Hello Group Earnings Call: Overseas Growth, Home Strain

Hello Group Inc. ((MOMO)) has held its Q4 earnings call. Read on for the main highlights of the call.

Hello Group Inc.’s latest earnings call painted a picture of a company balancing clear operational strengths with mounting domestic headwinds. Management highlighted robust overseas expansion, steady margin execution, and early signs of user recovery at core app Momo, even as China revenue fell sharply and regulatory and macro pressures weighed on high-value live-streaming activity.

Overseas Revenue Becomes a Real Growth Engine

Overseas revenue surged to RMB 608 million in Q4 2025, up 70% year-over-year and 14% sequentially, lifting its share to 24% of group revenue in the quarter. For 2025 as a whole, overseas sales climbed 71% to RMB 2.0 billion, meaning international markets now account for 19% of annual revenue versus just 11% in 2024.

Margins Improve Despite Top-Line Pressures

Profitability held up well, with adjusted operating income in Q4 2025 rising 26% year-over-year to RMB 354.1 million and margin improving to 13.7%. Non-GAAP gross margin widened to 37.8% from 34.7% a year earlier, underscoring disciplined cost management even as the company navigates revenue declines at home.

Momo Shows Resilience and User Momentum

Flagship app Momo delivered signs of stabilization, as paying users reached 3.9 million in Q4, an increase of 200,000 versus the prior quarter. Management credited new product features such as AI greeting and chat assistance and better targeting of high-intent users for supporting stable ARPU and a recovery in paying-user trends in the second half.

Tantan Tightens Product, Edges Toward Profitability

Dating app Tantan emphasized organic growth and product upgrades, including real-person verification and AI tools for profiles and chat. These efforts helped lift pay conversion and ARPU, and management now expects Tantan to sustain around RMB 100 million in annual operating profit after optimizing marketing channels.

M&A Accelerates Global Portfolio Expansion

Hello Group continued to expand its international footprint through acquisitions, including the purchase of European dating app Happn and other deals in Turkey and South America. New overseas brands such as Yaha Live, Amar and MiraiMind contributed meaningfully to growth, diversifying both geography and product mix beyond the legacy China business.

Cost Discipline Underpins Operating Resilience

The company leaned on strict cost control to defend margins, with non-GAAP R&D expenses down 4% year-over-year to RMB 203.9 million in Q4 and G&A dropping to RMB 85.7 million from RMB 117.6 million. Management also cut marketing with weak returns and reallocated spend to higher-ROI channels to improve user acquisition efficiency.

Cash Generation Supports Ongoing Shareholder Returns

Hello Group still generated substantial cash, posting RMB 549.7 million in operating cash flow in Q4. The Board approved a special dividend of USD 0.28 per ADS, worth roughly USD 42.6 million, marking the eighth consecutive year of cash returns to shareholders despite a more volatile operating backdrop.

Management Outlines Clear 2026 Strategic Priorities

Looking ahead, the company laid out a focused game plan centered on three pillars: protecting Momo’s productivity, elevating Tantan into a leading Asian dating platform, and scaling overseas products under strict return targets. New initiatives are being managed with a 1–3 year payback horizon, aiming to balance growth ambitions with capital discipline.

Domestic Revenue Slide Weighs on the Core Business

Domestic revenue fell to RMB 1.97 billion in Q4, a 14% year-over-year drop, bringing full-year China revenue down 11% to RMB 8.37 billion. Management signaled the weakness is not over, guiding to mid- to high-teen declines in Mainland China revenue for Q1 2026 and low- to mid-teen declines for the full year.

Momo’s Value-Added Services Under Regulatory Pressure

Momo’s value-added services remained under strain, with Q4 VAS revenue down 14% year-over-year to RMB 1.68 billion and 6% sequentially. For 2025, VAS revenue fell 11% to RMB 7.09 billion, as new tax regulations and a soft macro backdrop hurt high-grossing streamers and agencies that historically drove a large share of monetization.

Tantan’s User Base Shrinks as It Resets

Tantan’s paying user count declined to 600,000 in Q4 from 700,000 in the previous quarter, reflecting a deliberate pullback from lower-quality growth channels. Q4 domestic revenue dropped to RMB 136 million, down RMB 41 million year-over-year and RMB 16 million sequentially, with full-year domestic revenue sliding to RMB 613 million from RMB 733 million.

Cash Reserves Fall Sharply Amid Capital Deployment

The company ended 2025 with RMB 8.68 billion in combined cash, deposits and investments, down from RMB 14.73 billion a year earlier, a drop of about RMB 6.05 billion or roughly 41%. Management attributed the decline to loan repayments, special dividends, tax settlements, acquisitions and share buybacks, signaling active use of the balance sheet.

Overseas Growth Still Comes with Losses

Despite rapid top-line gains, overseas businesses remained loss-making, with management estimating around RMB 200 million in operating losses for 2025. Platforms like Yaha Live and Amar, along with new AI offerings, are still in scale-up mode and require heavy marketing and engineering investment before reaching profitability.

Full-Year Profitability Faces Ongoing Pressure

Adjusted operating income for 2025 declined 10% year-over-year to RMB 1.55 billion, translating to a 15% margin for the year. Management cautioned that if revenue stays broadly flat in 2026 while operating expenses rise, bottom-line margins could fall, though they still aim to keep adjusted operating margin above 10%.

Macro and Regulatory Uncertainty Remains a Key Risk

The company flagged heightened tax scrutiny on live-streaming agencies as a major drag on H2 2025 VAS revenue and warned that these headwinds may persist. Management also acknowledged broader macro softness and geopolitical risks in regions such as MENA, which could slow overseas expansion if tensions escalate.

Guidance Points to Near-Term Pain, Longer-Term Rebalancing

For Q1 2026, management guided revenue to RMB 2.3–2.4 billion, implying a year-over-year decline of about 4.8%–8.8% as Mainland China revenue falls by mid- to high-teens and overseas grows in the high-40s. For 2026, they expect group revenue to drop in the low- to mid-teens with overseas reaching roughly RMB 3.0 billion, while targeting adjusted operating margin in the low-teens, modest R&D growth, marketing up high-teens to about 20% of revenue, and a path to profitability for Yaha Live and later Amar.

Hello Group’s earnings call showed a business in transition, leaning on global expansion, product innovation and cost control to offset a shrinking domestic base and regulatory headwinds. For investors, the story hinges on whether the fast-growing but loss-making overseas portfolio can scale profitably fast enough to stabilize earnings as China revenues continue to reset.