Momo Inc. (MOMO) is rallying today (+11%) to a new post-IPO high after reporting Q4 results this morning. In terms of background, you probably have heard the MOMO ticker but are not really sure what they do, so let's provide some quick context. MOMO is a mobile social networking platform in China. Momo's platform includes the Momo mobile dating app (similar to Tinder in the US) and a variety of related services.
Its core business is its dating app and it has been growing very quickly. However, MOMO has been expanding in other areas, such as live video, mobile games and music. A big part of this strategy is Momo Live, an interactive live concert service launched in September 2015. Its live video service ramped to revenue of $195 mln in Q4 with paying users reaching 3.5 mln. Live video opens up many doors for MOMO. For example, live video service is fundamentally changing the way people socialize. MOMO believes it's only at the beginning of a golden age where live video converges with social activities. MOMO is delving deeper into the space. Another high growth area is its mobile marketing segment.
Turning to the Q4 results, MOMO reported non-GAAP EPS of US$0.44, which was much better than market expectations. Revenue jumped 524% YoY to $246.1 mln, well above prior guidance of $185-190 mln.
Breaking it down by segment, its live video service, which was launched in 3Q15, continued its strong momentum and generated revenue of $194.8 mln in Q4, up from just $1 mln in the prior year period. The rapid growth in live video revenue is mainly because of the increase in paying users of live video service. Paying users of live video service for Q4 reached 3.5 mln.
Value-added service revenue mainly includes membership subscription revenues and virtual gift revenues, the latter of which MOMO launched in 4Q16 to enrich the communication experience among users. The total value-added service revenue came in at $19.1 mln, a 31% YoY increase due to an increase in average revenue per paying user, as more members bought the premium VIP package, and the increase in the total number of members.
Mobile marketing revenue came in at $19.7 mln, up 29% YoY. The significant growth in the mobile marketing business was 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. Mobile games revenue was $11.3 mln, up 45% YoY, driven by the contribution of a self-developed game.
In sum, this was a strong quarter for MOMO. After an EPS miss in Q3, MOMO responded with nice upside in Q4. MOMO is showing very impressive growth right now. This has pushed the stock to new post-IPO highs.