Hello Group Inc. Announces Unaudited Financial Results for the Third Quarter of 2022

<br /> Hello Group Inc. Announces Unaudited Financial Results for the Third Quarter of 2022<br />

PR Newswire



BEIJING


,


Dec. 8, 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 third quarter of 2022.


Third


Quarter of 2022 Highlights

  • Net revenues decreased by 14.0% year over year to

    RMB3,233.0 million

    (

    US$454.5 million

    *) in the third quarter of 2022.
  • Net income attributable to Hello Group Inc. increased to

    RMB450.8 million

    (

    US$63.4 million

    ) in the third quarter of 2022, from

    RMB403.2 million

    in the same period of 2021.
  • Non-GAAP net income attributable to Hello Group Inc. (note 1) decreased to

    RMB535.8 million

    (

    US$75.3 million

    ) in the third quarter of 2022, from

    RMB571.6 million

    in the same period of 2021.
  • Diluted net income per American Depositary Share (“ADS”) was

    RMB2.20


    (US$0.31)

    in the third quarter of 2022, compared to

    RMB1.93

    in the same period of 2021.
  • Non-GAAP diluted net income per ADS (note 1) was

    RMB2.60


    (US$0.37)

    in the third quarter of 2022, compared to

    RMB2.70

    in the same period of 2021.
  • Monthly Active Users (“MAU”) on Momo application were 108.8 million in

    September 2022

    , compared to 115.5 million in

    September 2021

    . MAU on Tantan application were 20.9 million in

    September 2022

    .
  • For the Momo app total paying users was 8.4 million for the third quarter of 2022, compared to 9.3 million for the same period last year. Tantan had 2.0 million paying users for the third quarter of 2022 compared to 2.9 million from the year ago period.


* This press release contains translations of certain Renminbi amounts into U.S. dollars at specified rates solely for the convenience of readers. Unless otherwise noted, all translations from Renminbi to U.S. dollars, in this press release, were made at a rate of RMB7.1135 to US$1.00, the effective noon buying rate for September 30, 2022 as set forth in the H.10 statistical release of the Federal Reserve Board.


First


Nine Months


of 2022 Highlights

  • Net revenues decreased 12.9% year over year to

    RMB9,491.5 million

    (

    US$1,334.3 million

    ) for the first nine months of 2022.
  • Net income attributable to Hello Group Inc. was

    RMB1,086.3 million

    (

    US$152.7 million

    ) for the first nine months of 2022, compared to

    RMB1,329.0 million

    during the same period of 2021.
  • Non-GAAP net income attributable to Hello Group Inc. (note 1) was

    RMB1,397.8 million

    (

    US$196.5 million

    ) for the first nine months of 2022, compared to

    RMB1,756.2 million

    during the same period of 2021.
  • Diluted net income per ADS was

    RMB5.30


    (US$0.75)

    for the first nine months of 2022, compared to

    RMB6.22

    during the same period of 2021.
  • Non-GAAP diluted net income per ADS (note 1) was

    RMB6.75


    (US$0.95)

    for the first nine months of 2022, compared to

    RMB8.14

    during the same period of 2021.

“I am very happy to return to the CEO position. In the third quarter, thanks to product and operational enhancements, we delivered good financial results and made solid progress across all business lines.” commented

Yan Tang

, Chairman and CEO of Hello Group. “Such progress on the business front, coupled with the efforts to improve cost efficiency, allowed us to see meaningful bottom line improvement on a sequential basis. I am very proud of the execution capabilities that the team demonstrated in such a challenging environment.”


Third


Quarter of 2022 Financial Results



Net revenues

Total net revenues were

RMB3,233.0 million

(

US$454

.5 million) in the third quarter of 2022, a decrease of 14.0% from

RMB3,759.2 million

in the third quarter of 2021.

Live video service revenues were

RMB1,657.5 million

(

US$233.0 million

) in the third quarter of 2022, a decrease of 23.5% from

RMB2,166.7 million

during the same period of 2021. The decrease was primarily attributable to COVID related consumption softness and regulatory changes, and to a lesser extent, Tantan’s product adjustment to improve user experience in September last year and negative impact of pandemic resurgence and channel investment reduction.

Value-added service revenues mainly include virtual gift revenues and membership subscription revenues. Total value-added service revenues were

RMB1,537.7 million

(

US$216.2 million

) in the third quarter of 2022, an increase of 0.3% from

RMB1,533.3 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. The increase was partially offset by the decrease in Tantan’s value-added service due to the demonetization process to improve user experience and retention, as well as the negative impact of COVID and the reduction of channel investments on Tantan’s user growth and paying conversion.

Mobile marketing revenues were

RMB28.2 million

(

US$4.0 million

) in the third quarter of 2022, a decrease of 34.8% from

RMB43.3 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.

Mobile games revenues were

RMB7.7 million

(

US$1.1 million

) in the third quarter of 2022, a decrease of 4.1% from

RMB8.1 million

in the third quarter of 2021. The decrease in mobile game revenues was mainly due to the decrease in paying users of mobile games.

