Inc. (MOMO 44.05, +5.10, +13.11%) is trading sharply higher today in early trading after reporting Q1
results this morning. The company operates Momo, one of China's largest
mobile-based social networking platforms that is similar to Tinder in the US.
Momo users can build relationships through private and group communication tools, content creation, and sharing functions, recreational activities such as gaming, as well as offline social activities. Momo offers a personal and lively way for users to discover people nearby and facilitates connection and content sharing with others. Momo features various location and interest-based features, including Nearby functions, live broadcast, and others.
The Momo app can be downloaded and used free of charge. MOMO generates revenue from the various services it offers on the Momo platform. Its core business is its dating app and it has been growing very quickly. MOMO has also been expanding in other areas, such as live video, mobile games, and music.
Currently, the company’s largest driver of revenue by far is its Momo Live Video Service, which launched in September 2015. This segment generates revenue when users purchase and send in-show virtual gifts to broadcasters. Initially, the service adopted an online live concert format whereby MOMO invited certain talented performers to put on live music shows in a professional studio environment. Such shows were broadcast live on a daily basis and at pre-announced times.
MOMO also has a Mobile Marketing Services unit, which provides advertising services to enable customers to develop ad campaigns and post ads on the Momo platform. MOMO also provides customers with analytical tools to help them to track and improve the effectiveness of their marketing campaigns. In terms of mobile gaming, MOMO's app offers games primarily developed by third-party developers. Games on its platform are designed with a variety of themes, cultural characteristics, and features to appeal to different segments of the game player community.
It's worth noting that MOMO recently closed on a large acquisition in May 2018. Momo acquired Tantan for about $600 mln in cash and stock. Tantan is a social and dating app in China for the young generation. With 5 billion matches and counting, Tantan has become a top choice for Chinese young singles trying to find love and relationships. Tantan's product strategy focuses on the customer experience of female users.
Turning to the Q1 results, non-GAAP income per ADS was $0.69, up 57% Year/year and well above market expectations. Revenue increased 64% year/year to $435.1 mln, which was a good bit above prior guidance of $387-402 mln. Monthly Active Users (MAU) were 103.3 mln in March 2018, compared to 85.2 mln in March 2017. In terms of guidance, MOMO sees Q2 revenue of $470-485 mln, which is well above market expectations.
Live video service revenue continued its momentum and the total live video service revenue came in at $371.5 mln, up 74.8% Year/year. Total paying users of its live video service and value-added service, without double counting the overlap, were 8.1 mln in 1Q18, up from 7.0 mln in 1Q17. Value-added service revenue mainly includes membership subscriptions and virtual gifts. The total value-added service revenue was $37.0 mln, up 62% Year/year. Mobile marketing revenue was $18.7 mln, up 5% Year/year.
Overall, management describes Q1 as a strong quarter and a great start to the year. Its community continued to grow in size and engagements despite the negative seasonality, thanks to the product and marketing initiatives taken in recent quarters. The content ecosystem continues to improve, driving robust organic growth momentum for live streaming business.
- OUR VIEW
- LEARNING CENTER