Hello Group, Inc. Q2 FY2024 earnings call

Momo App - Product and Operational Front: In Q2, product team optimized community ecosystem, improved female user experience, applied AI to help male users generate greeting faces, increased matching rate of active female users. Focused on expanding young user base for online to offline interest group pilot. - Channel Front: User acquisition team implemented ROI-oriented strategies, adjusted advertising materials and channel strategies to focus on female users, worked with KOLs to bring in incremental traffic. Momo app had 7.2 million paying users in Q2. - Live Streaming Revenue: Momo's live streaming revenue was RMB1.22 billion in Q2, down 50% year-over-year but up 6% sequentially. Adjusted value-added services revenue: Excluding Tantan, totaled RMB1.21 billion, down 9% year-over-year but up 5% sequentially. ### Tantan - User Trends and Financials: MAU of Tantan decreased by 6% sequentially to 12.9 million in June. Had 1 million paying users in Q2, down 100,000 sequentially. Total revenue was RMB234 million, down 27% year-over-year and 3% sequentially. - Product and User Acquisition: Conducted branding events, leveraged new media channels; user acquisition team worked to recommend high-end membership products. - Product Upgrades: Redesign focused on guiding users to complete profile info, encouraging learning before swiping. ### New Endeavors: Total revenue of new apps reached RMB355 million in Q2, up 36% year-over-year and 4% sequentially, driven by overseas business. Accelerated localization of overseas business, introduced hot-sell gifts matching local user preferences, refined services for high paying users.

For the second quarter of 2024, total group revenue was RMB2.69 billion, down 14% year-over-year but up 5% sequentially. Adjusted operating income was RMB477 million, down 33% year-over-year and 7% sequentially. Profit margin was 17.7%, down 4.9 percentage points year-over-year and 2.4 percentage points sequentially. Regarding business segments: The total revenue from the Momo app and standalone new apps was RMB2.46 billion, down 30% year-over-year but up 6% sequentially. Adjusted operating income from the Momo app and standalone new app was RMB456 million, down 33% year-over-year and 6% sequentially. For Tantan, total revenue for the quarter was RMB234 million, down 27% year-over-year and 3% sequentially. Adjusted operating income was RMB20.6 million, with a margin of 8.8%, down 1.1 percentage point year-over-year and 3.1 percentage points sequentially.

Third Quarter Guidance: Estimated third quarter revenue to be in the range from RMB2.58 billion to RMB2.68 billion, representing a decrease of 15.2% to 11.9% year-over-year, or a decrease of 4.1% to 0.4% quarter-over-quarter. ### Segment-wise Q3 Guidance: On a sequential basis, expect Momo revenue to decrease mid-to-low single-digit; Tantan revenue to decrease high single-digit. ### Full-Year Outlook: Profit-wise, still on track to hit adjusted operating margin of high-teens for the year and deliver the annual profit target. 2025 revenue depends mainly on macroeconomic and regulatory changes.

Risks: - Macro economy: Weak macroeconomy led to spending softness affecting revenue. - User acquisition: Room to further reduce unit acquisition cost is limited. - Localization: Expansion in MENA region taking longer than anticipated due to need for highly localized service team. - Product upgrades: Negative impact on new user paying conversion from Tantan's product upgrades in short term.

Q: About core Momo, considering current macro and regulation environment, how to build revenue and profit in the second half and sales strategy for live streaming and VAS business in next few years, and whether Momo has chance to achieve topline growth in 2025?

A: Adjusted operating strategy for live streaming and VAS to reduce revenue-oriented competition events, introduced new interactive gamified features. For second half, continue operational adjustments to ecosystem, deemphasize agency-dominated experiences. Momo segment revenues likely to have 10%-12% Y-o-Y decrease in 2024. 2025 revenue depends on macro and regulatory environment.

Q: Regarding overseas business, with good revenue growth momentum in new apps, update overseas progress and financial outlook?

A: Accelerated localization of overseas business, but spent time beefing up local operations in MENA. Q2 overseas piece had 40%-something Y-o-Y growth, likely to slow to mid-30s in back half before live streaming start bearing fruits.

Q: About Tantan, current situation of revamp, ultimate goal and impact on revenue and profitability?

A: Tantan's user base not stabilized, revenues down due to user scale. Revamp aims to return to user experience, adjust interface, optimize user guidance strategy. Allowing short-term fluctuations in user scale and revenue for long-term benefit. Profit for 2024 still expected to be profitable despite likely decrease from first half.