Q: Can you discuss the outlook for Momo in the second half of the year and your strategy regarding AI applications? A: Momo's revenue saw sequential growth in Q2 due to seasonal recovery and stable consumer sentiment. The outlook for the second half depends on consumer sentiment and new tax regulations affecting agents and broadcasters. We are adjusting operational policies to maintain compliance and profitability. Regarding AI, we are integrating AI into social products to enhance user experience, particularly in icebreaking conversations. We have also launched a standalone AI chat app in Japan, which is performing well.
Q: Can you elaborate on the measures taken to mitigate the impact of Tantan's product upgrade on the paying ratio? A: The Tantan product upgrade improved user verification and profile information, enhancing user authenticity. We adopted a user classification approach to tailor exposure and monetization strategies. For high-paying potential users, we adjusted matching rates and pricing to improve conversion and ARPPU. We also developed membership packages based on city tiers. These efforts have helped drive organic user growth and retention.
Q: What is the sustainability of the strong overseas revenue growth, and what are your expectations for the second half? A: The overseas business has shown strong growth, driven by social entertainment and dating products. We are focusing on improving ARPU and optimizing acquisition costs. Although growth may slow slightly, we expect robust overall growth. The overseas dating business, including Tantan International, is performing well and will be a key growth driver. We anticipate overseas revenue growth of around 60% year over year in Q3.
Q: Can you provide more details on the withholding tax issue and its impact on profit margins? A: The tax authorities have determined that a 10% withholding tax rate should apply to dividends, rather than the 5% rate previously used. This is not unique to Hello Group and may affect other companies with similar structures. We are adjusting our accounting accordingly. Despite some near-term challenges, our annual margin profile remains stable, and we continue to exercise cost discipline while expanding overseas.
Q: How do you expect the group's revenue and profit margins to evolve in 2025? A: We anticipate a low teens year-over-year decline in domestic revenue, offset by strong overseas growth of around 70%. This implies that the group's top line could remain flat or slightly decline compared to 2024. Gross margins may be affected by increased payout ratios and business mix shifts. We expect adjusted gross margins to be closer to the lower end of our previous guidance range, with operating margins also at the lower end of our 13-14% guidance.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.