Hello Group Inc.

Ladies and gentlemen, thank you for standing by and welcome to fourth quarter and fiscal year 2022 Hello Group, Inc. earnings conference call. All participants are in a listen-only mode. There will be a presentation followed by a question and answer session. If you wish to ask a question, you will need to press the star key followed by the number one on your telephone keypad. Please note that the conference is being recorded. I would now like to hand the conference over to your first speaker today, Ms. Ashley Ying. Thank you. Please go ahead, ma'am.

Thank you, operator. Good morning and good evening, everyone. Thank you for joining us today for Hello Group's fourth quarter and fiscal 2022 earnings conference call. The company's results were released earlier today and are available on the company's IR website. On the call today are Mr. Tang Yan, CEO of the company, and Ms. Peng Hui, CFO of the company. They will discuss the company's business operations and highlights, as well as the financials and guidance. They will both 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 provision 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. Further information regarding this and other risks, uncertainties, and factors is 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 statements as a result of new information for the events or otherwise, except as required under law. I will now pass the call over to our CEO, Mr. Tang Yan. Mr. Tang, please.

Hello everyone, thank you for joining our call. 2022 was an extremely challenging year for many Chinese companies.

as the COVID resurgence brought a lot of uncertainties to the overall business environment. However, I'm pleased to see that our team withstood external pressures by timely adjusting strategic priorities and corresponding execution plans in the second half of the year with flexible product and operational measures. Despite the challenges, we delivered solid financial results for shareholders, enabling us to conclude the year on a satisfactory note. I will first review the main operating and business results in the fourth quarter and fiscal year 2022, and then I will outline our strategic priorities for fiscal 2023.

不考虑探探默默主战及独立新Apps 共计营收28.7亿人民币 同比下降11% 环比下降1% 调整后营业利润5.14亿人民币 同比下降21% 环比下降20% 对应营业利润率18% 探探营收3.47亿人民币 同比下降21% 环比增长2% 调整后运营亏损 I will start with a brief overview of our financial performance. For the fourth quarter of 2022,

Total revenue was 3.21 billion RMB, down 13% year-over-year and 1% quarter-over-quarter. Adjusted operating income was 499 million RMB, with a margin of 16%. Total revenue from Momo app and standalone new app was 2.87 billion RMB, down 11% year-over-year and 1% quarter-over-quarter. And adjusted operating income was 514 million RMB, down 21% year-over-year and 20% quarter-over-quarter. with a margin of 18%. Total revenue from Tantan came in at 347 million RMB, down 21% year-over-year, but up 2% quarter-over-quarter. Adjusted operating loss was significantly narrowed to 15.17 million RMB from 140 million RMB in the same quarter of last year. On a sequential basis, adjusted operating loss continued to narrow further, despite an increase in the year and seasonal expenses. I'm pleased with the progress that Tantan made in improving cost efficiency in the second half of the year.

In 2012, Tantan's total revenue was 12.7 billion RMB. Last year, it was 14.6 billion RMB. After adjustment, the revenue was 20.3 billion RMB. Last year, it was 25.9 billion RMB. After adjustment, the revenue was 16%. The main reason for the decline in revenue and revenue is related to the epidemic. And supervision and other factors have caused obvious pressure on MoMo and Tantan. For this reason, we adjusted some of the strategic points at the end of the year. Emphasize the cost-benefit strategy. Try to ease the impact of external factors on income. Convey to the profit level. Not to mention Tantan. MoMo main station in 2022. And independent new apps. A annual revenue of 1.13 billion RMB. The same as a 10% decline. All come from MoMo main station's decline in revenue. New apps maintain a fast-growing trend on the basis of high demand in 2021. After adjustment, the operating profit is 23.6 billion RMB, corresponding to 21% operating profit. Last year, it was 29.2 billion RMB, corresponding to 23% operating profit. Let's look at annual revenue, 13.7 billion RMB, the same as 33%. After adjustment, the operating loss is 3.3 billion RMB, corresponding to 3.37 billion RMB. For fiscal 2022, total group revenue was 12.7 billion RMB compared with 14.6 billion RMB in 2021.

Adjusted operating income was 2.03 billion RMB, with a margin of 16%, compared with 2.59 billion RMB in 2021. The decrease in total revenue and adjusted operating income was mainly due to the significant pressure on both Momo and Tantan caused by COVID-related factors and regulatory factors. We adjusted some of our strategic priorities mid-year, focusing on cost reduction and efficiency improvement, to mitigate the negative impact of external factors on our bottom line. Total revenue from the Momo app and standalone app for fiscal year 2022 was 11.3 billion RMB, down 10% from last year. The decrease was due to the decline in Momo revenue, while the standalone apps maintained rapid growth momentum from a high base in 2021. Adjusted operating income was 2.36 billion RMB in 2022, with a margin of 21%. compared with 2.92 billion RMB in 2021, with a margin of 23%. Ten times total revenue was 1.37 billion RMB, down 33% from 2021. Adjusted operating loss was 330 million RMB, compared with 337 million RMB in 2021. Although revenue declined from last year due to the impact of the pandemic and the reduction in channel investments, Tantan's adjusted operating loss narrowed as a result of our initiatives to reduce cost and improve efficiency starting in July. Bottom line performance improved significantly in the latter half of the year, laying a solid foundation for Tantan to achieve break-even in fiscal 2023. 接下来回顾一下团队2022年在各项战略重点方面取得的成果。 年初,我们对默默主战,Tantan和独立性Apps

These three sectors are in different stages of development, each setting a corresponding strategic goal. MoMo is the largest in the group of products, and is the most mature product in the commercial experience. Our main requirement for MoMo is to achieve users' scale and steady progress with limited sales budget. At the same time, we want to ensure that the cash flow business is stable and productive, even though the epidemic and supervision of the year are full of uncertainties, which leads to a greater gap between our users and revenue targets. But the team took the cost-benefit strategy to respond to the external challenges and temporarily controlled the rate of decline, and laid the foundation for the re-growth of the cash flow business after the good turn of the external environment this year. The goal of the beginning of the year is to improve market sales efficiency and core dating experience to promote steady growth of user scale. But due to the pandemic control and continuous increase since the beginning of the year, it has seriously affected the needs of user dating and paid members. As a result, in the second half of the year, we will adjust Tantan's strategic goal to cut head control, continue to reduce losses, run in the product and business model suitable for Asian market dating culture, and pursue growth on the basis of profit-loss balance. In the past two seasons, Tantan's financial performance has well verified the importance of strategic adjustment and the team's efficient execution ability. Regarding new business, our goal is to continue to enrich product governance,

Now, I'll discuss the execution of our strategic priorities in 2022. At the beginning of the year, we set separate goals for Momo, Tantan, and our new standalone apps, given the different business cycles. For the Momo app, the product with the largest user base and most mature commercial experience in our brand portfolio. Its main goal was to maintain a stable user base with a limited marketing budget and seek growth opportunities on top of that, while ensuring the cash cow business remains stable. Although many uncertainties surrounding the COVID and regulatory environment last year resulted in a relatively large gap between that goal and actual results. I'm pleased to see that in response to the external challenges, our team timely mitigated the decline in profit by reducing cost and improving efficiency. This has laid a solid foundation for our cash cow business to turn to a growth trajectory once the external environment improves this year. Tantan's goal was to deliver solid user growth by improving marketing efficiency and the coordinating experience. However, the COVID situation continued to deteriorate from the beginning of the year and largely affected users' daily sentiment and their propensity to pay for value-added services, resulting in a significant decline in channel ROI. Therefore, we decided to adjust the Tantan's strategic goals in the second half of the year to focus on narrowing net loss by reducing low efficiency channel marketing spend and accelerating our efforts to develop products and modernization models that are suitable for the Asian dating culture in order to pursue profitable growth. Tantan's financial performance in the past two quarters has clearly demonstrated the importance of our strategic adjustments and our team's strong execution ability. With respect to the new products and businesses, our goal was to continue to enrich our product portfolio and push the boundaries beyond Momo and Tantan. We made steady progress on this front in 2022. Next, I'll walk you through the details.

首先是MOMO主战用户及核心运营数据。 2022年平台流量及活跃度与上年相比面临了更加严峻的挑战。 主要压力来自年初以来日趋收紧的疫情防控政策。 以及12月疫情政策开放后,全国多处地区发生了大面积感染。四季度默默的MAU9,460万人,环比下降13%。疫情的快速扩展导致自然量及流存明显回落。出于ROI考虑,货客团队及时缩减了投放的规模,以降低疫情高峰期不必要的用户增长成本。MAU下滑导致四季度的付费用户数量环比减少60万至780万人。 In 2022, the channel team aims to improve investment efficiency and continue to optimize the channel strategy, and will focus on the transition from active users to paid users. The increase in channel efficiency has reduced the financial pressure in the difficult external environment, and has had a positive effect on the stable output of cash flow business. With the social will of users gradually warming up after the Spring Festival, MAU has shown a continuous trend of growth, and has now recovered to the level of 3G last year.

Firstly, regarding MomoApp user growth and key operating matrix, in 2022, user traffic and engagement level faced the most severe challenges in comparison with the previous year. The main pressure came from the increasingly tightened COVID containment measures throughout the year, as well as the COVID infection surge in many regions in China after the removal of the zero COVID policy in December. In the fourth quarter, Momo had 94.6 million monthly actives, down 13% sequentially. The rapid spread of COVID led to a significant decline in organic traffic and retention. For ROI considerations, our team scaled back investments in channels timely to reduce unnecessary spending during the peak of the pandemic. The decline in MAU caused the number of paying users to decrease by 600,000 to 7.8 million in the fourth quarter. In 2022, to improve marketing efficiency, our team continued to optimize channel strategy and shifted our user acquisition focus from MAUs to paying users. The improvement in channel marketing efficiency mitigated our financial pressure in the challenging environment and had a positive impact on ensuring the stability of our cash call business. With user social sentiment gradually recovering after the Chinese New Year, MAUs started to continuously trend upward and have bounced back to the same level as Q3 last year. Meanwhile, users' time spent surpassed its peak level in 2022. 接下来介绍一下确保现金流业务稳定产出这一战略重点的执行情况。 2022年多重因素叠加给以直播为主的默默营收带来了严峻的挑战。 新Apps对WASC贡献的增量流水部分缓解了

Now, I'll discuss progress we made regarding the priorities of ensuring our cash cow business remains stable. In 2022,

Multiple external factors brought severe challenges to MoMo app top line, particularly the live streaming business. The incremental revenue contributed by the new standalone apps to MoMo segment VaaS line partially elevated the pressure from MoMo app. For fiscal 2022, the revenue ratio of VaaS and live streaming increased by 22 percentage points from the previous year to 87%. Our team leveraged VaaS use cases to unleash the spending potential of long-tail users which created a more balanced revenue structure.

四季度默默主APP直播業務營收15.6億人民幣, 同比下降20%,環比增長3%。 2022年直播總營收59.7億人民幣, 同比下降20%。 2022年直播營收下行壓力主要來自兩個方面。 第一是疫情導致的宏觀經濟, In the second half of the year, the live broadcast team continued to launch new play methods for users with stronger consumer capacity to improve the use experience of high-consumption groups. The growth of head users promoted live broadcast revenue to continue to increase in the second half of the year. Although in December, after the opening of the epidemic policy, a large number of live broadcast infections caused a very serious impact on supply and flow in the short term. However, the increase in income from the four-season live streaming has played a very important role in the growth of the annual net profit of the 11th of November.

