Hello Group Inc.

Ladies and gentlemen, thank you for standing by and welcome to the fourth quarter and full year of 2020 MOMO Incorporated Earnings Conference Call. And at this time, all participants are on listen-only mode. Now for the speaker's presentation, there will be a question and answer session. And to ask a question, you'll need to press star and the number one on your telephones. And please note that this conference is being recorded today. I would now like to hand the conference over to your first speaker today, Ms. Kathy Peng. Thank you. Please go ahead, ma'am.

Thank you, operator. Hello, everyone, and thank you for joining us today for Momo's fourth quarter and fiscal 2020 earnings conference call. The company's results were released earlier today and are available on the company's website. On the call today from Momo are Mr. Wang Li, CEO of the company, Mr. Wang Yu, founder and CEO of Tantan, and Mr. Johnson Zhang, CFO of the company. They will discuss the company's business operations and highlights, as well as the financials and guidance. We will all be available to answer your questions during the Q&A session that follows. Before we begin, I would like to remind you that this call may contain forward-looking statements made under the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such statements are based on management's current expectations and current market and operating conditions and relate to events that involve known or unknown risks, uncertainties, and other factors, all of which are difficult to predict and many of which are beyond the company's control, which may cause the company's actual results, performance, or achievements to differ materially from those in the forward-looking statements. For the information regarding these and other risks, uncertainties, and factors, it's included in the company's filings with the U.S. Securities and Exchange Commission. The company does not undertake any obligation to update any forward-looking statement as a result of new information, future events, or otherwise, except as required under law. I will now pass the call over to Mr. Wang. I will translate for him. Mr. Wang, please.

Hello, everyone. Thank you for attending today's call. 2020 has been a tough year for us. What makes us proud is that the team has faced many challenges and has been able to persistently focus on our core mission. Good morning and good evening, everyone. Thank you for joining our conference call today.

was a tough year for all of us. I'm proud that my teams were able to navigate through the many challenges with relentless focus on our core mission, which is to help users discover new relationships and build meaningful interactions. The commitment to that core mission also enabled us to make difficult, right decisions in the past year for the long-term well-being of the company and our community. Getting through that bumpy journey was also a valuable growth experience for my team. I'm happy to see that we have finally come out of those temporary drawbacks stronger and better poised to seize the growth opportunities ahead of us.

I'm going to share two parts of my speech today. In the first part, I will review the main operations and business results of the fourth quarter and the 2020 fiscal year, and then I will introduce the strategic highlights of 2021, especially how these mid-term strategic highlights will help us achieve our long-term goals.

My speech today consists of two sections. In the first part, I'm going to review the key operating and business results for the fourth quarter and fiscal 2020, and then I'm going to run through our strategic priorities for the year 2021, and perhaps more importantly, how these mid-term strategic priorities fit into our ambitions over the longer-term horizon.

Compared to the previous quarter's 37.7 RMB, there is an increase. The fourth quarter's revenue is higher than we expected. This is mainly due to the outstanding performance of MoMo's live broadcast business during the year-end competition. The net profit after adjustment is 8.36 billion RMB, which corresponds to a net profit of 22%. In addition to the loss of Titan, the net profit after adjustment of MoMo's main app is 8.45 billion RMB, which corresponds to a net profit of 28%. The total revenue of the fourth quarter is 7.41 billion RMB, which is a total increase of 100%. For the fourth quarter 2020, total revenue was 3.80 billion RMB, down 19% year-over-year, but up from 3.77 billion RMB last quarter.

Q4's revenue came in better than our original expectation, mainly because of our performance from Momo's livestreaming business in the year-end competition event. Adjusted net income for the quarter was 836 million RMB, representing a 22% profit margin. Excluding Tantan's net loss, adjusted net income for the core Momo was 845 million RMB, or a 28% profit margin. Cantan's total revenue came in 341 million RMB for the fourth quarter, up 100% year-over-year. Adjusted net loss of Cantan further narrowed down to 8.84 million RMB as a result of strong top-line growth, as well as temporary scale-back of marketing investment in the fourth quarter.

In 2020, the total revenue of the Group was 151 million RMB. In 2019, the total revenue was 1.7 billion RMB. For fiscal 2020, total revenues for the whole group were 15.0 billion RMB compared to 17.0 billion RMB last year.

Adjusted net income was 2.9 billion RMB compared to 4.49 billion RMB last year. The year-over-year decrease at top-line and bottom-line level were mainly caused by the COVID impacts during the first half and the structural reform in the second half of the year.

接下来,具体介绍本财年的其他情况。 首先,运行指标把默默赌亚克斯基度MAU达到1.138亿人, 本比微涨但仍低于2019年的分支水平。 This is mainly due to the consideration of RRI. We decided to reduce sales in November and December. Just as we expected at the last financial briefing, education, the e-commerce industry, and a number of game companies have actively invested in the strategy, and the price of goods and services is high. Therefore, we decided to postpone some of the sales to the Spring Festival, and then invest it when the sales cost returns. The number of subcontractors is closely related to MAU. In the fourth quarter, the number of subcontractors of Momo Group is 9 million, which is equal to the previous quarter. Now, a deeper dive into other aspects of the year. First, on key operating metrics.

Momocore ended the year with 113.8 million MAUs, slightly better than last quarter, but still below the peak level in the year 2019, primarily due to us optimistically lowering the marketing stand in November and December for ROI considerations. As we expected on last earnings call, the acquisition cost per user was at a hyper level due to heavy spending from the education, e-commerce, and to some extent, gaming companies. We therefore would rather defer part of our marketing spend till after Chinese New Year when the marketing cost came down. Paying user count, which has been pretty much in correlation to MAUs, came in 9.0 million for the core mobile, flashish over last quarter. The post-Chinese New Year user recovery on the core has been pretty encouraging, which can be attributed to our successful campaigns during and after Chinese New Year, as well as the team's efforts to improve the basic social experience, which I would like to elaborate a little bit later.

Compensating user count came in 3.8 million end of 2020.

down from $4.1 million from the previous quarter. The net decrease was attributable to the following two factors. Number one, the continuous rollout of the SBIP premium package, which had a positive impact on RPPU, a negative impact on the number of paying users due to its price lifting effect. The second factor pertains to the pressure on MAU as we substantially lowered Tantan's investment in the paid marketing channels. due to the same ROI considerations as mentioned in the earlier part of my remarks. The user acquisition costs came down during the Chinese New Year holiday, so we stepped up our marketing efforts then to capture the window opportunities.