Net revenues from the Momo segment decreased from

RMB3,246.3 million

in the third quarter of 2021 to

RMB2,891.0 million

(

US$406.4 million

) in the third quarter of 2022, primarily due to the decrease in net revenues from live video service. Net revenues from the Tantan segment decreased from

RMB510.7 million

in the third quarter of 2021 to

RMB341.3 million

(

US$48.0 million

) in the third quarter of 2022, due to our demonetization strategy to improve user experience, as well as the negative impact of COVID and the reduction of channel investments on Tantan’s user growth and paying conversion.



Cost and expenses

Cost and expenses were

RMB2,734.2 million

(

US$384.4 million

) in the third quarter of 2022, a decrease of 17.6% from

RMB3,319.9 million

in the third quarter of 2021. The decrease was primarily attributable to: (a) a decrease in revenue sharing with broadcasters related to Momo’s core live video service and Tantan’s live video service, which was partially offset by an increase in revenue sharing with virtual gift recipients for our virtual gift service; (b) a decrease in sales and marketing expenses due to our initiatives to control cost and optimize Tantan’s channel marketing strategy; (c) a decrease in salary expenses and share-based compensation expenses, due to our continuous optimization in personnel costs since the beginning of the year and the decreased fair value of the share options new grants; (d) no production cost from television program and film compared to the third quarter of 2021; and (e) a decrease in depreciation and amortization cost due to the impairment of intangible assets in 2021.

Non-GAAP cost and expenses (note 1) were

RMB2,649.2 million

(

US$372.4 million

) in the third quarter of 2022, a decrease of 15.7% from

RMB3,143.2 million

during the same period of 2021.



Income




from operations

Income from operations was

RMB520.1 million

(

US$73.1 million

) in the third quarter of 2022, compared to

RMB460.5 million

during the same period of 2021. Income from operations of the Momo segment was RMB569.4 million (

US$80.0 million

) in the third quarter of 2022, which decreased from

RMB676.5 million

in the third quarter of 2021. Loss from operations of the Tantan segment was

RMB44.5 million

(

US$6.2 million

) in the third quarter of 2022, compared to loss from operations of

RMB179.8 million

in the third quarter of 2021.

Non-GAAP income from operations (note 1) was

RMB605.1 million

(

US$85

.1 million) in the third quarter of 2022, compared to

RMB637.2 million

during the same period of 2021. Non-GAAP income from operations of the Momo segment was RMB648.2 million (

US$91.1 million

) in the third quarter of 2022, which decreased from

RMB786.3 million

in the third quarter of 2021. Non-GAAP loss from operations of the Tantan segment was

RMB38.3 million

(

US$5.4 million

) in the third quarter of 2022, compared to non-GAAP loss from operations of

RMB112.9 million

in the third quarter of 2021.



Other gain or loss, net

Other gain was

RMB40.4 million

(

US$5.7 million

) in the third quarter of 2022, which mainly resulted from the Company’s repurchase of its convertible senior notes from certain bond holders in the third quarter of 2022, partially offset by impairment loss on other long-term investments.



Income tax expenses

Income tax expenses were

RMB156.0 million

(

US$21.9 million

) in the third quarter of 2022, compared to

RMB143.2 million

in the third quarter of 2021. The increase was primarily due to the fact that in the third quarter of 2022, we accrued withholding income tax of

RMB42.9 million

(

US$6

.0 million) on undistributed earnings generated in the third 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 for US dollars in business operations, payments of dividends and debts, potential investments, share repurchase plan, etc.



Net




income

Net income was

RMB449.9 million

(

US$63.2 million

) in the third quarter of 2022, compared to

RMB395.9 million

during the same period of 2021. Net income from the Momo segment was

RMB499.6 million

(

US$70.2 million

) in the third quarter of 2022, compared to RMB611.1 million in the same period of 2021. Net loss from the Tantan segment was

RMB45.0 million

(

US$6.3 million

) in the third quarter of 2022, compared to net loss of

RMB179.0 million

in the third quarter of 2021.

Non-GAAP net income (note 1) was

RMB534.8 million

(

US$75

.2 million) in the third quarter of 2022, compared to

RMB564.3 million

during the same period of 2021. Non-GAAP net income from the Momo segment was RMB578.4 million (

US$81.3 million

) in the third quarter of 2022, which decreased from

RMB720

.9 million in the third quarter of 2021. Non-GAAP net loss of the Tantan segment was

RMB38.8 million

(

US$5.5 million

) in the third quarter of 2022, compared to non-GAAP net loss of

RMB120.5 million

in the third quarter of 2021.



Net




income attributable to Hello Group Inc.

Net income attributable to Hello Group Inc. was

RMB450.8 million

(

US$63.4 million

) in the third quarter of 2022, compared to a net income of RMB403.2 million during the same period of 2021.

Non-GAAP net income (note 1) attributable to Hello Group Inc. was

RMB535.8 million

(

US$75

.3 million) in the third quarter of 2022, compared to

RMB571.6 million

during the same period of 2021.



Net




income




per ADS

Diluted net income per ADS was

RMB2.20


(US$0.31)

in the third quarter of 2022, compared to

RMB1

.93 in the third quarter of 2021.

Non-GAAP diluted net income per ADS (note 1) was

RMB2.60


(US$0.37)

in the third quarter of 2022, compared to

RMB2.70

in the third quarter of 2021.



