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Momo Inc. (Nasdaq:MOMO), a leading mobile social networking platform in China, today announced its unaudited financial results for the first quarter, 2015.
First Quarter 2015 Highlights
– Net revenues increased 383% year over year to $26.3 million, exceeding the Company’s guidance between $24 million and $26 million.
– Net income attributable to Momo Inc. was $6.7 million, compared to a net loss of $1.2 million for the same period last year.
– Non-GAAP net income attributable to Momo Inc. (note 1) was $9.4 million compared to a non-GAAP net loss of $0.3 million for the same period last year.
– Diluted net income per American Depositary Share (“ADS”) was $0.03, compared to a diluted net loss per ADS of $0.08 for the same period last year.
– Non-GAAP diluted net income per ADS (note 1) was $0.05, compared to a non-GAAP diluted net loss per ADS of $0.06 for the same period last year.
– Monthly Active Users (“MAU”)1 were 78.1 million in March 2015, an increase of 83% year over year.
“The first quarter of 2015 has been a fruitful quarter and a solid start to the year ahead of us. We continued to deliver strong topline growth and achieved profitability for the first time in our operating history.” Said Yan Tang, Chairman and CEO of Momo, “On the operational front, we stayed focused on executing in our key strategic areas. The size of our platform continued to expand and we are seeing our users engaging with the platform in an increasingly diversified way. With the launch of Momo 6.0 in April, we are taking a significant step forward toward our long term mission of enabling every Momo user to discover and connect to interesting people around them.”
First Quarter 2015 Financial Results
Net revenues
Total net revenues were $26.3 million in the first quarter of 2015, an increase of 383% from $5.4 million during the same quarter of 2014.
Membership subscription revenues were $13.0 million in the first quarter of 2015, an increase of 311% from $3.2 million during the same period of 2014. Members are Momo users who have paid the subscription fees for the membership services. The increase in membership subscription revenues was primarily driven by the significant growth in the number of Momo members, which was in turn driven by the Company’s growing user base. Momo members reached 3.1 million as of March 31, 2015, up from 1.3 million as of March 31, 2014.
Mobile games revenues were $6.1 million in the first quarter of 2015, an increase of 212% from $2.0 million during the first quarter of 2014. The increase in game revenues was mainly due to the increase in the number of games operated by the Company as well as the growing number of active game players on Momo’s platform, which was 6.2 million during the quarter.
Mobile marketing revenues were $6.0 million in the first quarter of 2015. Mobile marketing revenues for the same period last year were immaterial. The growth of mobile marketing revenues was powered by the Company’s strategic co-operations with Alibaba and 58.com, and to a lesser degree, the increase in revenues from the Company’s proprietary marketing services.
Revenues from other services, which mainly consisted of paid emoticons and revenues from our gifting services, was $1.1 million in the first quarter of 2015, a substantial increase from $0.3 million during the first quarter of 2014. The increase in other services revenues was primarily driven by the growth from paid emoticons as well as the launch of gifting services in the first quarter of 2015.
Cost and expenses
Costs and expenses were $21.4 million in the first quarter of 2015, an increase of 217% from $6.8 million during the same period last year. The increase was primarily attributable to: (a) an increase in personnel related costs including share-based compensation expenses as a result of the Company’s rapidly expanding talent pool; (b) an increase in marketing expenditures to enhance Momo’s brand awareness and promote games; (c) an increase in infrastructure related spending driven by strong traffic growth; and (d) increased fees to payment channels resulting from higher revenues.
Non-GAAP costs and expenses (note 1) were $18.7 million in the first quarter of 2015, an increase of 222% from $5.8 million during the same period last year.
Income from operations
Income from operations was $5.0 million in the first quarter of 2015, compared to a loss from operations of $1.3 million during the same period last year.
Non-GAAP income from operations (note 1) was $7.8 million in the first quarter of 2015, compared to a non-GAAP loss from operations of $0.4 million during the same period last year.
Net income
Net income attributable to Momo Inc. was $6.7 million in the first quarter of 2015, compared to a net loss of $1.2 million during the same period last year.
Non-GAAP net income (note 1) attributable to Momo Inc. was $9.4 million in the first quarter of 2015, compared to a non-GAAP net loss of $0.3 million during the same period last year.
Net income per ADS
Diluted net income per ADS was $0.03 in the first quarter of 2015, compared to a diluted net loss per ADS of $0.08 in the first quarter of 2014.
Non-GAAP diluted net income per ADS (note 1) was $0.05 in the first quarter of 2015 compared to a non-GAAP diluted net loss per ADS of $0.06 in the first quarter of 2014.
Cash and cash flow
As of March 31, 2015, Momo’s cash, cash equivalents and term deposits totaled US$452.0 million compared to US$451.0 million as of December 31, 2014. Net cash provided by operating activities in the first quarter of 2015 was US$8.7 million compared to US$1.4 million for the same quarter of 2014.
Recent Developments
In April 2015, the Company launched Momo 6.0. The new 6.0 version contains major upgrades including the replacement of the Nearby People List by Message Board as the default landing page. Message Board is a stream of pictures and posts by users who share similar interests, backgrounds, hometowns, colleges, professions and residential and work place information. The order in which posts are sorted on Message Board is defined by Momo’s proprietary algorithm, which is based on both physical proximity and the compatibility of user profiles. Nearby People List is now a secondary page under Discovery function. Momo 6.0 also introduced location and interest based virtual chat rooms where users can easily participate in group conversations that require no pre-approval to join.
Business Outlook
For the second quarter of 2015, the Company expects revenues to be between $31 million and $33 million, representing a year-over-year increase of 267% to 291%. These estimates reflect the Company’s current and preliminary view, which is subject to change.
