Hello Group Inc. Announces Unaudited Financial Results for the First Quarter of 2022
PR Newswire
BEIJING
,
June 7, 2022
/PRNewswire/ — Hello Group Inc. (NASDAQ: MOMO) (“Hello Group” or the “Company”), a leading mobile social and entertainment platform in
China
, today announced its unaudited financial results for the first quarter of 2022.
First
Quarter of 2022 Highlights
-
Net revenues decreased by 9.3% year over year to
RMB3,148.1 million
(
US$496.6 million
*) in the first quarter of 2022. -
Net income attributable to Hello Group Inc. decreased to
RMB289.9 million
(
US$45.7 million
) in the first quarter of 2022, from
RMB461.7 million
in the same period of 2021. -
Non-GAAP net income attributable to Hello Group Inc. (note 1) decreased to
RMB398.5 million
(
US$62.9 million
) in the first quarter of 2022, from
RMB633.7 million
in the same period of 2021. -
Diluted net income per American Depositary Share (“ADS”) was
RMB1.42
(US$0.22)
in the first quarter of 2022, compared to
RMB2.14
in the same period of 2021. -
Non-GAAP diluted net income per ADS (note 1) was
RMB1.94
(US$0.31)
in the first quarter of 2022, compared to
RMB2.91
in the same period of 2021. -
Monthly Active Users (“MAU”) on Momo application were 110.9 million in
March 2022
, compared to 115.3 million in
March 2021
. MAU on Tantan application were 25.6 million in
March 2022
. - Total paying users of live video service and value-added service, without double counting the overlap and including 2.4 million paying users of Tantan Limited (“Tantan”), were 11.0 million for the first quarter of 2022, compared to 12.6 million for the first quarter of 2021, which included 3.5 million paying users of Tantan.
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“Q1 2022 was a challenging yet fruitful quarter for us. I am pleased that our team was able to focus on our product and operational initiatives to cope with the
headwinds
from the
resurgence of
COVID-19
and related challenges
, getting 2022 off to a good start.” commented
Li Wang
, CEO of Hello Group.
First
Quarter of 2022 Financial Results
Net revenues
Total net revenues were
RMB3,148.1 million
(
US$496
.6 million) in the first quarter of 2022, a decrease of 9.3% from
RMB3,470.6 million
in the first quarter of 2021.
Live video service revenues were
RMB1,608.7 million
(
US$253.8 million
) in the first quarter of 2022, a decrease of 18.0% from
RMB1,962.1 million
during the same period of 2021. The decrease was primarily attributable to consumption softness as a result of the macro headwind, and the strategic decision to scale back from Tantan’s live streaming business.
Value-added service revenues mainly include virtual gift revenues and membership subscription revenues. Total value-added service revenues were
RMB1,483.4 million
(
US$234.0 million
) in the first quarter of 2022, an increase of 1.9% from
RMB1,455.5 million
during the same period of 2021. The year-over-year increase was primarily attributable to the rapid revenue growth from the new standalone apps, and to a lesser extent, the continued growth of the virtual gift business on the Momo application driven by product innovation. The increase was partially offset by the decrease in Tantan’s value-added service as a result of its strategic decision to lower the monetization level in order to improve user experience and retention, as well as COVID’s negative impact on users’ dating sentiment and intention to pay for VAS.
Mobile marketing revenues were
RMB27.9 million
(
US$4.4 million
) in the first quarter of 2022, a decrease of 28.0% from
RMB38.7 million
during the same period of 2021. The decrease in mobile marketing revenues was due to the negative impact of macro headwind on client’s advertising budget, and our product adjustment to address new regulation requirement.
Mobile games revenues were
RMB25.5 million
(
US$4.0 million
) in the first quarter of 2022, an increase of 128.0% from
RMB11.2 million
in the first quarter of 2021, primarily due to one new mobile game launched in the second half of 2021.
Net revenues from the Momo segment decreased from
RMB2,901.8 million
in the first quarter of 2021 to
RMB2,798.9 million
(
US$441.5 million
) in the first quarter of 2022, primarily due to the decrease in net revenues from live video service. Net revenues from the Tantan segment decreased from
RMB567.7 million
in the first quarter of 2021 to
RMB349.0 million
(
US$55.1 million
) in the first quarter of 2022, due to our strategy to lower the monetization level in order to improve user experience and retention, as well as the impact from the elevated COVID situations.
