Momo's 2020 Q4 and full-year financial reports have been released.What's your insight?

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Momo's revenue for the full year of 2020 was 15.024.2 billion yuan, net profit of 2,896.2 billion yuan

On March 25, Beijing time, China's leading mobile social networking platform Nasdaq: MOMO (Nasdaq: MOMO) announced unaudited financial results for the fourth quarter and full year of 2020. Financial reports show that in the fourth quarter of 2020, Momo's net revenue reached 3,795.2 million yuan (approximately US$581.6 million). Not measured in accordance with US GAAP standards, net profit attributable to Momo's parent company in the fourth quarter of 2020 was 836.4 million yuan (approximately US$128.2 million), which continued to be profitable for 24 quarters.

In 2020, Momo's net revenue reached 15.024.2 billion yuan (approximately US$2,302.6 billion). Net profit attributable to Momo's parent company was 2,896.2 million yuan (approximately US$443.9 million), not measured in accordance with US GAAP. The diluted net profit per share of American Depositary Shares (ADS) was 13.16 yuan (approximately $2.02), as measured in accordance with US GAAP.

According to data compiled by Bloomberg, the 11 Wall Street analysts estimated on average that Momo's revenue for the fourth quarter of 2020 would be $3,682.2 billion. According to financial reports, Momo's revenue for the fourth quarter of 2020 was 3,795.2 billion yuan, exceeding Wall Street expectations.

Fourth quarter 2020 results summary

Net revenue reached $3,795.2 million (approximately US$581.6 million).

Net profit attributable to Momo's parent company was 651.5 million yuan (about US$99.8 million). Net profit attributable to Momo's parent company was 836.4 million yuan (approximately US$128.2 million), not measured in accordance with US GAAP.

The diluted net profit per American Depositary Share (ADS) was $2.98 (approximately $0.46). The diluted net profit per share of American Depositary Shares (ADS) was $3.80 (approximately $0.58), as measured in accordance with US GAAP.

In December 2020, Momo's main app had 113.8 million monthly active users.

In the fourth quarter of 2020, the total number of paid users of Momo's live streaming services and value-added services was reduced to 12.8 million (including 3.8 million paid users).

Summary of financial results for the full year of 2020

Net revenue reached 15.024.2 billion yuan (approximately US$2,302.6 billion).

Net profit attributable to Momo's parent company was 2.103.5 billion yuan (approximately US$322.4 million). Net profit attributable to Momo's parent company was 2,896.2 million yuan (approximately US$443.9 million), not measured in accordance with US GAAP.

The diluted net profit per American Depositary Share (ADS) was $9.65 (approximately $1.48). The diluted net profit per share of American Depositary Shares (ADS) was 13.16 yuan (approximately $2.02), as measured in accordance with US GAAP.

Executive reviews

Wang Li, CEO of Momo, said, “2020 was a difficult year for us. I'm proud that the team has been able to persevere in the face of many challenges and still focus on our core mission. Our commitment to this core mission has also enabled us to make difficult but correct decisions over the past year for the long-term benefit of our company and community. After months of hard work, the content ecosystem and business of Momo's main platform have begun to show a positive development trend. For the team, this difficult journey has given us valuable growth experience. I am very happy to see that we have finally come out of this temporary predicament and are able to firmly and better grasp future growth opportunities.”

Financial results for the fourth quarter of 2020

Net revenue

Net revenue for the fourth quarter of 2020 was $3,795.2 million (approximately US$581.6 million).

Momo's live streaming service revenue for the fourth quarter of 2020 was 2,327.9 million yuan (approximately US$356.8 million), a decrease of 31.2% compared with 3.383.5 billion yuan in the same period last year. The decline in live streaming service revenue is mainly due to structural reforms in the Momo main app live streaming business to revive the long-tail content ecosystem. At the same time, to a lesser extent, it is also due to the negative impact of the COVID-19 pandemic on the spending intentions of paying users, especially high-paying users. The increase in revenue from exploration live streaming services partially offset the pressure from these two factors. In the fourth quarter of 2020, exploration live streaming service revenue was 404.3 million yuan (approximately US$62 million).

