Hello Group Inc. Announces Unaudited Financial Results for the Fourth Quarter and Fiscal Year 2021

Author: Hello Group Inc. / 2023-07-24 00:15 / Source: Hello Group Inc.

Hello Group Inc. Announces Unaudited Financial Results for the Fourth Quarter and Fiscal Year 2021

BEIJING,March 24,2022 --Hello Group Inc. (NASDAQ: MOMO) ("Hello Group" or the "Company"),a leading mobile social and entertainment platform in China,today announced its unaudited financial results for the fourthquarterand the full year ended December 31,2021.

FourthQuarter of 2021 Highlights

Net revenues decreased by 3.2% year over year to RMB3,674.2 million (US$576.6 million*) in the fourth quarter of 2021.

Net lossattributable to Hello Group Inc. was RMB4,242.7 million (US$665.8million) in the fourthquarter of 2021,compared to anet income of RMB651.5million in the same period of 2020. Due to the fact that the Group's fair market value as indicated by its market capitalization was significantly below its net book value of equity,the Group determined that a triggering event had occurred for impairment. The Group conducted a detailed impairment analysis and recordedRMB4,397.0 million (US$690.0 million) as impairment loss,which represented the total value of all the goodwill and intangible assets with the exception of its operational licenses and permits on the consolidated statement of operations for the year ended December 31,2021.

Non-GAAP net income attributable to Hello Group Inc. (note 1) decreased to RMB280.9 million (US$44.1million) in the fourth quarter of 2021,from RMB836.4million in the same period of 2020. Non-GAAP net income attributable to Hello Group Inc. included an accrual of withholding income tax of RMB207.4 million (US$32.5million)on undistributed earnings generated in 2021by our wholly-foreign owned enterprise ("WFOE"),due to our plan to remit WFOE's earnings to its offshore parent companyin the foreseeable futureto fund its demand on US dollar in business operations,payments of dividends,potential investments,etc.. Without this item,non-GAAP net income attributable to Hello Group Inc. would have been RMB488.3 million (US$76.6 million) in the fourth quarter of 2021.

Diluted net loss per American Depositary Share ("ADS") was RMB21.50 (US$3.37) in the fourth quarter of 2021,compared to a diluted net income per ADS of RMB2.98 in the same period of 2020.

Non-GAAP diluted net income per ADS (note 1) was RMB1.38 (US$0.22) in thefourth quarter of 2021,compared to RMB3.80 in the same period of 2020.

Monthly Active Users ("MAU") on Momo application were 114.1 million inDecember2021,compared to 113.8 million inDecember2020. MAU on Tantan application were 27.0 million in December 2021.

Total paying users of live video service and value-added service,without double counting the overlap and including 2.5 million paying users of Tantan Limited ("Tantan"),were 11.4 million for the fourth quarter of 2021,compared to 12.8 million for thefourth quarter of 2020,which included 3.8 million paying users of Tantan.

Full Year2021 Highlights

Net revenues decreased 3.0% year over year to RMB14,575.7 million (US$2,287.2 million) for the full yearof 2021.

Net lossattributable to Hello GroupInc. was RMB2,913.7 million (US$457.2 million) for the full year of 2021,compared to anet income ofRMB2,103.5 million during the same period of 2020.

Non-GAAP net income attributable to Hello GroupInc. (note 1)was RMB2,037.1 million (US$319.7 million) for the full year of 2021,compared with RMB2,896.2 million during the same period of 2020.

Dilutednet lossper ADS was RMB14.40 (US$2.26) for the full year of 2021,compared to a diluted net income per ADS ofRMB9.65 during the same period of 2020.

Non-GAAP diluted net incomeper ADS (note 1)was RMB9.56 (US$1.50)for the full year of 2021,compared with RMB13.16 during the same period of 2020.

* This press release contains translations of certain Renminbi amounts into U.S. dollars at specified rates solely for the convenience of readers. Unlessotherwise noted,all translations from Renminbi to U.S. dollars,in this press release,were made at a rate of RMB6.3726 to US$1.00,the effective noon buying rate for December 30,2021 as set forth in the H.10 statistical release of the Federal Reserve Board.

"2021 was a busy year for us. Despite a variety of external challenges,our team was able to methodically execute our strategic priorities and delivered solid results. I am confident that we'll continue to navigate through the challenges ahead and capitalize on the growth opportunities down the road."commented Li Wang,CEO of Hello Group.

FourthQuarter of 2021 Financial Results

Net revenues

Total net revenues were RMB3,674.2 million (US$576.6million) in the fourth quarter of 2021,a decrease of 3.2% from RMB3,795.2 million in the fourthquarter of 2020.

Live video service revenues were RMB2,148.8 million (US$337.2 million) in the fourth quarter of 2021,a decrease of 7.7% from RMB2,327.9 million during the same period of 2020. The decrease was primarily attributable to the decrease in Tantan's live streaming revenues due to the shift of our strategic focus. The live steaming revenues on Momo application increased 1% year over year in the fourth quarter of 2021.

Value-addedservice revenues mainly include virtual gift revenues and membership subscription revenues. Total value-added service revenues were RMB1,475.7 million (US$231.6million) in the fourth quarter of 2021,an increase of 5.3% from RMB1,401.3 million during the same period of 2020. The year-over-year increase was primarily attributable to the continued growth of the virtual gift business on the Momo application driven by the introduction of innovative features and operational events in the audio and video social entertainment experiences,and the rapid growth in the revenues generated by new standalone apps. The increase was partially offset by the decrease in the value-addedservice revenues of Tantan,due to our strategy to lower the monetization levelto improve user experience and retention.

