Hello Group Inc (MOMO) 2023 Q3 法說會逐字稿

Ladies and gentlemen, thank you for standing by, and welcome to Third Quarter 2023 Hello Group, Inc. Earnings Conference Call. (Operator Instructions) Please note, this conference is being recorded today.

女士們，先生們，感謝您的支持，歡迎參加 2023 年第三季 Hello Group, Inc. 收益電話會議。 （操作員指示）請注意，今天正在錄製本次會議。

I would now like to hand the conference over to your first speaker today, Ms. Ashley Jing. Thank you. Please go ahead, ma'am.

現在，我想將會議交給今天的第一位演講者 Ashley Jing 女士。謝謝。請繼續，女士。

Thank you, operator. Good morning and good evening, everyone. Thank you for joining us today for Hello Group's Third 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; Ms. Zhang Sichuan, COO 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 all be available to answer your questions during the Q&A session that follows.

謝謝您，接線生。大家早安，晚上好。感謝您今天參加 Hello Group 2023 年第三季財報電話會議。該公司的業績已於今天早些時候公佈，並可在公司的 IR 網站上查閱。今天參加電話會議的有公司執行長唐岩先生；公司營運長張四川女士；以及公司財務長彭暉女士。他們將討論公司的業務運營和亮點以及財務狀況和指導。他們將在隨後的問答環節中回答您的問題。

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.

在我們開始之前，我想提醒您，本次電話會議可能包含根據《1995 年私人證券訴訟改革法》安全港條款做出的前瞻性陳述。 此類陳述基於管理層當前的預期以及當前的市場和運營條件，並與涉及已知或未知風險、不確定性和其他因素的事件有關，所有這些因素都難以預測且其中許多超出了公司的結果、結果、結果和經驗陳述中存在的重大成果。

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 statements as a result of new information, future events or otherwise, except as required under law.

有關此風險和其他風險、不確定性和因素的更多資​​訊包含在公司提交給美國證券交易委員會的文件中。除法律要求外，本公司不承擔因新資訊、未來事件或其他原因更新任何前瞻性聲明的義務。

I will now pass the call over to our COO, Ms. Zhang Sichuan. Ms. Zhang, please.

現在我將電話轉給我們的營運長張四川女士。請張女士。

Hello, everyone. Thank you for joining our call. We are pleased to report strong financial results for the third quarter and steady progress on various strategic priority across all business lines. I will now walk you through the details of our work for the quarter and, together with Tang Yan and Cathy, take questions in the Q&A session that follows.

大家好。感謝您加入我們的電話會議。我們很高興地報告第三季強勁的財務業績，各業務線的各項策略重點都取得了穩步進展。現在我將向大家介紹本季的工作細節，並在接下來的問答環節與唐燕和 Cathy 一起回答大家的問題。

I will start with a brief overview of our financial performance. Total group revenue was RMB 3.04 billion, down 6% year-over-year and 3% sequentially, exceeding our previous guidance. The main reason for the decline in revenue were the consumption softness caused by the softer economy and product adjustments we made to maintain a healthy community ecosystem.

我將首先簡要介紹我們的財務表現。集團總收入為人民幣 30.4 億元，較上年同期下降 6%，較上一季下降 3%，超過我們先前的預期。收入下降的主要原因是經濟疲軟導致的消費疲軟，以及我們為維持健康的社區生態系統而進行的產品調整。

Adjusted operating income was RMB 681 million, up 13% year-over-year, but down 4% sequentially. Profit margin was 22.4%, up 3.7 percentage point year-over-year and down slightly 0.2 percentage point quarter-over-quarter. Compared to the same period with last year, adjusted operating profit increased significantly despite lower revenue. This improvement was driven by our effective cost optimization and efficiency improvement initiatives, which turned Tantan profitable compared to a year ago as well as supported the stable productivity of Momo cash cow business.

調整後營業收入為人民幣 6.81 億元，年增 13%，但較上季下降 4%。利潤率為22.4%，年增3.7個百分點，季減0.2個百分點。與去年同期相比，儘管營收下降，但調整後的營業利潤大幅增加。這項改善得益於我們有效的成本優化和效率改善舉措，使得探探較上年同期實現盈利，同時支持了陌陌搖錢樹業務的穩定生產力。

Total revenue from the Momo app and standalone new app was RMB 2.74 billion, down 5% year-over-year and 3% sequentially. Adjusted operating income was RMB 675 million, up 4% year-over-year and down slightly 1% quarter-over-quarter with a margin of 24.6%, up 2.2 percentage points year-over-year and 0.4 percentage point quarter-over-quarter. Profit margin improved despite the decline in revenue, primarily due to our team's solid ability to control costs and expenses.

陌陌應用程式及獨立新應用程式的總收入為 27.4 億元，年減 5%，季減 3%。調整後營業收入為人民幣 6.75 億元，較去年同期成長 4%，較上季下降 1%；利潤率為 24.6%，較去年同期成長 2.2 個百分點，較上季上升 0.4 個百分點。儘管收入下降，利潤率仍有所提高，這主要歸功於我們團隊強大的成本和費用控制能力。

Total revenue from Tantan came in at RMB 295 million, down 14% year-over-year and 8% sequentially, mainly due to our reduction in channel investments, combined with our anti-spam initiatives, resulting in a drop in our user base. Thanks to improvements in staff and channel marketing efficiency, Tantan achieved an adjusted operating income of RMB 27.6 million in the third quarter with a margin of 9%. Adjusted operating loss in Q3 last year was RMB 38.3 million and adjusted operating income in the previous quarter was RMB 31.9 million.

探探總收入為人民幣 2.95 億元，年減 14%，季減 8%，主要是因為我們減少了通路投資，加上我們的反垃圾郵件舉措，導致我們的用戶群下降。得益於員工提升及通路行銷效率的提升，探探第三季實現調整後營業收入2760萬元，利潤率為9%。去年第三季調整後營業虧損為3,830萬元人民幣，上一季調整後營業收入為3,190萬元。

Now I will discuss the progress we made against our strategic priorities and future development plans for Momo, Tantan and the new endeavors. Starting with the mature Momo app. Our goal for Momo is to keep the user and revenue scale stable, continue to optimize cost structure and maintain the productivity of the cash cow business. To achieve this goal, our team has focused on 2 aspects - product operations and costs and expenses. First, we mitigated revenue pressure from the external environment by continuously optimizing product operations and introducing new monetization features. Second, we maintained broadly stable profit margin by improving cash unitization and staff efficiency. The group's better-than-expected financial performance in Q3 was mainly due to the better than expected financial performance of the Momo app.

現在，我將討論我們在陌陌、探探和新業務的策略重點和未來發展計劃方面所取得的進展。從成熟的陌陌應用開始。我們對陌陌的目標是維持用戶和收入規模穩定，持續優化成本結構，維持現金牛業務的生產力。為了實現這個目標，我們團隊重點抓了兩個方面，產品營運和成本費用。首先，我們透過不斷優化產品營運和引入新的貨幣化功能來減輕外部環境的收入壓力。第二，透過提高現金單位化程度和員工效率，我們維持了大致穩定的利潤率。集團第三季​​財務表現優於預期，主要得益於陌陌應用程式的財務表現優於預期。

Now, I will walk you through the details. Firstly, on the product and operational front, our focus on product operations this year has been to stabilize the user base and improve monetization efficiency. While focusing on providing timely social experience and enriching the content supply, our product team further integrated user products and consumer products to improve the overall monetization efficiency of the platform. On the channel side, the continuous improvement in user acquisition efficiency provides an effective way to maintain the stability of the user base under the strategy of cost optimization and efficiency improvement.

