Ladies and gentlemen, thank you for standing by, and welcome to the First Quarter 2023 Hello Group, Inc. Earnings Conference Call. Please note the conference is being recorded today. I would now like to hand the conference over to your first speaker today, Ms. Ashley Jing. Thank you. Please go ahead, ma'am.

Thank you, operator. Good morning and good evening, everyone. Thank you for joining us today for Hello Group's first quarter 2023 earnings conference call. The Company's results were released earlier today and are available on the company's IR website. On the call today are Mr. Tang Yan, CEO of the company, and Ms. Peng Hui, CFO of the company. They will discuss the company's business operations and highlights, as well as the financials and guidance. They will both be available to answer your questions during the Q&A session that follows. Before we begin, I would like to remind you that this call may contain forward-looking statements made under the Safe Harbor provision of the Private Securities Litigation Reform Act of 1995. Such statements are based on management's current expectations and current market and operating conditions and relate to events that involve known or unknown risks, uncertainties, and other factors, all of which are difficult to predict and many of which are beyond the company's control, which may cause the company's actual results, performance or achievements to differ materially from those in the forward-looking statements. Further information regarding this and other risks, uncertainties, and factors is included in the company's filings with the U.S. Securities and Exchange Commission. The company does not undertake any obligation to update any forward-looking statement as a result of new information, future event, or otherwise, except as required under law. I'll now pass the call over to our CEO, Mr. Tang Yan.

[Foreign Language] [Interpreted] Hello, everyone. Thank you for joining our call. We delivered solid results in the first quarter, laying a good foundation for our business development in the post-pandemic era. Now, I'll review the progresses was made in each business line since the beginning of the year and our future development plan. I will start with a brief overview of our financial performance for the first quarter of 2023, total revenue was RMB2.82 billion, down 10% from the same period last year and 12% sequentially. Top line performance came in better than our expectations as the year-on-year decline in revenue narrowed, compared to the previous quarter. Adjusted operating income was RMB518 million, up 12% from Q1 last year and 4% sequentially with a margin of 18%, up 4 percentage point year-on-year and 3 percentage quarter-over-quarter. Profitability improved despite the downward pressure on top-line mainly due to Tantan's breakeven which relieve pressure on the Group's profit level, as well as the solid cost control on the cash cow business front. Total revenue from the Momo app and standalone new apps was RMB2.51 billion, down 10% year-over-year and 12% quarter-over-quarter. The adjusted operating income was RMB503 million, down 19% year-over-year or a slight decrease of 2% from the previous quarter with a margin of 20%. Total revenue from Tantan came in at RMB309 million, down 12% year-over-year and 11% quarter-over-quarter in response to the many uncertainties surrounding the pandemic and its impact on the economy, we initiated a cost control strategy in the second-half of last year to reduce low-efficiency channel marketing spend in order to narrow Tantan's net loss. As a result, in Q1, Tantan delivered its first quarterly profit at the operating level since its inception with an adjusted operating income of RMB14.48 million, representing a margin of 5%,…

Thanks, Tang Yan and Ashley. Hello everyone. Thank you for joining our conference call today. Now, let me briefly take you through the financial review. Total revenue for the first quarter of 2023 came in better than our previous expectation at RMB2.82 billion, down 10% year-on-year and 12% quarter-on-quarter. Non-GAAP net income attributable to the company was RMB471.9 million, up 18% from the year-ago period, despite the top line decrease were down 3% from the previous quarter. The better-than-expected bottom line performance was attributable to our continuous cost control efforts, which led to Tantan's breakeven and improvement in Momo's profitability. Looking into the key revenue line items for the quarter. Firstly, on the live broadcasting. Total revenue from live broadcasting business for the first quarter of 2023 was RMB1.43 billion, down 11% year-on-year and 17% quarter-over-quarter. Momo app's live broadcasting revenue totaled RMB1.29 billion for the quarter, down 13% year-over-year and 17% quarter-over-quarter. The year-over-year decrease was due to the pressure caused by the COVID infection surge and regulatory factors. The sequential decrease was mainly due to COVID coupled with negative seasonality. Tantan's live broadcasting revenue amounted to RMB139.6 million, up 12% from Q1 last year, but down 14% from the previous quarter. The year-over-year growth was mainly due to a low base in Q1 2022 when we adopted a demonetization strategy to focus on user experience and retention. The sequential decrease was due to the pandemic and negative seasonality. Revenue from value-added service for the first quarter of 2023 was RMB1.36 billion, down 8% from Q1 last year and 6% sequentially. Revenue from value-added service on an ex-Tantan basis was RMB1.19 billion in the first quarter of 2023, a 5% decrease year-on-year and down 6% sequentially. The decrease was due to pressure on the Momo application caused by the…

