Hello Gr Reports Q2 2026 Results: Full Earnings Call Transcript

On Thursday, Hello Gr (NASDAQ: MOMO ) discussed second-quarter financial results during its earnings call. The full transcript is provided below. This content is powered APIs. For comprehensive financial data and transcripts, visit The full earnings call is available at Summary Full Transcript OPERATOR Ladies and gentlemen, thank you for standing by and welcome to Hello Gr's second quarter 2026 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.

Ashley Jing, Investor Relations Thank you, operator. Good morning and good evening everyone. Thank you for joining us today for Hello Gr's second quarter 2026 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, Mr. Wen Jianhua, COO 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 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 or performance to differ materially from those in the forward-looking statements. S. Securities and Exchange Commission. The company does not take any further 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, Mr. Wen Jianhua. Please. Wen Jianhua, COO Okay.

Hello everyone. Thank you for joining today's call. The Group maintained steady business momentum in Q2. On the domestic side, Momo continued to preserve the healthy functioning of our cash cow business through product innovation and refined operations, while Tantan focused on AI capability building to improve user experience and monetization efficiency.

On the overseas side, the synergy across our diversified product portfolio became increasingly evident. Next, I'll walk you through the key updates. Starting with the financials for Q2 2026. 49 billion RMB, down 5% year over year, but up 4% quarter over quarter.

81 billion RMB, down 17% year over year but up 1% quarter over quarter. Overseas revenue was 673 million RMB, up 52% year over year and 13% quarter over quarter. Overseas revenue accounted for 27% of total revenue compared to 17% in the same period last year. Adjusted operating income was 276 million RMB with a margin of 11%.

Our 2026 priorities continue along three main tracks: for Momo, the goal is to ensure stable, sustained productivity of our cash cow business; for Tantan, to continue exploring a dating experience and an efficient business model tailored for Asian users; and for our new businesses, to deepen overseas presence, enrich our brand portfolio and build a long-term growth engine. Next, I'll walk you through each. Let me start with Momo. On the user side, a year of user-oriented product iteration has effectively lifted platform engagement.

Combined with the sequential recovery from the seasonal low in organic traffic, this drove a modest increase in Momo's overall user base. 9 million. On the product side, Knock Knock focused on refining our deep chat matching strategy, precisely pairing users with a high intent to chat, which had a positive effect on engagement, retention and overall user scale. AI Chat Assistant trains its models on real user behavior data to deepen its understanding of user preferences, driving steady growth in feature adoption as well as the reply rate in AI Greetings.

This has both supported long-term retention and user base scale and opened up new revenue scenarios. This quarter we also began gray testing AI Xiaomo, which has AI browse users' photos to identify common interests, complete an initial screening of potential matches and automatically generate a personalized icebreaker message, further improving matching efficiency and connection success rate. On user acquisition, we ran a holdout experiment on channel spend for dormant user reactivation, aiming to test whether attribution errors in our channel data were leading to inefficiencies in these re-engagement efforts.

The results show that there is indeed room for continued optimization in our channel investment, and we are confident we can maintain our current platform scale and revenue with less spend in Q3. We will continue to improve acquisition efficiency based on these findings. 54 billion RMB, down 16% year over year but up 2% quarter over quarter. The year-over-year decline was mainly driven by two factors: number one, continued tightening on the tax front, which has had a sustained and material negative impact on all agencies and broadcasters; number two, softness in consumer spending due to macro.

Sequential growth came in weaker than in previous years mainly because since April some agencies in the audio scenario scaled back operations due to tax-related pressures, which weighed on revenue. In late May we rolled out targeted subsidies to ease the operating pressure on these agencies, which drove a quick recovery in revenue.

In Q2, our overall VAS revenue sharing ratio rose by a low single-digit percentage point both year over year and quarter over quarter, mainly because we moderately raised the revenue sharing ratio and subsidy support for certain core agencies in the audio scenarios to ease the supply side's financial pressure through the tax compliance process, keeping the supply side stable at a manageable cost. On the product and operation side, we stayed with our approach of tiered monetization and use-case innovation.

