Momo Announces Unaudited Financial Results for the Third Quarter 2016
BEIJING, Nov. 08, 2016 (GLOBE NEWSWIRE) -- Momo Inc. (NASDAQ:MOMO) ("Momo" or the "Company"), a leading mobile social networking platform in China, today announced its unaudited financial results for the third quarter 2016.
Third Quarter 2016 Highlights
Net revenues increased 319% year over year to $157.0 million. Net income attributable to Momo Inc. increased to $39.0 million in the third quarter 2016 from a net loss of $0.8 million in the same period last year. Non-GAAP net income attributable to Momo Inc. (note 1) increased 1,182% to $49.5 million in the third quarter 2016 from $3.9 million in the same period last year. Diluted net income per American Depositary Share (“ADS”) was $0.19, compared to a diluted net loss per ADS of $0.00 in the same period last year. Non-GAAP diluted net income per ADS (note 1) was $0.24, compared to $0.02 in the same period last year. Monthly Active Users ("MAU")1 were 77.4 million in September 2016, compared to 73.0 million in September 2015. First Nine Months 2016 Highlights
Net revenues increased 225% year over year to $307.0 million for the first nine months of 2016. Net income attributable to Momo Inc. was $61.5 million for the first nine months of 2016, compared with $7.6 million during the same period of 2015. Non-GAAP net income attributable to Momo Inc. (note 1) was $85.4 million for the first nine months of 2016, compared with $19.3 million during the same period of 2015. Diluted net income per ADS was $0.30 for the first nine months of 2016, compared with $0.04 during the same period of 2015. Non-GAAP diluted income per ADS (note 1) was $0.42 for the first nine months of 2016, compared with $0.10 during the same period of 2015. “Q3 2016 was a remarkable quarter for us, with achievements on product innovations, business operations as well as financial results.” Commented Yan Tang, Chairman and CEO of Momo. "Live broadcasting business continued to gain traction and boosted the acceleration in revenue and profit growth. At the same time we are making good progress with our strategy to drive the convergence of video and social activities on our platform. We launched “Moments”, an interactive short video service in August. We are happy to see that an increasing number of users on our platform are realizing that video, as compared to text and graphic based content, delivers a more compelling and immersive social and entertainment experience. By deeply integrating video elements into every major social scenarios on Momo and providing more entertaining content to our users, we could substantially broaden the core use cases on Momo and raise the ceilings of our total addressable audience.”
Third Quarter 2016 Financial Results
Net revenues
Total net revenues were $157.0 million in the third quarter of 2016, an increase of 319% from $37.5 million in the third quarter of 2015.
Live video service, which was launched in the third quarter of 2015, continued its strong momentum and generated revenues of $108.6 million in the third quarter of 2016. The rapid growth in live video revenues is mainly because of the increase in paying users of live video service. Paying users of live video service for the third quarter of 2016 reached 2.6 million.
Membership subscription revenues were $18.1 million in the third quarter of 2016, an increase of 13% from $16.0 million during the same period of 2015. The year over year increase in membership subscription revenues was primarily driven by: (a) the increase in average revenues per paying user, as more members bought our premium VIP package; and (b) the increase in the total number of members. Momo members were 3.4 million and 3.3 million as of September 30, 2016 and 2015, respectively.
Mobile marketing revenues were $17.7 million in the third quarter of 2016, an increase of 64% from $10.8 million during the same period of 2015. The significant growth in mobile marketing business was driven by more new customers and orders introduced by sales agents engaged since the third quarter of 2015, as well as the increase of eCPM (effective cost per mille) of the in feed advertisement service.
Mobile games revenues were $9.3 million in the third quarter of 2016, a decrease of 2% from $9.5 million during the third quarter of 2015. The decrease in game revenues was mainly due to that a lesser number of popular games was available on Momo’s platform in the third quarter 2016 as compared with the third quarter of 2015.
