Hello Group Inc. Announces Unaudited Financial Results for the Third Quarter of 2022

Author: Hello Group Inc. / 2023-07-24 01:20 / Source: Hello Group Inc.

Hello Group Inc. Announces Unaudited Financial Results for the Third Quarter of 2022

BEIJING,Dec. 8,2022 -- 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 thirdquarter of 2022.

ThirdQuarter of 2022 Highlights

Net revenues decreased by 14.0% year over year to RMB3,233.0 million (US$454.5 million*) in the third quarter of 2022.

Net income attributable to Hello Group Inc. increased to RMB450.8 million (US$63.4 million) in the third quarter of 2022,from RMB403.2 million in the same period of 2021.

Non-GAAP net income attributable to Hello Group Inc. (note 1) decreased to RMB535.8 million (US$75.3 million) in the third quarter of 2022,from RMB571.6 million in the same period of 2021.

Diluted net income per American Depositary Share ("ADS") was RMB2.20 (US$0.31) in the third quarter of 2022,compared to RMB1.93 in the same period of 2021.

Non-GAAP diluted net income per ADS (note 1) was RMB2.60 (US$0.37) in the third quarter of 2022,compared to RMB2.70 in the same period of 2021.

Monthly Active Users ("MAU") on Momo application were 108.8 million in September 2022,compared to 115.5 million in September 2021. MAU on Tantan application were 20.9 million in September 2022.

For the Momo app total paying users was 8.4 million for the third quarter of 2022,compared to 9.3 million for the same period last year. Tantan had 2.0 million paying users for the third quarter of 2022 compared to 2.9 million from the year ago period.

* 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 RMB7.1135 to US$1.00,the effective noon buying rate for September 30,2022 as set forth in the H.10 statistical release of the Federal Reserve Board.

First Nine Monthsof 2022 Highlights

Net revenues decreased 12.9% year over year to RMB9,491.5 million (US$1,334.3 million) for the first nine months of 2022.

Net income attributable to Hello Group Inc. was RMB1,086.3 million (US$152.7 million) for the first nine months of 2022,compared to RMB1,329.0 million during the same period of 2021.

Non-GAAP net income attributable to Hello Group Inc. (note 1) was RMB1,397.8 million (US$196.5 million) for the first nine months of 2022,756.2 million during the same period of 2021.

Diluted net income per ADS was RMB5.30 (US$0.75) for the first nine months of 2022,compared to RMB6.22 during the same period of 2021.

Non-GAAP diluted net income per ADS (note 1) was RMB6.75 (US$0.95) for the first nine months of 2022,compared to RMB8.14 during the same period of 2021.

"I am very happy to returntothe CEO position. In the third quarter,thanks to product and operational enhancements,we delivered good financial results and made solid progress across all business lines."commented Yan Tang,Chairman and CEO of Hello Group. "Such progress on the business front,coupled with the efforts to improve cost efficiency,allowed us to see meaningful bottom line improvement on a sequential basis. I am very proud of the execution capabilities that the team demonstrated in such a challenging environment."

ThirdQuarter of 2022 Financial Results

Net revenues

Total net revenues were RMB3,233.0 million (US$454.5million) in the thirdquarter of 2022,a decrease of 14.0% from RMB3,759.2 million in the third quarter of 2021.

Live video service revenues were RMB1,657.5 million (US$233.0 million) in the thirdquarter of 2022,a decrease of 23.5% from RMB2,166.7 million during the same period of 2021. The decrease was primarily attributable to COVID related consumption softness and regulatory changes,and to a lesser extent,Tantan's product adjustment to improve user experience in September last year and negative impact of pandemic resurgence and channel investment reduction.

Value-added service revenues mainly include virtual gift revenues and membership subscription revenues. Total value-added service revenues were RMB1,537.7 million (US$216.2 million) in the third quarter of 2022,an increase of 0.3% from RMB1,533.3 million during the same period of 2021. The year-over-year increase was primarily attributable to the rapid revenue growth from the new standalone apps. The increase was partially offset by the decrease in Tantan's value-added service due to the demonetization process to improve user experience and retention,as well as the negative impact of COVID and the reduction of channel investments on Tantan's user growth and paying conversion.

Mobile marketing revenues were RMB28.2 million (US$4.0 million) in the thirdquarter of 2022,a decrease of 34.8% from RMB43.3 million during the same period of 2021. The decrease in mobile marketing revenues was due to the negative impact of macro headwind on client's advertising budget.

Mobile games revenues were RMB7.7 million (US$1.1 million) in the thirdquarter of 2022,a decrease of 4.1% from RMB8.1 million in the thirdquarter of 2021. The decrease in mobile game revenues was mainly due to the decrease in paying users of mobile games.