Cost and expenses
Cost and expenses were
RMB2,820.0 million
(
US$444.8 million
) in the first quarter of 2022, a decrease of 6.5% from
RMB3,016.3 million
in the first quarter of 2021. The decrease was primarily attributable to: (a) a decrease in personnel related costs including share-based compensation expenses resulting from the decreased number of employees and the decreased fair value of the share options granted during the period; (b) a decrease in revenue sharing with broadcasters related to Momo’s core live video service and Tantan’s live video service; and (c) a decrease in depreciation and amortization cost due to the impairment of intangible assets in 2021. These decreases were partially offset by an increase in revenue sharing with virtual gift recipients for our virtual gift service.
Non-GAAP cost and expenses (note 1) were
RMB2,711.4 million
(
US$427.7 million
) in the first quarter of 2022, a decrease of 4.4% from
RMB2,835.3 million
during the same period of 2021.
Income
from operations
Income from operations was
RMB352.0 million
(
US$55.5 million
) in the first quarter of 2022, compared to
RMB480.2 million
during the same period of 2021. Income from operations of the Momo segment was RMB519.2 million (
US$81.9 million
) in the first quarter of 2022, which decreased from
RMB573.2 million
in the first quarter of 2021. Loss from operations of the Tantan segment was
RMB161.8 million
(
US$25.5 million
) in the first quarter of 2022, compared to loss from operations of
RMB89.3 million
in the first quarter of 2021.
Non-GAAP income from operations (note 1) was
RMB460.6 million
(
US$72
.7 million) in the first quarter of 2022, compared to
RMB661.2 million
during the same period of 2021. Non-GAAP income from operations of the Momo segment was RMB624.0 million (
US$98.4 million
) in the first quarter of 2022, which decreased from
RMB700.5 million
in the first quarter of 2021. Non-GAAP loss from operations of the Tantan segment was
RMB157.9 million
(
US$24.9 million
) in the first quarter of 2022, compared to non-GAAP loss from operations of
RMB35.6 million
in the first quarter of 2021.
Income tax expenses
Income tax expenses were
RMB150.8 million
(
US$23.8 million
) in the first quarter of 2022, compared to
RMB91.4 million
in the first quarter of 2021. The increase was primarily due to the following reasons: (a) in the first quarter of 2022, we accrued withholding income tax of
RMB44.0 million
(
US$6.9 million
) on undistributed earnings generated in the first quarter of 2022 by our wholly-foreign owned enterprise (“WFOE”), because we plan to remit WFOE’s earnings to its offshore parent company in the foreseeable future to fund its demand on US dollar in business operations, payments of dividends, potential investments, etc.; (b) in the first quarter of 2021, we received tax refund resulted from additional expense deduction related to previous years.
Net
income
Net income was
RMB288.8 million
(
US$45.6 million
) in the first quarter of 2022, compared to
RMB460.9 million
during the same period of 2021. Net income from the Momo segment was
RMB456.5 million
(
US$72.0 million
) in the first quarter of 2022, which decreased from RMB551.4 million in the first quarter of 2021. Net loss from the Tantan segment was
RMB162.4 million
(
US$25.6 million
) in the first quarter of 2022, compared to net loss of
RMB86.8 million
in the first quarter of 2021.
Non-GAAP net income (note 1) was
RMB397.4 million
(
US$62
.7 million) in the first quarter of 2022, compared to
RMB633.0 million
during the same period of 2021. Non-GAAP net income from the Momo segment was RMB561.3 million (
US$88.6 million
) in the first quarter of 2022, which decreased from
RMB678
.6 million in the first quarter of 2021. Non-GAAP net loss of the Tantan segment was
RMB158.6 million
(
US$25.0 million
) in the first quarter of 2022, compared to non-GAAP net loss of
RMB42.0 million
in the first quarter of 2021.
Net
income attributable to Hello Group Inc.
Net income attributable to Hello Group Inc. was
RMB289.9 million
(
US$45.7 million
) in the first quarter of 2022, compared to a net income of RMB461.7 million during the same period of 2021.
Non-GAAP net income (note 1) attributable to Hello Group Inc. was
RMB398.5 million
(
US$62
.9 million) in the first quarter of 2022, compared to
RMB633.7 million
during the same period of 2021.