Mobile marketing revenues were RMB25.4 million (US$4.0 million) in the fourth quarter of 2021,a decrease of 51.8% from RMB52.7 million during the same period of 2020. The decrease in mobile marketing revenues was due to our product adjustment to address new regulation requirement.

Mobile games revenues were RMB19.3 million (US$3.0 million) in the fourth quarter of 2021,an increase of 163.1% from RMB7.3 million in the fourth quarter of 2020.

Net revenues from the Momo segment increased from RMB3,051.3 million in the fourth quarter of 2020 to RMB3,235.6 million (US$507.7 million) in the fourth quarter of 2021,primarily due to the increase in net revenues from value-added service. Net revenues from the Tantan segment decreased from RMB740.5 million in the fourth quarter of 2020 to RMB437.2 million (US$68.6 million) in the fourth quarter of 2021,due to our strategy to lower the monetization level in order to improve user experience and retention.

Cost and expenses

Cost and expenses were RMB7,729.4 million (US$1,212.9 million) in the fourth quarter of 2021,an increase of 134.9% from RMB3,290.0 million in the fourth quarter of 2020. The increase was primarily attributable to: (a) an increase in impairment loss on goodwill and intangible assets amounting to RMB4,397.0 million (US$690.0 million); and (b) an increase in revenue sharing with broadcasters related to Momo's core live video service,and virtual gift recipients for our virtual gift service.These increases were partially offset by a decrease in revenue sharing with broadcasters related to Tantan'slive video service,and a decrease in personnel related costs including share-based compensation expenses resulting from the decreased number of employees and the decreased fair value of the share options granted during the period.

Non-GAAP cost and expenses (note 1) were RMB3,205.8 million (US$503.1 million) in the fourth quarter of 2021,an increase of 3.6% from RMB3,095.9 million during the same period of 2020.

Other operating income

Other operating income was RMB38.6 million (US$6.1 million)in the fourthquarter of 2021,a decrease from RMB88.4million during the fourthquarter of 2020. The other operating income mainly consisted of government incentives.

Income (loss)from operations

Lossfrom operations was RMB4,016.6 million (US$630.3 million)in the fourth quarter of 2021,compared to an income from operations of RMB593.6 million during the same period of 2020. Incomefrom operations of the Momo segment wasRMB549.3 million (US$86.2 million) in the fourth quarter of 2021,which decreased from RMB650.9 million in thefourth quarter of 2020. Loss from operations of the Tantan segment was RMB162.5 million (US$25.5 million) in the fourth quarter of 2021,compared to loss from operationsof RMB53.1 million in the fourth quarter of 2020.

Non-GAAP income from operations (note 1) was RMB507.0 million (US$79.6million) in the fourthquarter of 2021,compared to RMB787.7 million during the same period of 2020. Non-GAAPincomefrom operations of the Momo segment wasRMB658.4 million (US$103.3 million)in the fourth quarter of 2021,which decreased from RMB791.8 million in the fourthquarter of 2020. Non-GAAPlossfrom operations of the Tantan segment was RMB145.0 million (US$22.8 million) in the fourthquarter of 2021,compared to non-GAAP loss from operations of RMB2.3 million in the fourth quarter of 2020.

Income tax expenses

Income tax expenses were RMB296.5 million (US$46.5 million) in the fourth quarter of 2021,compared to RMB5.5 million in the fourth quarter of 2020. The increase was primarily due to the following reasons: (a) in the fourth quarter of 2021,we accrued withholding income tax of RMB207.4 million (US$32.5million)on undistributed earnings generated in 2021by our WFOE,because we plan to remit WFOE's earnings to its offshore parent companyin the foreseeable futureto fund its demand on US dollar in business operations,etc.; (b) in the fourth quarter of 2020,we reversed the over-accrued income tax expenses of RMB113.4 million,due to the preferential tax rate adjustment from 12.5% to 10.0% for WFOE,resulting from the fact that the application of the Key Software Enterprise for the fiscal year of 2019 was approved in 2020.

Net income (loss)

Net losswas RMB4,244.0 million (US$666.0 million) in the fourth quarter of 2021,compared to a net income ofRMB651.1 million during the same period of 2020. Net incomefrom theMomo segment was RMB306.7 million (US$48.1 million) in the fourth quarter of 2021,which decreased fromRMB705.8million in the fourth quarter of 2020. Net loss from the Tantan segment was RMB147.3 million (US$23.1 million) in the fourth quarter of 2021,compared tonet loss of RMB50.5 million in the fourth quarter of 2020.

Non-GAAP net income (note 1) was RMB279.6 million (US$43.9million) in the fourth quarter of 2021,compared to RMB836.1 million during the same period of 2020. Non-GAAPnet incomefrom the Momo segment wasRMB415.8million(US$65.3 million) in the fourth quarter of 2021,which decreased fromRMB846.7million in the fourth quarter of 2020. Non-GAAPnet lossof the Tantan segment was RMB129.9 million (US$20.4 million) in the fourth quarter of 2021,compared tonon-GAAP net loss of RMB8.8 million in the fourth quarter of 2020.

Net income (loss) attributable to Hello Group Inc.

Net lossattributable to Hello Group Inc. was RMB4,242.7 million (US$665.8 million) in the fourth quarter of 2021,compared toanet income ofRMB651.5million during the same period of 2020.

Non-GAAP net income (note 1) attributable to Hello Group Inc. was RMB280.9 million (US$44.1million) in thefourth quarter of 2021,compared to RMB836.4 million during the same period of 2020.

Net income(loss) per ADS

Diluted net lossper ADS was RMB21.50 (US$3.37) in the fourth quarter of 2021,compared toa diluted net income per ADS of RMB2.98in the fourthquarter of 2020.

Non-GAAP diluted net income per ADS (note 1) was RMB1.38 (US$0.22) in the fourth quarter of 2021,compared to RMB3.80 in the fourth quarter of 2020.