Net revenues from the Momo segment decreased from RMB3,246.3 million in the thirdquarter of 2021 to RMB2,891.0 million (US$406.4 million) in the third quarter of 2022,primarily due to the decrease in net revenues from live videoservice. Net revenues from the Tantan segment decreased from RMB510.7 million in the thirdquarter of 2021 to RMB341.3 million (US$48.0 million) in the thirdquarter of 2022,due to our demonetization strategy to improve user experience,as well as the negative impact of COVID and the reduction of channel investments on Tantan's user growth and paying conversion.

Cost and expenses

Cost and expenses were RMB2,734.2 million (US$384.4 million) in the thirdquarter of 2022,a decrease of 17.6% from RMB3,319.9 million in the third quarter of 2021. The decrease was primarily attributable to: (a) a decrease in revenue sharing with broadcasters related to Momo's core live video service and Tantan's live video service,which was partially offset by an increase in revenue sharing with virtual gift recipients for our virtual gift service; (b) a decrease in sales and marketing expenses due to our initiatives to control cost and optimize Tantan's channel marketing strategy; (c) a decrease in salary expenses and share-based compensation expenses,due to our continuous optimization in personnel costs since the beginning of the year and the decreased fair value of the share options new grants; (d) no production cost from television program and film compared to the third quarter of 2021; and (e) a decrease in depreciation and amortization cost due to the impairment of intangible assets in 2021.

Non-GAAP cost and expenses (note 1) were RMB2,649.2 million (US$372.4 million) in the third quarter of 2022,a decrease of 15.7% from RMB3,143.2 million during the same period of 2021.

Incomefrom operations

Incomefrom operations was RMB520.1 million (US$73.1 million)in the thirdquarter of 2022,compared to RMB460.5 million during the same period of 2021. Incomefrom operations of the Momo segment wasRMB569.4 million (US$80.0 million) in the thirdquarter of 2022,which decreased from RMB676.5 million in thethirdquarter of 2021. Loss from operations of the Tantan segment was RMB44.5 million (US$6.2 million) in the thirdquarter of 2022,compared to loss from operations of RMB179.8 million in the thirdquarter of 2021.

Non-GAAP income from operations (note 1) was RMB605.1 million (US$85.1million) in the third quarter of 2022,compared to RMB637.2 million during the same period of 2021. Non-GAAPincomefrom operations of the Momo segment wasRMB648.2 million (US$91.1 million)in the thirdquarter of 2022,which decreased from RMB786.3 million in the third quarter of 2021. Non-GAAPlossfrom operations of the Tantan segment was RMB38.3 million (US$5.4 million) in the third quarter of 2022,compared to non-GAAP loss from operations of RMB112.9 million in the thirdquarter of 2021.

Other gain or loss,net

Other gain was RMB40.4 million (US$5.7 million) in the third quarter of 2022,which mainly resulted from the Company's repurchase of its convertible senior notes from certain bond holders in the third quarter of 2022,partially offset by impairment loss on other long-term investments.

Income tax expenses

Income tax expenses were RMB156.0 million (US$21.9 million) in the thirdquarter of 2022,compared to RMB143.2 million in the thirdquarter of 2021. The increase was primarily due to the fact that in the thirdquarter of 2022,we accrued withholding income tax of RMB42.9 million (US$6.0million)on undistributed earnings generated in the thirdquarter of 2022by our wholly-foreign owned enterprise ("WFOE"),because we plan to remit WFOE's earnings to its offshore parent company in the foreseeable future to fund its demand for US dollars in business operations,payments of dividends and debts,potential investments,share repurchase plan,etc.

Net income

Net incomewas RMB449.9 million (US$63.2 million) in the third quarter of 2022,compared to RMB395.9 million during the same period of 2021. Net incomefrom theMomo segment was RMB499.6 million (US$70.2 million) in the thirdquarter of 2022,compared toRMB611.1million in the same period of 2021. Net loss from the Tantan segment was RMB45.0 million (US$6.3 million) in the thirdquarter of 2022,compared tonet loss of RMB179.0 million in the third quarter of 2021.

Non-GAAP net income (note 1) was RMB534.8 million (US$75.2million) in the third quarter of 2022,compared to RMB564.3 million during the same period of 2021. Non-GAAPnet incomefrom the Momo segment wasRMB578.4million(US$81.3 million) in the third quarter of 2022,which decreased from RMB720.9million in the thirdquarter of 2021. Non-GAAPnet lossof the Tantan segment was RMB38.8 million (US$5.5 million) in the thirdquarter of 2022,compared tonon-GAAP net loss of RMB120.5 million in the thirdquarter of 2021.

