Hello Group Inc.

Ladies and gentlemen, thank you for standing by and welcome to the third quarter 2024 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'll 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 2024 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 Security 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 statement. 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 statement 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. Zhang Sichun. Ms. Zhang, please.

Thank you. Hello, everyone. Thank you for joining our call. I would now like to give you an update on our business on Q3 2024. Starting with an overview of our financial performance for Q3 2024, Total group revenues was 2.67 billion RMB, close to the high end of our guidance, down 12% from the year ago, with a smaller year-over-year decrease than in Q2. Adjusted operating income was 465 million RMB, down 33% year-over-year, representing a margin of 17%. down 5.4 percentage points from a year ago. Looking at the Momo app and standalone new app, total revenue was 2.46 billion RMB, down 10% year-over-year. The decrease was mainly due to the 17% year-over-year decline in the Momo app, resulting from our proactive product adjustment and the spending softness amidst the weak microeconomy. The decrease was partially offset by the accelerated 41% year-over-year revenue growth in standalone new apps driven by our overseas business. Adjusted operating income was 440 million RMB, down 33% year-over-year, with a margin of 17.8%. down 5.9 percentage points year-over-year, mainly due to the decline in revenue and margin of the mobile app. For TangTang, Q3's total revenue was 212 million RMB, down 28% year-over-year, due to the decreased number of paying users. Adjusted operating income was 15.17 million RMB, compared with 27.58 million RMB from the year ago, representing a margin of 7.2% down 2.2 percentage points year-over-year. Now I will give you an update on executing our strategic priorities for each business night. Our main goal for the Momo app this year is to maintain the productivity of this catch-cow business, with a healthy social ecosystem. TimeTown's goal is to continue improving the core dating experience and build an efficient business model that drives profitable growth. As for our new endeavors, our goal is to enrich the brand portfolio further, push the business boundary beyond normal and TimeTown, and build a long-term growth engine. I will now walk you through the details of our execution. First, on the Momo app product and operations in Q3, our product team focused on optimizing the user experience and increasing the volume of effective user interactions. We introduced multiple VoIP-based one-on-one chat experiences in our legacy tech-based chat greeting features. to facilitate in-depth user interaction. As for female users, we use women's favorite mini-social games and a sign-in reward mechanism to increase female user engagement and stickiness. We also provide an AI-assisted reading tool to improve the quality of eye-catching reading messages for male users. thereby increasing the response rate and interactive experience for female users. On the user acquisition front, we have optimized transitional channels over the past two years, bringing down acquisition costs and improving ROI. Therefore, we reduced overall marketing spending but kept traffic relatively stable. However, as the cost continue to decline, the potential to further optimize transitional channels is getting limited. So we started exploring new ways to drive traffic from KOLs. For example, increasing brand exposure and user favorability by working with short video influencers in new media. In Q3, we increased our investments in KOL channels, and the numbers of videos released and played related to the Momo app increased significantly from Q2. While deepening our collaboration with KOL, we've also been refining our channel strategy. Continuous cost optimization has given KOL marketing calls a clear advantage over transitional channels. Therefore, we plan to continue working with KOLs, including enhancing the selection of accumulation of influences, further innovating ad materials, and optimizing onboarding and conversion strategies. This help us further improve user acquisition ROI and strengthening MoMo's branding. To increase the proportion of female users Our user acquisition team continued to refine the app material tailored to women and collaborated with our product and operation team to emphasize features favored by female users. In quarter three, the Momo app has 6.9 million paying users, a sequential decrease of 300,000. This may be due to two factors. First, the wide ecosystem adjustment reduced competition events and operational activities, resulting in a decrease in the number of paying users. Second, to improve profitability and pursue profitable growth, we further reduced the acquisition of small-ticket paying users with negative ROI, decreasing long-tail users, Now on the productivity of Momo's cash cow business. Momo's live streaming revenue was 1.22 billion RMB, down 14% year-over-year and flat sequentially. The year-over-year decline was mainly due to our strategy to proactively reduce revenue-oriented large-scale competition events to maintain