Hello Group Inc. (MOMO) Q4 2025 Earnings Call Transcript

Access earnings results, analyst expectations, report, slides, earnings call, and transcript.

Overview

The earnings call reveals mixed outcomes. While overseas revenue growth is strong, domestic revenue faces challenges due to tax policies. The company is focusing on cost control and efficiency measures, which may stabilize profit margins. However, the lack of precise guidance and potential geopolitical risks in the MENA region introduce uncertainties. The market cap of $1.11 billion suggests moderate sensitivity to these factors, leading to a neutral prediction for stock price movement.

Key Financial Performance

Total Group Revenue (Q4 2025) RMB 2.58 billion, down 2% year-over-year. The decline was attributed to a decrease in domestic revenue despite strong overseas revenue growth.

Domestic Revenue (Q4 2025) RMB 1.97 billion, down 14% year-over-year. The decline was due to heightened tax scrutiny, softened consumer sentiment, and a decline in paying users on Tantan.

Overseas Revenue (Q4 2025) RMB 608 million, up 70% year-over-year. The growth was driven by the rapid expansion of multiple social entertainment and dating brands.

Adjusted Operating Income (Q4 2025) RMB 354 million, up 26% year-over-year with a margin of 13.7%. The increase was due to cost control measures and a shift towards higher-margin revenue streams.

Total Group Revenue (Fiscal 2025) RMB 10.37 billion, a slight decrease of less than 2% year-over-year. The decline was due to a drop in domestic revenue, partially offset by strong overseas revenue growth.

Domestic Revenue (Fiscal 2025) RMB 8.37 billion, down 11% year-over-year. The decline was attributed to macroeconomic softness and tax regulations affecting high-value users.

Overseas Revenue (Fiscal 2025) RMB 2 billion, up 71% year-over-year. The growth was fueled by audio and video social products in the MENA region and strategic acquisitions.

Adjusted Operating Income (Fiscal 2025) RMB 1.55 billion, down 10% year-over-year with a margin of 15%. The decline was due to increased costs in overseas operations and macroeconomic pressures.

Momo VAS Revenue (Q4 2025) RMB 1.68 billion, down 14% year-over-year. The decline was mainly due to new tax regulations and stricter enforcement dampening high-grossing streamers' motivation.

Tantan Domestic Revenue (Q4 2025) RMB 136 million, down RMB 41 million year-over-year. The decline was a result of reduced channel investments, though steady ARPU growth partially offset the impact.

Overseas VAS Revenue (Q4 2025) RMB 604.4 million, up 70% year-over-year. The growth was driven by the expansion of social entertainment and dating brands.

Non-GAAP Gross Margin (Q4 2025) 37.8%, compared to 34.7% in Q4 2024. The increase was due to a shift towards higher-margin revenue streams and reduced revenue share to content providers.

Non-GAAP Operating Income (Q4 2025) RMB 354.1 million, representing a margin of 13.7%, up from 10.6% in Q4 2024. The increase was due to cost control measures and higher-margin revenue streams.

Non-GAAP R&D Expenses (Q4 2025) RMB 203.9 million, down 4% year-over-year. The decrease was attributed to optimization of engineering personnel.

Non-GAAP Sales and Marketing Expenses (Q4 2025) RMB 339.9 million, up from RMB 311.7 million in Q4 2024. The increase was driven by marketing investments in overseas apps, partially offset by cost control in domestic businesses.

Non-GAAP G&A Expenses (Q4 2025) RMB 85.7 million, down from RMB 117.6 million in Q4 2024. The decrease was due to a high base in Q4 2024 caused by legal provisions and due diligence costs.

Net Cash Provided by Operating Activities (Q4 2025) RMB 549.7 million. The cash flow was supported by stable operations and cost control measures.

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Operating Highlights

AI greeting and chat assist models: Upgraded to help users break the ice with personalized messages and keep conversations going. Adoption rate of AI features significantly boosted.

Real-time chat scenario optimization: Improved matching accuracy and smoother interactions, leading to increased two-way and in-depth chats.

New apps in MENA region: Yaha Live and Amar began monetization at the end of 2024, driving revenue growth.

