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    MOMO
    Earnings call· Mar 2026(Q1 FY26)

    Hello Group Q1 FY26 earnings call MOMO

    Jun 2, 2026 Source

    Executive summary

    Hello Group Q1 FY26 – Overseas Growth Offsets Domestic Headwinds

    Hello Group navigated Q1 FY26 with strong overseas expansion, driven by new product growth and a diversified portfolio, which helped offset persistent domestic headwinds from tax regulations and soft consumer sentiment. The company is strategically optimizing its core Momo business, refining Tantan's user experience, and scaling new overseas ventures, aiming for long-term profitability despite near-term revenue pressures. AI investments are focused on enhancing user connections and enabling new product formats.

    Highlights

    5

    • Overseas revenue grew 44% year-over-year to RMB 597 million, now accounting for 25% of group revenue.

    • Adjusted operating income increased 1% year-over-year to RMB 349 million, with margin expanding to 14.6%.

    • Two new overseas products delivered triple-digit revenue growth year-over-year, with one approaching net income breakeven and the other achieving positive marginal contribution.

    • China ROI for user acquisition remained fully profitable, with improved channel conversions lifting payment intent among net and small spending users.

    • Non-GAAP gross margin rose by 1 percentage point year-over-year to 38.8%, driven by improved margins in MENA products.

    Concerns

    5

    • Total group revenue decreased 5% year-over-year to RMB 2.39 billion.

    • Domestic revenue declined 15% year-over-year to RMB 1.79 billion, impacted by new tax regulations and soft consumer spending sentiment.

    • Momo's paying users decreased by 200,000 quarter-over-quarter to 3.7 million.

    • Tantan's paying users decreased by 30,000 quarter-over-quarter to 0.6 million, due to MAU decline and Alipay policy changes.

    • Overseas business faced sequential softness (2% quarter-over-quarter decline) due to Turkish regulatory issues, Ramadan, and Middle East conflicts.

    Guidance & targets

    9
    CategoryTargetConfidence
    Q2 FY26 Total Revenue
    RMB 2.45 billion to RMB 2.55 billion
    high materiality
    Medium
    Q2 FY26 Mainland China Business Revenue Growth
    High teens percentage-wise decline
    medium materiality
    Medium
    Q2 FY26 Overseas Revenue Growth
    High 50s percentage-wise growth
    medium materiality
    Medium
    FY26 Overseas Revenue
    RMB 3 billion
    high materiality
    Medium
    FY26 Domestic Business Revenue Growth
    Mid-teens year-over-year decline
    high materiality
    Medium
    FY26 Group Revenue Growth
    Slight year-over-year decline (couple of percentage points)
    high materiality
    Medium
    FY26 Adjusted Operating Margin
    Low teens
    high materiality
    High
    Yalla Net Income Breakeven
    Within a quarter
    medium materiality
    High
    Amar Net Income Breakeven
    About half a year behind Yalla
    medium materiality
    High

    Segment performance

    6
    SegmentRevenueYoYQoQMargin
    Group Total
    Maintained steady business momentum, but total revenue declined due to domestic pressures.
    		RMB 2.39 billion-5%-7%—
    Domestic Business
    Healthy through focused product innovation and refined operations despite external pressures. PRC Mainland value-added service revenue was RMB 1.76 billion, down 9% QoQ.
    		RMB 1.79 billion-15%——
    Overseas Business
    Remained a positive trend, accounted for 25% of group revenue (compared to 16% in the same period last year). Sequential softness due to external challenges (Turkish regulation, Ramadan, Middle East conflict).
    		RMB 597 million+44%-2%—
    Momo (Domestic)
    Year-over-year decline due to new tax regulations and stricter local enforcement; QoQ decline seasonal due to Chinese New Year and soft consumer spending. Glass revenue.
    Paying users: 3.7 million (down 200,000 QoQ)
    		RMB 1.52 billion-15%-9%—
    Tantan (Domestic)
    Decline driven by MAU contraction leading to fewer paying users, compounded by the short-term impact of Alipay's policy adjustments on auto-renewal payments. Net profit grew significantly YoY due to cost controls.
    Paying users: 0.6 million (down 30,000 QoQ)
    		RMB 125 million-25%-8%—
    New Overseas Products (MENA)
    Two new products (Yalla, Amar) showed rapid growth, continuously improving localized operations and game plan innovation. Yalla approaching net income breakeven, Amar achieved positive marginal contribution for the first time.
    		—Triple-digit revenue growth——