現在，我將向你詳細介紹。首先在產品和營運方面，今年我們的產品營運重點是穩定用戶基礎和提高貨幣化效率。產品團隊在註重提供及時的社交體驗、豐富內容供給的同時，進一步整合使用者產品與消費者產品，提昇平台整體的變現效率。在通路側，用戶獲取效率的不斷提升，為在成本優化、效率提升的策略下維持用戶群的穩定性提供了有效途徑。

Thanks to lower unit acquisition costs, we acquired 40% more new users with a slightly lower channel investment year-over-year. In Q3, the number of active users declined slightly quarter-over-quarter due to the start of school year and VAS product adjustments. But the extent of the decline was less than a year ago. On a year-over-year basis, the total user scale was still slightly lower, but the gap has narrowed significantly compared to the first half of the year. In Q3, the number of Momo's paying users decreased by 100,000 to 7.8 million from the previous quarter, mainly due to the policy adjustments in VAS membership, which result in a decline in the number of VAS paying users.

由於單位獲取成本較低，我們以年比略低的通路投資獲得了多40%的新用戶。第三季度，受開學及加值產品調整等影響，活躍用戶數季略有下降。但下降幅度比一年前還要小。從年比來看，整體用戶規模仍略有下降，但差距較上半年明顯縮小。第三季度，陌陌付費用戶數較上季減少10萬至780萬，主要由於增值會員政策調整，導致增值付費用戶數下降。

Now let's go through the productivity of our Momo cash cow business. In the third quarter, Momo's live streaming revenue was RMB 1.41 billion, down 7% year-over-year and 2% sequentially. The pressure on revenue mainly came from a softer consumer sentiment. Considering the current macroeconomic environment, our team decided to reduce revenue-oriented competition events. Meanwhile, on the product front, we have launched new interactive gamified features that enable us to keep the number of core paying users relatively stable. The launch of interactive gamified features has not only improved the paying user experience of middle and long-tail cohort users, which plays a positive role in stabilizing livestreaming user engagement, but has also created new revenue streams for long-tail broadcasters in a transitional showroom live streaming business.

現在我們來看看陌陌這顆搖錢樹的生產力。第三季度，陌陌直播收入為14.1億元，年減7%，季減2%。收入壓力主要來自於消費者信心走弱。考慮到當前的宏觀經濟環境，我們團隊決定減少以收益為導向的比賽活動。同時，在產品方面，我們推出了新的互動遊戲化功能，使我們能夠保持核心付費用戶數量相對穩定。互動遊戲化功能的推出，不僅提升了中長尾用戶的付費體驗，對穩定直播用戶活躍度起到了積極作用，也為轉型為展廳直播業務的長尾主播創造了新的收入來源。

In the third quarter, the revenue sharing ratio of live streaming decreased slightly quarter-over-quarter, mainly due to the reduction in event-related bonuses. User-oriented operational efforts led to a slight decrease in the proportion of revenue contributed by talent agencies, but engagement of the supply side remains stable.

第三季度，直播收入分成比例較上一季略有下降，主要因為賽事相關獎金減少。用戶化營運導致經紀公司貢獻的收入佔比略有下降，但供給側的參與度保持穩定。

In the third quarter, VAS revenue, excluding Tantan, totaled RMB 1.3 billion, down 3% year-over-year and 2% sequentially. VAS revenue from the Momo app totaled RMB 1 billion, down 12% year-over-year and 6% quarter-over-quarter. Revenue from the standalone app was RMB 295 million. The year-over-year growth accelerated to 51% and revenue was up 30% sequentially. The decrease in Momo VAS revenue was mainly due to our proactive product adjustments to improve the overall ecosystem and the impact of macroeconomy on consumer sentiment.

第三季度，不含探探的增值服務收入總計人民幣 13 億元，年減 3%，較上季下降 2%。陌陌應用增值服務收入總計10億元人民幣，較去年同期下降12%，季減6%。獨立應用程式收入為人民幣2.95億元。年成長加速至51%，營收季增30%。陌陌加值服務收入的下降主要由於我們主動進行產品調整以改善整體生態系統以及宏觀經濟對消費者情緒的影響。

As I mentioned earlier about our user product, in order to improve the monetization efficiency of the Momo app, we have embedded access to pay experience in, for example, nearby people and some other non-paying features. The increase in DAU and the paying ratio of audio and video-based VAS experience, partially mitigated the pressure on revenue caused by product adjustments and the external environment. The overall VAS revenue sharing ratio decreased slightly quarter-over-quarter, primarily due to the discontinuation of lower gross margin features following our ecosystem adjustments. This shift in the product mix contribute positively to the improvement in VAS gross margin.

正如我之前提到的關於我們的用戶產品，為了提高陌陌應用程式的貨幣化效率，我們在附近的人和一些其他非付費功能中嵌入了存取付費體驗的功能。 DAU的提升以及影音類加值服務體驗付費比例的提升，部分緩解了產品調整和外部環境對收入造成的壓力。整體加值服務收入分成比例較上一季略有下降，主要由於我們進行生態系統調整後停止了毛利率較低的功能。產品結構的轉變對增值服務毛利率的提高產生了積極的貢獻。

Now, let's review Tantan's performance. Our strategic goal for Tantan is to achieve overall breakeven for the year and develop products and monetization models that are suitable for the Asian dating culture in order to pursue sustainable growth on the back of a positive business cycle. Over the past year, Tantan has made solid progress in reducing low-efficiency channel marketing spend to achieve breakeven. It delivered first operating profit at the beginning of this year and maintain profitability in Q3 despite lower revenue. However, we still have a long way to go in achieving our strategic goal of sustainable growth on the back of positive business cycle. The underlying reason is that we have yet to make breakthroughs in developing products and monetization models that are suitable for the Asian dating culture.

現在，我們來回顧一下探探的表現。我們對探探的策略目標是實現全年整體盈虧平衡，並開發適合亞洲約會文化的產品和貨幣化模式，以在積極的商業週期中實現永續成長。過去一年，探探在削減低效通路行銷投入、實現損益平衡等方面取得了紮實進展。該公司今年年初首次實現營業利潤，第三季儘管收入下降，但仍保持獲利。但在良性商業週期的推動下，我們距離實現永續成長的策略目標還有很長的路要走。根本原因是我們尚未在開發適合亞洲約會文化的產品和貨幣化模式方面取得突破。

The ongoing anti-spam campaign started this spring, coupled with the seasonal impact of the new school year put notable pressure on Tantan's user base in September. MAUs decreased 9% sequentially to 15.7 million. As of the end of Q3, Tantan has 1.4 million paying users. Despite a decrease in overall user base, the paying user count remained stable sequentially, primarily due to our commercial product team's efforts to improve user paying experience and higher stickiness of the group compared to non-paying users.

受今年春季啟動的反垃圾資訊行動和新學年的季節性影響，探訪9月的使用者壓力較大。每月活躍用戶數季減 9% 至 1,570 萬。截至第三季末，探探擁有140萬付費用戶。儘管整體用戶群有所下降，但付費用戶數量則是環比保持​​穩定，這主要得益於我們的商業產品團隊努力改善用戶付費體驗，以及與非付費用戶相比更高的群體黏性。

Total revenue for the third quarter was RMB 295 million, down 14% year-over-year and 8% sequentially. The year-over-year decrease was solely attributed to a reduction in the number of paying users caused by decline of overall user base. Thanks to improvement in both products and channels, ARPPU increased by 20% from a year ago, which partially offset the revenue loss from the decline in paying users. The sequential decrease in revenue was mainly due to significant impact of softer macroeconomy on the live streaming business.

