EX-99.1 2 d756317dex991.htm EX-99.1 EX-99.1

Exhibit 99.1

Momo Announces Unaudited Financial Results for the First Quarter of 2019

BEIJING, CHINA, May 28, 2019 – Momo Inc. (NASDAQ: MOMO) (“Momo” or the “Company”), a leading mobile social networking platform in China, today announced its unaudited financial results for the first quarter of 2019.

First Quarter of 2019 Highlights

 

   

Net revenues increased 35% year over year to RMB3,722.9 million (US$554.7 million*) in the first quarter of 2019.

 

   

Net income attributable to Momo Inc. decreased to RMB289.3 million (US$43.1 million) in the first quarter of 2019 from RMB825.2 million in the same period of 2018, which was mainly due to the fact that we recognized a total share-based compensation expense of RMB593.1 million (US$88.4 million) in the first quarter of 2019 including a share-based compensation expense of RMB466.9 million (US$69.6 million) regarding to certain share options granted to Tantan’s founders, while the total share-based compensation expense recognized in the same period of 2018 was only RMB78.7 million. In August 2018, Tantan Limited granted 3,578,205 share options to its founders. The share options included a performance condition in which the founders have the right to receive fully vested options immediately upon achieving certain performance condition. During the first quarter of 2019, we determined that it became probable that the performance condition will be met and accordingly, recognized a share-based compensation expense of RMB466.9 million (US$69.6 million) related to those options.

 

   

Non-GAAP net income attributable to Momo Inc. (note 1) increased slightly to RMB910.3 million (US$135.6 million) in the first quarter of 2019 from RMB903.8 million in the same period of 2018.

 

   

Diluted net income per American Depositary Share (“ADS”) was RMB1.36 (US$0.20) in the first quarter of 2019, compared to RMB3.98 in the same period of 2018.

 

   

Non-GAAP diluted net income per ADS (note 1) was RMB4.15 (US$0.62) in the first quarter of 2019, compared to RMB4.36 in the same period of 2018.

 

   

Monthly Active Users (“MAU”) on Momo application were 114.4 million in March 2019, compared to 103.3 million in March 2018.

 

   

Total paying users of our live video service and value-added service, without double counting the overlap, including 5.0 million paying users of Tantan Limited (“Tantan”), were 14.0 million for the first quarter of 2019, compared to 8.1 million for the first quarter of 2018.

“Q1 was a solid quarter and a good start to the year 2019,” commented Yan Tang, Chairman and CEO of Momo. “We have started to implement the strategies that we laid out at the beginning of the year. Some of the initiatives we took on the product and operational fronts have already generated good results in driving business growth. We will continue to execute against the strategic priorities and create value for our shareholders.”

 

* 

This press release contains translations of certain Renminbi amounts into U.S. dollars at specified rates solely for the convenience of readers. Unless otherwise noted, all translations from Renminbi to U.S. dollars, in this press release, were made at a rate of RMB6.7112 to US$1.00, the effective noon buying rate for March 29, 2019 as set forth in the H.10 statistical release of the Federal Reserve Board.

 

1


First Quarter of 2019 Financial Results

Net revenues

Total net revenues were RMB3,722.9 million (US$554.7 million) in the first quarter of 2019, an increase of 35% from RMB2,764.4 million in the first quarter of 2018.

Live video service revenues were RMB2,689.4 million (US$400.7 million) in the first quarter of 2019, an increase of 14% from RMB2,360.1 million during the same period of 2018. The growth in live video revenues was contributed by the increase in quarterly paying users, as well as the increase in average revenues per paying user per quarter.

Value-added service revenues mainly include membership subscription revenues and virtual gift revenues. The total value-added service revenues were RMB903.8 million (US$134.7 million) in the first quarter of 2019, an increase of 285% from RMB235.0 million during the same period of 2018. The year-over-year increase was primarily attributable to the continued growth of the virtual gift business on the Momo application driven by more paying scenarios introduced to enhance the social experience of Momo users, and to a lesser extent, the consolidation of Tantan’s membership subscription revenues for the whole first quarter of 2019.

Mobile marketing revenues were RMB80.7 million (US$12.0 million) in the first quarter of 2019, a decrease of 32% from RMB118.9 million during the same period of 2018. The decrease in mobile marketing revenues was driven by the decreased demand from our advertising and marketing customers.

