In the third quarter of 2020, the net profit attributable to Momo’s parent company was 653.8 million yuan (approximately US$96.3 million), which was profitable for 23 consecutive quarters.
Editor’s note: This article is from “Tencent Technology”, reprinted with authorization.
News on December 1, Momo (Nasdaq: MOMO) announced the third quarter of 2020 Unaudited financial performance. The financial report shows that in the third quarter of 2020, Momo’s net revenue reached 3.766.7 billion yuan (approximately US$554.8 million), which is not measured in accordance with the US GAAP. The net profit attributable to Momo’s parent company in the third quarter of 2020 was 653.8 million Yuan (approximately US$96.3 million), profitable for 23 consecutive quarters.
According to data compiled by Bloomberg, 11 Wall Street analysts on average predict that Momo’s revenue in the third quarter of 2020 will be 3.71 billion. The financial report shows that Momo’s revenue for the third quarter of 2020 was 3.766.7 billion yuan (approximately $554.8 million), exceeding Wall Street expectations.
2020 Third Quarter Results Summary
Net revenue reached 3.766.7 billion yuan (approximately $554.8 million).
The net profit attributable to Momo’s parent company is 456.7 million yuan (approximately US$667.3 million), which is not measured in accordance with US GAAP, and the net profit attributable to Momo’s parent company is 653.8 million yuan (approximately US$96.3 million) .
The diluted net profit per American Depositary Share (ADS) was 2.11 yuan (about 0.31 US dollars), compared with 4.04 yuan in the same period last year. Not in accordance with US GAAP, the diluted net profit per American Depository Share (ADS) was 2.98 yuan (approximately US$0.44), compared to 4.90 yuan in the same period last year.
In September 2020, the monthly active users of the Momo Main App were 113.6 million.
In the third quarter of 2020, Momo’s live broadcast serviceThe total number of paid users of service and value-added services after deduplication reached 13.1 million (including Tantan 4.1 million paid users).
Summary of financial performance for the first nine months of 2020
Net revenue reached 11.229 billion yuan (about 1.653.9 billion US dollars).
Net profit attributable to Momo’s parent company was 1.452 billion yuan (approximately US$213.9 million), compared with 1.915 billion yuan in the same period last year. The net profit attributable to Momo’s parent company is 2.0598 billion yuan (approximately US$303.4 million).
The diluted net profit per American Depositary Share (ADS) was 6.68 yuan (approximately US$0.98), compared with 8.76 yuan in the same period last year. Not in accordance with US GAAP, the diluted net profit per American Depository Share (ADS) was 9.36 yuan (about 1.38 US dollars), compared with 14.65 yuan in the same period of the previous year.
Executive Comments
Momo CEO Wang Li said: “The third quarter of 2020 is a busy quarter. Thanks to the commitment of the management and the unremitting efforts of the team, the structural reform of Momo’s main App live broadcast business has made initial progress. The key quantitative indicators to judge the health of the ecosystem have begun to show signs of improvement. With the gradual improvement of the content ecology, the flow of non-competition days has also increased compared with the trough period. Although we still have a lot of work to do in this regard, But the current achievements mean that our live broadcast business has steadily entered a benign track of ecological improvement driving income recovery.”
2020 third quarter financial results
Net Revenue
Net revenue in the third quarter of 2020 was 3.766.7 billion yuan (approximately US$554.8 million), compared with 4.4516 billion yuan in the same period last year.
In the third quarter of 2020, Momo’s live broadcast service revenue was 2.378 billion yuan (approximately US$349.8 million), compared with the same period last year.Compared with 3.275.4 billion yuan, it was reduced by 27%. The revenue of live streaming services declined, mainly due to structural reforms in the live streaming business of Momo’s main App to revitalize the long-tail content ecosystem, and to a lesser extent due to the impact of the new crown pneumonia epidemic on paying users, especially high-paying users The negative impact of consumer willingness. The growth of Tantan’s live broadcast service revenue partially offset the pressure from the above two factors. In the third quarter of 2020, Tantan’s live broadcast service revenue was 396.7 million yuan (approximately $58.4 million).
