INTRODUCTION

In this annual report, except where the context otherwise requires and for purposes of this annual report only:

“$,” “dollars,” “US$” or “U.S. dollars” refers to the legal currency of the United States;

“ADSs” refers to our American depositary shares, each representing two Class A ordinary shares, par value US$0.0001 per share;

~~“China” or the “PRC” refers to the People’s Republic of China, and solely for the purpose of this annual report, excludes Hong Kong, Macau and Taiwan;~~

•

“MAUs” refers to monthly active users. We define Momo MAUs during a given calendar month as Momo users who were daily active users for at least one day during the 30-day period counting back from the last day of such calendar month. Momo daily active users are users who accessed our platform through mobile devices and utilized any of the functions on our platform on a given day;

“MAUs” refers to monthly active users. Prior to June 2014, we defined MAUs during a given calendar month as Momo users who were daily active users for at least one day during the 28-day period counting back from the last day of such calendar month. Beginning from June 2014, we define MAUs during a given calendar month as Momo users who were daily active users for at least one day during the 30-day period counting back from the last day of such calendar month. Daily active users are Momo users who accessed our platform through Momo mobile application and utilized any of the functions on our platform on a given day;

~~“Momo Inc.,~~Hello Group,” “we,” “us,” “our company,” or “our” refers to our holding company ~~Momo~~Hello Group Inc., previously named “Momo Inc.,” its subsidiaries and ~~its~~in the context of describing our operations and consolidated financial information, the consolidated affiliated ~~entity~~entities and ~~its~~their subsidiaries;

“ordinary shares” ~~prior to the completion of our initial public offering in December 2014 refers to our ordinary shares of par value US$0.0001 per share, and upon and after the completion of our initial public offering~~ refers to our Class A and Class B ordinary shares, par value US$0.0001 per share; and

“RMB” or “Renminbi” refers to the legal currency of mainland China.

Our reporting and functional currency is U.S. dollar. This annual report contains translations of certain foreign currency amounts into U.S. dollars for the convenience of the reader. Unless otherwise stated, all translations of Renminbi into U.S. dollars were made at the rate at RMB6.4778 to US$1.00, the noon buying rate on December 31, 2015 as set forth in the H.10 statistical release of the U.S. Federal Reserve Board. We make no representation that the Renminbi or U.S. dollar amounts referred to in this annual report could have been or could be converted into U.S. dollars or Renminbi, as the case may be, at any particular rate or at all. On April 15, 2016, the noon buying rate for Renminbi was RMB6.4730 to US$1.00.

Unless the context indicates otherwise, all share and per share data in this annual report give effect to a share split effected on September 12, 2012 in which each of the previously issued ordinary shares and preferred shares were split into 10 ordinary shares and preferred shares, respectively.

FORWARD-LOOKING INFORMATION

This annual report on Form 20-F contains forward-looking statements that reflect our current expectations and views of future events. These statements are made under the “safe harbor” provisions of the U.S. Private Securities Litigation Reform Act of 1995. You can identify these forward-looking statements by words or phrases such as “may,” “could,” “should,” “would,” “will,” “expect,” “anticipate,” “aim,” “estimate,” “intend,” “plan,” “believe,” “likely to,” “project,” “continue,” ~~“potential,”~~“potential” or other similar expressions. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our financial condition, results of operations, business strategy and financial needs. These forward-looking statements include, but are not limited to, statements about:

our goals and strategies;

our future business development, financial condition and results of operations;

the expected growth of mobile social networking platforms, live video services, mobile marketing services, mobile games and online entertainment services in mainland China;

our expectations regarding demand for and market acceptance of our services;

our expectations regarding our user base and level of user engagement;

our monetization strategies;

our plans to invest in our technology infrastructure;

competition in our industry; and

relevant government policies and regulations relating to our industry.

You should not place undue reliance on these forward-looking statements and you should read these statements in conjunction other sections of this annual report, in particular the risk factors disclosed in “Item 3. Key Information—D. Risk Factors.” These statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from those expressed or implied by the forward-looking statements. Moreover, we operate in a rapidly evolving environment. New risks emerge from time to time and it is impossible for our management to predict all risk factors, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ from those contained in any forward-looking statement. The forward-looking statements made in this annual report relate only to events or information as of the date on which the statements are made in this annual report. We do not undertake any obligation to update or revise the forward-looking statements except as required under applicable law.

Current period amounts in this annual report are translated into U.S. dollars for the convenience of the readers. Unless otherwise stated, all translations of Renminbi into U.S. dollars were made at the rate at RMB6.8972 to US$1.0000, the exchange rate as set forth in the H.10 statistical release of the Board of Governors of the Federal Reserve System in effect as of December 30, 2022. We make no representation that any RMB or U.S. dollar amounts could have been, or could be, converted into U.S. dollars or RMB, as the case may be, at any particular rate, or at all. The mainland China government imposes control over its foreign currency reserves in part through direct regulation of the conversion of RMB into foreign exchange and through restrictions on foreign trade.

PART I

Item 1.

Identity of Directors, Senior Management and Advisers

Not applicable.

Item 2.

Offer Statistics and Expected Timetable

Not applicable.

Item 3.
Key Information

Our Holding Company Structure and Contractual Arrangements with the Consolidated Affiliated Entities

Hello Group Inc. is not a mainland China operating company, but rather a Cayman Islands holding company with no equity ownership in its consolidated affiliated entities. Our Cayman Islands holding company does not conduct business operations directly. We conduct our operations in mainland China through (i) our mainland China subsidiaries and (ii) the consolidated affiliated entities with which we have maintained contractual arrangements and their subsidiaries in mainland China. Mainland China laws and regulations impose certain restrictions or prohibitions on foreign ownership of companies that engage in certain value-added telecommunication services, internet audio-video program services and certain other businesses. Accordingly, we operate these businesses in mainland China through the consolidated affiliated entities and their subsidiaries, and rely on contractual arrangements among our mainland China subsidiaries, the consolidated affiliated entities and their nominee shareholders to control the business operations of the consolidated affiliated entities. The consolidated affiliated entities are consolidated for accounting purposes, but are not entities in which our Cayman Islands holding company, or our investors, own equity. Revenues contributed by the consolidated affiliated entities accounted for 99.2%, 98.4% and 95.7% of our total revenues for the years ended December 31, 2020, 2021 and 2022, respectively. As used in this annual report, “we,” “us,” “our company,” “our,” or “Hello Group” refers to Hello Group Inc., its subsidiaries, and, in the context of describing our operations and consolidated financial information, the consolidated affiliated entities and their subsidiaries in mainland China, including but not limited to Beijing Momo Technology Co., Ltd. (“Beijing Momo”), Tianjin Heer Technology Co., Ltd. ( “Tianjin Heer”), Loudi Momo Technology Co. Ltd. (“Loudi Momo”), Chengdu Momo Technology Co. Ltd. (“Chengdu Momo”), Hainan Yilingliuer Network Technology Co., Ltd. (“Hainan Yilingliuer”), Hainan Miaoka Network Technology Co., Ltd. (“Hainan Miaoka”), Tantan Culture Development (Beijing) Co., Ltd. (“Tantan Culture”), Tianjin Apollo Exploration Culture Co., Ltd.(“Tianjin Apollo”), QOOL Media (Tianjin) Co., Ltd (“Tianjin QOOL Media”), Beijing Top Maker Technology Co., Ltd. (“Beijing Top Maker,” formerly known as Beijing Fancy Reader Technology Co., Ltd.), Beijing Perfect Match Technology Co., Ltd. (“Beijing Perfect Match”), SpaceTime (Beijing) Technology Co., Ltd. (“SpaceTime Beijing”) and Tianjin Nishuodedoudui Technology Co., Ltd. (“Tianjin Nishuodedoudui”). Investors in our ADSs are not purchasing equity interest in the consolidated affiliated entities in mainland China, but instead are purchasing equity interest in a holding company incorporated in the Cayman Islands.

Our subsidiaries, the consolidated affiliated entities and their shareholders have entered into a series of contractual agreements. These contractual arrangements enable us to:

receive the economic benefits that could potentially be significant to the consolidated affiliated entities in consideration for the services provided by our subsidiaries;

exercise effective control over the consolidated affiliated entities; and

hold an exclusive option to purchase all or part of the equity interests in the consolidated affiliated entities when and to the extent permitted by mainland China law.

A series of contractual agreements, including business operation agreements, exclusive call option agreements, equity interest pledge agreements, exclusive cooperation agreements, power of attorney and spousal consent letters, have been entered into by and among our subsidiaries, the consolidated affiliated entities and their respective shareholders. Terms contained in each set of contractual arrangements with the consolidated affiliated entities and their respective shareholders are substantially similar. Despite the lack of legal majority ownership, our Cayman Island holding company is considered the primary beneficiary of the consolidated affiliated entities and consolidates the consolidated affiliated entities and their subsidiaries as required by Accounting Standards Codification (“ASC”) topic 810, Consolidation. Accordingly, we treat the consolidated affiliated entities as the consolidated entities under the accounting principles generally accepted in the United States, or U.S. GAAP, and we consolidate the financial results of the consolidated affiliated entities in the consolidated financial statements in accordance with U.S. GAAP. For more details of these contractual arrangements, see “Item 4. Information on the Company—C. Organizational Structure—Contractual Arrangements with the Consolidated Affiliated Entities and Their Respective Shareholders.”

However, the contractual arrangements may not be as effective as direct ownership in providing us with control over the consolidated affiliated entities and we may incur substantial costs to enforce the terms of the arrangements. Uncertainties in the mainland China legal system may limit our ability, as a Cayman Islands holding company, to enforce these contractual arrangements. Meanwhile, there are very few precedents as to whether contractual arrangements would be judged to form effective control over the relevant consolidated affiliated entities through the contractual arrangements, or how contractual arrangements in the context of a consolidated affiliated entity should be interpreted or enforced by the mainland China courts. Should legal actions become necessary, we cannot guarantee that the court will rule in favor of the enforceability of the consolidated affiliated entity contractual arrangements. In the event we are unable to enforce these contractual arrangements, or if we suffer significant delay or other obstacles in the process of enforcing these contractual arrangements, we may not be able to exert effective control over the consolidated affiliated entities, and our ability to conduct our business may be materially adversely affected. See “Item 3. Key Information—D. Risk Factors—Risks Related to Our Corporate Structure—We rely on contractual arrangements with the consolidated affiliated entities and their respective shareholders for our operations in mainland China, which may not be as effective in providing operational control as direct ownership” and “Item 3. Key Information—D. Risk Factors—Risks Related to Our Corporate Structure—The shareholders of the consolidated affiliated entities may have potential conflicts of interest with us, which may materially and adversely affect our business.”

There are also substantial uncertainties regarding the interpretation and application of current and future mainland China laws, regulations and rules regarding the status of the rights of our Cayman Islands holding company with respect to its contractual arrangements with the consolidated affiliated entities and their nominee shareholders. It is uncertain whether any new mainland China laws or regulations relating to variable interest entity structures will be adopted or if adopted, what they would provide. If we or any of the consolidated affiliated entities is found to be in violation of any existing or future mainland China laws or regulations, or fail to obtain or maintain any of the required permits or approvals, the relevant mainland China regulatory authorities would have broad discretion to take action in dealing with such violations or failures. If the mainland China government deems that our contractual arrangements with the consolidated affiliated entities do not comply with mainland China regulatory restrictions on foreign investment in the relevant industries, or if these regulations or the interpretation of existing regulations change or are interpreted differently in the future, we could be subject to severe penalties or be forced to relinquish our interests in those operations. Since mainland China administrative and court authorities have significant discretion in interpreting and implementing statutory provisions and contractual terms, it may be difficult to evaluate the outcome of administrative and court proceedings and the level of legal protection we enjoy. Our Cayman Islands holding company, our mainland China subsidiaries and consolidated affiliated entities, and investors of our company face uncertainty about potential future actions by the mainland China government that could affect the enforceability of the contractual arrangements with the consolidated affiliated entities and, consequently, significantly affect the financial performance of the consolidated affiliated entities and our company as a whole. See “Item 3. Key Information—D. Risk Factors—Risks Related to Our Corporate Structure—If the mainland China government finds that the agreements that establish the structure for operating certain of our operations in mainland China do not comply with mainland China regulations relating to the relevant industries, or if these regulations or the interpretation of existing regulations change in the future, we could be subject to severe penalties or be forced to relinquish our interests in those operations” and “Item 3. Key Information—D. Risk Factors—Risks Related to Doing Business in Mainland China—We face uncertainties with respect to the implementation of the PRC Foreign Investment Law and how it may impact the viability of our current corporate structure, corporate governance and business operations.”