Mobile games revenues were RMB39.0 million (US$5.8 million) in the first quarter of 2019, a decrease of 8% from RMB42.2 million in the first quarter of 2018. The decrease in mobile game revenues was mainly due to the continued decrease in quarterly paying users.

Net revenues from Momo segment increased from RMB2,758.3 million in the first quarter of 2018 to RMB3,419.2 million (US$509.5 million) in the first quarter of 2019, primarily driven by the significant increase in net revenues from live video service and value-added service. Net revenues from Tantan segment was RMB295.3 million (US$44.0million) in the first quarter of 2019, which mainly included value -added service revenue.

Cost and expenses

Cost and expenses were RMB3,349.4 million (US$499.1 million) in the first quarter of 2019, an increase of 83% from RMB1,834.2 million in the first quarter of 2018. The increase was primarily attributable to: (a) an increase in personnel related costs including share-based compensation expenses, especially the share-based compensation expenses of RMB466.9 million (US$69.6 million) charged from the options granted to Tantan’s founders and the Company’s rapidly expanding talent pool; (b) an increase in revenue sharing with the broadcasters related to our live video service and virtual gift recipients; (c) an increase in marketing and promotional expenses to attract users and promote our live video services; (d) an increase in amortization expenses related to the intangible assets from business acquisitions; and (e) an increase in fees to payment channels resulting from a higher volume of cash collection through such channels.

Non-GAAP cost and expenses (note 1) were RMB2,719.2 million (US$405.2 million) in the first quarter of 2019, an increase of 55% from RMB1,755.5 million during the same period of 2018.

 

2


Income from operations

Income from operations was RMB384.4 million (US$57.3 million) in the first quarter of 2019, compared to RMB937.1 million during the same period of 2018. Income from operations of Momo segment was RMB998.6 million (US$148.8 million) in the first quarter of 2019 and increased from RMB940.6 million in the first quarter of 2018. Loss from operations of Tantan segment was RMB604.6 million (US$90.1 million) in the first quarter of 2019.

Non-GAAP income from operations (note 1) was RMB1,014.7 million (US$151.2 million) in the first quarter of 2019, compared to RMB1,015.7 million during the same period of 2018. Non-GAAP income from operations of Momo segment was RMB1,098.9 million (US$163.7 million) in the first quarter of 2019 and increased from RMB1,019.3 million in the first quarter of 2018. Non-GAAP loss from operations of Tantan segment was RMB77.1 million (US$11.5 million) in the first quarter of 2019.

Income tax expenses

Income tax expenses were RMB163.7 million (US$24.4 million) in the first quarter of 2019 and decreased from RMB170.9 million in the first quarter of 2018. The decrease was mainly because profit before income tax decreased in the first quarter of 2019.

Net income

Net income was RMB286.6 million (US$42.7 million) in the first quarter of 2019, compared to RMB822.2 million during the same period of 2018. Net income from Momo segment was RMB893.9 million (US$133.2 million) in the first quarter of 2019 and increased from RMB825.7 million in the first quarter of 2018. Net loss from Tantan segment was 597.7 million (US$89.1 million) in the first quarter of 2019 which was mainly due to the share-based compensation expenses of RMB466.9 million (US$69.6 million) charged from the options granted to Tantan’s founders.

Non-GAAP net income (note 1) was RMB907.5 million (US$135.2 million) in the first quarter of 2019, compared to RMB900.8 million during the same period of 2018. Non-GAAP net income from Momo segment was RMB994.2 million (US$148.1 million) in the first quarter of 2019 and increased from RMB904.3 million in the first quarter of 2018. Non-GAAP net loss of Tantan segment was RMB79.6 million (US$11.9 million) in the first quarter of 2019.

Net income attributable to Momo Inc.

Net income attributable to Momo Inc. was RMB289.3 million (US$43.1 million) in the first quarter of 2019, compared to RMB825.2 million during the same period of 2018.

Non-GAAP net income (note 1) attributable to Momo Inc. was RMB910.3 million (US$135.6 million) in the first quarter of 2019, compared to RMB903.8 million during the same period of 2018.

Net income per ADS

Diluted net income per ADS was RMB1.36 (US$0.20) in the first quarter of 2019, compared to RMB 3.98 in the first quarter of 2018.

Non-GAAP diluted net income per ADS (note 1) was RMB4.15 (US$0.62) in the first quarter of 2019, compared to RMB4.36 in the first quarter of 2018.