Cash and cash flow

As of

September 30, 2022

, the Company’s cash, cash equivalents, short-term deposits, long-term deposits, short-term restricted cash and long-term restricted cash totaled

RMB13,021.3 million

(

US$1,830

.5 million), compared to

RMB15,707

.0 million as of

December 31, 2021

. The decrease was due to a number of cash outflow items, including our cash dividend payment of

RMB841.0 million

(

US$118

.2 million) to shareholders; an aggregate payment of

RMB2,137.0 million

(

US$300

.4 million) for the repurchase of the company’s convertible notes; an aggregate of

RMB287.7 million

(

US$40

.4 million) in relation to the share repurchase program; and

RMB300.0 million

(

US$42

.2 million) payment to Chinese tax authorities to repatriate cash from our WOFE in

China

to our offshore entity in the first nine months of 2022.

Net cash provided by operating activities in the third quarter of 2022 was

RMB444.5 million

(

US$62

.5 million), compared to

RMB559.9 million

in the third quarter of 2021.


F


irst Nine Months of 2022


Financial Results

Net revenues for the first nine months of 2022 were

RMB9,491.5 million

(

US$1,334.3 million

), a decrease of 12.9% from

RMB10,901.5 million

in the same period of 2021.

Net income attributable to Hello Group Inc. was

RMB1,086.3 million

(

US$152.7 million

) for the first nine months of 2022, compared to

RMB1,329.0 million

during the same period of 2021.

Non-GAAP net income attributable to Hello Group Inc. (note 1) was

RMB1,397.8 million

(

US$196.5 million

) for the first nine months of 2022, compared to

RMB1,756.2 million

during the same period of 2021.

Diluted net income per ADS was

RMB5.30


(US$0.75)

during the first nine months of 2022, compared to

RMB6.22

in the same period of 2021.

Non-GAAP diluted net income per ADS (note 1) was

RMB6.75


(US$0.95)

during the first nine months of 2022, compared to

RMB8

.14 in the same period of 2021.

Net cash provided by operating activities was

RMB688.2 million

(

US$96.7 million

) during the first nine months of 2022, compared to

RMB893.7 million

in the same period of 2021.


Recent Development


Execution of 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. As of

December 8, 2022

, the Company has repurchased 12.0 million ADSs for

US$56.7 million

on the open market under this program, at an average purchase price of

US$4.71

per ADS.


Business Outlook

For the fourth quarter of 2022, the Company expects total net revenues to be between

RMB3.15 billion

to

RMB3.25 billion

, representing a decrease of 14.3% to 11.5% 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

Thursday, December 8

, 2022, at 8:00 a.m. U.S. Eastern Time (

9:00 p.m.

Beijing / Hong Kong Time on

December 8, 2022

).

Participants can register for the conference call by navigating to:


https://s1.c-conf.com/diamondpass/10027148-ghj92l.html

.

Upon registration, each participant will receive details for the conference call, including dial-in numbers, conference call passcode and a unique access PIN. Please dial in 10 minutes before the call is scheduled to begin.

A telephone replay of the call will be available after the conclusion of the conference call through

December 15, 2022

. The dial-in details for the replay are as follows:

U.S. /

Canada

: 1-855-883-1031


Hong Kong

:      800-930-639

Passcode:        10027148

Additionally, a live and archived webcast of the conference call will be available on the Investor Relations section of Hello Group’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. Tantan 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 U.S.

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 fourth 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 third quarter of 2022 are preliminary, unaudited and subject to audit adjustment. In addition, we may not meet our financial outlook for the fourth 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.



Hello Group Inc.



Unaudited Condensed Consolidated Statement of

Operations



(All amounts in thousands, except share and per share data)


Three months


First nine months


Ended September 30


Ended September 30


2021


2022


2022


2021


2022


2022


RMB


RMB


US$


RMB


RMB


US$


Net revenues:


Live video service


2,166,733


1,657,531


233,012


6,230,160


4,786,232


672,838


Value-added service


1,533,288


1,537,666


216,162


4,496,059


4,557,481


640,681


Mobile marketing


43,323


28,243


3,970


133,641


92,029


12,937


Mobile games


8,052


7,719


1,085


28,418


50,416


7,087


Other services


7,784


1,862


262


13,212


5,356


753



Total net revenues



3,759,180



3,233,021



454,491



10,901,490



9,491,514



1,334,296


Cost and expenses:


Cost of revenues


(2,183,337)


(1,886,135)


(265,149)


(6,191,911)


(5,505,369)


(773,933)


Research and development


(260,939)


(245,105)


(34,456)


(815,757)


(733,562)


(103,123)


Sales and marketing


(680,896)


(467,012)


(65,652)


(1,944,705)


(1,666,542)


(234,279)


General and administrative


(194,734)


(135,933)


(19,109)


(459,443)


(453,514)


(63,754)



Total cost and expenses



(3,319,906)



(2,734,185)



(384,366)



(9,411,816)



(8,358,987)



(1,175,089)


Other operating income


21,221


21,289


2,993


137,389


85,790


12,060



Income from operations



460,495



520,125



73,118



1,627,063



1,218,317



171,267


Interest income


93,564


89,274


12,550


284,706


280,761


39,469


Interest expense


(18,669)


(25,010)


(3,516)


(55,332)


(72,575)


(10,202)


Other gain or loss, net




40,403


5,680


(18,000)


118,325


16,634



Income before income tax and



share of income on equity method



investments



535,390



624,792



87,832



1,838,437



1,544,828



217,168


Income tax expenses


(143,158)


(156,041)


(21,936)


(526,065)


(452,860)


(63,662)



Income before share of income on



equity method investments



392,232



468,751



65,896



1,312,372



1,091,968



153,506


Share of income (loss) on equity


method investments


3,658


(18,880)


(2,654)


5,961


(8,967)


(1,261)



Net income



395,890



449,871



63,242



1,318,333



1,083,001



152,245


Less: net loss attributable to non-


controlling interest


(7,301)


(964)


(136)


(10,677)


(3,288)


(462)



Net income attributable to the



shareholders of Hello Group Inc.