Cash and cash flow

As of December 31,2021,the Company's cash,cash equivalents,short-term deposits,long-term deposits and long-term restricted cash totaled RMB15,707.0 million (US$2,464.8million),compared to RMB16,482.3million as of December 31,2020. Net cash provided by operating activities in the fourth quarter of 2021 was RMB665.5 million (US$104.4million),compared to RMB1,039.1 million in the fourth quarter of 2020.

Full Year2021Financial Results

Net revenues for the full year of 2021 were RMB14,287.2 million),a decrease of 3.0% from RMB15,024.2 million in the same period of 2020.

Net loss attributable to Hello GroupInc. was RMB2,compared to RMB2,896.2 million during the same period of 2020.

Dilutednet lossper ADS was RMB14.40 (US$2.26) during the full year of 2021,compared to a diluted net income per ADS ofRMB9.65 in the same period of 2020.

Non-GAAP diluted net incomeper ADS (note 1) was RMB9.56 (US$1.50) during the full year of 2021,compared to RMB13.16inthe same period of 2020.

Net cash provided by operating activities was RMB1,559.2 million (US$244.7 million) during the full year of 2021,compared to RMB3,080.9 million in the same period of 2020.

Recent Development

Declaration of a special cash dividend

Hello Group's board of directors has declared a special cash dividend in the amount of US$0.64 per ADS,or US$0.32 per ordinary share. The cash dividend will be paid on April 29,2022 to shareholders of record at the close of business on April 13,2022. The ex-dividend date will be April 12,2022. The aggregate amount of cash dividends to be paid is approximately US$127 million,which will be funded by surplus cash on the Company's balance sheet.

CFO Transition

The Company today announced that Jonathon Zhang,Chief Financial Officer,will retire effective June 30,2022. Cathy Hui Peng,Senior Vice President of corporate finance,will assume the role of chief financial officer following Mr. Zhang's retirement and Mr. Zhang will remain with the Company as a senior advisor.

"My tenure with Hello Group was such a gratifying journey. I consider the past 8 years with the Company as the most exciting part of my long career life. It has been an absolute privilege to work with the team and have built a great business."said Jonathon Zhang. "I'm also pleased to pass the baton to Cathy. A long time deputy of mine,she is the right person to lead the team to continue their success."

"Jonathon has made tremendous contribution to the Company over the past 8 years. He has been playing an indispensable role in transforming the company and guiding the team to enable our success. On behalf of the company,I want to thank Jonathon for his leadership and dedication and wish him much happiness in his next chapter."said Li Wang,Chief Executive Officer of the Company. "At the same time,we are delighted that Cathy will transition into the CFO role. Her deep capital market experience,demonstrated financial acumen and leadership skills will serve her well in her new role."

Prior to this expanded role,Ms. Peng serves as the Company's Senior Vice President of corporate finance. In this role she is responsible for the company's financial planning and analysis,strategic investment and acquisitions,as well as corporate strategy and investor communications. Ms. Peng joined the Company in 2015 as vice president of investor relations. Since then,she has played a key role in driving the company's success in various capital market transactions. From 2007 to 2015,Ms. Peng worked for SINA Corporation as director of investor relations and a corporate treasurer. Prior to that,she worked for several public and private companies in TMT space where she served various roles in accounting,financial planning and analysis,M&As and corporate communications. Ms. Peng started her career in auditing at Ernst &Young from 2001. Ms. Peng received her bachelor degree in Economics from Peking University in 2001.

Business Outlook

For the first quarter of 2022,the Company expects total net revenues to be between RMB3.1 billion to RMB3.2 billion,representing a decrease of 10.7% to 7.8% year-over-year. This forecast reflects the Company's current and preliminary views on the market and operational conditions,which are 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,Hello Group,use various non-GAAP financial measures that are adjusted from the most comparable GAAP results to exclude share-based compensation,impairment loss on goodwill and intangible assets,amortization of intangible assets from business acquisitions,and tax impacts related to the amortization of intangible assets from business acquisitions.

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 (loss) from operations,net income (loss),net income (loss) attributable to Hello Group Inc.,and diluted net income per ADS) is adjusted from the most comparable GAAP results to exclude share-based compensation,and tax impacts related to the amortization of intangible assets from business acquisitions. A limitation of using these non-GAAP financial measures is that share-based compensation,and tax impacts related to the amortization of intangible assets from business acquisitions have been and will continue to be for the foreseeable future significant recurring expenses in our results of operations. We compensate for such limitation 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

Hello Group's management will host an earnings conference call on Thursday,2022,at8:00 a.m.U.S. Eastern Time (8:00 p.m. Beijing/Hong KongTime on March 24,2022).

All participants must preregister online prior to the call to receive the dial-in details. Oncepreregistration has been complete,participants will receive dial-in numbers,direct event passcode,and a unique registrant ID.

PRE-REGISTER LINK http://apac.directeventreg.com/registration/event/1244109

To join the conference,simply dial the number in the calendar invite you receive after preregistering,enter the passcode followed by your registrant ID,and you will join the conference instantly.

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,April 1,2022. The dial-in details for the replay are as follows:

International: +61-2- 9003- 4211

U.S. Toll Free: +1-855- 4525-696

Passcode: 1244109

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

About Hello Group Inc.

We are a leading player in China's online social and entertainment space. ThroughMomo,Tantan and other properties within our product portfolio,we enable users to discover new relationships,expand their social connections and build meaningful interactions.Momois a mobile application that connects people and facilitates social interactions based on location,interests and a variety of online recreational activities. Tantan,which was added into our family of applications through acquisition inMay 2018,is a leading social and dating application. It is designed to help its users find and establish romantic connections as well as meet interesting people. We also operate a number of other applications to serve different social and entertainment demands from our users.