 

3


Cash and cash flow

As of March 31, 2019, Momo’s cash, cash equivalents, term deposits and short-term investment totaled RMB12,015.9 million (US$1,790.4 million), compared to RMB11,292.6 million as of December 31, 2018. Net cash provided by operating activities in the first quarter of 2019 was RMB1,175.9 million (US$175.2 million), compared to RMB825.5 million in the first quarter of 2018.

Recent Development

On March 12, 2019, Momo’s board of directors declared a special cash dividend in the amount of US$0.62 per ADS, or US$0.31 per ordinary share. The cash dividend was paid on April 30, 2019 to shareholders of record at the close of business on April 5, 2019. The aggregate amount of cash dividends paid was US$128.6 million.

Business Outlook

For the second quarter of 2019, the Company expects total net revenues to be between RMB4.0 billion to RMB4.1 billion, representing an increase of 27% to 30% year over year. These estimates reflect the Company’s current and preliminary view, which is subject to change.

Note 1: Non-GAAP measures

To supplement our consolidated financial statements presented in accordance with U.S. generally accepted accounting principles (“GAAP”), we use various non-GAAP financial measures that are adjusted from the most comparable GAAP results to exclude share-based compensation and amortization of intangible assets from business acquisitions, and tax impacts related to the amortization of intangible assets from business acquisitions.

Reconciliations of our non-GAAP financial measures to our U.S. GAAP financial measures are shown in tables at the end of this earnings release, which provide more details about the non-GAAP financial measures.

Our non-GAAP financial information is provided as additional information to help investors compare business trends among different reporting periods on a consistent basis and to enhance investors’ overall understanding of the historical and current financial performance of our continuing operations and our prospects for the future. Our non-GAAP financial information should be considered in addition to results prepared in accordance with GAAP, but should not be considered a substitute for or superior to the GAAP results. In addition, our calculation of the non-GAAP financial measures may be different from the calculation used by other companies, and therefore comparability may be limited.

Our non-GAAP information (including non-GAAP cost and operating expenses, income from operations, net income, net income attributable to Momo Inc., and diluted net income per ADS) is adjusted from the most comparable GAAP results to exclude share-based compensation, amortization of intangible assets from business acquisitions, and tax impacts related to the amortization of intangible assets from business acquisitions. A limitation of using these non-GAAP financial measures is that share-based compensation, amortization of intangible assets from business acquisitions and tax impacts related to the amortization of intangible assets from business acquisitions have been and will continue to be for the foreseeable future a significant recurring expense in our results of operations. We compensate for these limitations by providing reconciliations of our non-GAAP measures to our U.S. GAAP measures. Please see the reconciliation tables at the end of this earnings release.

 

4


Conference Call

Momo’s management will host an earnings conference call on Tuesday, May 28, 2019, at 8:00 a.m. U.S. Eastern Time (8:00 p.m. Beijing / Hong Kong Time on May 28, 2019).

Dial-in details for the earnings conference call are as follows:

International: +65-6713-5090

U.S. Toll Free: +1-866-519-4004

Hong Kong Toll Free: 800-906601

Mainland China: 4006-208038

Passcode: Momo

Please dial in 15 minutes before the call is scheduled to begin.

A telephone replay of the call will be available after the conclusion of the conference call through 9:00 a.m. U.S. Eastern Time, June 5, 2019. The dial-in details for the replay are as follows:

International: +61-2-8199-0299

U.S. Toll Free: +1-855-452-5696

Passcode: 9359493

Additionally, a live and archived webcast of the conference call will be available on the Investor Relations section of Momo’s website at http://ir.immomo.com.

About Momo

Momo is a leading mobile social networking platform in China. Momo connects people in a personal and lively way through a revolutionary mobile-based social networking platform. With powerful and precise location-based features, Momo enables users to connect with each other and expand relationships from online to offline. Momo’s platform includes the Momo mobile application and a variety of related features, functionalities, tools and services that it provides to users, customers and platform partners. Leveraging its social interest graph engine and analysis of user behavior data, Momo is able to provide users a customized experience based on their social preferences and needs. Momo users can maintain and strengthen their relationships through private and group communication tools, content creation and sharing functions, as well as the offline social activities promoted on Momo’s platform. Momo users are also able to enjoy live video on our platform. In addition, in May 2018, Momo completed its acquisition of Tantan, a leading social and dating app for the younger generation. Tantan, whose primary users consist of young Chinese singles, is designed to help its users find and establish romantic connections, as well as meet interesting people.