Value-added business revenue reached 1,401.3 billion yuan (approximately US$214.8 million) in the fourth quarter of 2020, an increase of 17.8% over the previous year's 1,1891 million yuan. Value-added business revenue mainly includes virtual gift revenue and membership subscription service revenue. The increase in value-added business revenue is mainly due to the continuous growth of Momo's main app virtual gift business. This is due to continuous innovation in products and operations, as well as Momo's introduction of more payment solutions to enhance users' social entertainment experience.

Mobile marketing revenue for the fourth quarter of 2020 was 52.7 million yuan (about 8.1 million US dollars), and mobile game revenue for the fourth quarter of 2020 was 7.3 million yuan (about 1.1 million US dollars).

The net revenue of Momo's main app in the fourth quarter of 2020 decreased from 4,317.3 billion yuan in the fourth quarter of 2019 to 3,501.3 billion yuan (approximately US$467.6 million). This was mainly due to a decrease in net revenue from live streaming services, but the increase in net revenue from value-added services partially offset this impact. The net revenue explored in the fourth quarter of 2020 increased from 369.8 million yuan in the fourth quarter of 2019 to 740.5 million yuan (approximately US$113.5 million), mainly due to an increase in net revenue from live streaming services.

Costs and expenses

Costs and expenses for the fourth quarter of 2020 were 3.290 billion yuan (approximately US$504.2 million), a decrease of 8.1% compared with 3,581.1 billion yuan in the same period of the previous year. The reduction in costs and expenses was mainly due to:

1. Reduction in sharing with anchors providing live streaming services;

2. Reduction in professional expenses and broadband costs related to technical services;

3. Reduction in payment channel commissions.

These decreases were partially offset by an increase in the share of recipients of virtual gifts with virtual gift services.

In the fourth quarter of 2020, not measured in accordance with US GAAP, costs and expenses were $3,905.9 billion (approximately US$474.5 million), a decrease of 8.3% compared to the same period of the previous year.

Other operating profits

Other operating profit for the fourth quarter of 2020 was 88.4 million yuan (approximately US$13.5 million), compared to 142.6 million yuan in the same period of the previous year. Other operating profits are mainly composed of government subsidies.

Operating profit

Operating profit for the fourth quarter of 2020 was 593.6 million yuan (approximately US$91 million), compared with 1,249.4 billion yuan for the same period of the previous year. The operating profit of Momo's main app in the fourth quarter of 2020 was 650.9 million yuan (about 99.8 million US dollars), compared to 1,458.5 billion yuan in the same period of the previous year. The operating loss explored in the fourth quarter of 2020 was 53.1 million yuan (approximately US$8.1 million), compared with an operating loss of 202.7 million yuan for the same period last year.

Not measured in accordance with US GAAP, operating profit for the fourth quarter of 2020 was 787.7 million yuan (approximately US$120.7 million), compared to 1,455.7 million yuan for the same period of the previous year. Not measured in accordance with US GAAP, Momo's operating profit for the fourth quarter of 2020 was 791.8 million yuan (approximately US$121.4 million), compared to 1,593.9 million yuan for the same period of the previous year. Not measured in accordance with US GAAP, the operating loss explored in the fourth quarter of 2020 was 2.3 million yuan (about 400,000 US dollars), and the operating loss for the same period last year was 135 million yuan.

net profit

Net profit for the fourth quarter of 2020 was 651.1 million yuan (approximately US$99.8 million), compared with 1,052.3 million yuan for the same period of the previous year. The net profit of Momo's main app in the fourth quarter of 2020 was 705.8 million yuan (approximately US$108.2 million), compared to 1,246.9 million yuan for the same period of the previous year. The net loss explored in the fourth quarter of 2020 was $50.5 million (approximately US$7.7 million), compared with a net loss of 188.2 million yuan for the same period of the previous year.