For high-value users, we selected top-growing broadcasters and created AI-generated likeness-based custom gifts for them, which effectively refreshed paying interest among our top spenders. For mid-tier users, we capitalized on World Cup-related traffic by rolling out interactive gameplay such as match predictions, which lifted engagement and user stickiness. At the long-tail end, we gray tested a Moments Boost feature, letting users pay to increase the exposure of their post. This not only produced positive operating data but also successfully validated a new small-ticket payment scenario.

This multi-pronged, refined operating approach provided solid support for the stability of our overall revenue base amid the macro downturn. Now let's turn to Tantan. 5 million paying users, a modest decrease of 40,000 quarter over quarter, mainly due to pressure on paying conversion from Alipay's adjustments to its auto-renewal deduction rules. On the user base, average domestic user scale was stable with a slight uptick in Q2, marking the first stabilization in our user base since we began scaling back marketing spend in early 2022.

New user growth stayed under year-over-year pressure amid the lingering effects of lower marketing spend, but on the product side, refined targeting strategies for different user segments improved matching efficiency, lifting retention among both male and female users to varying degrees and contributing positively to overall user base stability. In Q2, Tantan's domestic business focused its core efforts on exploring AI-driven improvements to the user experience. Among this, AI Icebreaker and AI Chatter system delivered encouraging early results.

The team strengthened AI's semantic understanding of users' photos—which fits Tantan users' preference for expressing themselves through images rather than text—and used the photo content to generate personalized opening lines, which had a particularly strong pull on female user retention. To address the pain point of female users receiving too many matches, the new AI-created matching feature scans through a large volume of matches to surface the best people to chat with, effectively reducing decision fatigue.

In addition, AI one-click registration and profile optimization processed user information in bulk with precision, which not only lowered the barrier to onboarding but also laid a high-quality data foundation for building an AI engine social manager down the road and enabling deeper, more curated matching and recommendations. On user acquisition, external factors pushed up unit acquisition cost year over year, and combined with narrowed channel budget this reduced the number of users acquired from a year ago.

However, because organic traffic retains better and drops more slowly than channel traffic, this partially offset the pressure on the overall user base from the reduction in paid acquisition. China ROI declined quarter over quarter due to rising unit cost and the impact of Alipay's policy change on ARPU, but Tantan's overall ROI remained at a healthy level above 100% payback. On the financial side in Q2, Tantan generated total revenue of 156 million RMB, down 18% year over year and 3% quarter over quarter. The revenue decline was mainly due to the temporary pressure on membership renewals from Alipay's domestic channel policy adjustments.

In response, we took several measures. First, we launched a lifetime membership product and encouraged the short-cycle subscribers to convert to longer-cycle plans, reducing the volatility risk tied to the renewal frequency. Second, we completed an upgrade to our payment infrastructure, integrating Douyin Pay and WeChat Pay to meaningfully reduce the reliance on a single channel. At the same time, we optimized the matching strategy behind Flash Chat, driving revenue growth in that scenario against the broader trend.

Meanwhile, Lastly, our new businesses in Q2 total overseas revenue was 673 million RMB, up 52% year over year and 13% quarter over quarter. Overseas revenue as a share of Group revenue rose 10 percentage points year over year to 27%. The acceleration in year over year growth was mainly driven by strong momentum from our new MENA products as well as the consolidation of overseas dating products acquired last year.

Sequentially, overseas revenue grew at a double digit rate, mainly reflecting the natural recovery in the MENA region following the seasonal Ramadan low along with new gamified features on the product side and themed events tied to seasonal occasions and the World Cup on the operational side, both of which lifted user engagement and paying propensity and drove revenue growth across the board within the portfolio. Socio's progress moderated relative to our initial timeline due to external factors including its removal from the Turkish App Store and the ongoing geopolitical tension in the Middle East since the beginning of the year.