 

5


For investor and media inquiries, please contact:

Momo Inc.

Investor Relations

Phone: +86-10-5731-0538

Email: ir@immomo.com

Christensen

In China

Mr. Christian Arnell

Phone: +86-10-5900-1548

E-mail: carnell@christensenir.com

In US

Ms. Linda Bergkamp

Phone: +1-480-614-3004

Email: lbergkamp@christensenir.com

Safe Harbor Statement

This news release contains “forward-looking” statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and as defined in the Private Securities Litigation Reform Act of 1995. These forward-looking statements include but are not limited to our management quotes and our financial outlook for the second quarter of 2019.

Our forward-looking statements are not historical facts but instead represent only our belief regarding expected results and events, many of which, by their nature, are inherently uncertain and outside of our control. Our actual results and other circumstances may differ, possibly materially, from the anticipated results and events indicated in these forward-looking statements. Announced results for the first quarter of 2019 are preliminary, unaudited and subject to audit adjustment. In addition, we may not meet our financial outlook for the second quarter of 2019 and may be unable to grow our business in the manner planned. We may also modify our strategy for growth. In addition, there are other risks and uncertainties that could cause our actual results to differ from what we currently anticipate, including those relating to our ability to retain and grow our user base, our ability to attract and retain sufficiently trained professionals to support our operations, and our ability to anticipate and develop new services and enhance existing services to meet the demand of our users or customers. For additional information on these and other important factors that could adversely affect our business, financial condition, results of operations, and prospects, please see our filings with the U.S. Securities and Exchange Commission.

All information provided in this press release and in the attachments is as of the date of the press release. We undertake no obligation to update any forward-looking statement, whether as a result of new information, future events or otherwise, after the date of this release, except as required by law. Such information speaks only as of the date of this release.

 

6


Momo Inc.

Unaudited Condensed Consolidated Statement of Operations

(All amounts in thousands, except share and per share data)

 

     Three months  
     ended March 31  
     2018     2019     2019  
     RMB     RMB     US$  

Net revenues:

      

Live video service

     2,360,114       2,689,413       400,735  

Value-added service

     235,004       903,849       134,678  

Mobile marketing

     118,858       80,729       12,029  

Mobile games

     42,228       39,008       5,812  

Other services

     8,172       9,920       1,478  
  

 

 

   

 

 

   

 

 

 

Total net revenues

     2,764,376       3,722,919       554,732  

Cost and expenses:

      

Cost of revenues

     (1,331,640     (1,873,574     (279,171

Research and development

     (111,386     (249,431     (37,166

Sales and marketing

     (281,708     (623,848     (92,956

General and administrative

     (109,469     (602,596     (89,790
  

 

 

   

 

 

   

 

 

 

Total cost and expenses

     (1,834,203     (3,349,449     (499,083

Other operating income

     6,904       10,954       1,632  
  

 

 

   

 

 

   

 

 

 

Income from operations

     937,077       384,424       57,281  

Interest income

     47,905       93,778       13,973  

Interest expense

     —         (18,989     (2,829

Impairment loss on long-term investments

     —         (4,500     (671
  

 

 

   

 

 

   

 

 

 

Income before income tax and share of income on equity method investments

     984,982       454,713       67,754  

Income tax expenses

     (170,929     (163,651     (24,385
  

 

 

   

 

 

   

 

 

 

Income before share of income on equity method investments

     814,053       291,062       43,369  

Share of income (loss) on equity method investments

     8,126       (4,504     (671
  

 

 

   

 

 

   

 

 

 

Net income

     822,179       286,558       42,698  
  

 

 

   

 

 

   

 

 

 

Less: net loss attributable to non-controlling interest

     (2,976     (2,759     (411
  

 

 

   

 

 

   

 

 

 

Net income attributable to Momo Inc.

     825,155       289,317       43,109  
  

 

 

   

 

 

   

 

 

 

Net income per share attributable to ordinary shareholders

      

Basic

     2.07       0.70       0.10  

Diluted

     1.99       0.68       0.10  

Weighted average shares used in calculating net income per ordinary share

      

Basic

     399,002,678       413,967,371       413,967,371  

Diluted

     415,045,295       425,890,818       425,890,818  

 

7


Momo Inc.