第三季總營收為人民幣2.95億元，年減14%，季減8%。年比下降完全是由於整體用戶群下降導致付費用戶數量減少。受惠於產品和通路的提升，ARPPU較去年同期成長了20%，部分抵銷了付費用戶減少帶來的收入損失。營收季減主要由於宏觀經濟走弱對直播業務造成較大影響。

Additionally, the policy adjustment on automatic renewal by the Ministry of Industry and Information Technology had some impact on VAS membership subscription revenue. However, Tantan's gross margin was up by nearly 4 percentage points year-over-year and 1 percentage point quarter-over-quarter, driven by the greater revenue contribution of VAS business, which carries a higher gross margin.

此外，工信部對自動續費政策的調整也對加值服務會員訂閱收入產生一定影響。不過，探探的毛利率較去年同期上升了近4個百分點，環比上升了1個百分點，這得益於毛利率較高的增值業務的收入貢獻增加。

As I mentioned at the beginning, the decline in users and revenue of Tantan was mainly attributed to our initiatives in cost optimization and efficiency improvement. In terms of improving staff efficiency, we have continued to reduce features and operational activities that cannot provide high-quality user experience and incremental revenue and realigned human resource accordingly.

正如我在開頭提到的，探探用戶數和收入的下降，主要原因是我們在成本優化和效率提升方面的舉措。在提高員工效率方面，我們不斷減少無法提供高品質使用者體驗和增量收入的功能和營運活動，並相應地重新調整人力資源。

In terms of improving marketing efficiency, we have continued to reduce unit acquisition costs and further cut marketing expenses that cannot generate positive ROI. Although this approach has resulted in a reduction in the number of users and revenue, the cost optimization strategy has brought greater benefit to our bottom line as the market spend that we cut were ROI negative. This is why despite lower revenue, Tantan still achieved adjusted operating income of RMB 27.58 million in the third quarter.

在提升行銷效率方面，我們持續降低單位獲客成本，進一步削減無法產生正投資回報的行銷費用。雖然這種方法導致用戶數量和收入的減少，但是成本優化策略為我們的底線帶來了更大的利益，因為我們削減的市場支出的投資回報率為負。這也是為什麼探探在營收下滑的情況下，第三季仍實現了2,758萬元的調整後營業收入。

So now I would like to walk you through the details of Tantan's progress on the channel and product front. Firstly, on the marketing front, the unit acquisition cost of app store increased sequentially in the third quarter due to the decline in its own traffic. Our team timely adjusted the proportion of investment across different channels in order to acquire more users while controlling the increase in unit acquisition costs to low single digits sequentially. On the product and operational front, the biggest achievement in the third quarter is that we managed to maintain spamming activity to a low level significantly, and therefore, the community returned to normal. Our product team emphasized guidance of real person authentication on the swipe and match homepage. The increase in real person authentication rates positively contribute to the improvement of the community ecosystem.

現在我想向大家詳細介紹探探在通路和產品的進度。首先，在行銷方面，由於自身流量的下降，應用程式商店第三季單位獲客成本較上季增加。我們的團隊及時調整了不同管道的投入比例以獲取更多用戶，同時將單位獲取成本的增幅控制在環比個位數的低點。在產品和營運方面，第三季最大的成就是我們成功將垃圾郵件活動顯著維持在較低水平，因此社群恢復正常。我們的產品團隊在滑動配對首頁上強調了真人認證的引導。真人認證率的提升對社區生態的完善有著正面的促進作用。

In terms of commercial products, on top of the basic monthly membership service, we launch a variety of pay-as-you-go privilege that aims to increase exposure and improve matching efficiency. As a result, our VAS ARPPU continued to grow on both on a year-over-year and a sequential basis, largely offsetting the impact of user decline on VAS revenue. However, due to the lack of breakthrough in user products, our user retention unfortunately have not yet been substantially improved.

在商業產品方面，我們在基礎的包月會員服務基礎上，推出了多種按需付費的權益，旨在增加曝光度，提高匹配效率。因此，我們的加值服務ARPPU年比和季均持續成長，很大程度上抵銷了用戶下滑對加值服務收入的影響。但由於用戶產品缺乏突破，我們的用戶留存率遺憾尚未有實質的提升。

Additionally, the outbreak of spamming activities combined with a softer spending among live streaming users led to a decline in channel ROI. Therefore, our team's execution for the rest of this year has been focusing on further reducing costs and channel investments, reallocating excess human resources to new endeavors and driving ARPU growth through new product features on the basis of operational efficiency improvement until ROI turns positive.

此外，垃圾訊息傳播活動的爆發，加上直播用戶消費意願減弱，導致通路投資報酬率下降。因此，我們團隊今年剩餘時間的執行重點是進一步降低成本和通路投資，將過剩的人力資源重新分配到新的業務上，並在提高營運效率的基礎上透過新的產品功能推動ARPU成長，直至ROI變為正值。

Lastly, in terms of new endeavors, our goal is to enrich our product portfolio, push the boundary beyond Momo and Tantan, and develop long-term growth engine. In the third quarter, total revenue of the new app included social and games products was RMB 302 million, up 49% year-over-year and 15% sequentially. Among them, VAS revenue of domestic and overseas social products was RMB 295 million, up 51% year-over-year and 13% sequentially. For domestic apps, given their relatively mature stage, the operational focus on our team is to control costs and expenses while pushing harder on monetization, so that profit can grow in line with revenue.

最後，在新的嘗試上，我們的目標是豐富產品線，突破陌陌、探探的界限，打造長期成長引擎。第三季度，新應用包括社交和遊戲產品的總收入為人民幣 3.02 億元，年增 49%，季增 15%。其中，國內外社交產品增值收入為人民幣2.95億元，較去年同期成長51%，較上季成長13%。對於國產APP，由於仍處於較成熟的階段，我們團隊的營運重點是控製成本費用，加大獲利能力，使利潤能夠隨著收入的成長而成長。

Now, in terms of our overseas business, thanks to our border market space, revenue in the third quarter continue to grow rapidly from a higher base. The introduction of new features together with our paying user focused acquisition strategy play a pivotal role in driving revenue growth. In Turkey, which accounts for a substantial portion of overseas market revenue, significant currency fluctuations during the quarter impacted revenue and exerting pressure on gross margins. To protect profit, our team reduced channel investments in a timely manner, resulting in continued sequential growth of operating income. At the moment, we have mitigated some of the problems affecting the profitability level of overseas business and it's expected that it will deliver better sequential performance in both revenue and profit at the end of the year.

現在，就我們的海外業務而言，由於我們的邊境市場空間，第三季的收入在較高基礎上繼續快速增長。新功能的推出以及我們以付費用戶為中心的獲取策略在推動收入成長方面發揮關鍵作用。在佔海外市場收入相當大一部分的土耳其，本季的大幅貨幣波動影響了收入並對毛利率造成壓力。為了保護利潤，我們的團隊及時減少了通路投資，從而導致營業收入持續持續成長。目前，我們已經緩解了一些影響海外業務獲利水準的問題，預計年底海外業務收入和利潤都將實現季比更好的表現。

So this concludes my remarks. Now I will pass the call over to Cathy for the financial review. Cathy, please.

我的發言到此結束。現在我將把電話轉給 Cathy 進行財務審查。請叫我凱西。

Thank you, Sic. Hello, everyone. Thank you for joining our conference call today. Now let me briefly take you through the financial review. Total revenue for the third quarter of 2023 came in better than our previous expectation at RMB 3.04 billion, down 6% year-over-year and 3% quarter-over-quarter. Non-GAAP net income attributable to the company was RMB 605.9 million, up 13% year-on-year but down 4% from the previous quarter.

