Dating and live-streaming platform Momo posted steady revenue and net profit growth in the third quarter, driven by a surge in virtual gift business, while dating subsidiary Tantan continued to leak money.
Why it matters: As China’s largest online dating platform, Momo has bolstered its product offering in recent years to boost growth, though not all have been well-received by regulators.
- Regulators summoned Momo executives in September to discuss data collection and privacy protection related to its deepfake app Zao, which went viral in China for its face-swapping functions.
Details: Net profit for the third quarter rose 22% year on year to RMB 4.45 billion ($623 million), with Momo contributing close to 93% of the total and Tantan accounting for 7%.
- Revenues from live video services grew 18% year on year to RMB 3.28 billion, driven by increased spending from different user groups.
- Value-added service revenues nearly doubled during the quarter to RMB 1.06 billion, mainly due to continued growth from Momo’s virtual gift business. Increased subscriptions on Tantan also contributed to revenue growth.
- Momo’s monthly active users (MAUs), which does not include Tantan, increased a modest 3% year on year to 114.1 million in September.
- Total paying users on the two dating apps reached 13.4 million, increasing by 7% year on year.
- Net income for the third quarter surged by more than half to reach RMB 893.9 million. Momo contributed RMB 1.11 billion of net income, rising nearly 29% year on year, while Tantan booked RMB 214 million in net losses.
- Momo expects total net revenues for the fourth quarter to rise between 18% and 20% on an annual basis to fall within a range of RMB 4.52 billion to RMB 4.62 billion.
Context: Momo fully acquired rival dating app Tantan for $600 million in February 2018.
- Both Momo and Tantan have faced heightened government scrutiny this year. Tantan was taken down from Apple’s China App Store and major third-party Android stores in April for sexually explicit content and was censured by regulators in June for similar violations shortly after its return.
- In May, both apps also issued announcements saying that they would suspend their location-based social newsfeed for a month to conduct self-regulation.