For investor and media inquiries,please contact:

Hello Group Inc.

Investor Relations

Phone: +86-10-5731-0538

Email: ir@immomo.com

Christensen

In China

Mr. Eric Yuan

Phone: +86-10-5900-1548

E-mail: Eyuan@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,our financial outlook for the firstquarter of 2022,as well as the amount of,timing,methods and funding sources for repurchases of our shares under the share repurchase program.

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 fourthquarter of 2021 are preliminary,unaudited and subject to audit adjustment. In addition,we may not meet our financial outlook for the firstquarter of 2022 and may be unable to grow our business in the manner planned. We may also modifyour strategy for growth. Moreover,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,our ability to anticipate and develop new services and enhance existing services to meet the demand of our users or customers,the impact of the COVID-19 pandemic on the Company's business operations and the economy in China,the market price of the Company's stock prevailing from time to time,the nature of other investment opportunities presented to the Company from time to time,the Company's cash flows from operations,general economic conditions,and other factors. 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.

Hello Group Inc.

Unaudited Condensed Consolidated Statement of Operations

(All amounts in thousands,except share and per share data)

Three months

Year

Ended December 31

2020

2021

2020

2021

RMB

US$

RMB

US$

Net revenues:

Live video service

2,327,875

2,148,785

337,191

9,637,579

8,378,945

1,314,839

Value-added service

1,401,269

1,475,733

231,575

5,112,182

5,971,792

937,104

Mobile marketing

52,663

25,369

3,981

198,197

159,010

24,952

Mobile games

7,334

19,294

3,028

39,564

47,712

7,487

Other services

6,060

5,048

792

36,666

18,260

2,866

Total net revenues

3,795,201

3,674,229

576,567

15,024,188

14,575,719

2,287,248

Cost and expenses:

Cost of revenues

(2,042,781)

(2,191,520)

(343,897)

(7,976,781)

(8,383,431)

(1,315,543)

Research and development

(327,295)

(316,024)

(49,591)

(1,167,677)

(1,131,781)

(177,601)

Sales and marketing

(697,722)

(659,604)

(103,506)

(2,813,922)

(2,604,309)

(408,673)

General and administrative

(222,191)

(165,257)

(25,932)

(763,150)

(624,700)

(98,029)

Impairment loss ongoodwill and intangible assets

(4,397,012)

(689,987)

(4,987)

Total cost and expenses

(3,289,989)

(7,729,417)

(1,212,913)

(12,721,530)

(17,141,233)

(2,689,833)

Other operating income

88,385

38,558

6,051

228,777

175,947

27,610

Income (loss) from operations

593,597

(4,016,630)

(630,295)

2,531,435

(2,389,567)

(374,975)

Interest income

100,880

99,573

15,625

444,471

384,279

60,302

Interest expense

(19,047)

(18,444)

(2,894)

(78,872)

(73,776)

(11,577)

Other gain or loss,net

7,500

2,000

314

1,500

(16,000)

(2,511)

Income (loss) before income tax and share of income on

equity method investments

682,930

(3,933,501)

(617,250)

2,898,534

(2,095,064)

(328,761)

Income tax expenses

(5,481)

(296,491)

(46,526)

(755,620)

(822,556)

(129,077)

Income (loss) before share of income on equity method

investments

677,449

(4,229,992)

(663,776)

2,142,914

(2,917,620)

(457,838)

Share of loss on equity method investments

(26,319)

(14,045)

(2,204)

(42,522)

(8,084)

(1,269)

Net income (loss)

651,130

(4,244,037)

(665,980)

2,100,392

(2,925,704)

(459,107)

Less: net loss attributable to non-controlling interest

(320)

(1,319)

(207)

(3,092)

(11,996)

(1,882)

Net income (loss) attributable to the shareholders of Hello

Group Inc.

651,450

(4,242,718)

(665,773)

2,103,484

(2,913,708)

(457,225)

Net income (loss) per share attributable to ordinary

shareholders

Basic

1.57

(10.75)

(1.69)

5.05

(7.20)

(1.13)

Diluted

1.49

(10.75)

(1.69)

4.83

(7.20)

(1.13)

Weighted average shares used in calculating net income (loss)

per ordinary share

Basic

414,839,350

394,694,993

394,993

416,914,898

404,701,910

404,910

Diluted

449,683,596

394,993

452,081,642

404,910

Hello Group Inc.

Unaudited Condensed Consolidated Statement of Comprehensive Income

(All amounts in thousands,except share and per share data)

Three months

Year

Ended December 31

2020

2021

2020

2021

RMB

US$

RMB

US$

Net income (loss)

651,107)

Other comprehensive loss,net of tax:

Foreign currency translation adjustment

(69,010)

(7,331)

(1,150)

(141,677)

(39,161)

(6,145)

Comprehensive income (loss)

582,120

(4,251,368)

(667,130)

1,958,715

(2,964,865)

(465,252)

Less: comprehensive loss attributed to the non-

controlling interest

(9,059)

(3,280)

(515)

(26,004)

(16,603)

(2,605)

Comprehensive income (loss) attributable to

Hello Group Inc.

591,179

(4,248,088)

(666,615)

1,984,719

(2,948,262)

(462,647)

Hello Group Inc.

