Hello Group Inc. 3Q 2025 Earnings Call - Overseas Growth Offsets Domestic Headwinds Amid Tax Scrutiny

Conference Operator: Ladies and gentlemen, thank you for standing by and welcome to the third quarter 2025 Hello Group Inc. earnings conference call. All participants are in a listen-only mode. There will be a presentation followed by a question-and-answer session. If you wish to ask a question, you’ll need to press the star key followed by the number one on your telephone keypad. Please note this conference is being recorded today. I would now like to hand the conference over to your first speaker today, Ms. Ashley Jing. Thank you. Please go ahead, ma’am.

Ashley Jing, Investor Relations, Hello Group: Thank you, Operator. Good morning and good evening, everyone. Thank you for joining us today for Hello Group’s third quarter 2025 earnings conference call. The company’s results were released earlier today and are available on the company’s IR website. On the call today are Mr. Tang Yan, CEO of the company, Ms. Zhang Sichuan, COO of the company, and Ms. Peng Hui, CFO of the company. We will discuss the company’s business operations and highlights, as well as the financials and guidance. We will all be available to answer your questions during the Q&A session that follows. Before we begin, I would like to remind you that this call may contain forward-looking statements made under the safe harbor provision of the Private Securities Litigation Reform Act of 1995.

Such statements are based on management’s current expectations and current market and operating conditions, and relate to events that involve known or unknown risks, uncertainties, and other factors, all of which are difficult to predict, and many of which are beyond the company’s control, which may cause the company’s actual results, performance, or achievements to differ materially from those in the forward-looking statements. Further information regarding this and other risks, uncertainties, and factors is included in the company’s filings with the U.S. Securities and Exchange Commission. The company does not undertake any obligation to update any forward-looking statements as a result of new information, future events, or otherwise, except as required under law. I will now pass the call over to our COO, Ms. Zhang Sichuan. Ms. Zhang, please.

Thank you. Hello, everyone. Thank you for joining our call. In Q3, our business faced some external challenges, but our team was able to respond proactively and achieve good results in both user and financial measures. Next, I will give you an update on execution of our strategic goals. Starting with the financial performance, for Q3 2025, total group revenue was RMB 2.65 billion, down 1% year-over-year. Domestic revenue reached RMB 2.12 billion, down 10% year-over-year, while overseas revenue was RMB 535 million, up 69% year-over-year. Adjusted operating income was RMB 404 million, down 11% from Q3 last year, with a margin of 15.2%. Our key priorities for 2025 include the following. For Momo, our goal is to maintain the productivity of this cash cow business with a healthy social ecosystem.

For Tantan, the goal is to improve its core dating experience and build an efficient business model that drives profitable growth. As for the new endeavors, our goal is to deepen our presence in the overseas market, enrich our brand portfolio, and build a long-term engine. And now, let me walk you through the details. First, on the Momo app, we believe that a healthy social ecosystem is the foundation of sustaining and stabilizing our cash cow business. Therefore, our product efforts are focused on optimizing the chat experience and creating better chat scenarios and tools for users. We fully rolled out the in-house developed AI greetings features in the first half of the year. Data shows that the reply rate of male users has increased as a result. It proves the team’s exploration on leveraging AI technologies to upgrade social chatting tools is practicable during the past year.

In Q3, we updated the AI chat assistant model based on earlier tests. By leveraging the platform’s corpus, the model was optimized to better align with users’ preferences and chatting style, thereby encouraging more users to adopt the AI chat assistant content suggestions during the ongoing conversations. We have increased exposure to this feature to improve its penetration rates on the platform, enabling more users to benefit from it. The optimization of the AI chat assistant model and its in-platform promotion has improved the female user’s experience, driving ongoing quarter-over-quarter increase in various user metrics such as number of two-way chats, the rates of in-depth chats, and user retention, etc. On the user acquisition front, we dynamically adjusted the channel budget allocation based on their ROI performance to ensure 100% ROI.

Over the past year, although the shift to a profit-oriented channel strategy brought the churn of large numbers of ultra-low-spending users, it improved the platform’s overall profitability by reducing user acquisition expenditure with negative returns. As of Q3, the impact of reduced channel investment on paying users had bottomed out. The multiple new gifting features we introduced in an audio-based scenario led by chat rooms drove a paying ratio increase, driving the number of paying users to increase by 200,000 quarter-over-quarter to 3.7 million in Q3. Although the reduction in user acquisition spending has led to a slight year-over-year decrease in overall user scale, Momo’s social fundamentals remain robust. Thanks to the product upgrades and the recommendation algorithm optimization, which has enhanced the user experience, user engagements continue to grow, building a healthy social ecosystem.