Hi operator, we're ready to take questions. And just a quick reminder for those who are taking questions and please ask your questions in Chinese and followed by a English translation by yourself. Thanks.

Thank you. (Operator Instructions) Your first question comes from Xueqing Zhang with CICC. Please go ahead.

[Foreign Language] Thanks, management for taking my question. My question is about Tantan. We've noticed that the MAU on Tantan has recovered in the first quarter, could management share about the latest user trend and also what's the progress on [Indiscernible] chat room. In terms of financials, Tantan delivered the first quarterly profit at the operating level, what's your outlook for 2023 revenue and profitability? Thank you.

[Foreign Language] [Interpreted] Tantan's biggest achievement since the beginning of the year is that it delivered its first-ever quarterly profit at the operating level and channel ROI turned positive and user scale has bottomed out. We need to further improve the marginal contribution rate of the new users in order to achieve effective user growth from the current level onwards and therefore our next step is to increase ARPU through new VAS features and at the same time further reduce unit acquisition cost through technical means to drive ROI growth through both product and channel efforts. In terms of our goal to increase ARPU, we have actually made some pretty good progress, except for the low seasonality in the first quarter, Tantan's ARPU has actually been trending up sequentially since the beginning of 2022. The drivers behind this include improvements in the basic paying experience and the launch of new paying features such as the Black Gold membership service and the chat room and so on. Regarding the chat room, we have also made some pretty good progress on the product front since the beginning of the year. We do not want to get too aggressive on the monetization for the time being, because the product is not quite yet where we want it to be and we're not limiting ourselves to this specific paying experience. In addition to the chat room, we are also testing other new product features to drive our ARPU growth that will be launched in the second half of the year.

Yes. So for Tantan's revenue, I guess -- Tantan's revenue will be driven by both user growth and ARPU growth. As Tang Yan mentioned just now, we expect ARPU -- Tantan's ARPU to keep improving as we rolled out more value-added service experience in the second-half of the year and if we can get to a satisfactory level in terms of marketing ROI, we are going to push the marketing button a bit harder then we're going to see user growth kicking in as another leg of the growth engine. But before we actually see that second leg kicking in, I would lean on the conservative end and assume mid to high single-digit quarter-over-quarter growth -- top-line growth for Tantan from Q2 onwards, so that's revenue. I guess the question covers the profitability outlook as we move deeper into the year, as well. On that front, I guess I would say, the bottom line will stay relatively stable around Q1’s level as well, if like I said, if marketing ROI improves in a significant way, topline and gross profit obviously would be higher, but instead of letting it flow straight to the bottom line, we would likely invest a good portion of that into marketing to build future driver and expand market share. So I hope that answers your question.

Yes, that's it. Operator, next question please.

Thank you. Your next question comes from Raphael Chen with BOCI please go ahead.

[Foreign Language] I will translate myself. Thanks, management for taking my questions. Congrats on a strong quarter. Firstly, could management share some latest update on development of Tantan's overseas business? Secondly, could management share some insights on the latest updates on our new initiatives, including ROI-oriented apps and DAU-oriented app? Take care. Thank you.