Unaudited Condensed Consolidated Balance Sheets

(All amounts in thousands,except share and per share data)

December 31

2020

2021

RMB

US$

Assets

Current assets

Cash and cash equivalents

3,363,942

5,570,563

874,143

Short-term deposits

7,566,250

2,860,000

448,796

Restricted cash

2,130

Accounts receivable,net of allowance for doubtful accounts of

RMB15,390 and RMB15,127 as of December 31,2020 and 2021,

respectively

200,831

205,225

32,204

Prepaid expenses and other current assets

613,696

775,072

121,626

Total current assets

11,746,849

9,410,860

1,476,769

Long-term deposits

5,550,000

7,200,000

1,129,837

Long-term restricted cash

76,471

12,000

Right-of-use assets,net

278,175

257,934

40,475

Property and equipment,net

265,765

180,664

28,350

Intangible assets,net

687,211

27,320

4,287

Rental deposits

21,794

19,204

3,014

Long-term investments

454,996

820,006

128,677

Other non-current assets

94,868

83,930

13,170

Deferred tax assets

32,495

34,849

5,469

Goodwill

4,088,403

Total assets

23,220,556

18,111,238

2,842,048

Liabilities and equity

Current liabilities

Accounts payable

699,394

726,207

113,957

Deferred revenue

511,617

539,967

84,733

Accrued expenses and other current liabilities

854,835

911,050

142,964

Amount due to related parties

19,462

5,016

787

Lease liabilities due within one year

132,793

162,950

25,570

Income tax payable

236,490

125,773

19,737

Deferred consideration in connection with business acquisitions

62,149

44,802

7,030

Total current liabilities

2,516,740

2,515,765

394,778

Deferred tax liabilities

171,803

213,384

33,485

Convertible senior notes

4,658,966

4,565,292

716,394

Share-based compensation liability

875,616

Lease liabilities

136,436

103,105

16,179

Other non-current liabilities

25,666

128,095

20,101

Total liabilities

8,385,227

7,525,641

1,180,937

Shareholder's equity (i)

14,835,329

10,585,597

1,661,111

Total liabilities and shareholder's equity

23,048

(i): As of December 31,the number of ordinary shares outstanding was 395,884.

Hello Group Inc.

Unaudited Condensed Consolidated Statement of Cash Flows

(All amounts in thousands,except share and per share data)

Three months

Year

Ended December 31

2020

2021

2020

2021

RMB

US$

RMB

US$

Cash flows from operating activities:

Net income (loss)

651,130

(4,037)

(665,980)

2,392

(2,704)

(459,107)

Adjustments to reconcile net income (loss) to net cash provided by

operating activities:

Depreciation of property and equipment

55,375

34,226

5,371

208,990

155,537

24,407

Amortization of intangible assets

37,741

1,279

201

157,258

109,062

17,114

Share-based compensation

157,584

126,576

19,862

678,686

475,771

74,658

Share of loss on equity method investments

26,319

14,045

2,204

42,522

8,084

1,269

Impairment loss on goodwill and intangible assets

4,012

689,987

4,987

Gain or loss on long-term investments

(7,500)

(2,000)

(314)

(1,500)

16,000

2,511

Gain on subsidiary deconsolidation

(6,676)

Gain on disposal of subsidiaries

(15,526)

(2,436)

Loss or gain on disposal of property and equipment

(36)

(6)

(282)

1,236

194

Provision of losses (income) on receivable and other assets

19,663

(505)

(79)

46,075

(263)

(41)

Cash received on investment income distribution

1,153

Changes in operating assets and liabilities:

Accounts receivable

34,533

13,984

2,194

52,247

(10,374)

(1,628)

Prepaid expenses and other current assets

104,636

52,504

8,239

(59,117)

(151,162)

(23,721)

Amount due from a related party

4,382

Rental deposits

(4,372)

1,171

184

(4,265)

(343)

(54)

Deferred tax assets

1,535

(338)

(53)

4,569

(2,354)

(369)

Other non-current assets

(166,665)

42,125

6,610

(138,484)

34,075

5,347

Accounts payable

66,948

11,053

1,734

(11,716)

30,475

4,782

Income tax payable

(95,341)

(39,285)

(6,165)

82,514

(110,716)

(17,374)

Deferred revenue

24,740

9,652

1,515

8,910

35,106

5,509

Accrued expenses and other current liabilities

41,048

99,497

15,613

(120,363)

60,668

9,520

Amount due to related parties

(12,406)

(9,751)

(1,530)

(10,144)

(14,447)

(2,267)

Deferred tax liability

(9,435)

207,114

32,501

(39,315)

180,173

28,273

Share-based compensation liability

(678,153)

(106,417)

Other non-current liabilities

113,553

(48,777)

(7,654)

85,053

(34,959)

(5,486)

Net cash provided by operating activities

1,039,089

665,509

104,434

3,080,889

1,559,198

244,671

Cash flows from investing activities:

Purchase of property and equipment

(16,095)

(19,201)

(3,013)

(124,143)

(95,323)

(14,958)

Payment for long-term investments

(9,000)

(115,052)

(18,054)

(13,500)

(415,052)

(65,131)

Purchase of short-term deposits

(3,654,500)

(400,000)

(62,769)

(14,949,665)

(4,688)

(780,951)

Cash received on maturity of short-term deposits

3,954,500

3,000

557,072

19,577,159

9,667,570

1,517,053

Payment for short-term investments

(10,000)

Cash received from sales of short-term investment

10,000

Cash received on investment income distribution

5,610

880

Cash of disposed subsidiaries

(8,750)

(1,373)

Cash received from sales of long term investment

12,000

20,000

3,138

12,138

Purchase of long-term deposits

(900,000)

(1,600,000)

(251,075)

(5,250,850,000)

(290,305)

Cash received on maturity of long term deposits

200,000

31,384

200,384

Other investing activities

569

(317)

2,975

467

Net cash (used in) provided by investing activities

(613,093)

1,636,316

256,772

(748,466)

2,342

400,204

Cash flows from financing activities:

Deferred payment for business acquisition

(50)

(8)

(18,355)

(12,957)