Our corporate structure is subject to risks associated with our contractual arrangements with the consolidated affiliated entities. The company and its investors may never have a direct ownership interest in the businesses that are conducted by the consolidated affiliated entities. Uncertainties in the mainland China legal system could limit our ability to enforce these contractual arrangements, and these contractual arrangements have not been tested in a court of law. If the mainland China government finds that the agreements that establish the structure for operating our business in mainland China do not comply with mainland China laws and regulations, or if these regulations or the interpretation of existing regulations change or are interpreted differently in the future, we and the consolidated affiliated entities could be subject to severe penalties or be forced to relinquish our interests in those operations. This would result in the consolidated affiliated entities being deconsolidated. The majority of our assets, including the necessary licenses to conduct business in mainland China, are held by the consolidated affiliated entities. A significant part of our revenues are generated by the consolidated affiliated entities. An event that results in the deconsolidation of the consolidated affiliated entities would have a material effect on our operations and result in the value of the securities of our company diminish substantially or even become worthless. Our company, our mainland China subsidiaries and consolidated affiliated entities, and investors of our company face uncertainty about potential future actions by the mainland China government that could affect the enforceability of the contractual arrangements with the consolidated affiliated entities and, consequently, significantly affect the financial performance of the consolidated affiliated entities and our company as a whole. Hello Group Inc. may not be able to repay its indebtedness, and the Class A ordinary shares or ADSs of our company may decline in value or become worthless, if we are unable to assert our contractual control rights over the assets of our mainland China subsidiaries and consolidated affiliated entities that conduct all or substantially all of our operations. For a detailed description of the risks associated with our corporate structure, please refer to risks disclosed under “Item 3. Key Information—D. Risk Factors—Risks Related to Our Corporate Structure.”

Other Risks related to Our Mainland China Operations

We face various risks and uncertainties related to doing business in mainland China. Our business operations are primarily conducted in mainland China, and we are subject to complex and evolving mainland China laws and regulations. For example, we face risks associated with regulatory approvals on offshore offerings, anti-monopoly regulatory actions, and oversight on cybersecurity and data privacy, which may impact our ability to conduct certain businesses, accept foreign investments or financing, or list on a United States exchange. These risks could result in a material adverse change in our operations and the value of our ADSs, significantly limit or completely hinder our ability to continue to offer securities to investors, or cause the value of such securities to significantly decline or become worthless. For a detailed description of risks related to doing business in mainland China, see “Item 3. Key Information—D. Risk Factors—Risks Related to Doing Business in Mainland China.”

Mainland China government’s significant authority in regulating our operations and its oversight and control over offerings conducted overseas by, and foreign investment in, mainland China-based issuers could significantly limit or completely hinder our ability to offer or continue to offer securities to investors. Implementation of industry-wide regulations in this nature may cause the value of such securities to significantly decline or become worthless. For more details, see “Item 3. Key Information—D. Risk Factors—Risks Related to Doing Business in Mainland China—The mainland China government’s significant oversight and discretion over our business operations could result in a material adverse change in our operations and the value of our ADSs.”

Risks and uncertainties arising from the legal system in mainland China, including risks and uncertainties regarding the enforcement of laws and quickly evolving rules and regulations in mainland China, could result in a material adverse change in our operations and the value of our ADSs. For more details, see “Item 3. Key Information—D. Risk Factors—Risks Related to Doing Business in Mainland China— Uncertainties in the interpretation and enforcement of mainland China laws and regulations could limit the legal protections available to you and us.”

The Holding Foreign Companies Accountable Act

Pursuant to the Holding Foreign Companies Accountable Act, or the HFCAA, if the SEC determines that we have filed audit reports issued by a registered public accounting firm that has not been subject to inspections by the Public Company Accounting Oversight Board (United States), or the PCAOB, for two consecutive years, the SEC will prohibit our shares or the ADSs from being traded on a national securities exchange or in the over-the-counter trading market in the United States. On December 16, 2021, the PCAOB issued a report to notify the SEC of its determination that the PCAOB was unable to inspect or investigate completely registered public accounting firms headquartered in mainland China and Hong Kong, including our auditor. In May 2022, the SEC conclusively listed us as a Commission-Identified Issuer under the HFCAA following the filing of the annual report on Form 20-F for the fiscal year ended December 31, 2021. On December 15, 2022, the PCAOB issued a report that vacated its December 16, 2021 determination and removed mainland China and Hong Kong from the list of jurisdictions where it is unable to inspect or investigate completely registered public accounting firms. For this reason, we do not expect to be identified as a Commission-Identified Issuer under the HFCAA after we file this annual report on Form 20-F. Each year, the PCAOB will determine whether it can inspect and investigate completely audit firms in mainland China and Hong Kong, among other jurisdictions. If PCAOB determines in the future that it no longer has full access to inspect and investigate completely accounting firms in mainland China and Hong Kong and we continue to use an accounting firm headquartered in one of these jurisdictions to issue an audit report on our financial statements filed with the Securities and Exchange Commission, we would be identified as a Commission-Identified Issuer following the filing of the annual report on Form 20-F for the relevant fiscal year. There can be no assurance that we would not be identified as a Commission-Identified Issuer for any future fiscal year, and if we were so identified for two consecutive years, we would become subject to the prohibition on trading under the HFCAA. See “Item 3. Key Information—D. Risk Factors—Risks Related to Doing Business in Mainland China—The PCAOB had historically been unable to inspect our auditor in relation to their audit work performed for our financial statements and the inability of the PCAOB to conduct inspections of our auditor in the past has deprived our investors with the benefits of such inspections.” And “Item 3. Key Information—D. Risk Factors—Risks Relating to Doing Business in Mainland China—Our ADSs may be prohibited from trading in the United States under the HFCAA in the future if the PCAOB is unable to inspect or investigate completely auditors located in mainland China. The delisting of the ADSs, or the threat of their being delisted, may materially and adversely affect the value of your investment.”

Cash Flow through Our Organization

Hello Group Inc. is a holding company with no operations of its own. We conduct our operations primarily through our mainland China subsidiaries, the consolidated affiliated entities and their subsidiaries in mainland China. As a result, Hello Group Inc.’s ability to pay dividends depends upon dividends paid by our mainland China subsidiaries. If our existing mainland China subsidiaries or any newly formed ones incur debt on their own behalf in the future, the instruments governing their debt may restrict their ability to pay dividends to us. In addition, current mainland China regulations permit our mainland China subsidiaries to pay dividends to their respective shareholders only out of their accumulated profits, if any, determined in accordance with mainland China accounting standards and regulations. Furthermore, each of our mainland China subsidiaries and the consolidated affiliated entities is required to set aside at least 10% of its after-tax profits each year, if any, to fund a statutory reserve until such reserve reaches 50% of its registered capital. Each of such entities in mainland China is also required to further set aside a portion of its after-tax profits to fund the employee welfare fund, although the amount to be set aside, if any, is determined at the discretion of its board of directors. These reserves are not distributable as cash dividends. For more details, see “Item 5. Operating and Financial Review and Prospects—B. Liquidity and Capital Resources—Holding Company Structure.” Our subsidiaries’ ability to distribute dividends is based upon their distributable earnings.

Under mainland China laws and regulations, our mainland China subsidiaries and consolidated affiliated entities are subject to certain restrictions with respect to paying dividends or otherwise transferring any of their net assets to us. Remittance of dividends by a wholly foreign-owned enterprise out of mainland China is also subject to examination by the banks designated by State Administration of Foreign Exchange, or SAFE. The amounts restricted include the paid-up capital and the statutory reserve funds of our mainland China subsidiaries and the net assets of the consolidated affiliated entities in which we have no legal ownership, totaling RMB1.5 billion, RMB1.5 billion and RMB1.5 billion (US$0.2 billion) as of December 31, 2020, 2021 and 2022, respectively. For risks relating to the fund flows of our operations in mainland China, see “Item 3. Key Information—D. Risk Factors—Risks Related to Our Corporate Structure—We may rely on dividends paid by our mainland China subsidiaries to fund cash and financing requirements. Any limitation on the ability of our mainland China subsidiaries to pay dividends to us could have a material adverse effect on our ability to conduct our business and to pay dividends to holders of the ADSs and our ordinary shares.”

For the years ended December 31, 2020, 2021 and 2022, the Company declared and distributed cash dividends with amount of US$158.6 million, US$132.0 million and US$127.3 million to its investors, respectively, which was funded by surplus cash on our balance sheet.

For the years ended December 31, 2020, 2021 and 2022, Beijing Momo IT declared and distributed dividends with amount of RMB2,200.0 million, RMB1,300.0 million and RMB3,600.0 million (US$522.0 million), respectively, to its offshore parent company, Momo HK. Withholding taxes of RMB220.0 million, RMB130.0 million and RMB360.0 million (US$52.2 million) in connection with the dividends were fully paid during the years ended December 31, 2020, 2021 and 2022, respectively.

Under mainland China law, Hello Group Inc. may provide funding to our mainland China subsidiaries only through capital contributions or loans, and to the consolidated affiliated entities only through loans, subject to satisfaction of applicable government registration and approval requirements. Hello Group Inc., its subsidiaries and the consolidated affiliated entities may also transfer cash through intra-group transactions.

For the years ended December 31, 2020, 2021 and 2022, Hello Group Inc. provided loans with principal amount of RMB118.2 million, RMB820.9 million and RMB6.6 million (US$1.0 million), respectively, to its subsidiaries, and there was no repayment from the subsidiaries to Hello Group Inc.

For the years ended December 31, 2020, 2021 and 2022, Hello Group Inc. provided capital contributions with the amount of RMB142,000.0, RMB nil and RMB nil, respectively, to its subsidiaries.

For the years ended December 31, 2020, 2021 and 2022, the subsidiaries of Hello Group Inc. did not provide loans to Hello Group Inc., and there was no repayment from Hello Group Inc. to its subsidiaries.

For the years ended December 31, 2020, 2021 and 2022, subsidiaries of Hello Group Inc. provided loans with principal amount of RMB nil, RMB799.8 million and RMB nil, respectively, to the consolidated affiliated entities and there was no repayment from the consolidated affiliated entities to our subsidiaries.

For the years ended December 31, 2020, 2021 and 2022, the consolidated affiliated entities provided loans with principal amount of RMB71.9 million, RMB nil and RMB1,232.9 million (US$178.7 million), respectively, to our mainland China subsidiaries and there was no repayment from our mainland China subsidiaries to the consolidated affiliated entities.

The consolidated affiliated entities may transfer cash to the subsidiaries of Hello Group Inc. by paying service fees and license fees pursuant to certain contractual arrangements among them, and we intend to settle the services fees and license fees through such contractual arrangements going forward. For the years ended December 31, 2020, 2021 and 2022, subsidiaries of Hello Group Inc. received license fee, technical service fees and non-technical services fees with amount of RMB6,317.8 million, RMB5,616.2 million and RMB4,369.7 million (US$633.6 million), respectively, from the consolidated affiliated entities.

For the years ended December 31, 2020, 2021 and 2022, cash paid by the consolidated affiliated entities to the subsidiaries of Hello Group Inc. for other operation service fees were RMB23.0 million, RMB64.5 million and RMB49.4 million (US$7.2 million), respectively. For the years ended December 31, 2020, 2021 and 2022, cash paid by the subsidiaries of Hello Group Inc. to consolidated affiliated entities for other operation service fees were RMB12.0 million, RMB nil and RMB nil, respectively.