Net income attributable to Hello Group Inc.

Net income attributable to Hello Group Inc. was RMB450.8 million (US$63.4 million) in the thirdquarter of 2022,compared toanet income ofRMB403.2million during the same period of 2021.

Non-GAAP net income (note 1) attributable to Hello Group Inc. was RMB535.8 million (US$75.3million) in thethirdquarter of 2022,compared to RMB571.6 million during the same period of 2021.

Net incomeper ADS

Diluted net incomeper ADS was RMB2.20 (US$0.31) in the third quarter of 2022,compared to RMB1.93in the third quarter of 2021.

Non-GAAP diluted net income per ADS (note 1) was RMB2.60 (US$0.37) in the thirdquarter of 2022,compared to RMB2.70 in the thirdquarter of 2021.

Cash and cash flow

As of September 30,2022,the Company's cash,cash equivalents,short-term deposits,long-term deposits,short-term restricted cash and long-term restricted cash totaled RMB13,021.3 million (US$1,830.5million),compared to RMB15,707.0million as of December 31,2021. The decrease was due to a number of cash outflow items,including our cash dividend payment of RMB841.0 million (US$118.2million) to shareholders; an aggregate payment of RMB2,137.0 million (US$300.4million)for the repurchase of the company's convertible notes; an aggregate of RMB287.7 million (US$40.4million) in relation to the share repurchase program; and RMB300.0 million (US$42.2million)payment to Chinese tax authorities to repatriate cash from our WOFE in China to our offshore entity in the first nine months of 2022.

Net cash provided by operating activities in the thirdquarter of 2022 was RMB444.5 million (US$62.5million),compared to RMB559.9 million in the thirdquarter of 2021.

First Nine Months of 2022Financial Results

Net revenues for the first nine months of 2022 were RMB9,334.3 million),a decrease of 12.9% from RMB10,901.5 million in the same period of 2021.

Net income attributable to Hello GroupInc. was RMB1,329.0 million during the same period of 2021.

Non-GAAP net income attributable to Hello GroupInc. (note 1)was RMB1,756.2 million during the same period of 2021.

Dilutednet incomeper ADS was RMB5.30 (US$0.75) during the first nine months of 2022,compared to RMB6.22 in the same period of 2021.

Non-GAAP diluted net incomeper ADS (note 1) was RMB6.75 (US$0.95) during the first nine months of 2022,compared to RMB8.14in the same period of 2021.

Net cash provided by operating activities was RMB688.2 million (US$96.7 million) during the first nine months of 2022,compared to RMB893.7 million in the same period of 2021.

Recent Development

Execution of share repurchase program

On June 7,Hello Group's board of directors authorized a share repurchase program under which the Company may repurchase up to US$200 million of its shares over the next 24 months. As of December 8,the Company has repurchased 12.0 million ADSs for US$56.7 million on the open market under this program,at an average purchase price of US$4.71 per ADS.

Business Outlook

For the fourthquarter of 2022,the Company expects total net revenues to be between RMB3.15 billion to RMB3.25 billion,representing a decrease of 14.3% to 11.5% year-over-year. This forecast reflects the Company's current and preliminary views on the market and operational conditions,which are subject to change,particularly as to the potential impact of the COVID-19 resurgence on the Chinese and global economies,as well as on users' paying capabilities.

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,December 8,at8:00 a.m.U.S. Eastern Time (9:00 p.m. Beijing/Hong KongTime on December 8,2022).

Participants can register for the conference call by navigating to:

https://s1.c-conf.com/diamondpass/10027148-ghj92l.html.

Upon registration,each participant will receive details for the conference call,including dial-in numbers,conference call passcode and a unique access PIN. Please dial in 10 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 December 15,2022. The dial-in details for the replay are as follows:

U.S. / Canada: 1-855-883-1031

Hong Kong: 800-930-639

Passcode: 10027148

Additionally,a live and archived webcast of the conference call will be available on the Investor Relations section of Hello Group's website at https://ir.hellogroup.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. Tantan 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@hellogroup.com

Christensen

In China

Mr. Eric Yuan

Phone: +86-10-5900-1548

E-mail: eric.yuan@christensencomms.com

In U.S.