(2,033)

Proceeds from exercise of share options

171

226

776

122

Repurchase of ordinary shares

(197,799)

(330,206)

(862,865)

(135,402)

Repurchase of subsidiary's share options

(932)

(5,070)

(796)

(25,832)

(59,120)

(9,277)

Dividends payment

(1,123,983)

(852,743)

(133,814)

Net cash used in financing activities

(198,560)

(5,115)

(803)

(1,498,150)

(1,786,909)

(280,404)

Effect of exchange rate changes

(37,770)

(12,972)

(2,035)

(80,944)

(41,669)

(6,538)

Net increase in cash and cash equivalents

189,666

2,283,738

358,368

753,329

2,280,962

357,933

Cash,cash equivalents and restricted cash at the beginning of period

3,176,406

3,296

527,775

2,612,743

3,366,072

528,210

Cash,cash equivalents and restricted cash at the end of period

3,072

5,647,034

886,143

3,143

Hello Group Inc.

Reconciliation of Non-GAAP financial measures to comparable GAAP measures

(All amounts in thousands,except per share data)

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

Three months

Ended December 31,2020

Ended December 31,2021

GAAP

Amortization of

intangible assets

from business

acquisitions

Share-based

compensation

Tax impacts

Non-GAAP

GAAP

Impairment

loss on

goodwill and

intangible

assets

Share-

based

compensation

Non-GAAP

GAAP

Impairment loss

on goodwill and

intangible

assets

Share-based

compensation

Non-GAAP

(ii)

RMB

US$

Cost of revenues

(2,781)

17,694

4,242

(2,020,845)

(2,520)

3,393

(2,188,127)

(343,897)

532

(343,365)

Research and development

(327,295)

2,247

38,515

(286,533)

(316,024)

36,303

(279,721)

(49,591)

5,697

(43,894)

Sales and marketing

(697,722)

16,547

27,122

(654,053)

(659,604)

11,024

(648,580)

(103,506)

1,730

(101,776)

General and administrative

(222,191)

87,705

(134,486)

(165,257)

75,856

(89,401)

(25,932)

11,903

(14,029)

Impairment loss on goodwill and intangible assets

(4,012)

4,012

(689,987)

689,987

Cost and operating expenses

(3,989)

36,488

157,584

(3,917)

(7,417)

4,012

126,576

(3,205,829)

(1,913)

689,987

19,862

(503,064)

Income (loss) from operations

593,597

36,488

157,584

787,669

(4,630)

4,012

126,576

506,958

(630,295)

689,987

19,862

79,554

Net income (loss) attributable to Hello Group Inc.

651,450

36,584

(9,122)

836,400

(4,718)

4,576

280,870

(665,773)

689,862

44,076

Hello Group Inc.

Reconciliation of Non-GAAP financial measures to comparable GAAP measures

(All amounts in thousands,except per share data)

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

Year

Ended December 31,2021

GAAP

Amortization of

intangible assets

from business

acquisitions

Share-based

compensation

Tax

impacts

Non-GAAP

GAAP

Impairment

loss on

goodwill and

intangible

assets

Amortization of

intangible assets

from business

acquisitions

Share-based

compensation

Tax

impacts

Non-GAAP

GAAP

Impairment

loss on

goodwill and

intangible

assets

Amortization of

intangible

assets from

business

acquisitions

Share-based

compensation

Tax impacts

Non-GAAP

(ii)

RMB

US$

Cost of revenues

(7,781)

73,740

18,449

(7,884,592)

(8,431)

51,853

17,941

(8,313,637)

(1,543)

8,137

2,815

(1,304,591)

Research and development

(1,677)

9,365

175,870

(982,442)

(1,781)

3,660

139,571

(988,550)

(177,601)

574

21,902

(155,125)

Sales and marketing

(2,922)

68,960

158,902

(2,586,060)

(2,309)

48,491

70,821

(2,484,997)

(408,673)

7,609

11,113

(389,951)

General and administrative

(763,150)

325,465

(437,685)

(624,700)

247,438

(377,262)

(98,029)

38,828

(59,201)

Impairment loss on goodwill and intangible assets

(4,012

(689,987

Cost and operating expenses

(12,530)

152,065

678,686

(11,890,779)

(17,233)

4,012

104,004

475,771

(12,164,446)

(2,833)

689,987

16,320

74,658

(1,908,868)

Income (loss) from operations

2,435

152,065

678,686

3,362,186

(2,567)

4,012

104,004

475,771

2,587,220

(374,975)

689,987

16,320

74,658

405,990

Net income (loss) attributable toHello Group Inc.

2,484

152,686

(38,016)

2,896,219

(2,708)

4,771

(26,002)

2,037,077

(457,225)

689,658

(4,080)

319,660

(ii) Includes tax impacts related to the amortization of intangible assets from business acquisition.

Hello Group Inc.

Unaudited Condensed Segment Report

(All amounts in thousands,except share and per share data)

Three months

Ended December 31,2021

Momo

Tantan

QOOL

Unallocated[1]

Total

RMB

US$

Net revenues:

Live video service

1,947,958

200,827

2,191

Value-added service

1,239,351

236,382

1,575

Mobile marketing

25,369

25,981

Mobile games

19,294

19,028

Other services

3,667

1,381

5,048

792

Total net revenues

3,235,639

437,209

1,381

3,567

Cost and expenses (iii):

Cost of revenues

(1,962,718)

(228,290)

(512)

(2,897)

Research and development

(233,512)

(82,512)

(316,591)

Sales and marketing

(377,672)

(281,534)

(398)

(659,506)

General and administrative

(147,957)

(10,362)

(6,938)

(165,932)

Impairment loss on goodwill and intangible assets

(4,012)

(4,987)

