Release Date: June 05, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Overseas revenue accounted for 16% of total revenue in Q1 2025, up from less than 10% in Q1 2024, indicating strong international growth.
- Overseas revenues reached RMB415 million with accelerated year-over-year growth of 72%, showcasing successful expansion efforts.
- The company has developed an in-house AI algorithm that significantly improves user engagement by generating personalized greetings.
- The overseas business, particularly in the MENA region, is expected to achieve more than 80% growth, becoming a key growth engine for the group.
- Hello Group Inc (MOMO, Financial) has successfully optimized user acquisition channels, resulting in improved ROI and stable user retention.
Negative Points
- Total revenue for Q1 2025 was RMB2.52 billion, slightly down 1.5% year over year, indicating a decline in overall revenue.
- Domestic revenue decreased by 9% year over year, reflecting challenges in the local market.
- Adjusted operating income was down 33% from Q1 last year, with a margin decrease of 6 percentage points.
- The number of paying users for the Momo app decreased by 1.5 million, impacting revenue from long-time paying users.
- Gross margin declined due to higher payout ratios and increased costs associated with overseas expansion.
Q & A Highlights
Q: What factors contributed to the slowdown in Sochio's revenue growth, and what is the future outlook for its revenue and profit?
A: The slowdown in Sochio's revenue growth is attributed to a high base effect and political unrest in the Middle East, which affected user consumption sentiment. Despite this, efforts to acquire paying users and enhance user engagement have been implemented. The market remains fragmented, and Sochio has significant growth potential. The focus will be on expanding market penetration and product innovation. Profitability will not be prioritized during this growth phase, but channel ROI will be strictly controlled.
Q: Can you provide insights into the growth plans for Hello Group's other overseas products and the overall overseas revenue outlook?
A: Sochio is the largest overseas product, with other social entertainment products in the Middle East showing significant progress. Improved user retention and marketing efficiency have driven growth. Tantan's overseas business also contributes to revenue. The overseas dating market is a key focus, with a strong team in Singapore managing international operations. The overseas business is expected to continue growing, becoming a major growth engine for the group.
Q: How should we view the 2025 outlook for Momo and Tantan, and what is the expected performance of China revenue this year?
A: For Momo and Tantan, the goal is to stabilize user engagement and ensure profitability. New technologies, like AI-generated personalized greetings, are enhancing user experience. Tantan has implemented cost efficiency measures, improving ROI. Mainland China's revenue is expected to decline by around 10% year over year, showing stabilization compared to previous years. The group-level revenue may turn to positive growth in the second half of the year.
Q: What is the profit outlook for Hello Group, and how will expenses be managed throughout the year?
A: The gross margin is expected to decline due to the increasing contribution of lower-margin overseas revenue. Operating expenses will be optimized, with R&D and G&A expenses decreasing slightly. Sales and marketing expenses will increase by about 10% due to overseas expansion. The adjusted operating margin is expected to be in the range of 13% to 14% for 2025, absorbing near-term margin pressure and increased marketing investments.
Q: What are the key drivers for Hello Group's domestic business trajectory, and how might they impact future performance?
A: Key drivers include macroeconomic sentiment, regulatory environment, and strategic restructuring of Tantan's domestic business. Momo's revenue is tied to discretionary spending, influenced by macroeconomic indicators. Regulatory improvements have allowed a shift back to normal operations. Tantan's strategic cost reductions have improved ROI, with a manageable impact on revenue. The domestic business is expected to stabilize, with potential positive group-level growth in the second half of the year.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