謝謝你，Sic。大家好。感謝您參加我們今天的電話會議。現在讓我簡單向大家介紹一下財務回顧。 2023年第三季的總收入優於我們先前的預期，為人民幣30.4億元，年減6%，季減3%。非美國通用會計準則下歸屬於公司淨利為人民幣6.059億元，較去年同期成長13%，較上季下降4%。

Net income significantly outperformed our expectation mainly due to 2 factors: number one, better-than-expected top line performance; and number two, our continuous cost control efforts resulted in better-than-expected profitability for both Momo and Tantan. Net income continued to grow on a year-over-year basis despite lower revenue, thanks to our effective cost optimization and efficiency improvement initiatives, which enabled us to maintain the stability of Momo cash cow business, turn Tantan profitable as well as support the development of new endeavors.

淨收入大幅超出我們的預期，主要歸因於兩個因素：第一，營收表現優於預期；第二，我們持續的成本控制使得陌陌和探探的獲利能力均好於預期。儘管營收下降，但淨利潤仍同比增長，這得益於我們有效的成本優化和效率提升舉措，這使我們能夠保持陌陌搖錢樹業務的穩定，幫助探探實現盈利，並支持新業務的發展。

Now, let me walk you through the details. Looking into the key revenue line items for the quarter - Firstly, on live broadcasting. Total revenue for live broadcasting business for the third quarter of 2023 was RMB 1.53 billion, down 8% year-over-year and 4% quarter-over-quarter. The decrease was mainly due to a soft consumer sentiment in the current macro environment, and to a lesser degree, Tantan pivoting away from the live streaming service, which we deem is not the priority for Tantan at this point for the dating business. Momo app live broadcasting revenue totaled RMB 1.41 billion for the quarter, down 7% year-over-year and 2% quarter-over-quarter. Tantan's live broadcasting revenue amounted to RMB 120.0 million, down 14% from Q3 last year and 17% from the previous quarter.

現在，讓我向您詳細介紹一下。研究本季的主要收入項目－首先是直播。 2023年第三季直播業務總收入為人民幣15.3億元，較去年同期下降8%，季減4%。下降的主要原因是當前宏觀環境下消費者信心疲軟，而較小程度上，探探正在放棄直播服務，我們認為這不是探探目前約會業務的重點。陌陌App直播收入本季總計14.1億元人民幣，年減7%，季減2%。探探直播營收為1.20億元，較去年第三季下降14%，較上季下降17%。

Revenue from value-added service for the third quarter of 2023 was RMB 1.47 billion, down 5% from Q3 last year and 2% sequentially. Revenue from value-added service on an ex-Tantan basis was RMB 1.30 billion in the third quarter of 2023, down 3% year-on-year and 2% sequentially. The decrease in Momo app value-added service was due to our proactive product adjustments as well as the impact of macroeconomy on consumer sentiment. However, the downward pressure on Momo value-added service revenue was largely offset by the growth of stand-alone new apps.

2023年第三季增值服務收入為人民幣14.7億元，較去年第三季下降5%，較上一季下降2%。 2023年第三季除探探外增值服務收入為人民幣13.0億元，較去年同期下降3%，季減2%。陌陌應用加值服務的減少是由於我們主動進行產品調整以及宏觀經濟對消費者情緒的影響。不過陌陌增值服務收入的下行壓力很大程度被獨立新應用的成長所抵消。

Tantan's value-added service revenue amounted to RMB 168.4 million, down 16% from Q3 last year and 1% from the previous quarter. The decrease was due to the decline in paying users, which was in turn an outcome of us scaling back from the low efficiency marketing spend. However, the downward pressure was partially offset by the growth in ARPPU driven by commercial product efforts.

探探增值服務收入為1.684億元，較去年第三季下降16%，較上季下降1%。下降的原因是付費用戶數的下降，而這又是我們縮減低效率行銷支出的結果。不過，商業產品努力推動的ARPPU成長部分抵銷了下行壓力。

Now turning to costs and expenses. Non-GAAP cost of revenue for the third quarter of 2023 was RMB 1.77 billion compared to RMB 1.88 billion for the same period last year. Non-GAAP gross margin for the quarter was 41.8%. Gross margin remained relatively stable compared to the same period last year and the previous quarter. Non-GAAP R&D expenses for the third quarter was RMB 186.7 million, compared to RMB 223.4 million for the same period last year, or a 16% decrease Y-o-Y. The decrease was due to the continuous optimization and personnel costs. Non-GAAP R&D expenses as a percentage of revenue was 6.1% compared with 6.9% Q3 last year.

現在來談談成本和費用。 2023年第三季非公認會計準則營收成本為人民幣17.7億元，去年同期為人民幣18.8億元。本季非公認會計準則毛利率為41.8%。毛利率與去年同期及上季相比保持相對穩定。第三季非美國通用會計準則研發費用為1.867億元人民幣，去年同期為2.234億元人民幣，較去年同期下降16%。下降是由於持續優化和人員成本。非公認會計準則研發費用佔營收的比例為 6.1%，去年第三季為 6.9%。

We ended the quarter with 1,410 total employees, of which 314 are from Tantan, compared to 1,750 total employees, of which 479 from Tantan a year ago. The R&D personnel as a percentage of total employees for the group was 64% compared with 62% Q3 last year.

截至本季度，我們共有 1,410 名員工，其中 314 名來自探探；去年同期共有 1,750 名員工，其中 479 名來自探探。集團研發人員佔員工總數的比例為64%，去年第三季為62%。

Non-GAAP sales and marketing expenses for the third quarter was RMB 368.1 million, or 12.1% of total revenue compared to RMB 458.6 million, or 14.2% of the total revenue for the same period last year. The significant year-over-year decrease both in terms of absolute renminbi amount and as a percentage of revenue was primarily attributable to Tantan's shift in marketing strategy to control costs and focus on channel ROI and to a lesser degree, Momo's strategy to trim low-efficiency channel marketing spends.

第三季非美國通用會計準則銷售及行銷費用為人民幣3.681億元，佔總收入的12.1%，去年同期非美國通用會計準則銷售及行銷費用為人民幣4.586億元，佔總收入的14.2%。無論是人民幣絕對金額還是佔收入的百分比，同比均大幅下降，主要原因是探探轉變營銷策略，控製成本，注重渠道投資回報率，而陌陌則削減了低效渠道營銷支出。

Non-GAAP G&A expenses was RMB 76.5 million for the third quarter of 2023 compared to RMB 82.6 million for the same quarter last year. G&A expenses as a percentage of total revenue remained largely stable at around 2.5% compared to Q3 last year.

2023 年第三季非公認會計準則一般及行政費用為 7,650 萬元，去年同期為 8,260 萬元。與去年第三季相比，一般及行政費用佔總收入的百分比基本上保持穩定，約 2.5%。

Non-GAAP operating income was RMB 681.2 million, up 13% from Q3 2022 but down 4% from the previous quarter. Non-GAAP operating margin for the quarter was 22.4%, up 3.7 percentage points from the same period last year, but slightly down 0.2 percentage points from the previous quarter.

非公認會計準則營業收入為人民幣 6.812 億元，較 2022 年第三季成長 13%，但較上一季下降 4%。本季非美國通用會計準則營業利益率為22.4%，較去年同期上升3.7個百分點，但較上季略有下降0.2個百分點。

Non-GAAP operating expenses as a percentage of total revenue was 20.7%, a decrease from 23.6% in Q3 2022 but slightly up from 20.2% in Q2 this year. Non-GAAP expenses in absolute R&D amount decreased 17% year-over-year. This was due to a reduction in sales and marketing expenses and optimization and personnel costs.

非公認會計準則營業費用佔總收入的百分比為 20.7%，低於 2022 年第三季的 23.6%，但略高於今年第二季的 20.2%。非公認會計準則下研發費用絕對金額較去年同期下降 17%。這是由於銷售和行銷費用以及優化和人員成本的減少。

Now, briefly on income tax expenses. Total income tax expenses was RMB 158.1 million for the quarter with an effective tax rate of 21%. In Q3, the company accrued withholding income tax of RMB 47.9 million, which is 10% of undistributed profit generated by our WFOE. Without the withholding tax, our estimated non-GAAP effective tax rate was around 15% in the third quarter.