Total cost and expenses

(2,859)

(602,698)

(7,848)

(4,012)

(7,913)

Other operating income

35,532

3,023

38,051

Income (loss) from operations

549,312

(162,466)

(6,464)

(4,012)

(4,295)

Interest income

99,399

139

99,625

Interest expense

(18,444)

(18,894)

Other gain or loss,net

2,000

314

Income (loss) before income tax and share of income on

equity method investments

632,267

(162,327)

(6,429)

(4,012)

(3,250)

Income tax (expenses) benefits

(311,479)

14,988

(296,526)

Income (loss) before share of income on equity method

investments

320,788

(147,339)

(6,776)

Share of loss on equity method investments

(14,045)

(14,204)

Net income (loss)

306,743

(147,980)

(iii) Share-based compensation was allocated in cost of revenues and operating expenses as follows:

Three months

Ended December 31,2021

Momo

Tantan

QOOL

Total

RMB

US$

Cost of revenues

2,729

664

3,393

532

Research and development

19,569

16,734

36,303

5,697

Sales and marketing

10,997

11,024

1,730

General and administrative

75,808

75,856

11,903

Total cost and expenses

109,103

17,473

126,576

19,862

[1] The impairment loss on goodwill and intangible assets is presented as an unallocated item in the segment information because our management does not consider this as part of the segment operating performance measure.

Hello Group Inc.

Reconciliation of GAAP and NON-GAAP Results of Unaudited Segment Report

(All amounts in thousands,except share and per share data)

Three months

Ended December 31,2021

Momo

Tantan

QOOL

Unallocated

Total

RMB

US$

Income (loss) from operations

549,312

(162,466)

(6,464)

(4,630)

(630,295)

Share-based compensation

109,103

17,473

126,862

Impairment loss on goodwill and intangible assets

4,012

4,987

Non-GAAP income (loss) from operations

658,415

(144,993)

(6,464)

506,958

79,554

Net income (loss)

306,743

(147,339)

(6,429)

(4,980)

Share-based compensation

109,987

Non-GAAP net income (loss)

415,846

(129,866)

(6,429)

279,551

43,869

Hello Group Inc.

Unaudited Condensed Segment Report

(All amounts in thousands,2020

Momo

Tantan

QOOL

Total

RMB

US$[2]

Net revenues:

Live video service

1,923,544

404,331

2,875

356,762

Value-added service

1,065,062

336,207

1,269

214,754

Mobile marketing

52,663

8,071

Mobile games

7,334

1,124

Other services

2,743

3,317

6,060

929

Total net revenues

3,051,346

740,538

3,317

3,201

581,640

Cost and expenses (iv):

Cost of revenues

(1,676,071)

(365,350)

(1,360)

(2,781)

(313,070)

Research and development

(243,555)

(83,740)

(327,295)

(50,160)

Sales and marketing

(361,115)

(336,558)

(49)

(697,722)

(106,931)

General and administrative

(202,831)

(11,891)

(7,469)

(222,191)

(34,052)

Total cost and expenses

(2,483,572)

(797,539)

(8,878)

(3,989)

(504,213)

Other operating income

83,110

3,330

88,385

13,546

Income (loss) from operations

650,884

(53,056)

(4,231)

593,597

90,973

Interest income

100,347

486

100,880

15,461

Interest expense

(19,047)

(2,919)

Other gain or loss,500

7,500

1,149

Income (loss) before income tax and share of income on equity

method investments

739,684

(52,570)

(4,184)

682,930

104,664

Income tax (expenses) benefits

(7,565)

2,084

(5,481)

(840)

Income (loss) before share of income on equity method

investments

732,119

(50,486)

(4,184)

677,449

103,824

Share of loss on equity method investments

(26,319)

(4,034)

Net income (loss)

705,800

(50,184)

651,130

99,790

(iv) Share-based compensation was allocated in cost of revenues and operating expenses as follows:

Three months

Ended December 31,2020

Momo

Tantan

QOOL

Total

RMB

US$

Cost of revenues

2,844

1,398

4,242

650

Research and development

31,946

6,569

38,515

5,903

Sales and marketing

21,452

5,670

27,122

4,157

General and administrative

84,706

644

2,355

87,705

13,441

Total cost and expenses

140,948

14,281

2,355

157,584

24,151

[2] All translations from RMB to U.S. dollars are made at a rate of RMB6.525 to US$1.00,the effective noon buying rate for December 31,2020 as set forth in the H.10 statistical release of the Federal Reserve Board.

Hello Group Inc.

Reconciliation of GAAP and NON-GAAP Results of Unaudited Segment Report

(All amounts in thousands,2020

Momo

Tantan

QOOL

Total

RMB

US$

Income (loss) from operations

650,884

(53,056)

(4,231)

593,597

90,973

Share-based compensation

140,948

14,281

2,355

157,584

24,151

Amortization of intangible assets from

business acquisitions

36,488

5,592

Non-GAAP income (loss) from operations

791,832

(2,287)

(1,876)

787,669

120,716

Net income (loss)

705,800

(50,486)

(4,184)

651,130

99,790

Share-based compensation

140,592

Tax impacts

(9,122)

(1,398)

Non-GAAP net income (loss)

846,748

(8,839)

(1,829)

836,080

128,135

Hello Group Inc.