Cost and expenses
Cost and expenses were $120.0 million in the third quarter of 2016, an increase of 199% from $40.1 million in the third quarter of 2015. The increase was primarily attributable to: (a) an increase in revenue sharing with the broadcasters related to our live video service; (b) an increase in personnel related costs including share-based compensation expenses as a result of the Company’s rapidly expanding talent pool; (c) an increase in fees to payment channels resulting from higher volume of cash collection through such channels; d) increase in marketing and promotional expenses to expand service accessibility and attract live video service and other services users; and (e) increased infrastructure related spending, such as bandwidth costs and server depreciation costs, driven by more functions introduced on Momo’s platform.
Non-GAAP cost and expenses (note 1) were $109.5 million in the third quarter of 2016, an increase of 209% from $35.4 million during the same period last year.
Income (loss) from operations
Income from operations was $37.2 million in the third quarter of 2016, compared to a loss of $2.5 million during the same period last year.
Non-GAAP income from operations (note 1) was $47.7 million in the third quarter of 2016, compared to $2.2 million during the same period last year.
Net income
Net income attributable to Momo Inc. was $39.0 million in the third quarter of 2016, compared to a net loss of $0.8 million during the same period last year.
Non-GAAP net income (note 1) attributable to Momo Inc. was $49.5 million in the third quarter of 2016, compared to $3.9 million during the same period last year.
Net income per ADS
Diluted net income per ADS was $0.19 in the third quarter of 2016, compared to a diluted net loss per ADS of $0.00 in the third quarter of 2015.
Non-GAAP diluted net income per ADS (note 1) was $0.24 in the third quarter of 2016, compared to $0.02 in the third quarter of 2015.
Cash and cash flow
As of September 30, 2016, Momo’s cash, cash equivalents and term deposits totaled $560.6 million compared to $469.5 million as of December 31, 2015. Net cash provided by operating activities in the third quarter of 2016 was $62.9 million compared to $7.5 million for the same quarter of 2015.
F irst Nine Months 2016 Financial Results
Net revenues for the first nine months of 2016 were $307.0 million, an increase of 225% from $94.5 million in the same period of 2015, primarily driven by the significant increase in net revenues from live video service, mobile marketing business, and membership subscription.
Net income attributable to Momo Inc. was $61.5 million in the first nine months of 2016, compared to $7.6 million during the same period of 2015.
Non-GAAP net income attributable to Momo Inc. (note 1) was $85.4 million in the first nine months of 2016, compared to $19.3 million during the same period of 2015.
Diluted net income per ADS was $0.30 during the first nine months of 2016, compared to $0.04 in the same period of 2015.
Non-GAAP diluted net income per ADS (note 1) was $0.42 during the first nine months of 2016, compared to $0.10 in the same period of 2015.
Net cash provided by operating activities was $111.1 million during the first nine months of 2016, compared with $25.5 million during the same period of 2015.
Business Outlook
For the fourth quarter of 2016, the Company expects total net revenues to be between $185 million and $190 million, representing a year-over-year increase of 369% to 381%. 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.
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. A limitation of using these non-GAAP financial measures is that share-based compensation 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 Tuesday, November 8, 2016 at 8:00 a.m. U.S. Eastern Time (9:00 p.m. Beijing / Hong Kong Time on November 8, 2016).
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
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, November 16, 2016. The dial-in details for the replay are as follows:
International: +61-2-8199 0299
U.S. Toll Free: +1 855 452 5696
Passcode: 97430159
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, the Hani 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. For more information, please visit http://ir.immomo.com .
For investor and media inquiries, please contact:
Momo Inc.
Investor Relations
Phone: +86-10-5731-0538
Email: [email protected]
Christensen In China
Mr. Christian Arnell
Phone: +86-10-5900-1548
E-mail: [email protected]
In US
Ms. Linda Bergkamp
Phone: +1-480-614-3004
Email: [email protected]
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 unaudited results for the third quarter of 2016, our management quotes and our financial outlook for the fourth quarter of 2016.
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 third quarter of 2016 are preliminary, unaudited and subject to audit adjustment. In addition, we may not meet our financial outlook for the fourth quarter of 2016 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.
