Interpretation of Momo's financial report: Pan-entertainment eye-catching live streaming has become a new engine of revenue and profit

On March 7, 2017, Momo, a mobile LBS social platform, delivered its most eye-catching financial report since its listing, hitting record highs in terms of revenue, profit, business growth and active users.

On March 7, 2017, Momo, a mobile LBS social platform, delivered its most eye-catching financial report since its listing, hitting record highs in terms of revenue, profit, business growth and active users.

If there were any doubts about where Momo was going, then this financial report data shows that the video-centered business is becoming Momo's new revenue and profit growth engine. LBS-based social platforms and video-centered pan-entertainment platforms are demonstrating their synergistic and pulling effect-social has become the foundation of pan-entertainment, which in turn further promotes the establishment and maintenance of social relationships.

Momo's revenue and growth trend

financial report disclosure shows that in the fourth quarter, Momo's net revenue was US$246.1 million, a year-on-year increase of 524%. Net profit attributable to Momo was US$83.8 million, compared with US$6.1 million for the same period last year. Based on non-GAAP, net profit attributable to Momo was US$91.5 million, an increase of 674% compared with net profit of US$11.8 million in the same period last year.

For the entire fiscal year 2016, Momo's net revenue was US$553.1 million, a year-on-year increase of 313%. Net profit attributable to Momo was US$145.3 million, compared with US$13.7 million in fiscal 2015. Based on non-GAAP, net profit attributable to Momo was US$177 million, compared with US$31.1 million for fiscal year 2015.

1) Live broadcast revenue accounted for 79% of the total annual contribution of 2.6 billion yuan

. Momo's main business trend in 2016

, total revenue of US$246.1 million hit a record high, and net profit of US$83.8 million also hit a record high. The core business behind these two items-live broadcast also hit a record high in growth data and proportion.

In the fourth quarter, Momo's live broadcast business brought in revenue of US$194.8 million, accounting for 79% of the total revenue of US$246.1 million. For the whole year of 2016, the total revenue brought by live broadcast revenue reached US$376.90 million, or approximately RMB 2.60679 billion, accounting for more than 68% of total revenue, becoming the veritable largest source of revenue.

Momo has been making profits for five consecutive quarters since it was launched live broadcasts

. In fact, this business, which was launched in the third quarter of 2015, on the one hand, created a substantial increase in revenue, helping Momo achieve its first consecutive year of growth since its listing, achieving five consecutive quarters of positive profit growth.

On the other hand, the video business, with live streaming as its core, is becoming a lubricant for Momo's social relationships. Live streaming promotes the establishment of new social relationships, while also helping to further enhance user activity.

Financial report data shows that in addition to the significant increase in live broadcast revenue, Momo's other business revenue is also increasing accordingly. After experiencing a steady recovery in four quarters accompanied by live broadcast growth, the monthly active number surpassed the historical peak in early 2015 in the fourth quarter.

In the fourth quarter, Momo's mobile marketing revenue was US$19.7 million, revenue from value-added services such as members reached US$19.1 million, and mobile game revenue was US$11.3 million, up 29%, 31% and 45% year-on-year respectively.

As of December 31, 2016, Momo's monthly active users were 81.1 million. In the same period last year, Momo's monthly active users were 69.8 million, a year-on-year increase of 16.12%. Among them, the number of paid members has also increased accordingly. As of December 31, the number of Momo members was 3.5 million, compared with 2.9 million in the same period last year, a year-on-year increase of 20.7%.

Momo launched its live broadcast business to operate profit and cost trends.

2) Social and video display synergy. The next step is to overcome the user ceiling.

Regarding this performance answer sheet, Momo CEO Tang Yan believes that it proves the correctness of the direction. Tang Yan said these results all show that by optimizing existing social experiences and introducing new social and entertainment scenarios, Momo is moving in the right direction and gradually becoming a larger and more stable social entertainment platform.

However, the chairman and CEO of Momo Company believes that the significance of live broadcast is not only limited to financial results, but also the future prospects it shows. On the conference call, Tang Yan explained: "The platform live broadcast business is progressing smoothly and has become a strong company. A strong revenue and profit engine, but what is even more exciting is that we can gain synergy from the integration of video and social activities, and a huge opportunity to expand our user base by introducing entertainment content to the platform."

He showed a set of operating data that was not disclosed in the earnings report. According to Tang Yan, in the fourth quarter of 2016, the average usage time of Momo Daily Live users increased by more than 10% year-on-year. During the same period, the volume of platform relationships, an important indicator reflecting the stability and stickiness of social platform users, increased by 48% year-on-year.

Since the second half of 2016, the statement that "user dividends are close" has been widely discussed, that is, the difficulty of acquiring new users will continue to increase, and strengthening product operations and improving product experience will become the main task. Wang Li, co-founder and COO of Momo, once talked about this view in an exclusive interview with reporters. He believed that when Momo was founded five years ago, traffic had run out, and it was indeed time for intensive cultivation.

