Momo Announces Unaudited Financial Results for the Third Quarter of 2018

BEIJING,Dec. 6,2018 -- Momo Inc. (NASDAQ: MOMO) ("Momo" or the "Company"),a leading mobile social networking platform in China,today announced its unaudited financial results for the third quarter of 2018.

Third Quarter of 2018 Highlights

Net revenues increased 51% year over year to $536.0 million in the third quarter of 2018.

Net income attributable to Momo Inc. increased to $85.2 million in the third quarter of 2018 from $79.1 million in the same period last year.

Non-GAAP net income attributable to Momo Inc. (note 1) increased 22% to $114.3 million in the third quarter of 2018 from $93.8 million in the same period last year.

Diluted net income per American Depositary Share ("ADS") was $0.39,compared to $0.38 in the same period last year.

Non-GAAP diluted net income per ADS (note 1) was $0.53,compared to $0.45 in the same period last year.

Monthly Active Users ("MAU") on Momo application were 110.5 million in September 2018,compared to 94.4 million in September 2017.

Total paying users of our live video service and value-added service,without double counting the overlap,including 3.6 million paying users of Tantan Limited ("Tantan"),were 12.5 million for the third quarter of 2018,compared to 7.3 million for the third quarter of 2017.

First Nine Months of 2018 Highlights

Net revenues increased 57% year over year to $1,465.4 million for the first nine months of 2018.

Net income attributable to Momo Inc. was $332.8 million for the first nine months of 2018,compared with $221.1 million during the same period of 2017.

Non-GAAP net income attributable to Momo Inc. (note 1) was $396.7 million for the first nine months of 2018,compared with $258.2 million during the same period of 2017.

Diluted net income per ADS was $1.57 for the first nine months of 2018,compared with $1.07 during the same period of 2017.

Non-GAAP diluted income per ADS (note 1) was $1.87 for the first nine months of 2018,compared with $1.24 during the same period of 2017.

"I am pleased that we delivered solid operational and financial results for the quarter." Commented Yan Tang,Chairman and CEO of Momo. "At the same time we continued to push forward on product and operational fronts,in order to build up longer term growth drivers as we start to look beyond 2018 into next year."

Third Quarter of 2018 Financial Results

Net revenues

Total net revenues were $536.0 million in the third quarter of 2018,an increase of 51% from $354.5 million in the third quarter of 2017.

Live video service revenues were $406.9 million in the third quarter of 2018,an increase of 34% from $302.6 million during the same period of 2017. The growth in live video revenues was contributed by the increase in the quarterly paying users,as well as the increase in the average revenues per paying user per quarter.

Value-addedservice revenues mainly include membership subscription revenues and virtual gift revenues. The total value-added service revenues were $84.2 million in the third quarter of 2018,an increase of 221% from $26.3 million during the same period of 2017. The year over year increase was primarily attributable to the continuous growth of the virtual gift business on the Momo application and to a lesser extent,the consolidation of Tantan's membership subscription revenues for the whole third quarter of 2018. The growth of the virtual gift business was driven by more paying use cases introduced to enhance the social experience for Momo users.

Mobile marketing revenues were $17.2 million in the third quarter of 2018,a decrease of 1% from $17.4 million during the same period of 2017.

Mobile games revenues were $4.1 million in the third quarter of 2018,a decrease of 49% from $8.0 million in the third quarter of 2017. The decrease in game revenues was mainly due to the decrease in quarterly paying users.

Revenues from other services in the third quarter of 2018 mainly consisted of revenues from Phanta City,a TV variety show co-produced by the Company.

Cost and expenses

Cost and expenses were $442.1 million in the third quarter of 2018,an increase of 66% from $266.3 million in the third quarter of 2017. The increase was primarily attributable to: (a) an increase in revenue sharing with the broadcasters related to our live video service and virtual gift recipients; (b) the produced contents in connection with Phanta City; (c) an increase in personnel related costs including share-based compensation expenses as a result of the Company's rapidly expanding talent pool; (d) an increase in marketing and promotional expenses to enhance our brand awareness and attract users; and (e) an increase in amortization expenses related to the intangible assets from acquisitions.