Momo's live streaming revenue was 1.56 billion RMB for the fourth quarter, down 20% year-over-year but up 3% sequentially. For fiscal 2022, revenue from live streaming totaled 5.97 billion RMB, down 20% year-over-year. In 2022, the pressure on live streaming revenue mainly came from two factors. Number one, the market headwinds and spending softness as a result of the pandemic. And number two, product adjustments were made in Q2 to meet regulatory requirements. In the second half of the year, our live streaming team introduced new features targeting high-paying users to improve their product experience. And the expansion in the number of top cohort users drove continuous growth in live streaming revenue. In December, a large number of broadcasters suspended work due to high infection rate after the reopening, causing severe short-term disruptions to the supply side and revenue growth. However, the incremental revenue from the year-end competition in November provided strong support for the live-streaming revenue to grow sequentially in Q4.

In 2022, the live-streaming team will gradually move from a simple flow growth to a profitable growth. By adjusting the live-streaming strategy and The game design and other ways to control costs, the winning point of the tournament and the prize arrangement are also reduced under the influence of this idea. At the end of the year, the pressure of the tournament activities on the interest rate is less than that of the previous year. Therefore, the interest rate of the fourth quarter is less than that of the previous year. The overall policy of division and supply and demand are always stable in the year.

In 2022, our live streaming team gradually shifted the operational focus from revenue growth to profitable growth and controlled costs by adjusting the operational policy and design of the Gamify features. With this guideline in mind, we introduced some cost-saving designs to the year-end competition events. This partially reduced the pressure of large-scale events on the gross profit margin. The sequential dip in GP margin in Q4-22 was milder than in the same period last year. The overall revenue sharing policy and supply-side ecosystem remained stable throughout the year.

接下来介绍增值业务。 四季度不包含碳碳,WAS营收12.7亿人民币, 同比增长2%,环比下降5%。 同比增长全部来自新业务的增量流水。 With regards to VAS, revenue from value-added services, excluding Tantan, totaled 1.27 billion RMB for the fourth quarter, up 2% year-over-year and down 5% sequentially.

The year-over-year growth was entirely attributable to the incremental revenue from the new stand-alone apps. In the fourth quarter, vast revenue from the MoMo app totaled 1.04 billion RMB, down 9% both year-on-year and quarter-over-quarter. Revenue from the stand-alone apps was 220 million RMB, up 129% year-over-year and 15% sequentially. 2022 财年不包含探探,WAS总营收51.8亿人民币,

The same growth of 7%. Among them, MoMo主战WASH revenue since the beginning of the year has been continuously suppressed due to the impact of the epidemic. The annual total revenue of 44.5 billion RMB, the same decline of 2%, is significantly lower than our expectation at the beginning of the year. To make up for the shortage of主战流水, the team has increased the commercialization force of new apps, promoting revenue growth of 143% to 7.37 billion RMB. In 2022, the level of epidemic control is getting more and more strict. From online to offline, the scene of social transformation with stronger properties, traffic and income have undergone obvious pressure. For example, in the scene of group owners and nearby people greeting each other, the consumer enthusiasm of virtual gifts is significantly reduced before the lockdown, and the revenue scale of membership businesses with the purpose of improving the efficiency of looking for people is also declining. In contrast, the video business with weaker LBS properties 在产品及玩法创新的带动下,能够相对有效地对冲疫情及对流量以及消费意愿造成的冲击,推动年度营收,同比稳中有深。 For fiscal year 2022, revenue from value-added services excluding Tantan totaled 5.18 billion RMB, up 7% year-over-year.

vast revenue from the MoMA app decreased 2% year-over-year to 4.45 billion RMB due to the continuous pressure from COVID. MoMA app vast revenue was considerably lower than our expectation at the beginning of 2022. In order to offset this revenue decline, our team pushed harder on monetization of new apps, driving revenue from these new apps collectively to increase 143% year-over-year to 737 million RMB. As COVID control measures became increasingly strict in 2022, social use cases with higher conversion of online to offline activities bore significant pressure on both traffic and revenue fronts. For example, users' enthusiasm on virtual gifts consumption in interest groups and in greetings from the nearby people list significantly weakened compared with before the strict COVID control measures were implemented. Revenue from membership subscriptions also declined because this service represents paying features designed to increase users' efficiency to make new connections that they can potentially meet offline. In contrast, the audio and video-based social entertainment experiences with less LBS attributes were able to effectively offset the impact of COVID on traffic and users' propensity to pay and drove steady revenue growth in 2022 by leveraging innovative products and features.

First, user trends and overall financial performance. In order to deal with the ongoing epidemic control that has been upgraded since the beginning of the year, the business and financial impact caused by carbon emissions. In the second half of the year, the management city decided to launch a strategy to reduce carbon emissions. The channel is lowered to reduce carbon loss. After the opening of the epidemic policy in early December, many regions throughout the country have entered the peak of infection. This has caused a great impact on traffic. If the channel is added, the channel will be further shortened. At the end of the year, 18.4 million MAUs fell by 12% and fell by 26% before June 30. The rate of transmission caused by the decline in MAUs and the outbreak of the epidemic decreased by 300,000 people to 1.7 million people. After the Spring Festival, the epidemic gradually dissipated, and the size of the users entered a recovery path. By the end of March, the DAU had recovered to the level before the outbreak of the epidemic in December last year.

With respect to Tantan, I'll start with user trends and overall financials. In response to the business and financial impacts on Tantan caused by the escalating pandemic control measures since the beginning of the year, the management decided to pursue a cost control strategy in the second half to narrow Tantan's net loss by reducing marketing spend and cutting investments in channels and methods with low ROI. Since the removal of the zero COVID policy in early December, Many regions across the country experienced a surge in COVID infections, which put a lot of pressure on user traffic. Compounded by the reduction in China investments, China's overall MAU decreased 12% quarter-over-quarter to 18.4 million in December, down 26% from June before we initiated cost controls. The number of paying users was 1.7 million, down 300,000 sequentially. mainly due to the decline in both MAU and paying conversion amid the fast-growing COVID infections. As infection gradually eased off after the Chinese New Year, traffic started to resume growth. DAU in early March has recovered to the level before the pandemic outbreak in December last year.

The same rate dropped by 21%, and the same rate increased by 2%. The same rate drop mainly comes from the decline of paid users. The same rate increase comes from the increase in the number of live broadcasts and high-end black gold members promoting RPPOO. The decrease in paid users' income caused pressure on the income. Based on the business line, WAAS's income is RMB1.84 billion, and the same rate dropped by 9%. Although the number of new member products has helped to improve WAAS and RPPOO, Now, I'll briefly review Tenta's financial performance.

Total revenue for the fourth quarter was 347 million RMB, down 21% year-over-year, but up 2% sequentially. The year-over-year decrease was mainly due to the decline in the number of paying users. The sequential growth was due to the improvement in the RP pool, driven by live streaming and the new premium Black Gold membership service, which offset the pressure on revenue caused by the decline in paying users. Vast revenue was 184 million RMB, down 9% sequentially. Although the sales of new membership service played a positive role in improving Bath RPPOO, the increase couldn't fully offset the pressure from paying user decline, because membership revenue is highly correlated with the number of paying users. On the other hand, the live streaming business, which is more sensitive to revenue-oriented operational efforts, our team was able to drive significant RPPOO growth through product improvements and new features. As a result, live streaming revenue for the fourth quarter was up 17% sequentially to 163 million RMB. 2022年,看看总营收13.7亿人民币。同比下降33%,下行压力主要来自于与疫情和减头控本相关的付费用户下滑。分业务线看,WAS总营收8.24亿人民币。 For fiscal year 2022, Tantan's total revenue was 1.37 billion RMB, down 33% year-over-year, mainly due to the decrease in paying use account resulting from COVID and our initiative to reduce channel investments. Vast revenue in 2022 was 824 million RMB, down 27% year-over-year, and live streaming revenue was 544 million RMB, down 40% year-over-year.

2022 fiscal year, Tantan adjusted and lost nearly 3.06 billion RMB. 2021 fiscal year, Tantan lost 3.37 billion RMB. Although Tantan's annual loss in 2022 is still relatively high, it is due to our effective cut-off-the-head strategy. Tantan's adjusted net loss for fiscal year 2022 was 306 million RMB compared with 337 million RMB in 2021. Although the net loss in 2022 was still relatively large,

adjusted net loss was substantially narrowed in the latter half of the year, thanks to our effective strategy to control cost and optimize channel investments. The average quarterly adjusted net loss significantly improved from 140 million RMB in the first half of the year to 14 million RMB in the second half, and the efficiency of resource investments greatly improved.

Looking back at the strategic implementation of Tantan 2022, at the beginning of the year, before the epidemic situation worsened, our demand for Tantan was to increase the market sales efficiency and the core dating experience to promote user-scale stable growth. However, in the second quarter, the epidemic prevention and control policy has been tightened, which has caused a very serious negative impact on user circulation and payment transfer. New customer circulation and payment transfer have determined that LTV and the important indicator of the return rate of customers. The significant decline in these data leads to the customer entering a cycle of buying more and losing more. The growth that can not bring profit is against the business logic and is not sustainable. In order to deal with the uncertainty of the epidemic, we decided to change the growth method at the cost of losses in the second half of the year, and choose a more stable strategy, which is to reduce capital control and continue to reduce losses. By algorithm, product innovation and the promotion of new paid products, Now, let's look at the progress Penta has made against its strategic priorities.

The strategic goal we set at the beginning of the year before the pandemic situation deteriorated was to deliver solid user growth by improving marketing efficiency and quality experience. However, during the second quarter, heightened COVID control measures had a severe negative impact on user retention and paying conversion. New user retention and paying conversion are key indicators that determine LTV and channel ROI. The significant decline in both metrics led to a negative search cycle, where the more user we acquired, the greater the financial loss. Growing the user base without making a profit not only makes no economic sense, but is also unsustainable. In response to the uncertainties created by the pandemic, in the second half of the year, we adopted a more prudent marketing strategy rather than grow at the expenses of bottom line. We reduced the spending in low efficiency channels to narrow net loss. At the same time, we continue to focus on improving user retention and ARPU growth through algorithm, product innovation, and new non-membership VAS features. Once ROI turns positive, we will reinvest the profit into marketing to create a self-sustaining growth cycle.

接下来介绍下我们在渠道提高货客效率以及产品提升留存和UP这两方面都做了哪些具体工作。 首先是渠道,年初以来货客团队通过优化广告素材, 灵活调整新增及召回比例,推动渠道效率持续提升。 因此, Although the large-scale outbreak of the epidemic in December caused the overall user size to be more than expected, but the customer price, channel flow and new app, these important customer indicators, compared with the previous year, have been improved to a different extent. The annual customer price has dropped nearly 20%, especially in the fourth quarter, the indicator has dropped 50%, while the new app has increased more than 40%. Compared with the previous year, the average user age is younger, and the new female user ratio remains at a reasonable level. Next, let's look at the progress we've made in terms of improving user acquisition efficiency and enhancing retention and ARPU.

