Momo Q3 's net profit increased by more than 10 times year-on-year, live broadcast revenue accounted for 69%

Momo Company announced its third-quarter 2016 financial report on November 8. As of September 30, net revenue reached US$157 million, a year-on-year increase of 319%. Net profit attributable to Momo was US$49.5 million, a year-on-year increase of 1182%, and it continued to be profitable for seven quarters.

Momo Company announced its third-quarter 2016 financial report on November 8. As of September 30, net revenue reached US$157 million, a year-on-year increase of 319%. Net profit attributable to Momo was US$49.5 million, a year-on-year increase of 1182%, and it continued to be profitable for seven quarters. This Chinese stock market, which once focused on "strangers social" and went public in the United States and was almost privatized and delisted six months later, is now full of energy at an amazing speed.

There is no doubt that Momo delivered the most eye-catching financial report since its listing. Whether it is revenue growth or main income, this mobile social platform, which started as a social networking company with strangers, shows its second spring to the outside world. The main reason is undoubtedly the opportunity of Mobile Live Video Broadcasting.

Live broadcast revenue grew rapidly, accounting for 69%

following the general trend of the first and second quarters. The most eye-catching revenue in Momo's third-quarter earnings report still came from the live broadcast business, which contributed US$108.6 million to Momo. Revenue, accounting for 69% of the total revenue of US$157 million, and the proportion continues to increase compared with 58% in the previous quarter. Moreover, compared with the live broadcast revenue of 57.9 million yuan in the second quarter, the revenue of this business in the third quarter almost doubled.

The second largest revenue business came from member subscriptions, with revenue of US$18.1 million, accounting for 11.5%; the third largest revenue source was mobile marketing, with revenue of US$17.7 million, accounting for 11.3%.

In addition to the financial report, the largest main revenue continued to exceed the sum of the second and third largest revenue, Momo's member revenue for this quarter also increased by US$2.5 million compared with the previous quarter, and the number of monthly active people was 77.4 million. It also increased by 2.6 million compared with the previous quarter, indicating that the live broadcast business has a significant impact on monthly activity growth and member services.

Momo launched its live broadcast business in September 2015, starting from elite live broadcasts, gradually opening up national live broadcasts, and then revised and upgraded its products, and continuously lowered the entry threshold for anchors. In the April 2016 update, the priority of Momo's "Live Broadcast" entrance was elevated to the position of the secondary main frame, marking that Momo officially launched its live broadcast business.

In addition, the growth of Momo monthly users may also be related to the launch of the "moment" of the Short Video function. In August this year, the revision of Momo 7.0 added the Short Video function "Moments". Users can upload Short Video ranging from ten seconds to tens of seconds in the dynamic, similar to the small videos in the WeChat circle of friends. Momo Chairman and CEO Tang Yan also talked about this content in the financial report. He said: "The live broadcast business remains the largest engine of continued growth in our revenue and profits. At the same time, we have made significant progress in building a platform strategy that combines video and social. We released the Short Video feature moment in August, and we are delighted to see that more and more users on the Momo platform realize that compared with text and picture-based content, videos provide a more realistic and immersive social and entertainment experience. By deeply integrating video elements into Momo's main social scenarios and providing users with more entertainment content, we can greatly expand Momo's core functions and gameplay, thereby raising the ceiling of potential user groups on the platform."

However, live streaming not only brings growth in revenue and active users, but the costs behind it are also staggering. According to Momo's financial report, costs and expenses in the third quarter of 2016 were US$120 million, an increase of 199% from US$40.1 million in the same period last year and an increase of 34.8 million yuan from 85.2 million yuan in the previous quarter. The increase in costs and expenses mainly focuses on the expenditure of live streaming services, such as: 1) anchor share and production costs;2) marketing expenses to promote live streaming services;3) payment channel fees caused by Live streaming tipping;4) broadband costs, etc.

Mobile marketing enters a stable period

. In Momo's third-quarter earnings report, mobile marketing revenue contributed US$17.7 million, an increase of 64% compared with US$10.8 million in the same period last year.

Momo also said that the significant increase in mobile marketing revenue was due to the increase in new customers and orders caused by the company's introduction of sales agents in the third quarter of 2015, and the increase in eCPM (Effective Thousands of People Display Fees) for information streaming advertising services.

