Hello Group Inc. Q1 FY2026 earnings call

- Strategic Priorities - Momo: Maintain stable, sustained productivity as the group's cash cow business - Tantan: Continue exploring Asian user-tailored dating experiences and an efficient business model - New overseas businesses: Deepen global presence, enrich brand portfolio, and build a long-term growth engine

- Momo Operational Updates - Refined chat experience: The Not-Lock feature optimized matching algorithms by analyzing historical chat patterns to improve connection accuracy, and added video features to real-time chat interactions, improving existing user retention - Expanded AI innovation: Launched AI greetings, AI chat assist, and new voice-driven AI features to help users complete voice profiles and auto-generate content, improving female user experience and overall conversation depth - User acquisition: Channel ROI turned fully profitable at the start of 2026; acquisition spend maintained a disciplined approach, narrowing slightly QoQ - Seasonal impact mitigation: Targeted Chinese New Year operations narrowed the user activity decline vs past holidays, and post-holiday recovery was stronger than YoY - Compliance response: Rolled out a new incentive revenue sharing policy to support quality mid-tier and long-tail agencies facing profit pressure from tax compliance adjustments

- Tantan Operational Updates - Product optimization: Implemented restricted matching for female users to improve social experience, driving a 3 percentage point increase in average swipes per female user and improved retention; piloted AI chat assist and new match-based social features - User acquisition: Maintained strategic marketing cuts, narrowed unit acquisition cost meaningfully; organic traffic outperformed channel traffic, so overall user base decline was smaller than expected; channel ROI remained above 100% throughout the quarter - Monetization adjustment: Unbundled membership features into stand-alone offerings and enriched in-app promotions to offset membership headwinds from Alipay policy changes

- Overseas Operational Updates - MENA market: Two new products Yahalan and Amar maintained rapid triple-digit YoY growth, with narrowing losses; Yahalan is approaching net income break-even, and Amar achieved positive marginal contribution for the first time - Developed market dating business: Panda International completed migration to a standalone overseas app with minimal revenue impact; Happn maintained stable user base and grew revenue from improved conversion efficiency, and began testing expansion into new markets

- Financial Performance - Adjusted non-GAAP operating income was 349.2 million RMB, up 1% YoY, with an operating margin of 14.6% (up 0.9 percentage points YoY) - Non-GAAP gross margin was 38.8%, up 0.9 percentage points YoY, driven by improved MENA product margins and a higher mix of higher-margin overseas products, partially offset by lower Momo margins from increased agency payouts - Non-GAAP R&D expenses decreased 11% YoY to 165.2 million RMB (7% of total revenue, unchanged YoY) due to personnel structure optimization - Non-GAAP sales and marketing expenses increased 4% YoY to 335.4 million RMB (13% of total revenue), driven by higher marketing investment in new overseas apps, partially offset by domestic cost control - Non-GAAP net income attributable to shareholders was 328.8 million RMB, compared to 403.8 million RMB in Q1 2025

Hello Group's total Q1 2026 revenue was 2.39 billion RMB, down 5% year-over-year (YoY) and 7% quarter-over-quarter (QoQ). - Momo: Q1 revenue was 1.52 billion RMB, down 15% YoY and 9% QoQ, accounting for 63.6% of total group revenue. The YoY decline stemmed from ongoing impacts of new 2025 H2 tax regulation and stricter enforcement, while the QoQ decline was driven by Chinese New Year seasonal effects and soft consumer sentiment. - Tantan (Domestic): Q1 revenue was 125 million RMB, down 25% YoY and 8% QoQ, accounting for 5.2% of total group revenue. As of quarter-end, Tantan had 0.6 million paying users, a 30,000 QoQ decrease. The decline was driven by ongoing MAU contraction and short-term pressure from Alipay's auto-renewal rule changes on membership conversions. Net profit grew significantly YoY due to ongoing cost cuts. - Overseas New Businesses: Total Q1 overseas revenue was 597 million RMB, up 44% YoY and down 2% QoQ, accounting for 25% of total group revenue (up from 16% YoY). Yahalan and Amar (MENA region) delivered triple-digit YoY revenue growth, with improved profitability. SoChill faced external headwinds that caused a sequential revenue decline; excluding SoChill, other overseas businesses grew healthily. Panda International completed standalone app migration with 99% of paying users successfully transferred. Happn maintained stable user base and delivered YoY/sequential revenue growth from improved conversion efficiency.