Ms. Linda Bergkamp

Phone: +1-480-614-3004

Email: linda.bergkamp@christensencomms.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 fourth quarter 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 thirdquarter of 2022 are preliminary,unaudited and subject to audit adjustment. In addition,we may not meet our financial outlook for the fourth quarter of 2022 and may be unable to grow our business in the manner planned. We may also modify our 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

First nine months

Ended September 30

2021

2022

2021

2022

RMB

US$

RMB

US$

Net revenues:

Live video service

2,166,733

1,657,531

233,012

6,230,160

4,786,232

672,838

Value-added service

1,533,288

1,537,666

216,162

4,496,059

4,557,481

640,681

Mobile marketing

43,323

28,243

3,970

133,641

92,029

12,937

Mobile games

8,052

7,719

1,085

28,418

50,416

7,087

Other services

7,784

1,862

262

13,212

5,356

753

Total net revenues

3,759,180

3,233,021

454,491

10,901,490

9,491,514

1,334,296

Cost and expenses:

Cost of revenues

(2,183,337)

(1,886,135)

(265,149)

(6,191,911)

(5,505,369)

(773,933)

Research and development

(260,939)

(245,105)

(34,456)

(815,757)

(733,562)

(103,123)

Sales and marketing

(680,896)

(467,012)

(65,652)

(1,944,705)

(1,666,542)

(234,279)

General and administrative

(194,734)

(135,933)

(19,109)

(459,443)

(453,514)

(63,754)

Total cost and expenses

(3,319,906)

(2,734,185)

(384,366)

(9,411,816)

(8,358,987)

(1,175,089)

Other operating income

21,221

21,289

2,993

137,389

85,790

12,060

Income from operations

460,495

520,125

73,118

1,627,063

1,218,317

171,267

Interest income

93,564

89,274

12,550

284,706

280,761

39,469

Interest expense

(18,669)

(25,010)

(3,516)

(55,332)

(72,575)

(10,202)

Other gain or loss,net

40,403

5,680

(18,000)

118,325

16,634

Income before income tax and

share of income on equity method

investments

535,390

624,792

87,832

1,838,437

1,544,828

217,168

Income tax expenses

(143,158)

(156,041)

(21,936)

(526,065)

(452,860)

(63,662)

Income before share of income on

equity method investments

392,232

468,751

65,896

1,312,372

1,091,968

153,506

Share of income (loss) on equity

method investments

3,658

(18,880)

(2,654)

5,961

(8,967)

(1,261)

Net income

395,890

449,871

63,242

1,318,333

1,083,001

152,245

Less: net loss attributable to non-

controlling interest

(7,301)

(964)

(136)

(10,677)

(3,288)

(462)

Net income attributable to the

shareholders of Hello Group Inc.

403,191

450,835

63,378

1,329,010

1,086,289

152,707

Net income per share attributable to

ordinary shareholders

Basic

1.01

1.15

0.16

3.26

2.75

0.39

Diluted

0.96

1.1

0.15

3.11

2.65

0.37

Weighted average shares used in

calculating net income per ordinary share

Basic

400,835,428

391,027,485

391,485

408,074,205

394,333,009

394,009

Diluted

437,639,164

423,608,050

423,050

444,906,615

429,765,849

429,849

Hello Group Inc.

Unaudited Condensed Consolidated Statement of Comprehensive Income

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

Three months

First nine months

Ended September 30

2021

2022

2021

2022

RMB

US$

RMB

US$

Net income

395,245

Other comprehensive income (loss),net of tax:

Foreign currency translation adjustment

368

(188,343)

(26,477)

(31,830)

(328,832)

(46,226)

Comprehensive income

396,258

261,528

36,765

1,286,503

754,169

106,019

Less: comprehensive (loss) income attributed to the non-

controlling interest

(7,540)

10,831

1,523

(13,323)

17,710

2,490

Comprehensive income attributable to Hello Group Inc.

403,798

250,697

35,299,826

736,459

103,529

Hello Group Inc.