Non-GAAP cost and expenses (note 1) were $411.7 million in the third quarter of 2018,an increase of 64% from $251.7 million during the same period last year.

Income from operations

Income from operations was $94.6 million in the third quarter of 2018,compared to $89.0 million during the same period last year.

Non-GAAP income from operations (note 1) was $125.1 million in the third quarter of 2018,compared to $103.7 million during the same period last year.

Income tax expenses

Income tax expenses were $21.6 million in the third quarter of 2018,increased from $17.2 million in the third quarter of 2017. The increase was mainly because we generated higher profit in the third quarter of 2018.

Net income attributable to Momo Inc.

Net income attributable to Momo Inc. was $85.2 million in the third quarter of 2018,compared to $79.1 million during the same period last year.

Non-GAAP net income (note 1) attributable to Momo Inc. was $114.3 million in the third quarter of 2018,compared to $93.8 million during the same period last year.

Net income per ADS

Diluted net income per ADS was $0.39 in the third quarter of 2018,compared to $0.38 in the third quarter of 2017.

Non-GAAP diluted net income per ADS (note 1) was $0.53 in the third quarter of 2018,compared to $0.45 in the third quarter of 2017.

Cash and cash flow

As of September 30,2018,Momo's cash,cash equivalents,term deposits,restricted cash and short-term investment totaled $1,493.6 million,compared to $1,061.2 million as of December 31,2017. Net cash provided by operating activities in the third quarter of 2018 was $50.9 million,compared to $104.6 million for the same quarter of 2017. The decrease in the operating cash flow for the quarter was primarily because revenues from the TV show Phanta City still sit as accounts receivable on the balance sheet while related costs have largely been paid.

First Nine Months of 2018 Financial Results

Net revenues for the first nine months of 2018 were $1,465.4 million,an increase of 57% from $931.9 million in the same period of 2017,primarily driven by the significant increase in net revenues from live video service and value-addedservice.

Net income attributable to Momo Inc. was $332.8 million in the first nine months of 2018,compared to $221.1 million during the same period of 2017.

Non-GAAP net income attributable to Momo Inc. (note 1) was $396.7 million in the first nine months of 2018,compared to $258.2 million during the same period of 2017.

Diluted net income per ADS was $1.57 during the first nine months of 2018,compared to $1.07 in the same period of 2017.

Non-GAAP diluted net income per ADS (note 1) was $1.87 during the first nine months of 2018,compared to $1.24 in the same period of 2017.

Net cash provided by operating activities was $336.5 million during the first nine months of 2018,compared to $308.0 million in the same period of 2017.

Recent Development - changes to the Board of Directors

The Company also announced several changes to its board of directors (the "Board"). Mr. Yongming Wu,a director and founding partner of Vision Plus Capital and a co-founder of Alibaba Group,has been appointed to be a director of Momo's Board,effective on December 3,2018. Mr. Wu founded Vision Plus Capital in 2015 and has led several key business segments of Alibaba Group. In addition,Mr. Neil Nanpeng Shen resigned from the Board on December 1,effective immediately. The resignation of Mr. Neil Nanpeng Shen was not due to any disagreement with the Company regarding its business,finance,accounting and/or any other affairs.

Business Outlook

For the fourth quarter of 2018,the Company expects total net revenues to be between RMB3,655.0 million to RMB3,755.0 million,representing an increase of 43% to 47% year over year and an increase of 0% to 3% quarter over quarter,on a constant currency basis. Excluding the revenues from Phanta City,the Company expects the total revenues for the fourth quarter of 2018 to be between RMB3,624.0 million to RMB3,724.0 million,representing an increase of 42% to 46% year over year and an increase of 4% to 7% quarter over quarter,on a constant currency basis. The Company is not providing the business outlook in USD terms due to the recent volatility and uncertainty in foreign exchange rate. These estimates reflect the Company's current and preliminary view,which is subject to change.