Our mainland China subsidiaries may charge the consolidated affiliated entities for services provided to the consolidated affiliated entities. These service fees shall be recognized as expenses of the consolidated affiliated entities, with a corresponding amount as service income by our mainland China subsidiaries and eliminate in consolidation. For income tax purposes, our mainland China subsidiaries and the consolidated affiliated entities file income tax returns on a separate company basis. The service fees paid are recognized as a tax deduction by the consolidated affiliated entities and as income by our mainland China subsidiaries and are tax neutral.

Permissions Required from the Mainland China Authorities for Our Operations

We conduct our business primarily through our subsidiaries and consolidated affiliated entities in mainland China. Our operations in mainland China are governed by mainland China laws and regulations. As of the date of this annual report, our mainland China subsidiaries, consolidated affiliated entities and their subsidiaries have obtained the requisite licenses and permits from the mainland China government authorities that are material for the business operations of our holding company, the consolidated affiliated entities in mainland China, including, among others, the Value-added Telecommunications Business Operation License for information services via internet, or ICP License, and the Internet Culture Operation License and the Internet Audio/Video Program Transmission License. Given the uncertainties of interpretation and implementation of relevant laws and regulations and the enforcement practice by relevant government authorities, we may be required to obtain additional licenses, permits, filings or approvals for the functions and services of our platform in the future, and may not be able to maintain or renew our current licenses, permits, filings or approvals. For more detailed information, see “Item 3. Key Information—D. Risk Factors—Risks Related to Doing Business in China—If we fail to obtain and maintain the requisite licenses and approvals required under the complex regulatory environment applicable to our businesses in mainland China, or if we are required to take compliance actions that are time-consuming or costly, our business, financial condition and results of operations may be materially and adversely affected.”

Furthermore, under current mainland China laws, regulations and regulatory rules, we, our mainland China subsidiaries and the consolidated affiliated entities may be required to obtain permissions from or complete filings with the mainland China Securities Regulatory Commission, or the CSRC, and may be required to go through cybersecurity review by the Cyberspace Administration of China, or the CAC, in connection with any future offering and listing in an overseas market. As of the date of this annual report, we have not been subject to any cybersecurity review made by the CAC. If we fail to obtain the relevant approval or complete other review or filing procedures for any future offshore offering or listing, we may face sanctions by the CSRC or other mainland China regulatory authorities, which may include fines and penalties on our operations in mainland China, limitations on our operating privileges in mainland China, restrictions on or prohibition of the payments or remittance of dividends by our subsidiaries in mainland China, restrictions on or delays to our future financing transactions offshore, or other actions that could have a material and adverse effect on our business, financial condition, results of operations, reputation and prospects, as well as the trading price of our ADSs. For more detailed information, see “Item 3. Key Information—D. Risk Factors—Risks Related to Doing Business in Mainland China—The approval of or filing with the CSRC or other mainland China government authorities may be required in connection with our offshore offerings under mainland China law, and, if required, we cannot predict whether or for how long we will be able to obtain such approval” and “Item 3. Key Information—D. Risk Factors—Risks Related to Doing Business in Mainland China—mainland China regulation of loans to, and direct investment in, mainland China entities by offshore holding companies and governmental control of currency conversion may restrict or prevent us from using offshore funds to make loans to our mainland China subsidiaries and consolidated affiliated entities and their subsidiaries, or to make additional capital contributions to our mainland China subsidiaries.”

Financial Information Related to the Consolidated Affiliated Entities

The following table presents the condensed consolidating schedule of financial position for Hello Group Inc., its wholly-owned subsidiaries that are the primary beneficiaries of the consolidated affiliated entities under U.S. GAAP and their subsidiaries (the “Primary Beneficiaries of Consolidated Affiliated Entities and Their Subsidiaries”), its other subsidiaries that are not the Primary Beneficiaries of the consolidated affiliated entities (the “Other Subsidiaries”), and the consolidated affiliated entities and their subsidiaries as of the dates presented.

Selected Condensed Consolidating Statements of Income Information


	For the Year Ended December 31, 2022
	Hello Group Inc.			Other Subsidiaries			Primary Beneficiaries of Consolidated Affiliated Entities and Their Subsidiaries			Consolidated Affiliated Entities and Their Subsidiaries			Eliminating Adjustments			Consolidated Totals

	(in RMB thousands)
Third-party revenues		—			549,310			1,865			12,152,997			—			12,704,172
Inter-company revenues⁽¹⁾		—			—			4,134,173			—			(4,134,173	)		—
Total costs and expenses		(237,702	)		(539,969	)		(2,906,256	)		(11,547,507	)		4,134,173			(11,097,261	)
Income (loss) from subsidiaries and VIEs⁽²⁾		1,616,391			1,768,959			463,592			—			(3,848,942	)		—
Other income		86,582			2,364			284,091			51,269			—			424,306

Income (loss) before income tax expense and share of loss on equity method investments		1,465,271			1,780,664			1,977,465			656,759			(3,848,942	)		2,031,217
Income tax expenses		—			(164,290	)		(208,425	)		(189,566	)		—			(562,281	)
Share of income (loss) on equity method investments		19,012			(1	)		(82	)		(7,856	)		—			11,073

Net income (loss)		1,484,283			1,616,373			1,768,958			459,337			(3,848,942	)		1,480,009
Less: net loss attributable to non-controlling interests		—			(18	)		—			(4,256	)		—			(4,274	)

Net income (loss) attributable to Hello Group’s shareholders		1,484,283			1,616,391			1,768,958			463,593			(3,848,942	)		1,484,283


	For the Year Ended December 31, 2021
	Hello Group Inc.			Other Subsidiaries			Primary Beneficiaries of Consolidated Affiliated Entities and Their Subsidiaries			Consolidated Affiliated Entities and Their Subsidiaries			Eliminating Adjustments			Consolidated Totals

	(in RMB thousands)
Third-party revenues		—			238,224			956			14,336,539			—			14,575,719
Inter-company revenues⁽¹⁾		—			—			5,100,060			1,352			(5,101,412	)		—
Total costs and expenses		(248,609	)		(6,257,292	)		(2,025,730	)		(13,711,014	)		5,101,412			(17,141,233	)
(Loss) income from subsidiaries and VIEs⁽²⁾		(2,629,002	)		3,424,401			587,892			—			(1,383,291	)		—
Other (loss) income		(36,876	)		240,061			84,452			182,813			—			470,450

(Loss) income before income tax expense and share of loss on equity method investments		(2,914,487	)		(2,354,606	)		3,747,630			809,690			(1,383,291	)		(2,095,064	)
Income tax expenses		—			(274,404	)		(323,224	)		(224,928	)		—			(822,556	)
Share of income (loss) on equity method investments		779			—			—			(8,863	)		—			(8,084	)

Net (loss) income		(2,913,708	)		(2,629,010	)		3,424,406			575,899			(1,383,291	)		(2,925,704	)
Less: net loss attributable to non-controlling interests		—			(14	)		—			(11,982	)		—			(11,996	)

Net (loss) income attributable to Hello Group’s shareholders		(2,913,708	)		(2,628,996	)		3,424,406			587,881			(1,383,291	)		(2,913,708	)


	For the Year Ended December 31, 2020
	Hello Group Inc.			Other Subsidiaries			Primary Beneficiaries of Consolidated Affiliated Entities and Their Subsidiaries			Consolidated Affiliated Entities and Their Subsidiaries			Eliminating Adjustments			Consolidated Totals

	(in RMB thousands)
Third-party revenues		—			121,370			127			14,902,691			—			15,024,188
Inter-company revenues⁽¹⁾		—			—			6,257,010			6,580			(6,263,590	)		—
Total costs and expenses		(340,519	)		(448,435	)		(3,804,640	)		(14,391,526	)		6,263,590			(12,721,530	)
Income (loss) from subsidiaries and VIEs⁽²⁾		2,467,172			2,975,491			501,180			—			(5,943,843	)		—
Other (loss) income		(23,169	)		267			366,969			251,809			—			595,876

Income (loss) before income tax expense and share of loss on equity method investments		2,103,484			2,648,693			3,320,646			769,554			(5,943,843	)		2,898,534
Income tax expenses		—			(181,767	)		(345,155	)		(228,698	)		—			(755,620	)
Share of income (loss) on equity method investments		—			233			—			(42,755	)		—			(42,522	)

Net income (loss)		2,103,484			2,467,159			2,975,491			498,101			(5,943,843	)		2,100,392
Less: net loss attributable to non-controlling interests		—			(13	)		—			(3,079	)		—			(3,092	)

Net income (loss) attributable to Hello Group’s shareholders		2,103,484			2,467,172			2,975,491			501,180			(5,943,843	)		2,103,484

Selected Condensed Consolidating Balance Sheets Information


	As of December 31, 2022
	Hello Group Inc.		Other Subsidiaries		Primary Beneficiaries of Consolidated Affiliated Entities and Their Subsidiaries			Consolidated Affiliated Entities and Their Subsidiaries		Eliminating Adjustments			Consolidated Totals

	(in RMB thousands)
Cash and cash equivalents		578,935		136,570		2,194,376			2,108,248		—			5,018,129
Short-term deposits		—		—		4,450,000			850,000		—			5,300,000
Restricted cash		—		—		—			97,706		—			97,706
Short-term investment		—		—		300,240			—		—			300,240
Accounts receivable		—		34,011		—			154,700		—			188,711
Amount due from Group companies⁽³⁾		686,429		—		236,695			631,607		(1,554,731	)		—
Other current assets		20,683		11,396		406,869			401,702		(20,889	)		819,761
Long-term deposits		—		—		2,600,000			—		—			2,600,000
Investment in subsidiaries and VIEs⁽²⁾		11,794,110		11,430,678		3,522,496			—		(26,747,284	)		—
Long-term investments		143,540		300,000		70,261			380,187		—			893,988
Other non-current assets		82,766		16		236,428			291,842		—			611,052

Total assets		13,306,463		11,912,671		14,017,365			4,915,992		(28,322,904	)		15,829,587

Accounts payable		—		25,010		82,970			509,042		—			617,022
Deferred revenue		—		15,711		(12	)		469,076		—			484,775
Amount due to Group companies⁽³⁾		—		1,554,731		—			—		(1,554,731	)		—
Other current liabilities		2,699,230		57,449		427,978			451,793		—			3,636,450
Non-current liabilities		22,644		94,449		9,550			34,059		—			160,702

Total Liabilities		2,721,874		1,747,350		520,486			1,463,970		(1,554,731	)		4,898,949
Total shareholders’ equity		10,584,589		10,165,321		13,496,879			3,452,022		(26,768,173	)		10,930,638

Total liabilities and shareholders’ equity		13,306,463		11,912,671		14,017,365			4,915,992		(28,322,904	)		15,829,587


	As of December 31, 2021
	Hello Group Inc.		Other Subsidiaries			Primary Beneficiaries of Consolidated Affiliated Entities and Their Subsidiaries		Consolidated Affiliated Entities and Their Subsidiaries		Eliminating Adjustments			Consolidated Totals

	(in RMB thousands)
Cash and cash equivalents		876,917		62,188			2,156,484		2,474,974		—			5,570,563
Short-term deposits		—		—			2,310,000		550,000		—			2,860,000
Accounts receivable		—		28,916			—		176,309		—			205,225
Amount due from Group companies⁽³⁾		1,523,429		—			689,195		—		(2,212,624	)		—
Other current assets		16,875		9,897			355,476		413,713		(20,889	)		775,072
Long-term deposits		—		—			6,450,000		750,000		—			7,200,000
Investment in subsidiaries and VIEs⁽²⁾		12,051,913		14,658,461			3,058,502		—		(29,768,876	)		—
Long-term investments		115,482		300,000			—		404,524		—			820,006
Other non-current assets		76,471		(5	)		362,406		241,500		—			680,372

Total assets		14,661,087		15,059,457			15,382,063		5,011,020		(32,002,389	)		18,111,238

Accounts payable		—		17,477			73,095		635,635		—			726,207
Deferred revenue		—		19,531			1,199		519,237		—			539,967
Amount due to Group companies⁽³⁾		—		1,792,937			—		419,687		(2,212,624	)		—
Other current liabilities		77,958		99,599			672,348		399,686		—			1,249,591
Non-current liabilities		4,588,608		311,583			46,590		63,095		—			5,009,876