According to an independent report released by QuestMobile 2025 Male Consumer Market Insights in June, Momo, as a 40-year-old social brand, remains the top social choice for male users aged 30 to 40. This clearly shows that Momo has established strong brand loyalty among high-value users with substantial spending power. We believe this is a valuable asset that the company will continue to nurture and benefit from for years to come. Now, on the productivity of Momo’s cash cow business. In Q3, Momo’s value-added service revenue reached RMB 1.79 billion, down 11% year-over-year and 3% quarter-over-quarter.

As we indicated last quarter, the new tax requirements came out at the end of June, coupled with the local tax authorities’ inspections of agencies since Q3, have severely impacted the operational focus of some broadcasters and agencies on our platform, leading to a significant revenue decline in audio and video-based scenarios. To alleviate supply-side pressure, we rolled out a new revenue-sharing policy in August, providing appropriate subsidies to broadcasters and agencies that were severely affected by tax changes. The policy had some encouraging effects, but it couldn’t fully offset the negative impact from the tax scrutiny in the short term. Turning to Tantan, as of the end of Q3, Tantan has 0.7 million paying users, broadly in line with last quarter. The pressure on the paying ratio caused by last year’s product upgrade was fully released after the complete rollout of the pilot in Q2.

In Q3, the team drove a slight recovery in the paying ratio by adjusting the monetization strategy. Turning to Tantan’s financials, revenue from the onshore business in Q3 was RMB 150 million, down 15% year-over-year and 5% quarter-over-quarter. The revenue decrease was due to the decline in number of paying users, but ARPU significantly increased 25% year-over-year and 6% quarter-over-quarter. At the product level, we continue to refine our strategy on optimizing the experience for female users, which includes establishing a curated recommendation pool for newly registered female users to improve their swipe quality, and providing highly attractive female users with a more diverse male recommendation to enrich their matching options, and implementing an overheating protection mechanism to prevent excessive matches that may affect the depth of current interactions. For male users, we optimized back-end recommendation rules by adjusting their exposure concentrations.

Both enhancements in female user experience and male user recommendation algorithm have driven quarter-over-quarter growth in several key user metrics, such as day-one retention, average number of likes per user, and DAU among new users. At the monetization level, we introduced basic products such as an unlimited swipe privilege pack to fill the gap in low-tier membership offerings. Regarding the algorithm, we slightly adjusted the matching rate for high-potential paying users to improve their conversion to paying. In Q3, although our focus on acquiring higher-quality user groups led to a sequential increase in unit acquisition costs, the restructuring of our new membership system combined with the algorithm optimization drove ARPU growth, pushing Tantan’s channel ROI to a record high.

As a result, despite pressure on user scale and revenue, Tantan achieved significant year-on-year and quarter-on-quarter profit growth, creating more room for our dating products to exploration tailored to Asian users. Lastly, in overseas businesses, in Q3, revenue reached RMB 535 million, up 69% year-over-year and 21% quarter-over-quarter. Overseas revenue accounted for 20% of the group’s revenue, compared to 12% in the same period of last year. In Q3, overseas revenue growth mainly came from audio and video social products in the MENA region. Among them, YoHo and Ahlan continued to enhance product features by improving localized operations and strengthening product end partnerships, driving a steady increase in both the number of paying users and ARPU. On the user acquisition front, during the first half of the year, we observed a rapid rise in user acquisition costs while scaling up channel investments in new products.

So we slowed down our marketing efforts and tried to find a scalable solution that can also balance ROI. In Q3, our channel experiments showed initial success, so we moderately increased channel spending and accelerated revenue growth. Meanwhile, Soulchill, our largest audio-based social product in the MENA region, optimized its marketing strategy by increasing investment proportion in high-value countries, driving a substantial growth in both revenue and profit. Except for these three audio-based products, we have recently begun testing the expansion of audio and video-based social entertainment products into other high-app regions, such as the Gulf countries and Japan. We hope this effort will become our growth drivers for the group in the future. Beyond our audio-video social products in the MENA region, another key segment for our overseas business, the dating product line focused on developed markets, also delivers strong performance.

Tantan International returned to substantial growth for the first time in nearly a year. Following a full year of product adjustments and rebranding executed by our Singapore team, additionally, we completed the acquisition of a European dating product, Happn, at the end of Q3. Happn, founded in Paris, France, primarily leveraged location-based services to facilitate online to offline dating experiences for users. With Happn joining our portfolio, the group’s product landscape now officially extends to Europe, further enriching the diversity of our overseas dating products. We believe that the high-quality dating brands like Happn, which originated in the Western developed world, have significant growth potential in the Asia-Pacific region. In the past, these brands were constrained by limited resources and insufficient localization expertise, preventing them from fully realizing their potential in the Asia-Pacific region.