Unaudited Condensed Consolidated Balance Sheets

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

December 31

September 30

2021

2022

RMB

US$

Assets

Current assets

Cash and cash equivalents

5,570,563

3,435,616

482,971

Short-term deposits

2,860,000

5,900,000

829,409

Restricted cash

100,327

14,104

Accounts receivable,net of allowance for doubtful accounts of RMB15,127

and RMB5,945 as of December 31,2021 and September 30,

respectively

205,225

194,344

27,320

Prepaid expenses and other current assets

775,072

877,348

123,336

Total current assets

9,410,860

10,507,635

1,477,140

Long-term deposits

7,200,000

3,500,000

492,022

Long-term restricted cash

76,471

85,362

12,000

Right-of-use assets,net

257,934

142,492

20,031

Property and equipment,net

180,664

186,949

26,281

Intangible assets,net

27,320

23,482

3,301

Rental deposits

19,204

20,737

2,915

Long-term investments

820,006

863,452

121,382

Other non-current assets

83,930

119,620

16,816

Deferred tax assets

34,849

35,836

5,038

Total assets

18,111,238

15,485,565

2,176,926

Liabilities and equity

Current liabilities

Accounts payable

726,207

622,980

87,576

Deferred revenue

539,967

467,763

65,757

Accrued expenses and other current liabilities

911,050

664,867

93,466

Amount due to related parties

5,016

9,443

1,327

Lease liabilities due within one year

162,950

102,585

14,421

Income tax payable

125,773

74,848

10,522

Deferred consideration in connection with business acquisitions

44,802

27,313

3,840

Convertible Senior Notes-current

2,726,763

383,322

Total current liabilities

2,515,765

4,696,562

660,231

Deferred tax liabilities

213,384

37,635

5,291

Convertible senior notes

4,565,292

Lease liabilities

103,105

42,578

5,986

Other non-current liabilities

128,095

114,577

16,107

Total liabilities

7,525,641

4,891,352

687,615

Shareholder's equity (i)

10,585,597

10,594,213

1,489,311

Total liabilities and shareholder's equity

18,926

(i): As of September 30,the number of ordinary shares outstanding was 385,309,239.

Hello Group Inc.

Unaudited Condensed Consolidated Statement of Cash Flows

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

Three months

First nine months

Ended September 30

2021

2022

2021

2022

RMB

US$

RMB

US$

Cash flows from operating activities:

Net income

395,890

449,871

63,242

1,333

1,001

152,245

Adjustments to reconcile net income to net cash provided by

operating activities:

Depreciation of property and equipment

38,696

27,047

3,802

121,311

83,107

11,683

Amortization of intangible assets

34,722

1,279

180

107,783

3,837

539

Share-based compensation

143,280

84,976

11,945

349,195

311,540

43,797

Share of income (loss) on equity method investments

(3,658)

18,880

2,654

(5,961)

8,967

1,261

Gain on repurchase of convertible senior notes

(51,653)

(7,261)

(129,575)

(18,215)

Loss on long-term investments

11,250

1,581

18,000

11,581

Gain on disposal of subsidiaries

(15,526)

Cash received on distributions from equity method investments

1,708

240

Loss or gain on disposal of property and equipment

2,351

(923)

(130)

1,272

(783)

(110)

Provision of losses on receivable and other assets

(322)

(820)

(115)

242

(453)

(64)

Changes in operating assets and liabilities:

Accounts receivable

(1,616)

22,973

3,229

(24,358)

15,695

2,206

Prepaid expenses and other current assets

(85,048)

41,418

5,822

(203,666)

(16,144)

(2,269)

Rental deposits

(922)

716

101

(1,514)

1,399

197

Deferred tax assets

(782)

590

(2,016)

(986)

(139)

Other non-current assets

(57,100)

16,130

2,268

(8,050)

76,820

10,799

Accounts payable

(28,400)

(438)

(62)

19,422

(106,392)

(14,956)

Income tax payable

24,947

(15,635)

(2,198)

(71,431)

(50,923)

(7,159)

Deferred revenue

9,369

(19,356)

(2,721)

25,454

(73,891)

(10,387)

Accrued expenses and other current liabilities

56,954

(108,513)

(15,255)

(38,829)

(304,346)

(42,784)

Amount due to related parties

1,860

7,824

1,100

(4,696)

4,427

622

Deferred tax liabilities

(8,676)

(14,425)

(2,028)

(26,941)

(171,752)

(24,145)

Share-based compensation liability

(678,153)

Other non-current liabilities

38,335

(26,655)

(3,747)

13,818

(58,311)

(8,197)

Net cash provided by operating activities

559,880

444,536

62,490

893,689

688,195

96,745

Cash flows from investing activities:

Purchase of property and equipment

(30,919)

(27,051)

(3,803)

(76,122)

(70,392)

(9,896)

Payment for long-term investments

(300,000)

(55,343)

(7,780)

Purchase of short-term deposits

(2,100,000)

(1,700,000)

(238,982)

(4,576,688)

(1,982)

Cash received on maturity of short-term deposits

3,458,658

2,000

379,560

6,117,570

3,710,000

521,544

Cash received on investment income distribution

5,610

3,523

495

Cash of disposed subsidiaries

(8,750)

Purchase of long-term deposits

(1,000,000)

(140,578)

(250,000)

(2,550,000)

(358,473)

Cash received on maturity of long-term deposits

1,000

168,693

Other investing activities

2,781

391

2,406

3,103

436

Net cash provided by (used in) investing activities

1,327,752

(24,270)

(3,412)

914,026

540,891

76,037

Cash flows from financing activities:

Deferred payment for business acquisition

(15,858)

(2,229)

(12,907)

(21,421)

(3,011)

Proceeds from exercise of share options

461

771

Payment in relation to the share repurchase program

(756,714)

(285,355)

(40,115)

(862,865)

(287,690)

(40,443)