現在，簡單介紹一下所得稅費用。本季總所得稅費用為人民幣1.581億元，有效稅率為21%。第三季度，公司預扣所得稅4,790萬元，占我們WFOE產生的未分配利潤的10%。如果沒有預扣稅，我們估計第三季的非公認會計準則有效稅率約為 15%。

Now, turning to balance sheet and cash flow items. As of September 30, 2023, Hello Group's cash, cash equivalents, short-term deposits, long-term deposits, short-term investments and restricted cash totaled RMB 13.64 billion compared to RMB 13.40 billion as of December 31, 2022. Net cash provided by operating activities in the third quarter 2023 was RMB 582.5 million.

現在，轉向資產負債表和現金流量項目。截至2023年9月30日，哈嘍集團的現金、現金等價物、短期存款、長期存款、短期投資及受限現金總計人民幣136.4億元，而截至2022年12月31日為人民幣134.0億元。

Lastly, on business outlook. We estimate the group's fourth quarter revenue to come in the range from RMB 2.9 billion to RMB 3.0 billion, representing a decrease of 7.9% to 6.6% year-on-year or a decrease of 4.7% to 1.4% quarter-over-quarter. At segment level, for Q3 2023 on a sequential basis, we expect Momo revenue to decrease mid- to low-single digits. The decrease was primarily due to the pressure on value-added service from the product adjustment we made in mid-Q3, which will have a full quarter impact in Q4, and to a lesser degree, the macro impact on the overall spending sentiment.

最後，關於商業前景。我們預期集團第四季營業收入介於人民幣29億元至人民幣30億元之間，年減7.9%至6.6%，季減4.7%至1.4%。從細分層面來看，我們預計 2023 年第三季陌陌收入將環比下降中低個位數。下降主要由於我們在第三季度中期進行的產品調整給增值服務帶來了壓力，這將對第四季度產生整個季度的影響，並且在較小程度上對整體消費情緒產生了宏觀影響。

Considering the external environment, we've decided to cut back on the incentive to the agency-driven year-end competition events. Therefore, revenue contribution from year-end competition events will be quite limited. On the Tantan side, we expect revenues to decrease in low teens, primarily due to us pivoting away from live streaming business in Tantan and to a lesser extent, the product adjustments we made to comply with the new policy rolled out by MIIT, which will have some negative impact on membership renewal revenue. Please be mindful that this forecast represents the company's current and preliminary view on the market and operational conditions, which are subject to changes.

考慮到外部環境，我們決定減少對機構主導的年終比賽活動的激勵。因此年終賽事的營收貢獻將十分有限。就探探方面而言，我們預計收入將下降百分之十幾，這主要是因為我們將重心轉移至探探的直播業務，在較小程度上，我們為遵守工信部推出的新政策而進行的產品調整，這將對會員續費收入產生一些負面影響。請注意，此預測代表公司對市場和營運狀況的當前和初步看法，可能會發生變化。

That concluded the prepared portion of today's discussion. With that, let me turn the call back to Ashley to start Q&A. Ashley, please.

今天討論的準備部分到此結束。說完這些，讓我將電話轉回給 Ashley 開始問答環節。請叫我艾希莉。

Thanks. Just a quick reminder before we start taking the questions for both who can speak Chinese, please ask your questions from Chinese first and followed by English translation by yourself. Thank you. And we're ready for questions, operator.

謝謝。在我們開始為會說中文的各位答疑之前，請大家先用中文提問，然後再自己進行英文翻譯。謝謝。接線員，我們已經準備好回答您的問題了。

(Operator Instructions) The first question today comes from Leo Chiang with Deutsche Bank.

（操作員指示）今天的第一個問題來自德意志銀行的 Leo Chiang。

(foreign language) Congratulations on the strong results. My question is on Tantan side. Can management share the outlook of Tantan's user scale and financial outlook in 2024?

（外語）恭喜您所取得的優異成績。我的問題是關於探探方面的。管理階層能否分享對探探2024年用戶規模與財務前景的展望？

(foreign language)

（外語）

[Interpreted] Let me translate first. So as Sic mentioned earlier, Tantan's biggest progress this year was to achieve a breakeven at the operational level and our effective cost optimization and efficiency improvement initiatives. This is the result of the joint efforts of several teams that delivered, among others, product-driven ARPPU growth and continuous improvement in channel ROI and staff allocation efficiency.

[翻譯] 我先翻譯一下。所以就像Sic之前提到的，探探今年最大的進步是在營運層面實現了損益平衡，以及我們有效的成本優化和效率提升措施。這是多個團隊共同努力的成果，其中包括產品驅動ARPPU成長、通路ROI和人員配置效率的持續提升。

On the product front, on top of the basic pay monthly membership subscription service, we launched a variety of pay-as-you-go privileges such as accelerated matching, which is called (inaudible) in Chinese. So this kind of special privileges increased exposure and improved matching efficiency, thereby driving VAS ARPPU growth. So on the channel front, our team controlled unit acquisition cost well, at the same time has been trying to testing paying features-oriented marketing materials with a limited budget to explore new ways to improve our ARPU and channel ROI.

在產品方面，在基本按月付費的會員訂閱服務的基礎上，我們也推出了各種按用量付費的特權，例如加速匹配，中文稱之為（聽不清楚）。因此這種特殊的特權增加了曝光度並提高了匹配效率，從而推動了增值服務ARPPU的成長。因此在通路方面，我們的團隊很好地控制了單位獲取成本，同時一直在嘗試用有限的預算測試付費功能導向的營銷材料，以探索提高我們的 ARPU 和渠道投資回報率的新方法。

Due to the outbreak of the spamming activities this year, our product team had to devote a large part of their efforts to anti-spam and maintaining a healthy ecosystem. In this case, we have reallocated excess R&D staff to support the development and operation of new endeavors to improve the overall staff utilization efficiency. Although the community ecosystem currently has returned to normal, the decline in ARPPU due to a weak live streaming revenue has led to a temporary reduction in the overall channel ROI.

由於今年垃圾郵件活動的爆發，我們的產品團隊不得不投入很大一部分精力來反垃圾郵件和維護健康的生態系統。在這種情況下，我們將多餘的研發人員重新分配到支援新業務的開發和營運上，以提高整體的人員使用效率。雖然目前社群生態已經恢復正常，但直播收入疲軟導致ARPPU下降，導致整體通路ROI暫時降低。

Therefore, we cut investment in channels with negative ROI. The reduction in marketing expenses put some pressure on the recovery of the user scale. But we believe that compared with the approach of pursuing user growth regardless of costs, being able to improve user retention and VAS revenue on top of breakeven is a healthier and more sustainable business model. Therefore, our product and channel strategies in 2024 will carry on with this current approach.

因此，我們減少了對投資報酬率為負的管道的投資。行銷費用的減少對用戶規模的恢復造成一定壓力。但我們認為，相較於不計成本追求用戶成長的做法，在損益平衡的基礎上能夠提升用戶留存和加值服務收入，是一種更健康、更永續的商業模式。因此，我們2024年的產品和通路策略將延續目前的做法。

In terms of revenue-related question, I'll leave it to Cathy.

至於與收入相關的問題，我就留給凱西來回答吧。

Okay. I've been very optimistic about Tantan. And I continue to be so despite all the arduous journey that Tantan has been through since 2019. The reason for my optimism is quite simple. Chinese users have genuine demand for dating applications to help them discover romantic relationships, which they can bring to their real life. And that demand is currently underserved. Although Tantan is not doing as good a job as we expected to, it's still undoubtedly the biggest and most effective and also the most relentless player in serving that demand in China market today. As long as that is still the case, we believe the revenue and profit potential remains there for us to cultivate. That's why I remain very optimistic about Tantan's long-term potential in revenue and profit. I think it's just a matter of continuing to stick to that goal and finding the right formula for the Asian user in the dating space.