Since 2016, the addition of hundreds of Mobile Live Video Broadcasting apps has made the entire industry mixed. In a seemingly serious bubble environment, leading companies can still easily earn a large amount of profits through rewards and shares. However, since September 2016, many leading live broadcast companies have low-key launched the pace of "commercialization", and Yingke's commercialization plan has even been circulated among the media and the industry. After the reward sharing, information will be used. The new commercialization model dominated by streaming advertising and open-screen advertising may spread to the entire industry.

In the early days of its launch (May 2016), Momo's live broadcast business insisted on using only the reward sharing model to make profits to avoid "damaging the user experience." However, half a year later, at the end of October, Momo carefully avoided the usual "plug-in advertising" on video websites, and started the advertising business in the form of video streaming, mainly targeting Momo's "nearby dynamics" and "friend dynamics". At present, many companies such as Budweiser Beer, Ctrip, Today's Headline, and Meizu have participated in the advertising.

However, compared with the previous rapid growth trend, Momo's growth rate in mobile marketing slowed down during the quarter. Officials explained that the reason was partially offset by weak demand from brand marketers. Previously, in the second quarter, Momo's mobile marketing revenue in the second quarter was US$16.6 million, an increase of 146% compared with US$6.7 million in the same period last year.

In fact, to a certain extent, it can also be seen that mobile marketing revenue has entered a period of stable growth. However, the "power" of mobile marketing may not have been really released. After all, in an interview with reporters before, Momo paid close attention to mobile marketing. The future is very important, and compared to Mobile Live Video Broadcasting, mobile marketing is more stable and is the metronome of Momo's commercialization.

Momo, a mobile game that looks beautiful and has a mediocre performance

and started out in social networking, was once considered to be able to compete with the Japanese social application Line. Line's 2015 annual financial report shows that its game business accounted for 40% of total revenue in 2015, and emoji revenue accounted for 24%. In fact, Momo is also committed to developing mobile games and paid emoticons business. Momo once had many more emoticons to choose from than WeChat. But since the emergence of the live broadcast business, people can no longer benchmark it against Line-at least based on the revenue size of each business segment.

Momo's new financial report showed that compared with the live broadcast revenue of US$108.6 million, mobile game revenue was US$9.3 million, a slight decrease from US$9.5 million in the same period last year. Mobile games that once looked beautiful have a slightly smaller revenue scale. As for the reason, Momo CFO Zhang Xiaosong said in an analyst conference call: We decided to reduce the jointly operated and released game business and refocused on self-developed and customized games. So in the next few quarters, our new game strategy will start to pay off, and the current trend in mobile game revenue will continue.

Six things that were not explicitly stated in the financial report

. After the third quarter financial report was announced, Momo Company Chairman and CEO Tang Yan attended an analyst conference call. At the meeting, Tang Yan not only explained Momo's future strategic vision, but also conducted data analysis on Momo's current situation and specific live broadcast business.

However, compared with previous public speeches, it is not difficult to find that Tang Yan had a few things that he did not say clearly during this conference call, which more reflects the present and future of Momo Company.

1) Momo has changed from an LBS social platform to a pan-entertainment and pan-social platform

. When talking about the future vision, Tang Yan said: My long-term vision for Momo is "pan-social and pan-entertainment in China." The industry plays a very important role."To this end, we will explore in different fields based on Momo's core scenarios to achieve our goals.

Tang Yan also said that in the past five years, Momo has started from a simple LBS function to help people discover and make new friends, and on this basis, through continuous innovation, has developed into a platform that includes many social and entertainment scenarios, including one-on-one and group chats, post sharing, and now live broadcast and Short videos functions.

2) User growth is achieved through product innovation and adheres to the video social strategy.

Secondly, in Tang Yan's speech, he also mentioned that user growth has always been Momo's most concerned concern at this stage, but user growth will be done through product innovation, and In the field of video social, it is achieved through "user awareness + product emphasis to the entry level".

At the analyst conference, Tang Yan said: We are very happy to see that more and more users on the Momo platform realize that video provides a more realistic and immersive social experience than text and picture-based content. In the next version update, we will consider raising the moment product to a more important entry-level position on the platform. On the one hand, based on Momo's social attributes, we will provide users with new interactive methods at all times. On the other hand, we will also provide anchors with tools to attract and maintain fans; in addition, we will also build a set of incentives and recommendation measures to support more high-quality UGC and PGC video content.