- Q2 2026 total revenue is expected to be in the range of 2.45 billion RMB to 2.55 billion RMB, representing a YoY decline of 2.7% to 6.5%. At the midpoint, mainland China revenue is expected to decline by a high-teens percentage YoY, while overseas revenue is expected to grow by a high-fifties percentage YoY. - 2026 full-year overseas revenue is still expected to hit the 3 billion RMB milestone, with a potential variation of ±100 million RMB based on market expansion progress, unchanged from prior guidance. - For 2026 full-year domestic revenue, management revised the outlook from a prior low-teens YoY decline to a mid-teens YoY decline, due to additional first-half disruption from tightened tax scrutiny. The YoY decline rate is expected to narrow meaningfully to below 15% in the second half of 2026 as regulatory impacts normalize and easier comparison bases set in. - 2026 full-year group total revenue is expected to see a slight YoY decline of a couple of percentage points. The full-year adjusted operating margin target of low teens remains achievable, though absolute profit is lower than initial guidance due to lower top-line projections; management will optimize discretionary spending across personnel, marketing and operations to hit profitability targets. - Momo agency revenue impacted by tax regulation is expected to return to normal levels by Q3 2026. - Yahalan is expected to achieve net profitability within one quarter, and Amar is expected to reach net profitability approximately six months after Yahalan.

- Strengthened tax regulation and enforcement for domestic live streaming agencies created ongoing top-line pressure on Momo, with additional tightening in early 2026 causing revenue declines in March and April 2026. - Alipay's auto-renewal billing rule changes created short-term pressure on Tantan's domestic membership conversion and renewal, leading to some subscriber churn in Q1. - Turkey tightened regulation of social and live streaming products, leading to the temporary blanket removal of SoChill from app stores, creating headwinds for new user acquisition and Q1 revenue. - Ongoing geopolitical conflicts in the Middle East dragged on SoChill's revenue in the Gulf region. - Seasonal softening of consumer sentiment during Ramadan negatively impacted SoChill's Q1 performance, as a mature large-scale product. - Persistently soft overall domestic consumer sentiment creates ongoing headwinds for domestic paying user growth and average spending. - SoChill's Q1 performance is expected to remain below original full-year expectations in the first half of 2026, even as it begins recovery.

Q: What caused SoChill's Q1 challenges in MENA, when will new MENA products turn profitable, and is the full-year 2026 overseas revenue outlook maintained? / A: SoChill's sequential decline stemmed from three factors: Turkish regulatory tightening that removed the app from stores, Ramadan seasonal softness, and ongoing Middle East conflicts dragging Gulf revenue. Management is confident SoChill complies with Turkish rules, is working to restore access, and accelerating other market localization to offset the impact; the business has already started recovering from Q1 lows. The two new MENA products had triple-digit YoY growth with narrowing losses. Yahalan is expected to hit net profitability within one quarter, with Amar about six months behind; investment will be scaled selectively based on ROI to keep losses narrowing while expanding. Management maintains the full-year 2026 overseas revenue target of ~3 billion RMB, with a ±100 million RMB variation range.

Q: When will the tax impact on Momo be fully digested, what is the scope and duration of Alipay's auto-renewal impact, and what is the full-year domestic revenue outlook? / A: Additional tax tightening in early 2026 hit agency revenue in March and April; after rolling out new incentive support for quality compliant agencies in May, performance has rebounded rapidly, and is expected to return to normal by Q3. Alipay's changes only impacted Tantan's domestic subscription membership business, causing temporary renewal headwinds and churn; Momo's consumable virtual gift model and overseas payment rails are unaffected. Management expects the impact to be concentrated in H1 2026, improving in H1 as payment channels are diversified. The full-year domestic revenue decline is revised to mid-teens YoY from the prior low-teens guide, with the decline narrowing to below 15% YoY in H2 2026.

Q: What is Hello Group's AI product roadmap, how will AI impact long-term performance and near-term profitability, and what is the 2026 full group profitability outlook? / A: AI lowers social connection barriers, which is core to the group's social product mission, and is advancing along two paths: 1) incremental improvements to existing products via AI-assisted chat, AI voice profile tools and other ice-breaking features for users with weaker social skills; 2) enabling entirely new product formats, such as the fully AI-powered domestic voice social product Donut, and AI role-play dating app Milai Mind that is expanding across Asian markets after strong early results in Japan. AI investment is high-return, as it directly improves user experience and willingness to pay; the company will reuse existing AI tech stacks across new use cases to maximize investment returns. The full-year adjusted operating margin target of low teens remains achievable, though absolute profit is lower than initial guidance due to lower top-line projections; management will optimize discretionary spending across the business to hit the target.