好的。我一直非常看好探探。儘管2019年以來，探探經歷了許多艱辛，但我依然對它充滿信心。中國用戶對約會應用程式有著真正的需求，希望它能幫助他們找到浪漫的關係，並將其帶到現實生活中。但目前這項需求尚未充分滿足。雖然探探的表現不如我們預期，但毫無疑問，它仍然是目前中國市場上最大、最有效、也是最堅持不懈地滿足這項需求的參與者。只要情況仍然如此，我們相信收入和利潤潛力仍然有待我們去培養。這就是為什麼我對探探的長期收入和利潤潛力仍然非常樂觀。我認為這只是一個繼續堅持這個目標並為亞洲用戶在約會領域找到正確的方法的問題。

As far as next year is concerned, there are several things I can share at this point. First of all, we are going to refocus on the dating aspect of the applications, meaning that we're going to continue to pivot away from some of the peripheral features, such as the live streaming showroom business. Live streaming currently bring in a little bit less than CNY 1 million per day in terms of daily grossing. So as we continue to downsize that service, I think top line could be pressured. However, as live streaming, there's a 20-something percent gross margin and consumes a lot of operational human resources, downsizing live streaming would have minimal or even positive impact on the bottom line.

就明年而言，現在我可以分享幾件事。首先，我們將重新關注應用程式的約會方面，這意味著我們將繼續放棄一些外圍功能，例如直播秀場業務。目前，直播日收入略低於100萬元。因此，隨著我們繼續縮減該服務，我認為營收可能會面臨壓力。然而，由於直播的毛利率高達20%多，且耗費了大量的營運人力資源，因此縮減直播規模對利潤的影響微乎其微，甚至是正面的影響。

However, the fact that Tantan has built a pretty sizable customer base for live streaming show business shows that its users, Tantan's users actually have sufficient spending power to support a much higher ARPU. The biggest priority for next year for the team is to build the right product and services to unleash that ARPU potential. And unlike live streaming, the new products and services that we're going to build should contribute positively to the dating aspect of the application of the Tantan platform. If we are successful in doing so, that could push ROI from negative to positive and the positive growth cycle will start to form on Tantan.

但探探在直播間累積了相當規模的客戶基礎，也顯示探探的用戶其實擁有足夠的消費能力，能夠支撐更高的ARPU值。團隊明年的首要任務是打造合適的產品和服務，以釋放 ARPU 潛力。而且和直播不同的是，我們要打造的新產品和服務應該會對探探平台應用的約會方面做出積極的貢獻。如果我們成功做到這一點，那麼投資報酬率將由負轉正，探探將開始形成積極的成長週期。

Currently, we are working on several new features in the pipeline to be launched next year. We'll see whether any of them works as the year progresses. Meanwhile, of course, we are going to continue to optimize the key cost items such as personnel and marketing. One thing we know for sure is that cost efficiency will continue to improve. So although we cannot pin down a revenue target now for next year, we are very optimistic that the profitability is going to continue to see improvement in 2024. So these are the things that I could share for Tantan's financial outlook next year.

目前，我們正在開發幾項新功能，計劃於明年推出。隨著時間的推移，我們將看看其中是否有任何一種方案可以發揮作用。同時，我們當然將繼續優化人員和行銷等關鍵成本項目。我們可以肯定的是，成本效率將會持續提高。因此，儘管我們現在無法確定明年的收入目標，但我們非常樂觀地認為，2024 年的獲利能力將繼續改善。

I'm handing back to Ashley for more questions.

我將把問題交還給 Ashley，以便他可以回答更多問題。

Operator, next question, please.

接線員，請問下一個問題。

Your next question comes from Zhang Xueqing from CICC.

您的下一個問題來自中金公司的張學清。

(foreign language) Congratulations on the strong quarter. My question is about our new apps. Could the management share more latest updates on the new apps? And do we have any revenue and profit guidance of new apps in 2024?

（外語）恭喜您本季業績強勁。我的問題是關於我們的新應用程式的。管理層能否分享更多有關新應用程式的最新更新？我們對 2024 年新應用的收入和利潤有什麼指導嗎？

(foreign language)

（外語）

[Interpreted] Let me translate first. Starting from 2019, our incubator launched several revenue and profit-oriented standalone apps, targeting vertical social segments and overseas markets. And these apps have begun to gradually contribute to the group financials. In 2022, for example, under the revenue pressure brought by the pandemic, we pushed a little bit harder on the monetization efforts for these new stand-alone apps in order to keep the group levels of VAS revenue stable. And as a result, revenue from these new endeavors in 2022 increased around 1.5x compared with the previous year. The incremental revenue not only offset the decline in VAS revenue from Momo and Tantan, but also drove a slight increase in our group's VAS revenue despite several unfavorable external factors.

[翻譯] 我先翻譯一下。從2019年開始，我們的孵化器推出了幾個以收益和盈利為導向的獨立應用程序，瞄準垂直社交領域和海外市場。而這些應用程式已經開始逐漸為集團財務做出貢獻。例如，2022年，在疫情帶來的收入壓力下，我們在這些新的獨立應用程式的貨幣化工作上加大了力度，以維持集團加值服務收入水準的穩定。因此，2022 年這些新業務的收入比前一年增加了約 1.5 倍。增量收入不僅抵銷了陌陌和探探加值服務收入的下滑，且在面臨許多不利外部因素的情況下，仍帶動集團增值服務收入小幅增長。

Our team did a good job in controlling our expenses while driving users and revenue growth. So we could enjoy operating leverage and achieve sustained profitability for the 3 small apps last year. And our goal for the new endeavors this year has been to continue to grow our revenue and profit. And on the product front, we launched a new paying features to increase paying ratio and ARPPU. And in the first 9 months of the year, the contribution of these new endeavors to the group's top line increased to high single digits from mid-single digits last year. And we expect this contribution to be in the double digits next year.

我們的團隊在推動用戶和收入成長的同時，也很好地控制了開支。因此，去年我們可以享受經營槓桿，並使這三個小應用程式持續獲利。我們今年新努力的目標是繼續增加收入和利潤。在產品方面，我們推出了新的付費功能，以提高付費率和ARPPU。今年前 9 個月，這些新措施對集團營收的貢獻從去年的中個位數上升至高個位數。我們預計明年這項貢獻將達到兩位數。

Our team adjusted various expenses based on revenue growth and channel ROI to ensure the profit will grow together with our revenue. Since new endeavors collectively achieved breakeven at the beginning of last year, the profit has continued to improve steadily. In the overseas business, which is growing revenue and profit faster and has greater growth potential, we plan to replicate in these apps some gamified features that have proven to be beneficial to user experience and monetization in our domestic products and further drive revenue growth by increasing ARPU.

我們的團隊根據收入成長和通路投資報酬率調整各項費用，以確保利潤隨收入一起成長。自去年初新業務集體實現損益平衡以來，利潤持續穩定提升。在營收和利潤成長較快、成長潛力較大的海外業務，我們計劃在這些應用中複製一些已被證明有利於國內產品使用者體驗和貨幣化的遊戲化功能，並透過提高ARPU來進一步推動營收成長。

And on the channel front, we will continue to focus on high-quality users with paying potential in the affluent market and improve the retention of high-paying users through monetization innovation. We will slightly lower the revenue sharing ratio to improve gross margin based on a stable supply. Profit from the new endeavors is expected to grow much faster than revenue this year. Currently, there are some new apps that are being tested and have not yet generated meaningful revenues. We expect them to further support revenue growth once this product format are stabilized.