    Operational metrics

    19
    Non-GAAP Net Income attributable to shareholders
    RMB 288 millionvs RMB 403.8 million in Q1 FY25; vs RMB 281.3 million in Q4 FY25
    Q1 FY26
    Total Revenue for Value-Added Services
    RMB 2.35 billiondown 6% YoY; down 7% QoQ
    Q1 FY26
    PRC Mainland Value-Added Service Revenue
    RMB 1.76 billiondown 15% YoY; down 9% QoQ
    Q1 FY26
    Non-GAAP Cost of Revenue
    RMB 1.46 billionvs RMB 1.57 billion in Q1 FY25
    Q1 FY26
    Non-GAAP Gross Margin
    38.8%vs 37.9% in Q1 FY25
    Q1 FY26

    Increase driven by improved margins in MENA products after lowering revenue sharing ratio, and greater revenue mix from higher-margin overseas streaming products, partially offset by decline in Momo's GPM due to increased payout ratio to agencies.

    Non-GAAP R&D Expenses
    RMB 165.2 milliondown 11% YoY
    Q1 FY26

    Decrease due to overall labor cost savings from personnel structure optimization.

    Total Employees
    1,396vs 1,336 a year ago
    End of Q1 FY26
    R&D Personnel as % of Total Employees
    56%vs 58% in Q1 FY25
    Q1 FY26
    Non-GAAP Sales and Marketing Expenses
    RMB 335.4 millionvs RMB 322.1 million in Q1 FY25 (derived from % of revenue)
    Q1 FY26

    Year-over-year increase mainly driven by increased marketing investments in new overseas apps, partially offset by continued cost control in PRC Mainland operations. Note: Q1 FY25 value of RMB 22.1 million in transcript appears to be an ASR error, derived as RMB 322.1 million from 13% of total revenue.

    Non-GAAP G&A Expenses
    RMB 89.4 millionvs RMB 114.8 million in Q1 FY25
    Q1 FY26

    Decrease primarily attributable to a high base effect in Q1 FY25 from a self-inspection related to tax matters.

    Non-GAAP Operating Income
    RMB 349.2 millionvs RMB 345.3 million in Q1 FY25
    Q1 FY26

    Increase driven by improvement in gross profit.

    Non-GAAP Effective Tax Rate
    20%
    Q1 FY26
    Withholding Tax Accrued
    RMB 21.2 million
    Q1 FY26

    Accrued on undistributed profit generated by ROFE.

    Cash, Cash Equivalents, Short-term Deposits, Long-term Deposits from Investments, and Restricted Cash
    RMB 8.56 billionvs RMB 8.68 billion as of December 31, 2025
    As of March 31, 2026
    Net Cash Provided by Operating Activities
    RMB 158.9 million
    Q1 FY26

    Difference from non-GAAP net income mainly due to significant increase in accounts receivable from temporary payment collection delays and higher other current liabilities from accrual of year-end bonuses and 13-month payroll.

    Momo Paying Users
    3.7 milliondown 200,000 QoQ
    Q1 FY26

    Decline affected by Chinese New Year as some users shifted activities offline.

    Tantan Paying Users
    0.6 milliondown 30,000 QoQ
    Q1 FY26

    Decline driven by ongoing MAU decline and Alipay changes to auto-renewal paying rules.

    Tantan Channel ROI
    Well above 100%
    Q1 FY26

    Sustained throughout the quarter despite Alipay policy changes.

    Tantan Female User Swipe Rate Increase
    Near 3 percentage point
    Q1 FY26

    Result of optimizing recommendation strategies, specifically introducing restrictions on female users' metrics allowing only 'indiscernible' or upward matching.

    Industry KPIs

    2
    MetricValueDetails
    CAPEX compute commitmentsRMB 165.2 millionRMB
    Ai feature adoption monetizationTriple-digit revenue growth%

    Product announcements

    3
    ProductTypeDetails
    AI voice drift bottleupdate
    Donutlaunch
    Soulmatelaunch

    Risks & headwinds

    6
    Turkish Regulatory TighteningQ1 FY26 (temporary)

    Not quantified in revenue terms, but impacted Soulchill's user acquisition.

    Mitigation: Company working with authorities for app reinstatement; accelerating localization efforts in other markets to offset temporary impact.

    Soft Consumer Sentiment in MENAQ1 FY26 (during Ramadan)

    Not quantified, but impacted Soulchill.

    Mitigation: Diversified product portfolio helps mitigate single product volatility.

    Middle East ConflictOngoing (Q1 FY26)

    Not quantified, but had some drag on Soulchill's revenue in the Gulf region.

    Mitigation: Diversified product portfolio helps mitigate single product volatility.

    New Tax Regulations and Stricter Enforcement in ChinaH2 2025, Q1-Q2 2026, expected to normalize by Q3 2026.