We believe that this year's main task is to speed up the acquisition system, optimize the overall market strategy, and thus greatly improve the impact efficiency. In this respect, Mengwu has a rich management and practical experience. In 2017, we made a similar reform, and we have seen a significant improvement in the conversion of users. We plan to make adjustments in the same way. Since the beginning of the year, our marketing team has started some preliminary work, and this work has also met our expectations. By optimizing the customer system, market strategy, and user conversion method, we can see that there is a lot of room for growth in terms of user size. In February, the marketing activity showed that even if only the marketing method is made to make initial adjustments, it can also be effective. The initial improvement of marketing materials and delivery methods has led to a significant increase in the proportion of new users, and the situation of customer feedback has also been gradually improved. At the same time, the new process has also been improved. Of course, we still have a lot of hard work to do in this regard. This is one of our most important tasks this year.

At the same time, we believe that the biggest priority for TanTan this year is to reshape its user acquisition system and more broadly its marketing approaches so that we can see substantial improvement in its marketing efficiency. This is an area where MoMo team has extensive expertise and experience to lend. MoMo undertook the same reform in 2017 and have since made significant improvements in user acquisition and subsequent conversions. We are going to implement the same playbook on the marketing front at Tantan this year. Our marketing team has already started some initial work since the beginning of the year. These early works confirmed our belief that Tantan still has significant headroom to grow its user base by optimizing its marketing and conversion approaches. Our February campaign shows that even the initial change in the marketing approach could make a difference. For example, the initial adjustment to the marketing materials and the data management system brought in a substantial increase in the female percentage in the new users. At the same time, we were also able to see some initial improvement in managing the unit acquisition cost as well as the user retention ratio. Of course, we still have a lot of hard work ahead of us, and making this one of my biggest priorities for the year. Now let me switch gears a little bit to review the key things that we did last year to better serve our users and communities. I'm going to break this part down by the core, pantan, and then the newer buckets within our product portfolio.

First of all, in terms of Momo's main app, last year's team's primary task was to improve platform-based social functions and user experience, including nearby people and nearby dynamics, improve new user logic experience, and gradually upgrade the old user interaction model. Through the effort of products and operations, the design team has seen some of the most critical indicators that reflect the efficiency of Momo's social media, and there has been a great improvement. Among them, the amount of user information survey, point-to-point information, and the amount of interaction generated around the nearby dynamics have reached the highest level since early 2018. First of all, on the core MoMo side, the biggest focus of the team last year was to improve the basic social infrastructures

and user experience on the platform, including the nearby people, nearby posts, optimizing our onboarding experience, and making initial upgrades to the user resurrection model. As a result of these product and operational efforts, in Q4 2020, we were able to see meaningful improvement in some of the most important metrics reflecting the social efficiency on Momo. Among them, the number of impressions of the user profile page, the number of two-way conversations, as well as the number of interactions around nearby content has reached their peak since the beginning of 2018. At the same time, the 30 days retention ratio for resurrected users improved three percentage points versus the beginning of the year. The 30 days retention ratio for complete new registrations reached its peak level since the beginning of 2019. These improvements in engagement metrics show that even amid tremendous external challenges of the year, the fundamentals of Core Momo as a social platform to build new relationships are strengthening. That constitutes a solid foundation for Momo to pursue further growth opportunities in the year 2021.

Next, I'd like to make a brief introduction. Wang Yu will share the details with you. Now turning to Tantan, I'll be brief here and leave the details to Wang Yu later in his speech.

If I were to name only one most impressive progress Tantan made in the year 2020, it would have to be that we've taken a few concrete steps toward enriching the peripheral social experience around the core swipe and match system. We'll further accelerate Tantan's product efforts this year, aiming at taking the core dating experience to the next level and making it better fit into the Asian dating culture.

In addition to the main apps and TITAN, in 2020, we have also achieved positive progress in creating new apps. For example, we have achieved the first stage of storage and RRR goals for low-end cities and young users. This year, these two apps will enter the second stage of development. On the basis of user growth, we aim to achieve RRR, which is able to cover its own income cost, income share and income cost. RII is an important new project management indicator, because once an app reaches a certain stage, it can form a self-sufficient positive cycle and have the ability to generate profits. In addition to these new apps that are guided by RII, we are also promoting several other projects. The goal is to establish new shortcuts in the social and entertainment fields. In addition, compared to 2019, we now have a set of more mature systems for effective evaluation and management of different stages and types of new projects.

In addition to the MoMoCore and TanTan, in the year 2020, we have made solid progresses with endeavors to build new applications. For example, Herds, a voice-based dating application primarily serving the Gen Z in lower tier cities, and Duidui, a video and voice-based matchmaking application serving users seeking more serious relationships, have all hit their respective retention and ROI targets for the first phase. This year we're moving these two applications into the second phase where we are going to demand the growth of users as well as the fulfillment of ROI2, which means having enough revenue generation power to cover the revenue share and the marketing costs. This is an important milestone metric in our new project management system because Once the new application reaches that stage, it is rolling into a self-sustaining cycle and have the ability to contribute to the bottom line. Other than these RI-focused new applications, we are also working on a couple of projects that aim at establishing new touchpoints in the social as well as the pen and payment industry. In addition, as compared with the year 2019, now have a much more mature system that effectively evaluates and manages different types of new projects at different stages.

First of all, live streaming. In 2020, it was a very challenging year for MoMo's main app live streaming team. In the first half of the year, the pandemic hit the live streaming business, especially head and neck consumption, seriously. In August, we made structural changes to the live streaming business. The purpose is to revitalize the long-term content ecosystem and ensure that the current financial business continues to grow healthily in the new external environment. Now turning to a quick review across our key business lines. I'm going to focus on the core of MoMo and leave Tan Tan's part to Wang Yu.

live broadcasting. 2020 was a challenging year for the live streaming team at the core. During the first half, the business, especially the top spending, was struck hard by the COVID impact. In August, we undertook a structural reform to the live streaming business in order to revive the long-tail content input system and to make sure this cash cow business continues to grow healthily in the new external environment. The reform touched many different areas on the product and operational side. Although the initial product adjustment in August caused significant negative impact on revenues, it was a critical step in eradicating the undesirable practices that were harmful for the long-term healthiness of the business. After several months of hard work, we have started seeing positive signs for improvement in the content ecosystem. Revenues have also shown stabilization and a gradual improvement from the bottom seen in August.