Unaudited Condensed Consolidated Statement of Comprehensive Income

(All amounts in thousands, except share and per share data)

 

     Three months  
     ended March 31  
     2018     2019     2019  
     RMB     RMB     US$  

Net income

     822,179       286,558       42,698  

Other comprehensive loss, net of tax:

      

Foreign currency translation adjustment

     (88,293     (72,981     (10,875
  

 

 

   

 

 

   

 

 

 

Comprehensive income

     733,886       213,577       31,823  

Less: comprehensive loss attributed to the non-controlling interest

     (2,976     (5,234     (780
  

 

 

   

 

 

   

 

 

 

Comprehensive income attributable to Momo Inc.

     736,862       218,811       32,603  
  

 

 

   

 

 

   

 

 

 

 

8


Momo Inc.

Unaudited Condensed Consolidated Balance Sheets

(All amounts in thousands, except share and per share data)

 

     December 31      March 31      March 31  
     2018      2019      2019  
     RMB      RMB      US$  

Assets

        

Current assets

        

Cash and cash equivalents

     2,468,034        2,678,342        399,085  

Term deposits

     8,824,610        9,227,553        1,374,948  

Short-term investment

     —          110,000        16,391  

Accounts receivable, net of allowance for doubtful accounts of RMB nil and RMB nil as of December 31, 2018 and March 31, 2019, respectively

     719,606        310,192        46,220  

Prepaid expenses and other current assets

     620,979        609,956        90,886  
  

 

 

    

 

 

    

 

 

 

Total current assets

     12,633,229        12,936,043        1,927,530  

Property and equipment, net

     387,532        362,062        53,949  

Intangible assets

     1,036,986        974,820        145,253  

Rental deposits

     24,192        25,508        3,801  

Long-term investments

     447,465        458,462        68,313  

Deferred tax assets

     57,786        32,249        4,805  

Other non-current assets

     71,519        43,988        6,554  

Right-of-use assets, net1

     —          175,911        26,211  

Goodwill

     4,306,829        4,204,440        626,481  
  

 

 

    

 

 

    

 

 

 

Total assets

     18,965,538        19,213,483        2,862,897  
  

 

 

    

 

 

    

 

 

 

Liabilities and equity

        

Current liabilities

        

Accounts payable

     718,362        720,924        107,419  

Deferred revenue

     441,892        460,734        68,652  

Accrued expenses and other current liabilities

     846,710        655,174        97,625  

Amount due to related parties

     82,948        56,034        8,349  

Income tax payable

     137,090        65,533        9,765  

Lease liabilities due within one year1

     —          74,499        11,101  

Dividends payable

     —          863,110        128,607  

Deferred consideration in connection with business acquisitions

     469,274        154,521        23,024  
  

 

 

    

 

 

    

 

 

 

Total current liabilities

     2,696,276        3,050,529        454,542  

Deferred tax liabilities

     259,247        243,705        36,313  

Convertible senior notes

     4,877,116        4,764,259        709,897  

Share-based compensation liability

     86,767        549,207        81,834  

Lease liabilities1

     —          79,731        11,880  

Other non-current liabilities

     23,273        30,751        4,582  
  

 

 

    

 

 

    

 

 

 

Total liabilities

     7,942,679        8,718,182        1,299,048  

Shareholder’s equity (i)

     11,022,859        10,495,301        1,563,849  
  

 

 

    

 

 

    

 

 

 

Total liabilities and shareholder’s equity

     18,965,538        19,213,483        2,862,897  
  

 

 

    

 

 

    

 

 

 

(i): As of March 31, 2019, the number of ordinary shares issued and outstanding was 414,698,540.

 

1 

On January 1, 2019, the company adopted ASU 2016-02, the new lease standard, using the modified retrospective basis and did not restate comparative periods.

 

9


Momo Inc.

Unaudited Condensed Consolidated Statement of Cash Flows

(All amounts in thousands, except share and per share data)

 

     Three months  
     ended March 31  
     2018     2019     2019  
     RMB     RMB     US$  

Cash flows from operating activities:

      

Net income

     822,179       286,558       42,698  

Adjustments to reconcile net income to net cash provided by operating activities:

      

Depreciation of property and equipment

     31,472       48,400       7,212  

Amortization of intangible assets

     1,433       38,595       5,751  

Share-based compensation

     78,664       593,074       88,372  

Share of (income) loss on equity method investments

     (8,126     4,504       671  

Impairment loss on long-term investments

     —         4,500       671  

Loss on disposal of property and equipment

     2       4       1  

Changes in operating assets and liabilities:

      

Accounts receivable

     53,232       409,414       61,005  

Prepaid expenses and other current assets

     56,487       (18,189     (2,710

Amount due from related parties

     (7,424     —         —    

Rental deposits

     336       (1,317     (196

Deferred tax assets

     7,965       25,537       3,805  

Other non-current assets

     (11,524     31,439       4,684  

Accounts payable

     56,359       32,515       4,845  

Income tax payable

     (64,366     (71,558     (10,662

Deferred revenue

     (33,591     18,842       2,808  

Accrued expenses and other current liabilities

     (169,103     (185,495     (27,640

Amount due to related parties

     (32     (25,965     (3,869

Deferred tax liability

     (358     (15,542     (2,316

Other non-current liabilities

     11,851       593       88  
  

 

 

   

 

 

   

 

 

 

Net cash provided by operating activities

     825,456       1,175,909       175,218  
  

 

 

   

 

 

   

 

 

 

Cash flows from investing activities:

      

Purchase of property and equipment

     (64,263     (52,798     (7,867

Proceeds from disposal of property and equipment

     9       5       1  

Payment for long-term investments

     (4,000     (12,000     (1,788

Prepayment of long-term investments

     (47,000     —         —    

Payment for business acquisition, net of cash acquired

     (1,460,063     (305,067     (45,456

Purchase of term deposits

     (3,636,592     (3,485,005     (519,282

Cash received on maturity of term deposits

     2,382,960       3,005,005       447,760  

Payment for short-term investments

     —         (210,000     (31,291

Cash received from sales of short-term investment

     10,500       100,000       14,900  
  

 

 

   

 

 

   

 

 

 

Net cash used in investing activities

     (2,818,449     (959,860     (143,023

Cash flows from financing activities:

      

Proceeds from exercise of share options

     2,437       83       12  

Deferred payment of purchase of property and equipment

     (7,327     (94     (14
  

 

 

   

 

 

   

 

 

 

Net cash used in financing activities

     (4,890     (11     (2

Effect of exchange rate changes

     (14,936     (5,730     (857
  

 

 

   

 

 

   

 

 

 

Net (decrease) increase in cash, cash equivalents, and restricted cash

     (2,012,819     210,308       31,336  

Cash, cash equivalents, and restricted cash at beginning of period

     4,462,194       2,468,034       367,749  
  

 

 

   

 

 

   

 

 

 

Cash, cash equivalents, and restricted cash at end of period

     2,449,375       2,678,342       399,085  
  

 

 

   

 

 

   

 

 

 

 

10


Momo Inc.

Reconciliation of Non-GAAP financial measures to comparable GAAP measures

(All amounts in thousands, except per share data)

 

1.

Reconciliation of Non-GAAP cost and operating expenses, income from operations, and net income to comparable GAAP measures.

 

    Three months     Three months     Three months  
    ended March 31, 2018     ended March 31, 2019     ended March 31, 2019  
    GAAP
RMB
    Share-
based
compensation
RMB
    Non-GAAP
RMB
    GAAP
RMB
    Amortization
of intangible
assets from
business
acquisitions
RMB
    Share-
based
compensation
RMB
    Tax
impacts(ii)
RMB
    Non-GAAP
RMB
    GAAP
US$
    Amortization
of intangible
assets from
business
acquisitions
US$
    Share-
based
compensation
US$
    Tax
impacts(ii)
US$
    Non-
GAAP
US$
 

Cost of revenues

    (1,331,640     3,037       (1,328,603     (1,873,574     18,021       4,186       —         (1,851,367     (279,171     2,685       624       —         (275,862

Research and development

    (111,386     16,359       (95,027     (249,431     2,289       39,730       —         (207,412     (37,166     341       5,920       —         (30,905

Sales and marketing

    (281,708     20,908       (260,800     (623,848     16,853       39,452       —         (567,543     (92,956     2,511       5,879       —         (84,566

General and administrative

    (109,469     38,360       (71,109     (602,596     —         509,706       —         (92,890     (89,790     —         75,949       —         (13,841
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Cost and operating expenses

    (1,834,203     78,664       (1,755,539     (3,349,449     37,163       593,074       —         (2,719,212     (499,083     5,537       88,372       —         (405,174

Income from operations

    937,077       78,664       1,015,741       384,424       37,163       593,074       —         1,014,661       57,281       5,537       88,372       —         151,190  

Net income attributable to Momo Inc.