a healthy social ecosystem. and expanding softness among top cohort users amid the weak micro-economy. To mitigate the revenue pressure, our live streaming team focused on introducing innovative features to improve the product experience for meet and long-time users. Meanwhile, we set up our live streaming promotion efforts in the nearby people and the nearby host features which resulted in a steady increase in live streaming penetration and paying ratio. The reduction in high-priced competition events complied with the increase in sales of live streaming showrooms, costumes, and PK props that do not require any revenue sharing, resulting in a slight sequential decrease in the revenue sharing ratio. which play a positive role in stabilizing the profit level of the cash cow business. Revenue from value-added services, excluding time-to-time, totaled 1.22 billion RMB, down 6% year-over-year, up 1% sequentially. Last revenue from the Momo app was 828 million RMB, down 17% year-over-year and 3% sequentially. Revenue from the Send Along app was 391 million RMB, up 32% year-over-year and 10% sequentially. The year-over-year decline in Momo app's vast revenue was mainly due to our proactive setup and operational adjustments to mitigate regulatory risks combined with the impact of spending softness against the weak macroeconomy. In Q3, our product team promoted chat rooms in the nearby features and nearby people features, applied new algorithms to improve penetration. On the operational front, we organized operational activities that tie into holidays and festivals, to boost consumer sentiment. In addition to traditional audio features, we continued introducing new voice-based gamified play, such as brilliant and matching puzzle games in chat rooms. Early data shows that the retention of this new mini-game-alike feature is better than the average retention of chat rooms. We expect the full rollout of these new features will help increase Chatroom's user engagement rate. Turning to TomTom. First on user trends and financial performance. Since the acquisition of TomTom, the number of organic new users has shown a long-term downward trend due to the need for new branding investments. and user growth was largely dependent on acquisition channels. Although the ROI-oriented channel investment reduction and cost control strategy over the past two years has effectively driven TanTan to achieve profitability, it also has put much pressure on TanTan's user base. The product upgrade we launched in Q2 aimed to explore effective solutions to improve the core data experience and increase user retention. However, the upgrade is still in early stage and it has not yet significantly impacted all overall user retention. Due to the combination of the broad factors, 10 times user base have not yet stabilized. MAU decreased by 7% sequentially to 12 million in September. As of the end of Q3, Tantan had 940,000 paying users, down 60,000 sequentially, mainly due to the decline in MAU and the short-term impact of the product upgrades on new user paying conversions. Turning to Tantan Financial, 403 total revenue was 212 million RMB, down 28% year-over-year and 9% sequentially. The year-over-year decrease was due to the declining payers, whereas overall IP pool increased slightly. IP pool of our live streaming business decreased significantly as we continued to de-emphasize live streaming. well have some low correlation with the dating experience. Meanwhile, the last team drove the sales of SVIP and Black Gold membership by subdividing members' paying features and redesigning the guidance narrative on paying experience, which drove a slight increase in Tantan's overall RP pool. partially alleviated revenue pressure. The sequential revenue decrease was mainly due to the decrease in payers and slightly lower AP pool due to the impact of live streaming business. In terms of business life, gross revenue was 137 million RMB, down 19% year-over-year and 2% sequentially. While live streaming revenue was 66.65 million RMB, down 45% year-over-year and 20% vacation. Now, moving to our efforts on time-to-time startup and user acquisition and the challenges we face. First on the marketing and user acquisition front, to address the continuous inflation continuous decline in organic traffic caused by years of inadequate brand exposure. In quarter three, our marketing team selected online and offline events that are popular amongst young men and women and organized various marketing activities at a controllable cost to promote Timetown's brand awareness. For example, we set up interactive booths at music festivals, which we believe is the most effective way to reach young people offline and guide them using content to explore their music plus dating experience. We combine online community activities and KOL events marketing to expand brand influence. At the same time, it continues to accumulate influencer resources and optimize channel investment strategies, resulting in a significant sequential reduction in average KOL user acquisition costs. In terms of channel, we continue to reduce investment based on ROI and further reduce costs from the transitional channel such as feeds and app stores. This coupled with increased investments in KOR channels with the most competitive