Momo, China’s top location-based social networking app, has continued last year’s growth feat with the announcement of an outstanding performance for the past year. The company, backed by Alibaba, listed on NASDAQ in December 2014.

The firm’s revenue recorded a significant 524% YOY jump to US$ 246.1 million USD in Q4 last year, while the annual revenue soared 313% YOY to US$ 553.1 million USD. Momo reported a non-GAAP earning per share of 0.44$ in Q4 and 0.87$ for the whole year.

Momo’s monthly active users bounced to 81.1 million in December 2016 from 69.8 million, rebounding to exceed its historical peak from back in early 2015. This is some amazing improvement after the company began seeing stagnant active user growth in H2 2015.

Previously, Momo cited smartphone sales and software updates as the reason for the stagnation.

From LBS dating app to social platform

Momo is certainly not aiming to become a live streaming company even the business now represents nearly 80% of its revenue. Rather, the company has evolved from a simple location-based feature that helps people discover new relationships. It is now a platform that accommodates a variety of different social and entertainment use cases, including one-to-one communications, group chatting, postings in various formats, and of course, live broadcasting and short videos.

Live streaming drives growth

Momo has been recording profits for eight consecutive quarters, but 2016 is the real start point for its rocketing growth. Like many of the social networking services in China, live streaming became the most significant propeller for its business, generating US$ 194.8 million revenue in Q4 2016.  Add to the platform in Q3 2015, live streaming has taken a larger and larger share of Momo’s revenue stream, up to almost 80%.

Coupling a younger user base with the culture of the platform, paying users picked up quickly. Momo says that in Q4 2016, they had 3.5 million paying live stream users.

Virtual gift-based live video streaming has been highly profitable in China. Momo’s live video streaming business is adopting a similar commercialization model where the platform enables viewers to buy virtual gifts for singers, splitting the gains with the company.

“We believe we are still early in the monetization process and have many opportunities to drive further growth year… In 2016, we have primarily relied on converting existing Momo users onto the live streaming service. In December 2016, the service covered around 23% of the daily active users for the main application. In 2017, we plan to expand the user acquisition effort beyond the Momo platform,” said company CEO Tang Yan in the earnings conference call.

Momo-Q4

Momo 2016 revenue break down (unit: 10k USD) (Image credit: Sina Tech)

Social networking, marketing, and gaming

The rest of the annual revenue was primarily derived from membership and gifting on their social network as well as marketing and gaming, both on mobile.

Value-added service revenues from their social network, which totaled 19.1 million USD in Q4 2016, mainly include membership subscription revenues and virtual gift revenues. The firm cites the increase of premium VIP users and total users as well as virtual gift service as the reason.

Mobile marketing revenues recorded a 29% YOY growth to $19.7 million in Q4 2016, mainly driven by more new customers and orders introduced by sales agents, as well as the increase of eCPM (effective cost per mille) of the in-feed advertisement service.

Momo’s mobile gaming unit has been growing quickly thanks to several big titles like hard-core game Momo Craft and Momo Fight the Landlord. The company is gradually retreating from game publishing joint operations to focus on in-house developed games in 2016. The effect of this strategy is evident that the company’s mobile games revenues surged 45% YOY to $11.3 million in Q4 2016.