Momo Inc, the mobile social networking platform, announced its unaudited financial results for the second quarter of 2017 on Aug. 22.
Momo Inc's net income reached $312 million in the second quarter of 2017, up 215 per cent from a year earlier, according to the financial report. Momo Inc's net profit was $60.8 million, compared with $15.4 million a year earlier. Not measured in accordance with US general accounting standards, the net profit attributed to Momo Inc in the second quarter of 2017 was 73.8 million US dollars, an increase of 218 percent over the same period last year, and continued to make a profit for 10 quarters.
In terms of the number of users, Momo Inc's latest monthly active users (MAU) reached 91.3 million, a record high. Compared with the same period last year, there was an increase of 22% compared with the same period last year. It was 7.2 per cent higher than the first quarter figure of 85.2 million.
On average, seven Wall Street analysts expect Momo Inc's diluted earnings per American depositary receipt (ADS) per share to be 31 cents per share in non-Non-GAAP terms, according to data compiled by Yahoo Finance. Momo Inc's earnings per ADS in the second quarter were 35 cents, higher than analysts' expectations, according to the financial report.
In addition, on average, seven Wall Street analysts expect Momo Inc's second-quarter revenue to reach $286.33 million. Momo Inc's second-quarter revenue was $312.2 million, higher than analysts' expectations, according to the financial report.
Affected by the news, Momo Inc's pre-market share price rose 3.7 per cent.
Summary of results for the first half of 2017
Net revenue in the first half reached $577 million, up 285 per cent from a year earlier.
Momo Inc's net profit was $142 million, compared with $22.5 million a year earlier. Not measured in accordance with US GAAP, Momo Inc's net profit in the first half of the year was $164 million, up 356 per cent from a year earlier.
Net diluted profit per American depositary share (ADS) was $0.69, compared with $0.11 in the same period the previous year. Net diluted profit per American depositary share (ADS), not measured in accordance with GAAP, was $0.80, compared with $0.18 a year earlier.
Executive comments
Momo Inc Chairman and CEO Tang Yan said, "I am very glad that the company has achieved excellent results again in the second quarter." Due to the expansion of the video content ecosystem, our number of users continues to accelerate. The use of short video service has ushered in a new milestone, and the revenue of live streaming service has reached a new high. More importantly, with the latest launch of Momo Inc's 8.0 version, we have carried out new exploration and innovation in the social and entertainment fields. We believe that these groundbreaking efforts will enable the company to seize new opportunities and inject long-term growth momentum into the company. "
CTO appointment
The company has recently appointed Wang Chunlai as its chief technology officer. Wang Chunlai served as Momo Inc's vice president of technology from April 2015 and as technical director from June 2014 to April 2015. From June 2013 to June 2014, in charge of Momo Inc's technical team. Since joining Momo Inc in February 2012, Wang Chunlai has been deeply involved in the construction of Momo Inc's important technical architecture. Prior to joining Momo Inc, Wang Chunlai worked as an engineer and senior engineer at NetEase, Inc from September 2010 to February 2012. From March 2009 to September 2010, he started a business with partners to provide semantic search services. Wang Chunlai received a master's degree in engineering from Peking University in June 2013 and a bachelor's degree from Beijing Jiaotong University in June 2009.
Attached: detailed financial results for the second quarter of 2017
Net revenue
Net revenue in the second quarter of 2017 was $312.2 million, up 215 per cent from $99 million in the same period the previous year.
The live streaming service continued its strong growth momentum, generating revenue of $259.4 million in the second quarter of 2017. The rapid growth in revenue from live streaming services is mainly due to the growth of paying users of live streaming services, which reached 4.1 million in the second quarter of 2017. In addition, the average income of paying users increased slightly each quarter.
Momo Inc's value-added business income reached US $24.6 million in the second quarter of 2017, up 58 per cent from US $15.6 million in the previous year. Momo Inc's value-added business includes member subscription service and virtual gift service. The year-on-year growth of Momo Inc's value-added business revenue is mainly due to the increase in the number of paying households and the growth of the average income of paying users, all of which are due to the fact that we provide users with richer value-added services. As of June 30, 2017, the number of Momo Inc members was 4.5 million, compared with 3.2 million in the same period of the previous year.
Mobile marketing revenue in the second quarter of 2017 was $19 million, up 15 per cent from $16.6 million in the same period a year earlier. The significant increase in mobile marketing revenue is due to an increase in sales of existing advertising inventory in the information flow advertising service.
Revenue from mobile games was $9.1 million in the second quarter of 2017, up 23% from $7.4 million in the same period last year. The growth of mobile game revenue is mainly due to the contribution of self-developed games, which uses gross revenue recognition for self-developed game companies.
Cost and expenditure
Costs and expenditures in the second quarter of 2017 were $246 million, an increase of 189 per cent from $85.2 million in the same period of the previous year. The increase in costs and expenditure is mainly due to:
1. Increase in share with anchors who provide live broadcast services and virtual gift services
2. The increase in marketing and promotion costs to enhance brand awareness, attract users and promote live streaming services.
3. Due to the increase in the total amount of online payment, the sharing cost of the third-party payment channel increases.
4. the increase of personnel-related costs such as equity incentive expenses, which is the result of the company's rapid expansion of its talent reserve.
5. The increase in infrastructure-related expenditure, such as broadband costs and server depreciation, is due to the introduction of more features by Momo Inc platform.
In the second quarter of 2017, costs and expenses, not measured in accordance with GAAP, were $233 million, up 201 per cent from $77.3 million in the same period of the previous year.
Other operating income
Other operating income was $7.6 million in the second quarter of 2017, a significant increase from $200000 in the same period the previous year. The increase in other operating income was mainly due to government subsidies received in the second quarter.
Operating profit
Operating profit was $73.7 million in the second quarter of 2017, compared with $14 million in the same period the previous year. Operating profit, not measured by GAAP, was $86.7 million, compared with $21.8 million in the same period last year.
Income tax expense
Income tax expenses were $13.9 million in the second quarter of 2017, up from $400000 in the same period of the previous year. The increase in income tax expenses is mainly due to the fact that the tax-exempt proportion of income tax expenses of the company's main profitability has changed from 100% to 50%.
Net profit
The net profit attributed to Momo Inc in the second quarter of 2017 was $60.8 million, compared with $15.4 million in the same period a year earlier. Not measured in accordance with US general accounting standards, the net profit attributed to Momo Inc was $73.8 million, compared with $23.2 million in the same period last year.
Net profit per American depositary share (ADS)
Net diluted profit per American depositary share (ADS) was 29 cents per share in the second quarter of 2017, compared with $.08 a year earlier. Net diluted profit per American depositary share (ADS), not measured in accordance with GAAP, was $0.35, compared with $0.12 a year earlier.
Cash and cash flow
As of June 30, 2017, Momo Inc had cash, cash equivalents and term deposits of US $846.3 million and US $651.3 million as of December 31, 2016. Net cash from operating activities was $108.1 million in the second quarter of 2017, compared with $42.6 million in the same period of the previous year.
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