We hope that the combination of Hello Group and this brand will fully unleash that potential. We have enough patience and commitment to create a high-quality dating experience for young people in China and Asia. We are confident that these dating brands will inject new momentum into the group’s future. This concludes my remarks. Now, let me pass the call over to Cathy for the financial review. Thanks, Yan. Hello everyone. Thank you for joining our conference call today. Now, let me take you through the financial review. Total revenue for the third quarter of 2025 was RMB 2.65 billion, down 1% year-on-year but up 1% quarter-on-quarter. Non-GAAP net income attributable to the company was RMB 404.5 million, compared to RMB 493.3 million in the same period of 2024, and RMB 451.9 million in the previous quarter, excluding a one-off tax expense item.

Looking into the key revenue items for Q3, total revenue from value-added services for the third quarter of 2025 was 2.61 billion RMB, down 1% year-on-year but up 1% quarter-on-quarter. On a user geography basis, PRC mainland value-added services revenue was 2.08 billion RMB, down 11% year-over-year and 3% quarter-over-quarter. The decrease was primarily attributable to three factors. Number one, tax scrutiny on certain broadcasters and agencies, which distracted their operational focus. Number two, softened consumer sentiment driven by macro factors, and number three, a decline in paying users on Tantan. VAS overseas revenue came in at 533.1 million RMB, up 69% year-over-year and 21% quarter-over-quarter. The year-over-year and sequential growth was mainly driven by rapid expansion from multiple social entertainment as well as dating brands across our rich portfolio.

Turning to cost and expenses, Non-GAAP cost of revenue for the third quarter of 2025 was 1.65 billion RMB, compared to 1.62 billion RMB for the same period last year. Non-GAAP gross margin for the quarter was 37.6%, down 1.7 percentage points from the year-ago period. The decrease was primarily attributable to two factors. Number one, a deliberately higher payout ratio for the Momo business to ease supply-side pressure amid tax scrutiny. Number two, a structural revenue shift towards overseas markets, where payment channel costs represent a higher percentage of revenue. Non-GAAP R&D expenses for the third quarter were 170.6 million RMB, compared to 185.4 million RMB for the same period last year, representing an 8% decrease year-over-year. The decrease was attributed to personnel optimization. Non-GAAP R&D expenses as a percentage of revenue were 6%, compared with 7% from the year-ago period.

We ended the quarter with 1,354 employees, compared to 1,355 from a year ago. R&D personnel as a percentage of total employees for the group was 57%, compared to 61% from Q3 last year. Non-GAAP sales and marketing expenses for the third quarter were RMB 335.9 million, compared to RMB 350.1 million for the same period last year, both representing 13% of total revenue. The year-over-year increase in sales and marketing expenses was attributable to the ongoing cost control strategy for the PRC mainland businesses, where both Momo and Tantan narrowed their marketing spend. This decrease was partially offset by the increase in channel investment for the overseas apps. Non-GAAP G&A expenses were RMB 91.0 million for the third quarter, compared to RMB 85.2 million for the same quarter last year, both representing 3% of total revenue, respectively.

Non-GAAP operating income was 404.0 million RMB, with a margin of 15.2%, compared with 454.7 million RMB, with a margin of 17% from the same period last year. Non-GAAP OpEx as a percentage of total revenue was 23%, same as Q3 2024. Now, briefly on income tax expenses. Total income tax expenses were 69.0 million RMB for the quarter, with an effective tax rate of 14%. In Q3, the company accrued withholding income tax of 24.5 million RMB, which is 10% of undistributed profit generated by our royalties. Without withholding tax, our estimated non-GAAP effective tax rate was around 9% in the third quarter. Now, turning to balance sheet and cash flow items. As of September 30, 2025, Hello Group’s cash, cash equivalents, short-term deposits, long-term deposits, short-term investments, and restricted cash totaled 8.86 billion RMB, compared to 14.73 billion RMB as of December 31, 2024.

The decrease in cash reserves was primarily attributable to three factors. Number one, repayment of 4.41 billion RMB bank loans, including accrued interest. Number two, payment of special cash dividends totaling 346 million RMB to our shareholders in Q2, and number three, a one-off withholding tax payment of 356 million RMB in September, which was previously communicated during our last earnings call. Net cash provided by operating activities in the third quarter 2025 was 143.5 million RMB. The gap between operating cash flow and Non-GAAP net income was primarily attributable to the payment of the above-mentioned withholding tax. Lastly, on business outlook, we estimated our fourth quarter revenue to come in the range from 2.52 billion RMB to 2.62 billion RMB, representing a decrease of 4.4% to 0.6% year-on-year.

