Hello Group NASDAQ: MOMO reported a decline in first-quarter revenue as weakness in its mainland China operations offset rapid growth overseas, while management said adjusted operating income edged higher on improved margins.
For the first quarter of 2026, total revenue was RMB 2.39 billion, down 5% from a year earlier and 7% from the prior quarter, according to CFO Hui Peng. Non-GAAP net income attributable to shareholders was RMB 328.8 million, compared with RMB 403.8 million in the same period of 2025 and RMB 281.3 million in the previous quarter.
Sichuan Zhang said the company maintained “steady business momentum” during the quarter, with domestic operations remaining healthy despite external pressure and overseas revenue continuing to grow. Domestic revenue was RMB 1.79 billion, down 15% year over year, while overseas revenue rose 44% to RMB 597 million. Overseas revenue accounted for 25% of total revenue, up from 16% in the prior-year quarter.
Adjusted operating income was RMB 349 million, up 1% year over year, with an adjusted operating margin of 14.6%.
Domestic Business Pressured by Tax Scrutiny and Consumer Sentiment
Management said Momo, the company’s core domestic platform, remains focused on stabilizing its user base and improving monetization efficiency. Zhang said the company continued refining chat features, including its “Knock Knock” matching function, voice and video interaction tools, and AI-assisted greetings and chat support.
However, Momo revenue fell 15% year over year and 9% quarter over quarter to RMB 1.52 billion. Zhang attributed the year-over-year decline primarily to the continuing impact of new tax regulations and stricter local enforcement that began in the second half of 2025, which affected some high-grossing agencies and broadcasters. The sequential decline was largely seasonal, tied to the Chinese New Year, as well as soft consumer spending sentiment.
During the question-and-answer session, CEO Yan Tang said tax authorities tightened policies targeting agencies again in early 2026, pressuring agency-related revenue in March and April. Tang said Hello Group began assisting selected high-quality agencies with tax compliance in mid-May and introduced a new incentive program to help offset profit pressure from compliance costs.
“Since late May, both operational enthusiasm and revenue among these agencies have rebounded actually rapidly,” Tang said through the call interpreter. “We expect their performance to return to normal level by Q3.”
Peng said the domestic business is now expected to decline by a mid-teens percentage for the full year, compared with the company’s prior expectation for a low-teens decline. She said the most difficult period from tax-related disruption is likely behind the company, although some pressure may carry into the third quarter.
Tantan Sees Paying User Decline, Alipay Impact
Tantan ended the quarter with 600,000 paying users, down by 30,000 from the prior quarter. Zhang said the decline reflected a continuing reduction in monthly active users and changes to Alipay’s auto-renewal billing rules, which created short-term pressure on membership conversion.
Tantan’s domestic revenue was RMB 125 million, down 25% year over year and 8% quarter over quarter. Management said the company has reduced channel investments and personnel costs, helping net profit grow significantly year over year.
Tang said Alipay’s policy changes primarily affected subscription and membership products, especially Tantan’s domestic membership business. He said Momo’s core payment model is based on consumable virtual gifts and is not materially dependent on auto-renewal, while overseas businesses use App Store and Google Play payment channels.
To offset pressure on Tantan, management said the team unbundled some membership benefits, such as Super Likes and Boosts, into standalone purchases and improved pay-as-you-go features like Flash Chats. Tang said the company expects the Alipay-related impact to be concentrated in the first half of the year and gradually improve in the second half as payment channels and membership structures are adjusted.
Overseas Revenue Grows Despite Social Headwinds
Hello Group’s overseas business remained a major growth driver. Zhang said overseas revenue reached RMB 597 million, up 44% year over year, though down 2% sequentially. Peng said overseas value-added services revenue rose 44% to RMB 593.7 million, driven by expansion of the company’s diversified product portfolio.
Management said the sequential softness reflected Ramadan seasonality and external challenges in the Middle East and North Africa region, including pressure on Social, the company’s flagship overseas app. Peng said Social was affected by tighter regulation in Turkey, which resulted in the temporary removal of social and streaming apps across the industry, as well as conflict-related pressure in the Gulf region.
Tang said the company believes Social complies with Turkish laws and regulations and is working with authorities to return the app to app stores. He added that the business has begun recovering from its first-quarter low and that Hello Group is accelerating localization in other markets to offset the Turkey impact.
The company’s newer MENA products, Yaahlan and amar, continued to grow rapidly, with both posting triple-digit year-over-year revenue growth in the quarter. Zhang said Yaahlan is approaching net income break-even, while amar achieved positive marginal contribution for the first time. Tang said Yaahlan should reach net profitability within a quarter, while amar is roughly six months behind on that path.
Peng said the company still expects 2026 overseas revenue to approach an RMB 3 billion milestone, with possible variation of about RMB 100 million in either direction depending on market expansion.
AI Investments Expand Across Product Portfolio
Management also highlighted AI as a product development priority. Tang said AI is “particularly meaningful” for a company centered on social products because it can lower barriers to user connections and improve engagement.
Tang said the company is pursuing two AI directions: tools that help users break the ice, such as AI-assisted chat and AI voice “drift bottle” features, and new AI-native product formats. He cited Donut, a fully AI-powered voice social product that has begun monetization in China, and MiraiMind, an AI role-play dating app that has shown early traction in Japan and is expanding into other Asian markets.
Tang said AI investment is expected to be “high return” because it can improve user experience and increase willingness to pay. He said the company plans to reuse its AI technology stack across additional use cases, including AI agents for Momo live streaming, AI-generated short dramas based on broadcasters’ images, and smarter matching and chat support for Tantan.
Second-Quarter Guidance and Profit Outlook
Hello Group guided for second-quarter revenue of RMB 2.45 billion to RMB 2.55 billion, representing a year-over-year decline of 6.5% to 2.7%. At the midpoint, Peng said mainland China revenue is expected to decline by a high-teens percentage, while overseas revenue is expected to grow by a high-50s percentage.
For the full year, Peng said group revenue is now expected to decline slightly from 2025, “probably down by a couple of percentage points.” She said the company still expects to achieve an adjusted operating margin in the low teens, consistent with its earlier target, though lower absolute revenue creates pressure on absolute profit levels.
As of March 31, Hello Group held RMB 8.56 billion in cash, deposits, short-term investments and restricted cash, compared with RMB 8.68 billion at the end of 2025. Net cash provided by operating activities was RMB 158.9 million in the quarter.
About Hello Group NASDAQ: MOMO
Hello Group Inc NASDAQ: MOMO is a China-based technology company specializing in mobile social networking and interactive entertainment. Its flagship product, the Momo app, offers location-based social discovery services that enable users to find and connect with new friends based on shared interests and geographic proximity. The platform integrates instant messaging, group chat, and content-sharing features, while also providing premium subscriptions and in-app purchases such as virtual gifts and sticker packs.
In addition to Momo, Hello Group's portfolio includes Tantan, a dating-focused social app designed to help users build meaningful relationships through profile matching and interest-driven swiping.
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