403,191



450,835



63,378



1,329,010



1,086,289



152,707


Net income per share attributable to


ordinary shareholders


Basic


1.01


1.15


0.16


3.26


2.75


0.39


Diluted


0.96


1.1


0.15


3.11


2.65


0.37


Weighted average shares used in


calculating net income per ordinary share


Basic


400,835,428


391,027,485


391,027,485


408,074,205


394,333,009


394,333,009


Diluted


437,639,164


423,608,050


423,608,050


444,906,615


429,765,849


429,765,849



Hello Group Inc.



Unaudited Condensed Consolidated Statement of

Comprehensive Income



(All amounts in thousands, except share and per share data)


Three months


First nine months


Ended September 30


Ended September 30


2021


2022


2022


2021


2022


2022


RMB


RMB


US$


RMB


RMB


US$



Net income



395,890



449,871



63,242



1,318,333



1,083,001



152,245


Other comprehensive income (loss), net of tax:


Foreign currency translation adjustment


368


(188,343)


(26,477)


(31,830)


(328,832)


(46,226)



Comprehensive income



396,258



261,528



36,765



1,286,503



754,169



106,019


Less: comprehensive (loss) income attributed to the non-


controlling interest


(7,540)


10,831


1,523


(13,323)


17,710


2,490



Comprehensive income attributable to Hello Group Inc.



403,798



250,697



35,242



1,299,826



736,459



103,529



Hello Group Inc.



Unaudited Condensed Consolidated Balance Sheets


(All amounts in thousands, except share and per share data)


December 31


September 30


September 30


2021


2022


2022


RMB


RMB


US$


Assets


Current assets


Cash and cash equivalents


5,570,563


3,435,616


482,971


Short-term deposits


2,860,000


5,900,000


829,409


Restricted cash




100,327


14,104


Accounts receivable, net of allowance for doubtful accounts of RMB15,127


and RMB5,945 as of December 31, 2021 and September 30, 2022,


respectively


205,225


194,344


27,320


Prepaid expenses and other current assets


775,072


877,348


123,336


Total current assets


9,410,860


10,507,635


1,477,140


Long-term deposits


7,200,000


3,500,000


492,022


Long-term restricted cash


76,471


85,362


12,000


Right-of-use assets, net


257,934


142,492


20,031


Property and equipment, net


180,664


186,949


26,281


Intangible assets, net


27,320


23,482


3,301


Rental deposits


19,204


20,737


2,915


Long-term investments


820,006


863,452


121,382


Other non-current assets


83,930


119,620


16,816


Deferred tax assets


34,849


35,836


5,038



Total assets



18,111,238



15,485,565



2,176,926


Liabilities and equity


Current liabilities


Accounts payable


726,207


622,980


87,576


Deferred revenue


539,967


467,763


65,757


Accrued expenses and other current liabilities


911,050


664,867


93,466


Amount due to related parties


5,016


9,443


1,327


Lease liabilities due within one year


162,950


102,585


14,421


Income tax payable


125,773


74,848


10,522


Deferred consideration in connection with business acquisitions


44,802


27,313


3,840


Convertible Senior Notes-current




2,726,763


383,322


Total current liabilities


2,515,765


4,696,562


660,231


Deferred tax liabilities


213,384


37,635


5,291


Convertible senior notes


4,565,292






Lease liabilities


103,105


42,578


5,986


Other non-current liabilities


128,095


114,577


16,107


Total liabilities


7,525,641


4,891,352


687,615


Shareholder’s equity (i)


10,585,597


10,594,213


1,489,311



Total liabilities and shareholder’s equity



18,111,238



15,485,565



2,176,926


(i): As of September 30, 2022, the number of ordinary shares outstanding was 385,309,239.



Hello Group Inc.



Unaudited Condensed Consolidated Statement of Cash Flows


(All amounts in thousands, except share and per share data)


Three months


First nine months


Ended September 30


Ended September 30


2021


2022


2022


2021


2022


2022


RMB


RMB


US$


RMB


RMB


US$


Cash flows from operating activities:


Net income


395,890


449,871


63,242


1,318,333


1,083,001


152,245


Adjustments to reconcile net income to net cash provided by


operating activities:


Depreciation of property and equipment


38,696


27,047


3,802


121,311


83,107


11,683


Amortization of intangible assets


34,722


1,279


180


107,783


3,837


539


Share-based compensation


143,280


84,976


11,945


349,195


311,540


43,797


Share of income (loss) on equity method investments


(3,658)


18,880


2,654


(5,961)


8,967


1,261


Gain on repurchase of convertible senior notes




(51,653)


(7,261)




(129,575)


(18,215)