This is based on the assumption that on a year-over-year basis, revenue from our Mainland China business will decline by mid- to low-teens percentage-wise, while overseas revenue is expected to maintain a growth rate similar to that seen in Q3. Please be mindful that this forecast represents the company’s current and preliminary view on the market and operational conditions, which are subject to change. That concluded our prepared portion of today’s discussion. With that, let me turn the call back to Ashley to start Q&A. Ashley, please. Just a quick reminder before we take the questions. For those who can speak Chinese, please ask your questions in Chinese first, followed by English translations by yourself. Thank you. Operator, we’re ready to take questions. Thank you. If you wish to ask a question, please press star one on your telephone and wait for your name to be announced.

If you wish to cancel your request, please press star two. If you’re on a speakerphone, please pick up the handset to ask your question. Your first question comes from Thomas Chong with Jefferies. Please go ahead. 晚上好，谢谢管理层接受我的提问。刚刚管理层在发言中也提到，上季度为应对税务因素的话，对Momo供给侧做成的压力，公司适度调整了这个分层的政策。想问一下，目前看到这个调整的效果如何，对利润率的影响会有多大？另外想问一下，为什么没有听到其他友商提到类似的情况？如果按照刚才给的指引的话，Momo传联大概会有一个小时级的同比下滑。我们应该如何看待呢？现在这个现金流业务明年的收入的情况呢？谢谢。 Good evening. Thanks, Management, for taking my question. During the prepared remarks, Management highlights Momo is affected by the tax issue from the supply side and adjust the revenue sharing ratio. Can Management comment about the latest progress of the adjustment, and how should we think about the margin impact? On the other hand, can Management also provide some more color why our peers didn’t mention a similar issue? On the guidance we just given, there’s about a low teens year-on-year decline for Momo, so just for the full year. So how should we think about the revenue trend for this cash cow business as we come into 2026?

Thank you. 二季度末，税务机关出台了对这个灵活用工群体的相关税收调整，正式实施的时间是10月1号。对Momo平台而言，此次调整主要涉及到音视频场景中的一部分腰部主播和工会群体。文件颁布后，部分地方税务机关很快跟当地的工会就政策细节展开沟通，这导致了供给侧的这个工作积极性出现下滑。这是为什么平台在调整正式实施前就感受到了流水的压力。我们的主播和工会分成比例一直处于行业相对较低的水平，但是因为平台独特的社交属性，工会和主播愿意接受相对低的分成，也同样可以获得可观的收入。但这一特性也使他们在本次税务调整政策的调整中受到的影响相对更大，特别是一些中腰部主播。为了保证工会和主播的合理收益，我们在8月针对受税务影响比较大的供给侧群体推出了新的分成政策，这推动了9月流水环比7、8月小幅的回升。但是进入四季度，随着规则的正式实施和监管对工会税务合规的一个加强，我们观察到部分工会和主播受到进一步的影响。因此我们也加大了对工会的扶持力度，来部分对冲相应的影响。目前看到我们的让利会对今年下半年集团层面的毛利率产生一两个点的影响。收入层面，本来我们预计下半年国内收入的同比降幅可能会较上半年收窄，但从Q3的实际和我们Q4的指引来看，并没有如期实现。另外我想呼应一下刚才Sichuan的发言，Momo作为移动互联最早的社交产品之一，至今仍保持着旺盛的品牌生命力。在持续迭代的产品玩法和后台算法的协同驱动下，例如双向消息队、深度聊天率以及用户流程率这类核心的互动指标仍能实现稳步提升。从这个季度开始，在音视频聊天等新场景的带动下，我们的付费用户数也实现了稳步提升。这不仅反映出平台和用户之间持续强化的连接效率，也印证了Momo在陌生人社交生态中扎实的运营根基和场景创新能力。叠加利润导向的战略定位，团队行之有效的成本费用把控，让我们完全有信心Momo未来会为集团持续贡献可观的利润和经营性的现金流。具体的数字问题我会留给Cathy。 Okay, let me translate. At the end of Q2, tax authorities introduced policy adjustments related to the flexible workforce, which officially took effect on October 1st. For Momo, these adjustments primarily affect some mid-tier broadcasters and agencies in our audio and video-based scenarios. Shortly after the adjustments were announced, regional tax authorities in certain areas reached out to their local MCNs to clarify implementation details. This led to a noticeable decline in work enthusiasm among supply side, even before the adjustments were formally effective, resulting in revenue pressure for Momo App in the third quarter. Momo has maintained a relatively low revenue sharing ratio to broadcasters and agencies compared to our peers, thanks to our unique social attribute. Agencies and broadcasters were willing to accept this lower ratio while still making considerable income.