However, the product is gradually emerging from its Q1 trough and is showing a clear recovery trend. Notably, the two newer products in Milan demonstrated strong growth momentum with their combined revenue in the second quarter already approaching the scale of Socio, and alongside this high growth, profitability has also continued to improve. Jahaland achieved a net income breakeven for the first time in Q2. AMA, having turned marginal contribution positive earlier this year, has seen its net loss continue to narrow quickly on the back of a rapid revenue growth and operating leverage.

This marks a new stage of our MENA strategy moving from a Socio-driven single product model toward a multi-product matrix working in concert. Meanwhile, on the other hand, our developed market dating business has maintained high quality expansion in Q2 in the first half of the year, Happn improved pay conversion and RP pool through iterating on its membership benefit and precision targeting, driving continued revenue growth both year over year and quarter over quarter. Building on its strong position in its core European markets, Happn began exploring neighboring markets starting early this year and has seen encouraging early results.

The current user and revenue performance in these new markets fully validates their long term growth potential and lays a solid foundation for the next phase of scaled expansion. Overall in the first half of the year, while our domestic business continued to weather external headwinds, our overseas product portfolio has shifted from being supported by a single product to achieving balanced diversified growth. This validates the effectiveness of our sustained investment in globalization over the past several years and has given the group a healthier revenue structure and stronger resilience.

In the second half of the year we'll continue to strengthen the foundation of our domestic cash cow business through product innovation and refined operations while advancing the scaling of our overseas business so as to create long term value for both users and shareholders. This concludes my remarks today. Now let me pass the call over to Cassie for the Financial Review. Cassie please.

Cassie, CFO Thanks. Yunhua and Ashley, hello everyone. Thank you for joining our conference call today. Now let me take you through the Financial Review.

Total revenue for the second quarter 2026 was 2 point down 5% year on year but up 4% quarter on quarter. 8 million renminbi in the previous quarter. 44 billion RMB, down 5% year on year but up 4% quarter on quarter. 77 billion RMB, down 17% year over year.

The decrease was primarily due to continuous tax scrutiny on some of Momo's agencies combined with weak consumer sentiment due to broader macro pressures and, to a lesser degree, a decline in paying users on Tantan. 26 was up 1% quarter over quarter due to recovery from low seasonality. 9 million renminbi, up 51% year over year, driven by strong growth momentum from our new MENA product as well as the consolidation of overseas dating products acquired last year. Sequentially, overseas VAS revenue rose 12% driven by a recovery in the MENA region after its seasonal low alongside product and operational initiatives.

6 billion renminbi, same as the year-ago period. 8% from year-ago period. 8 million renminbi in film production expenses. 1%, a decline of less than 1 percentage point versus Q2 last year.

The decrease was primarily due to payment channel costs rising as a percentage of revenue. This resulted from a geographic mix shift toward international operations which carry higher payment channel fee structures compared with our domestic businesses. Although Momo raised agency payout ratio to mitigate impact from tax scrutiny, improved gross margins in the MENA region coupled with larger revenue contribution from higher margin overseas dating products, offsetting the margin pressure stemming from Momo's operations. As a result, total revenue share costs as a percentage of revenue remained stable from the year-ago period.

0 million renminbi for the same period last year. Non-GAAP R and D expenses as a percentage of revenue was 7%, same as Q2 last year. We ended the quarter with 1,399 total employees compared to 1,268 from a year ago. The R and D personnel as a percentage of total employee for the group was 56% compared with 58% from Q2 last year.

7 million renminbi for the same period last year, representing a 15% and 13% of total revenue respectively. The year over year increase in sales and marketing expenses was mainly attributable to a greater marketing spend on our new overseas app. This increase was partly offset by ongoing cost controls in mainland China operations. Both Momo and Tantan cut marketing spend while Socio temporarily pulled back on channel investments amid external challenges.

5 million RMB for the same period last year.