Loss on long-term investments




11,250


1,581


18,000


11,250


1,581


Gain on disposal of subsidiaries








(15,526)






Cash received on distributions from equity method investments










1,708


240


Loss or gain on disposal of property and equipment


2,351


(923)


(130)


1,272


(783)


(110)


Provision of losses on receivable and other assets


(322)


(820)


(115)


242


(453)


(64)


Changes in operating assets and liabilities:


Accounts receivable


(1,616)


22,973


3,229


(24,358)


15,695


2,206


Prepaid expenses and other current assets


(85,048)


41,418


5,822


(203,666)


(16,144)


(2,269)


Rental deposits


(922)


716


101


(1,514)


1,399


197


Deferred tax assets


(782)


590


83


(2,016)


(986)


(139)


Other non-current assets


(57,100)


16,130


2,268


(8,050)


76,820


10,799


Accounts payable


(28,400)


(438)


(62)


19,422


(106,392)


(14,956)


Income tax payable


24,947


(15,635)


(2,198)


(71,431)


(50,923)


(7,159)


Deferred revenue


9,369


(19,356)


(2,721)


25,454


(73,891)


(10,387)


Accrued expenses and other current liabilities


56,954


(108,513)


(15,255)


(38,829)


(304,346)


(42,784)


Amount due to related parties


1,860


7,824


1,100


(4,696)


4,427


622


Deferred tax liabilities


(8,676)


(14,425)


(2,028)


(26,941)


(171,752)


(24,145)


Share-based compensation liability








(678,153)






Other non-current liabilities


38,335


(26,655)


(3,747)


13,818


(58,311)


(8,197)



Net cash provided by operating activities



559,880



444,536



62,490



893,689



688,195



96,745


Cash flows from investing activities:


Purchase of property and equipment


(30,919)


(27,051)


(3,803)


(76,122)


(70,392)


(9,896)


Payment for long-term investments








(300,000)


(55,343)


(7,780)


Purchase of short-term deposits


(2,100,000)


(1,700,000)


(238,982)


(4,576,688)


(1,700,000)


(238,982)


Cash received on maturity of short-term deposits


3,458,658


2,700,000


379,560


6,117,570


3,710,000


521,544


Cash received on investment income distribution








5,610


3,523


495


Cash of disposed subsidiaries








(8,750)






Purchase of long-term deposits




(1,000,000)


(140,578)


(250,000)


(2,550,000)


(358,473)


Cash received on maturity of long-term deposits










1,200,000


168,693


Other investing activities


13


2,781


391


2,406


3,103


436



Net cash provided by (used in) investing activities



1,327,752



(24,270)



(3,412)



914,026



540,891



76,037


Cash flows from financing activities:


Deferred payment for business acquisition




(15,858)


(2,229)


(12,907)


(21,421)


(3,011)


Proceeds from exercise of share options


461


18


3


771


51


7


Payment in relation to the share repurchase program


(756,714)


(285,355)


(40,115)


(862,865)


(287,690)


(40,443)


Repurchase of subsidiary’s share options


(48,489)


(14,330)


(2,014)


(54,050)


(39,867)


(5,604)


Dividends payment








(852,743)


(840,997)


(118,225)


Payment for redemption of convertible bonds




(1,024,443)


(144,014)




(2,136,987)


(300,413)



Net cash used in financing activities



(804,742)



(1,339,968)



(188,369)



(1,781,794)



(3,326,911)



(467,689)


Effect of exchange rate changes


(3,661)


(6,190)


(869)


(28,697)


72,096


10,135



Net increase (decrease) in cash and cash equivalents



1,079,229



(925,892)



(130,160)



(2,776)



(2,025,729)



(284,772)


Cash, cash equivalents and restricted cash at the beginning of period


2,284,067


4,547,197


639,235


3,366,072


5,647,034


793,847


Cash, cash equivalents and restricted cash at the end of period


3,363,296


3,621,305


509,075


3,363,296


3,621,305


509,075



Reconciliation of Non-GAAP financial measures to comparable GAAP measures


(All amounts in thousands, except per share data)


1.


Reconciliation of Non-GAAP cost and operating expenses, income from operations, and net income to comparable GAAP measures.


Three months


Three months


Three months


Ended September 30, 2021


Ended September 30, 2022


Ended September 30, 2022


GAAP


Amortization of


intangible assets


from business


acquisitions


Share-based


compensation


Tax


impacts


Non-GAAP


GAAP


Share-based


compensation


Non-GAAP


GAAP


Share-based


compensation


Non-GAAP


(ii)


RMB


RMB


RMB


RMB


RMB


RMB


RMB


RMB


US$


US$


US$


Cost of revenues


(2,183,337)


17,286


6,623




(2,159,428)


(1,886,135)


1,496


(1,884,639)


(265,149)


210


(264,939)


Research and development


(260,939)




29,094




(231,845)


(245,105)


21,713


(223,392)


(34,456)


3,052


(31,404)


Sales and marketing


(680,896)


16,165


27,653




(637,078)


(467,012)


8,453


(458,559)


(65,652)


1,188


(64,464)


General and administrative


(194,734)




79,910




(114,824)


(135,933)


53,314


(82,619)


(19,109)


7,495


(11,614)



Cost and operating expenses



(3,319,906)



33,451



143,280







(3,143,175)



(2,734,185)



84,976



(2,649,209)



(384,366)



11,945



(372,421)


Income from operations


460,495


33,451


143,280




637,226


520,125


84,976


605,101


73,118


11,945


85,063


Net income attributable to Hello


Group Inc.