3) Momo platform live broadcast conversion rate of 20%

. Tang Yan also talked about the number of viewers of Momo's live broadcast. First of all, he said that Momo's independent live broadcast platform, Ha You Live Broadcast, already has millions of monthly live data, and secondly, he revealed The current live broadcast conversion rate on Momo platform.

Tang Yan said: The conversion rate for Momo platform's DAU turned into live broadcast users. Our rate in June was 13%, and by September our number had become 20%. Based on our observation of this momentum and our matching of the nature of platform users and live broadcast behavior, we feel that there is still a lot of room for improvement in this proportion.

"Judging from the payment situation, our payment situation in the second quarter was 1.3 million yuan, and in the third quarter it was 2.6 million yuan. Judging from the payment situation, we feel that we are still in the early stage of payment conversion. Judging from the situation of ARPPU, since our live broadcast service has only been launched for just six months, except for our routine monthly Hayou Star event that may help the improvement of ARPPU, we have not carried out other ARPPU over-development situations. It has not yet been carried out.”said the Momo chairman.

4) Momo's "head anchor" has a monthly revenue of more than 30,000 yuan, accounting for 40%-50% of the total revenue

. In addition, Tang Yan also disclosed the income of Momo's anchor for the first time at an analyst meeting. According to Tang Yan, in September, Momo platform had more than 30,000 "head anchors" last month, accounting for 40%-50% of total revenue. These people can be regarded as professional anchors.

"At the bottom of the other anchor pyramid, there are more than 400,000 anchors with monthly turnover of less than 1,000 yuan. This group of people is basically the existing user group of Momo platform, which is purely for social entertainment purposes. For this group of people, our view is that the focus is on participation rather than making money." Tang Yan introduced.

In addition, Tang Yan also said that judging from the consumption of Momo platform users, high-paying users who spend more than 5000 per month account for about half of our traffic.

5) How to lower the threshold for live broadcasting? Cooperation with operators

During the meeting, Tang Yan also talked about how to reduce the threshold and cost of live broadcasting. He said that after cooperating with China Unicom to launch the traffic package, the feedback was good and he would further think about how to use cooperation with operators to lower user live broadcasting threshold.

6) LBS will still be an important tactic for Momo's video social networking.

Tang Yan also revealed at the analyst meeting ways to use product innovation to drive user growth. For Momo, the core is to seize the advantages of LBS.

The Momo chairman said that in the updated version released on September 30, AR elements were injected into the function, and the technology based on Face Recognition added more interesting filters. In the same upgrade, we also launched a new "Nearby Video Stream" that summarizes all video stories posted by people nearby. These two updates brought a significant increase in the average daily upload and playback volume for Time in October.

However, Tang Yan said that he would also be cautious about the use of LBS. He said: "Since 'nearby people' is currently the most important traffic entry and usage scenario on the platform, we will be relatively cautious in this regard. algorithmically, our exposure mechanism will not only have a positive effect on the live broadcast service, but also improve the experience of the 'nearby people' list."

In addition, in terms of commercialization, Momo is trying to establish brand advertising channels and add video information streaming advertising to mobile marketing. If these two items go smoothly, Momo's main revenue method-mobile marketing-will contribute more to revenue in the next quarter.

How to use a beautiful report card to persuade the capital market to buy it?

Momo expects net revenue for the fourth quarter of 2016 to be between US$185 million and US$190 million, a year-on-year increase of 369% to 381%. Although the official has not estimated the growth forecast of the live broadcast business and its proportion in total revenue, in the next quarter, Momo's live broadcast business will rise with the growth of net revenue, which is a high probability event. Momo CEO Tang Yan said in a reply to an analyst conference call that the commercial realization of Momo's live broadcast business is "still in a relatively early stage." In his statement, Momo may need to redefine itself: We believe that as products continue to be updated, and when appropriate, we may have greater market behaviors to tell us users the attributes of the entire Momo platform, or It is the user's core gameplay has undergone fundamental changes. By this time, we will believe that the overall active users of the platform can also be greatly improved.

However, although the report card and future outlook are beautiful, the capital market does not seem to buy it. As of press time (0:15 a.m. Beijing time on November 9, and 11:15 a.m. Eastern time on November 8), Momo's share price unexpectedly fell by US$2.98 to US$23.74, with a market value of US$4.574 billion.

People's question may be: Momo, who started socializing and thrives on live broadcasting, where is the future moat?

Yien.com compiled and released it based on relevant reports from Sina Technology and PingWest

Editor: Nancy