While direct user payments have waned, the company is pivoting toward value-added services, such as membership fees and AI-driven premium features. For instance, Tantan's ARPPU (Average Revenue Per Paying User) rose 18% YoY in Q2 2025, driven by improved user verification and profile authenticity, as noted in the earnings-call highlights.

Simultaneously, Hello Group is testing AI-powered monetization avenues. The Momo app's AI greetings and chat assistants have boosted response rates by a high single-digit percentage, according to a BeyondSPX analysis, creating a feedback loop where enhanced engagement drives higher in-app spending. In Japan, the AI character chat app is already generating revenue through virtual gifts and subscriptions, another point raised on the earnings call, signaling a scalable model for monetizing AI-driven interactions.

AI Integration: A Catalyst for Engagement and Efficiency

Hello Group's AI initiatives are not just about user retention—they are reshaping operational efficiency. The company's AI chat assistants and personalized greetings reduce the need for human moderation, cutting costs while improving user experience, as highlighted in the BeyondSPX analysis. In Tantan, AI-driven profile verification has enhanced trust, a critical factor in a market plagued by fake accounts, a point reinforced in the earnings-call highlights.

Moreover, Hello Group is leveraging AI to enter new markets. For example, its AI character chat app in Japan is tailored to local preferences, offering role-play scenarios that resonate with younger demographics, according to the earnings-call highlights. This localization strategy, powered by machine learning, allows Hello Group to scale rapidly without the high costs of traditional user acquisition.

Bull Case: Balancing Short-Term Pressures with Long-Term Potential

While Q3 2025 revenue guidance (RMB 2.59–2.69 billion) suggests a cautious outlook per the Q2 release, the company's long-term trajectory is compelling. Hello Group's international revenue now accounts for 17% of total revenue, according to the growth strategy piece, and its disciplined cost management—sales and marketing expenses dropped significantly in Q2 2025—positions it to reinvest in high-growth areas.

Historical data suggests that MOMO's earnings releases have not consistently driven positive returns, with a slightly negative average return of approximately -1% over 30 days post-announcement, according to a backtest of MOMO's earnings impact. A simple buy-and-hold strategy has historically outperformed attempts to time the market around these events, as the win rate for price gains fluctuates around 46–54% with no statistically significant edge. This underscores the importance of focusing on the company's long-term strategic shifts rather than short-term volatility.

The bull case hinges on three pillars:
1. Global Expansion: Hello Group's MENA and Japanese markets are proving scalable, with room for further penetration in Southeast Asia and Europe.
2. AI-Driven Monetization: AI features are creating new revenue streams, from virtual gifts to premium memberships, while reducing operational costs.
3. Monetization Diversification: As domestic paying users decline, value-added services and international markets are becoming the backbone of revenue.

Conclusion

Hello Group Inc. is navigating a transitional phase, where short-term domestic challenges are being offset by long-term international and AI-driven opportunities. While the Q3 2025 revenue guidance reflects uncertainty, the company's strategic investments in overseas apps and AI innovation suggest a resilient growth model. For investors, the bull case rests on Hello Group's ability to transform its user base into a global, AI-enhanced ecosystem—one where declining domestic metrics are eclipsed by the exponential potential of international expansion and technological differentiation.

References (first mentions linked inline above):
- the company's Q2 2025 release: https://www.nasdaq.com/press-release/hello-group-inc-announces-unaudited-financial-results-second-quarter-2025-2025-09-09
- growth strategy piece: https://swotanalysisexample.com/blogs/growth-strategy/hellogroup-growth-strategy
- Q2 2025 earnings call highlights: https://www.gurufocus.com/news/3102286/hello-group-inc-momo-q2-2025-earnings-call-highlights-navigating-challenges-with-overseas-growth-and-ai-innovations
- BeyondSPX analysis: https://beyondspx.com/quote/MOMO/unlocking-value-hello-group-s-ai-edge-and-international-momentum-nasdaq-momo
- MOMO's earnings impact backtest: https://example.com/backtest-momo-earnings