403,191


33,451


143,280


(8,363)


571,559


450,835


84,976


535,811


63,378


11,945


75,323



Hello Group Inc.



Reconciliation of Non-GAAP financial measures to comparable GAAP measures


(All amounts in thousands, except per share data)


1.


Reconciliation of Non-GAAP cost and operating expenses, income from operations, and net income to comparable GAAP measures-continued.


First nine months


First nine months


First nine months


Ended September 30, 2021


Ended September 30, 2022


Ended September 30, 2022


GAAP


Amortization of


intangible assets


from business


acquisitions


Share-


based


compensati


on


Tax


impacts


Non-GAAP


GAAP


Share-


based


compensati


on


Non-GAAP


GAAP


Share-based


compensation


Non-GAAP


(ii)


RMB


RMB


RMB


RMB


RMB


RMB


RMB


RMB


US$


US$


US$


Cost of revenues


(6,191,911)


51,853


14,548




(6,125,510)


(5,505,369)


12,488


(5,492,881)


(773,933)


1,756


(772,177)


Research and development


(815,757)


3,660


103,268




(708,829)


(733,562)


66,652


(666,910)


(103,123)


9,370


(93,753)


Sales and marketing


(1,944,705)


48,491


59,797




(1,836,417)


(1,666,542)


29,952


(1,636,590)


(234,279)


4,211


(230,068)


General and administrative


(459,443)




171,582




(287,861)


(453,514)


202,448


(251,066)


(63,754)


28,460


(35,294)



Cost and operating expenses



(9,411,816)



104,004



349,195







(8,958,617)



(8,358,987)



311,540



(8,047,447)



(1,175,089)



43,797



(1,131,292)


Income from operations


1,627,063


104,004


349,195




2,080,262


1,218,317


311,540


1,529,857


171,267


43,797


215,064


Net income attributable to


Hello Group Inc.


1,329,010


104,004


349,195


(26,002)


1,756,207


1,086,289


311,540


1,397,829


152,707


43,797


196,504


(ii) Includes tax impacts related to the amortization of intangible assets from business acquisition.



Hello Group Inc.



Unaudited Condensed Segment Report


(All amounts in thousands, except share and per share data)


Three months


Ended September 30, 2022


Momo


Tantan


QOOL


Total


Total


RMB


RMB


RMB


RMB


US$


Net revenues:


Live video service


1,517,872


139,659




1,657,531


233,012


Value-added service


1,336,050


201,616




1,537,666


216,162


Mobile marketing


28,243






28,243


3,970


Mobile games


7,719






7,719


1,085


Other services


1,126




736


1,862


262



Total net revenues



2,891,010



341,275



736



3,233,021



454,491


Cost and expenses (iii):


Cost of revenues


(1,704,934)


(180,277)


(924)


(1,886,135)


(265,149)


Research and development


(176,727)


(68,378)




(245,105)


(34,456)


Sales and marketing


(335,350)


(130,222)


(1,440)


(467,012)


(65,652)


General and administrative


(124,184)


(8,574)


(3,175)


(135,933)


(19,109)



Total cost and expenses



(2,341,195)



(387,451)



(5,539)



(2,734,185)



(384,366)


Other operating income


19,563


1,722


4


21,289


2,993



Income (loss) from operations



569,378



(44,454)



(4,799)



520,125



73,118


Interest income


89,003


187


84


89,274


12,550


Interest expense


(25,010)






(25,010)


(3,516)


Other gain or loss, net


40,403






40,403


5,680



Income (loss) before income tax and share of income on equity



method investments



673,774



(44,267)



(4,715)



624,792



87,832


Income tax expenses


(155,328)


(713)




(156,041)


(21,936)



Income (loss) before share of income on equity method



investments



518,446



(44,980)



(4,715)



468,751



65,896


Share of loss on equity method investments


(18,880)






(18,880)


(2,654)



Net income (loss)



499,566



(44,980)



(4,715)



449,871



63,242


(iii) Share-based compensation was allocated in cost of revenues and operating expenses as follows:


Three months


Ended September 30, 2022


Momo


Tantan


QOOL


Total


Total


RMB


RMB


RMB


RMB


US$


Cost of revenues


1,478


18




1,496


210


Research and development


15,640


6,073




21,713


3,052


Sales and marketing


8,446


7




8,453


1,188


General and administrative


53,272


42




53,314


7,495



Total cost and expenses



78,836



6,140







84,976



11,945



Hello Group Inc.



Reconciliation of GAAP and NON-GAAP Results of Unaudited Segment Report


(All amounts in thousands, except share and per share data)


Three months


Ended September 30, 2022


Momo


Tantan


QOOL


Total


Total


RMB


RMB


RMB


RMB


US$


Income (loss) from operations


569,378


(44,454)


(4,799)


520,125


73,118


Share-based compensation


78,836


6,140




84,976


11,945



Non-GAAP income (loss) from operations



648,214



(38,314)



(4,799)



605,101



85,063


Net income (loss)


499,566


(44,980)


(4,715)


449,871


63,242


Share-based compensation


78,836


6,140




84,976


11,945



Non-GAAP net income (loss)



578,402



(38,840)



(4,715)



534,847



75,187



Hello Group Inc.