In the third quarter of 2020, revenue from value-added services reached 1.3308 billion yuan (approximately US$196 million), an increase of 25% from the previous year’s 1.0646 billion yuan. Value-added business revenue mainly includes virtual gift revenue and membership subscription service revenue. The increase in revenue from value-added services is mainly due to the fact that Momo has launched more innovative products and introduced more payment solutions to enhance users’ social experience, which has promoted the continued growth of Momo App’s virtual gift business, and to a lesser extent. Affected by the income growth of Tantan members.
Mobile marketing revenue in the third quarter of 2020 will be 50.4 million yuan (approximately US$7.4 million), and mobile game revenue in the third quarter of 2020 will be 8 million yuan (approximately US$1.2 million).
In the third quarter of 2020, the net revenue of Momo’s main app decreased from 4.138.9 billion yuan in the third quarter of 2019 to 3.037 billion yuan (approximately US$447.3 million). This was mainly due to the decrease in net revenue from live broadcast services. But the increase in net revenue from value-added services partially offset this impact. In the third quarter of 2020, Tantan’s net revenue increased from 310 million yuan in the third quarter of 2019 to 728.9 million yuan (approximately US$107.4 million). This was mainly due to the increase in net revenue from live broadcast services, and to a lesser extent. Explore the impact of net revenue growth in value-added services.
Cost and Expenses
Costs and expenditures for the third quarter of 2020 were 3.258.5 billion yuan (approximately US$479.9 million), a 6.6% decrease from 3.487 billion yuan in the same period of the previous year. The reduction in cost and expenditure is mainly due to:
1. The share with the anchors who provide live broadcast services is reduced;
2. Reduction in personnel-related expenses, professional expenses and infrastructure-related expenses, such as broadband costs and server depreciation expenses. The increase in marketing and promotion costs to attract users to Tantan and the increase in revenue sharing from virtual gift services partially offset this decrease.
In the third quarter of 2020, the costs and expenditures were 3.052 billion yuan (approximately US$449.5 million), which were not measured in accordance with US GAAP, which was a decrease of 7.1% from the 3.284 billion yuan in the same period of the previous year.
Operating Profit
2020Operating profit in the third quarter was 531.1 million yuan (approximately US$78.2 million), compared with 993.1 million yuan in the same period last year. In the third quarter of 2020, Momo’s main App’s operating profit was 658.7 million yuan (approximately US$97 million), compared with 1.2272 billion yuan in the same period last year. In the third quarter of 2020, Tantan’s operating loss was 121.5 million yuan (approximately US$17.9 million), compared with an operating loss of 228.7 million yuan in the same period last year.
Not measured in accordance with US GAAP, operating profit for the third quarter of 2020 was 737.6 million yuan (approximately US$108.6 million), compared with 1.196.9 billion yuan in the same period last year. Not measured in accordance with US GAAP, the operating profit of Momo Main App in the third quarter of 2020 was 805.8 million yuan (approximately US$118.7 million), compared with 1.3641 billion yuan in the same period last year. Not measured in accordance with US GAAP, Tantan’s operating loss in the third quarter of 2020 was 64.7 million yuan (approximately US$9.5 million), compared with an operating loss of 164.4 million yuan in the same period last year.
Income Tax Expenses
In the third quarter of 2020, income tax expenses were 143.6 million yuan (approximately 21.2 million U.S. dollars), compared with 182.6 million yuan in the same period last year. The decrease in income tax expenses was mainly due to the decrease in profit in the third quarter of 2020.
Net profit
Net profit in the third quarter of 2020 was 456.0 million yuan (approximately US$67.2 million), compared with 890.8 million yuan in the same period last year. In the third quarter of 2020, the net profit of Momo Main App was 576.2 million yuan (approximately US$84.9 million), compared with 1.11102 billion yuan in the same period of the previous year. In the third quarter of 2020, Tantan’s net loss was 114.2 million yuan (approximately US$16.8 million), compared with a net loss of 214.1 million yuan in the same period last year.