However, this very characteristic made them particularly vulnerable to these recent tax changes, and especially some mid-tier agencies. To protect the reasonable income level of our supply side partners, in August, we adjusted the revenue sharing policy for the groups mostly affected by the tax changes. This initiative led to a modest sequential revenue recovery in September compared to July and August. However, entering Q4, with the formal implementation of the tax policy adjustment and tightened regulatory oversight of the agency’s tax compliance, we have observed further pressure on certain agencies and broadcasters. To partially offset these impacts, we have further increased revenue sharing support for the supply side. These additional concessions are expected to reduce the group’s gross margin by approximately 1-2 percentage points in the second half of 2025.

On the revenue front, we had originally expected the year-on-year decline in the domestic revenue in the second half to narrow compared to the first half. However, based on the Q3 actual result and our Q4 current outlook, this improvement has not materialized to the extent anticipated. Furthermore, I would like to echo Six’s earlier remarks. As one of China’s earliest mobile social platforms, Momo has maintained strong brand vitality to this day, driven by continuous product innovation and back-end algorithm optimization. Core engagement metrics such as two-way messages, in-depth chat rates, and user retention have continued to improve steadily. In Q3, the launch of new scenarios, particularly audio and video chats, contributed to a steady increase in the number of paying users.

This not only reflects continuous improving connection efficiency between the platform and our users, but also validates Momo’s solid operational foundation and product innovation capabilities within this open social field. Coupled with our profit-oriented strategy and the team’s effective cost control, we are fully confident that Momo will continue to deliver meaningful profit and operating cash flow to the group. For specific figures, I will hand over to Cathy. Okay. I’ll look for 2026 for domestic business. Thomas, you’re right that based on our Q4 guidance for the full year 2025, our domestic business, including both Momo and Tantan, is on track for a low teens percentage decline versus 2024. At the beginning of 2025, we had expected that exit rate of year-over-year decline to narrow to somewhere around 10% or even slightly below 10%.

That didn’t happen because the tax scrutiny starting in Q3 had a meaningful negative impact on the supply side and therefore on revenue as well. That headwind was concentrated in the second half of 2025. In our guidance, we assume that the domestic business is going to exit 2025 with somewhere around 13% year-over-year decline. So if you take that exit rate, apply normal seasonality, and roll that forward throughout 2026, what you will likely see is that in the first half of 2026, domestic revenue will probably still show a similar mid to low teens year-over-year decline. As we move into the second half of 2026, the year-over-year decline is likely to naturally narrow down. That’s simply because the bulk of the negative tax-related impact hit the second half of 2025, creating an easier comp date for next year. So that’s the modeling perspective.

But remember that what math gives you is always going to be influenced one way or another by realities. And here are three fundamental factors I can highlight for you to adjust your model accordingly based on how you think realities will unfold in 2026. The first factor is always going to be platform fundamentals. On that front, both Momo and Tantan are in a much better position today. Momo’s paying user count, as you can see, after a prolonged period of decline, stabilized and grew in Q3. We expect that trend to continue into Q4. Much of that is driven by the long-tail use cases we’ve added, including one-to-one video and audio chats. Tantan, after spending the last couple of years improving user experience, is also moving in the right direction.

Fundamentally, the platforms are solid, and this is not where we see major risk as we head into 2026. Then comes the second important fundamental factor that you need to consider, which is macro and consumer sentiment. For domestic value-added service, the macro environment in China and overall consumer sentiment remain the biggest swing factors for us. If sentiment improves, we can outperform the seasonality-based model. If not, you would probably need to adjust estimates modestly downward. The third factor, as always, is regulatory and taxation environment. Operating and product-side regulations have been relatively stable for the past year. The near-term headwind is mostly concentrated on the taxation side. As we adjust payouts, agencies appear satisfied with the profit level they can retain on our platform. If that stability continues, we can be more constructive about the revenue trend in 2026.

So if you put everything all together, if you take the Q4 2025 exit rate of roughly 13% decline for domestic business and layer in normal seasonality, you would probably arrive at roughly 10% decline for full year 2026. Then, depending on macros, be it economic or regulatory, you would adjust that outlook up or down. That is what I can point to at this point about 2026. With that, back to Ashley to take the next question. Thank you. Operator, please take the next question. Thank you. Your next question comes from Jenny Wan from UBS. Please go ahead. 谢谢关丽芬的提问机会。那我的问题是关于海外业务的。我们三季度看到海外收入同比增长69%，是比我们上次财报会关丽芬给出的60%的增长也是要这个预期是要好一些的。那能否请关丽芬介绍一下是哪一部分的业务好预期？那对于四季度的指引，海外大概是70%的一个同比增长。能否麻烦你们拆分一下，这其中有多少是来自于我们原有业务的一个增长，多少是来自于新收购的Happn的一个并购因素？那按照这个趋势发展下去的话，我们该怎么看待明年海外增速的一个情况？那海外增速明年的话是否有机会完全对冲这个国内下滑的一个收入缺口？ So, thanks for taking my question. My question is regarding our overseas business. So, overseas revenue grew 69% year-over-year in the third quarter, ahead of management’s previous guidance of 60% growth. So, could you please walk us through which part of this outperformed expectations?

