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Momo Announces Unaudited Financial Results for the Second Quarter of 2018
BEIJING, Aug. 22, 2018 /PRNewswire/ -- Momo Inc. (NASDAQ: MOMO) ("Momo" or the "Company"), a leading mobile social networking platform in China, today announced its unaudited financial results for the second quarter of 2018. Second Quarter of 2018 Highlights
  • Net revenues increased 58% year over year to $494.3 million.
  • Net income attributable to Momo Inc. increased to $117.8 million in the second quarter of 2018 from $60.8 million in the same period last year.
  • Non-GAAP net income attributable to Momo Inc. (note 1) increased 90% to $140.2 million in the second quarter of 2018 from $73.8 million in the same period last year.
  • Diluted net income per American Depositary Share ("ADS") was $0.56, compared to $0.29 in the same period last year.
  • Non-GAAP diluted net income per ADS (note 1) was $0.66, compared to $0.35 in the same period last year.
  • Monthly Active Users ("MAU") on Momo application were 108.0 million in June 2018, compared to 91.3 million in June 2017.
  • Total paying users of our live video service and value-added service, without double counting the overlap, including 3.1 million paying users of Tantan in June 2018, were 11.6 million for the second quarter of 2018, compared to 7.1 million for the second quarter of 2017.
First Half of 2018 Highlights
  • Net revenues increased 61% year over year to $929.4 million for the first half of 2018.
  • Net income attributable to Momo Inc. was $247.7 million for the first half of 2018, compared with $142.0 million during the same period of 2017.
  • Non-GAAP net income attributable to Momo Inc. (note 1) was $282.4 million for the first half of 2018, compared with $164.5 million during the same period of 2017.
  • Diluted net income per ADS was $1.18 for the first half of 2018, compared with $0.69 during the same period of 2017.
  • Non-GAAP diluted income per ADS (note 1) was $1.35 for the first half of 2018, compared with $0.80 during the same period of 2017.
"I am glad that we delivered another solid quarter. Our community continued to grow with healthy engagement trends, thanks to our consistent endeavors to drive product innovation and content enrichment." Commented Yan Tang, Chairman and CEO of Momo. "Our live streaming business continued to grow robustly.  In addition, value-added service revenues for the Momo app more than doubled from a year ago, demonstrating Momo's monetization potential as a social platform. Tantan officially joined our family in the second quarter of 2018 and started to contribute to our social ecosystem and topline growth. Together we will be pushing forward our strategic priorities and solidifying our leadership in China's open social territory" Second Quarter of 2018 Financial Results Net revenues Total net revenues were $494.3 million in the second quarter of 2018, an increase of 58% from $312.2 million in the second quarter of 2017. Live video service revenues continued its growth momentum and the total live video service revenues were $411.0 million in the second quarter of 2018, an increase of 58% from $259.4 million during the same period of 2017. The rapid growth in live video revenues was contributed by the increase in the quarterly paying users, which was 4.6 million for the second quarter of 2018, as well as, the increase in the 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 $55.2 million in the second quarter of 2018, an increase of 124% from $24.6 million during the same period of 2017. The year over year increase was primarily attributable to the continuous growth of the virtual gift business on the Momo application and to a lesser extent, the consolidation of Tantan's membership subscription revenues for the single month of June 2018. The growth of the virtual gift business was driven by more paying use cases introduced to enhance the social experience for Momo users. Total paying users of the value-added service on Momo application was 5.3 million for the second quarter of 2018, compared with 4.5 million for the second quarter of 2017. As of June 30, 2018, Tantan has 3.1 million subscribers. Mobile marketing revenues were $22.3 million in the second quarter of 2018, an increase of 17% from $19.0 million during the same period of 2017. The growth in mobile marketing revenues was driven by improved sell-through of our existing advertisement inventories and the increased demand from brand marketers. Mobile games revenues were $5.5 million in the second quarter of 2018, a decrease of 40% from $9.1 million in the second quarter of 2017. The decrease in game revenues was mainly due to the decrease in the quarterly paying users. Cost and expenses Cost and expenses were $369.4 million in the second quarter of 2018, an increase of 50% from $246.0 million in the second quarter of 2017. The increase was primarily attributable to: (a) an increase in revenue sharing with the broadcasters related to our live video service and virtual gift recipients; (b) the production costs in connection with Phanta City, a TV variety show co-produced by the Company; (c) an increase in personnel related costs including share-based compensation expenses as a result of the Company's rapidly expanding talent pool; and (d) increased infrastructure related spending, such as short messaging service charges, bandwidth costs and server depreciation costs, driven by more functions introduced on Momo's platform; which was partially offset by a decrease in marketing and promotional expenses. Non-GAAP cost and expenses (note 1) were $346.5 million in the second quarter of 2018, an increase of 49% from $233.0 million during the same period last year. Other operating income Other operating income was $15.7 million in the second quarter of 2018, a significant increase from $7.6 million during the second quarter of 2017. The increase was mainly due to more government incentives received in the second quarter of 2018. Income from operations Income from operations was $140.6 million in the second quarter of 2018, compared to $73.7 million during the same period last