[Foreign Language] [Interpreted] Our most promising overseas product currently is SoulChill. Since we decided on the product direction, which is to focus on SoulChill and targeted the Middle East market in 2021, SoulChill has been experiencing rapid growth in terms of user's revenue and profit and despite encountered some unexpected events in the first quarter, such as the Turkish earthquake and the Egyptian currency devaluation, SoulChill has actually shown good resilience and continued growth. And revenue in the Turkish market has actually started to recover and as we temporarily shifted marketing dollars away from the above-mentioned affected market, we saw good potentials for growth in emerging market such as North Africa and also in the Middle East, which is SoulChill's traditional stronghold. Therefore, we will focus our resources on marketing SoulChill overseas and hope that it can achieve better revenue performance in the second-half of this year. So for Tantan's overseas development, we have been making some experiments in Indonesia and some other Southeast Asian countries for over a year, maybe because our localized operation is not quite good enough yet. We haven't found a way to scale up profit and we need more time to figure this out. However, we will stick to our current strategy of pursuing profitable growth. In other words, we will not rush to increase marketing spend without a significant positive ROI and instead, we will continue to explore ways to scale our profit while maintaining breakeven. The most promising app amongst our new endeavors is actually our overseas social product SoulChill. In the recent years, many Chinese Internet companies have launched products overseas and the success of SoulChill has actually shown that social apps has quite considerable advantage in the overseas market. And as a company that started with social products, our team has…

Maybe let's move to the next question, operator?

Thank you. Your next question comes from Thomas Chong with Jefferies. Please go ahead.

[Foreign Language] Thanks management for taking my questions. I have two questions. My first question is about Momo app. How should we think about the user's scale since Q2 and also the engagement? And on the other hand, talking about the outlook, can management talk about the full-year revenue trend, as well as from a Group level perspective, how should we think about the profitability? Thank you.

[Foreign Language] [Interpreted] Momo DAU and user engagement rebounded rapidly after the Chinese New Year holiday and the growth momentum was stronger than in previous years. Although the growth rate slowed down in May, but is still is showing a slight upward trend and we are very pleased to see that Momo as a mature brand can achieve this current user's trend, and driven by the recovery of the organic users and despite the reduction in channel investment. I think the reason behind this is that on the one hand, Momo is benefiting from the recovery in social sentiment of the pandemic. And on the other hand, our product team has made many innovations this year, such as providing users with more timely interactive experiences, the penetration ratio of our content and emotional sharing use cases such as the post and the Miniverse has actually increased significantly. I must say that the user engagement and financial performance of the Momo app has positively surprised me in 2023. This proves the strong vitality of Momo's brand influence and product form and social ecosystem which also gives our team more confidence to maintain the steady productivity of this cash cow business.

Hi. This is Cathy. I guess, I'll take the financial part of the question. I believe the question -- first part of the question is on revenue outlook for the cash cow for the ex-Tantan part and then the profitability outlook for the whole group. For Momo's top-line outlook or more broadly, the ex-Tantan part, as you can see from our Q2 guidance, the second quarter top line is showing a pretty nice and healthy quarter-over-quarter growth. The driving forces here came mainly from two directions, one is the overall post-COVID recovery both in terms of social sentiment and in terms of the consumer spending. The other driving factor is of course the growth momentum from the new applications with the oversea market being particularly strong and resilient, so that's Q2. Looking beyond that into the rest of the year, I believe top-line performance will continue to be dependent on these two driving forces. Currently, we are still gaining pretty strong traction in the MENA area and there are a number of other markets that we are trying -- that we are eyeing on and may try expanding into, as the year progresses. So that part should continue to drive the overall top line. The other factor which is China's macro, I guess we’re seeing a -- more of a mixed picture here. A lot of it will depend on consumer confidence, especially the financial condition of the wealthier private business owners, how they may perceive their future economic -- how they may perceive the future economic trend. Now it looks like that Chinese government is pretty determined to make things work on that front. So we remain cautiously optimistic on the macro side as well. And the other factor that we should consider, as far as modeling is concerned…

I think that's all the time we have for today's session. Maybe let's just call it a day. And thank you everyone for participating and we'll see you next quarter. Thank you. Operator, we're ready to close.

Thank you. That does conclude our conference for today. Thank you for participating. You may now disconnect.