Net
income
per ADS
Diluted net income per ADS was
RMB1.42
(US$0.22)
in the first quarter of 2022, compared to
RMB2
.14 in the first quarter of 2021.
Non-GAAP diluted net income per ADS (note 1) was
RMB1.94
(US$0.31)
in the first quarter of 2022, compared to
RMB2.91
in the first quarter of 2021.
Cash and cash flow
As of
March 31, 2022
, the Company’s cash, cash equivalents, short-term deposits, long-term deposits, short-term restricted cash and long-term restricted cash totaled
RMB15,596.6 million
(
US$2,460.3 million
), compared to
RMB15,707.0 million
as of
December 31, 2021
. Net cash provided by operating activities in the first quarter of 2022 was
RMB43.3 million
(
US$6.8 million
), compared to
RMB501.6 million
in the first quarter of 2021. Included in our cash provided by operating activities is
RMB140.0 million
(
US$22.1 million
) of cash payment to Chinese tax authorities to repatriate RMB1,400.0
million
(
US$220.8 million
) from our WFOE in
China
to our offshore entity. In addition, during the first quarter of 2022, the payment of revenue sharing to content providers were higher than payment during the same period last year as the beginning balance of revenue sharing payable was higher in the first quarter of 2022 than 2021. It has also caused the operating cash flow to decrease to a greater extent on a year over year basis than the non-GAAP Net income of the company.
Recent Development
Authorization of a new share repurchase program
On
June 7, 2022
, Hello Group’s board of directors authorized a share repurchase program under which the Company may repurchase up to
US$200 million
of its shares over the next 24 months.
The Company’s proposed repurchases may be made from time to time on the open market at prevailing market prices, in privately negotiated transactions, in block trades and/or through other legally permissible means, depending on market conditions and in accordance with applicable rules and regulations. The Company’s board of directors will review the share repurchase program periodically, and may authorize adjustment of its terms and size. The timing and conditions of the share repurchases will be subject to various factors, including the requirements under Rule
10b
-18 and Rule 10b5-1 promulgated pursuant to the Securities Exchange Act of 1934, as amended. The Company plans to fund repurchases from its existing cash balance.
Payment of a special cash dividend
In
March 2022
, Hello Group’s board of directors declared a special cash dividend in the amount of
US$0.64
per ADS, or
US$0.32
per ordinary share. The cash dividend was paid in
April 2022
to shareholders of record at the close of business on
April 13, 2022
. The aggregate amount of cash dividends paid was
US$127.3 million
.
Business Outlook
For the second quarter of 2022, the Company expects total net revenues to be between
RMB3.05 billion
to
RMB3.15 billion
, representing a decrease of 14.2% to 16.9% year-over-year. This forecast reflects the Company’s current and preliminary views on the market and operational conditions, which are subject to change, particularly as to the potential impact of the COVID-19 resurgence on the Chinese and global economies, as well as on users’ paying capabilities.
Note 1: Non-GAAP measures
To supplement our consolidated financial statements presented in accordance with U.S. generally accepted accounting principles (“GAAP”), we, Hello Group, use various non-GAAP financial measures that are adjusted from the most comparable GAAP results to exclude share-based compensation, impairment loss on goodwill and intangible assets, amortization of intangible assets from business acquisitions, and tax impacts related to the amortization of intangible assets from business acquisitions.
Reconciliations of our non-GAAP financial measures to our U.S. GAAP financial measures are shown in tables at the end of this earnings release, which provide more details about the non-GAAP financial measures.
Our non-GAAP financial information is provided as additional information to help investors compare business trends among different reporting periods on a consistent basis and to enhance investors’ overall understanding of the historical and current financial performance of our continuing operations and our prospects for the future. Our non-GAAP financial information should be considered in addition to results prepared in accordance with GAAP, but should not be considered a substitute for or superior to the GAAP results. In addition, our calculation of the non-GAAP financial measures may be different from the calculation used by other companies, and therefore comparability may be limited.