Note 1: Non-GAAP measures

To supplement our consolidated financial statements presented in accordance with U.S. generally accepted accounting principles ("GAAP"),we use various non-GAAP financial measures that are adjusted from the most comparable GAAP results to exclude share-based compensation and amortization of intangible assets from acquisitions,and provision for income tax related to the amortization of intangible assets.

Reconciliations of our non-GAAP financial measures to our U.S. GAAP financial measures are shown in tables at the end of this earnings release,which provide more details about the non-GAAP financial measures.

Our non-GAAP financial information is provided as additional information to help investors compare business trends among different reporting periods on a consistent basis and to enhance investors' overall understanding of the historical and current financial performance of our continuing operations and our prospects for the future. Our non-GAAP financial information should be considered in addition to results prepared in accordance with GAAP,but should not be considered a substitute for or superior to the GAAP results. In addition,our calculation of the non-GAAP financial measures may be different from the calculation used by other companies,and therefore comparability may be limited.

Our non-GAAP information (including non-GAAP cost and operating expenses,income from operations,net income attributable to Momo Inc.,and diluted earnings per ADS) is adjusted from the most comparable GAAP results to exclude share-based compensation,amortization of intangible assets from acquisitions,and provision for income tax related to the amortization of intangible assets. A limitation of using these non-GAAP financial measures is that share-based compensation,amortization of intangible assets from acquisitions and provision for income tax related to the amortization of intangible assets charge has been and will continue to be for the foreseeable future a significant recurring expense in our results of operations. We compensate for these limitations by providing reconciliations of our non-GAAP measures to our U.S. GAAP measures. Please see the reconciliation tables at the end of this earnings release.

Conference Call

Momo's management will host an earnings conference call on Thursday,December 6,2018at8:00 a.m.U.S. Eastern Time (9:00 p.m. Beijing/Hong KongTime on December 6,2018).

Dial-in details for the earnings conference call are as follows:

International: +65-6713-5090

U.S. Toll Free: +1-866-519-4004

Hong Kong Toll Free: 800-906601

Mainland China: 4006-208038

Passcode: Momo

Please dial in 15 minutes before the call is scheduled to begin.

A telephone replay of the call will be available after the conclusion of the conference call through 8:00 a.m.U.S. Eastern Time,December 14,2018. The dial-in details for the replay are as follows:

International: +61-2-8199-0299

U.S. Toll Free: +1-855-452-5696

Passcode: 3986625

Additionally,a live and archived webcast of the conference call will be available on the Investor Relations section of Momo's website at http://ir.immomo.com.

About Momo

Momo is a leading mobile social networking platform in China. Momo connects people in a personal and lively way through a revolutionary mobile-based social networking platform. With powerful and precise location-based features,Momo enables users to connect with each other and expand relationships from online to offline. Momo's platform includes the Momo mobile application and a variety of related features,functionalities,tools and services that it provides to users,customers and platform partners. Leveraging its social interest graph engine and analysis of user behavior data,Momo is able to provide users a customized experience based on their social preferences and needs. Momo users can maintain and strengthen their relationships through private and group communication tools,content creation and sharing functions,as well as the offline social activities promoted on Momo's platform. Momo users are also able to enjoy live video on our platform. In addition,in May 2018,Momo completed its acquisition of Tantan,a leading social and dating app for the younger generation. Tantan,whose primary users consist of young Chinese singles,is designed to help its users find and establish romantic connections,as well as meet interesting people.

For investor and media inquiries,please contact:

Momo Inc.

Investor Relations

Phone: +86-10-5731-0538

Email: ir@immomo.com

Christensen

In China

Mr. Christian Arnell

Phone: +86-10- 5900-1548

E-mail: carnell@christensenir.com

In US

Ms. Linda Bergkamp

Phone: +1-480-614-3004

Email: lbergkamp@christensenir.com

Safe Harbor Statement

This news release contains "forward-looking" statements within the meaning of Section 27A of the Securities Act of 1933,as amended,and Section 21E of the Securities Exchange Act of 1934,and as defined in the Private Securities Litigation Reform Act of 1995. These forward-looking statements include but are not limited to our management quotes and our financial outlook for the fourth quarter of 2018.