    825,155       78,664       903,819       289,317       37,163       593,074       (9,291     910,263       43,109       5,537       88,372       (1,384     135,634  

 

(ii)

Includes tax impacts related to the amortization of intangible assets from business acquisition. There is no tax impact related to share-based compensation.

 

11


Momo Inc.

Reconciliation of Non-GAAP financial measures to comparable GAAP measures

(All amounts in thousands, except per share data)

 

2.

Reconciliation of diluted EPS to Non-GAAP diluted EPS

 

    Three months     Three months     Three months  
    ended March 31, 2018     ended March 31, 2019     ended March 31, 2019  
    GAAP
RMB
    Adjustment     Non-GAAP
RMB
    GAAP
RMB
    Adjustment     Non-GAAP
RMB
    GAAP
US$
    Adjustment     Non-GAAP
US$
 

Weighted average ordinary shares outstanding used in computing diluted EPS

    415,045,295       —         415,045,295       425,890,818       22,442,346 (iii)      448,333,164       425,890,818       22,442,346 (iii)      448,333,164  

Diluted earnings per share

    1.99         2.18       0.68         2.07       0.10         0.31  

Diluted earnings per ADS

    3.98         4.36       1.36         4.15       0.20         0.62  

 

(iii)

The adjustment represents an incremental weighted average number of 22,442,346 ordinary shares resulting from the assumed conversion of convertible senior notes.

 

12


Momo Inc.

Unaudited Segment Report

(All amounts in thousands, except share and per share data)

 

     Three months  
     Ended March 31, 2019  
     Momo     Tantan     QOOL     Total     Total  
     RMB     RMB     RMB     RMB     US$  

Net revenues:

          

Live video service

     2,689,413       —         —         2,689,413       400,735  

Value-added service

     608,502       295,347       —         903,849       134,678  

Mobile marketing

     80,729       —         —         80,729       12,029  

Mobile games

     39,008       —         —         39,008       5,812  

Other services

     1,557       —         8,363       9,920       1,478  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total net revenues

     3,419,209       295,347       8,363       3,722,919       554,732  

Cost and expenses(iv):

          

Cost of revenues

     (1,770,038     (98,856     (4,680     (1,873,574     (279,171

Research and development

     (184,273     (65,158     —         (249,431     (37,166

Sales and marketing

     (362,958     (255,921     (4,969     (623,848     (92,956

General and administrative

     (114,264     (479,965     (8,367     (602,596     (89,790
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total cost and expenses

     (2,431,533     (899,900     (18,016     (3,349,449     (499,083

Other operating income

     10,954       —         —         10,954       1,632  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Income (loss) from operations

     998,630       (604,553     (9,653     384,424       57,281  

Interest income

     90,858       2,891       29       93,778       13,973  

Interest expense

     (18,989     —         —         (18,989     (2,829

Impairment loss on long-term investments

     (4,500     —         —         (4,500     (671
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Income (loss) before income tax and share of income on equity method investments

     1,065,999       (601,662     (9,624     454,713       67,754  

Income tax expenses

     (167,603     3,952       —         (163,651     (24,385
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Income (loss) before share of income on equity method investments

     898,396       (597,710     (9,624     291,062       43,369  

Share of loss on equity method investments

     (4,504     —         —         (4,504     (671
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss)

     893,892       (597,710     (9,624     286,558       42,698  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

(iv)

Share-based compensation was allocated in cost of revenues and operating expenses as follows:

 

     Three months  
     ended March 31, 2019  
     Momo      Tantan      QOOL      Total      Total  
     RMB      RMB      RMB      RMB      US$  

Cost of revenues

     3,606        580        —          4,186        624  

Research and development

     21,713        18,017        —          39,730        5,920  

Sales and marketing

     35,474        3,978        —          39,452        5,879  

General and administrative

     39,491        467,684        2,531        509,706        75,949  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total cost and expenses

     100,284        490,259        2,531        593,074        88,372  

 

13


Momo Inc.