Net profit not measured in accordance with US GAAP was $836.1 million (approximately US$128.1 million), compared to $1,248.9 million for the same period of the previous year. Not measured in accordance with US GAAP, Momo's net profit for the fourth quarter of 2020 was 846.7 million yuan (approximately US$129.8 million), compared to 1,382.3 million yuan for the same period of the previous year. Not measured in accordance with US GAAP, the net loss explored in the fourth quarter of 2020 was 8.8 million yuan (about 1.4 million US dollars), compared with a net loss of 130.2 million yuan for the same period of the previous year.

Net profit attributable to Momo's parent company

Net profit attributable to Momo's parent company in the fourth quarter of 2020 was 651.5 billion yuan (approximately US$99.8 million), compared to 1,0559 million yuan in the same period of the previous year.

Net profit attributable to Momo's parent company was 836.4 million yuan (approximately US$128.2 million), compared to 1,252.5 million yuan for the same period of the previous year.

Net profit per American Depositary Share (ADS)

Diluted net profit per American Depositary Share (ADS) share for the fourth quarter of 2020 was $2.98 (approximately $0.46), compared to $4.74 for the same period of the previous year. Excluding US GAAP, the diluted net profit per ADS share was $3.80 (approximately $0.58), compared to $5.61 for the same period of the previous year.

Cash and cash flow

As of December 31, 2020, Momo held cash, cash equivalents, time deposits, short-term deposits, and limited cash of $16.482.3 billion (approximately US$2,526 billion), compared to $15.225.3 billion as of December 31, 2019. Net cash from operating activities in the fourth quarter of 2020 was $1,0391 million (approximately US$159.2 million), compared to $1,675.1 million for the same period of the previous year.

2020 full year results

In 2020, Momo's net revenue reached 15.024.2 billion yuan (approximately US$2,302.6 billion), a year-on-year decrease of 11.7% compared with 17.0151 billion yuan in the same period of the previous year.

In 2020, net profit attributable to Momo's parent company was 2.103.5 billion yuan (approximately US$322.4 million), compared to 2,9709 million yuan in the same period of the previous year.

For the full year of 2020, net profit attributable to Momo's parent company was 2,896.2 billion yuan (approximately US$443.9 million), compared to 4.493.3 billion yuan for the same period of the previous year.

For 2020, the diluted net profit per American Depositary Share (ADS) share was $9.65 (approximately $1.48), compared to $13.52 for the same period of the previous year.

For the full year of 2020, not measured in accordance with US GAAP, diluted net profit per share of American Depositary Shares (ADS) was 13.16 yuan (approximately $2.02), compared to $20.26 for the same period of the previous year.

In 2020, net cash from operating activities was $3,080.9 million (approximately US$472.2 million), compared to $5.448.9 billion for the same period of the previous year.

Recent developments

Special cash dividend plan

Momo's board of directors announced a special cash dividend plan of $0.64 per ADS, or $0.32 per common share. These cash dividends will be paid on April 30, 2021 to shareholders who remain registered after the end of the trading day on April 13, 2021. The ex-dividend date is April 12, 2021. The total cash for this dispatch is approximately US$132 million, which will be paid in cash from the company's surplus.

Stock repurchase plan

On September 3, 2020, Momo's board of directors approved a share repurchase plan. Based on this plan, the company will repurchase up to 300 million US dollars of shares over the next 12 months. As of March 24, 2021, the company has repurchased approximately 3.61 million American Depositary Shares (ADS) on the open market based on this plan, totaling approximately US$49.2 million, with an average payment price of US$13.63 per share of American Depositary Shares (ADS).

Chief Technology Officer Resigns

Mr. Wang Chunlai will step down from the position of chief technology officer of the company due to personal reasons, which will officially take effect on April 30, 2021. At the same time, he will continue to serve the company as an advisor. The company is deeply grateful to Mr. Wang Chunlai for his valuable contributions over the past 9 years.

Performance outlook

The company expects net revenue for the first quarter of 2021 to be between RMB 3.36 billion and RMB 3.46 billion, a year-on-year decrease of 6.5% to 3.7%. This forecast takes into account the potential impact of the COVID-19 global outbreak and reflects the company's current initial views on the market and operating conditions, which may change, particularly the potential continuing impact of COVID-19 on the Chinese economy.

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