For the fourth quarter, we are guiding a 70% year-over-year growth in overseas revenue. So, could you please break down how much of this is driven by the organic business and how much is driven by the consolidation impact from the newly acquired Happn? Given Sichuan’s trajectory, how do we expect overseas growth next year? Is there a chance? Is it likely that overseas performance could fully offset the revenue decline in the domestic market? Thank you. 分析的海外业务，绝大部分的增量收入来自于中东北非地区的音频业务，尤其是Ahlan和Ahlan两款新产品的贡献。我们对于音视频出海业务的核心考核的标准是看ROI。今年年中，我们在加大投放力度的过程中发现渠道的投入产出比有所下滑，为此我们刻意缩减了投放预算，计划在降低单位成本或是提升ROI之后再重新启动加量投放。因此，我们也相应地降低了对音视频产品的收入要求。三季度，本地化团队通过持续优化产品玩法，深化供给侧的合作，推动ROI的增长，同时降低分成比例，实现了ROI的提升。因此，我们可以加大获客投入，带来增长的加速。除了中东地区的音视频产品外，三季度海外的约会产品也取得了不错的成绩。其中，探探在新加坡团队完成产品重塑后，启动了国际化的迁移工作。目前，迁移率符合预期，同时收入和利润都实现了近一年的首次企稳回升。对海外华人定制的产品玩法和UI设计给探探国际版深耕东南亚以及更广阔的海外市场奠定了基础。除此以外，我们一年前在日本推动的AI角色扮演的这个恋爱产品，在收入方面也取得了相当不错的进展。我们预计随着集团在模型上的不断进步，以及产品的不断成熟，这款产品为海外收入贡献的增量会越来越大。除了自研产品之外，我们在9月完成了对法国的约会品牌Happn的这个收购工作，对三季度的收入贡献比较小，但对四季度的海外业务确实有所贡献。那么至于明年的增速，也请Cathy跟大家分享一下。 Okay. So, in Q3, the vast majority of incremental revenue comes from the overseas business comes from audio and video-based products in the MENA region and driven primarily by the two new apps, Ahlan and Ahlan. Our core performance metric for the overseas audio and video-based business is the ROI. So, around mid-year, as we increase the marketing spend, channel ROI began to decline.

In response, we deliberately scaled back marketing investment and plan to resume more spending only after unit acquisition costs decrease or up and gross margin improve. Accordingly, we also moderated our near-term revenue expectations for these audio and video products. During Q3, the local team successfully drove ROI through continued product optimization and deeper supply-side partnerships while simultaneously lowering revenue sharing ratios. These efforts led to a clear improvement in ROI, which in turn has allowed us to step up user acquisition investment again and resulting in accelerating growth momentum. Beyond the audio-video products in MENA, our overseas dating portfolio also delivered solid performance in Q3. Notably, following the brand repositioning led by the Singapore team, Tantan International has begun migrating users to its refreshed international version.

The migration is progressing in line with our expectation, and both revenue and profit have stabilized and returned to growth for the first time in nearly a year. Product features and UI designs tailored specifically for overseas Chinese users have laid a strong foundation for Tantan International to deepen its presence in Southeast Asia and other global markets. Furthermore, the AI-powered role-playing dating app we launched in Japan a year ago has made significant revenue progress. We expect this contribution to overseas revenue to grow steadily as we continue upgrading the AI model and the product matures. On the M&A front, we completed the acquisition of the branch dating brand Happn in September. While its contribution to Q3 revenue was limited, it is expected to make a more meaningful impact on our Q4 overseas performance.

As for growth outlook for next year, I’ll hand it over to Cathy for more details. Sure. Let me take the more quantitative part of that question. As Tang Yan mentioned, our overseas portfolio today is fundamentally very different from what it was a year ago. Before getting into numbers, let me add a couple of quick points that investors may have overlooked. First thing I would like to call out is that our international growth strategy has become increasingly multi-pillar supported, both in terms of product mix and in terms of business model. From a product perspective, growth is no longer driven by one single engine. If you go back to the year 2024, the overseas business grew about 50% year-over-year, and almost all of that came from Soulchill alone. In 2025, we are on track to grow somewhere around 70%.