year. Non-GAAP income from operations (note 1) was $163.4 million in the second quarter of 2018, compared to $86.7 million during the same period last year. Income tax expenses Income tax expenses were $31.1 million in the second quarter of 2018, increased from $13.9 million in the second quarter of 2017. The increase was mainly because we generated higher profit in the second quarter of 2018. Net income attributable to Momo Inc. Net income attributable to Momo Inc. was $117.8 million in the second quarter of 2018, compared to $60.8 million during the same period last year. Non-GAAP net income (note 1) attributable to Momo Inc. was $140.2 million in the second quarter of 2018, compared to $73.8 million during the same period last year. Net income per ADS Diluted net income per ADS was $0.56 in the second quarter of 2018, compared to $0.29 in the second quarter of 2017. Non-GAAP diluted net income per ADS (note 1) was $0.66 in the second quarter of 2018, compared to $0.35 in the second quarter of 2017. Cash and cash flow As of June 30, 2018, Momo's cash, cash equivalents, term deposits and restricted cash totaled $1,079.8 million, compared to $1,059.6 million as of December 31, 2017. Net cash provided by operating activities in the second quarter of 2018 was $155.7 million, compared to $108.1 million for the same quarter of 2017. First Half of 2018 Financial Results Net revenues for the first half of 2018 were $929.4 million, an increase of 61% from $577.5 million in the same period of 2017, primarily driven by the significant increase in net revenues from live video service, and value-added service. Net income attributable to Momo Inc. was $247.7 million in the first half of 2018, compared to $142.0 million during the same period of 2017. Non-GAAP net income attributable to Momo Inc. (note 1) was $282.4 million in the first half of 2018, compared to $164.5 million during the same period of 2017. Diluted net income per ADS was $1.18 during the first half of 2018, compared to $0.69 in the same period of 2017. Non-GAAP diluted net income per ADS (note 1) was $1.35 during the first half of 2018, compared to $0.80 in the same period of 2017. Net cash provided by operating activities was $285.7 million during the first half of 2018, compared to $203.4 million in the same period of 2017. Recent Development Completion of Offering of Convertible Senior Notes By July 30, 2018, the Company had completed the offering of $725.0 million in aggregate principal amount of convertible senior notes due 2025, including an exercised over-allotment option of $75.0 million principal amount of notes that the Company granted to the initial purchasers (the "Notes"). The Notes will bear interest at a rate of 1.25% per year, payable semiannually in arrears on January 1 and July 1 of each year, beginning on January 1, 2019. The Notes will mature on July 1, 2025, unless previously repurchased, redeemed or converted in accordance with their terms prior to such date. Holders of the Notes have the right to require us to repurchase for cash all or part of their notes on July 1, 2023 at a repurchase price equal to 100% of the principal amount of the notes to be repurchased, plus accrued and unpaid interest to, but excluding, the repurchase date. The Notes will be convertible into Momo's American depositary shares ("ADSs"), at the option of the holders, based on an initial conversion rate of 15.4776 of the Company's ADSs per US$1,000 principal amount of Notes (which is equivalent to an initial conversion price of approximately US$64.61 per ADS and represents an approximately 42.5% conversion premium over the closing trading price of the Company's ADSs on June 26, 2018, which was US$45.34 per ADS). Repayment of Long-term Bank Loan To facilitate the closing of our acquisition of 100% equity stake of Tantan Limited, we borrowed a bank loan facility from a domestic commercial bank in May 2018. Total amount of drawdown was US$300.0 million, with a fixed interest rate of 4.5% per annum and with a period of two years. We repaid the bank loan in July 2018. Business Outlook For the third quarter of 2018, the Company expects total net revenues to be between $525.0 million and $540.0 million, representing a year-over-year increase of 51% to 55% and a quarter-over-quarter increase of 13% to 17% on a constant currency basis. This forecast reflects the currency translation risks and assumes an average exchange rate of RMB 6.8055 to US$1.00. 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 acquisitions, and provision for income tax related to the amortization of intangible assets. 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 attributable to Momo Inc., and diluted earnings per ADS) is adjusted from the most comparable GAAP results to exclude share-based compensation, amortization of intangible assets from acquisitions, and provision for income tax related to the amortization of intangible assets. A limitation of using these non-GAAP financial measures is that share-based compensation, amortization of intangible assets from acquisitions and provision for income tax related to the amortization of intangible assets charge has 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. Conference Call Momo's management will host an earnings conference call on Wednesday, August 22, 2018 at 8:00 a.m. U.S. Eastern Time (8:00 p.m. Beijing / Hong Kong Time on August 22, 2018). 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 8:00 a.m. U.S. Eastern Time, August 29, 2018. The dial-in details for the replay are as follows:
International: +61-2-8199-0299
U.S. Toll Free: +1-855-452-5696
Passcode:   9585639
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. 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 third quarter of 2018.  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 second quarter of 2018 are preliminary, unaudited and subject to audit adjustment. In addition, we may not meet our financial outlook for the third quarter of 2018 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.    
Momo Inc.
Unaudited Condensed Consolidated Statement of Operations
(US dollars in thousands, except per share data)