MiraiMind in Japan: AI-powered anime-style companion app with strong reception and expansion opportunities.

Tantan International separation: Separated domestic and overseas versions for tailored international experience.

Acquisition of Happn: Acquired European dating product, driving overseas revenue growth.

Overseas revenue growth: Increased by 71% year-over-year in 2025, now accounting for 19% of total revenue. Key regions include MENA, Europe, Turkey, and South America.

Expansion in MENA region: Audio and video social products driving growth, with plans to strengthen regional operations.

Entry into new markets: Acquisitions and tailored strategies enabled penetration into Europe, Turkey, and South America.

Cost optimization: Reduced marketing spend in Mainland China while increasing ROI in overseas markets.

Revenue diversification: Shifted focus to higher-margin audio and video scenarios, stabilizing gross margins.

Improved ARPU and ROI: Achieved ARPU growth and high ROI through product upgrades and cost control.

Focus on overseas growth: Overseas business identified as a key growth engine, with a multiproduct strategy and strategic acquisitions.

Tantan's Asian dating focus: Enhanced dating experience and business model tailored for Asian users.

Dividend payout: USD 0.28 per ADS, totaling USD 42.6 million, reflecting stable operations and shareholder value creation.

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Risk or Challenges

Domestic Revenue Decline: Domestic revenue decreased by 14% year-over-year in Q4 2025 and 11% for the full year, attributed to macroeconomic pressures, tax regulations, and reduced consumer sentiment.

Tax Regulations Impact: New tax regulations and stricter enforcement significantly dampened the motivation of high-grossing streamers and agencies, leading to a decline in Momo's VAS revenue.

Paying Users Decline: Momo and Tantan experienced a decline in paying users, with Tantan's paying users dropping from 700,000 to 600,000 in Q4 2025, impacting revenue.

Marketing Cost Reductions: Reductions in marketing spend for Momo and Tantan led to user acquisition challenges and declines in paying users, though it improved ROI.

Overseas Localization Challenges: Slower localization efforts in overseas markets, particularly for SoulChill, hindered growth and delayed expansion into wealthier regions.

Economic Environment: Broad macroeconomic pressures softened consumer sentiment, particularly among high-value users, affecting revenue.

Operational Costs: Increased personnel costs and payment channel costs in overseas markets posed headwinds to gross margins.

Revenue Concentration Risk: The company’s reliance on a few key regions and products, such as MENA and SoulChill, poses risks if these markets underperform.

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Guidance & Outlook

Revenue Projections: The company estimates Q1 2026 revenue to range from RMB 2.3 billion to RMB 2.4 billion, representing a year-over-year decrease of 8.8% to 4.8%. Mainland China business revenue is expected to decline by mid- to high teens percentage-wise, while overseas revenue is projected to grow by high 40s percentage-wise.

Overseas Business Growth: The overseas business is expected to remain a key driver of growth, with plans to solidify market position in the MENA region, enter high-potential new markets, and maximize synergies across core business segments. The company aims to strengthen regional operations and expand into high-growth areas.

Tantan's Financial Outlook: Tantan is expected to generate around RMB 100 million in annual operating profit for the foreseeable future, focusing on long-term user retention and providing a better dating experience tailored for Asian users.

Strategic Acquisitions: The company plans to leverage recent acquisitions, such as Happn, to penetrate untapped markets in Europe, Turkey, and South America, and bring premium global brands into Asian markets to create synergies.

Product and Market Expansion: The company will continue to focus on AI-driven product enhancements, regional market penetration, and tailored international experiences to drive growth in 2026.

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Shareholder Return Plan

Special Cash Dividend: The Board has approved a special cash dividend of USD 0.28 per ADS, amounting to a total cash payment of approximately USD 42.6 million. This represents about 30% of the adjusted net income contributed to Hello Group Inc. in 2025. This marks the eighth consecutive year of dividends, reflecting stable operations and a commitment to creating long-term value for shareholders.

Share Repurchase: The company engaged in ongoing repurchases of its own shares throughout 2025, contributing to the decrease in cash reserves.