While Soulchill still contributed meaningfully, another significant growth driver for 2025 has actually been the non-Soulchill brands. That piece grew close to 400% year-over-year in 2025, becoming a major pillar of our overseas business. And from a business model perspective, we are also diversifying. The overseas business is increasingly driven by the dating and membership-based model in developed markets, which include overseas Tantan, Mirai Mind, which is our AI-powered dating app in Japan, Happn, and some other quality dating brands. As we move deeper into 2026, we expect the overseas portfolio to rest on almost three roughly equal-weighted pillars. One is Soulchill, the other is emerging social entertainment apps in developing markets, and the third pillar is going to be dating/membership brands in developed markets.

Now turning specifically to your question about whether overseas growth can offset domestic declines, I would say that if you look at the second half of 2025, at group level, we are seeing somewhere around 2% year-over-year decline. Were it not the tech scrutiny that hit the supply side hard, top line could have turned positive in Q4. At this time, I don’t have enough visibility to make that call for 2026 yet, but here are some high-level thoughts about different pieces within our overseas portfolio. Looking ahead, Soulchill will likely continue to grow, though probably at a slower percentage rate as the base gets larger. That said, I would say that there is a meaningful upside variable, and that is our push into live streaming and into wealthier Gulf markets. Historically, our strengths have been in Turkey and North Africa.

Success in the Gulf region and in live streaming could meaningfully influence Soulchill’s growth trajectory in 2026, potentially helping stabilize or even re-accelerate its growth rate. Non-Soulchill brands should continue to deliver very robust growth next year. Combined with the scaling of the dating/membership model, we expect these segments to become increasingly important contributors as we head toward 2026, and with that, back to Ashley for the next question. Operator, the next question, please. Thank you. Your next question comes from Leo Chiang from Deutsche Bank. Please go ahead. 谢谢关丽芬接受我的提问。我的问题是关于并购的。能否请关丽芬分享一下公司在并购方面的重点，会考虑哪些因素？例如行业、地域、收入、利润等，以及对于买回来的产品，我们是否会参与主动管理？ Let me translate myself. Thanks, Management, for taking my questions. My question is regarding the company’s M&A strategy. Can you ensure the key factors the company focuses on when doing M&A such as industry, geography, revenue, and profit? And for the suppliers, will the company accept the business management? Thank you. Leo, we didn’t quite get your question.

Can you repeat, please? Is that better now? Should I? Yeah, yeah. We can hear you better now. We actually heard most of the Chinese part, but the English translation was not quite clear. Okay. Okay. Yeah. So my question is regarding the company’s M&A strategy. Could Management share the key factors the company focuses on when doing M&A, such as industry, geography, revenue, and profit? And for the acquired products, will the company be actively involved in the business management? Thank you. Okay. Thank you. 自从2011年上线了第一个LBS的社交产品Momo，到现在14年的时间里，我们从早年专注中国市场，做大DAU的单一产品，发展到如今在国内外拥有10余个品牌，覆盖不同细分市场和用户团体的集团公司。除了自主研发以外，从2018年开始，并购也成为了我们扩展商业版图的一个重要方式。无论是自研还是并购，行业方面我们始终围绕着自己最擅长的社交加约会的领域。近年，由于国内市场增长逐渐放缓，我们把发展重心转向了海外市场，以寻求新的增长点。经过不到五年的时间，目前海外产品带来的增量收入已经基本可以弥补国内下降造成的缺口。我们对潜在并购标的并没有过于僵化的要求，但如果看我们目前收购的对象，有以下几个方面的共性。那么第一是我们能够理解并且认同产品和团队价值以及商业模式，且我们有信心能够通过集团的资源帮助它能够更好地发挥潜力。第二是我们对它要有持续盈利的能力有足够的信心。第三就是价格要合理。至于是否主动参与管理和管理的程度，每个标的会不太一样。如果原来的团队管得比我们要好的话，我们会放权给本地团队，我们来做一些支持性的工作。但如果本地需要我们深度参与，我们也很愿意投入。总的来说，我们对收购公司的参与度会因地制宜，不会墨守成规。 Okay. Let me translate. Since the launch of our first LBS-based social product Momo in 2011, our company has transformed from the past 14 years from a single product company focused on DAU growth in China market into a diversified group with more than a dozen brands. These brands cover a wide range of niche markets and user segments, both domestically and internationally.