It's also worth mentioning that by the end of last year, with the new incentive plan,

We have successfully achieved our goal in the Golden Broadcaster's contract renewal project, securing the big majority of the high-grossing performers by multiple years' exclusive contracts. It will provide a solid base for us to drive continuous improvement in the live streaming business at the core. 新的激励方案也鼓舞了新主播和新定位的士气,盛典的超预期就是个很好的例子。

The new incentive plan also gave a morale boost to the new performers and agencies.

The outperformance of the year-end competition was a good example of that. We had quite a few new agencies and performers emerging from the competition as hardworking and dedicated value-adding partners for Momo platform. Moreover, we were able to manage cost structure well enough to fully absorb the impact of the increase in the payout at a gross margin level, which remained flattish versus Q3. This was a much better outcome than we originally expected. demonstrating our focus and ability to grow the business at a gross profit and cash flow level rather than purely at the revenue level.

Our plan in 2021 is to continuously support newcomers by diverting more traffic toward the mid to long tail.

We also have plans to enrich the content verticals and to promote content that emphasize on emotional companionship in particular, in order to further cultivate the social attributes of the Momo platform.

Next, let me introduce our main project or promotion business. I was very satisfied with the executive ability of the last year's WANF team. In the difficult external environment, we not only achieved a strong growth, but also effectively controlled the pace of development to ensure its active role in the overall social growth. Last year, the growth of NAS was mainly due to continuous innovation in products and operations. For example, we are constantly introducing new host mode play in chat experience. In addition, we also added interactive gifts in video and social entertainment scenarios. It is proven that this is a sustainable way to promote the consumption and return of chat. In the second half of the year, we changed to the core experience of Langrinsha, because the group of interests introduced a series of gift innovation play. Now turning to VAS on the core. I'm quite satisfied with the team's execution on the VAS front during the past year.

In a tough external environment, we've managed to not only deliver robust growth, but also successfully control the pace of growth to make sure it plays a positive role in the overall social ecosystem. Last year, the growth of Batch was primarily driven by innovative product and operational ideas. For example, we continue to introduce new moderated shows into the Chartroom experience. In addition, we also brought in interactive gifts into the audio and video social entertainment experiences. This has proven to be a sustainable lever that we can pull to drive revenue and engagement in the chat rooms. In the second half of the year, we revamped the werewolf experience and introduced a bunch of new gifting experiences into the interest group, both of which subsequently showed impressive growth. This proves that even for very mature use cases, as long as we continue to innovate on consumer and paying experiences, there is always going to be opportunity for us to drive for the growth in that.

I'm also pleased that the BaaS team focused not only on the quarterly revenues,

also on building future drivers for the long term. Throughout 2020, HERS and CuiDui continue to show gradual improvement both in terms of retention and user scale. We now have established a clear roadmap and a standard playbook for monetizing these experiences. As said in the early part of my speech, 2021 will still be a year focused on product, but we do expect Hertz and Duidui to contribute more meaningfully to the vast line relative to last year. We also believe that they have the potential to become longer-term drivers to both the top line and the bottom line.

Those are the business updates. Now moving to the most important part of my speech today, our strategic priorities for the year 2021, and how these mid-term priorities fit into our ambitions over the long-term horizon. Again, I'm breaking this section down by the core, tantan, and the new endeavors. We set two goals for all the teams in Momo. The first goal is to use limited marketing budget to achieve a steady growth of main battle users and achieve a better ROI than last year. To achieve this goal, we determined three specific tasks. First, to continue to focus on products on Momo's main app to better meet the needs of users who want to receive full service. As we can clearly see, female users show strong social will on Momo. The products and services on Momo's main app are obviously more friendly to male users. This is a field that we should and can do better in. Second, through the MoMo instant version, we have further downgraded to the low-end market. This is a key project of last year. In the second half of 2020, we have indeed made good progress in terms of products, but due to the epidemic prevention and control measures adopted by different regions, our marketing plan has been hindered. As the risk of the epidemic gradually decreased this year, we still have a good chance to continue implementing these plans. Third, Spring Phoenix optimized the old user-oriented model. For the core, I have two goals for the team. Number one,

further grow the core user base with limited marketing budgets and improve the ROI versus last year. Our action plan to this goal consists of three key tasks. A, build new social experiences within the core to better serve the underserved user demand. For example, we are clearly seeing the social desire from female users on Momo, but the product and services we currently have on the core could clearly work much better for men rather than women. This is an area where we should and can do much better than before. A, penetrate deeper into lower-tier markets with MoMoLight. This was a key product project for last year. We actually made some good progresses on the product side in the second half of 2020, but the marketing plans got stuck due to the measures in different regions to keep the virus under control. As COVID risk continues to tail out this year, we still have good opportunities to push the plans forward and see substantially refining our user resurrection model. Complete new registrations are increasingly becoming a scarce and expensive resource for every social media operator. That makes it crucially important to cultivate the value of existing users as well as the users in dormancy. This is an area where Momo has lots of edge because we have a large pool of dormant users and can leverage new social experiences to call them back. The focus this year is to improve our current resurrection model so that we can do much more effective targeting and conversion and drive better ROI from the reactivation.

The second goal is to bring Momo's main business back to normal. We need to keep the productivity of our current business. And this productivity should not only be reflected in the level of revenue, but also in the level of profit. Compared to the target of user growth, this target is easier to achieve. Because from the current development trend in March, we have already passed the hardest stage. The live broadcast business has entered the recovery track. Although the NAS business has been growing rapidly in the past two years, it still has a great chance of growth in terms of traffic and new features. As a social platform, we have more than 70% of the DAU and more than 80% of the usage market are happening in live broadcasts. The second goal for the core, of course, is to get the business onto the growth track. We need the cash cow to remain productive, not just at the revenue level, but at the gross profit level as well.