Firstly, on the channel front, since the beginning of the year, our team continued to improve channel efficiency by optimizing ad materials and adjusting the proportion of new users and dormant users. Therefore, Although the large-scale outbreak of the pandemic in December led to a larger than expected decline in user base, the key user acquisition indicators, such as the unit acquisition cost, retention, and new user R pool, have all improved to varying degrees compared with the previous year. The average unit acquisition cost for fiscal year 2022 was down nearly 20% year-on-year. And especially in Q4, user acquisition cost was down 50% from the year-ago period. and new user R pool increased by more than 40%. Compared with the previous year, the average user age tended to be younger, and the proportion of new female users remained at a satisfactory level. Our team maintained the stability of the user experience and of the platform ecosystem despite the deteriorating pandemic situation and the decline in new users resulting from the channel investment reduction. 再通过新的产品体验, In terms of improving our pool through new product experiences, we have clarified two important directions. First, for user products, we need to explore effective social experiences beyond the swipe and match features. Second, for commercial products, we need to introduce non-membership vast paying models to improve per user revenue. During the year of 2022, we made a few important optimizations to the chatroom experience, which have played a positive role in improving retention and the time span of female users, and of those who are reluctant to show their real photos. At the same time, as a consuming experience based on virtual gifting, Chartroom can also effectively unleash the spending potential of different cohorts of users when it comes to monetization.

In 2002, while the team was exploring non-membership WASPs, we continued to dig deeper in the direction of member subscription, In 2022, in addition to exploring non-membership VAS features, our team also continued to dig deeper in the direction of membership subscriptions. In the second half of the year, we launched a high-end black gold membership service on top of the SVIP.

This was immediately well-received by a high-spending cohort, making a positive impact on our people expansion.

接下来聊下创新业务。 以追求收入和利润为目标的WAS和游戏Apps。 财务数据合并在幕幕业务线下。 四季度,独立新Apps共计营收2.29亿人民币, 同比翻倍,环比增长13%。 2022年, Next, I'll review the progress we made with our new endeavors. For the new standalone apps,

Financials of the profit-oriented vast and gaming apps are consolidated under MoMA's P&L in our segment reporting. In the fourth quarter, revenue from the standalone apps totaled 229 million RMB, doubled from the year-ago period, and up 13% sequentially. For fiscal 2022, total revenue of our new endeavors was 791 million RMB, up nearly 150% year-over-year. All standalone social apps have started to contribute to the groups profits this year while delivering rapid top-line growth. We expect the three standalone apps to continuously contribute meaningful revenue and profit to the group.

除了以盈利为目的的产品外, 2022年我们首次在非ROI导向的产品方面取得了突破。 年初我们抓住了待机更替的机遇, 推出了首个面向00后的大DAU产品贴贴。 用户规模很快就达到了非常可观的体量。 In addition to profit-oriented products, we made breakthroughs in non-RY-oriented products for the first time in 2022. At the beginning of the year, we took the opportunity of the generational transaction to launch the first large DAU product targeting GenZ and GenAlpha users.

and the user base quickly reached to a considerable level. This confirms our team's competitive advantage in discovering new markets and seeding new opportunities in the social space. Going forward, we will accelerate the pace of new product exploration based on trial and error and strive to provide better social products for users of different ages and with different needs.

我还是分默默主App探探和新业务三部分来讲。 首先是默默,对于默默主战成熟产品, 我们的要求是稳规模,降成本, 保证现金流业务持续稳定产出。 实现这个目标的两个关键因素在于, 一,持续优化产品运营,拓展新的营收玩法。 第二,是提高资金及人员的使用效率。 探探今年的战略目标是实现盈亏平衡, a product and business model that is suitable for Asian market dating culture, and pursue sustainable growth on the basis of the business cycle. To achieve this goal, we need to work together with channels and products. Regarding new products, our plan is to continue to enrich product evidence, widen the business boundary beyond the desert, and build a long-term growth engine. Among them, the goal of ROI for independent apps is to continue to expand the use scale, and contribute more water and profit to the group.

This concludes our business updates. Now, I will briefly go through our strategic priorities for 2023. Firstly, for the mature Momo app, our goal is to keep the users and revenue scale stable and continue to optimize on-cost structure and maintain the productivity of the cash cow business. To achieve this goal, we will continue to optimize product operation and introduce new monetization features as well as improve cash utilization and personnel efficiency. Secondly, for Tantan, our goal is to achieve break-even for the year and pursue sustainable growth on the back of a positive business cycle. To achieve this, we will work on both channel and product fronts so we can build product and monetization models that are suitable for the Asian dating culture. And thirdly, with respect to new products, we will enrich our product portfolio, push the boundaries beyond Momo and Tantan, and develop long-term growth engine. Specifically, our plan for ROI-oriented standalone apps is to continue to scale up profit and to contribute more incremental revenue and profit to the group top line and bottom line. In addition, we'll further explore opportunities for large DAO products to open up a new growth path.

Finally, I would like to announce that the Board of Directors has approved a special cash issuance plan for each stock of $0.72. The cash issuance total is about $1.37 billion, which is equivalent to 50% of the net profit after the adjustment in 2022. Those who are familiar with us know that this is our success in continuing to share with shareholders for the fifth year in a row. Lastly, I would like to conclude by announcing that our board has declared a special cash dividend in the amount of $0.72 per ADS.

which will amount to a total cash payment of approximately $137 million, or 50% of the adjusted net income attributable to Hello Group Inc. in 2022. Investors who have been following us long enough will know that this is the fifth consecutive year that we have shared the fruit of our work with our shareholders. Whatever decision we make in terms of driving organic business growth, identifying decent investment opportunities, or paying back shareholders with dividends or in the form of equity buyback. The fundamental principle of our capital allocation strategy is to create long-term value for our shareholders. I would like to thank you all for your faith in us. Now, let me pass the call over to Cassie for financial review.

Cassie, please. Thanks, Tonto and Ashley. Hello, everyone. Thank you for joining our conference call today. Now, let me briefly take you through the financial review. Total revenue for the fourth quarter of 2022 was 3.21 billion RMB, down 13% year-on-year and less than 1% quarter-on-quarter. Non-GAAP net income attributable to the company was 487.9 million RMB, excluding the impact of accrued income tax expenses on the undistributed earnings, which were not on a comparable basis for the two periods. Non-GAAP net income in the fourth quarter of 2022 was up 8% from the year-ago period, despite the top line decrease as a result of our cost control efforts. Looking into the key revenue line items for the quarter. Firstly, on live broadcasting. Total revenue from live broadcasting business for the fourth quarter of 2022 was 1.72 billion RMB, down 20% young year, but up 4% quarter-over-quarter. Mobile app live broadcasting revenue totaled 1.56 billion RMB for the quarter, down 20% year-on-year, but up 3% quarter-over-quarter. The year-over-year decrease was due to the pressure caused by the COVID and regulatory factors. The sequential growth was mainly attributable to the incremental revenue generated by the year-end competition event. Time-to-time live broadcasting revenue amounted to 162.9 million RMB. down 19% from Q4 last year, but up 17% from the previous quarter. The year-over-year decrease was mainly due to the negative impact of the pandemic and reduced channel investment, resulting in a significant decrease in the paying user count. The sequential increase was driven by R2 growth thanks to our product and operational efforts. Revenue from value-added service for the fourth quarter of 2022 was 1.45 billion RMB, down 2% from Q4 last year and 6% sequentially. Revenue from value-added service on an ex-tom-tom basis reached 1.27 billion RMB in the fourth quarter of 2022, a 2% increase year-on-year, but down 5% sequentially. The year-over-year growth was driven by incremental revenue contributed by the standalone new applications. The sequential decrease was due to pressure on MomoApp LBS-related features caused by the deteriorating COVID situation in China in Q4-22. Tannan's value-added service revenue amounted to remain be $183.8 million, down 22% from Q4 last year and 9% from the previous quarter. The decrease was due to the pressure on TomTom's MAUs and paying conversion caused by the COVID-related factors, as well as the reduction on marketing spend. Non-GAAP cost of revenue for the fourth quarter of 2022 was 1.91 billion RMB compared to 2.19 billion for the same period last year. Non-GAAP gross margin for the quarter was 40.4%. same as the year-ago period and down 1.3% from last quarter, mainly due to the incremental expense in connection with the year-end competition event for live streaming. Non-GAAP R&D expenses for the fourth quarter was 250.5 million RMB compared to 279.7 million RMB for the same period last year, or a 10% decrease YYY. The decrease was due to continuous optimization in personnel costs since the beginning of the year. Non-GAAP R&D expenses as a percentage of revenue remained stable at 8% from the year-ago period. We ended the quarter with 1,705 total employees, of which 459 are from Tantan, compared to 2,051 total employees, of which 552 from Tantan a year ago. The RMB personnel as a percentage of total employees for the group was 63% compared with 62% Q4 last year. Non-GAAP sales and marketing expenses for the fourth quarter was 398.6 million RMB or 12% of total revenue compared to 648.6 million RMB or 18% of total revenue for the same period last year. The significant year-over-year decrease both in terms of absolute RMB amount and as a percentage of revenue was primarily attributable to Tantan's shift in marketing strategy to cut spending on low-efficiency approaches in order to take care of ROI, and to a lesser degree, reduction of Momo's marketing spend amid a pandemic outbreak. Non-GAAP G&A expenses was 84.9 million RMB for the fourth quarter of 2022, compared to 89.4 million RMB for the same period last year, representing 3% and 2% of total revenue respectively. Now briefly on other operating loss, other operating income slash loss item. Other operating loss for the quarter was 65.2 million renminbi compared to an income of 38.6 million renminbi for the same period last year. In Q4 2022, we accrued 92.9 million renminbi of potential loss related to a MoMA user's alleged illegal activity and embezzlement of funds, which was recharged and consumed on MoMA platform. There is no suspected or alleged wrongdoing on the part of the group. The 92.9 million RMB involved in the case is recorded as restricted cash on our balance sheet. Until the ruling of the court is announced, we won't know for sure whether the fund will be ultimately released or instead drawn from our account to compensate a plaintiff in the case. However, for conservative purpose, we've decided to take the item into our P&L as an operating loss in Q4 2022. Other operating loss caused by the accrued amount was partially offset by a couple of income items. Non-GAAP operating income was 499.2 million renminbi, a decrease of 2% from Q4 2021 and 18% from the previous quarter. Non-GAAP operating margin for the quarter was 16%, up 2 percentage points from the same period last year, but down 3 percentage points from the previous quarter. Non-GAAP OPEX as a percentage of total revenue was 23%, a decrease from 28% for Q4 2021 and 24% from last quarter. Non-GAAP operating expenses on a year-over-year basis decreased 28%. The decrease in both absolute RMB amount and as a percentage of revenue for OPACs was mainly due to the reduction in social marketing expenses and to a lesser degree optimization in personnel costs. Non-GAAP operating expenses decreased 4% sequentially. This is attributable to the decrease in marketing expenses, which offset the increase in seasonal expenses, such as year-end bonus. Now briefly on income tax expenses. Total income tax expenses was 110.3 million RMB for the quarter, with an effective tax rate of 19%. In Q4, a company accrued withholding tax income of 39.7 million RMB, which is 10% of undistributed profit generated by our roll fee. Without a withholding tax, our estimated non-GAAP effective tax rate was around 12% in the fourth quarter. Now turning to balance sheets and cash flow items. As of December 31st, 2022, whole groups cash, cash equivalents, short-term deposits, long-term deposits, short-term investments, and restricted cash totaled 13.4 billion RMB compared to 15.71 billion RMB as of December 31st, 2021. The decrease was due to a number of cash flow items, including our cash dividend payments, repurchase of the company's convertible notes, repurchase of the company's equity under the ongoing buyback program, and payment to Chinese tax authorities to repatriate cash from our wolfie in China to our offshore entity. Net cash provided by operating activities in the fourth quarter of 2022 was 539 million RMB compared to RMB 666 million in the fourth quarter of 2021. Lastly, on business outlook, we estimated our first quarter revenue to come in the range from 2.6 2.65 billion renminbi to 2.75 billion renminbi, representing a decrease of 15.8% to 12.6% year-on-year, or a decrease of 17.5% to 14.4% quarter-over-quarter. For Q1 2023, on a sequential basis, we expect the total revenue from both MoMo and TanTan to decline meet teens due to the inflection surge the infection surge after reopen, coupled with the Chinese New Year negative seasonality. Please be mindful that this forecast represents the company's current and preliminary view on the market and operating conditions, which are subject to changes. That concluded our prepared portion of today's discussion. With that, let me turn the call back to Ashley to start Q&A. Ashley, please. Thanks.

