Hello Group Inc.

Ladies and gentlemen, thank you for standing by and welcome to third quarter 2023 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 today. I would now like to hand the conference over to your first speaker today, Ms. Ashley Jing, 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 third quarter 2023 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, Ms. Zhang Sichuan, 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 all be available to answer your questions during the Q&A session that follows. Before we begin, I would like to remind you that this call may contain forward-looking statements made under the safe harbor provision of the Private Securities Litigation Reform Act of 1995. Such statements are based on management's current expectation 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 findings 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, future events, or otherwise, except as required under law. I will now pass the call over to our COO, Ms. Jiang Sichuan. Ms. Jiang, please.

Hello, everyone. Thank you for joining our call. We are pleased to report strong financial results for the first quarter and study progress on various strategic priorities across all business lines. I will now walk you through the details of our work for the quarter end. Together with Chang-Yen and Cathy, take questions in the Q&A session that follows. I will start with a brief overview of our financial performance. Total group revenue was 3.04 billion RMB, down 6% year-over-year and 3% sequentially, exceeding our previous guidance. The main reasons for the decline in revenue were the consumption softly caused by the softer economy and product adjustments we made to maintain a healthy community ecosystem. Adjusted operating income was 681 million RMB, up 30% year-over-year, but down 4% sequentially. Profit margin was 22.4%, up 3.7% year-over-year, and down slightly, 0.2 percentage point quarter over quarter. Compared to the same previous last year, adjusted operating profit increased significantly despite lower revenue. This improvement was driven by our effective cost optimization and efficiency improvement initiatives, which turned TanTan profitable compared to a year ago, as well as supported the stable productivity of Momo Cash Cow business. Total revenue from the Momo app and standalone new app was 2.74 billion RMB, down 5% year-over-year and 3% sequentially. Adjusted operating income was 675 million RMB, up 4% year-over-year and down slightly, 1% quarter-over-quarter. with a margin of 24.6%, up 2.2 percentage point year over year, and 0.4 percentage point quarter over quarter. Profit margin improved despite the decline in revenue, primarily due to our team's solid ability to control cost and expenses. Total revenue from Tantan came in at 295 million RMB, down 40% year-over-year and 8% sequentially, mainly due to our reduction in channel investment combined with our anti-spam initiatives, resulting in a drop in our user base. Thanks to improvements in staff and channel marketing efficiency, Tantan achieved an adjusted operating income of 27.6 million RMB in the first quarter with a margin of 9%. Adjusted operating loss in Q3 last year was 38.3 million RMB and adjusted operating income in the previous quarter was 31.9 million RMB. Now I will discuss the progress we make against our strategic priorities and features development plans for Momo, Tantan, and the new endeavors. Starting with the mature Momo app. Our goal for Momo is to keep the user and revenue scale stable, continue to optimize cost structure, and maintain the productivity of the cash cow business. To achieve this goal, Our team has focused on two aspects, product operation and cost and expenses. First, we mitigated revenue pressure from the external environment by continuously optimizing product operation and introducing new monetization features. Second, we maintained broadly stable profit margin by improving cash unitization and staff efficiency. The group's better-than-expected financial performance in Q3 was mainly due to the better-than-expected financial performance of the Momo app. Now, I will walk you through the details. Firstly, on the product and operational front, our focus on product operations This year has been stabilized as user-based and improved monetization efficiency. While focusing on providing timely social experience and enriching content supply, our product team further integrated user products and consumer products to improve the overall monetization efficiency of the platform. On the channel side, The continuous improvement in user acquisition efficiency provides an effective way to maintain the stable of the user base under the strategy of cost optimization and efficiency improvement. Thanks to lower unit acquisition costs, we acquire 40% more new users on a slightly lower channel investment year over year. In Q3, the number of active users declined slightly, quarter over quarter, due to the start of school year and vast product adjustments. But the extent of the decline was less than a year ago. On a year-over-year basis, the total user scale was still slightly lower, but the gap has never significantly compared to the first half of the year. In quarter three, the number of Momo paying users decreased by 100,000 to 7.8 million from the previous quarter, mainly due to the policy adjustment in WAAS membership, which results in a decline in the number of WAAS paying users. Now, let's go through the productivity of our Momo Cash Cow business. In the first quarter, Momo's live streaming revenue was 1.41 billion RMB, down 7% year-over-year and 2% sequentially. The pressure on revenue mainly came from a softer consumer sentiment. Considering the current macroeconomic environment, our team decided to reduce revenue-oriented competition events. Meanwhile, on the product front, we have launched new interactive gamified features that able us to keep the number of core paying users relatively stable. The launch of interactive gamified features had not only improved the paying user experience of middle and long-time cohort users, which plays a positive role in stabilizing live streaming user engagement, but has also created new revenue streams for long-tail broadcasters in the traditional showroom live streaming business. In the first quarter, the revenue sharing ratio of live streaming decreased slightly quarter over quarter, mainly due to the reduction in event-related bonuses. User-oriented operational efforts led to a slight decrease in the proportion of revenue contributed by talent agencies, but engagement of the supply side remained stable. In the third quarter, wealth revenue, excluding Tantan, totaled 1.3 billion RMB, down 3% year-over-year and 2% sequentially. Last revenue from the Momo app totaled $1 billion RMB, down 12% year-over-year and 6% quarter-over-quarter. Revenue from the standalone app was $295 million RMB. The year-over-year growth ascended generated to 51% and revenue was up 30% sequentially. The decrease in normal vast revenue was mainly due to our proactive product adjustment to improve the overall ecosystem and the impact of macroeconomy on consumer sentiment. As I mentioned earlier about our user product, In order to