20-F: Hello Group Inc. Reports Financials for Fiscal Year 2025

Hello Group Inc. disclosed its financial performance for the fiscal year ended December 31, 2025, highlighting revenue shifts and strategic adjustments impacting net income.

Summary

• Hello Group Inc. reported total net revenues of RMB10,367.1 million (US$1,482.5 million) for the fiscal year ended December 31, 2025, a decrease from RMB10,563.0 million in 2024 and RMB12,002.3 million in 2023.
• Value-added services, which include virtual gifts and membership subscriptions, accounted for 98.5% of net revenues in 2025.
• Net income for 2025 was RMB806.5 million (US$115.3 million), a decrease from RMB1,039.6 million in 2024 and RMB1,951.7 million in 2023.
• The decrease in net income was primarily attributed to lower revenues from Momo and Tantan apps in China, partially offset by growth in overseas markets.
• Research and development expenses decreased by 3.1% to RMB779.4 million (US$111.5 million) in 2025, while sales and marketing expenses increased by 2.9% to RMB1,368.7 million (US$195.7 million).
• The company completed acquisitions in Japan and Europe during 2025, contributing to the growth in overseas revenue.

Sentiment

Score: 3

Explanation: StockSavvy.ai views this filing as negative due to the continued decline in revenues and net income, despite strategic acquisitions and cost management efforts. The decrease in paying users on the core Momo platform is a significant concern.

Positives

• Revenue from overseas markets significantly increased, accounting for 19.3% of total net revenues in 2025, up from 11.1% in 2024.
• The company completed strategic acquisitions in Japan and Europe, expanding its global presence.
• Cost of revenues remained stable year-over-year, despite revenue declines, indicating cost management efforts.
• Research and development expenses decreased, potentially indicating improved efficiency or a shift in strategic focus.
• The company maintained effective internal controls over financial reporting as attested by its independent registered public accounting firm.

Negatives

• Total net revenues decreased for the second consecutive year, falling to RMB10,367.1 million in 2025.
• Net income saw a significant decline, dropping to RMB806.5 million in 2025 from RMB1,039.6 million in 2024 and RMB1,951.7 million in 2023.
• The number of paying users on the Momo app continued to decrease, falling to 3.9 million in Q4 2025 from 5.7 million in Q4 2024.
• Sales and marketing expenses increased despite revenue declines, suggesting potential inefficiencies in user acquisition or market penetration.
• The company faces ongoing risks related to its VIE structure and PRC regulations, which could materially impact its operations and financial performance.

Risks

• The company's reliance on contractual arrangements with VIEs in China carries significant legal and regulatory risks, including potential penalties or forced relinquishment of operations if these arrangements are deemed non-compliant with PRC laws.
• Future actions by the Chinese government could affect the enforceability of contractual arrangements with VIEs, impacting financial performance.
• The company's ADSs could be prohibited from trading in the U.S. under the HFCAA if the PCAOB is unable to inspect auditors in China for two consecutive years.
• Intensified government regulations in China's internet industry could restrict user traffic, spending, and market opportunities.
• The company faces risks related to cybersecurity, data privacy, and compliance with evolving Chinese and international laws in these areas.
• Negative publicity, user misconduct, and misuse of the platform could adversely impact the company's brand image and reputation.
• The company's business is subject to economic downturns, changes in international trade policies, and geopolitical tensions.
• The company believes it was a Passive Foreign Investment Company (PFIC) for U.S. federal income tax purposes for the taxable year ended December 31, 2025, which could result in adverse tax consequences for U.S. Holders.
• The company's dual-class voting structure concentrates significant voting power in the hands of its co-founder, potentially limiting the influence of other shareholders.
• The company's operations are subject to the complex and evolving regulatory environment in China, including potential changes in laws related to foreign investment, anti-monopoly, and data security.

Future Outlook

The company's future outlook is influenced by its ability to navigate regulatory changes in China, grow its international user base, and effectively monetize its services. Strategic investments in technology and potential acquisitions are expected to shape future growth, while cost management and user engagement remain key focus areas.