    Contributed to Momo's 15% YoY revenue decline and domestic revenue decline. Caused a decline in agency-related revenue during March and April.

    Mitigation: Moderately adjusted revenue sharing ratios for key agencies, introduced new incentive programs, provided financial support, and assisted agencies with tax compliance.

    Alipay Auto-Renewal Policy ChangesQ1-H1 2026, expected to improve in H2 2026.

    Caused a 30,000 QoQ decrease in Tantan paying users and contributed to Tantan's 25% YoY domestic revenue decline.

    Mitigation: Unbundling membership features, offering stand-alone purchases, enhancing FlashChat, diversifying payment channels, and promoting longer-term membership plans.

    Broader Consumer Spending Sentiment in ChinaOngoing

    Contributed to Momo's 15% YoY revenue decline.

    Mitigation: Focus on making product fundamentals rock solid and maximizing operating efficiency.

    Q&A highlights

    3

    Asked for details on external challenges impacting overseas business in Q1, their full-year impact, and the path to profitability for new products, specifically regarding marketing investment strategy.

    Management detailed challenges (Turkish regulation, Ramadan, Middle East conflict) impacting Soulchill, but expressed confidence in recovery and localization efforts. They stated new MENA products (Yalla, Amar) had strong triple-digit YoY revenue growth with rapidly narrowing losses, aiming for scale first, then gross margin optimization, and marketing ROI-driven approach for natural profitability. Yalla is near net income breakeven, Amar half a year behind. Full-year overseas revenue target of RMB 3 billion remains comfortable.

    “Our path for these 2 [indiscernible] products is pretty clear, build scale first. Optimize the gross margin structure, keep marketing ROI driven and net profitability flow naturally.”

    asked by Xueqing Zhang · answered by Ashley Jing, Cathy Peng

    2 min read6 chapters

    Detailed Narrative

    01

    Momo Product Innovation & User Base Stability

    Momo focused on optimizing user experience and stabilizing its user base in Q1 FY26. Key initiatives included refining the chat experience with improved matching algorithms and introducing video features for instant interactions. AI-driven innovations like voice profiles and AI chat assist features were piloted, showing encouraging results in improving female user experience and driving deeper conversations. Despite a 200,000 QoQ decrease in paying users to 3.7 million, organic traffic grew YoY and retention among existing users improved slightly.

    02

    Tantan Strategic Adjustments & Monetization

    Tantan experienced a modest decrease of 30,000 paying users QoQ, reaching 0.6 million, influenced by ongoing MAU decline and Alipay's policy changes on auto-renewal. The team optimized recommendation strategies, including gender restrictions on metrics for female users, leading to a near 3 percentage point increase in average swipe. Monetization efforts included unbundling membership features and enriching fresh chat gameplay to mitigate top-line pressure, while cost controls in channel investment and personnel significantly improved net profit YoY.

    03

    Overseas Business Diversification & Growth

    The overseas segment demonstrated robust growth, with revenue up 44% YoY to RMB 597 million, now contributing 25% of group revenue compared to 16% in the same period last year. This growth was driven by the rapid expansion of a diversified product portfolio, including two new products in MENA achieving triple-digit revenue growth and nearing profitability. Tantan International completed its migration to a dedicated overseas app, and the dating business in developed markets also showed satisfying progress.

    04

    Impact of Tax Regulations on Domestic Business

    New tax regulations and stricter local enforcement introduced in H2 2025 continued to impact Momo's domestic business, particularly high-grossing agencies. Further tightening in early 2026 led to a decline in agency-related revenue during March and April. In response, the company introduced new incentive-based revenue sharing policies and financial support for selected high-quality agencies, expecting their performance to normalize by Q3 FY26.

    05

    Alipay Auto-Renewal Policy Impact

    Alipay's policy changes primarily affected Tantan's domestic membership business, leading to a temporary decline in renewal rates and subscriber churn. The company responded by unbundling membership features, offering stand-alone purchases, enhancing FlashChat, diversifying payment channels, and promoting longer-term plans. The impact is expected to be concentrated in H1 2026, with gradual improvement in H2, and minimal effect on Momo or overseas businesses.

    06

    AI Investment Strategy and Impact

    Hello Group views AI as a high-return investment, directly improving user experience and payment propensity. AI is being used to enhance user connections through features like AI-assisted chat and AI voice drift bottles, and to enable new product formats such as the AI-powered voice social product Donut and the AI role-play dating app Soulmate. The company plans to replicate AI tech across more use cases, including AI agents for Momo live streaming and smart matching, to maximize ROI.

    AI-generated summary of the company’s earnings call. Not investment advice.