Total Liabilities		4,666,566		2,241,127			793,232		2,037,340		(2,212,624	)		7,525,641
Total shareholders’ equity		9,994,521		12,818,330			14,588,831		2,973,680		(29,789,765	)		10,585,597

Total liabilities and shareholders’ equity		14,661,087		15,059,457			15,382,063		5,011,020		(32,002,389	)		18,111,238

Selected Condensed Consolidating Cash Flows Information


	For the Year Ended December 31, 2022
	Hello Group Inc.			Other Subsidiaries			Primary Beneficiaries of Consolidated Affiliated Entities and Their Subsidiaries			Consolidated Affiliated Entities and Their Subsidiaries			Eliminating Adjustments			Consolidated Totals

	(in RMB thousands)
Net cash (used in) provided by operating activities⁽⁴⁾		(61,675	)		(364,460	)		108,819			1,544,207			—			1,226,891

Loans to Hello Group companies		(6,636	)		—			—			(1,232,857	)		1,239,493			—
Cash dividends received from subsidiaries		3,075,912			3,600,000			—			—			(6,675,912	)		—
Payment for short-term investments		—			—			(300,000	)		—			—			(300,000	)
Purchase of short-term deposits		—			—			(900,000	)		(800,000	)		—			(1,700,000	)
Cash received on maturity of short-term deposits		—			—			4,860,000			550,000			—			5,410,000
Purchase of long-term deposits		—			—			(2,750,000	)		—			—			(2,750,000	)
Cash received on maturity of long-term deposits		—			—			500,000			700,000			—			1,200,000
Other investing activities		—			—			(146,083	)		1,928			—			(144,155	)

Net cash provided by (used in) investing activities		3,069,276			3,600,000			1,263,917			(780,929	)		(5,436,419	)		1,715,845

Borrowings under loan from Hello Group companies		—			6,636			1,232,857			—			(1,239,493	)		—
Dividends payment to Hello Group Inc.		—			(3,075,912	)		(3,600,000	)		—			6,675,912			—
Payment for redemption of convertible bonds		(2,136,987	)		—			—			—			—			(2,136,987	)
Repurchase of ordinary shares		(392,374	)		—			—			—			—			(392,374	)
Dividends payment to Hello Group’s shareholders		(840,997	)		—			—			—			—			(840,997	)
Other financing activities		(21,258	)		(40,943	)		—			—			—			(62,201	)

Net cash (used in) provided by financing activities		(3,391,616	)		(3,110,219	)		(2,367,143	)		—			5,436,419			(3,432,559	)


	For the Year Ended December 31, 2021
	Hello Group Inc.			Other Subsidiaries			Primary Beneficiaries of Consolidated Affiliated Entities and Their Subsidiaries			Consolidated Affiliated Entities and Their Subsidiaries			Eliminating Adjustments			Consolidated Totals

	(in RMB thousands)
Net cash provided by (used in) operating activities⁽⁴⁾		25,346			(600,005	)		2,283,830			(149,973	)		—			1,559,198

Loans to Hello Group companies		(820,897	)		—			(799,794	)		—			1,620,691			—
Capital injection to subsidiaries		—			(32,293	)		—			—			32,293			—
Cash dividends received from subsidiaries		1,153,506			1,300,000			—			—			(2,453,506	)		—
Purchase of short-term deposits		(516,688	)		—			(3,910,000	)		(550,000	)		—			(4,976,688	)
Cash received on maturity of short-term deposits		2,263,070			—			6,800,000			604,500			—			9,667,570
Purchase of long-term deposits		—			—			(1,850,000	)		—			—			(1,850,000	)
Other investing activities		(115,052	)		(302,336	)		(72,745	)		199,593			—			(290,540	)

Net cash provided by (used in) investing activities		1,963,939			965,371			167,461			254,093			(800,522	)		2,550,342

Borrowings under loan from Hello Group companies		—			820,897			—			799,794			(1,620,691	)		—
Capital injection from parent company		—			—			32,293			—			(32,293	)		—
Dividends payment to Hello Group Inc.		—			(1,153,506	)		(1,300,000	)		—			2,453,506			—
Repurchase of ordinary shares		(862,865	)		—			—			—			—			(862,865	)
Dividends payment to Hello Group’s shareholders		(852,743	)		—			—			—			—			(852,743	)
Other financing activities		(12,181	)		(59,120	)		—			—			—			(71,301	)

Net cash (used in) provided by financing activities		(1,727,789	)		(391,729	)		(1,267,707	)		799,794			800,522			(1,786,909	)


	For the Year Ended December 31, 2020
	Hello Group Inc.			Other Subsidiaries			Primary Beneficiaries of Consolidated Affiliated Entities and Their Subsidiaries			Consolidated Affiliated Entities and Their Subsidiaries			Eliminating Adjustments			Consolidated Totals

	(in RMB thousands)
Net cash (used in) provided by operating activities⁽⁴⁾		(70,022	)		(46,946	)		2,456,429			741,428			—			3,080,889

Loans to Hello Group companies		(118,159	)		—			—			(71,860	)		190,019			—
Capital injection to subsidiaries		(142	)		—			(1,000	)		—			1,142			—
Cash dividends received from subsidiaries		1,976,631			2,200,000			—			—			(4,176,631	)		—
Purchase of short-term deposits		(1,890,665	)		—			(12,444,500	)		(614,500	)		—			(14,949,665	)
Cash received on maturity of short-term deposits		2,272,659			—			16,494,500			810,000			—			19,577,159
Purchase of long-term deposits		—			—			(4,300,000	)		(950,000	)		—			(5,250,000	)
Other investing activities		—			—			(122,511	)		(3,449	)		—			(125,960	)

Net cash provided by (used in) investing activities		2,240,324			2,200,000			(373,511	)		(829,809	)		(3,985,470	)		(748,466	)

Borrowings under loan from Hello Group companies		—			118,159			71,860			—			(190,019	)		—
Capital injection from parent company		—			142			—			1,000			(1,142	)		—
Dividends payment to Hello Group Inc.		—			(1,976,631	)		(2,200,000	)		—			4,176,631			—
Repurchase of ordinary shares		(330,207	)		—			—			—			—			(330,207	)
Dividends payment to Hello Group’s shareholders		(1,123,983	)		—			—			—			—			(1,123,983	)
Other financing activities		(18,128	)		(25,744	)		(88	)		—			—			(43,960	)

Net cash (used in) provided by financing activities		(1,472,318	)		(1,884,074	)		(2,128,228	)		1,000			3,985,470			(1,498,150	)

Notes:

(1)	Represents the elimination of the intercompany service charge at the consolidation level.

(2)	Represents the elimination of the investment among Hello Group Inc., other subsidiaries, the primary beneficiaries and consolidated affiliated entities and their subsidiaries.

(3)	Represents the elimination of intercompany balances among Hello Group Inc., other subsidiaries, the primary beneficiaries and consolidated affiliated entities and their subsidiaries.

(4)

For the years ended December 31, 2020, 2021 and 2022, cash paid by the consolidated affiliated entities to the primary beneficiaries for license fee, technical service fees and non-technical service fees were RMB6,317.8 million, RMB5,616.2 million and RMB4,369.7 million (US$633.6 million), respectively. For the years ended December 31, 2020, 2021 and 2022, cash paid by the consolidated affiliated entities to the primary beneficiaries for other operation service fee were RMB23.0 million, RMB64.5 million and RMB49.4 million (US$7.2 million), respectively. For the years ended December 31, 2020, 2021 and 2022, cash paid by the primary beneficiaries to consolidated affiliated entities for other operation service fees were RMB12.0 million, RMB nil and RMB nil, respectively.

A.	Selected Consolidated Financial Data

The following table presents the selected consolidated financial information of our company. The selected consolidated statements of comprehensive ~~(loss)~~ income data for the years ended December 31, ~~2013, 2014~~2020, 2021 and ~~2015~~2022 and the selected consolidated balance sheets data as of December 31, ~~2014~~2021 and ~~2015~~2022 have been derived from our audited consolidated financial statements included in this annual report beginning on page F-1.

The selected consolidated statements of comprehensive ~~(loss)~~ income data for the ~~year~~years ended December 31, ~~2012~~2018 and 2019 and the selected consolidated balance sheets data as of December 31, ~~2012~~2018, 2019 and ~~2013~~2020 have been derived from our audited consolidated financial statements not included in this annual report. We have not included financial information for the year ended December 31, 2011, as such information is not available on a basis that is consistent with the consolidated financial information for the years ended December 31, 2012, 2013, 2014 and 2015 and cannot be obtained without unreasonable effort or expense. Our audited consolidated financial statements are prepared and presented in accordance with ~~accounting principles generally accepted in the United States, or~~ U.S. GAAP. Our historical results do not necessarily indicate results expected for any future period. You should read the following selected financial data in conjunction with the consolidated financial statements and related notes and “Item 5. Operating and Financial Review and Prospects” included elsewhere in this annual report.

   Year Ended December 31,
   2012 2013 2014 2015
   (in US$ thousands, except share and share-related data)
Selected Data of Consolidated Statements of Operations

Net Revenues

Membership subscription fees
   —      2,808    29,756    58,462
Mobile marketing
   —      12    1,975    38,885
Mobile games
   —      92    11,237    31,082
Other services
   —      217    1,787    5,559


Total net revenues
   —      3,129    44,755    133,988
Cost and expenses⁽¹⁾

Cost of revenues
   —      (2,927 ) (15,762 ) (30,312 )
Research and development expenses
   (1,454 ) (3,532 ) (9,264 ) (23,265 )
Sales and marketing expenses
   (419 ) (3,018 ) (35,538 ) (52,631 )
General and administrative expenses
   (1,969 ) (3,010 ) (10,354 ) (22,879 )


Total cost and expenses
   (3,842 ) (12,487 ) (70,918 ) (129,087 )


Other operating income
   —      —      26    713
(Loss) Income from operations
   (3,842 ) (9,358 ) (26,137 ) 5,614
Interest income
   3    32    722    7,805


(Loss) Income before income tax and share of income on equity method investments
   —      —      (25,415 ) 13,419
Income tax expenses
   —      —      —      (92 )


(Loss) Income before share of income on equity method investments
   —      —      (25,415 ) 13,327
Share of income on equity method investments
   —      —      —      370


Net (loss) income attributable to Momo Inc.
   (3,839 ) (9,326 ) (25,415 ) 13,697
Deemed dividend to preferred shareholders
   (3,093 ) (8,120 ) (57,663 ) —


Net (loss) income attributable to ordinary shareholders
   (6,932 ) (17,446 ) (83,078 ) 13,697


Net (loss) income per share attributable to ordinary shareholders

Basic
   (0.12 ) (0.26 ) (0.97 ) 0.04
Diluted
   (0.12 ) (0.26 ) (0.97 ) 0.03
Weighted average shares used in computing net (loss) income per ordinary share

Basic
   60,103,654    67,190,411    85,293,775    342,646,282
Diluted
   60,103,654    67,190,411    85,293,775    401,396,548


	Year Ended December 31,
	2018 RMB			2019 RMB			2020 RMB			2021 RMB			2022 RMB			2022 US$

	(in thousands, except share and share-related data)
Selected Data of Consolidated Statements of Operations
Net Revenues⁽¹⁾		13,408,421			17,015,089			15,024,188			14,575,719			12,704,172			1,841,932
Cost and expenses⁽²⁾
Cost of revenues		(7,182,897	)		(8,492,096	)		(7,976,781	)		(8,383,431	)		(7,421,419	)		(1,076,005	)
Research and development expenses		(760,644	)		(1,095,031	)		(1,167,677	)		(1,131,781	)		(1,006,219	)		(145,888	)
Sales and marketing expenses		(1,812,262	)		(2,690,824	)		(2,813,922	)		(2,604,309	)		(2,073,617	)		(300,646	)
General and administrative expenses		(640,023	)		(1,527,282	)		(763,150	)		(624,700	)		(596,006	)		(86,413	)
Impairment loss on goodwill and intangible assets		—			—			—			(4,397,012	)		—			—

Total cost and expenses		(10,395,826	)		(13,805,233	)		(12,721,530	)		(17,141,233	)		(11,097,261	)		(1,608,952	)