Management Comments

• The decrease in Momo's paying users in 2025 was primarily due to our strategic emphasis on profitability, which resulted in a reduction in the acquisition of low-paying users with negative ROI, which is conducive to enhancing profitability.
• Value-added services have consistently accounted for the vast majority of our net revenues, contributing 98.5% in 2023, 98.6% in 2024, and 98.5% in 2025.
• Our research and development expenditures primarily consist of salaries and benefits, including share-based compensation expenses, for research and development personnel, technological service fee, depreciation and rental expenses associated with research and development activities.

Industry Context

StockSavvy.ai notes that Hello Group's financial performance reflects broader trends in the social networking and dating app industry, particularly the challenges of user acquisition costs, evolving monetization strategies, and the increasing importance of international markets. The company's strategic shift towards profitability, as evidenced by the decrease in Momo's paying users, aligns with industry pressures to optimize user acquisition spending.

Comparison to Industry Standards

• Hello Group's revenue decline in its core Chinese market mirrors challenges faced by other social media platforms in China due to regulatory shifts and increased competition.
• The company's successful expansion into overseas markets, particularly in the Middle East and North Africa and Europe, aligns with the industry trend of global diversification for social and dating platforms.
• The increase in sales and marketing expenses, despite revenue declines, suggests a competitive landscape where user acquisition remains a significant cost driver, a common theme across the industry.
• The company's focus on value-added services, particularly virtual gifting and subscriptions, is a standard monetization model within the social entertainment and dating app sector, as seen with competitors like Bilibili and Match Group.

Corporate Governance

Legal Proceedings

• The company is not currently a party to any material legal or administrative proceedings but may be subject to various legal or administrative claims and proceedings in the ordinary course of business.
• The company has been involved in disputes relating to refunding users' spouses for funds consumed by users for virtual items, which the company believes to be groundless.

Related Party Transactions

• The Group provided loans totaling RMB21.5 million (US$3.1 million) to a subsidiary of an investee, which became a related party in November 2025. The loans bear interest at 2.59% per annum and are repayable within one year.
• The Group paid RMB179.0 million in 2023 and RMB2.9 million in early 2024 to a subsidiary of an investee for revenue sharing related to live video services before the disposal of the investment in the parent company.

Stakeholder Impact

• Shareholders may experience dilution of their holdings due to the company's share incentive plans and potential future share issuances.
• Investors in ADSs may face challenges in protecting their interests due to differences in corporate law between the Cayman Islands and the United States.
• U.S. Holders of ADSs or ordinary shares may face adverse U.S. federal income tax consequences if the company is classified as a Passive Foreign Investment Company (PFIC).
• The company's reliance on dividends from its Chinese mainland subsidiaries for cash requirements could be impacted by PRC regulations, potentially affecting its ability to pay dividends to shareholders.
• Changes in PRC regulations, particularly those related to VIE structures, cybersecurity, and data privacy, could materially affect the company's operations and the value of its securities, impacting all stakeholders.

Next Steps

• Continue to invest in research and development to improve platform features and user experience.
• Focus on growing the user base and enhancing user engagement, particularly in overseas markets.
• Continue to optimize channel marketing investment strategies and control costs.
• Evaluate opportunities for strategic alliances and acquisitions.
• Manage capital allocation to balance strategic objectives, investment returns, and shareholder value, while being mindful of PFIC status implications.

Key Dates

Recommendation

While the company is expanding internationally and managing costs, the continued decline in revenue and net income, coupled with the decrease in paying users on its core Momo platform, warrants a cautious approach. The ongoing regulatory uncertainties in China and the potential PFIC classification for U.S. investors add further risk. A 'hold' recommendation reflects a balance between the company's growth potential in new markets and the significant headwinds in its core business and operating environment.

Keywords

Hello Group Inc., Form 20-F, SEC Filing, Annual Report, Financial Results, Revenue, Net Income, Momo, Tantan, Virtual Gifts, Membership Subscription, Overseas Markets, Acquisitions, VIE Structure, PRC Regulations, Cybersecurity, Data Privacy, Share Repurchase, Dividends