Unaudited Condensed Segment Report

(All amounts in thousands,except share and per share data)

Year

Ended December 31,2021

Momo

Tantan

QOOL

Unallocated

Total

RMB

US$

Net revenues:

Live video service

7,809

903,136

8,839

Value-added service

4,845,744

1,126,048

5,104

Mobile marketing

159,010

159,952

Mobile games

47,712

47,487

Other services

12,930

5,330

18,866

Total net revenues

12,541,205

2,029,184

5,330

14,248

Cost and expenses (v):

Cost of revenues

(7,301,048)

(1,044,852)

(37,531)

(8,543)

Research and development

(828,688)

(303,093)

(1,601)

Sales and marketing

(1,420,130)

(1,146)

(4,033)

(2,673)

General and administrative

(619,922)

18,401

(23,179)

(624,029)

Impairment loss on goodwill and intangible assets

(4,987)

Total cost and expenses

(10,169,788)

(2,509,690)

(64,743)

(4,012)

(17,833)

Other operating income

138,884

37,029

175,610

Income (loss) from operations

2,510,301

(443,477)

(59,379)

(4,012)

(2,975)

Interest income

383,028

1,091

160

384,302

Interest expense

(73,776)

(73,net

(16,000)

(16,511)

Income (loss) before income tax and share of income on

equity method investments

2,803,553

(442,386)

(59,219)

(4,761)

Income tax (expenses) benefits

(844,987)

22,431

(822,077)

Income (loss) before share of income on equity method

investments

1,566

(419,955)

(59,838)

Share of loss on equity method investments

(8,084)

(8,269)

Net income (loss)

1,950,482

(419,107)

(v) Share-based compensation was allocated in cost of revenues and operating expenses as follows:

Year

Ended December 31,2021

Momo

Tantan

QOOL

Total

RMB

US$

Cost of revenues

10,541

7,400

17,941

2,815

Research and development

97,828

41,743

139,571

21,902

Sales and marketing

48,154

22,667

70,821

11,113

General and administrative

314,216

-66,778

247,438

38,828

Total cost and expenses

470,739

5,032

475,771

74,658

Hello Group Inc.

Reconciliation of GAAP and NON-GAAP Results of Unaudited Segment Report

(All amounts in thousands,except share and per share data)

Year

Ended December 31,2021

Momo

Tantan

QOOL

Unallocated

Total

RMB

US$

Income (loss) from operations

2,301

(443,477)

(59,379)

(4,012)

(2,567)

(374,975)

Share-based compensation

470,739

5,032

475,658

Impairment loss on goodwill and intangible

assets

4,987

Amortization of intangible assets from

business acquisitions

104,004

16,320

Non-GAAP income (loss) from operations

2,981,040

(334,441)

(59,379)

2,220

405,990

Net income (loss)

1,482

(419,955)

(59,219)

(4,107)

Share-based compensation

470,320

Tax impacts

(26,002)

(4,080)

Non-GAAP net income (loss)

2,421,221

(336,921)

(59,219)

2,025,081

317,778

Hello Group Inc.

Unaudited Condensed Segment Report

(All amounts in thousands,2020

Momo

Tantan

QOOL

Total

RMB

US$

Net revenues:

Live video service

8,638,810

998,769

9,579

1,477,024

Value-added service

3,742,637

1,369,545

5,182

783,476

Mobile marketing

198,197

30,375

Mobile games

39,564

6,063

Other services

11,911

24,755

36,666

5,620

Total net revenues

12,631,119

2,368,314

24,755

15,188

2,302,558

Cost and expenses (vi):

Cost of revenues

(6,865,836)

(1,816)

(22,129)

(7,781)

(1,222,495)

Research and development

(844,826)

(322,851)

(1,677)

(178,954)

Sales and marketing

(1,454,123)

(1,359,709)

(90)

(2,922)

(431,252)

General and administrative

(664,458)

(73,019)

(25,673)

(763,150)

(116,958)

Total cost and expenses

(9,829,243)

(2,844,395)

(47,892)

(12,530)

(1,659)

Other operating income

223,312

3,520

228,777

35,062

Income (loss) from operations

3,188

(472,136)

(21,617)

2,435

387,961

Interest income

440,878

3,353

240

444,471

68,118

Interest expense

(78,872)

(12,088)

Other gain or loss,net

1,500

230

Income (loss) before income tax and share of

income on equity method investments

3,388,694

(468,783)

(21,377)

2,534

444,221

Income tax (expenses) benefits

(770,333)

14,713

(755,620)

(115,804)

Income (loss) before share of income on equity

method investments

2,618,361

(454,070)

(21,914

328,417

Share of loss on equity method investments

(42,522)

(6,517)

Net income (loss)

2,839

(454,392

321,900

(vi) Share-based compensation was allocated in cost of revenues and operating expenses as follows:

Year

Ended December 31,2020

Momo

Tantan

QOOL

Total

RMB

US$

Cost of revenues

15,189

3,260

18,449

2,827

Research and development

127,714

48,156

175,870

26,953

Sales and marketing

142,908

15,994

158,902

24,353

General and administrative

292,356

22,882

10,227

325,465

49,880

Total cost and expenses

578,167

90,292

10,227

678,686

104,013

Hello Group Inc.

Reconciliation of GAAP and NON-GAAP Results of Unaudited Segment Report

(All amounts in thousands,2020

Momo

Tantan

QOOL

Total

RMB

US$

Income (loss) from operations

3,188

(472,136)

(21,617)

2,435

387,961

Share-based compensation

578,167

90,292

10,227

678,686

104,013

Amortization of intangible assets from business

acquisitions

152,065

23,305

Non-GAAP income (loss) from operations

3,603,355

(229,779)

(11,390)

3,186

515,279

Net income (loss)

2,839

(454,070)

(21,377)

2,392

321,900

Share-based compensation

578,305

Tax impacts

(38,016)

(5,826)

Non-GAAP net income (loss)

3,154,006

(249,729)

(11,150)

2,893,127

443,392

View original content:https://www.prnewswire.com/news-releases/hello-group-inc-announces-unaudited-financial-results-for-the-fourth-quarter-and-fiscal-year-2021-301509804.html

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