Repurchase of subsidiary's share options

(48,489)

(14,330)

(2,014)

(54,050)

(39,867)

(5,604)

Dividends payment

(852,743)

(840,997)

(118,225)

Payment for redemption of convertible bonds

(1,024,443)

(144,014)

(2,136,987)

(300,413)

Net cash used in financing activities

(804,742)

(1,339,968)

(188,369)

(1,781,794)

(3,326,911)

(467,689)

Effect of exchange rate changes

(3,661)

(6,190)

(869)

(28,697)

72,096

10,135

Net increase (decrease) in cash and cash equivalents

1,079,229

(925,892)

(130,160)

(2,776)

(2,025,729)

(284,772)

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

2,284,067

4,547,197

639,235

3,366,072

5,647,034

793,847

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

3,363,296

3,621,305

509,075

3,075

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 September 30,2021

Ended September 30,2022

GAAP

Amortization of

intangible assets

from business

acquisitions

Share-based

compensation

Tax

impacts

Non-GAAP

GAAP

Share-based

compensation

Non-GAAP

GAAP

Share-based

compensation

Non-GAAP

(ii)

RMB

US$

Cost of revenues

(2,337)

17,286

6,623

(2,159,428)

(1,135)

1,496

(1,884,639)

(265,149)

210

(264,939)

Research and development

(260,939)

29,094

(231,845)

(245,105)

21,713

(223,392)

(34,456)

3,052

(31,404)

Sales and marketing

(680,896)

16,165

27,653

(637,078)

(467,012)

8,453

(458,559)

(65,652)

1,188

(64,464)

General and administrative

(194,734)

79,910

(114,824)

(135,933)

53,314

(82,619)

(19,109)

7,495

(11,614)

Cost and operating expenses

(3,906)

33,451

143,280

(3,143,175)

(2,185)

84,976

(2,649,209)

(384,366)

11,945

(372,421)

Income from operations

460,495

33,451

143,280

637,226

520,125

84,976

605,101

73,118

11,945

85,063

Net income attributable to Hello

Group Inc.

403,191

33,280

(8,363)

571,559

450,835

84,976

535,811

63,378

11,945

75,323

Hello Group Inc.

Reconciliation of Non-GAAP financial measures to comparable GAAP measures

(All amounts in thousands,and net income to comparable GAAP measures-continued.

First nine months

Ended September 30,2022

GAAP

Amortization of

intangible assets

from business

acquisitions

Share-based

compensation

Tax

impacts

Non-GAAP

GAAP

Share-based

compensation

Non-GAAP

GAAP

Share-based

compensation

Non-GAAP

(ii)

RMB

US$

Cost of revenues

(6,911)

51,853

14,548

(6,125,510)

(5,369)

12,488

(5,492,881)

(773,933)

1,756

(772,177)

Research and development

(815,757)

3,660

103,268

(708,829)

(733,562)

66,652

(666,910)

(103,123)

9,370

(93,753)

Sales and marketing

(1,705)

48,491

59,797

(1,836,417)

(1,542)

29,952

(1,636,590)

(234,279)

4,211

(230,068)

General and administrative

(459,443)

171,582

(287,861)

(453,514)

202,448

(251,066)

(63,754)

28,460

(35,294)

Cost and operating expenses

(9,816)

104,004

349,195

(8,958,617)

(8,987)

311,540

(8,047,447)

(1,089)

43,797

(1,131,292)

Income from operations

1,063

104,004

349,195

2,080,262

1,317

311,540

1,529,857

171,267

43,797

215,064

Net income attributable to

Hello Group Inc.

1,010

104,195

(26,002)

1,756,207

1,289

311,397,829

152,707

43,797

196,504

(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 September 30,2022

Momo

Tantan

QOOL

Total

RMB

US$

Net revenues:

Live video service

1,517,872

139,659

1,012

Value-added service

1,336,050

201,616

1,162

Mobile marketing

28,243

28,970

Mobile games

7,719

7,085

Other services

1,126

736

1,862

262

Total net revenues

2,010

341,275

736

3,491

Cost and expenses (iii):

Cost of revenues

(1,704,934)

(180,277)

(924)

(1,149)

Research and development

(176,727)

(68,378)

(245,456)

Sales and marketing

(335,350)

(130,222)

(1,440)

(467,652)

General and administrative

(124,184)

(8,574)

(3,175)

(135,109)

Total cost and expenses

(2,341,195)

(387,451)

(5,539)

(2,366)

Other operating income

19,563

1,722

21,993

Income (loss) from operations

569,378

(44,454)

(4,799)

520,118

Interest income

89,003

187

89,550

Interest expense

(25,010)

(25,516)