Other operating income		253,697			344,843			228,777			175,947			20,632			2,991
Income (loss) from operations		3,266,292			3,554,699			2,531,435			(2,389,567	)		1,627,543			235,971
Interest income		272,946			407,542			444,471			384,279			368,879			53,482
Interest expense		(56,503	)		(78,611	)		(78,872	)		(73,776	)		(83,530	)		(12,111	)
Other gain or loss, net		(43,200	)		(15,711	)		1,500			(16,000	)		118,325			17,156

Income (loss) before income tax and share of income on equity method investments		3,439,535			3,867,919			2,898,534			(2,095,064	)		2,031,217			294,498
Income tax expenses		(699,648	)		(883,801	)		(755,620	)		(822,556	)		(562,281	)		(81,523	)

Income (loss) before share of income (loss) on equity method investments		2,739,887			2,984,118			2,142,914			(2,917,620	)		1,468,936			212,975
Share of income (loss) on equity method investments		48,660			(23,350	)		(42,522	)		(8,084	)		11,073			1,605
Net income (loss)		2,788,547			2,960,768			2,100,392			(2,925,704	)		1,480,009			214,580
Less: net loss attributable to non-controlling interest		(27,228	)		(10,122	)		(3,092	)		(11,996	)		(4,274	)		(620	)

Net income (loss) attributable to Hello Group Inc.		2,815,775			2,970,890			2,103,484			(2,913,708	)		1,484,283			215,200


	Year Ended December 31,
	2018 RMB		2019 RMB		2020 RMB		2021 RMB			2022 RMB		2022 US$

	(in thousands, except share and share-related data)
Net income attributable to ordinary shareholders		2,815,775		2,970,890		2,103,484		(2,913,708	)		1,484,283		215,200

Net income (loss) per share attributable to ordinary shareholders
Basic		6.92		7.15		5.05		(7.20	)		3.80		0.55
Diluted		6.59		6.76		4.83		(7.20	)		3.65		0.53
Weighted average shares used in computing net income per ordinary share
Basic		407,009,875		415,316,627		416,914,898		404,701,910			390,176,367		390,176,367
Diluted		433,083,643		451,206,091		452,081,642		404,701,910			423,810,279		423,810,279

(1)	Components of our net revenues are presented in the following table:


	Year Ended December 31,
	2018 RMB		2019 RMB		2020 RMB		2021 RMB		2022 RMB		2022 US$

	(in thousands)
Live video service		10,709,491		12,448,131		9,637,579		8,378,945		6,510,460		943,928
Value-added service		1,883,150		4,105,963		5,112,182		5,971,792		6,007,018		870,936
Mobile marketing		500,321		331,822		198,197		159,010		124,956		18,117
Mobile games		130,392		92,451		39,564		47,712		55,732		8,080
Other services		185,067		36,722		36,666		18,260		6,006		871

Total		13,408,421		17,015,089		15,024,188		14,575,719		12,704,172		1,841,932

(2)	Share-based compensation expenses were allocated in cost and expenses as follows:


									Year Ended December 31,
	Year Ended December 31,								2018 RMB		2019 RMB		2020 RMB		2021 RMB		2022 RMB		2022 US$
	2012		2013		2014		2015
	(in US$ thousands)								(in thousands)
Cost of revenues		—		34		155		915		21,661		23,972		18,449		17,941		14,195		2,058
Research and development expenses		39		269		674		3,502		152,806		175,053		175,870		139,571		88,797		12,874
Sales and marketing expenses		11		128		736		3,780		142,927		196,311		158,902		70,821		38,432		5,572
General and administrative expenses		542		532		5,073		9,185		263,419		1,012,896		325,465		247,438		260,060		37,705

Total		592		963		6,638		17,382		580,813		1,408,232		678,686		475,771		401,484		58,209

The following table presents our selected consolidated balance sheet data as of December 31, ~~2012, 2013, 2014~~2018, 2019, 2020, 2021 and ~~2015.~~2022.


											As of December 31,
	As of December 31,										2018 RMB		2019 RMB		2020 RMB		2021 RMB		2022 RMB		2022 US$
	2012			2013			2014		2015
	(in US$ thousands)										(in thousands)
Selected Consolidated Balance Sheet Data:
Cash and cash equivalents		18,539			55,374			450,968		169,469		2,468,034		2,612,743		3,363,942		5,570,563		5,018,129		727,560
Total assets		20,784			63,025			478,504		542,157		18,965,538		22,483,681		23,220,556		18,111,238		15,829,587		2,295,075
Total liabilities		143			5,566			38,113		73,771		7,942,679		8,764,899		8,385,227		7,525,641		4,898,949		710,281
Total mezzanine equity		27,199			80,319			—		—
Total (deficit) equity		(6,558	)		(22,860	)		440,391		468,386
Total equity												11,022,859		13,718,782		14,835,329		10,585,597		10,930,638		1,584,794

B.	Capitalization and Indebtedness

Not applicable.

C.	Reasons for the Offer and Use of Proceeds

Not applicable.

D.	Risk Factors

Summary of Risk Factors

An investment in our ADSs or Class A ordinary shares involves significant risks. Below is a summary of material risks we face, organized under relevant headings. These risks are discussed more fully in Item 3. Key Information—D. Risk Factors.

Risks Related to Our Business and Industry

~~We experienced a significant decrease in the growth rate of our user base in 2015.~~

If we fail to retain our existing users, further grow our user base, or if user engagement on our platform declines, our business and operating results may be materially and adversely affected.;

We cannot guarantee that the monetization strategies we have adopted will be successfully implemented or generate sustainable revenues and profits;

We operate in a highly dynamic market, which makes it difficult to evaluate our future prospects;

We currently generate a substantial majority of our revenues from our live video service. We may not be able to continue to grow or continue to achieve profitability from such service;

We may not be able to successfully maintain and increase the number of paying users for the various services we offer on our platform;

Our business is dependent on the strength of our brands and market perception of our brand;

Content posted or displayed on our social networking platform, including the live video shows hosted by us or our users, has been and may again be found objectionable by mainland China regulatory authorities and may subject us to penalties and other serious consequences;

Risks Related to Our Corporate Structure

We are a Cayman Islands holding company with no equity ownership in the consolidated affiliated entities and we conduct our operations in mainland China through (i) our mainland China subsidiaries and (ii) the consolidated affiliated entities with which we have maintained contractual arrangements and their subsidiaries. Investors in our Class A ordinary shares or the ADSs thus are not purchasing equity interest in the consolidated affiliated entities in mainland China but instead are purchasing equity interest in a Cayman Islands holding company. If the mainland China government finds that the agreements that establish the structure for operating certain of our operations in mainland China do not comply with mainland China regulations relating to the relevant industries, or if these regulations or the interpretation of existing regulations change in the future, we could be subject to severe penalties or be forced to relinquish our interests in those operations. Our holding company in the Cayman Islands, the consolidated affiliated entities, and investors of our company face uncertainty about potential future actions by the mainland China government that could affect the enforceability of the contractual arrangements with the consolidated affiliated entities and, consequently, significantly affect the financial performance of the consolidated affiliated entities and our company as a group;

We rely on contractual arrangements with the consolidated affiliated entities and their respective shareholders for our operations in mainland China, which may not be as effective in providing operational control as direct ownership; and

We may lose the ability to use and enjoy assets held by the consolidated affiliated entities that are important to the operation of our business if the consolidated affiliated entities declare bankruptcy or become subject to a dissolution or liquidation proceeding.

Risks Related to Doing Business in mainland China

The PCAOB had historically been unable to inspect our auditor in relation to their audit work performed for our financial statements and the inability of the PCAOB to conduct inspections of our auditor in the past has deprived our investors with the benefits of such inspections;

Our ADSs may be prohibited from trading in the United States under the HFCAA in the future if the PCAOB is unable to inspect or investigate completely auditors located in mainland China. The delisting of the ADSs, or the threat of their being delisted, may materially and adversely affect the value of your investment;

The mainland China government’s significant oversight and discretion over our business operations could result in a material adverse change in our operations and the value of our ADSs.

Uncertainties in the interpretation and enforcement of mainland China laws and regulations could limit the legal protections available to you and us;

We face uncertainties with respect to the implementation of the PRC Foreign Investment Law and how it may impact the viability of our current corporate structure, corporate governance and business operations;

Mainland China’s M&A Rules and certain other mainland China regulations establish complex procedures for some acquisitions of Chinese companies by foreign investors, which could make it more difficult for us to pursue growth through acquisitions in mainland China; and

The approval of or filing with the CSRC or other mainland China government authorities may be required in connection with our offshore offerings under mainland China law, and, if required, we cannot predict whether or for how long we will be able to obtain such approval.

Risks Related to our ADSs

The trading price of our ADSs is likely to be volatile, which could result in substantial losses to investors;

If securities or industry analysts do not publish research or reports about our business, or if they adversely change their recommendations regarding our ADSs, the market price for our ADSs and trading volume could decline; and

Substantial future sales or the expectation of substantial sales of our ADSs in the public market could cause the price of our ADSs to decline.

Risks Related to Our Business and Industry

If we fail to retain our existing users, further grow our user base, or if user engagement on our platform declines, our business and operating results may be materially and adversely affected.

The size of our user base and the level of our user engagement are critical to our success. ~~Our MAUs reached 69.8 million in December 2015, representing a 0.7% increase from 69.3 million in December 2014, compared~~There have been times when our user base failed to ~~a 105.6% increase from December 2013. The growth rate of~~grow or even declined. There is no guarantee that our MAUs ~~significantly decreased in 2015 primarily due to the reduced growth of number of smartphone users in China, and upgrades to our platform that take time for users to adapt to.~~will grow at a desirable rate or at all. Growing our user base and increasing the overall level of user engagement on our social networking platform and in particular our live video service, which currently contributes a majority of our revenues, are critical to our business. If our user growth rate ~~continues to~~ slows down ~~as it did in 2015,~~or becomes negative, our success will become increasingly dependent on our ability to retain existing users and enhance user engagement on our platform. If our Momo and Tantan mobile ~~application is~~applications are no longer one of the social networking tools that people frequently use, or if people do not perceive our services to be interesting or useful, we may not be able to attract users or increase the frequency or degree of their engagement. A number of user-oriented instant communication products that achieved early popularity have since seen the size of their user base or level of user engagement decline, in some cases precipitously. There is no guarantee that we will not experience a similar erosion of our user base or user engagement level in the future. A number of factors could negatively affect user retention, growth and engagement, including if:

we are unable to attract new users to our platform or retain existing ones;

we fail to introduce new and improved services, or if we introduce services that are not favorably received by users;

we are unable to combat spam on or inappropriate or abusive use of our platform, which may lead to negative public perception of us and our brand;

technical or other problems prevent us from delivering our services in a rapid and reliable manner or otherwise adversely affect the user experience;

we suffer from negative publicity, fail to maintain our brand or if our reputation is damaged;

we fail to address user concerns related to privacy and communication, safety, security or other factors;

there are adverse changes in our services that are mandated by, or that we elect to make to address, legislation, regulations or government policies; and

the growth of the number of smartphone users in mainland China stalls.

If we are unable to grow our user base or enhance user engagement, our platform will become less attractive to our users, customers and platform partners, which would have a material and adverse impact on our business and operating results.

We ~~are in the early stages of monetization and~~ cannot guarantee that the monetization strategies we have adopted will be successfully implemented or generate sustainable revenues and ~~profit.~~profits.