As compared to the user goal, this one is easier to fulfill because from the trends we've been seeing so far into March, it seems that we have already completed the most arduous part of the journey and get the live streaming business on track for recovery. VAS, having been growing robustly for the past two years, still has plenty of growth opportunities both in terms of traffic and in terms of new revenue features. As a social platform, 70 plus percent of our BAU and 80 plus percent of total time span are not related to live streaming at all. Having VAS as a main revenue source will eventually prove to the investor community our potential and advantage as a social networking product as opposed to a live streaming product. That's an important goal I set for the team for 2021 and beyond.

Now, let's talk about Tantan. Tantan's annual goal is to greatly improve sales efficiency and core dating experience to achieve stable growth for users. As I said at the teleconference, from the long-term trend of China, Tantan's user size and user activity still have a lot of room for growth. We can confidently say that Tantan is currently the most focused and most effective dating product in the Chinese market. It is also responsible for helping people to build romantic relationships and realize the transformation of social relationships. This is also a basic requirement that runs through human history. I think Tantan has no reason is smaller than MoMo's current users. Considering the development trend of future young people's dating culture, it is completely capable of growing into a bigger platform than MoMo. Now moving on to Tantan.

Our goal for the year is to deliver solid user growth by substantially improving the marketing efficiency and the core dating experience. As I said on the previous call, Tantan has huge room to grow its user base and engagement due to the secular trends that we're seeing in China. And currently, we can say with full confidence that in China, Tantan is clearly the most committed as well as the most effective dating product focused on connecting people for romantic purpose and offline relationship conversions. This is a fundamental demand proven throughout human history. I see no reason why Tangtang cannot be as large as Momo today in terms of user scale. As a matter of fact, it should be much bigger than that as we see how today's young people evolve as it relates to dating culture. Now the question really is why we are not growing as fast as we should be. The answer is not because the opportunities are not there or somebody else is stronger than we are in serving that demand, but because there are important areas where we need to improve. We should make our product and marketing efforts more effective and execution more efficient so that we hit the nail right on its head to pin down the growth opportunities that we're seeing. The two teams will need to work more closely together in order to push forward faster. you will see the collaborations between MoMo and Tantan moving to a deeper level.

Now let's talk about the plans other than MoMo and Tantan. This is all about the new applications we are developing. I've already talked about a lot of this before. Now I'd like to add something. I think a lot of people will agree that in the next 10 years, China's personal consumption will continue to grow rapidly and will transition from the product-driven mode to the service- and new consumption-driven mode. In the next 10 years, communication technology and hardware will also make huge changes and progress. In addition, with the increase in personal income and education levels, as well as China's leading digitalization level and the improvement in the level of personalization, young people's acceptance of online dating and social media and services that provide emotional accompaniment will be higher and higher. In the next ten years, we are likely to adopt the cultural perspective of dating and open social media. As a company dedicated to helping users establish new relationships, we are at the intersection of the above three trends. This is why we are so excited about the future growth opportunities. Now turning to the plans beyond Momo and Tantan. This, of course, involves the new applications that we're working on,

about which I've already talked a lot in the previous sections. But there is something more to it. Many of you would agree with me that the coming 10 years will see continuous boom of China's private consumption, and it will be gearing up from a goods-driven mode toward a service and new consumption-driven model. The coming decade will also see phenomenal changes and advancement in communication technology and hardware devices. Moreover, with the rising personal income and education level, the world's highest level of digitalization and increasing focus on individuality, today's younger generations are becoming increasingly open toward the idea of online dating and broader social product and services providing emotional companionship. It's quite possible that we will see the cultural inflection point in the dating and social space within the coming decade. As a company that focuses on helping people build new relationships, we stand at a cross-section of all those trends. That's why I'm extremely excited about the growth opportunities that we have ahead of us. In order to capture these opportunities, we need to A, drill down deeper in our strong areas, namely the open social space, and B, push the boundaries and expand the footprint in other adjacent areas along the value chain. And last but not least, stick to our long-term mission and have sufficient patience and tenacity to push through. 最后向大家宣布,总是会批准了每股IDS 0.64美元的特别现金派系方案。 现金派系总额约1.32亿美元,相当于2020年调整后归属于某公司净利润的30%。

Lastly, I would like to finish my speech today by announcing that our Board has declared a cash dividend in the amount of US$0.64 per ADS, which will amount to a total cash payment of approximately US$132 million.

where 30% of our adjusted net income attributable to MoMA Inc. In 2020, this is MoMA Inc. in 2020. This is the third consecutive year that we've shared the fruits of our operation with the shareholders. It demonstrates management's confidence in the fundamentals of the company, as well as our commitment to creating and delivering shareholder value for the long term. Thank you for trusting MoMA team.

These are the things I'd like to cover on this call.

Now here is Wang Yu to talk about Tantan's product and service, product and business development. Mr. Wang, please.