Just a quick reminder before we take the questions, please ask your questions in Chinese and followed by English translation by yourself.

Operator, we're ready for questions. Thank you.

Thank you. If you wish to ask a question, please press star then one on your telephone and wait for your name to be announced. If you wish to cancel your request, please press star then two. If you're on a speakerphone, please pick up the handset to ask your question. Our first question today comes from Leo Chang with Deutsche Bank. Please go ahead.

谢谢管理层接受我的提问。 我的问题是关于默默的APP。 随着线下活动恢复常态化以后, 想请问一下管理层对于近期默默APP用户及收入的恢复情况是怎么样的? Thank you, management, for taking my question. My question is regarding to the Momo app. As the offline activities resume normalization, can management share the latest user and revenue recovery trend of the Momo app? Additionally, what is the target of Momo's revenue in 2023? Thank you.

I mentioned in my speech that after the COVID-19 policy was released in early December, the number of users was greatly affected in a short period of time, which led to a significant decline in the number of MAUs in the fourth quarter. In early January, the number of infected cities, mainly in the northern region, reached its peak. The number of local users gradually recovered as the pandemic eased. However, the recovery trend was interrupted by the traditional spring and winter break in the middle of January. After the low in the spring, the DAU began to rebound quickly in early February. Then the real number is obviously higher than the level in early January, which is better than our previous forecast. Currently, the user size has recovered to the level of last year's summer. Then in terms of this operation strategy, then MoMo's main debt will be based on ecology and products. In terms of activities and competitions, it will continue to adopt a conservative strategy. The focus will be on guaranteeing profits, not charging income.

Let me translate first.

So as I mentioned earlier, the reopening in early December severely affected our user base in a short period of time, resulting in a sharp sequential decline in MAUs in Q4. In early January, after the infection rate reached its peak in many regions, mainly in northern part of China, local users started to gradually come back as the pandemic subsided. However, the recovery trend was interrupted by the traditional low seasonality of Chinese New Year, when people started to return to their hometowns in mid-January to get ready for the holiday celebration. But DAU rebounded rapidly in early February after the Chinese New Year trial, and the growth rate was actually significantly higher than that in early January, and it was also better than our previous expectations. And currently, MoMA user base has rebounded to the same level as the end of summer holiday last year. In terms of operation strategy, MoMA app will remain focused on the ecosystem and product experience. We will continue to take a conservative approach in terms of event operation and competition arrangements. That means we will prioritize stabilizing profit over driving non-profitable revenue growth. And I'll leave it to Cassie for financial details.

Sure. Let me briefly share what we can say at this point about that good old question. For Q1, as you can see from our guidance, most live streaming is going to see mid to high teens decrease from last year. The biggest reason here is that last quarter was last Q1 was relatively a high base because if you remember correctly, it was before the regulatory changes in May, regulatory changes that happened in May 2022. That sort of made the prior Q1 sort of a tough con for us. On top of that, I suspect that not having full visibility into the macro condition for the rest of the year is still weighing on the mind of some of our high-paying users. At least that's the general sentiment that we are getting from talking to a portion of our top spenders. We'll see if the sentiment gets better over time as the year progresses and more stimulating policies get released. So that's Q1. Looking out to Q2 onwards, we are definitely going to see quarter-over-quarter increase as both traffic and the whole economy continues to recover from the past three years of COVID restrictions. Plus, it looks like that the fluid regulatory situation that had been hanging over the sector over the past two to three years is going to is also going to see some stabilization for the coming few quarters. The only uncertainty is, I would say, is how strong the macro gets as we move deeper into the year, because that's really going to determine the spending sentiment of the top of the pyramid users for live streaming. For value-added service, Q1 this year is also a bit tough due to the January trough related to China's reopen infection surge. Another factor here was related to Sochil, which was heavily impacted in Q1 due to the Turkey earthquake, as well as the heavy depreciation of the Egyptian pound against U.S. dollar. Some of our payment channels in Egypt was actually suspended by local authorities due to that reason. We are currently shifting both the marketing dollars as well as some of the other resources to other Gulf countries where the growth momentum remains quite strong. Overall, we expect value-added service to continue to grow this year with second half being substantially stronger than first half due to the aforementioned several factors. So if you put all these different pieces together, I guess for the ex-tenten part, We're going to probably see continuous quarter-over-quarter improvement throughout this year, driven by the gradual recovery as well as the strong momentum that's coming from the smaller new apps. How fast the top line may ramp up throughout the year is really going to, as I said, heavily depend on the macro conditions. So I hope that sort of answers your question.

The next question comes from Thomas Chong with Jefferies. Please go ahead.

In addition, I would like to ask, from this chat room, how much income can be achieved this year? Thank you. Thanks, management, for taking my question. My question is about Tantan. Can management share about the latest user trend as well as the outlook for 2023 revenue and profitability? On the other hand, In terms of the revenue scale, can management share about the chat room in 2023? Thank you. 坦坦的用户经历了跟默默比较类似的一个走势。 疫情爆发期间出现了快速的下跌,并于春节后处理反弹。 目前这个DAU已经恢复到11月的水平。 在此基础上,是否能够持续的增长以及增长的速度,

It depends on whether we can see the continuous improvement of product experience and the improvement of flow. And whether there is a new paid product that can actually improve the ROI. I think in the past one or two years, the mode of pursuing user growth at the expense of sacrifice profits has not worked. What we need is growth that can generate profits. If the ROI increases significantly, we will restart the market. The number of users will increase. In this aspect, investors need to give us some time.

Canton user base showed a similar trend to MoMo, falling sharply during the surge of the infection and bottoming out after the Chinese New Year. Currently, DAU has rebounded to the same level as November last year. Whether or not we can continue to grow from there and at what pace depends on if we can see continuous improvement in product experience and user retention, as well as our ability to introduce new paying features that can effectively improve channel ROI. I don't think the pursuit of user growth at the expenses of profit, like in the past year or two, is still a viable model. So what we need is revenue growth that can generate profit. We will resume channel investment to accelerate user growth if there is a significant improvement in ROI. and investors are pulling to be a bit patient with us on this front.

So in terms of revenue growth, revenue growth is likely to come earlier and faster than user growth.

And because both Black Gold membership and the chatroom experience are actually built on well-established monetization models, And both features play a positive role in enhancing user experience and retention. So therefore, even if user scale remains at the current level, we will continue to grow sequentially from Q1. And as for chatroom experience, we will focus on refining product and operations for now. And so we don't expect the chatroom to bring a large amount of revenue this year. But however, we have full confidence in the monetization model and revenue potential of the chatroom experience. I will let Cassie talk about the bottom line.

Okay, about Tantan's bottom line.

Well, if you look at the trajectory of the non-GAAP operating loss in 2022, you can see that we've been consistently narrowing down the operating loss quarter over quarter throughout the year. In Q4, non-GAAP operating loss was already at 15 million renminbi kind of run rate. We expect that narrowing trend, overall narrowing trend to continue into this year, into 2023, which means that we should be looking at a positive bottom line for Tonton toward back half of the year, if not earlier this year. The other thing worth calling out here is that, as Tang Yan mentioned, as long as marketing ROI remains positive, we won't focus too much on growing the bottom line margins at this point for Tan Tan because there are still a great deal of growth opportunities for dating products in the China market. Instead, we could let part of the profit flow back into marketing to drive sustainable user growth as well as top line growth. That's what we meant by, you know, getting into a positive cycle, which is the most important strategic priority for Tantan this year.

Last question. Okay. So, operator, next question, please.

The next question is from Lu Wei Jiang with CICC. Please go ahead.

Good evening, everyone. I'm Lu Wei from CICC. Thank you for accepting my question. 我的问题是关于创新业务,想请关于从分享一下这部分今年的整体的规划和收入,谢谢。 那我自己翻译一下。 Thanks, management, for taking my question. My question is about standalone new applications. Could management share more color on the strategies and revenue expectations of new apps this year? Thanks. 创新业务,RY导向的新产品。

In 2022, we doubled our revenue by nearly 1.5 times and achieved full profit. In 2023, our demand for these products is to increase both revenue and profit. Among them, domestic apps are relatively mature, and users have entered a stable stage. We will increase the profit and profit rate of RP, and drive profit and profit to continue to grow. For overseas products, due to facing a wider market space, In 2022, ROI-oriented new products turned profitable, with revenues up nearly 150% from 2021.

And our goal for these apps this year is to further scale up revenue and profit. For the domestic apps, which are at a more mature stage, the user base is relatively stable at the moment. So we'll continue to expand profits by driving RP pool and margins. And for the overseas apps, which are facing a much broader market space, our goal is to expand new revenue markets on top of deepening the existing territory. Turkish and Egyptian markets may be affected to some extent this year, but overall, we see strong revenue and profit growth opportunities for social apps in the mainland market. We'll continue to make efforts in this direction.

除了这些以收入和利润为目标的 ROI 项产品, DAU 的产品我们也会持续的投入和尝试。 除了贴贴之外,我们实际上还储备了几个大 DAU 项的产品。 目前还在测试当中,等有更多的数据累积后再与大家分享。

In addition to the ROI-oriented products that focus on revenue and profits, we will continue to invest and explore opportunities in DAU-oriented products. And in fact, in addition to TTA, we have several DAU-oriented products in the pipeline currently in beta. We will share more information with the investor community as we accumulate more data.

Operator, do we have any more questions on the queue?

Yes, we have one more from Henry Sun with JP Morgan. Please go ahead.

Thanks management for taking that question. My question is about margin. As you mentioned in a prepared remark, optimizing cost will continue to be a key goal this year. Could management share more color on the cost control strategy and the overall margin trend this year? Thanks.

Sure, sure. I guess that's for me.

For growth profit margin, the biggest driving force here is the payout ratio. I remember someone asked that question last quarter. as well. Actually, probably every quarter we'll face this good old question. My answer remains pretty consistent with what I said at that time last quarter, which is that the supply side factors are, at this moment, pretty stable. That means payout is going to remain largely stable as well. you know, different business of ours, there are different margin profiles. So revenue mix is always going to be another variable in the equation you should consider when modeling out the GP margin. So that's the GP margin line. Moving down that line, last year we did a pretty good job in optimizing the key operating expenses items such as personnel, expenses, marketing costs, as well as infrastructure spending. We just finished the annual budgeting cycle, and it seems that we still have some room to further improve the efficiency across all those spending areas. So investors can expect the operating expenses to further shrink down in a pretty meaningful way this year. And with top-line trend improving as the year progresses, both bottom line and and bottom line margins are going to improve as well. I'm trying to put things into a nutshell. If you look at the top line and the OPEX trends that I mentioned earlier and try to think about how the overall math works this year, there are probably two key takeaways. One is that top line-wise, 2023 is going to see continuous quarter-over-quarter improvement driven by the overall COVID recovery as well as the strong growth momentum coming from the smaller new applications. And the second takeaway is that we're going to continue to optimize our costs and expenses. So bottom line is going to see pretty meaningful growth on a year-over-year basis. basis, especially in the second half of the year. So that's basically the overall financial picture that I can lay out at this point. I have visibility to lay out at this point. For other stuff, I guess we'll have to wait and see as the year progresses. I guess for the interest of time, that's going to be the last question that we take. I'll hand back to Ashley for closing remarks.