Other gain or loss,net

40,403

40,680

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

method investments

673,774

(44,267)

(4,715)

624,832

Income tax expenses

(155,328)

(713)

(156,936)

Income (loss) before share of income on equity method

investments

518,446

(44,980)

(4,715)

468,896

Share of loss on equity method investments

(18,880)

(18,654)

Net income (loss)

499,566

(44,715)

449,242

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

Three months

Ended September 30,2022

Momo

Tantan

QOOL

Total

RMB

US$

Cost of revenues

1,478

1,496

210

Research and development

15,640

6,073

21,713

3,052

Sales and marketing

8,446

8,453

1,188

General and administrative

53,272

53,314

7,495

Total cost and expenses

78,836

6,140

84,976

11,945

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 September 30,2022

Momo

Tantan

QOOL

Total

RMB

US$

Income (loss) from operations

569,378

(44,454)

(4,799)

520,125

73,118

Share-based compensation

78,836

6,140

84,945

Non-GAAP income (loss) from operations

648,214

(38,314)

(4,799)

605,101

85,063

Net income (loss)

499,566

(44,980)

(4,715)

449,242

Share-based compensation

78,945

Non-GAAP net income (loss)

578,402

(38,840)

(4,715)

534,847

75,187

Hello Group Inc.

Unaudited Condensed Segment Report

(All amounts in thousands,2021

Momo

Tantan

QOOL

Total

RMB

US$[1]

Net revenues:

Live video service

1,932,141

234,592

2,733

336,272

Value-added service

1,257,158

276,130

1,288

237,962

Mobile marketing

43,323

6,724

Mobile games

8,052

1,250

Other services

5,589

2,195

7,208

Total net revenues

3,246,263

510,722

2,195

3,180

583,416

Cost and expenses (iv):

Cost of revenues

(1,931)

(269,376)

(29,030)

(2,337)

(338,849)

Research and development

(194,475)

(66,464)

(260,939)

(40,497)

Sales and marketing

(336,691)

(341,636)

(2,569)

(680,896)

(105,673)

General and administrative

(171,609)

(16,321)

(6,804)

(194,734)

(30,222)

Total cost and expenses

(2,587,706)

(693,797)

(38,403)

(3,906)

(515,241)

Other operating income

17,946

3,270

21,221

3,293

Income (loss) from operations

676,503

(179,805)

(36,203)

460,495

71,468

Interest income

93,174

356

93,564

14,521

Interest expense

(18,669)

(2,897)

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

equity method investments

751,008

(179,449)

(36,169)

535,390

83,092

Income tax (expenses) benefits

(143,562)

404

(143,158)

(22,218)

Income (loss) before share of income on equity method

investments

607,446

(179,045)

(36,169)

392,232

60,874

Share of income on equity method investments

3,658

568

Net income (loss)

611,104

(179,169)

395,890

61,442

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

Three months

Ended September 30,2021

Momo

Tantan

QOOL

Total

RMB

US$

Cost of revenues

2,847

3,776

6,623

1,028

Research and development

18,071

11,023

29,094

4,515

Sales and marketing

11,280

16,373

27,653

4,292

General and administrative

77,616

2,294

79,910

12,402

Total cost and expenses

109,814

33,466

143,280

22,237

[1] All translations from RMB to U.S. dollars are made at a rate of RMB6.4434 to US$1.00,2021 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,2021

Momo

Tantan

QOOL

Total

RMB

US$

Income (loss) from operations

676,503

(179,805)

(36,203)

460,495

71,468

Share-based compensation

109,814

33,466

143,280

22,237

Amortization of intangible assets from

business acquisitions

33,451

5,192

Non-GAAP income (loss) from operations

786,317

(112,888)

(36,203)

637,226

98,897

Net income (loss)

611,104

(179,045)

(36,169)

395,890

61,442

Share-based compensation

109,192

Tax impacts

(8,363)

(1,298)

Non-GAAP net income (loss)

720,918

(120,491)

(36,169)

564,258

87,573

Hello Group Inc.