在通路方面，我們將持續聚焦在富裕市場中具有付費潛力的優質用戶，並透過貨幣化創新提高高付費用戶的留存。在供應穩定的基礎上，我們會稍微降低分成比例，以提高毛利率。預計今年新業務的利潤成長速度將遠高於營收成長速度。目前，有一些新的應用正在測試中，尚未產生可觀的收入。我們預計，一旦這種產品形式穩定下來，它們將進一步支持收入成長。

And for the specific revenue and profit guidance, I will leave it to Cathy.

至於具體的收入和利潤預測，我將留給 Cathy 決定。

Sure. That was already a pretty thorough description of our strategy to the new apps and the achievements we've made under those strategies. For financial outlook, as you understand, a little bit too early to talk about the numbers now in December. But there are a couple of things we see happening next year, which I can share to help you understand how the new apps are going to contribute to the P&L in 2024. First of all, Soulchill, which is the social app that we run in the Middle East and North Africa area is going to -- that app is going to continue to grow pretty rapidly next year. The driver will come from 3 directions. One is the continuous penetration into the existing markets by beefing up local operations and providing better customer service and so on. Compared with our peers, we believe we still have potential in driving further user and ARPU growth in those markets.

當然。這已經是對我們的新應用策略以及我們在這些策略下所取得的成就的一個相當詳細的描述。就財務前景而言，正如您所知，現在談論 12 月的數字還為時過早。但我們預計明年會發生一些事情，我可以分享這些事情，以幫助您了解新應用程式將如何為 2024 年的損益表做出貢獻。司機將從 3 個方向前來。一是透過加強本地營運、提供更好的客戶服務等方式不斷滲透現有市場。與同業相比，我們相信我們仍有潛力在這些市場進一步推動用戶和 ARPU 的成長。

The second direction of growth is that as Sic and Tang Yan mentioned just now, we are now mainly providing the peer-to-peer social entertainment on Souchill, and we expect to launch new features and services such as live streaming. That obviously can help us increase the share and ARPU as well. And thirdly, we are also looking at some other markets that we might be able to penetrate in. But as competition is already pretty intensive elsewhere in the GCC region, in the Gulf countries, this third strategy will be more of an uphill battle, but we'll see how it plays out.

第二個成長方向就像剛才Sic和唐岩提到的，我們現在在Souchill上主要提供點對點的社交娛樂，並且期待推出直播等新的功能和服務。這顯然可以幫助我們提高份額和ARPU。第三，我們也在尋找其他可以進入的市場。

Overall, for social and also the other 2 smaller apps in China should continue to grow quite rapidly next year. This year, these 3 apps grew 15-something percent year-over-year and are on track to bring in somewhere between CNY 1.1 billion to CNY 1.2 billion in top line and more than CNY 100 million at bottom line. Next year, the top line could slow down a little bit. The growth could slow down a little bit, but profit growth should be quite impressive as the operating leverage manifests itself. That's my answer to the financial outlook for the new business.

總體而言，中國的社交應用以及其他兩款小型應用程式明年應該會繼續快速成長。今年，這 3 款應用程式的營收年增了 15% 左右，預計實現營收 11 億至 12 億元人民幣，淨利超過 1 億元。明年，營業收入成長可能會略有放緩。成長速度可能會放緩，但隨著經營槓桿的顯現，利潤成長應該會相當可觀。這就是我對新業務財務前景的回答。

Back to Ashley for the questions.

回到 Ashley 的提問環節。

In the interest of time, let's just take one last question. Operator, we're ready.

由於時間有限，我們只回答最後一個問題。接線員，我們準備好了。

The next question comes from Thomas Chong with Jefferies.

下一個問題來自 Jefferies 的 Thomas Chong。

(foreign language) My first question is about core Momo. Can management comment about the 2024 product strategies as well as the revenue outlook? And my second question is about shareholders' return. Can management comment about the thoughts on share repurchase and dividends?

（外語）我的第一個問題是關於核心Momo的。管理階層能否評論一下 2024 年的產品策略以及收入前景？我的第二個問題是關於股東回報。管理階層能否評論一下對股票回購和股利的想法？

(foreign language)

（外語）

[Interpreted] So let me translate first. Our goal for the mature Momo app for now and for the next few years is to keep the users and revenue scale stable and continue to optimize the cost structure and maintain the productivity of this cash cow business. Therefore, our execution plans for our products, user products, commercial products and channel efforts are all focused on this strategic goal. And for example, this year, our user product team added a navigation bar for FlashChat on the homepage to direct users to matching-based real-time voice or text chatting experiences such as Yuyinlianmai and Qiaoqiao. And our commercial product teams embedded paying features such as live streaming or chatroom into these experiences.

[翻譯] 那麼讓我先翻譯一下。對於已經成熟的陌陌，我們現在以及未來幾年的目標是，保持用戶和收入規模的穩定，並持續優化成本結構，保持這顆搖錢樹業務的生產力。因此，我們的產品、使用者產品、商業產品和通路工作的執行計畫都圍繞著這個策略目標。例如今年我們的用戶產品團隊在首頁增加了FlashChat的導覽欄，引導用戶使用語音連麥、巧巧等基於匹配的即時語音或文字聊天功能。我們的商業產品團隊將直播或聊天室等付費功能嵌入這些體驗中。

This design not only highlights the timely social value of the Momo app, but also increases the penetration rate of paying features and the monetization potential of the platform. Our user acquisition team has fine-tuned its focus on paying users and has strengthened cooperation with the commercial product team to better accommodate users from the channels. And the resulting ARPU growth has supported the continued improvement in channel ROI, enabling us to maintain a stable user scale and solid social fundamentals with a continuously decreasing marketing budget, which plays a positive role in improving Momo's overall profit. In 2024, we will continue to execute the strategy for the Momo product and channels.

這樣的設計，不僅凸顯了陌陌APP的時效社交價值，也提升了付費功能的普及率以及平台的變現潛力。我們的用戶獲取團隊已經將重點放在付費用戶上，並加強了與商業產品團隊的合作，以更好地容納來自管道的用戶。而由此帶來的ARPU值成長支撐了通路ROI的持續提升，使得我們在行銷預算不斷減少的情況下，依然保持了穩定的用戶規模和堅實的社交基本面，對陌陌整體利潤的提升起到了積極的作用。 2024年我們將繼續執行陌陌產品和通路策略。

In terms of financials, I'll leave it to Cathy.

至於財務方面，我就交給凱西 (Cathy) 來處理了。

Okay. After this earnings call, our job will move forward to putting together the financial plan for next year. Before that plan comes together, it's hard for me to talk about the outlook in a very quantitative way. However, same as in the past, as we approach the end of the year, there are several trends that we can talk about to help you think about how the different line items may move heading into next year.

好的。這次財報電話會議之後，我們的工作將繼續推進，制定明年的財務計畫。在該計劃出台之前，我很難以非常量化的方式談論前景。然而，與過去一樣，隨著年底的臨近，我們可以討論幾個趨勢，以幫助您思考明年不同專案的發展趨勢。

As many of the investors know, Momo is a brand that has been around for more than 12 years. In terms of monetization, being 12 years old has both advantages and disadvantages. The biggest disadvantage here, obviously, is that it's already pretty mature in terms of user penetration and also deeply monetized in terms of ARPU, that will make the business more cyclical to the macro and the regulatory environment. So next year, we continue to see macro and regulation has 2 biggest factors that are going to move the Momo business either up or down. Macro-wise, I guess, everybody has his or her own estimation. So I don't think I know better than investors do in this space.