Three months
First half year
ended June 30
ended June 30

2017
2018
2017
2018
Net revenues:







Live video service 259,417
410,977
471,994
782,473
Value-added service 24,636
55,221
47,503
92,212
Mobile marketing 19,018
22,264
36,907
40,973
Mobile games 9,143
5,454
20,704
12,101
Other services 10
354
354
1,640
Total net revenues 312,224
494,270
577,462
929,399
Cost and expenses:







Cost of revenues (150,668)
  (269,736)
(271,112)
(479,344)
Research and development (10,317)
(25,069)
(18,876)
(42,602)
Sales and marketing (69,084)
(54,553)
(103,081)
(98,895)
General and administrative (15,978)
(20,003)
(28,078)
(37,234)
Total cost and expenses (246,047)
(369,361)
(421,147)
(658,075)
Other operating income 7,569
15,692
8,474
16,779
Income from operations 73,746
140,601
164,789
288,103
Interest income 4,628
8,239
8,380
15,779
Interest expense -
(1,950)
-
(1,950)
Impairment loss on long-term investments (4,386)
-
(4,386)
-
Income before income tax and share of
    income on equity method investments
73,988
146,890
168,783
301,932
Income tax expenses (13,938)
(31,143)
(29,715)
(58,048)
Income before share of income on equity
    method investments
60,050
115,747
139,068
243,884
Share of income on equity method investments 514
1,692
2,697
2,971
Net income 60,564
117,439
141,765
246,855
Less: net loss attributable to non-controlling interest (198)
(340)
(205)
(808)
Net income attributable to Momo Inc. 60,762
117,779
141,970
247,663
  Net income per share attributable to ordinary 
   shareholders








Basic 0.15
0.29
0.36
0.62
Diluted 0.15
0.28
0.34
0.59
Weighted average shares used in calculating net
   income per ordinary share