Thanks. So let me briefly review Tantan's operational and business development in the past quarter and . A quick review of the user trends and related metrics. CAU and Ping users were impacted by the COVID outbreak in early 2020. By May, the pandemic in China got under control, and we subsequently saw decent user recovery from May to early August. Since mid-August, the user acquisition cost has started to rise dramatically due to the aggressive marketing investments from medication online gaming companies. and in Q4, joined by e-commerce players as well. For ROI considerations, we scaled back our spending in the paid marketing channels in Q4, which put some pressure on the user trend. During Q4, our team fully focused on improving the marketing efficiency and lowering the unit acquisition cost. The team conducted a thorough walkthrough of the system to identify potential areas of improvement and optimization. we realized that marketing and top-of-the-funnel conversion is indeed an area where we need to make concrete improvements in order to get more efficient in driving user growth. There's actually a great deal of potential we can cultivate here. In Q4 and January 2021, we quickly put two things in place for the Chinese New Year's campaign. Number one, building up the backend infrastructure to enhance our data tracking capability so that we can provide more effective feedback to our channel partners. Number two, beefing up add materials to make it more appealing to our target users. We stepped up our marketing efforts when competition became milder towards mid-February. we were able to see some initial positive results on the cost side. The new ad materials and channel strategy are also bringing in a significantly higher percentage of women in the new users. At the same time, the retention ratio in new users also improved meaningfully. Overall, we're on track to deliver a better March DAU than last December. More importantly, we should be able to achieve that while further lowering the marketing cost from Q4, which was already a step down from Q3. All of this gave us the confidence that this is the right path to go down. From March onwards, we are going to take bigger steps to refine our marketing approaches. I'll give more details later. Now turning to paying users. paying users for the fourth quarter of TumTum totaled 3.8 million, down from 4.1 million last quarter. The 300,000 net decrease was due to the combination of the full-scale rollout of the SVIP package, as well as the pressure on new users due to the decreased marketing spending in Q4. Now, briefly on revenues. Total revenues for the fourth quarter reached 740.5 million, up 100% year-on-year. The growth was driven by the increase in average revenue per user, which is contributed by the live streaming service, as well as users' continuous shift towards higher-priced membership services. For fiscal year 2020, total revenue was 2.37 billion RMB, up 88% from last year. Livestreaming contributed the vast majority of the incremental revenue, which amounted to 999 million RMB. Despite the decrease in number of paying users, cost revenue still grew 9% on a year-over-year basis, driven by the steady RRP pool increase. Next, let me give you an update on the progress that we made against our other strategic priorities. First, enriching the product experiences. One of our biggest focus for 2020 was to build supplementary features and services around the core swiping experience, so we can offer a richer canvas for users to discover and establish new romantic relationships. In the first half of the year, we introduced a brand new version of TomTom with the discovery page and nearby posts and activities, which paved the road for further diversification of our offerings. This is particularly helpful for users who found it less effective to connect and interact based on the swipe and match mechanism. Providing content users with richer ways to connect beyond our signature swiping experience is an important step that we've taken to enhance user engagement, retention, and time spent. Towards the end of last year, we have also begun a limited scale testing on a new voice dating experience. which, based on the early data we have been seeing, could be a positive engagement and revenue driver in the coming few quarters. Another achievement for 2020 was the successful introduction of live video service, which has clearly helped us further unlock the monetization value of the platform. This was particularly helpful when our membership business was under COVID-related pressure. At the same time, we have also have been extremely careful in monitoring and pacing the growth of live streaming service to make sure that it plays a complementary role to the core dating experience and does not harm the overall dating ecosystem. So far, live streaming has been fitting well into the dating ecosystem without showing any significant undesirable results. In comparison with core mobile live streaming, Tantan's paying user structure and performance and performs revenue contribution are much more decentralized and long tail driven. TamTam's showrooms are relatively small with fewer concurrent users, but very interactive. In smaller showrooms, you do not have to pay a huge amount in order to get quality interactions. So the relatively distribution structure is very helpful in enhancing the social attributes of the live streaming experience of TamTam. Our intention is to keep our live video channels that way this year. For that reason, we're going to continue to control the pace in adding revenue-oriented operational efforts, especially those that aim at increasing the RP pool or otherwise cost centralizations. In late Q3, we also started rolling out the new SVIP membership package. The new package includes some existing popular membership privileges. as well as a number of new premium features added to the package. The goal of introducing the SVIP is, of course, to offer new value-added services to the dating community. However, we do have a rationale on the business front as well. During the past couple of years, we have consistently observed a key trend that young people in China are demonstrating strong winningness and rising consumption power to pay for dating services. I believe that such trend is going to continue or even accelerate in the coming decade. Long-term wise, the best way to take advantage of such secular trend is certainly to supplement the subscription-based model with a good non-sub-based value-added service mechanism. This is indeed one of our key priorities in the coming few years. But for the time being, within the subscription model, we also need a mechanism whereby we can adjust the average selling price. which is by nature more rigid within the submodel. SVIP is our attempted solution here. So far, such solutions have been working pretty well, both in terms of how the user receives it and in terms of hitting the goals we are trying to achieve on the business side. After the rollout of SVIP, we ceased to offer some previously existing features, such as separate VAS items. Our general principle in making price decisions is to maximize revenue. The combination of merchandise replacement and the price strategy led to a de facto price lift effect, which caused a number of subscribers to decline and our people, on the contrary, to rise. As we expected, Q4 VAT revenue indicates that full-scale launch of SVIP is positive to the overall revenue. For the users who churned the previous package but yet described to SVIP, we plan to board them back over time via paywall strategy or new boss features. Therefore, this approach actually leaves bigger room for us to drive paying user expansion as well as revenue growth in the future. Those are the key updates about the year 2020. Now that we've started the new year, I'd like to briefly talk about the key things on our agenda for 2020-21. As Van Lee mentioned, our growth is of the top priorities for TATAM this year. Two areas that are crucially important for us to achieve this goal. First, significantly improve marketing efficiency. The second, make the coordinating experience more appealing. On the marketing side, there are a number of things that we need to do. Number one, we're going to further optimize our user acquisition system. Although we have made some initial progress in beefing up our channel marketing approach, we still have a lot of work ahead of us. These efforts range from making fundamental changes to the backend infrastructure, such as enhancing our data tracking capability and feedback system, to improving the ad materials and adjusting them based on the outcome of the campaign. Number two, optimize our user conversion model so we can drive better ROI for user acquisition. Number three, enhance our brand awareness. TomTom is a relatively young brand. There are still many people who are not using TomTom because they have not heard of us before or yet to be fully aware of the core value TomTom can provide. We will invest more to empower our brand equity and drive user awareness this year. The second area we need to improve is to enhance the core dating experience. While TomTom is undoubtedly the most dedicated and effective dating app in China, we do have many opportunities to optimize so we can do better in connecting the users for romantic purposes. The most near-term priority is to make our swipe and match system more effective. Our efforts include upgrading the user tagging system to generate better portraits of each of the Tantan users, and based on the tagging and other aspects of big data mining, optimizing the recommendation engine to make more relevant pushes. We want the users to genuinely feel that Tantan understands what they're looking for on the platform. While continuing to strengthen our dating-related product offering, we're also going to keep exploring more diversified features and services to make the Tantan experience better fit for Asian dating culture. This, in turn, will further improve user engagement and retention, which will translate to user growth. Those are the key things that I'd like to cover for today, so let me pass the call over to Mr. Jonathan Zhang for financial review. Zhang, please.

