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Momo's (MOMO) Q1 Earnings Beat Estimates, Revenues Fall Y/Y
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Momo (MOMO - Free Report) reported non-GAAP earnings per American Depositary Share (ADS) of 34 cents in first-quarter 2023, beating the Zacks Consensus Estimate by 6.25%. The figure jumped 21.6% from the year-ago quarter’s levels.
Revenues of $410.5 million surpassed the consensus mark of $393.8 million.
In domestic currency, the company reported earnings of RMB2.36 per ADS. Revenues decreased 10.5% year over year to RMB2,818.9 million. The downside was primarily due to pandemic and regulatory factors.
Net revenues from the Momo segment dropped 10.3% on a year-over-year basis to RMB2,510.1 million ($365.5 million), primarily impacted by a revenue decline in live-video service, value-added service and mobile games segments.
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Net revenues from Tantan in the reported quarter fell 11.6% on a year-over-year basis to RMB308.6 million ($44.9 million). This downtick was driven by a loss in its user base, which was affected by factors such as the pandemic, the Chinese New Year and the continued reduction in channel investment.
Segment Details
Live-video service revenues were RMB1,429.3 million (US$208.1 million), down 11.2% year over year. This was impacted by surge in COVID infection and regulatory complexities during the reported quarter.
Value-added service revenues mainly include membership subscription revenues and virtual gift revenues. Revenues declined 8.2% year on year to RMB1,361.5 million (US$198.2 million). The downside was caused by pressure on the Momo application due to the pandemic and Chinese New Year negative seasonality, which impacted traffic and users’ propensity to pay for value added service.
Mobile marketing revenues fell 24.4% year over year to RMB21.1 million (US$3.1 million). This downside resulted from lower demand from advertising and marketing customers.
Mobile games revenues slumped 85.5% year over year to RMB3.7 million (US$0.5 million), primarily due to a decline in the number of quarterly paying users.
User Details
Monthly active users (MAU) on Momo application were 106.5 million March 2023, down 4% year on year.
Total paying users for the Momo platform was 7.8 million, with an 800K net abatement from the previous quarter. This downside was driven by the pandemic and Chinese New Year holiday, which led to soft consumer demand during the reported quarter.
Total paying users of Tantan Limited were 1.6 million in first-quarter 2023 compared with the year-ago quarter’s 2.4 million.
Operating Details
Non-GAAP cost and expenses declined 13.8% year over year to RMB2,337.4 million (US$340.4 million). This was primarily due to a reduction in sales and marketing expenses, reflected in its shift in marketing strategy to control costs.
A decrease in research and development expenses owing to continuous optimization in personnel costs reduced overall expenses.
Non-GAAP research and development (R&D) expenses were down 6.4% year over year to RMB214.4 million ($31.2 million).
Non-GAAP sales & marketing (S&M) expenses declined 35.6% year over year to RMB372 million ($54.2 million).
Additionally, non-GAAP general & administrative expenses rose 2.9% year over year to RMB88.4 million ($12.9 million).
On a non-GAAP basis, the company’s operating income came in at RMB517.8 million ($75.4 million), up 12.4% from the year-ago quarter. The non-GAAP operating margin expanded 374 basis points (bps) from the year-ago quarter to 18.4%, driven by decrease in sales and marketing expenses as well as optimization in personnel costs.
On a non-GAAP basis, operating income of the Momo segment came in at RMB507.5 million (US$73.9 million), down 18.7% from the year-ago quarter’s levels. Non-GAAP operating margin contracted 208 bps from the year-ago quarter’s levels to 20.2%.
On a non-GAAP basis, the reported operating income of the TanTan segment was RMB14.5 million (US$2.1 million), up 109.2% from the year-ago quarter’s figure. The non-GAAP operating margin expanded 4994 bps from the year-ago quarter’s levels to 4.7%.
Balance Sheet & Cash Flow Details
Momo exited the first quarter with cash, cash equivalents, term deposits and short-term investments of RMB10,872.2 million (US$1.58 billion) compared with the prior quarter’s RMB10,618.4 million (US$1.54 billion).
Cash flow from operations was RMB451.1 million (US$65.7 million) compared with the RMB538.7 million (US$78.1 million) recorded in the prior quarter.
Guidance
For second-quarter 2023, revenues are anticipated between RMB3 billion and RMB3.1 billion, indicating a decrease of 3.5-0.3% year over year.
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Momo's (MOMO) Q1 Earnings Beat Estimates, Revenues Fall Y/Y
Momo (MOMO - Free Report) reported non-GAAP earnings per American Depositary Share (ADS) of 34 cents in first-quarter 2023, beating the Zacks Consensus Estimate by 6.25%. The figure jumped 21.6% from the year-ago quarter’s levels.