As the online social networking industry in mainland China is relatively young, prevailing monetization models similar to ours have yet to be proven to be sustainable, and it may be more difficult to predict user and customer behaviors and demands compared to other established industries. Our monetization model ~~is new and~~has been evolving. We began to generate revenues in the second half of 2013 primarily through membership subscriptions and also game publishing and other services, but we continue to explore and implement new monetization models. WeWhile membership subscriptions contributed a majority of our revenues prior to 2016, live video service, which we launched in September 2015 and adopted a virtual items-based revenue model, has replaced membership subscription as our major source of revenues in after 2016. The services that we currently ~~generate revenues through~~provide, including live video service, value-added service (comprising membership subscriptions and virtual gift service), mobile marketing services, mobile games, and other services, ~~which accounted for~~contributed approximately ~~43.6%~~51.2%, ~~29.0%~~47.3%, ~~23.2%~~1.0%, 0.4% and ~~4.2%~~0.1%, respectively, of our net revenues in ~~2015. In 2015,~~2022. Apart from live video services, from time to time we have ~~continued to strategize to increase monetization of our platform. In January 2015, we~~ launched ~~gift mall~~new services ~~that allow users to send gifts to each other. In February 2015, we launched our first self-developed game~~ on our platform, explored new monetization models and ~~started~~broadened our revenue sources, and we expect to ~~generate revenues by in-game purchases of virtual items. In~~continue to do so. For example, in the ~~second~~fourth quarter of ~~2015,~~2016, we launched ~~our in-feed marketing solutions powered by~~ a proprietary self-serve advertising system, and started to offer brand-oriented display ads and action-driven ad products such as app downloads. In addition, in September 2015, we launched our live music and entertainment broadcastingvirtual gift service which ~~adopts~~allows our users to purchase and send virtual gifts to other users outside of live video service. In 2018, we co-produced a TV variety show. In 2018, Tantan launched membership subscriptions and some other premium features on a pay-per-use basis. In 2019, Tantan introduced Quick Chat, which has services based on both the subscription model and the pay-per-use model. In 2020, Tantan launched its live video services with a virtual ~~items-based~~item-based revenue model. Tantan is also experimenting other monetization models in order to improve its revenues and profits. In 2021, Tantan launched a virtual gift-based Chatroom experience as part of its value-added service. However, there is no assurance that any of these and other new monetization models would be profitable or sustainable. If our strategic initiatives do not enhance our ability to monetize our existing services or enable us to develop new approaches to monetization, we may not be able to maintain or increase our revenues and profits or recover any associated costs. ~~Furthermore, as the online music and entertainment industry in China is relatively young, there are few proven methods of projecting user demand or available industry standards on which we can rely.~~

As we further expand, we will also seek to develop additional strategic partnerships with third parties, including e-commerce companies, online marketplaces and other content or service providers. There is no assurance that we will be able to develop, maintain or enhance beneficial strategic partnership at reasonable cost, or at all. In addition, we

We may in the future introduce new services to further diversify our revenue streams, including services with which we have little or no prior development or operating experience. If these new or enhanced services fail to engage users, customers or platform partners, we may fail to attract or retain users or to generate sufficient revenues to justify our investments, and our business and operating results may suffer as a result.

We ~~have a limited operating history~~operate in a highly dynamic market, which makes it difficult to evaluate our future prospects.

The market for social networking platforms is relatively new, highly dynamic and may not develop as expected. Our users, customers and platform partners may not fully understand the value of our services, and potential new users, customers and platform partners may have difficulty distinguishing our services from those of our competitors. Convincing potential users, customers and platform partners of the value of our services is critical to the growth of our user base and the success of our business.

We launched our Momo mobile application in August 2011 and ~~the relatively short operating history makes~~acquired our Tantan mobile application in May 2018. The evolving monetization strategies make it difficult to assess our future prospects or forecast our future results. You should consider our business and prospects in light of the risks and challenges we encounter or may encounter in this developing and rapidly evolving market. These risks and challenges include our ability to, among other things:

~~increase~~

expand our ~~number of members and other~~ paying ~~users, which include users who purchase emoticons and virtual gifts or virtual items in~~user base for the various services offered by our platforms, including live video service, value-added service, mobile games and ~~live music shows offered on our platform, as well as the level of user engagement;~~others;

develop and deploy diversified and distinguishable products, features and services for our users, customers and platform partners;

convince customers of the benefits of our marketing services compared to alternative forms of marketing, and continue to increase the efficiency of our mobile marketing solutions and expand our network of marketers;

develop or implement strategic initiatives to monetize our ~~platform;~~platforms;

~~maintain or~~ develop beneficial relationship with key strategic ~~partners;~~partners, talented broadcasters and talent agencies for our live video service;

develop a reliable, scalable, secure, high-performance technology infrastructure that can efficiently handle increased usage;

successfully compete with other companies, some of which have substantially greater resources and market power than us, that are currently in, or may in the future enter, our industry, or duplicate the features of our services;

attract, retain and motivate talented employees; and

defend ourselves against litigation, regulatory, intellectual property, privacy or other claims.

If we fail to educate potential users, customers and platform partners about the value of our products and services, if the market for our ~~platform~~platforms does not develop as we expect or if we fail to address the needs of this dynamic market, our business will be harmed. Failure to adequately address these or other risks and challenges could harm our business and cause our operating results to suffer.

We ~~have incurred significant net losses in the past and only recently began to achieve profitability, and we may not be able to subsequently maintain profitability.~~

~~We have incurred significant net losses since our inception until 2015, in which we generated~~currently generate a net income of US$13.7 million. As of December 31, 2015, we had an accumulated deficit of US$94.1 million. Our profitability may not sustain. We believe that our future revenue growth will depend on, among other factors, the popularity of social networking applications, as well as our ability to attract new users, increase user engagement, effectively design and implement monetization strategies, develop new services and compete effectively and successfully. In addition, our ability to sustain profitability is affected by various factors, many of which are beyond our control, such as the continuous development of social networking, mobile marketing services, mobile games, and online music and entertainment services in China.

We may again incur losses in the near future due to our continued investments in technologies, research and development and our continued sales and marketing initiatives. Changes in the macroeconomic and regulatory environment or competitive dynamics and our inability to respond to these changes in a timely and effective manner may also impact our profitability. Accordingly, you should not rely on the revenues of any prior quarterly or annual period as an indicationsubstantial majority of our ~~future performance.~~

revenues from our live video service. We may not be able to ~~successfully maintain and increase the number of our members or other paying users.~~

Revenues generated from membership subscription packages, mobile marketing services, mobile games, and other services including paid emoticons and live music and entertainment broadcasting service historically accounted for substantially all of our total revenues. Our future growth depends on our abilitycontinue to convert our existing users into members and other paying users of our services and mobile games and retain our current members and paying users. Paying users include our members as well as users who purchase emoticons and virtual gifts or virtual items in mobile games and live music shows offered on our platform. However, we cannot assure you that we will be able to retain our members and other paying usersgrow or continue to convert existing or new users into members and other paying users, nor can we assure you that we will be able to successfully compete with current and new competitors on members and other paying users. We had 2.9 million members as of December 31, 2015, same as the number of members as of December 31, 2014. Our efforts to provide greater incentives for our users to subscribe for our membership status may not continue to succeed. Our members and other paying users may discontinue their subscriptions or other spending on our services because we no longer serve their needs, or simply because the interests and preferences of these users shift. If we cannot successfully maintain or increase the number of our members and other paying users, our business, results of operations and prospects will be adversely affected.

~~We generate an increasing portion of our revenues from mobile marketing services, and the loss of marketers, or reduction in spending by marketers, could seriously harm our business.~~

Revenues generated from our mobile marketing services have increased significantly from 0.4% and 4.4% of our net revenues in 2013 and 2014, respectively, to 29.0% of our net revenues in 2015. Since we began to offer mobile marketing services in the third quarter of 2013, we have diversified and expanded our mobile marketing service offerings to increasingly monetize our platform. Currently our mobile marketing services primarily comprise brand-oriented display ads and in-feed marketing solutions. As is common in the industry, our marketers do not have long-term advertising commitments with us. Many of our marketers spend only a relatively small portion of their overall advertising budget with us. In addition, marketers may view some of our products as experimental and unproven. Marketers may not continue to do business with us, or they may advertise with us based on terms unfavorable to us, if we do not deliver our marketing solutions in an effective manner, or if they do not believe that their investment in advertising with us will generate a competitive return relative to other alternatives. For example, failure to maintain or increase the quantity or quality of ads shown to users, or a decrease in user engagement may cause marketers to reduce or cease their spending on our mobile marketing services.

In addition, expenditures by marketers tend to be cyclical, reflecting overall economic conditions and budgeting and buying patterns. Adverse macroeconomic conditions can also have a material negative impact on the demand for advertising and cause our marketers to reduce the amounts they spend on advertising, which could adversely affect our revenues and business.

~~If we fail to launch new games or release upgrades to existing games that attract new players and retain existing players, our business and operating results will be materially and adversely affected.~~

We have relied on mobile games for a substantial portion of our revenues, and we expect mobile games to continue to be an important part of our revenues. Revenues generated from mobile games contributed 25.1% and 23.2% of our total revenues in 2014 and 2015, respectively. Growing and retaining our user base and converting some of our users into paying users largely depend on our ability to continuously offer new games and game updates that anticipate and effectively respond to changing player interests and preferences. If we cannot maintain our existing partnership with third-party game developers, or source new popular games that retain existing players and attract new players by expanding our network of partnering game developers, our business, results of operations and prospects will be materially and adversely affected.

It is difficult to consistently anticipate player preferences or industry changes, particularly games in new genres. Neither can we assure you that the new games we offer will attract a large number of players and be commercially successful, nor can we guarantee that we will be able to meet our timetable for new game launches. A number of factors, including changing game player preferences and our relationship with existing and new third-party game developers, could affect the popularity of new games or delay the launch of new games on our platform. If the new games we introduce are not commercially successful, we may not be able to recover the expenses we incur in game development, which can be significant.

In addition, new games that we offer may attract game players away from existing games on our platform. If this occurs, it will decrease the player base of our existing games, which could result in decreased revenuesachieve profitability from such existing games. Game players of our existing games may also spend less money to purchase virtual items in our new games than they would have spent if they had continued playing our existing games, which could materially and adversely affect our revenues.

~~We may not be able to grow our live music and entertainment broadcasting service and achieve the level of profitability that we currently anticipate.~~service.

In September 2015, weMomo launched our live ~~music and entertainment broadcasting~~video service with a virtual items-based revenue model, whereby users can enjoy live ~~music shows~~performances and interact with the ~~singers~~broadcasters for free, and have the option of purchasing in-show virtual items. In 2020, Tantan launched its live video services and contributed to our live video service revenue. While we had initial success with this service, which contributed RMB10,709.5 million and RMB12,448.1 million to, or 79.9% and 73.2% of, our net revenues in 2018 and 2019, respectively, this contribution dropped to RMB9,637.6 million, RMB8,378.9 million and RMB6,510.5 million (US$943.9 million) in 2020, 2021 and 2022, respectively, or 64.1%, 57.5% and 51.2% of our net revenues, respectively. While we plan to continue to invest significantly in expanding our live ~~music and entertainment broadcasting~~video service, we may not be able to continue to achieve ~~the level~~our historical levels of profitability based on the virtual items-based revenue ~~model, as we have relatively little experience in operating such service in the online music and entertainment industry.~~model. In addition, popular ~~singers~~broadcasters or talent agencies may cease to use our service and we may be unable to attract new ~~talent~~talents that can attract users or cause such users to increase the amount of time spent on our platform or the amount of money spent on in-show virtual items.

Although we believe we have a large and diversified pool of talented broadcasters, talent agencies as well as paying users and have entered into multi-year exclusivity agreements with popular broadcasters and talent agencies, if a large number of our broadcasters, particularly popular broadcasters, were to leave our platform for competing platforms at the same time, if we are unable to negotiate acceptable business terms with popular broadcasters or talent agencies, or if a large number of our users decided to use live video services provided by our competitors, we might not be able to expand the user base of our live video service and achieve or maintain the level of revenues and profitability as we currently anticipate. Broadcasters provide live video service on our platform as an individual or as a member of a talent agency. The talent agencies recruit, train and retain the broadcasters. We are committed to provide strong support and resources to broadcasters and talent agencies to offer high-quality content. We are also committed to closely cooperate and develop long-term relationship with broadcasters and talent agencies. Under our current arrangements with ~~certain popular singers,~~our broadcasters and talent agencies, we share with them a portion of the revenues we derive from the sales of in-show virtual items in our live ~~music~~video service. Payments of revenue sharing to broadcasters and ~~entertainment broadcasting service. In the future, the amount~~talent agencies for our live video service constitute a major portion of our cost of revenues. If we ~~pay~~are required to ~~these singers may increase or we may fail to reach mutually acceptable terms with these singers, which may adversely affect~~share a larger portion of our revenues ~~or cause popular performers to leave~~with the broadcasters and talent agencies for competition purpose, our ~~platform. In addition, if our users decide to use live music and entertainment broadcasting services provided by our competitors, we~~results of operations may be adversely impacted.

