BEIJING - Hello Group Inc. (NASDAQ: MOMO), a prominent mobile social and entertainment platform in China, reported a stronger-than-expected performance for the fourth quarter of 2023, surpassing analyst estimates for both earnings per share (EPS) and revenue.
The company posted an adjusted EPS of RMB2.63, which was RMB0.27 higher than the analyst consensus of RMB2.36. Revenue reached RMB3 billion, exceeding the consensus estimate of RMB2.93 billion.
Despite the positive results, Hello Group's shares plummeted by 22.56% due to the company's guidance for the first quarter of 2024, which indicated a potential year-over-year (YoY) revenue decline of 13.1% to 9.5%, with expected revenue between RMB2.45 billion and RMB2.55 billion. This forecast, reflecting the company's preliminary market and operational conditions, suggests a weaker performance compared to the previous year.
The fourth quarter saw a 6.5% YoY decrease in net revenues, amounting to RMB3,002.9 million (US$423.0 million). The decline was primarily due to a decrease in live video service revenues, which fell by 11.6% YoY, attributed to soft consumer sentiment and strategic adjustments to the Momo (NASDAQ:MOMO) app's operations. Still, the company managed to increase its net income attributable to Hello Group Inc. to RMB452.5 million (US$63.7 million) from RMB398.0 million in the same period of 2022.
The company's cost efficiency improvements were highlighted by Chairman and CEO Yan Tang, who stated, "Despite many changes and challenges in the external environment, our team made steady progress against our strategic priorities." He also expressed optimism about the company's new ventures in overseas markets.
The significant drop in the company's stock price following the earnings release underscores investor concerns over the company's future revenue prospects. The guidance for the first quarter of 2024, which falls below the performance of the same period in the previous year, has raised questions about the company's growth trajectory amidst economic headwinds.
Hello Group's financial health remains robust, with a total of RMB13,478.5 million (US$1,898.4 million) in cash, cash equivalents, and restricted cash as of December 31, 2023. The company also declared a special cash dividend of US$0.54 per American Depositary Share (ADS) and extended its share repurchase program, further demonstrating its commitment to returning value to shareholders.
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