Thank you. Thank you everyone for participating in our call and we'll see you next quarter. Have a good night and good morning. Bye.

That does conclude our conference for today.

Thank you for participating. you Thank you. Thank you. you you Thank you. Bye. Thank you.

Ladies and gentlemen, thank you for standing by and welcome to fourth quarter and fiscal year 2022 Hello Group, Inc. earnings conference call. All participants are in a listen-only mode. There will be a presentation followed by a question and answer session. If you wish to ask a question, you will need to press the star key followed by the number one on your telephone keypad. Please note this conference is being recorded. I would now like to hand the conference over to your first speaker today, Ms. Ashley Ying. Thank you. Please go ahead, ma'am.

Thank you, operator. Good morning and good evening, everyone. Thank you for joining us today for Hello Group's fourth quarter and fiscal 2022 earnings conference call. The company's results were released earlier today and are available on the company's IR website. On the call today are Mr. Tang Yan, CEO of the company, and Ms. Peng Hui, CFO of the company. They will discuss the company's business operations and highlights, as well as the financials and guidance. They will both 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 provision 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. Further information regarding this and other risks, uncertainties, and factors is 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 statements as a result of new information for the events or otherwise, except as required under law. I'll now pass the call over to our CEO, Mr. Tang Yan.

Mr. Tang, please. Hello everyone, thank you for joining our call. 2022 was an extremely challenging year for many Chinese companies.

as the COVID resurgence brought a lot of uncertainties to the overall business environment. However, I'm pleased to see that our team withstood external pressures by timely adjusting strategic priorities and corresponding execution plans in the second half of the year with flexible product and operational measures. Despite the challenges, we delivered solid financial results for shareholders, enabling us to conclude the year on a satisfactory note. I will first review the main operating and business results in the fourth quarter and fiscal year 2022, and then I will outline our strategic priorities for fiscal 2023.

不考虑探探默默主战及独立新Apps 共计营收28.7亿人民币 同比下降11% 环比下降1% 调整后营业利润5.14亿人民币 同比下降21% 环比下降20% 对应营业利润率18% 探探营收3.47亿人民币 同比下降21% 环比增长2% 调整后运营亏损 I will start with a brief overview of our financial performance. For the fourth quarter of 2022,

Total group revenue was 3.21 billion RMB, down 13% year-over-year and 1% quarter-over-quarter. Adjusted operating income was 499 million RMB, with a margin of 16%. Total revenue from Momo app and standalone new apps was 2.87 billion RMB, down 11% year-over-year and 1% quarter-over-quarter. And adjusted operating income was 514 million RMB, down 21% year-over-year and 20% quarter-over-quarter. with a margin of 18%. Total revenue from Tantan came in at 347 million RMB, down 21% year-over-year, but up 2% quarter-over-quarter. Adjusted operating loss was significantly narrowed to 15.17 million RMB from 140 million RMB in the same quarter of last year. On a sequential basis, adjusted operating loss continued to narrow further, despite an increase in the year and seasonal expenses. I'm pleased with the progress that Tantan made in improving cost efficiency in the second half of the year.

The main reason for the decline in revenue and profit is related to the epidemic. And supervision and other factors have caused obvious pressure on MoMo and Tantan. For this reason, we adjusted some strategic points at the end of the year. Emphasize the policy of lower capital sales. Try to ease the impact of external factors on income. Convey to the profit level. Not to mention Tantan. MoMo main station in 2022. And independent new apps. Annual revenue of 1.13 billion RMB. The same as a 10% decline. All come from MoMo main station's decline in revenue. New apps maintain a fast-growing trend on the basis of high demand in 2021. After adjustment, the operating profit is 23.6 billion RMB, corresponding to 21% operating profit. Last year, it was 29.2 billion RMB, corresponding to 23% operating profit. Look at annual revenue, 13.7 billion RMB, the same as 33%. After adjustment, the operating loss is 3.3 billion RMB, corresponding to 3.37 billion RMB. For fiscal 2022, total group revenue was 12.7 billion RMB, compared with 14.6 billion RMB in 2021.

Adjusted operating income was 2.03 billion RMB with a margin of 16%, compared with 2.59 billion RMB in 2021. The decrease in total revenue and adjusted operating income was mainly due to the significant pressure on both Momo and Tantan caused by COVID-related factors and regulatory factors. We adjusted some of our strategic priorities mid-year, focusing on cost reduction and efficiency improvement, to mitigate the negative impact of external factors on our bottom line. Total revenue from the Momo app and standalone app for fiscal year 2022 was 11.3 billion RMB, down 10% from last year. The decrease was due to the decline in Momo revenue, while the standalone apps maintained rapid growth momentum from a high base in 2021. Adjusted operating income was 2.36 billion RMB in 2022, with a margin of 21%. compared with 2.92 billion RMB in 2021, with a margin of 23%. Hentai's total revenue was 1.37 billion RMB, down 33% from 2021. Adjusted operating loss was 330 million RMB, compared with 337 million RMB in 2021. Although revenue declined from last year due to the impact of the pandemic and the reduction in China investments, Tantan's adjusted operating loss narrowed as a result of our initiatives to reduce cost and improve efficiency, starting in July. Bottom-line performance improved significantly in the latter half of the year, laying a solid foundation for Tantan to achieve break-even in fiscal 2023.

Next, let's look back at the team's achievements in 2022 in various strategic key areas. In the beginning of the year, we focused on Tantan and independent new apps. These three sectors are in different stages of development, each setting a corresponding strategic goal. MoMo is the largest in terms of customer size as a group product. It is the most mature product in terms of commercialization. Our main requirement for MoMo is limited sales and budget, in order to achieve a steady growth in terms of customer size. At the same time, we want to ensure that the cash flow business is stable and productive. Although the epidemic and supervision of the year are full of uncertainties, we have created a large gap in terms of users and revenue. But the team took the cost-benefit strategy to meet the external challenges and temporarily controlled the rate of decline, and laid the foundation for the re-growth of the cash flow business after the good turn of the external environment this year. Tantan's initial goal is to improve market sales efficiency and core dating experience to promote user scale stable growth. But due to the pandemic control and continuous increase since the beginning of the year, it has seriously affected the needs of user dating and paid members. The ROI of the customers has been greatly reduced. Therefore, in the second half of the year, we will adjust Tantan's strategic goals to reduce capital control, continue to reduce losses, and run in a product and business model that is suitable for Asian market dating culture, and pursue growth on the basis of profit and loss balance. In the past two seasons, Tantan's financial performance has proved the importance of strategic adjustment very well, as well as the team's efficient execution ability. Regarding new business, our goal is to continue to enrich product governance,

Now, I'll discuss the execution of our strategic priorities in 2022. At the beginning of the year, we set separate goals for Momo, Tantan, and our new standalone apps, given the different business cycles. For the Momo app, the product with the largest user base and most mature commercial experience in our brand portfolio. Its main goal was to maintain a stable user base with a limited marketing budget and seek growth opportunities on top of that, while ensuring the cash cow business remains stable. Although many uncertainties surrounding the COVID and regulatory environment last year resulted in a relatively large gap between that goal and actual results. I'm pleased to see that in response to the external challenges, our team timely mitigated the decline in profit by reducing cost and improving efficiency. This has laid a solid foundation for our cash cow business to turn to a growth trajectory once the external environment improves this year. Tantan's goal was to deliver solid user growth by improving marketing efficiency and the coordinating experience. However, the COVID situation continued to deteriorate from the beginning of the year and largely affected user statement sentiment and their propensity to pay for value-added services, resulting in a significant decline in channel ROI. Therefore, We decided to adjust the Tentas strategic goals in the second half of the year to focus on narrowing net loss by reducing low efficiency channel marketing spend and accelerating our efforts to develop products and monetization models that are suitable for the Asian dating culture in order to pursue profitable growth. Tentas financial performance in the past two quarters has clearly demonstrated the importance of our strategic adjustments and our team's strong execution ability. With respect to the new products and businesses, our goal was to continue to enrich our product portfolio and push the boundaries beyond MoMo and Tantan. We made steady progress on this front in 2022. Next, I'll walk you through the details.

首先是 MoMo主战用户及核心运营数据。 2022年平台流量及活跃度与上年相比面临了更加严峻的挑战。 主要压力来自年初以来日趋收紧的疫情防控政策。 以及12月疫情政策开放后,全国多处地区发生了大面积感染。四季度默默的MAU9,460万人,环比下降13%。疫情的快速扩展导致自然量及流存明显回落。出于ROI考虑,货客团队及时缩减了投放的规模,以降低疫情高峰期不必要的用户增长成本。MAU下滑导致四季度的付费用户数量环比减少60万至780万人。 In 2022, the channel team aims to improve investment efficiency, continue to optimize the channel strategy, and shift the focus from active users to paid users. The increase in channel efficiency has reduced financial pressure in a difficult external environment, and has had a positive effect on the stable output of cash flow business. With the social will of users gradually weakening after the Spring Festival, MAU has shown a continuous trend of growth, and has now recovered to the level of 3G last year.

Firstly, regarding MomoApp user growth and key operating matrix, in 2022, user traffic and engagement level faced the most severe challenges in comparison with the previous year. The main pressure came from the increasingly tightened COVID containment measures throughout the year, as well as the COVID infection surge in many regions in China after the removal of the zero COVID policy in December. In the fourth quarter, Momo had 94.6 million monthly active, down 13% sequentially. The rapid spread of COVID led to a significant decline in organic traffic and retention. For ROI considerations, our team scaled back investments in channels timely to reduce unnecessary spending during the peak of the pandemic. The decline in MAU caused the number of paying users to decrease by 600,000 to 7.8 million in the fourth quarter. In 2022, to improve marketing efficiency, our team continued to optimize channel strategy and shifted our user acquisition focus from MAUs to paying users. The improvement in channel marketing efficiency mitigated our financial pressure in the challenging environment and had a positive impact on ensuring the stability of our cash call business. With user social sentiment gradually recovering after the Chinese New Year, MAUs started to continuously trend upward and have bounced back to the same level as Q3 last year. Meanwhile, users' time spent surpassed its peak level in 2022. 接下来介绍一下确保现金流业务稳定产出这一战略重点的执行情况。 2022年多重因素叠加给以直播为主的默默营收带来了严峻的挑战。 新Apps对WAS贡献的增量流水部分缓解了

Now, I'll discuss progress we made regarding the priorities of ensuring our cash cow business remains stable. In 2022,

Multiple external factors brought severe challenges to Momo app top line, particularly the live streaming business. The incremental revenue contributed by the new standalone apps to Momo segment VaaS line partially elevated the pressure from Momo app. For fiscal 2022, the revenue ratio of VaaS and live streaming increased by 22 percentage points from the previous year to 87%. Our team leveraged VaaS use cases to unleash the spending potential of long-tail users which created a more balanced revenue structure.