Unaudited Condensed Segment Report

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

First nine months

Ended September 30,2022

Momo

Tantan

QOOL

Total

RMB

US$

Net revenues:

Live video service

4,404,991

381,241

4,838

Value-added service

3,917,609

639,872

4,681

Mobile marketing

92,029

92,937

Mobile games

50,416

50,087

Other services

4,298

1,058

5,356

753

Total net revenues

8,469,343

1,021,113

1,058

9,296

Cost and expenses (v):

Cost of revenues

(4,981,345)

(522,188)

(1,836)

(5,933)

Research and development

(536,640)

(196,922)

(733,123)

Sales and marketing

(1,039,526)

(623,680)

(3,336)

(1,279)

General and administrative

(415,954)

(25,335)

(12,225)

(453,754)

Total cost and expenses

(6,973,465)

(1,368,125)

(17,397)

(8,089)

Other operating income

76,253

9,491

85,060

Income (loss) from operations

1,572,131

(337,521)

(16,293)

1,267

Interest income

280,252

291

218

280,469

Interest expense

(72,575)

(72,net

118,325

118,634

Income (loss) before income tax and share

of income on equity method investments

1,898,133

(337,230)

(16,075)

1,168

Income tax expenses

(451,061)

(1,799)

(452,662)

Income (loss) before share of income on

equity method investments

1,447,072

(339,029)

(16,506

Share of loss on equity method investments

(8,967)

(8,261)

Net income (loss)

1,438,105

(339,245

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

First nine months

Ended September 30,2022

Momo

Tantan

QOOL

Total

RMB

US$

Cost of revenues

5,477

7,011

12,488

1,756

Research and development

51,752

14,900

66,652

9,370

Sales and marketing

29,729

223

29,952

4,211

General and administrative

202,319

129

202,448

28,460

Total cost and expenses

289,277

22,263

311,540

43,797

Hello Group Inc.

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

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

First nine months

ended September 30,2022

Momo

Tantan

QOOL

Total

RMB

US$

Operating income (loss)

1,131

(337,521)

(16,293)

1,317

171,267

Share-based compensation

289,277

22,263

311,797

Non-GAAP operating income

(loss)

1,861,408

(315,258)

(16,857

215,064

Net income (loss)

1,105

(339,029)

(16,075)

1,245

Share-based compensation

289,797

Non-GAAP net income (loss)

1,727,382

(316,766)

(16,394,541

196,042

Hello Group Inc.

Unaudited Condensed Segment Report

(All amounts in thousands,2021

Momo

Tantan

QOOL

Total

RMB

US$

Net revenues:

Live video service

5,527,851

702,309

6,160

966,906

Value-added service

3,606,393

889,666

4,059

697,777

Mobile marketing

133,641

20,741

Mobile games

28,418

4,410

Other services

9,263

3,949

13,212

2,051

Total net revenues

9,305,566

1,591,975

3,949

10,490

1,691,885

Cost and expenses (vi):

Cost of revenues

(5,338,330)

(816,562)

(37,019)

(6,911)

(960,970)

Research and development

(595,176)

(220,581)

(815,757)

(126,604)

Sales and marketing

(1,042,458)

(898,612)

(3,635)

(1,705)

(301,813)

General and administrative

(471,965)

28,763

(16,241)

(459,443)

(71,304)

Total cost and expenses

(7,929)

(1,992)

(56,895)

(9,816)

(1,460,691)

Other operating income

103,352

34,006

137,389

21,322

Income (loss) from operations

1,960,989

(281,011)

(52,915)

1,063

252,516

Interest income

283,629

952

125

284,706

44,186

Interest expense

(55,332)

(8,587)

Other gain or loss,net

(18,000)

(18,794)

Income (loss) before income tax and share of

income on equity method investments

2,171,286

(280,059)

(52,790)

1,437

285,321

Income tax (expenses) benefits

(533,508)

7,443

(526,065)

(81,644)

Income (loss) before share of income on

equity method investments

1,637,778

(272,616)

(52,372

203,677

Share of income on equity method investments

5,961

925

Net income (loss)

1,643,739

(272,333

204,602

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

First nine months

ended September 30,2021

Momo

Tantan

QOOL

Total

RMB

US$

Cost of revenues

7,812

6,736

14,548

2,258

Research and development

78,259

25,009

103,268

16,027

Sales and marketing

37,157

22,640

59,797

9,280

General and administrative

238,408

(66,826)

171,582

26,629

Total cost and expenses

361,636

(12,441)

349,195

54,194

Hello Group Inc.

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

(All amounts in thousands,2021

Momo

Tantan

QOOL

Total

RMB

US$

Operating income (loss)

1,989

(281,011)

(52,915)

1,063

252,516

Share-based compensation

361,636

(12,441)

349,195

54,194

Amortization of intangible assets

from business acquisitions

104,004

16,141

Non-GAAP operating income (loss)

2,322,625

(189,448)

(52,915)

2,262

322,851

Net income (loss)

1,739

(272,616)

(52,790)

1,333

204,602

Share-based compensation

361,141

Tax impacts

(26,002)

(4,035)

Non-GAAP net income (loss)

2,005,375

(207,055)

(52,745,530

270,902

View original content:https://www.prnewswire.com/news-releases/hello-group-inc-announces-unaudited-financial-results-for-the-third-quarter-of-2022-301697932.html

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