Unaudited Condensed Segment Report


(All amounts in thousands, except share and per share data)


Three months


Ended September 30, 2021


Momo


Tantan


QOOL


Total


Total


RMB


RMB


RMB


RMB




US$[1]



Net revenues:


Live video service


1,932,141


234,592




2,166,733


336,272


Value-added service


1,257,158


276,130




1,533,288


237,962


Mobile marketing


43,323






43,323


6,724


Mobile games


8,052






8,052


1,250


Other services


5,589




2,195


7,784


1,208



Total net revenues



3,246,263



510,722



2,195



3,759,180



583,416


Cost and expenses (iv):


Cost of revenues


(1,884,931)


(269,376)


(29,030)


(2,183,337)


(338,849)


Research and development


(194,475)


(66,464)




(260,939)


(40,497)


Sales and marketing


(336,691)


(341,636)


(2,569)


(680,896)


(105,673)


General and administrative


(171,609)


(16,321)


(6,804)


(194,734)


(30,222)



Total cost and expenses



(2,587,706)



(693,797)



(38,403)



(3,319,906)



(515,241)


Other operating income


17,946


3,270


5


21,221


3,293



Income (loss) from operations



676,503



(179,805)



(36,203)



460,495



71,468


Interest income


93,174


356


34


93,564


14,521


Interest expense


(18,669)






(18,669)


(2,897)



Income (loss) before income tax and share of income on



equity method investments



751,008



(179,449)



(36,169)



535,390



83,092


Income tax (expenses) benefits


(143,562)


404




(143,158)


(22,218)



Income (loss) before share of income on equity method



investments



607,446



(179,045)



(36,169)



392,232



60,874


Share of income on equity method investments


3,658






3,658


568



Net income (loss)



611,104



(179,045)



(36,169)



395,890



61,442


(iv) Share-based compensation was allocated in cost of revenues and operating expenses as follows:


Three months


Ended September 30, 2021


Momo


Tantan


QOOL


Total


Total


RMB


RMB


RMB


RMB


US$


Cost of revenues


2,847


3,776




6,623


1,028


Research and development


18,071


11,023




29,094


4,515


Sales and marketing


11,280


16,373




27,653


4,292


General and administrative


77,616


2,294




79,910


12,402



Total cost and expenses



109,814



33,466







143,280



22,237


[1] All translations from RMB to U.S. dollars are made at a rate of RMB6.4434 to US$1.00, the effective noon buying rate for September 30, 2021 as set forth in the H.10 statistical release of the Federal Reserve Board.



Hello Group Inc.



Reconciliation of GAAP and NON-GAAP Results of Unaudited Segment Report


(All amounts in thousands, except share and per share data)


Three months


Ended September 30, 2021


Momo


Tantan


QOOL


Total


Total


RMB


RMB


RMB


RMB


US$


Income (loss) from operations


676,503


(179,805)


(36,203)


460,495


71,468


Share-based compensation


109,814


33,466




143,280


22,237


Amortization of intangible assets from


business acquisitions




33,451




33,451


5,192



Non-GAAP income (loss) from operations



786,317



(112,888)



(36,203)



637,226



98,897


Net income (loss)


611,104


(179,045)


(36,169)


395,890


61,442


Share-based compensation


109,814


33,466




143,280


22,237


Amortization of intangible assets from


business acquisitions




33,451




33,451


5,192


Tax impacts




(8,363)




(8,363)


(1,298)



Non-GAAP net income (loss)



720,918



(120,491)



(36,169)



564,258



87,573



Hello Group Inc.



Unaudited Condensed Segment Report


(All amounts in thousands, except share and per share data)


First nine months


Ended September 30, 2022


Momo


Tantan


QOOL


Total


Total


RMB


RMB


RMB


RMB


US$


Net revenues:


Live video service


4,404,991


381,241




4,786,232


672,838


Value-added service


3,917,609


639,872




4,557,481


640,681


Mobile marketing


92,029






92,029


12,937


Mobile games


50,416






50,416


7,087


Other services


4,298




1,058


5,356


753



Total net revenues



8,469,343



1,021,113



1,058



9,491,514



1,334,296


Cost and expenses (v):


Cost of revenues


(4,981,345)


(522,188)


(1,836)


(5,505,369)


(773,933)


Research and development


(536,640)


(196,922)




(733,562)


(103,123)


Sales and marketing


(1,039,526)


(623,680)


(3,336)


(1,666,542)


(234,279)


General and administrative


(415,954)


(25,335)


(12,225)


(453,514)


(63,754)



Total cost and expenses



(6,973,465)



(1,368,125)



(17,397)



(8,358,987)



(1,175,089)


Other operating income


76,253


9,491


46


85,790


12,060



Income (loss) from operations



1,572,131



(337,521)



(16,293)



1,218,317



171,267


Interest income


280,252


291


218


280,761


39,469


Interest expense


(72,575)






(72,575)


(10,202)


Other gain or loss, net


118,325






118,325


16,634



Income (loss) before income tax and share



of income on equity method investments



1,898,133



(337,230)



(16,075)



1,544,828



217,168


Income tax expenses


(451,061)


(1,799)




(452,860)


(63,662)



