Momo Inc. Stock Earnings Reports

Q4 & FY 2024 Earnings Call

Financial Overview:

• Total revenue for Q4 2024 was RMB 2.64 billion, a decline of 12% year-over-year.
• Adjusted operating income for Q4 was RMB 280 million, yielding a margin of 10.6%.
  • Excluding film production costs, it would have been RMB 374 million with a margin of 14.2%.
• For FY 2024, total revenue decreased to RMB 10.6 billion from RMB 12 billion, with adjusted operating income of RMB 1.173 billion (16.3% margin).

Business Segments Performance:

• Momo App: Revenue decreased 16% year-over-year, primarily due to proactive product adjustments and a weak macroeconomic environment; however, standalone new apps saw a 40% revenue increase.
• Tantan App: Revenue fell by 22% year-over-year due to a decrease in the number of paying users and overall declining user engagement.
• New International Apps: Revenue grew by 37% year-over-year (RMB 416 million) due to successful expansion in overseas markets, especially within the MENA region.

Strategic Outlook:

• Management intends to maintain the productivity of the Momo app through operational adjustments and focus on profitability.
• For Tantan, there will be a shift towards reducing user acquisition costs and improving product experience, even if it leads to a temporary decline in user numbers and revenues.
• The company plans to continue focusing on the international market expansion, especially with Soulchill and the new apps Yaahlan and AMAR, which showed promising early revenues.

Dividend and Share Buyback Policy:

• The Board approved a special dividend of $0.30 per ADS, marking the seventh consecutive year of dividend payments. However, management does not plan to formalize this into a regular policy.
• The preference is for flexibility in capital allocation, allowing for potential investments or buybacks instead of rigid dividend commitments.

Guidance for 2025:

• Management estimates continued revenue decline in the cash cow Momo segment but expects overseas business to grow significantly, narrowing overall declines at the group level.
• The first quarter revenue forecast is between RMB 2.4 billion and RMB 2.5 billion, with ongoing macroeconomic uncertainties.

Conclusions:

Investors should be mindful of the company's proactive approach to profitability, particularly through cost reductions and optimization, despite headwinds in user acquisition. The focus on overseas expansion and innovations with new apps offers potential growth avenues that may offset domestic challenges. Continued cash returns indicate a commitment to shareholder value, but with an emphasis on flexible capital deployment strategies.