We may not be able to ~~expand~~successfully maintain and increase the ~~user base~~number of paying users for the various services we offer on our platform.

Our future growth depends on our ability to convert our users into paying users of our services, including live ~~music~~video service, value-added service, mobile games and ~~entertainment broadcasting service~~other services, and ~~achieve~~our ability to retain our existing paying users. However, we cannot assure you that we will be successful in any of the foregoing initiatives, nor can we assure you that we will be able to successfully compete with current and new competitors on attracting paying users. Our efforts to provide greater incentives for our users to pay for our various services may not continue to succeed. Our paying users may discontinue their spending on our services because they may no longer serve our paying users’ needs, or simply because the interests and preferences of these users shift. If we cannot successfully maintain or increase the ~~level~~number of ~~profitability as we currently anticipate.~~our paying users, our business, results of operations and prospects will be adversely affected.

Our business is dependent on the strength of our ~~brand~~brands and market perception of our brand.

In mainland China, we market our services primarily under the ~~brand “~~ brands “陌陌” or ~~“Momo.~~“Momo” and “探探” or “Tantan.” Our business and financial performance are highly dependent on the strength and the market perception of our ~~brand~~brands and services. A well-recognized brand is critical to increasing our user base and, in turn, facilitating our efforts to monetize our services and enhancing our attractiveness to customers. From time to time, we conduct marketing activities across various media to enhance our ~~brand~~brands and to guide public perception of our ~~brand~~brands and services. In order to create and maintain brand awareness and brand loyalty, to influence public perception and to retain existing and attract new mobile users, customers and platform partners, we may need to substantially increase our marketing expenditures. We cannot assure you, however, that these activities will be successful or that we will be able to achieve the brand promotion effect we expect.

In addition, people may not understand the value of our platform, and there may be a misperception that Momo is used solely as a tool to randomly meet or date strangers. Convincing potential new users, customers and platform partners of the value of our services is critical to increasing the number of our users, customers and platform partners and to the success of our business.