Not measured in accordance with US GAAP, net profit for the third quarter of 2020 was 653.1 million yuan (approximately US$96.2 million), compared with 1.0849 billion yuan in the same period last year. Not measured in accordance with US GAAP, the net profit of Momo Main App in the third quarter of 2020 was 723.4 million yuan (approximately US$106.5 million), compared with 1.247.2 billion yuan in the same period last year. Not measured in accordance with US GAAP, Tantan’s net loss in the third quarter of 2020 was 66.9 million yuan (approximately US$9.8 million), compared with a net loss of 159.5 million yuan in the same period last year.
Net profit attributable to Momo’s parent company
The net profit attributable to Momo’s parent company in the third quarter of 2020 was 456.7 million yuan (approximately US$67.3 million), compared with 893.9 million yuan in the same period last year.
Not measured in accordance with US GAAP, 2020Net profit attributable to Momo’s parent company in the third quarter was 653.8 million yuan (approximately US$96.3 million), compared with 1.0881 billion yuan in the same period last year.
Net profit per American Depositary Share (ADS)
In the third quarter of 2020, the diluted net profit per American Depositary Share (ADS) was 2.11 yuan (about 0.31 US dollars), compared to 4.04 yuan in the same period of the previous year. Not measured in accordance with US GAAP, the diluted net profit per American Depositary Share (ADS) in the third quarter of 2020 was 2.98 yuan (approximately US$0.44), compared with 4.90 yuan in the same period of the previous year.
Cash and cash flow
As of September 30, 2020, Momo’s cash, cash equivalents, short-term deposits and long-term deposits were 15.764 billion yuan (approximately US$2.3218 billion), as of December 31, 2019, 15.25253 billion yuan. Net cash from operating activities in the third quarter of 2020 was 691.1 million yuan (approximately 101.8 million U.S. dollars), compared with 1,175.9 million yuan in the same period last year.
The first nine months of 2020 performance
In the first nine months of 2020, Momo’s net revenue reached 11.229 billion yuan (approximately US$1.653.9 billion), a decrease of 8.9% from the 12.327.2 billion yuan in the same period last year.
In the first nine months of 2020, the net profit attributable to Momo was 1.452 billion yuan (approximately US$213.9 million), compared with 1.915 billion yuan in the same period last year.
In the first nine months of 2020, the net profit attributable to Momo was 2.0598 billion yuan (approximately US$303.4 million), which was not measured in accordance with US GAAP, compared with 3.240.8 billion yuan in the same period last year.
In the first nine months of 2020, the diluted net profit per American Depositary Share (ADS) was 6.68 yuan (approximately US$0.98), compared to 8.76 yuan in the same period last year.
In the first nine months of 2020, not in accordance with US GAAP, the diluted net profit per American Depositary Share (ADS) was 9.36 yuan (approximately US$1.38), compared to 14.65 yuan in the same period last year.
In the first nine months of 2020, net cash from operating activities was 2.0418 billion yuan (about 300.7 million U.S. dollars), compared with 3.773.8 billion yuan in the same period last year.
Recent Development
On September 3, 2020, Momo’s board of directors approved a stock repurchase plan based on which the company will repurchase up to $300 million in stock in the next 12 months. As of September 30, 2020, the company hasApproximately 1.66 million American Depository Shares (ADS) were repurchased in the open market, totaling approximately 23.3 million U.S. dollars, and the average price paid per American Depository Share (ADS) was 14.03 U.S. dollars.
Mr. Lei Xiaoliang will step down as the company’s chief strategy officer due to personal reasons, which will take effect in December 2020. At the same time, he will continue to serve the company as a senior consultant.
Performance Outlook
The company expects its net revenue in the fourth quarter of 2020 to be between RMB 3.65 billion and RMB 3.75 billion, a year-on-year decrease of between 22.1% and 20.0%.