Income (loss) before share of income on



equity method investments



1,447,072



(339,029)



(16,075)



1,091,968



153,506


Share of loss on equity method investments


(8,967)






(8,967)


(1,261)



Net income (loss)



1,438,105



(339,029)



(16,075)



1,083,001



152,245


(v) Share-based compensation was allocated in cost of revenues and operating expenses as follows:


First nine months


Ended September 30, 2022


Momo


Tantan


QOOL


Total


Total


RMB


RMB


RMB


RMB


US$


Cost of revenues


5,477


7,011




12,488


1,756


Research and development


51,752


14,900




66,652


9,370


Sales and marketing


29,729


223




29,952


4,211


General and administrative


202,319


129




202,448


28,460



Total cost and expenses



289,277



22,263







311,540



43,797



Hello Group Inc.



Reconciliation of GAAP and NON-GAAP Results of Unaudited Segment Report


(All amounts in thousands, except share and per share data)


First nine months


ended September 30, 2022


Momo


Tantan


QOOL


Total


Total


RMB


RMB


RMB


RMB


US$


Operating income (loss)


1,572,131


(337,521)


(16,293)


1,218,317


171,267


Share-based compensation


289,277


22,263




311,540


43,797



Non-GAAP operating income



(loss)



1,861,408



(315,258)



(16,293)



1,529,857



215,064


Net income (loss)


1,438,105


(339,029)


(16,075)


1,083,001


152,245


Share-based compensation


289,277


22,263




311,540


43,797



Non-GAAP net income (loss)



1,727,382



(316,766)



(16,075)



1,394,541



196,042



Hello Group Inc.



Unaudited Condensed Segment Report


(All amounts in thousands, except share and per share data)


First nine months


Ended September 30, 2021


Momo


Tantan


QOOL


Total


Total


RMB


RMB


RMB


RMB


US$


Net revenues:


Live video service


5,527,851


702,309




6,230,160


966,906


Value-added service


3,606,393


889,666




4,496,059


697,777


Mobile marketing


133,641






133,641


20,741


Mobile games


28,418






28,418


4,410


Other services


9,263




3,949


13,212


2,051



Total net revenues



9,305,566



1,591,975



3,949



10,901,490



1,691,885


Cost and expenses (vi):


Cost of revenues


(5,338,330)


(816,562)


(37,019)


(6,191,911)


(960,970)


Research and development


(595,176)


(220,581)




(815,757)


(126,604)


Sales and marketing


(1,042,458)


(898,612)


(3,635)


(1,944,705)


(301,813)


General and administrative


(471,965)


28,763


(16,241)


(459,443)


(71,304)



Total cost and expenses



(7,447,929)



(1,906,992)



(56,895)



(9,411,816)



(1,460,691)


Other operating income


103,352


34,006


31


137,389


21,322



Income (loss) from operations



1,960,989



(281,011)



(52,915)



1,627,063



252,516


Interest income


283,629


952


125


284,706


44,186


Interest expense


(55,332)






(55,332)


(8,587)


Other gain or loss, net


(18,000)






(18,000)


(2,794)



Income (loss) before income tax and share of



income on equity method investments



2,171,286



(280,059)



(52,790)



1,838,437



285,321


Income tax (expenses) benefits


(533,508)


7,443




(526,065)


(81,644)



Income (loss) before share of income on



equity method investments



1,637,778



(272,616)



(52,790)



1,312,372



203,677


Share of income on equity method investments


5,961






5,961


925



Net income (loss)



1,643,739



(272,616)



(52,790)



1,318,333



204,602


(vi)   Share-based compensation was allocated in cost of revenues and operating expenses as follows:


First nine months


ended September 30, 2021


Momo


Tantan


QOOL


Total


Total


RMB


RMB


RMB


RMB


US$


Cost of revenues


7,812


6,736




14,548


2,258


Research and development


78,259


25,009




103,268


16,027


Sales and marketing


37,157


22,640




59,797


9,280


General and administrative


238,408


(66,826)




171,582


26,629



Total cost and expenses



361,636



(12,441)







349,195



54,194



Hello Group Inc.



Reconciliation of GAAP and NON-GAAP Results of Unaudited Segment Report


(All amounts in thousands, except share and per share data)


First nine months


ended September 30, 2021


Momo


Tantan


QOOL


Total


Total


RMB


RMB


RMB


RMB


US$


Operating income (loss)


1,960,989


(281,011)


(52,915)


1,627,063


252,516


Share-based compensation


361,636


(12,441)




349,195


54,194


Amortization of intangible assets


from business acquisitions




104,004




104,004


16,141



Non-GAAP operating income (loss)



2,322,625



(189,448)



(52,915)



2,080,262



322,851


Net income (loss)


1,643,739


(272,616)


(52,790)


1,318,333


204,602


Share-based compensation


361,636


(12,441)




349,195


54,194


Amortization of intangible assets


from business acquisitions




104,004




104,004


16,141


Tax impacts




(26,002)




(26,002)


(4,035)



Non-GAAP net income (loss)



2,005,375



(207,055)



(52,790)



1,745,530



270,902

Cision
View original content:

https://www.prnewswire.com/news-releases/hello-group-inc-announces-unaudited-financial-results-for-the-third-quarter-of-2022-301697932.html

SOURCE Hello Group Inc.