1 MAU during a given calendar month is defined as Momo users who accessed the Momo platform through Momo mobile application and utilized any of the functions on the Momo platform for at least one day during the 30-day period counting back from the last day of such calendar month. The active users on Hani, the Company’s stand-alone live video application, were not included in the MAU disclosed herein.
Momo Inc. Unaudited Condensed Consolidated Statement of Operations (US dollars in thousands, except per share data) Three months First nine months Ended September 30 ended September 30 2015 2016 2015 2016 Net revenues: Live video service 212 108,595 212 182,085 Membership subscription 16,002 18,074 43,857 48,536 Mobile marketing 10,777 17,682 23,554 46,609 Mobile games 9,499 9,284 23,307 24,154 Other services 986 3,411 3,596 5,596 Total net revenues 37,476 157,046 94,526 306,980 Cost and expenses: Cost of revenues (8,580 ) (68,762 ) (20,518 ) (131,244 ) Research and development (6,046 ) (8,987 ) (16,742 ) (23,666 ) Sales and marketing (18,673 ) (29,876 ) (40,278 ) (68,778 ) General and administrative (6,802 ) (12,378 ) (15,404 ) (27,626 ) Total cost and expenses (40,101 ) (120,003 ) (92,942 ) (251,314 ) Other operating income 170 155 559 463 (Loss) Income from operations (2,455 ) 37,198 2,143 56,129 Interest income 1,750 1,975 5,730 5,455 Impairment loss on long-term investments - - - (306 ) (Loss) Income before income tax and share of income on equity method investments (705 ) 39,173 7,873 61,278 Income tax expenses 23 (1,048 ) (161 ) (1,954 ) (Loss) Income before share of income on equity method investments (682 ) 38,125 7,712 59,324 Share of (loss) income on equity method investments (156 ) 879 (146 ) 2,143 Net (loss) income attributable to Momo Inc. (838 ) 39,004 7,566 61,467 Net (loss) income per share attributable to ordinary shareholders Basic (0.00 ) 0.10 0.02 0.16 Diluted (0.00 ) 0.10 0.02 0.15 Weighted average shares used in calculating net income per ordinary share Basic 352,330,072 386,338,146 339,152,726 373,564,700 Diluted 352,330,072 409,603,891 402,555,176 405,049,516
Momo Inc. Unaudited Condensed Consolidated Statement of Comprehensive Income (US dollars in thousands, except per share data) Three months First nine months ended September 30 ended September 30 2015 2016 2015 2016 Net (loss) income attributable to Momo Inc. (838 ) 39,004 7,566 61,467 Other comprehensive loss, net of tax of nil Foreign currency translation adjustment (1,927 ) (444 ) (1,848 ) (3,305 ) Comprehensive (loss) income attribut able to Momo Inc. shareholders (2,765 ) 38,560 5,718 58,162
Momo Inc. Unaudited Condensed Consolidated Balance Sheets ( US dollars in thousands) December 31 September 30 2015 2016 Assets Current assets Cash and cash equivalents 169,469 246,006 Term deposits 300,000 314,592 Accounts receivable, net of allowance for doubtful accounts of $nil and $nil as of December 31, 2015 and September 30, 2016, respectively 14,896 26,496 Prepaid expenses and other current assets 18,297 26,935 Amount due from related parties 1,175 492 Total current assets 503,837 614,521 Property and equipment, net 16,259 14,956 Rental deposits 743 929 Long term investments 19,318 34,082 Other non-current assets 2,000 - Total assets 542,157 664,488 Liabilities and equity Current liabilities Accounts payable 10,445 30,745 Deferred revenue 28,274 39,356 Accrued expenses and other current liabilities 26,694 35,197 Amount due to related parties 6,532 7,005 Total current liabilities 71,945 112,303 Other non-current liabilities 1,826 1,363 Total liabilities 73,771 113,666 Shareholder’s equity (Note a) 468,386 550,822 Total liabilities and shareholder’s equity 542,157 664,488
Note a: As of September 30, 2016, the number of ordinary shares issued and outstanding was 388,306,897.