四季度默默主APP直播業務營收15.6億人民幣, 同比下降20%,環比增長3%。 2022年直播總營收59.7億人民幣, 同比下降20%。 2022年直播營收下行壓力主要來自兩個方面。 第一是疫情導致的宏觀經濟, In the second half of the year, the live broadcast team continued to introduce new play methods for users with stronger consumer capacity to improve the user experience of high-consumption groups. The growth of head users promoted the live broadcast income and continued to increase in the second half of the year. Although in December, after the opening of the epidemic policy, a large number of live broadcast infections caused a very serious impact on supply and flow in the short term, But the increase in revenue from the four-season live streaming has played a very important role in the growth of the annual profit of the 11-month year.

the market headwinds and spending softness as a result of the pandemic. And number two, product adjustments were made in Q2 to meet regulatory requirements. In the second half of the year, our live streaming team introduced new features targeting high paying users to improve their product experience. And the expansion in the number of top cohort users drove continuous growth in live streaming revenue. In December, a large number of broadcasters suspended work due to high infection rate after the reopening, causing severe short-term disruptions to the supply side and revenue growth. However, the incremental revenue from the year-end competition in November provided strong support for the live-streaming revenue to grow sequentially in Q4.

In 2022, the live-streaming team will gradually increase the focus of the business by a simple flow growth and turn to a profitable growth. By adjusting the business strategy and Game design and other ways to control costs, the winning point of the season and the prize arrangement are also reduced under the influence of this idea. At the end of the year, the pressure of the season activities on the interest rate is weaker than that of the previous year, so the interest rate of the four seasons fluctuates less than that of the same period of the previous year. The overall policy of division and supply and demand are always stable in the year.

In 2022, our live streaming team gradually shifted the operational focus from revenue growth to profitable growth and controlled costs by adjusting the operational policy and design of the Gamify features. With this guideline in mind, we introduced some cost-saving designs to the year-end competition events. This partially reduced the pressure of large-scale events on the gross profit margin. The sequential dip in GP margin in Q4-22 was milder than in the same period last year. The overall revenue sharing policy and supply-side ecosystem remained stable throughout the year.

接下来介绍增值业务。 四季度不包含碳碳,WAS营收12.7亿人民币, 同比增长2%,环比下降5% 同比增长全部来自新业务的增量流水。 With regards to VAS, revenue from value-added services excluding Tantan totaled 1.27 billion RMB for the fourth quarter, up 2% year-over-year and down 5% sequentially.

The year-over-year growth was entirely attributable to the incremental revenue from the new standalone apps. In the fourth quarter, vast revenue from the Momo app totaled 1.04 billion RMB, down 9% both year-on-year and quarter-over-quarter. Revenue from the standalone apps was 220 million RMB, up 129% year-over-year and 15% sequentially. 2022 财年不包含探探,WAS总营收51.8亿人民币,

to 7.37 billion RMB. 2022年伴随疫情管控的程度越来越严格,线上到线下社交转换属性较强的场景,流量及收入都承受了明显压力。例如在群组及附近的人打招呼这类场景中,虚拟礼物的消费热情较封控前明显减弱,而以提升找人效率为目的的会员业务,收入规模同样出现下滑。相比之下,LBS属性较弱的音视频业务 在产品及玩法创新的带动下,能够相对有效地对冲疫情及对流量以及消费意愿造成的冲击,推动年度营收,同比稳中有生。 For fiscal year 2022, revenue from value-added services excluding Tantan totaled 5.18 billion RMB, up 7% year-over-year.

vast revenue from the MoMA app decreased 2% year-over-year to 4.45 billion RMB due to the continuous pressure from COVID. MoMA app vast revenue was considerably lower than our expectation at the beginning of 2022. In order to offset this revenue decline, our team pushed harder on monetization of new apps, driving revenue from these new apps collectively to increase 143% year-over-year to 737 million RMB. As COVID control measures became increasingly strict in 2022, social use cases with higher conversion of online to offline activities bore significant pressure on both traffic and revenue fronts. For example, users' enthusiasm on virtual gifts consumption in interest groups and in greetings from the nearby people list significantly weakened compared with before the strict COVID control measures were implemented. Revenue from membership subscriptions also declined because this service represents paying features designed to increase users' efficiency to make new connections that they can potentially meet offline. In contrast, the audio and video-based social entertainment experiences with less LBS attributes were able to effectively offset the impact of COVID on traffic and users' propensity to pay and drove steady revenue growth in 2022 by leveraging innovative products and features.

Let's take a look at the following. First of all, user trends and overall financial performance. In order to deal with the continuous upgrade of the epidemic control in the beginning of the year, the business and financial impact caused by the pandemic, the management team decided to start a strategy of cut-off and control in the second half of the year. To reduce the loss of carbon dioxide in the channels with low efficiency. After the opening of the epidemic policy in early December, many regions throughout the country entered the peak of infection, which caused a great impact on the traffic. With the addition of channels, the supply has been further shortened, At the end of the year, the number of MAUs dropped by 1,840,000, which fell by 12%, and fell by 26% before June 30. The rate of transmission caused by the decline in MAUs and the outbreak of the epidemic was reduced by less than 300,000 people to 1.7 million. After the Spring Festival, the epidemic gradually dissipated, and the number of users entered a recovery path. By the end of March, the DAU had recovered to the level before the outbreak in December last year.

With respect to Tantan, I'll start with user trends and overall financials. In response to the business and financial impacts on Tantan caused by the escalating pandemic control measures since the beginning of the year, the management decided to pursue a cost control strategy in the second half to narrow Tantan's net loss by reducing marketing spend and cutting investments in channels and methods with low ROI. Since the removal of the zero COVID policy in early December, Many regions across the country experienced a surge in COVID infections, which put a lot of pressure on user traffic. Compounded by the reduction in China investments, Tantan's overall MAU decreased 12% quarter-over-quarter to 18.4 million in December, down 26% from June before we initiated cost controls. The number of paying users was 1.7 million, down 300,000 sequentially. mainly due to the decline in both MAU and paying conversion amid the fast-growing COVID infections. As infection gradually eased off after the Chinese New Year, traffic started to resume growth. DAU in early March has recovered to the level before the pandemic outbreak in December last year.

同比下降21%,环比增长2%。同比下降主要来自于付费用户的下滑,环比增长则来自于直播和高阶的黑金会员放量推动的RP pool的增长,抵消了付费用户下滑对收入造成的压力。从业务线看,WAS收入1.84亿人民币,环比下降9%。虽然新会员产品放量对提升WAS RP pool起到了一定的正向帮助, Now, I'll briefly review Tenta's financial performance.

Total revenue for the fourth quarter was 347 million RMB, down 21% year-over-year, but up 2% sequentially. The year-over-year decrease was mainly due to the decline in the number of paying users. The sequential growth was due to the improvement in the RP pool, driven by live streaming and the new premium Black Gold membership service, which offset the pressure on revenue caused by the decline in paying users. Vast revenue was 184 million RMB, down 9% sequentially. Although the sales of new membership service played a positive role in improving Bath RPPOO, the increase couldn't fully offset the pressure from paying user decline, because membership revenue is highly correlated with the number of paying users. On the other hand, the live streaming business, which is more sensitive to revenue-oriented operational efforts, our team was able to drive significant RPPOO growth through product improvements and new features. As a result, live streaming revenue for the fourth quarter was up 17% sequentially to 163 million RMB.

As a result, live streaming revenue for the fourth quarter was up 17% sequentially to 163 million RMB.

For fiscal year 2022, Tantan's total revenue was 1.37 billion RMB, down 33% year-over-year, mainly due to the decrease in paying use account resulting from COVID and our initiative to reduce channel investments. Vast revenue in 2022 was 824 million RMB, down 27% year-over-year, and live streaming revenue was 544 million RMB, down 40% year-over-year.

2022 fiscal year, Tantan adjusted and lost nearly 3.06 billion RMB. 2021 fiscal year, Tantan lost 3.37 billion RMB. Although Tantan's annual loss in 2022 is still relatively high, but thanks to our effective solution strategy, Although the net loss in 2022 was still relatively large,

adjusted net loss was substantially narrowed in the latter half of the year, thanks to our effective strategy to control cost and optimize channel investments. The average quarterly adjusted net loss significantly improved from 140 million RMB in the first half of the year to 14 million RMB in the second half, and the efficiency of resource investments greatly improved.

Let's review the implementation of the strategic focus of Tantan 2022. At the beginning of the year, before the epidemic situation worsened, our requirements for Tantan were to improve market sales efficiency and core dating experience, and to promote user-scale stability and growth. However, in the second quarter, the epidemic prevention and control policy has been tightened, which has caused a very serious negative impact on user circulation and payment transfer. New customer circulation and payment transfer determined that LTV as well as important indicators of the return rate of customers. The significant decline in these data has led to the customer entering a negative cycle of buying and losing. The growth that can not bring profit is against the business logic and is not sustainable. In order to deal with the uncertainty of the epidemic, we decided to change the growth method at the cost of losses in the second half of the year and choose a more stable strategy, which is to reduce capital control and continue to reduce losses. By algorithm, product innovation and the promotion of new paid products, Now, let's look at the progress Tenta has made against its strategic priorities.

The strategic goal we set at the beginning of the year before the pandemic situation deteriorated was to deliver solid user growth by improving marketing efficiency and quality experience. However, during the second quarter, tightened COVID control measures had a severe negative impact on user retention and paying conversion. New user retention and paying conversion are key indicators that determine LTV and channel ROI. The significant decline in both metrics led to a negative cycle, where the more user we acquired, the greater the financial loss. Growing the user base without making a profit not only makes no economic sense, but is also unsustainable. In response to the uncertainties created by the pandemic, in the second half of the year, we adopted a more prudent marketing strategy rather than grow at the expenses of bottom line. We reduced spending in low efficiency channels to narrow net loss. At the same time, we continue to focus on improving user retention and ARPU growth through algorithm, product innovation, and new non-membership VAS features. Once ROI turns positive, we will reinvest the profit into marketing to create a self-sustaining growth cycle.

接下来介绍下我们在渠道提高货客效率以及产品提升留存和UP这两方面都做了哪些具体工作。 首先是渠道,年初以来货客团队通过优化广告素材, 灵活调整新增及召回比例,推动渠道效率持续提升。 因此, Although the large-scale outbreak of the epidemic in December caused the overall user size to be more than expected, but the price, channel flow, and new app, these important customer indicators, have been improved to a different extent over the past year. The annual customer price has dropped by nearly 20%, especially in the fourth quarter, the indicator has dropped by 50%, and the new app has increased by more than 40%. Compared with the previous year, the average user age and young, the new female user ratio has remained at a reasonable level.

Next, let's look at the progress we've made in terms of improving user acquisition efficiency and enhancing retention and ARPU. Firstly, on the channel front, since the beginning of the year, our team continued to improve channel efficiency by optimizing ad materials and adjusting the proportion of new users and dormant users. Therefore, Although the large-scale outbreak of the pandemic in December led to a larger-than-expected decline in user base, the key user acquisition indicators such as the unit acquisition cost, retention, and new user R pool have all improved to varying degrees compared with the previous year. The average unit acquisition cost for fiscal year 2022 was down nearly 20% year-on-year, and especially in Q4, user acquisition cost was down 50% from the year-ago period. and new user R pool increased by more than 40%. Compared with the previous year, the average user age tended to be younger, and the proportion of new female users remained at a satisfactory level. Our team maintained the stability of the user experience and of the platform ecosystem despite the deteriorating pandemic situation and the decline in new users resulting from the channel investment reduction. 再通过新的产品体验, In terms of improving our pool through new product experiences, we have clarified two important directions. First, for user products, we need to explore effective social experiences beyond the swipe and match features. Second, for commercial products, we need to introduce non-membership vast paying models to improve per user revenue. During the year of 2022, we made a few important optimizations to the chatroom experience. which have played a positive role in improving retention and the time span of female users, and of those who are reluctant to show their real photos. At the same time, as a consuming experience based on virtual gifting, Chartroom can also effectively unleash the spending potential of different cohorts of users when it comes to monetization.