user acquisition costs helps significantly reduce unit acquisition costs quarter over quarter. Therefore, we acquire more users with a slight sequential decrease in total channel investments with lower unit acquisition costs and a slightly higher new user output. Although channel ROI has not turned fully positive, we have seen varied degrees of improvement year-over-year and quarterly. Next, update on Chan Han's product and operations. In Quarter 2, based on the results of user surveys, we initiate a product upgrade to address two major problems that make users feel that that are unrealistic. First, uncertainty about the authenticity of a user identity, and two, lack of response to chat after matching. To address the first issue, such as product picture looking too good to be true, limited information that lacks real-life references and is sufficient real-person verification. Our product team has increased the proportion of high-quality profile on the platform by providing prompts to encourage users to enrich their profile information and guiding users in choosing suitable profile pictures. Meanwhile, we offered rewards such as extra swipes to users who completed their real-person revocation to increase the overall real-person revocation rate. Regarding the lack of response to chats after matching, previously, we deliberately increased the exposure of some high-quality active users in the algorithm to improve the experience of some users who don't get matching opportunities easily. While this approach increased the number of matches, it unfortunately resulted in many matches that did not convert to chat. This quarter, we reduced matching concentrations in our algorithm to address the issue of some female users not chatting after matching because they received too many matches. At the product level, we tested several features aimed at improving the response rate, such as or , which allow users to directly deliver a message to a favorite person every once in a while, improving interactive quality through this unique outreach. We expect this series of product trials to play a positive role in improving the response rate. Product upgrades have enhanced matching quality and encouraged more in-depth conversations. However, the short term, this has a negative impact on Tantan's original business model, which was built around look at picture, swipe, pay to increase matching up. The decline in new user-paying conversions was one of the reasons for the sequential decrease in Tang Han paying users. However, we believe that providing a good product experience to improve user retention and drive organic user growth is the foundation of Tang Han to achieve long-term sustainable revenue and profit growth. We need to drive user growth based on profitability to sustain a long-term positive business cycle. Lastly, in terms of new endeavors, in Q3, the total revenue of the new apps reached 418 million RMB, with an accelerated growth rate of 41% year-over-year and 17% sequentially, mainly driven by our overseas business. Social's revenue in Q3 achieved its highest sequential growth of the past year, driven by improvements in our operational efficiency. In Q3, our management, key product, and tech team from the Beijing headquarter visited several key social markets. They worked with local teams to analyze user feedback and optimize product and technical solutions. We optimized agency broadcasters' payment and compensation systems and strengthening our frontline staff decision-making power, boosting their work morale. We also optimized channel strategies for paying users, growth, paying ratio, and the number of paying users. Our people increased significantly quarter over quarter, driven by various factors, such as introducing new virtual gifts gameplay enhancement, and product design improvements. Together, the improvements in paying users and app people drive Rabbit's sequential revenue growth. In Q3, we strengthened our supply-side collaboration with new agencies and increased the number of broadcasters, which also plays a positive role in driving revenue growth. With the gradual expansion of the business, Vulture's revenue sharing ratio has shrunk slightly upward since the beginning of the year, mainly because the relatively low margin business, including the Turkish market and the newly introduced live streaming business, grew much faster than the overall overseas market. Our team has particularly alleviated the pressure on GP margin caused by the increase in revenue sharing ratio by optimizing top-up channel costs. Combined with our ROI-oriented user acquisition strategy, enabling us to enjoy operation leverage and fast profit growth despite the increase in channel investments, In Q3, we made good progress in enhancing the localization progress and expanding the voice-based features to live streaming. The growth in users and financial metrics has well reflected our team's recent efforts. We believe that continuously strengthening localized operation and improving user and product experience we can bring continuous growth to social and other overseas products in the MENA region. We will commit more firmly to overseas business in the future. This concludes my remarks. Now, let me pass the call to Cathy for the financial review. Cathy, please.