Hello (MOMO) 3 Sep 24 2024 Q2 Earnings call transcript
2min read In the second quarter of 2024, Hello Group Inc. presented a mixed bag of financial results and strategic initiatives during their earnings call. The company reported a 14% year-over-year decrease in total revenue to RMB 2.69 billion, driven primarily by a decline in revenue from the Momo app and Tantan. However, the company showed signs of resilience with a 5% sequential increase, demonstrating their ability to adapt to the challenging macroeconomic environment.
Financial Performance Overview
The company's adjusted operating income decreased by 33% year-over-year and 7% sequentially to RMB 477 million, while the profit margin stood at 17.7%. The decline was attributed to the revenue drop from the Momo app and Tantan, as well as the proactive product and operational adjustments to maintain a healthy community ecosystem.
Momo App and Standalone New App
The Momo app and standalone new app segment saw a 30% year-over-year decline in revenue to RMB 2.46 billion, primarily due to the weak macroeconomy and the company's efforts to maintain a healthy community ecosystem. However, the sequential increase of 6% was a positive sign, indicating growth momentum in the standalone new apps.
Tantan
Tantan, the company's dating app, experienced a 27% year-over-year decrease in revenue to RMB 234 million, largely due to the reduced number of paying users. The company's strategy to reduce channel investment has been successful in driving Tantan to profitability, but the lack of investments in branding and the inability to significantly improve user retention have put pressure on the app's user base.
Strategic Priorities and Future Outlook
The company's strategic priorities for the Momo app, Tantan, and new endeavors were discussed in detail. The main goal for Momo is to maintain the productivity of the cash cow business with a healthy social ecosystem, while Tantan aims to continue improving the core dating experience and be an efficient business model that drives profitable growth. The company also aims to further enrich the brand portfolio and push the business boundaries beyond Momo and Tantan, building a long-term growth engine.
Investments and Growth Opportunities
The company highlighted the importance of overseas business in driving growth, particularly in the Middle East market. They are investing in localization efforts to better understand and cater to the social preferences and needs of users from different cultural backgrounds. This strategic focus on the overseas market, coupled with the growth momentum in the standalone new apps, signals a positive outlook for Hello Group Inc. in the long term.
Conclusion
Hello Group Inc.'s second quarter earnings call presented a mixed bag of financial results and strategic initiatives. While the company faced challenges in the form of revenue declines and operational adjustments, their focus on strategic priorities and future growth opportunities, particularly in the overseas market, bodes well for their long-term prospects. The company's commitment to improving user experience and maintaining a healthy community ecosystem, coupled with their strategic investments in localization and new endeavors, positions them for continued success in the competitive tech industry.