After achieving performance breakthroughs in live broadcasts, the Momo team further incorporated other elements of the video strategy into the social experience. At the end of August 2016, Momo tried to launch the Short Video service project "Moment." In the fourth quarter, another major revision of the product was carried out around "Moment", which adjusted "Moment" as an important function to the "Nearby" frame. The default homepage "People Near" swiped to the right to the "Moment" page. At the same time, operational efforts have also been stepped up to introduce more high-quality content. Momo revealed that in addition to nearby Short Video naturally shared, Momo has also gradually established a systematic recommendation mechanism to push more content produced by professional content producers, namely PUGC, to users.

In fact, Momo's move is not just about content creation itself, but also hopes to use anchors on the platform to more effectively establish a head Short Video content production mechanism. This is also the current peer approach in the video industry. Professional anchors build and maintain their fan base by creating and sharing Short Video, which will promote the generation of new users on the platform and the maintenance of inherent relationships.

Tang Yan also believes that LBS stranger relationship-based social networking and video-centered pan-entertainment are helping Momo establish synergy effects. He explained this as: anchors contribute high-quality content to Short Video, and Short Video in turn bring traffic to the live broadcast business.

What is important is that this synergy is entering a virtuous cycle, and in order to improve content quality and diversity, Momo is also cooperating with third-party content producers. The data also shows these attempts: the average daily viewing of Short Video increased eightfold in the fourth quarter and continued to rise rapidly in the first quarter of 2017.

The founder of Momo Company also showed his rare emotional moment during the earnings conference, which he called an "important milestone" in Momo's development. He also pointed out that the goal in the next stage is to further penetrate the target market and drive the continuous expansion of user scale.

It is worth noting that Momo currently has 81.1 million monthly active users. If it exceeds the 100 million mark with further growth, Momo will be expected to be among the two core indicators of social platforms: registered users and monthly active users., both exceeded the 100 million mark. According to Momo, there are currently more than 300 million registered users on the platform.

3) The pan-entertainment platform is taking shape in the future to explore the long tail effect of live broadcasts

. At the earnings conference in the third quarter of 2016, the company's CEO Tang Yan proposed to Momo the long-term vision of a "pan-social and pan-entertainment platform" for the first time, and said that he would explore in different fields based on Momo's core scenarios to achieve this long-term goal.

At present, Momo is accelerating the creation of a "pan-entertainment" platform through two aspects. On the one hand, it is to improve live broadcast operation and maintenance and experience; on the other hand, it is to explore the long tail effect of live broadcast.

In terms of live broadcast operation, maintenance and experience, there are three main aspects: 1) Establish a traffic allocation mechanism to ensure that all talented anchors, whether they are Internet celebrities who already have a large fan base or potential new anchors who want to start their careers here, have Opportunities to be exposed on the platform;2) Start to establish user-specific operating mechanisms to better protect paying users; 3) Based on AR technology, gesture special effects have been introduced. Anchors can make gestures to create certain animation effects in live broadcast rooms.

In terms of exploring the long-tail effect, we mainly generate content through live broadcasts, discover high-quality anchors, and build channels for career development and growth through platforms.

It can be exemplified by that in the fourth quarter, Momo held a year-end grand event around live broadcasts for the first time, inviting anchors to sit on the same stage with first-line stars, attracting anchor fans to attend, expanding social relationships from online to offline, and showing anchors The possibility of future development, such as Liu Yan and Li Yuchun, who were invited on the spot, were both "Internet celebrities" produced in their era. Now platforms like Momo have greatly reduced the entry threshold and competition mechanism. and broadened future possibilities.

On the other hand, Momo and Taihe Maitian also produced and released a collection of 12 original songs sung by some leading anchors, showing the possibilities of music development for talented anchors on Momo platform and driving the production of more high-quality content.

In fact, Momo's layout in the pan-entertainment industry chain does not stop there. Also in the fourth quarter, a "Momo Film" company whose legal representative is Tang Yan was registered and established. Momo is very likely to expand its business to the core of the pan-entertainment industry chain around live broadcasts.

Finally, Tang Yan talked about the goals for 2017. The general goal is to follow the established goal of "pan-social and pan-entertainment", explore more opportunities from the pan-social and pan-entertainment fields, promote further growth in core indicators such as revenue, profits and users, and deliver greater value and return on revenue for shareholders.

In terms of specific goals, we will further strengthen the polishing of video products at the product level, promote the video of the overall platform, enhance entertainment content, broaden Momo's usage scenarios, and lift the user ceiling.

Tang Yan also revealed that in terms of user expansion, the current number of Momo users is close to 300 million, but the previous recognition of live broadcast services and videos is not in line with the current status, and brand promotion will be strengthened in the second quarter of this year.

It is worth mentioning that this is also the first time Momo released pre-market earnings data in a year, and this quarter's earnings report has obviously been recognized by the capital market. Since the announcement of the financial report, Momo has been rising sharply at the beginning of the day. As of the close, it has increased by more than 12.74%. Its stock price has reached US$30 and its market value has reached US$5.825 billion.

In the second year after Momo was founded, Momo COO Wang Li talked with Tang Yan about the future and thought that it would be great to build a company with a market value of US$5 billion. Now, five years after Momo was founded, the market value goal has been achieved.

Will Momo become the next Chinese-listed company with a market value of US$10 billion?

Editor: yvette