Reconciliation of GAAP and NON-GAAP Results of Unaudited Segment Report

(All amounts in thousands, except share and per share data)

 

     Three months  
     ended March 31, 2019  
     Momo      Tantan     QOOL     Total     Total  
     RMB      RMB     RMB     RMB     US$  

Operating income (loss)

     998,630        (604,553     (9,653     384,424       57,281  

Share-based compensation

     100,284        490,259       2,531       593,074       88,372  

Amortization of intangible assets from business acquisitions

     —          37,163       —         37,163       5,537  
  

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP operating income (loss)

     1,098,914        (77,131     (7,122     1,014,661       151,190  

Net income (loss)

     893,892        (597,710     (9,624     286,558       42,698  

Share-based compensation

     100,284        490,259       2,531       593,074       88,372  

Amortization of intangible assets from business acquisitions

     —          37,163       —         37,163       5,537  

Tax impacts

     —          (9,291     —         (9,291     (1,384
  

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP net income (loss)

     994,176        (79,579     (7,093     907,504       135,223  

 

14


Momo Inc.

Unaudited Segment Report

(All amounts in thousands, except share and per share data)

 

     Three months  
     ended March 31, 2018  
     Momo     QOOL     Total     Total  
     RMB     RMB     RMB     US$2  

Net revenues:

        

Live video service

     2,360,114       —         2,360,114       376,258  

Value-added service

     235,004       —         235,004       37,465  

Mobile marketing

     118,858       —         118,858       18,949  

Mobile games

     42,228       —         42,228       6,732  

Other services

     2,053       6,119       8,172       1,303  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total net revenues

     2,758,257       6,119       2,764,376       440,707  

Cost and expenses(v):

        

Cost of revenues

     (1,327,371     (4,269     (1,331,640     (212,295

Research and development

     (111,386     —         (111,386     (17,758

Sales and marketing

     (278,790     (2,918     (281,708     (44,911

General and administrative

     (107,024     (2,445     (109,469     (17,452
  

 

 

   

 

 

   

 

 

   

 

 

 

Total cost and expenses

     (1,824,571     (9,632     (1,834,203     (292,416

Other operating income

     6,904       —         6,904       1,101  
  

 

 

   

 

 

   

 

 

   

 

 

 

Income (loss) from operations

     940,590       (3,513     937,077       149,392  

Interest income

     47,895       10       47,905       7,637  
  

 

 

   

 

 

   

 

 

   

 

 

 

Income (loss) before income tax and share of income on equity method investments

     988,485       (3,503     984,982       157,029  

Income tax expenses

     (170,929     —         (170,929     (27,250
  

 

 

   

 

 

   

 

 

   

 

 

 

Income (loss) before share of income on equity method investments

     817,556       (3,503     814,053       129,779  

Share of income on equity method investments

     8,126       —         8,126       1,296  
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss)

     825,682       (3,503     822,179       131,075  
  

 

 

   

 

 

   

 

 

   

 

 

 

 

(v)

Share-based compensation was allocated in cost of revenues and operating expenses as follows:

 

     Three months  
     ended March 31, 2018  
     Momo      QOOL      Total      Total  
     RMB      RMB      RMB      US$2  

Cost of revenues

     3,037        —          3,037        484  

Research and development

     16,359        —          16,359        2,608  

Sales and marketing

     20,908        —          20,908        3,333  

General and administrative

     38,360        —          38,360        6,116  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total cost and expenses

     78,664        —          78,664        12,541  

 

2 

All translations from RMB to U.S. dollars are made at a rate of RMB 6.2726 to US$1.00, the effective noon buying rate for March 30, 2018 as set forth in the H.10 statistical release of the Federal Reserve Board.

 

15


Momo Inc.

Reconciliation of GAAP and NON-GAAP Results of Unaudited Segment Report

(All amounts in thousands, except share and per share data)

 

     Three months  
     ended March 31, 2018  
     Momo      QOOL     Total      Total  
     RMB      RMB     RMB      US$2  

Operating income (loss)

     940,590        (3,513     937,077        149,392  

Share-based compensation

     78,664        —         78,664        12,541  
  

 

 

    

 

 

   

 

 

    

 

 

 

Non-GAAP operating income (loss)

     1,019,254        (3,513     1,015,741        161,933  

Net income (loss)

     825,682        (3,503     822,179        131,075  

Share-based compensation

     78,664        —         78,664        12,541  
  

 

 

    

 

 

   

 

 

    

 

 

 

Non-GAAP net income (loss)

     904,346        (3,503     900,843        143,616  

 

2 

All translations from RMB to U.S. dollars are made at a rate of RMB 6.2726 to US$1.00, the effective noon buying rate for March 30, 2018 as set forth in the H.10 statistical release of the Federal Reserve Board.

 

16