improve the monetization efficiency of the normal app, we have embedded assets to pay experience in, for example, nearby people and some other non-paying features. The income in ZAU and the paying ratio of audio and video-based vast experience, particularly, mitigated the pressure on revenue caused by product adjustments and the external environment. The overall blast revenue sharing ratio decreased slightly quarter over quarter, primarily due to the discrimination of lower growth margin features following our ecosystem adjustments. This shift in the product makes contribute positively to an improvement in vast growth margin. Now, let's review TomTom's performance. Our strategic goal for TomTom is to achieve overall break-even from the year and develop product and monetization models that are suitable for the Asian dating culture in order to pursue sustainable growth on the back of a positive business cycle. Over the past year, Tantan has made solid progress in reducing low-efficiency channel marketing plans to achieve break-even. It delivered first operating profit at the beginning of this year and maintained profitability in Q3 despite lower revenue. However, we still have a long way to go in achieving our strategic goal. of sustainable growth on the back of positive business cycle. The underlying reason is that we have yet to make breakthrough in the development products and manifestation models that's suitable for the Asian dating culture. The ongoing anti-spam campaign started this spring, coupled with the seasonal impact of the new school year put notable pressure on Tantan's user base in September. MAU decreased 9% sequentially to 15.7 million. As of the end of Q3, Tantan has 1.4 million paying users. Despite a decrease in overall user base, the paying user count remains stable sequentially. primarily due to our commercial product team's efforts to improve user paying experience and the higher stickiness of the group compared to non-paying users. The total revenue for the first quarter was 295 million RMB, down 40% year-over-year and 8% sequentially. The year-over-year decrease was solely contributed to a reduction in the number of paying users caused by decline of overall user base. Thanks to improvement in both product and channels, our people increased by 20% from a year ago, which particularly offset the revenue loss from the decline in paying users. The sequential decrease in revenue is mainly due to significant impact of software macroeconomy on the live streaming business. Additionally, the policy adjustment on automatic renewal by the Ministry of Industry and Information Technology has some impact on vast membership subscription revenue. However, Tantan's growth margin was up by nearly four percentage point year-over-year and one percentage point quarter-over-quarter, driven by the greater revenue contribution of Watt's business, which carries a higher growth margin. As I mentioned at the beginning, the decline in users and revenue of Tantan has mainly attributed by to our initiative in cost optimization and efficiency improvement. In terms of improving staff efficiency, we have continued to reduce features and operational activities that cannot provide high quality user experience and incremental revenue and realigned human resource accordingly. In terms of improving marketing efficiency, we have continued to reduce unit acquisition costs and further cut marketing expenses that can generate positive ROI. Although this approach has resulted in a reduction in the number of users and revenue, the cost optimization strategy has brought greater benefit to our bottom line as the market spend that we cut were ROI negative. And this is why despite lower revenue, Tantan still achieves an adjusted operating income of 27.58 million RMB in the third quarter. So now I would like to walk you through the details of Tantan's progress on the channel and product fund. Firstly, On the marketing front, the unit acquisition cost of App Store increased sequentially in the third quarter due to the decline on its own traffic. Our team timely adjusted the proportion of investment across different channels in order to acquire more users while controlling the increase in unit acquisition costs to low single digits sequentially. On the product and operational front, the biggest achievement in the third quarter is that we managed to maintain spamming activity to a low level significantly, and therefore the community returned to normal. Our product team emphasized guidance of real person authentication on the swipe and match homepage. The increase in real person authentication rates positively contribute to the improvement of the community ecosystem. In terms of commercial products, on top of the basic monthly membership service, we launched a variety of pay-as-you-go privileges that aim to increase exposure and improve matching efficiency. As a result, our vast app people continue to grow both on a year-over-year and a sequential basis, largely offset the impact of user decline on vast revenue. However, due to the lack of breakthroughs in user products, our user retention unfortunately has not yet been stable, but basically improved. Additionally, the outbreak of spamming activities combined with a softer spending among live streaming users led to a decline in channel ROI. Therefore, our team's execution for the rest of this year has been focusing on further reducing costs and channel investments. Relocating exceeds access human resources to new endeavors and driving app-proof growth through new product features on the basis of operational efficiency improvement until our eye turns positive. Lastly, in terms of new endeavors, our goal is to enrich our product portfolio, push the boundary beyond normal and townhouse, the developed long-term growth engine. In the first quarter, total revenue of the new apps included social and games products with 302 million RMB, up 49% year-over-year and 50% sequentially. Among them was revenue of domestic and overseas social product was 295 million RMB, up 51% year-over-year and 30% sequentially. For domestic apps, given their relatively mature stage, the operational focus on our team is to control costs and expenses while pushing harder on monetization. so that profit can grow in line with revenue. Now, in terms of our overseas business, thanks to a border market space, revenue in the first quarter continues to grow rapidly from a higher base. The introduction of new features together with our paying user-focused acquisition strategy play a pivotal role in driving revenue growth. In Turkey, which accounts for a substantial portion of overseas market revenue, significant currency fluctuation during the quarter impacts revenue and exerts pressure on growth margins. To protect profits, our team reduced channel investments in a timely manner, resulting in continued sequential growth of operating income. At the moment, we have mitigated some of the problems affected the profitability level of overseas business, and it's expected that it will deliver better sequential performance in both revenue and profit at the end of the year. So this concludes my remarks. Now I will pass the call over to Kathy for the financial review. Kathy, please.