Basic 394,579,193
405,737,852
392,220,292
402,388,870
Diluted 416,635,812
423,089,714
413,773,272
419,086,110












     






Momo Inc.
Unaudited Condensed Consolidated Statement of Comprehensive Income
(US dollars in thousands, except per share data)







Three months
First half year
ended June 30
ended June 30

2017
2018
2017
2018
Net income 60,564
117,439
141,765
246,855
Other comprehensive income(loss), net of tax of nil






Foreign currency translation adjustment 6,680
(50,756)
8,943
(24,002)
Comprehensive income 67,244
66,683
150,708
222,853
Less: comprehensive loss attributed to the non-
  controlling interest
(200)
(457)
(207)
(825)
Comprehensive income attributable to Momo Inc.
  shareholders
67,444
67,140
150,915
223,678
   
 
Momo Inc.
Unaudited Condensed Consolidated Balance Sheets
( US dollars in thousands)





December 31
June 30
2017 2018
Assets


Current assets


Cash and cash equivalents 685,827
306,255
Term deposits 373,794
416,360
Restricted cash -
357,139
Accounts receivable, net of allowance for doubtful
    accounts of $90 and $nil as of December 31, 2017 and 
    June 30, 2018, respectively
39,597
32,434
Prepaid expenses and other current assets 82,717
69,650
Amount due from related parties 5,143
2,030
Short-term investment 1,614
-
Total current assets 1,188,692
1,183,868
Property and equipment, net 39,762
48,189
Intangible assets 7,462
162,519
Rental deposits 2,651
2,955
Long term investments 44,337
62,357
Deferred tax assets, non-current 7,197
2,759
Other non-current assets 8,495
14,081
Goodwill 3,401
626,528
Total assets 1,301,997
2,103,256
Liabilities and equity


Current liabilities


Accounts payable 74,535
86,535
Deferred revenue 64,865
59,969
Accrued expenses and other current liabilities 87,809
102,151
Amount due to related parties 5,804
5,869
Income tax payable 27,033
13,213
Deferred consideration in connection with business
    acquisitions
-
74,131
Total current liabilities 260,046
341,868
Deferred tax liabilities, non-current 1,866
40,630
Bank loan -
300,000
Other non-current liabilities 2,305
3,989
Total liabilities 264,217
686,487
Shareholder's equity (Note a) 1,037,780
1,416,769
Total liabilities and shareholder's equity 1,301,997
2,103,256

Note a: As of June 30, 2018, the number of ordinary shares issued and outstanding was 408,975,956.
     
Momo Inc.
Unaudited Condensed Consolidated Statement of Cash Flows
( US dollars in thousands)



Three months
First half year

ended June 30
ended June 30

2017
2018
2017
2018
Cash flows from operating activities:






      Net income 60,564
117,439
141,765
246,855
      Adjustments to reconcile net income to net cash 
provided by operating activities:







Depreciation of property and equipment 2,463
5,505
4,585
10,459
Amortization of intangible assets 183
2,061
183
2,287
Share-based compensation 12,998
21,011
22,507
33,393
Share of income on equity method investments (514)
(1,692)
(2,697)
(2,971)
Impairment loss on long-term investments 4,386
-
4,386
-
Income on disposal of property and equipment (2)
-
(2)
-
Provision of allowance for doubtful accounts 85
(92)
85
(92)
Changes in operating assets and liabilities:






Accounts receivable (4,228)
1,742
(318)
10,121
Prepaid expenses and other current assets (8,041)
3,526
(12,616)
12,522
Amount due from related parties (176)
4,305
(513)
3,136
Rental deposits (271)
76
(1,440)
129
Deferred tax assets -
3,231
73
4,485
Other non-current assets (48)
(4,182)
(781)
(5,996)
Accounts payable 5,165
5,855
11,621
14,726
Income tax payable (1,754)
(4,403)
8,043
(14,639)
Deferred revenue 1,757
(4,035)
1,333
(9,322)
Accrued expenses and other current liabilities 34,208
5,998
25,276
(20,620)
Amount due to related parties 1,463
71
1,208
66
Deferred tax liability (46)
(515)
(46)
(571)
Other non-current liabilities (109)
(182)
793
1,683
Net cash provided by operating activities 108,083
155,719
203,445
285,651
Cash flows from investing activities:






Purchase of property and equipment (4,140)
(4,067)
(11,344)
(14,182)
Proceeds from disposal of property and equipment 3
-
7
1
Payment for long term investments (2,114)
(7,860)
(3,629)
(8,490)
Prepayment of long term investments -
-
-
(7,398)
Payment for acquired intangible assets (2,187)
-
(2,765)
-
Prepaid consideration for business acquisition -
-
-
(229,823)
Payment for business acquisition -
(285,096)
-
(285,096)
Purchase of term deposits (130,181)
(616,662)
(391,968)
(1,189,083)
Cash received on maturity of term deposits 79,502
758,853
384,109
1,133,945
Cash received from sales of short term investment -
-
-
1,653
Net cash used in investing activities (59,117)
(154,832)
(25,590)
(598,473)
Cash flows from financing activities:






      Proceeds from exercise of options 111
9
410
393
      Deferred payment of purchase of property and
equipment
(30)
(169)
(204)
(1,322)
Proceeds from bank loan -
300,000
-
300,000
Net cash provided by financing activities 81
299,840
206
299,071
Effect of exchange rate changes 5,342
(27,821)
7,463
(8,682)
Net increase(decrease)  in cash, cash equivalent, and
restricted cash
54,389
272,906
185,524
(22,433)
Cash, cash equivalent, and restricted cash at beginning of
period
388,699
390,488
257,564
685,827
Cash, cash equivalent, and restricted cash at end of period 443,088
663,394
443,088
663,394









     

  Momo Inc.
Reconciliation of Non-GAAP financial measures to comparable GAAP measures
(US dollars 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
ended June 30, 2017 ended June 30, 2018

GAAP
Adjustments
Non-
GAAP

GAAP
Adjustments
Non-
GAAP
Cost and operating expenses (246,047)
12,998 (a)
(233,049)
(369,361)
22,848 (b)
(346,513)
Income from operations 73,746
12,998 (a)
86,744
140,601
22,848 (b)
163,449
Net income attributable to
   Momo Inc.
60,762
12,998 (a)
73,760
117,779
 22,389 (b)(c)
140,168













First half year
First half year
ended June 30, 2017 ended June 30, 2018

GAAP
Adjustments
Non-
GAAP

GAAP
Adjustments
Non-
GAAP
Cost and operating expenses (421,147)
22,507 (d)
(398,640)
(658,075)
35,230 (e)
(622,845)
Income from operations 164,789
22,507 (d)
187,296
288,103
35,230 (e)
323,333
Net income attributable to
   Momo Inc.
141,970
22,507 (d)
164,477
247,663
 34,771 (e)(f)
282,434

Notes:

(a)   Adjustments to exclude share-based compensation of $12,998 from the unaudited condensed consolidated statements.
(b)   Adjustments to exclude share-based compensation of $21,011 and amortization of intangible assets from acquisitions of
        $1,837 from the unaudited condensed consolidated statements.
(c)    Adjustments to exclude the provision for income tax related to amortization of intangible assets from acquisitions of
        $459 from the unaudited condensed consolidated statements.
(d)   Adjustments to exclude share-based compensation of $22,507 from the unaudited condensed consolidated statements.
(e)   Adjustments to exclude share-based compensation of $33,393 and amortization of intangible assets from acquisitions of
        $1,837 from the unaudited condensed consolidated statements.
(f)    Adjustments to exclude the provision for income tax related to amortization of intangible assets from acquisitions of
        $459 from the unaudited condensed consolidated statements.
  Cision View original content:http://www.prnewswire.com/news-releases/momo-announces-unaudited-financial-results-for-the-second-quarter-of-2018-300700772.html SOURCE Momo Inc.