Our forward-looking statements are not historical facts but instead represent only our belief regarding expected results and events,many of which,by their nature,are inherently uncertain and outside of our control. Our actual results and other circumstances may differ,possibly materially,from the anticipated results and events indicated in these forward-looking statements. Announced results for the third quarter of 2018 are preliminary,unaudited and subject to audit adjustment. In addition,we may not meet our financial outlook for the fourth quarter of 2018 and may be unable to grow our business in the manner planned. We may also modify our strategy for growth.In addition,there are other risks and uncertainties that could cause our actual results to differ from what we currently anticipate,including those relating to our ability to retain and grow our user base,our ability to attract and retain sufficiently trained professionals to support our operations,and our ability to anticipate and develop new services and enhance existing services to meet the demand of our users or customers.For additional information on these and other important factors that could adversely affect our business,financial condition,results of operations,and prospects,please see our filings with the U.S. Securities and Exchange Commission.

All information provided in this press release and in the attachments is as of the date of the press release. We undertake no obligation to update any forward-looking statement,whether as a result of new information,future events or otherwise,after the date of this release,except as required by law. Such information speaks only as of the date of this release.

Momo Inc.

Unaudited Condensed Consolidated Statement of Operations

(US dollars in thousands,except per share data)

Three months

First nine months

ended September 30

ended September 30

2017

2018

2017

2018

Net revenues:

Live video service

302,603

406,905

774,597

1,189,378

Value-added service

26,256

84,216

73,759

176,428

Mobile marketing

17,441

17,241

54,348

58,214

Mobile games

8,024

4,097

28,728

16,198

Other services

129

23,511

483

25,151

Total net revenues

354,453

535,970

931,915

1,465,369

Cost and expenses:

Cost of revenues

(177,967)

(298,527)

(449,079)

(777,871)

Research and development

(13,855)

(36,097)

(32,731)

(78,699)

Sales and marketing

(57,734)

(82,809)

(160,815)

(181,704)

General and administrative

(16,792)

(24,713)

(44,870)

(61,947)

Total cost and expenses

(266,348)

(442,146)

(687,495)

(1,100,221)

Other operating income

897

779

9,371

17,558

Income from operations

89,002

94,603

253,791

382,706

Interest income

6,029

12,155

14,409

27,934

Interest expense

-

(3,588)

-

(5,538)

Impairment loss on long-term investments

-

-

(4,386)

-

Income before income tax and share of

income on equity method investments

95,031

103,170

263,814

405,102

Income tax expenses

(17,218)

(21,567)

(46,933)

(79,615)

Income before share of income on equity

method investments

77,813

81,603

216,881

325,487

Share of income on equity method investments

1,166

2,428

3,863

5,399

Net income

78,979

84,031

220,744

330,886

Less: net loss attributable to non-controlling interest

(110)

(1,125)

(315)

(1,933)

Net income attributable to Momo Inc.

79,089

85,156

221,059

332,819

Net income per share attributable to ordinary shareholders

Basic

0.20

0.21

0.56

0.82

Diluted

0.19

0.20*

0.53

0.78*

Weighted average shares used in calculating net income per ordinary share

Basic

395,926,878

409,378,536

393,469,398

404,744,362

Diluted

417,066,439

445,871,236

414,884,571

428,148,904

* Net income attributable to Momo is adjusted for interest expense of Convertible Senior Notes for calculation of dilutive EPS.

Momo Inc.