Momo Inc. Unaudited Condensed Consolidated Statement of Cash Flows (US dollars in thousands) Three months First nine months Ended September 30 ended September 30 2015 2016 2015 2016 Cash flows from operating activities: Net (loss) income attributable to Momo Inc. (838 ) 39,004 7,566 61,467 Adjustments to reconcile net (loss) income to net cash provided by operating activities: Depreciation of property and equipment 1,798 2,137 4,569 6,248 Share-based compensation 4,700 10,512 11,695 23,972 Investing loss (income) 156 (879 ) 146 (2,143 ) Impairment loss on long-term investments - - - 306 Loss on disposal of property and equipment - 1 5 6 Changes in operating assets and liabilities: Accounts receivable (319 ) (5,050 ) (10,418 ) (12,172 ) Prepaid expenses and other current assets (1,557 ) (7,107 ) (11,733 ) (9,076 ) Amount due from related parties 873 786 (909 ) 646 Rental deposits 59 (61 ) 662 (208 ) Accounts payable 1,254 7,230 4,766 20,739 Deferred revenue 3,704 6,535 9,668 12,012 Accrued expenses and other current liabilities (2,183 ) 9,623 7,358 9,253 Amount due to related parties 27 301 175 480 Other non-current liabilities (154 ) (154 ) 1,982 (462 ) Net cash provided by operating activities 7,520 62,878 25,532 111,068 Cash flows from investing activities: Purchase of property and equipment (4,854 ) (2,471 ) (10,221 ) (4,986 ) Proceeds from disposal of property and equipment - 1 - 39 Payment for long term investments (8,644 ) (3,001 ) (15,879 ) (11,530 ) Prepayment of long term investments - - (806 ) - Purchase of term deposits (100,000 ) (60,501 ) (450,000 ) (379,878 ) Cash received on maturity of term deposits 150,000 50,000 150,000 365,313 Net cash provided by (used in) investing activities 36,502 (15,972 ) (326,906 ) (31,042 ) Cash flows from financing activities: Proceeds from exercise of options 101 170 263 308 Deferred payment of purchase of property and equipment - (26 ) - (319 ) Payment for IPO costs - - (2,634 ) - Net cash provided by (used in) financing activities 101 144 (2,371 ) (11 ) Effect of exchange rate on cash and cash equivalents (1,628 ) (478 ) (1,589 ) (3,478 ) Net increase (decrease) in cash and cash equivalents 42,495 46,572 (305,334 ) 76,537 Cash and cash equivalent at beginning of period 103,139 199,434 450,968 169,469 Cash and cash equivalent at end of period 145,634 246,006 145,634 246,006
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, (loss) income from operations, and net (loss) income to comparable GAAP measures. Three months Three months ended September 30, 2015 ended September 30, 2016 GAAP Adjustments Non-GAAP GAAP Adjustments Non-GAAP Cost and operating expenses (40,101 ) 4,700 (a) (35,401 ) (120,003 ) 10,512 (b) (109,491 ) (Loss) income from operations (2,455 ) 4,700 (a) 2,245 37,198 10,512 (b) 47,710 Net (loss) income attributable to Momo Inc. (838 ) 4,700 (a) 3,862 39,004 10,512 (b) 49,516 First nine months First nine months ended September 30, 2015 ended September 30, 2016 GAAP Adjustments Non-GAAP GAAP Adjustments Non-GAAP Cost and operating expenses (92,942 ) 11,695 (c) (81,247 ) (251,314 ) 23,972 (d) (227,342 ) Income from operations 2,143 11,695 (c) 13,838 56,129 23,972 (d) 80,101 Net income attributable to Momo Inc. 7,566 11,695 (c) 19,261 61,467 23,972 (d) 85,439
Notes:
(a) Adjustments to exclude share-based compensation of $4,700 from the unaudited condensed consolidated statements.
(b) Adjustments to exclude share-based compensation of $10,512 from the unaudited condensed consolidated statements.
(c) Adjustments to exclude share-based compensation of $11,695 from the unaudited condensed consolidated statements.
(d) Adjustments to exclude share-based compensation of $23,972 from the unaudited condensed consolidated statements.
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