Thank you. Hello, everyone. Thank you for joining our conference call today. Let me briefly take you through the financial review. Total revenue for the fourth quarter 2020 was 3.8 billion renminbi, down 19% year-on-year, up 1% quarter-on-quarter, exceeding the high end of our revenue guidance, primarily due to the better than expected outcome from the year-end competition event in live streaming business. Non-GAAP net income attributable to Momo was 836.4 million RMB compared to 1.25 billion RMB for the same period of 2019, or a 33% decrease year-over-year. Total revenue for fiscal year 2020 was 15.02 billion RMB compared to 17.02 billion for 2019, down 12% year-on-year. Non-GAAP net income attributable to Momo for 2020 was 2.9 billion RMB compared to 4.49 billion RMB for 2019. a decrease of 36% year-on-year. The year-over-year decrease in top line and bottom line was due to the impact from the pandemic during the first half of the year and the structural reform in the second half in 2020, partially offset by 10 times rapid growth in revenue and narrowing loss Looking into the key revenue items for the quarter, firstly, on live broadcasting, the total revenue for live broadcasting business for the fourth quarter 2020 was 2.33 billion RMB, down 31% from the same period last year and 2% from last quarter. Core MoMA's live broadcasting revenue totaled $1.92 billion for the fourth quarter, down 43% from the same period last year and 3% from last quarter, while 10 times live broadcasting revenue amounted 404 million RMB, 2% up from previous quarter. Moving on to vast revenue from the... Revenue from the value-added services reached 1.4 billion RMB, up 18% year-on-year, 5% quarter-over-quarter. Revenue from VAST, excluding 336 million from Tantan, reached 1.07 billion RMB for the fourth quarter of 2020, a 30% increase year-over-year, 7% increased sequentially. The solid performance of Momo's core vast business was primarily driven by the team's focus on product innovation and effective operational efforts. Audio and video-based social entertainment experience continued to generate strong growth momentum and was the biggest revenue driver for the core Momo vast services. Now let me briefly review the cost and the expenses items for the quarter. Our non-GAAP cost of revenue for the fourth quarter of 2020 was 2.02 billion RMB compared to 3.32 billion for the same period last year. Non-GAAP cost of revenue as a percentage of total revenue was 53%. an increase from 50% from Q4 2019. The non-GAAP gross profit margin for the quarter was down about 3% from a year ago. The decrease was attributed to the following factors. Number one, high payout ratio from the core Momo's Life broadcasting business. Number two, lower gross margin for Tantan. its live forecasting services revenue has become increasingly sizable. Number three, higher payout ratio from core mobile vast business due to the robust growth coming from audio video based social entertainment business, a big part of which involved third party professional moderators. And number four, certain fixed nature cost items such as headcount depreciation of fixed assets related impacted the gross margin negatively as the total revenue declined, and these items represent a higher percentage of total net revenue. On a sequential basis, the non-GAAP gross margin remained flattish compared to Q3, much better than our original expectation. As Wang Li mentioned earlier, in Q4, we successfully locked down a vast majority of existing high-grossing broadcasters by rolling out a new incentive program. We originally had expected this new plan to have a couple percentage adverse impact on the gross margin. However, the team was able to optimize the overall cost structure so that the gross margin remained the same as in Q3. This demonstrates the management's commitment to drive healthy growth of the business, not only for the revenue aspect, but also as the gross profit and cash flow level. This year, we will focus better supporting mid to long tail broadcasters and further strengthening the content ecosystem. A very important step for us to achieve that goal is to provide better motivation and recruit new talents so that we can maintain a good metabolic system. To serve that goal, in Q1, we made another adjustment to our incentive program to make it more attractive to the newcomers. We currently expect this new program to have a couple percentage impact to our gross margin starting from Q1. In return, we now have a well-rounded incentive program that can provide sufficient motivation to all important broadcasters in our ecosystem. Non-GAAP R&D expenses for the quarter was 286.5 million RMB compared to 244.3 million RMB for the same period last year. representing 7.5% and 5.2% of total revenue respectively. We ended the quarter with 2,394 total employees, of which 807 are from Tantan. The R&D personnel as a percentage of the total employees for the group was 57% compared to 58% for last year. Non-GAAP sales marketing expenses for the fourth quarter was 654.1 million RMB or 17.2% of total revenue compared to 554 million RMB or 14% of total revenue for the same year, the last year. Non-GAAP G&A expenses. was 134.5 million RMB for the fourth quarter 2020 compared to 151.7 million RMB for the same quarter last year, representing 3.5% and 3.2% for the total revenue respectively. Non-GAAP operating expenses as a percentage of total revenue was 28.3%, an increase from 22.4% from Q4 2019. The increase was mainly due to the negative operating leverage as a result of decrease in total revenue. Now briefly on income tax expenses. In Q4, the company received an approval for qualification of key software enterprise for one of our major profit generating entities to enjoy a 10% preferential income tax rate for the physical year of 2019, which enabled us to lower our tax rate for the entity from 12.5% to 10% for physical year 2019. Therefore, we subsequently reversed the over-accrued tax liability of RMB $113 million to reduce the current quarter income tax expenses. As this qualification application is assessed by the relevant tax authorities annually, we make these tax adjustments upon receipt of our approval notice going forward. Now turning to balance sheet and cash flow items, As December 31st, 2020, almost cash, cash equivalents, short-term deposits and long-term deposits, totaled 16.48 billion RMB compared to 15.23 billion RMB as of December 31st, 2019. Net cash provided by operating activities in the fourth quarter was 1.04 billion RMB. Lastly, on Business Outlook, we estimated our first quarter revenue for 2021 to come in the range from 3.36 billion RMB to 3.46 billion RMB, representing a decrease of 6.5% to 3.7% year-on-year. to a decrease of 11.5% to 8.8% quarter-over-quarter. For Q1 2021, on a year-over-year basis, we expected the total revenue from core mobile to decrease in low teens percentage. Total revenue from is expected to grow in the high 40s percentage. Please be mindful that the forecasts represent the company's current and preliminary view on the market and operation conditions, which are subject to change. That concluded our prepared portion of today's discussion. With that, let me turn the call back to Cathy to start the Q&A. Cathy, please.

Actually, just a quick reminder for people who are in the queue to ask the question in Chinese first and perhaps follow with English translation by yourself. And also, if you could limit the number of questions to one to two, that would leave more time for other people to ask questions. Operator, ready for questions? Thank you.