Unaudited Condensed Consolidated Statement of Comprehensive Income

(US dollars in thousands,except per share data)

Three months

First nine months

ended September 30

ended September 30

2017

2018

2017

2018

Net income

78,886

Other comprehensive income (loss),net of tax of nil

Foreign currency translation adjustment

9,021

(36,753)

17,964

(60,755)

Comprehensive income

88,000

47,278

238,708

270,131

Less: comprehensive loss attributed to the non- controlling interest

(115)

(1,192)

(322)

(2,017)

Comprehensive income attributable to Momo Inc. shareholders

88,115

48,470

239,030

272,148

Momo Inc.

Unaudited Condensed Consolidated Balance Sheets

( US dollars in thousands)

December 31

September 30

2017

2018

Assets

Current assets

Cash and cash equivalents

685,827

285,195

Term deposits

373,794

1,182,454

Restricted cash

-

9,208

Short-term investment

1,614

16,744

Accounts receivable,net of allowance for doubtful

accounts of $90 and $nil as of December 31,2017 and

September 30,respectively

39,597

92,404

Prepaid expenses and other current assets

82,717

91,892

Amount due from related parties

5,143

8

Total current assets

1,188,692

1,677,905

Property and equipment,net

39,762

48,776

Intangible assets

7,462

156,549

Rental deposits

2,651

2,931

Long term investments

44,337

67,326

Deferred tax assets,non-current

7,197

2,608

Other non-current assets

8,495

10,898

Goodwill

3,401

626,406

Total assets

1,301,997

2,593,399

Liabilities and equity

Current liabilities

Accounts payable

74,535

104,836

Deferred revenue

64,865

62,525

Accrued expenses and other current liabilities

87,809

89,732

Amount due to related parties

5,804

8,380

Income tax payable

27,033

12,645

Deferred consideration in connection with business

acquisitions

-

74,131

Total current liabilities

260,046

352,249

Deferred tax liabilities,non-current

1,866

39,137

Share-based compensation liability

-

4,323

Convertible Senior Notes

-

708,771

Other non-current liabilities

2,305

3,807

Total liabilities

264,217

1,108,287

Shareholder's equity(Note a)

1,037,780

1,485,112

Total liabilities and shareholder's equity

1,399

Note a: As of September 30,the number of ordinary shares issued and outstanding was 413,200,744.

Momo Inc.

Unaudited Condensed Consolidated Statement of Cash Flows

(US dollars in thousands)

Three months

First nine months

ended September 30

ended September 30

2017

2018

2017

2018

Cash flows from operating activities:

Net income

78,979

84,031

220,744

330,886

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation of property and equipment

3,220

5,773

7,805

16,232

Amortization of intangible assets

269

5,720

452

8,007

Share-based compensation

14,664

24,974

37,171

58,367

Share of income on equity method investment

(1,166)

(2,428)

(3,863)

(5,399)

Impairment loss on long-term investments

-

-

4,386

-

Income on disposal of property and equipment

-

(182)

(2)

(182)

Provision of allowance for doubtful accounts

-

-

85

(92)

Changes in operating assets and liabilities:

Accounts receivable

6,605

(61,716)

6,287

(51,595)

Prepaid expenses and other current assets

(10,429)

(26,885)

(23,045)

(14,363)

Amount due from related parties

(506)

1,966

(1,019)

5,102

Rental deposits

(27)

(85)

(1,467)

44

Deferred tax assets

-

50

73

4,535

Other non-current assets

(1,046)

(980)

(1,827)

(6,976)

Accounts payable

14,339

23,363

25,960

38,089

Income tax payable

800

(726)

8,843

(15,365)

Deferred revenue

1,966

4,790

3,299

(4,532)

Accrued expenses and other current liabilities

(5,574)

(7,692)

19,702

(28,312)

Amount due to related parties

2,638

2,536

3,846

2,602

Deferred tax liability

(47)

(1,430)

(93)

(2,001)

Other non-current liabilities

(109)

(182)

684

1,501

Net cash provided byoperating activities

104,576

50,897

308,021

336,548

Cash flows from investing activities:

Purchase of property and equipment

(7,937)

(10,491)

(19,281)

(24,673)

Payment for acquired intangible assets

(228)

-

(2,993)