Revenues of $410.5 million surpassed the consensus mark of $393.8 million.
In domestic currency, the company reported earnings of RMB2.36 per ADS. Revenues decreased 10.5% year over year to RMB2,818.9 million. The downside was primarily due to pandemic and regulatory factors.
Net revenues from the Momo segment dropped 10.3% on a year-over-year basis to RMB2,510.1 million ($365.5 million), primarily impacted by a revenue decline in live-video service, value-added service and mobile games segments.
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Net revenues from Tantan in the reported quarter fell 11.6% on a year-over-year basis to RMB308.6 million ($44.9 million). This downtick was driven by a loss in its user base, which was affected by factors such as the pandemic, the Chinese New Year and the continued reduction in channel investment.
Segment Details
Live-video service revenues were RMB1,429.3 million (US$208.1 million), down 11.2% year over year. This was impacted by surge in COVID infection and regulatory complexities during the reported quarter.
Value-added service revenues mainly include membership subscription revenues and virtual gift revenues. Revenues declined 8.2% year on year to RMB1,361.5 million (US$198.2 million). The downside was caused by pressure on the Momo application due to the pandemic and Chinese New Year negative seasonality, which impacted traffic and users’ propensity to pay for value added service.
Mobile marketing revenues fell 24.4% year over year to RMB21.1 million (US$3.1 million). This downside resulted from lower demand from advertising and marketing customers.
Mobile games revenues slumped 85.5% year over year to RMB3.7 million (US$0.5 million), primarily due to a decline in the number of quarterly paying users.
User Details
Monthly active users (MAU) on Momo application were 106.5 million March 2023, down 4% year on year.
Total paying users for the Momo platform was 7.8 million, with an 800K net abatement from the previous quarter. This downside was driven by the pandemic and Chinese New Year holiday, which led to soft consumer demand during the reported quarter.
Total paying users of Tantan Limited were 1.6 million in first-quarter 2023 compared with the year-ago quarter’s 2.4 million.
Operating Details
Non-GAAP cost and expenses declined 13.8% year over year to RMB2,337.4 million (US$340.4 million). This was primarily due to a reduction in sales and marketing expenses, reflected in its shift in marketing strategy to control costs.
A decrease in research and development expenses owing to continuous optimization in personnel costs reduced overall expenses.
Non-GAAP research and development (R&D) expenses were down 6.4% year over year to RMB214.4 million ($31.2 million).
Non-GAAP sales & marketing (S&M) expenses declined 35.6% year over year to RMB372 million ($54.2 million).
Additionally, non-GAAP general & administrative expenses rose 2.9% year over year to RMB88.4 million ($12.9 million).
On a non-GAAP basis, the company’s operating income came in at RMB517.8 million ($75.4 million), up 12.4% from the year-ago quarter. The non-GAAP operating margin expanded 374 basis points (bps) from the year-ago quarter to 18.4%, driven by decrease in sales and marketing expenses as well as optimization in personnel costs.
On a non-GAAP basis, operating income of the Momo segment came in at RMB507.5 million (US$73.9 million), down 18.7% from the year-ago quarter’s levels. Non-GAAP operating margin contracted 208 bps from the year-ago quarter’s levels to 20.2%.
On a non-GAAP basis, the reported operating income of the TanTan segment was RMB14.5 million (US$2.1 million), up 109.2% from the year-ago quarter’s figure. The non-GAAP operating margin expanded 4994 bps from the year-ago quarter’s levels to 4.7%.
Balance Sheet & Cash Flow Details
Momo exited the first quarter with cash, cash equivalents, term deposits and short-term investments of RMB10,872.2 million (US$1.58 billion) compared with the prior quarter’s RMB10,618.4 million (US$1.54 billion).
Cash flow from operations was RMB451.1 million (US$65.7 million) compared with the RMB538.7 million (US$78.1 million) recorded in the prior quarter.
Guidance
For second-quarter 2023, revenues are anticipated between RMB3 billion and RMB3.1 billion, indicating a decrease of 3.5-0.3% year over year.
Zacks Rank & Other Stocks to Consider
Currently, Momo carries a Zacks Rank #2 (Buy).
Some other top-ranked stocks in the broader sector are NVIDIA (NVDA - Free Report) , ServiceNow (NOW - Free Report) and Meta Platforms (META - Free Report) , each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The long-term earnings growth rate for NVIDIA, ServiceNow and Meta Platforms is currently pegged at 23.02%, 25.18% and 21.93%, respectively.