Yes. Yes, thank you. As a reminder, to ask a question, you need to press star 1 on your telephone. And to withdraw your questions, press the pound or hash key. And please stand by while we compile the Q&A roster. Once again, please press star 1 for your questions. First question comes from the line of Performance Tong of Jefferies. Your line is open. Please go ahead. 晚上好,謝謝管理長介紹我的提問。

I have two questions. First, I would like to ask about the time during the Spring Festival. Now, we see the number of users of Coa MoMo and TanTan and the income section. Can you share the performance during this period? In addition, I would like to ask about the guidance of Coa MoMo and TanTan in Q1. 我想問一下如果是看傳聯的話 帶開的情況可以分享一下嗎? 第二個問題就是關於成本端那邊 剛剛我們也提到 我們的ROI這個Marketing Strategies 想問一下我們看 今年的話在那個Marketing Spending 還有這個Margin 可以分享一下這個方向嗎? Thanks management for taking my questions. I have two questions. The first one is about the user and the revenue trend during and after Chinese New Year for Cuomo and Tantan. And also can management comment about the whole year outlook if possible? And my second question is about the spending. Can you comment about the marketing spending for this year as well as the overall margin outlook? Thank you.

Thank you for your question. This is the first question. It's been five weeks since the end of the Spring Festival. It should be said that in these five weeks, MoMo's main battle, whether it's the flow or the recovery of water, is very optimistic. I think this is mainly related to three factors. The first is the achievement we achieved last year in improving social basic experience. The second is the achievement of improving social ecology in the second half of the year. The third is the strategic strategy taken during the Spring Festival and the end of the year.

Let me translate first. It has been around five weeks after the Lunar Year holiday. During that period of time, it's fair to say that the Momo Corps has been seeing pretty encouraging recovery trends, both in terms of traffic and in terms of growth. I would attribute that positive trajectory to three major factors. One is the progress that we made in improving the basic social experiences last year. on the core, and the second factor is the fruits coming out of the structural reform in the second half of the year, and the third factor is the right approaches that we adopted on the channel marketing side both during and after Chinese New Year for the core model.

More specifically,

On the user front, the average DAU so far into March on the core has already exceeded last December's level in a pretty meaningful way. On the grossing front, we did see a pretty significant decline in both live streaming and VAS during the three weeks around Chinese New Year. But up until now, for live streaming, it has already entered into a period of steady improvement. And VAS has truly been an outperformer here. Its growth has already far exceeded the pre-Chinese New Year level. It looks like that in Q1, we are going to see a pretty meaningful sequential growth from last Q4. And even on a YY basis, we are going to see a very notable acceleration, which is very impressive to me.

In terms of the whole year, even though we don't have a definitive guidance now, I can share some of my views on the trend. As for the live broadcast, we will continue to consolidate the content ecosystem, expand and enrich the content of the factory committee. Steadfastness is the first priority. We will not take drastic measures to stimulate the revenue. But as the ecosystem gradually recovers, consumption will also slowly and steadily recover on the basis of the first quarter. And as I said, this steady rise, we not only need a steady rise in revenue levels, but also a steady rise in net profit levels. The chance of growth in the stock market will be more than the live broadcast, and we will also be more biased towards WANs in terms of products and traffic. Because compared to live broadcast, WANs are more flat, and it is easier to play the advantage of social platforms. For the whole year,

Although now it's still a little bit too early to get very prescriptive, but, you know, here are some big trends that I'm ready to share. For live streaming, I think this year will still be still about improving the content ecosystem, enriching and diversifying the long-term content. So I would definitely put stabilization as the number one priority. And for that reason, I'm not going to adopt aggressive approaches to stimulate short-term revenue. But as the overall content ecosystem continues to recover, the spending is also going to see steady and gradual improvement on top of Q1. And as I said, we need that steady improvement to happen not just at the revenue level. We need it to happen at a gross profit level as well. For VAS on the core, we're actually seeing a greater number of growth opportunities relative to live streaming. And also from a product and traffic allocation perspective, we are also going to be leaning more toward VAS because it does have a more flattish distribution structure in comparison with VAS. But that does have a more flattish distribution structure in comparison with live streaming. And it is also more tightly knitted into the vantage that we have as a social platform. So my expectation is that This year VAST is also, VAST is still going to be growing very robustly on a year-over-year basis as a percentage of total revenue is also going to continue to rise at the group level. I think the VAST revenue in Q1 is expected to reach close to 80% of live streaming revenue. In the future, you know, I'm also hoping that we can continue to drive up that ratio from there. That is the fundamental differentiation and advantage that we have as a social platform as opposed to other entertaining providers out there in the market. I think this year you guys are going to see us capitalizing on that advantage and differentiation in a bigger way than we did in the past.

Now here is Wang Yu to talk about Tantan.

Okay, so firstly, let me elaborate a bit on the Q1 trends. In January and early February, we pretty much focused on burying our user acquisition materials and fixing other technical stuff in order to make the Chinese New Year campaigns more effective. So the December week user trends continued in January and early February. The user data started ticking up from late February. As said, we're on track to deliver a better March DAU than last December, while further lowering the total marketing cost from Q4. Revenue-wise, we had pretty strong seasonality this year due to the streaming services, because we have the big majority of our live streaming revenue coming from long-tail broadcasters are difficult to manage. The broadcasting time and the number of channels saw a very significant decline during the winter holiday period, causing the revenue to see a deep dive and also a slow recovery. Now, the supply has come back, and we expect the revenue to gradually ramp up from Q2 onwards. Some thoughts about the whole year. User growth is the single most important priority for Tantan this year. we had some initial success in sorting out the user acquisition approach in the post-Chinese New Year campaign. It definitely shows that we are heading towards the right direction. In the coming few months, we've lined up a few other new product updates, most of which aim at further improving the retention ratio on the platform. We are confident that with these product and marketing efforts, we're going to see solid user growth this year. Revenue is not one of the top priorities for the company this year. Neither is profit. We certainly care about top and bottom line, and long-term-wise, it should be the outcome of user growth. But if this year, any of the financial goals temporarily goes against the product and user goals, we will definitely put the latter on top. Here's an example. As I said, after we adjusted our marketing approach, Tanta now has a much higher percentage of females in the newly acquired users, which is going to be a big, big benefit for dating ecosystem. However, that actually lowers the paying conversion ratio pretty significantly because women are much less likely to pay than men. Previously, we would have tried to reverse that change to raise the paying conversion because we need to meet quarterly numbers in revenue and paying users, et cetera. But this year, this is going to be an example that we're going to put the short-term numbers aside and focus on what's really important for our future. That said, I believe overall we're still going to see pretty decent growth on the top line for 2021. Here are some drivers for it. Firstly, user growth will drive vast growth. Secondly, we're going to be rolling out a few new monetization features this year. Some of these are sub-based and others are a la carte. For example, the virtual gifting around the voice dating experience, that could further drive our people under VOSS. For live streaming this year, we'll make it subservient to the product and VOSS goals. This year, we also prefer not to go any further in terms of raising monetization levels. Putting everything together, most likely we'll end this year with the majority of revenue coming from VOSS. which goes more hand-in-hand with coordinating in relation to live streaming. Thanks.