In 2002, while the team was exploring non-membership WAAS, we continued to dig deeper in the direction of member subscription,

In 2022, in addition to exploring non-membership vast features, our team also continued to dig deeper in the direction of membership subscriptions. In the second half of the year, we launched a high-end black gold membership service on top of the SVIP. This was immediately well-received by a high-spending cohort, making a positive impact on our people expansion.

接下来聊一下创新业务。 以追求收入和利润为目标的WAS和UCI apps。 财务数据合并在默密业务线下。 四季度,独立新apps共计营收2.29亿人民币, 同比翻倍,环比增长13%。 2022年,创新业务总营收7.91亿人民币, Next, I'll review the progress we made with our new endeavors. For the new standalone apps,

Financials of the profit-oriented vast and gaming apps are consolidated under MoMA's P&L in our segment reporting. In the fourth quarter, revenue from the standalone apps totaled 229 million RMB, doubled from the year-ago period, and up 13% sequentially. For fiscal 2022, total revenue of our new endeavors was 791 million RMB, up nearly 150% year-over-year. All standalone social apps have started to contribute to the groups profits this year while delivering rapid top-line growth. We expect the three standalone apps to continuously contribute meaningful revenue and profit to the group.

除了以盈利为目的的产品外, 2022年我们首次在非ROI导向的产品方面取得了突破。 年初我们抓住了待机更替的机遇, 推出了首个面向00后的大DAU产品贴贴。 用户规模很快就达到了非常可观的体量。 In addition to profit-oriented products, we made breakthroughs in non-RY-oriented products for the first time in 2022. At the beginning of the year, we took the opportunity of the generational transaction to launch the first large DAU product targeting GenZ and GenAlpha users.

and the user base quickly reached to a considerable level. This confirms our team's competitive advantage in discovering new markets and seeding new opportunities in the social space. Going forward, we will accelerate the pace of new product exploration based on trial and error and strive to provide better social products for users of different ages and with different needs.

to promote products and business models that are suitable for Asian market dating culture, and pursue sustainable growth on the basis of the business cycle. To achieve this goal, we need to work together with channels and products. Regarding new products, our plan is to continue to enrich product evidence, widen the business boundary beyond the desert, and build a long-term growth engine. One of the goals of ROI for independent apps is to continue to expand the scale of profit, and contribute more water and profit to the group. This concludes our business updates.

Now, I will briefly go through our strategic priorities for 2023. Firstly, for the mature Momo app, our goal is to keep the users and revenue scale stable and continue to optimize on-cost structure and maintain the productivity of the cash cow business. To achieve this goal, we will continue to optimize product operation and introduce new monetization features, as well as improve cash utilization and personnel efficiency. Secondly, for Tantan, our goal is to achieve breakeven for the year and pursue sustainable growth on the back of a positive business cycle. To achieve this, we will work on both channel and product fronts, so we can build product and monetization models that are suitable for the Asian dating culture. And thirdly, with respect to new products, we will enrich our product portfolio, push the boundaries beyond Momo and Tantan, and develop long-term growth engine. Specifically, our plan for ROI-oriented standalone apps is to continue to scale up profit and to contribute more incremental revenue and profit to the group top line and bottom line. In addition, we'll further explore opportunities for large DAO products to open up a new growth path.

Finally, I would like to announce that the Board of Directors has approved a special cash issuance plan for each stock of $0.72. The cash issuance total is about $1.37 billion, which is equivalent to 50% of the net profit after the adjustment in 2022. Those who are familiar with us know that this is our success in continuing to share with shareholders for the fifth year in a row. Lastly, I would like to conclude by announcing that our board has declared a special cash dividend in the amount of US$0.72 per ADS.

which will amount to a total cash payment of approximately $137 million, or 50% of the adjusted net income attributable to Hello Group Inc. in 2022. Investors who have been following us long enough will know that this is the fifth consecutive year that we have shared the fruit of our work with our shareholders. Whatever decision we make in terms of driving organic business growth, identifying decent investment opportunities, or paying back shareholders with dividends or in the form of equity buyback. The fundamental principle of our capital allocation strategy is to create long-term value for our shareholders. I would like to thank you all for your faith in us. Now, let me pass the call over to Cassie for financial review.

Cassie, please. Thanks, Tangzong and Ashley. Hello, everyone. Thank you for joining our conference call today. Now, let me briefly take you through the financial review. Total revenue for the fourth quarter of 2022 was 3.21 billion RMB, down 13% year-on-year and less than 1% quarter-on-quarter. Non-GAAP net income attributable to the company was 487.9 million RMB, excluding the impact of accrued income tax expenses on the undistributed earnings, which were not on a comparable basis for the two periods. Non-GAAP net income in the fourth quarter of 2022 was up 8% from the year-ago period, despite the top line decrease as a result of our cost control efforts. Looking into the key revenue line items for the quarter. Firstly, on live broadcasting. Total revenue from live broadcasting business for the fourth quarter of 2022 was 1.72 billion RMB, down 20% young year, but up 4% quarter-over-quarter. Mobile app live broadcasting revenue totaled 1.56 billion RMB for the quarter, down 20% year-on-year, but up 3% quarter-over-quarter. The year-over-year decrease was due to the pressure caused by the COVID and regulatory factors. The sequential growth was mainly attributable to the incremental revenue generated by the year-end competition event. Time-to-time live broadcasting revenue amounted to 162.9 million RMB. down 19% from Q4 last year, but up 17% from the previous quarter. The year-over-year decrease was mainly due to the negative impact of the pandemic and reduced channel investment, resulting in a significant decrease in the paying user count. The sequential increase was driven by R2 growth thanks to our product and operational efforts. Revenue from value-added service for the fourth quarter of 2022 was 1.45 billion RMB, down 2% from Q4 last year and 6% sequentially. Revenue from value-added service on an ex-town-town basis reached 1.27 billion RMB in the fourth quarter of 2022, a 2% increase year-on-year, but down 5% sequentially. The year-over-year growth was driven by incremental revenue contributed by the standalone new applications. The sequential decrease was due to pressure on MomoApp LBS-related features caused by the deteriorating COVID situation in China in Q4 22. Tannan's value-added service revenue amounted to remain be 183.8 million, down 22% from Q4 last year and 9% from the previous quarter. The decrease was due to the pressure on TomTom's MAUs and paying conversion caused by the COVID-related factors, as well as the reduction on marketing spend. Non-GAAP cost of revenue for the fourth quarter of 2022 was 1.91 billion RMB compared to 2.19 billion for the same period last year. Non-GAAP gross margin for the quarter was 40.4%. same as the year-ago period and down 1.3% from last quarter, mainly due to the incremental expense in connection with the year-end competition event for live streaming. Non-GAAP R&D expenses for the fourth quarter was 250.5 million RMB compared to 279.7 million RMB for the same period last year, or a 10% decrease YY. The decrease was due to continuous optimization in personnel costs since the beginning of the year. Non-GAAP R&D expenses as a percentage of revenue remained stable at 8% from the year-ago period. We ended the quarter with 1,705 total employees, of which 459 are from Tan Tan, compared to 2,051 total employees, of which 552 from Tan Tan a year ago. The RMB personnel as a percentage of total employees for the group was 63% compared with 62% Q4 last year. Non-GAAP sales and marketing expenses for the fourth quarter was 398.6 million RMB or 12% of total revenue compared to 648.6 million RMB or 18% of total revenue for the same period last year. The significant year-over-year decrease both in terms of absolute RMB amount and as a percentage of revenue, was primarily attributable to Tantan's shift in marketing strategy to cut spending on low-efficiency approaches in order to take care of ROI, and to a lesser degree, reduction of Momos marketing spend amid a pandemic outbreak. Non-GAAP G&A expenses was 84.9 million RMB for the fourth quarter of 2022, compared to 89.4 million RMB for the same period last year, representing 3%, and 2% of total revenue respectively. Now briefly on other operating loss, other operating income slash loss item. Other operating loss for the quarter was 65.2 million renminbi compared to an income of 38.6 million renminbi for the same period last year. In Q4 2022, we accrued 92.9 million renminbi of potential loss related to a MoMA user's alleged illegal activity and embezzlement of funds, which was recharged and consumed on MoMA platform. There is no suspected or alleged wrongdoing on the part of the group. The 92.9 million RMB involved in the case is recorded as restricted cash on our balance sheet. Until the ruling of the court is announced, we won't know for sure whether the fund will be ultimately released or instead drawn from our account to compensate a plaintiff in the case. However, for conservative purpose, we've decided to take the item into our P&L as an operating loss in Q4 2022. Other operating loss caused by the accrued amount was partially offset by a couple of income items. Non-GAAP operating income was 499.2 million renminbi, a decrease of 2% from Q4 2021 and 18% from the previous quarter. Non-GAAP operating margin for the quarter was 16%, up 2 percentage points from the same period last year, but down 3 percentage points from the previous quarter. Non-GAAP OPEX as a percentage of total revenue was 23%, a decrease from 28% for Q4 2021 and 24% from last quarter. Non-GAAP operating expenses on a year-over-year basis decreased 28%. The decrease in both absolute RMB amount and as a percentage of revenue for OPEX was mainly due to the reduction in social marketing expenses and to a lesser degree optimization in personnel costs. Non-GAAP operating expenses decreased 4% sequentially. This is attributable to the decrease in marketing expenses, which offset the increase in seasonal expenses, such as year-end bonus. Now briefly on income tax expenses. Total income tax expenses was 110.3 million RMB for the quarter, with an effective tax rate of 19%. In Q4, a company accrued withholding tax income of 39.7 million RMB, which is 10% of undistributed profit generated by our roll fee. Without withholding tax, our estimated non-GAAP effective tax rate was around 12% in the fourth quarter. Now turning to balance sheets and cash flow items. As of December 31st, 2022, whole groups cash, cash equivalents, short-term deposits, long-term deposits, short-term investments, and restricted cash totaled 13.4 billion RMB compared to 15.71 billion RMB as of December 31, 2021. The decrease was due to a number of cash flow items, including our cash dividend payments, repurchase of the company's convertible notes, repurchase of the company's equity under the ongoing buyback program, and payment to Chinese tax authorities to repatriate cash from our wolfie in China to our offshore entity. Net cash provided by operating activities in the fourth quarter of 2022 was 539 million RMB, compared to RMB 666 million in the fourth quarter of 2021. Lastly, on business outlook, we estimated our first quarter revenue to come in the range from 2.6 2.65 billion renminbi to 2.75 billion renminbi, representing a decrease of 15.8% to 12.6% year-on-year, or a decrease of 17.5% to 14.4% quarter-over-quarter. For Q1 2023, on a sequential basis, we expect the total revenue from both MoMo and TanTan to decline meet teens due to the inflection surge the infection surge after reopen, coupled with the Chinese New Year negative seasonality. Please be mindful that this forecast represents the company's current and preliminary view on the market and operating conditions, which are subject to changes. That concluded our prepared portion of today's discussion. With that, let me turn the call back to Ashley to start Q&A. Ashley, please. Thanks.