Our non-GAAP information (including non-GAAP cost and operating expenses, income (loss) from operations, net income (loss), net income (loss) attributable to Hello Group Inc., and diluted net income per ADS) is adjusted from the most comparable GAAP results to exclude share-based compensation, impairment loss on goodwill and intangible assets, amortization of intangible assets from business acquisitions, and tax impacts related to the amortization of intangible assets from business acquisitions. A limitation of using these non-GAAP financial measures is that share-based compensation, impairment loss on goodwill and intangible assets, amortization of intangible assets from business acquisitions, and tax impacts related to the amortization of intangible assets from business acquisitions have been and will continue to be for the foreseeable future significant recurring expenses in our results of operations. We compensate for such limitation by providing reconciliations of our non-GAAP measures to our U.S. GAAP measures. Please see the reconciliation tables at the end of this earnings release.
Conference Call
Hello Group’s management will host an earnings conference call on
Tuesday, June 7
, 2022, at 8:00 a.m. U.S. Eastern Time (
8:00 p.m.
Beijing / Hong Kong Time on
June 7, 2022
).
All participants must preregister online prior to the call to receive the dial-in details. Once preregistration has been complete, participants will receive dial-in numbers, direct event passcode, and a unique registrant ID.
PRE-REGISTER LINK
http://apac.directeventreg.com/registration/event/2456379
To join the conference, simply dial the number in the calendar invite you receive after preregistering, enter the passcode followed by your registrant ID, and you will join the conference instantly.
A telephone replay of the call will be available after the conclusion of the conference call through 9:00 a.m. U.S. Eastern Time, June 15, 2022. The dial-in details for the replay are as follows:
International: +61-2- 8199-0299
U.S. Toll Free: +1-855-452-5696
Passcode: 2456379
Additionally, a live and archived webcast of the conference call will be available on the Investor Relations section of the Company’s website at
https://ir.hellogroup.com
.
About Hello Group Inc.
We are a leading player in
China’s
online social and entertainment space. Through Momo, Tantan and other properties within our product portfolio, we enable users to discover new relationships, expand their social connections and build meaningful interactions. Momo is a mobile application that connects people and facilitates social interactions based on location, interests and a variety of online recreational activities. Tantan, which was added into our family of applications through acquisition in May 2018, is a leading social and dating application. It is designed to help its users find and establish romantic connections as well as meet interesting people. We also operate a number of other applications to serve different social and entertainment demands from our users.
For investor and media inquiries, please contact:
Hello Group Inc.
Investor Relations
Phone: +86-10-5731-0538
Email:
[email protected]
Christensen
In
China
Mr.
Eric Yuan
Phone: +86-10-5900-1548
E-mail:
[email protected]
In US
Ms.
Linda Bergkamp
Phone: +1-480-614-3004
Email:
[email protected]
Safe Harbor Statement
This news release contains “forward-looking” statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and as defined in the Private Securities Litigation Reform Act of 1995. These forward-looking statements include but are not limited to our management quotes, our financial outlook for the second quarter of 2022, as well as the amount of, timing, methods and funding sources for repurchases of our shares under the share repurchase program.
Our forward-looking statements are not historical facts but instead represent only our belief regarding expected results and events, many of which, by their nature, are inherently uncertain and outside of our control. Our actual results and other circumstances may differ, possibly materially, from the anticipated results and events indicated in these forward-looking statements. Announced results for the first quarter of 2022 are preliminary, unaudited and subject to audit adjustment. In addition, we may not meet our financial outlook for the second quarter of 2022 and may be unable to grow our business in the manner planned. We may also modify our strategy for growth. Moreover, there are other risks and uncertainties that could cause our actual results to differ from what we currently anticipate, including those relating to our ability to retain and grow our user base, our ability to attract and retain sufficiently trained professionals to support our operations, our ability to anticipate and develop new services and enhance existing services to meet the demand of our users or customers, the impact of the COVID-19 pandemic on the Company’s business operations and the economy in
China
, the market price of the Company’s stock prevailing from time to time, the nature of other investment opportunities presented to the Company from time to time, the Company’s cash flows from operations, general economic conditions, and other factors. For additional information on these and other important factors that could adversely affect our business, financial condition, results of operations, and prospects, please see our filings with the U.S. Securities and Exchange Commission.
All information provided in this press release and in the attachments is as of the date of the press release. We undertake no obligation to update any forward-looking statement, whether as a result of new information, future events or otherwise, after the date of this release, except as required by law. Such information speaks only as of the date of this release.
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View original content:
https://www.prnewswire.com/news-releases/hello-group-inc-announces-unaudited-financial-results-for-the-first-quarter-of-2022-301562561.html
SOURCE Hello Group Inc.