Thomas, this is John. Let me address your second question. On the marketing strategy, for core MoMA, actually, we are looking to keep the same level of channel investment, you know, for the payment for their marketing channels. Same dollar amount, similar dollar amount from last year. However, as Wang Li said, you know, this year some of our new apps are gaining fractions and we do like to keep the flexibility to invest more to grow the users and revenues for those new initiatives. But however, we are focusing on, you know, the revenue growth on those new apps. So I guess we are probably looking to increase the marketing resources available for those new initiatives, we're looking at probably around 1 to 2 percentage of total revenue for POMOMA. But, however, we will need to make adjustments on the spending level or the spending plan, you know, on an as-we-go basis because a lot of it really depending on the performance of ROI. So that's the moving piece. For Tantan, as Wang Yu just mentioned, Tantan's team placed the top priority on user growth. So we're going to spend, you know, how much they're going to spend, we're going to... It will really depend on the pace and magnitude of the improvement of its marketing efficiencies and product rollout. So if we move faster, we will spend more. But however, the vast revenue will grow up more. And if we need more time, we'll spend less, and the vast revenue will ramp up a bit slower. So instead of managing the line-by-line target, we are more focusing on targeting a range of bottom line. At this stage, we are looking at further narrowing down the adjusted net loss for 2021 down by 150 million to 200 million renminbi from last year's level. So that's on the Tantan side. In terms of margin trend, on top of the additional potential spending from Kuo Mo Mo, On the gross margin side, as I mentioned during the prepared remarks, due to the newly launched incentive program for new broadcasters, we do expect 2 to 3 percent margin impact on the gross margin side. And that's for starting from Q1. you can apply that throughout the year. And, however, there are other factors probably will impact the margin on a quarterly basis, such as, you know, the revenue mix might have some impact. But, however, we don't expect the impact will be significant. So, overall, the growth margin, we'll see two to three percent down take for the year and also the potential higher selling market expenses from Momo.

Thank you. Operator, we're ready for next. Maybe in the interest of time, this will be the last one we take in.

Thank you. Yes, our next question is from the line of Tian Hall of VH Capital. Please go ahead.

Yeah, good evening, management. Just a question on the VAS. Look at the financial results. VAS was growing pretty rapidly, and also Mr. Wang expressed enough confidence for 2021. Can Mr. Wang elaborate a little bit further on the drivers for BAS continue to grow in 2021? That's my question.

Thank you for your question. Regarding the future development of VAS, I see it this way. We believe that VAS has plenty of space for product innovation and revenue growth. 80% of the use market is distributed outside of live broadcasts. With regards to the future outlook for VAS, we are actually seeing plenty of growth opportunities

invest both in terms of product innovations as well as revenue growth. As I said, over 80% of the time spent on Momo is in a variety of social experiences that are not related to live streaming at all. You know, there is actually a lot of potential that we can cultivate in this big pool of users and traffic. In addition, other than MoMA and Tantan, this year some of our newer applications are also becoming more meaningful revenue contributors, and that could push the vast opportunities beyond the core of MoMA.

I think the growth in 2021 is mainly due to the following aspects. First, the continued innovation of the chat room game, such as the innovation of interactive objects, and the innovation of the criteria for playing, will all bring a significant growth in the market. The second is about new apps and new payment scenarios. For example, Hez, Tweet, and Fate Exchange. There are also a few other new payment experiences that we are testing. These new opportunities are gradually growing in terms of revenue. They will also become a longer-term growth force for VAS. More specifically, I think

In the year 2021, we are mainly looking at several key drivers. Number one is we're going to continue to bring in new product innovations into the chat room experience. Things like the new interactive gifting experience, the new gameplays into the karaoke experience. All of these have proven to be effective levers that we can pull to drive continuous growth in the chat room. And the second area of growth is the revenue opportunities around the new applications and the new paying experiences that we're testing. Things like and the video matchmaking experience both within our core website, which is and as a separate application, which is . Other than these, we also have a few, a couple of other things that we're testing. These new opportunities are increasingly coming into fruition on the revenue side. And, you know, so they can be more of a longer-term driver for the VAS line. And the third driver this year is going to be the innovations within the older experiences. the interest group is an old experience that has been around for many years, but after, have been around since the year 2012. But after the introduction of new gifting experience, it started growing very impressively in the sense of last year, making it actually one of the most important drivers for the last line. This year, we also have plans to continue to introduce new stuff into the one-to-one chatting and also the group chatting in order to activate people's willingness to pay for BaaS.

As for Tantan's BaaS, whether it's the users, the app, or the payment scene, they are all in the early stages. The biggest focus this year is still user growth, rather than the urge to pull other revenue bars. But in the next three to five years, Tantan's revenue potential in terms of BaaS will definitely be at the top.

Now about Tantan, Tantan's math is actually at a very early stage of development in terms of user growth, ARPU, and the overall expansion of paying experiences. I think obviously the biggest, biggest priority for Tantan this year is on user growth instead of, you know, pulling other revenue levers. But actually in the coming three to five years Tantan should actually have bigger potential, bigger revenue potential in the form of VAS than Momo has today. I think we're approaching the market's open, so that will be the last question that we take today. And that also wraps up the conference call for today. Thank you for joining us. We'll see you next quarter. Operator, we're ready to close. Thank you. Thank you.

Thank you. Ladies and gentlemen, that concludes this conference. Thank you for participating. You may now all disconnect.