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Key Q&A

Q:Can management provide some color about the trend for domestic revenue this year? What are the measures undertaken on this cash cow business? When should we expect domestic revenue to start declining year-on-year and stabilize?

A:Management highlighted that while 2025 revenue hit targets, challenges arose in the second half due to new tax policies. They shifted focus to small-ticket spenders and improved AI tools, adding 400,000 new paying users in H2 2025. For 2026, they expect revenue pressures similar to 2025 but aim to maintain profit stability through cost-cutting and efficiency measures. They anticipate a moderation in revenue decline in H2 2026, potentially narrowing the decline rate to below 10% by Q4 if external conditions stabilize.

Q:Could management share more color on the revenue contribution from MENA, specifically for audio and video products, new apps, and SoulChill? What kind of sales are we looking at for each of these? How should we think about the growth trend of overseas revenue in 2026? Also, has the recent geopolitical situation in the Mid East had any impact on the operations in the region? When do you expect overseas operations to start contributing meaningful profit?

A:Overseas revenue reached RMB 2 billion in 2025, with SoulChill contributing over half. New MENA products, Yaha Live and Amar, are scaling rapidly and will drive growth in 2026. Management expects overseas revenue to grow to RMB 3 billion in 2026. The geopolitical situation in the Middle East has had limited impact so far but could affect expansion plans if it escalates. Overseas operations remain in the investment phase, with profitability expected for Yaha Land in 2026 and Amar shortly after. Mature apps like SoulChill are already profitable, but investments in new markets and products continue.

Q:Should we interpret the stable Q4 gross margin as an indication that group gross margin in 2026 could remain broadly at the Q4 2025 level? Does the projected domestic revenue decline and overseas revenue growth suggest overall revenue for 2026 could be roughly flat? Could you provide directional guidance on profitability for 2026?

A:Management indicated that Q4 2025 gross margin stability was due to better-than-expected domestic and overseas performance. They expect 2026 gross margin to remain stable around Q4 2025 levels, with potential variability. Group revenue for 2026 is expected to be flat or slightly down, with domestic revenue declining in low to mid-teens and overseas revenue growing to RMB 3 billion. Operating margin is projected to be above 10%, likely in the low teens, balancing profitability with disciplined investment.

Q:Review of Unclear Management Responses

A:Management avoided providing precise quantitative guidance for overseas revenue growth in 2026, citing uncertainties across markets and sectors. They also did not give a clear timeline for when overseas operations would become fully profitable, emphasizing flexibility and disciplined investment instead.

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Earnings Word Cloud

The most frequently occurring keywords in this quarter's earning call

MOMO Transcript

Hello Group Inc. (MOMO) Q4 2025 Earnings Call Transcript

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Hello Group Inc. (MOMO) Q3 2025 Earnings Call Transcript

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The earnings call reveals a decline in domestic revenue and margins, despite strong overseas growth. The Q&A highlights management's lack of clarity on key metrics and an expected decline in domestic revenue and profitability. The company's cautious guidance and regulatory challenges further contribute to a negative outlook. Given the small market cap, the stock is likely to react negatively, with a predicted decline of -2% to -8%.

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The earnings report presents a mixed picture: overseas revenue is growing strongly, but domestic revenue is declining. Despite some operational improvements, financial metrics like adjusted operating income and gross margin are down. The Q&A reveals uncertainty about consumer sentiment and tax impacts, which could weigh on future performance. However, the strong overseas growth and AI investments provide some positive outlook. Given the company's small market cap, the stock may react more strongly, but the mixed signals suggest a neutral overall sentiment, with potential for slight fluctuations.

Hello Group Inc. (MOMO) Q1 2025 Earnings Call Transcript

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The earnings call reveals several negative factors: declining domestic revenue, competitive pressures, and regulatory risks. Despite overseas growth, the guidance indicates further revenue decline. The Q&A highlights concerns over unclear management guidance and political instability affecting user sentiment. Although there's a special dividend, the lack of a share repurchase program and increased operational costs negatively impact sentiment. Given the small market cap, these factors likely lead to a negative stock price reaction.

MOMO Report

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