Just a quick reminder before we take the questions, please ask your questions in Chinese and followed by English translation by yourself.

Operator, we're ready for questions. Thank you.

Thank you. If you wish to ask a question, please press star then one on your telephone and wait for your name to be announced. If you wish to cancel your request, please press star then two. If you're on a speakerphone, please pick up the handset to ask your question. Our first question today comes from Leo Chang with Deutsche Bank. Please go ahead.

谢谢管理层接受我的提问。 我的问题是关于默默的APP。 随着线下活动恢复常态化以后, 想请问一下管理层对于近期默默APP用户及收入的恢复情况是怎么样的? Thank you, management, for taking my question. My question is regarding to the Momo app. As the offline activities resume normalization, can management share the latest user and revenue recovery trend of the Momo app? Additionally, what is the target of Momo's revenue in 2023? Thank you.

I mentioned in my speech earlier that after the outbreak of the COVID-19 policy in early December, the size of the number of users in a short period of time was greatly affected, which led to a significant decline in the number of MAUs in the fourth quarter. In the beginning of January, some cities, mainly in the northern region, were infected with COVID-19, and the size of the local users began to recover gradually as the epidemic eased. However, the recovery trend was interrupted by the traditional curfew in early January. After the low in the spring, the DAU began to rebound quickly in early February. Then the rate is obviously higher than the level in early January, which is better than our previous expectation. Currently, the user size has recovered to the level of last year's summer. Then in terms of this operation strategy, then MoMo's主债会以生态和产品为主,在活动和赛事的方面会持续的采取保守的策略,重点会放在保证利润而不是充收入,

Let me translate first.

So as I mentioned earlier, the reopening in early December severely affected our user base in a short period of time, resulting in a sharp sequential decline in MAUs in Q4. In early January, after the infection rate reached its peak in many regions, mainly in northern part of China, local users started to gradually come back as the pandemic subsided. However, the recovery trend was interrupted by the traditional low seasonality of Chinese New Year, when people started to return to their hometowns in mid-January to get ready for the holiday celebration. But DAU rebounded rapidly in early February after the Chinese New Year trial, and the growth rate was actually significantly higher than that in early January, and it was also better than our previous expectations. And currently, MoMA user base has rebounded to the same level as the end of summer holiday last year. In terms of operation strategy, MoMA app will remain focused on the ecosystem and product experience. We will continue to take a conservative approach in terms of event operation and competition arrangements. That means we will prioritize stabilizing profit over driving non-profitable revenue growth. And I'll leave it to Cassie for financial details.

Sure. Let me briefly share what we can say at this point about that good old question. For Q1, as you can see from our guidance, most live streaming is going to see mid to high teens decrease from last year. The biggest reason here is that last quarter was last Q1 was relatively a high base because if you remember correctly, it was before the regulatory changes in May, regulatory changes that happened in May 2022. That sort of made the prior Q1 sort of a tough con for us. On top of that, I suspect that not having full visibility into the macro condition for the rest of the year is still weighing on the mind of some of our high-paying users. At least that's the general sentiment that we are getting from talking to a portion of our top spenders. We'll see if the sentiment gets better over time as the year progresses and more stimulating policies get released. So that's Q1. Looking out to Q2 onwards, we are definitely going to see quarter-over-quarter increase as both traffic and the whole economy continues to recover from the past three years of COVID restrictions. Plus, it looks like that the fluid regulatory situation that had been hanging over the sector over the past two to three years is going to is also going to see some stabilization for the coming few quarters. The only uncertainty is, I would say, is how strong the macro gets as we move deeper into the year, because that's really going to determine the spending sentiment of the top of the pyramid users for live streaming. For value-added service, Q1 this year is also a bit tough due to the January trough related to China's reopen infection surge. Another factor here was related to Sochil, which was heavily impacted in Q1 due to the Turkey earthquake, as well as the heavy depreciation of the Egyptian pound against U.S. dollar. Some of our payment channels actually, some of our payment channels in Egypt was actually suspended by local authorities due to that reason. We are currently shifting both the marketing dollars as well as some of the other resources to other Gulf countries where the growth momentum remains quite strong. Overall, we expect value-added service to continue to grow this year with second half being substantially stronger than first half due to the aforementioned several factors. So if you put all these different pieces together, I guess for the ex-tenten part, We're going to probably see continuous quarter-over-quarter improvement throughout this year, driven by the gradual recovery as well as the strong momentum that's coming from the smaller new apps. How fast the top line may ramp up throughout the year is really going to, as I said, heavily depend on the macro conditions. So I hope that sort of answers your question.

The next question comes from Thomas Chong with Jefferies. Please go ahead.

In addition, I would like to ask, from this chat, how much income can be achieved this year? Thank you. Thanks, management, for taking my question. My question is about Tantan. Can management share about the latest user trend as well as the outlook for 2023 revenue and profitability? On the other hand, In terms of the revenue scale, can management share about the chat room in 2023? Thank you. 探探的用户經歷了跟默默比較類似的一個走勢。 疫情爆發期間出現了快速的下跌, 並於春節後處理反彈。 目前這個DAU已經恢復到11月的水平。 在此基礎上,是否能夠持續的增長以及增長的速度,

It depends on whether we can see the continuous improvement of product experience and the improvement of circulation, and whether there is a new paid product that can actually improve the ROI. I think in the past one or two years, the mode of pursuing user growth at the expense of sacrifice profits has not worked. What we need is growth that can generate profits. If the ROI increases significantly, we will restart the market. The number of users will increase. In this aspect, investors need to give us some time.

Canton user base showed a similar trend to MoMo, falling sharply during the surge of the infection and bottoming out after the Chinese New Year. Currently, DAU has rebounded to the same level as November last year. Whether or not we can continue to grow from there and at what pace depends on if we can see continuous improvement in product experience and user retention, as well as our ability to introduce new paying features that can effectively improve China ROI. I don't think the pursuit of user growth at the expenses of profit, like in the past year or two, is still a viable model. So what we need is revenue growth that can generate profits. We will resume China investment to accelerate user growth if there is a significant improvement in ROI. and investors are pulling to be a bit patient with us on this front.

So in terms of revenue growth, revenue growth is likely to come earlier and faster than user growth.

And because both Black Gold membership and the chatroom experience are actually built on well-established monetization models, And both features play a positive role in enhancing user experience and retention. So therefore, even if user scale remains at the current level, will continue to grow sequentially from Q1. And as for chatroom experience, we will focus on refining the product and operations for now. And so we don't expect the chatroom to bring a large amount of revenue this year. However, we have full confidence in the monetization model and revenue potential of the Tyrone experience. I will let Cassie talk about the bottom line.

Okay, about Tantan's bottom line.

Well, if you look at the trajectory of the non-GAAP operating loss in 2022, You can see that we've been consistently narrowing down the operating loss quarter over quarter throughout the year. In Q4, non-GAAP operating loss was already at 15 million renminbi kind of run rate. We expect that narrowing trend, overall narrowing trend, to continue into this year, into 2023. which means that we should be looking at a positive bottom line for Tan Tan toward back half of the year, if not earlier this year. The other thing worth calling out here is that, as Tang Yan mentioned, as long as marketing ROI remains positive, we won't focus too much on growing the bottom line margins at this point for Tan Tan, because there are still a great deal of growth opportunities for dating products in the China market. Instead, we could let part of the profit flow back into marketing to drive sustainable user growth as well as top-line growth. That's what we meant by getting into a positive cycle, which is the most important strategic priority for Tantan this year.

Last question. Operator, next question, please.

The next question is from Luwei Zhang with CICC. Please go ahead.

Thanks, Manjin, for taking my question. My question is about standalone new applications.

Could Marchman share more color on the strategies and revenue expectations of new apps this year? Thanks.

创新业务 RY导向的新产品 在2022年 我们在收入上翻了将近1.5倍 然后也实现了全面的盈利 2023年我们对这些产品的要求是 收入和利润都要增长

Among them, the domestic apps are relatively mature, and the user size has entered a stable stage. We will continue to increase the profit and loss rate through the improvement of R&D. For overseas products, due to facing a wider market space, we will continue to expand new revenue areas on the basis of deepening existing markets. Turkey and Egypt may be affected this year, but overall, we think that social products in the Middle East and North Africa

In 2022, our oriented new products turned profitable with revenues up nearly 150% from 2021. And our goal for this app this year is to further scale up revenue and profit. For the domestic apps, which are at a more mature stage, the user base is relatively stable at the moment. So we will continue to expand profits by driving RP pool and margins. And for the overseas apps, which are facing a much broader market space, our goal is to expand new revenue markets on top of deepening the existing territory. Turkish and Egyptian markets may be affected to some extent this year. But overall, we see strong revenue and profit growth opportunities for social apps in the mainland market. We'll continue to make efforts in this direction.

In addition to the ROI-oriented products that focus on revenue and profits, we will continue to invest and explore opportunities in DAU-oriented products.

And in fact, in addition to TTA, we have several DAO-oriented products in the pipeline currently in beta. We will share more information with the investor community as we accumulate more data.

Operator, do we have any more questions on the queue?

Yes, we have one more from Henry Sun with JP Morgan. Please go ahead.

Thanks management for taking that question. My question is about margin. As you mentioned in the prepared remarks, optimizing cost will continue to be a key goal this year. Could management share more color on the cost control strategy and the overall margin trend this year? Thanks.

Sure, sure.

I guess that's for me. For gross profit margin, the biggest driving force here is the payout ratio. I remember someone asked that question last quarter as well. Actually, probably every quarter we all face this good old question. My answer remains pretty consistent with what I said at that time last quarter, which is that the supply side factors are at this moment pretty stable. That means payout is going to remain largely stable as well. Of course, you know, different business of ours, there are different margin profiles. So revenue mix is always going to be another variable in the equation you should consider when modeling out the GP margin. So that's the GP margin line. Moving down that line, Last year, we did a pretty good job in optimizing the key operating expenses items, such as personnel expenses, marketing costs, as well as infrastructure spending. We just finished the annual budgeting cycle, and it seems that we still have some room to further improve the efficiency across all those spending areas. So investors can expect the operating expenses to further shrink down in a pretty meaningful way this year. And with top line trend improving as the year progresses, both bottom line and bottom line margins are going to improve as well. So, you know, just I'm trying to sort of put things into a nutshell. If you look at the top line and the OPEX trends that I mentioned earlier and try to think about how the math, overall math works this year, there are probably two key takeaways. One is that top-line-wise, 2023 is going to see continuous quarter-over-quarter improvement driven by the overall COVID recovery as well as the strong growth momentum coming from the smaller new applications. And the second takeaway is that we're going to continue to optimize our costs and expenses, so bottom line is going to see pretty meaningful growth on a year-over-year basis, especially in the second half of the year. So that's basically the overall financial picture that I can lay out at this point. I have visibility to lay out at this point. For other stuff, I guess we'll have to wait and see as the year progresses. I guess for the interest of time, that's going to be the last question that we take. I'll hand back to Ashley for closing remarks.

Thank you. Thank you, everyone, for participating in our call, and we'll see you next quarter. Have a good night and good morning. Bye.

That does conclude our conference for today. Thank you for participating.