Hello Group, the Chinese social-media platform operator, anticipates a significant downturn in revenue year-over-year for the current quarter, following disappointing financial results for the last three months of 2024. This outlook has caused a rapid decrease in the company's stock price, illustrating the pressures facing the sector. For the ongoing quarter, Hello Group forecasts a revenue range between 2.4 billion Chinese renminbi (approximately $330.6 million) and 2.5 billion renminbi.
This projection indicates a potential decrease of up to 6.3% compared to the same period last year -- a decline that has not escaped the scrutiny of market analysts, as there are currently no estimates available for comparison on FactSet. In its fourth-quarter report for 2024, Hello Group revealed a revenue decline of 12%, totaling 2.64 billion renminbi; even though this figure surpassed the consensus estimate of 2.60 billion renminbi derived from a FactSet survey of four analysts.
Furthermore, non-GAAP earnings plummeted to 1.30 renminbi per American depositary share (ADS) from 2.63 renminbi in the previous year, falling short of the 1.59 renminbi expectation set by three analysts on FactSet. Shares of Hello Group, traded on the Nasdaq, saw a 5.8% drop on Wednesday, diverging from a broader market rebound in technology stocks that had been experiencing selling pressure earlier in the week. CEO Yan Tang reflected on the challenges of the past year, stating: "Last year was fraught with challenges and opportunities.
Our team maneuvered through external uncertainties well and delivered satisfactory financial and operational results." Nevertheless, the full-year net revenue exhibited a drop of 12%, alongside a decrease in earnings per ADS to 6.60 renminbi from the prior year’s figure of 11.17 renminbi, as outlined by the company. The revenue generated from live video services in the last quarter of 2024 fell by an alarming 17%, totaling 1.26 billion renminbi.
The decline is largely attributed to the company's strategic decision to “de-emphasize large scale competition events in the Momo app,” a reflection of the soft consumer sentiment currently prevailing in the macroeconomic landscape. Additionally, the value-added services segment, which encompasses subscriptions and virtual gifts, saw a revenue contraction of 6.9%, resulting in 1.33 billion renminbi.
Hello Group mentioned that it undertook “product adjustments to improve Momo app's ecosystem” but still faced reduced user engagement, specifically with its Tantan dating app. Current Price: 6.93, Change: -0.50, Percent Change: -6.67.