In addition to organic development, acquisitions have been another key growth strategy since 2018. Whether through organic development or M&A, we have consistently stayed focused on our core strengths in the social and dating sector, and in recent years, as growth in the domestic market has slowed, we have shifted our strategic focus overseas to capture new growth drivers, and in less than five years, incremental revenue from overseas products has largely offset the decline in our domestic business. We do not have rigid criteria for M&A targets. However, looking at the acquisitions we have completed so far, they share several common characteristics. Firstly, we must fully understand and recognize the value of the product, the team, and the business model, and we must be confident that the group’s resources can help unlock greater potential, and second, we need strong confidence in that the target’s ability to achieve sustainable profitability.

And third, of course, the valuation must be reasonable. Regarding post-acquisition management and the degree of our involvement, it varies on a case-by-case basis. If the original team is better positioned to run the business than we are, we tend to delegate full authority to the local team while providing necessary support functions. And if the local team ever needs us to dive in deeper, we are more than happy to engage in hands-on daily management. So overall, our level of engagement with acquired companies is tailored to the specific circumstances rather than following a one-size-fits-all rule. So Leo, I hope we answered your question there. In the interest of time, operator, let’s just take one last question before we close the line. Thank you. Thank you. Your final question, it comes from Xueqing Zhang from CICC. Please go ahead. 谢谢关丽芬接受我提问。我的问题是关于利润率和股东回报的。那管理层之前分享过集团增长最快的海外音视频业务，毛利率是比国内要低的。那再加上Momo近期分成比例的调整，我们应该如何看待集团未来整体毛利率的水平？然后另外的话，海外很多项目目前也处于一个投入期，那这是否会意味着明年集团的利润水平会进一步下降，会影响到股东回报方面的决策吗？谢谢. Thanks, Management, for taking my question.

My question is about the profit margin and shareholder returns. Management previously mentioned that Fasty’s growing overseas audio and video-based social business has a lower growth margin compared to domestic one. Additionally, Momo recently adjusted its revenue sharing ratio. How should we view the overall growth margin going forward? More than many of our overseas initiatives are still in the investment phase. Does it imply that your profit margin may further decline next year? And will this impact decisions regarding shareholder returns? Thank you. Okay. Let me try to answer the margin and profitability question first. First, it’s still a little bit too early to be very prescriptive about 2026 margins. Our portfolio today is more diversified than in prior years, with products carrying very different margin profiles. I can share a few directional points that should help frame expectations.

Number one, on the domestic business, you are correct. Given what we saw in the second half of 2025, domestic gross margin will likely be down a couple of points. The exit rate is going to roll into 2026. On the operating expenses front, we do see room to further optimize so we can mitigate part of the pressure at the operating profit level. But with both revenue and gross margin trending lower, bottom line for domestic business will remain under downward pressure in 2026. Number two, for the overseas business, margins look different by product category. On a standalone basis, most overseas products are actually seeing stable or improving gross margins as they scale. The key factor is the mix. Social entertainment products carry lower margins due to payout and revenue share arrangements, while the subscription and dating business carry significantly higher gross margins with no payout component.

As these categories grow at different speeds, mix will be a bit hard to pin down at this point. Given these moving pieces, the most practical approach now is perhaps to anchor on the Q4 2025 exit level, which based on our guidance should be about 36%-37% adjusted gross margin. Some forces push it upward. Some forces push it downward. We’ll have clearer visibility after we complete our annual planning and can give you more specific color during our next earnings call. On the group-level profitability outlook, it’s true that we remain in an investment phase for our overseas business, but investment does not mean we are loosening our discipline. We continue to apply very strict ROI filters, and we will not pursue top-line growth by sacrificing profitability.

At this point, our expectation is that the overseas business will probably not be able to meaningfully offset the domestic profit pressure in 2026, but at the same time, it will not be a significant dragger on the group bottom line either, so overall, we do expect some compression in profitability next year, but largely from domestic business, not really overseas business, and finally, regarding dividends and shareholder return expectations, profitability. You’re right that profitability for a particular year is a factor in determining our cash dividend, but it is not the only factor. Apart from that, we also evaluate some other stuff, such as potential M&A requirements and strategic cash needs. The other thing is liquidity and repatriation capability from our onshore entities to the holding company, and then there is also always going to be the balance between cash dividends versus share repurchases consideration.

All of these elements would go into the board’s decision-making process. We will provide more clarity after we finalize our annual plan. But the guiding principle remains unchanged: maintaining a disciplined, balanced capital return framework while ensuring that we have the resources to invest in long-term growth. I guess that wraps up today’s call. I’m handing over to Ashley to close today’s speech. Well, thank you, everyone, for joining us today. So we’ll see you next year, and happy holidays. Bye. Thank you. That does conclude our conference for today. Thank you for participating. You may now disconnect.