-

Proceeds from disposal of property and equipment

1

323

8

324

Payment for long term investments

(1,350)

(1,176)

(4,979)

(9,666)

Prepayment of long term investments

-

-

-

(7,398)

Payment for business acquisition

-

-

-

(514,919)

Purchase of term deposits

(127,781)

(1,089,995)

(519,749)

(2,279,078)

Cash received on maturity of term deposits

99,984

308,569

484,093

1,442,514

Payment for short term investments

(855)

(52,045)

(855)

(52,045)

Cash received from sales of short term investment

-

35,148

-

36,801

Net cash used in investing activities

(38,166)

(809,667)

(63,756)

(1,408,140)

Cash flows from financing activities:

Proceeds from exercise of options

51

414

461

807

Deferred payment of purchase of property and equipment

(13)

-

(217)

(1,322)

Capital contribution from non-controlling interest shareholder

73

-

73

-

Proceeds from bank loan

-

-

-

300,000

Repayment of bank loan

-

(300,000)

-

(300,000)

Proceeds from issuance of Convertible Senior Notes,net of

issuance cost of $16,703

-

708,297

-

708,297

Net cash provided byfinancing activities

111

408,711

317

707,782

Effect of exchange rate changes

7,110

(18,932)

14,573

(27,614)

Net increase (decrease)in cash,cash equivalent and restricted

cash

73,631

(368,991)

259,155

(391,424)

Cash,cash equivalent and restricted cash at beginning of period

443,088

663,394

257,564

685,827

Cash,cash equivalent and restricted cash at end of period

516,719

294,403

516,403

Momo Inc.

Reconciliation of Non-GAAP financial measures to comparable GAAP measures

(US dollars in thousands,except per share data)

1.Reconciliation of Non-GAAP cost and operating expenses,and net income to comparable GAAP measures.

Three months

Three months

ended September 30,2017

ended September 30,2018

GAAP

Share-based compensation

Non-GAAP

GAAP

Amortization of intangible assets from acquisitions

Share-based compensation

Non-GAAP

Cost of revenues

(177,967)

632

(177,335)

(298,527)

2,672

864

(294,991)

Research and development

(13,855)

2,751

(11,104)

(36,097)

339

6,747

(29,011)

Sales and marketing

(57,734)

3,492

(54,242)

(82,809)

2,499

6,430

(73,880)

General and administrative

(16,792)

7,789

(9,003)

(24,713)

-

10,933

(13,780)

Cost and operating

expenses

(266,348)

14,664

(251,684)

(442,146)

5,510

24,974

(411,662)

Income from operations

89,002

14,664

103,666

94,603

5,510

24,974

125,087

Net income attributable to

Momo Inc.

79,089

14,664

93,753

85,156

4,133(a)

24,974

114,263

First nine months

First nine months

ended September 30,2018

GAAP

Share-based compensation

Non-GAAP

GAAP

Amortization of intangible assets from acquisitions

Share-based compensation

Non-GAAP

Cost of revenues

(449,079)

1,385

(447,694)

(777,871)

3,563

2,478

(771,830)

Research and development

(32,731)

6,218

(26,513)

(78,699)

452

16,097

(62,150)

Sales and marketing

(160,815)

8,601

(152,214)

(181,704)

3,332

15,136

(163,236)

General and administrative

(44,870)

20,967

(23,903)

(61,947)

-

24,656

(37,291)

Cost and operating

expenses

(687,495)

37,171

(650,324)

(1,221)

7,347

58,367

(1,034,507)

Income from operations

253,791

37,171

290,962

382,706

7,347

58,367

448,420

Net income attributable to

Momo Inc.

221,059

37,171

258,230

332,819

5,511(b)

58,367

396,697

Notes:

(a)Adjustments to exclude the provision for income tax related to amortization of intangible assets from acquisitions of

$1,377 from the unaudited condensed consolidated statements.

(b)Adjustments to exclude the provision for income tax related to amortization of intangible assets from acquisitions of

$1,836 from the unaudited condensed consolidated statements.

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