很多投資人都知道，陌陌是個成立超過12年的品牌。從貨幣化角度來說，12歲既有優勢也有劣勢。顯然，這裡最大的缺點是，它在用戶滲透率方面已經相當成熟，並且在 ARPU 方面也已經深度貨幣化，這將使業務更容易受到宏觀和監管環境的周期性影響。因此，明年，我們將繼續看到宏觀和監管是影響陌陌業務上升或下降的兩個最大因素。宏觀上，我想每個人都有自己的估計。因此我認為我在這個領域的了解並不比投資者多。

Regulatory front, as you can see, we've been very prudent and conservative in making sure we stay compliant. That's why in the past few quarters, if you look at our performance, we have clearly been more stable than most of our peers in the social entertainment space. I guess that will continue to be the case next year. That said, in view of the overall environment that we face today, what we need to do is to focus more on profitable user and revenue growth instead of pursuing top line growth at all costs.

在監管方面，正如您所看到的，我們一直非常謹慎和保守，以確保我們保持合規。這就是為什麼在過去幾個季度裡，如果你看看我們的表現，你會發現我們顯然比社交娛樂領域的大多數同行更穩定。我想明年的情況還會繼續如此。儘管如此，鑑於我們今天面臨的整體環境，我們需要做的是更專注於有利可圖的用戶和收入成長，而不是不惜一切代價追求營收成長。

During the past few quarters, we've been scaling back from some of the user and revenue endeavors that generate limited or sometimes even negative margins. For example, you can see in this year's year-end competition event, we further cut the incentive for agency-driven promotional events. These competitions are not particularly helpful in building a healthy social ecosystem and thus, post regulatory risks in today's environment. In addition, although the agency-driven events would create a spike in revenue, but they usually hurt margins and sometimes even bring negative profits. So in this Q4, what you're going to see is that the incremental revenue coming from year-end competition is going to significantly shrink down.

在過去的幾個季度中，我們一直在縮減一些用戶和收入方面的努力，這些努力產生的利潤有限，有時甚至是負的。例如大家可以看到，在今年的年終賽事活動中，我們進一步削減了代理商驅動的促銷活動的誘因。這些競爭對於建立健康的社會生態系統沒有特別的幫助，因此在當今的環境下會帶來監管風險。此外，代理活動雖然會帶來收入的激增，但通常會損害利潤率，有時甚至會帶來負利潤。因此在第四季度，你會看到來自年底競爭的增量收入將大幅減少。

However, as the actual promotional costs and spending also substantially went down, the profit impact is actually quite limited. That's why, although we are guiding, as you can see in our guidance, we are guiding Q4 to show a mid- to high single-digit percentage year-over-year revenue decline for core Momo. Bottom line for the core could see a high single-digit year-over-year improvement. Such an overall trend of focusing on bottom line will continue to be the case next year.

但由於實際促銷成本及支出也大幅下降，對利潤的影響其實相當有限。這就是為什麼，儘管我們有指引，但正如你在我們的指引中所看到的，我們預計第四季度核心陌陌的收入將同比下降中高個位數百分比。核心利潤可能較去年同期出現高個位數成長。這種注重底線的整體趨勢明年仍將持續。

Now I'm going to -- I wanted to spend a few minutes talking about the good thing about being a 12 years old application. Over those 12 years, Momo has built up a strong brand loyalty as the go-to place, if you want to be around people discover some new friends and have fun and meaningful interactions with people you do not already know. And that brand loyalty allowed Momo to be able to navigate safely through the 3 years of pandemic and emerge on the other side with solid fundamentals and remarkable resilience.

現在我要——我想花幾分鐘來談談這個已有 12 年歷史的應用程式的好處。在這 12 年裡，陌陌已經建立了強大的品牌忠誠度，如果你想與人們相處、結識新朋友、與不認識的人進行有趣且有意義的互動，陌陌是你的最佳選擇。正是這種品牌忠誠度讓陌陌能夠安全度過3年的疫情，並憑藉紮實的基本面和非凡的韌性脫穎而出。

Looking into next year, I think Momo is going to continue to benefit from that stable and loyal user base. What that means as far as P&L is concerned, is that we're going to be able to maintain the scale of users and revenue and at the same time, continue to optimize on personnel and user acquisition costs. So that naturally leads to the question on profitability, the cash cow business. Looking out to next year, we expect gross margin to continue to be stable as is the case throughout this year.

展望明年，我認為陌陌將繼續受益於穩定且忠誠的用戶群。就損益表而言，這意味著我們將能夠維持用戶和收入規模，同時繼續優化人員和用戶獲取成本。所以這自然會引出關於獲利能力、搖錢樹業務的問題。展望明年，我們預計毛利率將繼續保持穩定，就像今年全年的情況一樣。

With respect to operating expenses, for the reason that I just mentioned, we have a good opportunity to further cut the OpEx down with continuous efforts to improve cost efficiency. So if you put these different things together in a nutshell, I'm pretty optimistic that we'll be doing a decent job in maintaining the productivity of the cash cow business.

關於營運費用，由於我剛才提到的原因，我們有很好的機會透過不斷努力提高成本效率來進一步削減營運支出。所以，如果你把這些不同的事情放在一起，我非常樂觀地認為我們將能夠很好地維持搖錢樹業務的生產力。

There was a question on cash use. Okay. I guess it's really a question of how does the company utilize this cash and allocate its capital resources. I've said before that there are 3 priorities for the company in terms of capital allocation. Number one is, of course, to reinvest back into the business for organic growth. And the second priority is if there are good strategic investment opportunities that could help us grow beyond what we can achieve organically, we would go for those strategic opportunities, and we prefer to use cash rather than through a stock deal.

有一個關於現金使用的問題。好的。我想這實際上是一個公司如何利用這些現金並分配其資本資源的問題。我之前說過，公司在資金配置方面有三個重點。當然，首要的是重新投資業務，實現有機成長。第二個優先事項是，如果有好的策略投資機會可以幫助我們實現超越有機成長的目標，我們就會抓住這些策略機會，而且我們更願意使用現金而不是透過股票交易。

And the third priority is, if we have excess cash as we've been the situation in the past, we would return the excess cash to the shareholders in the form of either cash dividends or share repurchase. We have an ongoing repurchase plan of USD 200 million. Under that plan, I think so far, we bought back slightly under USD 90 million worth of shares. So under that plan, we still have USD 110 million to go. We will continue to take advantage of the undervalued share price and make good use of our excess cash to enhance shareholder value.

第三個優先事項是，如果我們有剩餘現金，就像過去的情況一樣，我們會以現金股利或股票回購的形式將多餘的現金回饋給股東。我們有一個 2 億美元的持續回購計畫。根據該計劃，我認為到目前為止，我們已回購了價值略低於 9,000 萬美元的股票。因此，根據該計劃，我們仍有 1.1 億美元需要完成。我們將繼續利用被低估的股價，並充分利用我們的過剩現金來提升股東價值。

In terms of dividends, we have distributed special dividend 5 years in a row, starting from the year, I think, 2019. This is -- this way has proven our sincerity in sharing the fruit of our work with shareholders. Unless we have an opportunity to either reinvest our cash to drive organic business growth or through strategic investments, I think we're going to continue to return cash to shareholders in the form of cash dividends.

在股利方面，從2019年開始，我們已經連續5年派發特別股利。除非我們有機會透過再投資現金來推動有機業務成長或透過策略性投資，否則我認為我們將繼續以現金股利的形式向股東返還現金。

I guess that's the end of this conference call. I'm handing back to Ashley for closing remarks.

我想本次電話會議到此結束。我現在把發言權交還給阿什利，請他做最後發言。

Thank you all for your time. And I think that's it for the quarter. We will see you next year. Thank you. Bye.

感謝大家的時間。我認為本季的情況就是這樣。我們明年再見。謝謝。再見。

Thank you for participating in today's conference. You may now disconnect.

感謝大家參加今天的會議。您現在可以斷開連線。

[Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call.]

[本記錄中標記為[已翻譯]的部分由現場翻譯人員朗讀。