Our business is subject to complex and evolving Chinese and international laws and regulations regarding cybersecurity, information security, privacy and data protection. Many of these laws and regulations are subject to change and uncertain interpretation, and any failure or perceived failure to comply with these laws and regulations could result in claims, changes to our business practices, negative publicity, legal proceedings, increased cost of operations, or declines in user base or engagement, or otherwise harm our business.
Our business generates and processes a large quantity of data. We face risks inherent in handling and protecting large volume of data. In particular, we face a number of challenges relating to data from transactions and other activities on our platforms, including:
protecting the data in and hosted on our system, including against attacks on our system by outside parties or fraudulent behavior or improper use by our employees;
addressing concerns related to privacy and sharing, safety, security and other factors; and
complying with applicable laws, rules and regulations relating to the collection, use, storage, transfer, disclosure and security of personal information, including any requests from regulatory and government authorities relating to these data.
In general, we expect that data security and data protection compliance will receive greater attention and focus from regulators, both domestically and globally, as well as attract continued or greater public scrutiny and attention going forward, which could increase our compliance costs and subject us to heightened risks and challenges associated with data security and protection. If we are unable to manage these risks, we could become subject to penalties, including fines, suspension of business and revocation of required licenses, and our reputation and results of operations could be materially and adversely affected.
The mainland China regulatory and enforcement regime with regard to data security and data protection is evolving and may be subject to different interpretations or significant changes. Moreover, different mainland China regulatory bodies, including the Standing Committee of the National People’s Congress, or the NPC, the Ministry of Industry and Information Technology, or the MIIT, the CAC, the Ministry of Public Security, or the MPS, and the State Administration for Market Regulation, or the SAMR, have enforced data privacy and protections laws and regulations with varying standards and applications. See “Item 4. Information on the Company—B. Business Overview—Regulations—Regulations Relating to Internet Content and Information Security” and “Item 4. Information on the Company—B. Business Overview—Regulations—Regulations Relating to Privacy Protection.” The following are examples of certain recent mainland China regulatory activities in this area:
Data Security
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In June 2021, the Standing Committee of the NPC promulgated the PRC Data Security Law, which took effect in September 2021. The PRC Data Security Law, among other things, provides for security review procedure for data-related activities that may affect national security. In July 2021, the State Council promulgated the Regulations on Security and Protection of Critical Information Infrastructure, which became effective on September 1, 2021. Pursuant to this regulation, critical information infrastructure means key network facilities or information systems of critical industries or sectors, such as public communication and information service, energy, transportation, water conservation, finance, public services, e-government affairs and national defense science, the damage, malfunction or data leakage of which may endanger national security, people’s livelihoods and the public interest. In December 2021, the CAC, together with other authorities, jointly promulgated the Cybersecurity Review Measures, which became effective on February 15, 2022 and replaces its predecessor regulation. Pursuant to the Cybersecurity Review Measures, critical information infrastructure operators that procure internet products and services, and operators of network platforms conducting data processing activities must be subject to the cybersecurity review if their activities affect or may affect national security. The Cybersecurity Review Measures further stipulates that network platform operators that hold personal information of over one million users shall apply with the Cybersecurity Review Office for a cybersecurity review before any initial public offering at a foreign stock exchange. Given that the Cybersecurity Review Measures was recently promulgated, there are substantial uncertainties as to its interpretation, application, and enforcement. On November 14, 2021, the CAC published a draft of the Administrative Regulations for Internet Data Security, or the Draft Data Security Regulations, for public comments. The Draft Data Security Regulations provides that data processors conducting the following activities must apply for cybersecurity review: (i) merger, reorganization, or division of internet platform operators that have acquired a large number of data resources related to national security, economic development, or public interests, which affects or may affect national security; (ii) a foreign listing by a data processor processing personal information of over one million users; (iii) a listing in Hong Kong which affects or may affect national security; or (iv) other data processing activities that affect or may affect national security. There have been no further clarifications from the authorities as of the date of this annual report as to the standards for determining such activities that “affects or may affect national security.” The period for which the CAC solicited comments on this draft ended on December 13, 2021, but there is no timetable as to when the draft regulations will be enacted. As such, substantial uncertainties exist with respect to the enactment timetable, final content, interpretation, and implementation of the draft regulations, including the standards for determining activities that “affects or may affect national security.” As the Draft Data Security Regulations has not been adopted and it remains unclear whether the formal version adopted in the future will have any further material changes, it is uncertain how the draft regulations will be enacted, interpreted or implemented and how they will affect us.
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On July 7, 2022, the CAC promulgated the Security Assessment Measures for Outbound Data Transfer, effective from September 1, 2022, or the Security Assessment Measures, to regulate outbound data transfer activities, protect the information rights and interests of individuals, safeguard national security and social public interests, and promote the safe and free cross-border flow of data. Furthermore, the Security Assessment Measures provide that the security assessment for outbound data transfers shall follow principles of the combination of pre-assessment and continuous supervision and the combination of risk self-assessment and security assessment, so as to prevent the security risks arising from outbound data transfers and ensure the orderly and free flow of data according to the law. For outbound data transfers activities that have been carried out prior to the implementation of the Security Assessment Measures, and not in compliance with the Security Assessment Measures, rectification shall be completed within six months from the implementation of the Security Assessment Measures. The Security Assessment Measures further provide that a data processor intending to implement outbound data transfer under the following circumstances shall apply for security assessment to the CAC: (a) a data processor intending to provide critical data abroad; (b) a critical information infrastructure operator or a data processor processing the personal information of more than one million individuals intending to provide personal information abroad; (c) a data processor, who has cumulatively provided personal information of 100,000 individuals or sensitive personal information of 10,000 individuals abroad since January 1^st of the previous year, intending to provide personal information abroad; and (d) other circumstances prescribed by the CAC for which application for security assessment for outbound data transfers is required. Furthermore, on August 31, 2022, the CAC promulgated the Guidelines for Application for the Outbound Data Transfer Security Assessment, which provides that activities of outbound data transfer shall also include: (i) overseas transmission and storage by data processors of data collected and generated during mainland China domestic operations; (ii) granting the access to, visiting, acquiring, downloading or exporting the data collected and generated by data processors and stored in mainland China to overseas institutions, organizations or individuals; and (iii) other activities as specified by the CAC.
On December 8, 2022, the MIIT released the Administrative Measures for Data Security in Industry and Information Technology Sectors (Trial), or the MIIT Measures, which came into effect on January 1, 2023. The measures apply to data management in certain industries, including telecommunication sectors. The MIIT Measures set out three categories of data: ordinary data, important data and core data. The processing of important data and core data is subject to certain filing and reporting obligations. Since the categories of important data and core data have not been released, it is uncertain how the measures will be interpreted and implemented.
On December 2, 2022, the Central Committee of the Communist Party of China and the State Council jointly issued Opinions on Establishing Fundamental System to Better Play the Role of Data, which provides that, among others, the governance system of data shall be improved, and security of development shall be ensured. The opinion further requires that the administrator shall coordinate development and security, implement the comprehensive national security concept, strengthen the development of a data security protection system, and ensure security throughout the entire process of data supply, transaction, and use.
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Personal Information and Privacy
The Anti-monopoly Guidelines for the Platform Economy Sector published by the Anti-monopoly Committee of the State Council, effective on February 7, 2021, prohibits collection of user information through coercive means by online platforms operators.
In August 2021, the Standing Committee of the NPC promulgated the PRC Personal Information Protection Law, which integrates the scattered rules with respect to personal information rights and privacy protection and took effect on November 1, 2021. We update our privacy policies from time to time to meet the latest regulatory requirements of mainland China government authorities and adopt technical measures to protect data and ensure cybersecurity in a systematic way. Nonetheless, the PRC Personal Information Protection Law elevates the protection requirements for personal information processing, and many specific requirements of this law remain to be clarified by the CAC, other regulatory authorities, and courts in practice. We may be required to make further adjustments to our business practices to comply with the personal information protection laws and regulations.
Many of the data-related legislations are relatively new and certain concepts thereunder remain subject to interpretation by the regulators. If any data that we possess belongs to data categories that are subject to heightened scrutiny, we may be required to adopt stricter measures for protection and management of such data. The Cybersecurity Review Measures and the Draft Data Security Regulations remain unclear on whether the relevant requirements will be applicable to companies that are already listed in the United States, such as us, if we were to pursue another listing outside of the mainland China. We cannot predict the impact of the Cybersecurity Review Measures and the Draft Data Security Regulations, if any, at this stage, and we will closely monitor and assess any development in the rule-making process. If the Cybersecurity Review Measures and the enacted version of the Draft Data Security Regulations mandate clearance of cybersecurity review and other specific actions to be taken by issuers like us, we face uncertainties as to whether these additional procedures can be completed by us timely, or at all, which may delay or disallow our future listings (should we decide to pursue them), subject us to government enforcement actions and investigations, fines, penalties, suspension of our non-compliant operations, or removal of our apps from the relevant application stores, and materially and adversely affect our business and results of operations. As of the date of this annual report, we have not been involved in any formal investigations on cybersecurity review made by the CAC on such basis.
In general, compliance with the existing mainland China laws and regulations, as well as additional laws and regulations that mainland China regulatory bodies may enact in the future, related to data security and personal information protection, may be costly and result in additional expenses to us, and subject us to negative publicity, which could harm our reputation and business operations. There are also uncertainties with respect to how such laws and regulations will be implemented and interpreted in practice.
Our practices may become inconsistent with new laws or regulations concerning data protection, or the interpretation and application of existing consumer and data protection laws or regulations, which is often uncertain and in flux. If so, in addition to the possibility of fines, this could result in an order requiring that we change our practices, which could have an adverse effect on our business and operating results. For example, the European Union General Data Protection Regulation (“GDPR”), which came into effect on May 25, 2018, includes operational requirements for companies that receive or process personal data of residents of the European Economic Area. The GDPR establishes new requirements applicable to the processing of personal data, affords new data protection rights to individuals and imposes penalties for serious data breaches. Individuals also have a right to compensation under the GDPR for financial or non-financial losses. Although we do not conduct any business in the European Economic Area, in the event that residents of the European Economic Area access our platform and input protected information, we may become subject to provisions of the GDPR. Additionally, California recently enacted legislation that has been dubbed the first “GDPR-like” law in the U.S. Known as the California Consumer Privacy Act, or CCPA, it creates new individual privacy rights for consumers (as that word is broadly defined in the law) and places increased privacy and security obligations on entities handling personal data of consumers or households. The CCPA, which went into effect on January 1, 2020, requires covered companies to provide new disclosures to California consumers, and provides such consumers new ways to opt-out of certain sales of personal information. The CCPA provides for civil penalties for violations, as well as a private right of action for data breaches that is expected to increase data breach litigation. With some other conditions, the CCPA requires companies “doing business in California” to follow the CCPA. However, the phrase “doing business in California” is not defined in the CCPA. With reference to the California tax code, the phrase “doing business in California” is described as “ actively engaging in any transaction for the purpose of financial or pecuniary gain or profit.” We are currently not actively doing business in California, and thus, there is still uncertainty regarding whether the CCPA will apply to us. If further interpretations or court decisions render us “doing business in California,” the CCPA will apply to us and it may increase our compliance costs and potential liability. Some observers have noted that the CCPA could mark the beginning of a trend toward more stringent privacy legislation in the U.S., which could increase our potential liability and adversely affect our business.
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Intensified government regulations, rules or guidelines of the internet industry in mainland China could restrict our ability to maintain or increase the level of user traffic to, and user willingness to spend on, our platform as well as our ability to tap into other market opportunities, and negatively impact our businesses, results of operations, or financial condition.
The mainland China government has promulgated, in recent years, intensified regulations, rules, or guidelines on various aspects of the internet industry in mainland China. For example, in August 2018, the National Office of Anti-Pornography and Illegal Publication, or the NOAPIP, the MIIT, the MPS, the Ministry of Culture and Tourism, or MCT (previously known as the Ministry of Culture), the National Radio and Television Administration, or the NRTA, and the CAC jointly issued the Notice on Strengthen the Management of Online Live Broadcast Service, which required the real-name registration system for users to be put in place by online live broadcast service providers. On November 12, 2020, the NRTA promulgated the Circular on Strengthening the Administration of the Online Show Live Broadcast and Online E-commerce Live Broadcast (“Notice 78”), which sets forth registration requirements for platforms providing online show live broadcast or online e-commerce live broadcast to have their information and business operations registered by November 30, 2020. Notice 78 also sets forth requirements for certain online live broadcast businesses with respect to real-name registration, limits on user spending on virtual gifting, restrictions on minors on virtual gifting, online live broadcast review personnel requirements, content tagging requirements, and other requirements. For example, Notice 78 requires online live broadcast platforms to set a limit to the number of virtual gifts a user can send per day and per month, as well as the amount that can be gifted at any one time. However, there is currently no clear guidance as to what limits on virtual gifting spending will be imposed by the NRTA pursuant to Notice 78 and it is unclear how and to what degree any such limits would be imposed on different platforms.
Furthermore, on February 9, 2021, the NOAPIP, the MIIT, the MPS, the MCT, the NRTA, the CAC and the SAMR jointly issued the Guiding Opinions on Strengthening the Administration of Online Live Broadcast (“Opinions 3”), which strengthens the positive guidance and management of the online broadcast industry, including standardizing the behavior of virtual gifting and promoting the classification of the online live broadcast accounts. For example, Opinions 3 requires online live broadcast platforms to reasonably limit the maximum amount of a single virtual gift and a single virtual gifting per time to remind the users whose daily consumption amount has triggered the corresponding threshold, and to set necessary cooling off period and deferred payment period. We are still in the process of obtaining further guidance from regulatory authorities and evaluating the applicability and effect of the various requirements under Notice 78 and Opinions 3 on our business. Any limits on user spending on virtual gifting ultimately imposed may negatively impact our revenues derived from virtual gifting and our results of operations. Any further rulemaking under Notice 78, Opinions 3 or other intensified regulation with respect to online live broadcast may increase our compliance burden, and may have an adverse impact on our business and results of operations. On March 25, 2022, the CAC, the State Administration of Taxation, or the SAT, and the SAMR jointly issued the Opinions on Further Rectifying the Profit-making Online Live Broadcast to Promote the Healthy Development of the Industry, which enhances the online live broadcast accounts registration management, strengthens tax collection and punishes tax evasions and frauds in connection with online live broadcast.
On May 7, 2022, the Central Commission for Guiding Cultural and Ethical Progress of the Communist Party of China, the MCT, NRTA and the CAC promulgated the Opinions on Regulating Virtual Gifting during Online Live Broadcasting and Strengthening the Protection of Minors, or the May 7 Opinions. According to the May 7 Opinions, online live broadcasting platforms shall, among others (1) prohibit minors from virtual gifting, and strength the implementation of real-name registration; (2) not provide online live broadcaster account registration service to minors under 16 and shall obtain the consent from guardians before allowing minors between 16 and 18 to register as a broadcaster on their platforms; (3) continue to upgrade the youth mode of the platform and establish an exclusive customer service team for minors to prioritize the settlement of complaints and disputes related to minors; (4) strengthen the administration on key functions of the platform and prohibit virtual gifting amount from being the sole criteria for the ranking of broadcasters or the criteria for the ranking of users; and (5) suspend all services under youth mode after 10:00 p.m. every day to ensure the rest time of minors.
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The NRTA and the MCT jointly issued the Code of Conduct for Online Live Broadcasters on June 8, 2022, to regulate the conduct of broadcasters who provide online live broadcasting programs and audio/video program services through the Internet, including those who live broadcast on the online platforms, conduct real-time interactions with users, and perform through pre-uploaded audio or video programs. For live broadcasting content that requires a high level of professionalism (such as medical and healthcare, finance, law, education), the broadcasters should obtain corresponding qualifications and report to the live broadcasting platform, and the live broadcasting platform shall review and record the qualifications of the broadcasters.
In addition, as the internet industry in mainland China is still at a relatively early stage of development, new laws and regulations, rules or guidelines may be adopted from time to time to address new issues that come to the authorities’ attention. Some new laws, regulations, rules, or guidelines have or may in the future put additional restrictions on our users, broadcasters, content, product or service offerings, and may negatively impact our businesses, results of operations, or financial condition. For example, we are subject to a variety of regulatory restrictions concerning the age limit for broadcasters, as well as restrictions on our products’ features. The existing and future regulations rules and guidelines that could affect us are beyond our control, and their potential impact on us is difficult to predict. We may incur substantial financial, operational and managerial costs in response to and in anticipation to the relevant regulatory and policy risks, and we may not be able to effectively predict, estimate or manage those risks in a timely and cost-efficient manner. Furthermore, we may not timely obtain or maintain all the required licenses or approvals or to satisfy all the requirements posed by the authorities in the future. We also cannot assure you that we will be able to obtain the required licenses or approvals or to satisfy all the requirements posed by the authorities if we plan to expand into other internet businesses. If we fail to timely obtain or maintain any of the required licenses or approvals, we may be subject to various penalties, which may disrupt our business operations or derail our business strategy, and materially and adversely affect our business, financial condition and results of operations.
Content posted or displayed on our social networking platform, including the live video shows hosted by us or our users, has been and may again be found objectionable by mainland China regulatory authorities and may subject us to penalties and other serious consequences.
The mainland China government has adopted regulations governing internet and wireless access and the distribution of information over the internet and wireless telecommunications networks. Under these regulations, internet content providers and internet publishers are prohibited from posting or displaying over the internet or wireless networks content that, among other things, violates the principle of the PRC Constitution, laws and regulations, impairs the national dignity of mainland China or the public interest, or is obscene, superstitious, fraudulent or defamatory. Furthermore, internet content providers are also prohibited from displaying content that may be deemed by relevant government authorities as instigating ethnical hatred and harming ethnical unity, harming the national religious policy, “socially destabilizing” or leaking “state secrets” of the mainland China. Failure to comply with these requirements may result in the revocation of licenses to provide internet content or other licenses, the closure of the concerned platforms and reputational harm. The operator may also be held liable for any censored information displayed on or linked to their platform.
On December 15, 2019, the CAC released the Provisions on Ecological Governance of Network Information Content, or PEGNIC, which came into force on March 1, 2020. The PEGNIC is one of the latest regulations governing the distribution of information over the internet and wireless telecommunications networks in which it classifies the network information into three categories, namely the “encouraged information,” the “illegal information” and the “undesirable information.” While illegal information is strictly prohibited from distribution, the internet content providers are required to take relevant measures to prevent and resist the production and distribution of undesirable information. PEGNIC further clarifies the duties owed by the internet content providers in preventing the display of content that against the PEGNIC, such as obligations to improve the systems for users registration, accounts management, information release review, follow-up comments review, websites ecological management, real-time inspection, emergency response and disposal mechanism for cyber rumor and black industry chain information.
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On April 12, 2022, the Online Audio/Video Program Administration Division of the NRTA and the Publishing Bureau of the Publicity Department of the Central Committee of the Communist Party of China jointly promulgated the Notice on Strengthening the Administration of Live Broadcasting of Game-Playing on the Online Audio/Video Program Platforms, which stipulated that, among other things, (i) it is not allowed to live broadcast online games that have not been approved by the competent authorities in online audio/video programs or attract users to such games by any means, including through online live broadcasting, (ii) all online live broadcast platforms shall strengthen the management of online game live broadcast programs in terms of content and publicity, shall establish and improve management systems for information release, comments, and emergency response related to game-playing live broadcast program, and shall improve program monitoring and public opinion monitoring mechanisms, (iii) the online live broadcast platforms shall strengthen the management of the behavior of game broadcasters and those who conducted illegal and immoral behaviors are not allowed to be shown to the public through live broadcasting, (iv) the online live broadcast platforms are urged to establish and implement mechanisms for the protection of minors, and (v) the launch, broadcasting and layout of game-playing live broadcast programs shall be submitted to relevant radio and television administrative department in accordance with the relevant requirements of live broadcast programs, and online live broadcast platforms’ (including various domestic and overseas individual and institution accounts registered on relevant platforms) live broadcasting overseas game-playing programs or competitions shall be approved in advance.
The Administrative Provisions on Comment Threading Services on the Internet, or the Comment Threading Services Provisions, was amended by the CAC on November 16, 2022, and was effective on December 15, 2022. The Comment Threading Services Provisions requires that the comment threading service providers shall (1) verify the real identity information of the registered users under the principle of “using real name at back end and using alias or real name voluntarily at front end” and not provide comment threading services to users who have not verified their real identity information or fraudulently use the identity information of organizations or others; (2) establish and improve the system for the protection of the personal information of users, follow the principles of “legitimacy, appropriateness, necessity and good faith” in the processing of the personal information of users, disclose the rules for processing personal information, inform the users of the purpose and method of processing, type of personal information to be processed, storage period and other matters, and obtain individuals’ consents according to the law, unless otherwise provided for by laws or administrative regulations; (3) establish the system of “censorship before release” for comment threading services provided for news information; (4) provide the corresponding static version of information content at the same time on the same platform and page if the comment threading services are provided by way of bullet screens; (5) establish and improve a system of review and management of comments posted, real-time inspection, emergency response and reporting acceptance and other information security management systems, timely identify and dispose of illegal and negative information, and report to the cyberspace administration; (6) innovate the management methods for comments posted, research and develop information security management technology for comments posted and improve the ability to dispose of illegal and negative information, timely identify risks such as security defects and loopholes in the comment threading services, take remedial measures and report the same to the cyberspace administrations; (7) be staffed with a review editorial team that adapts to the scale of service, strengthen the review trainings and improve the professionalism of review editors; (8) cooperate with the cyberspace administrations in conducting supervision and inspection in accordance with the law and provide necessary technical and data support and assistance.
We have designed and implemented procedures to monitor content on our social networking platform, including the live video shows hosted by us or our users, in order to comply with relevant laws and regulations. However, it may not be possible to determine in all cases the types of content that could result in our liability as a distributor of such content and, if any of the content posted or displayed on our social networking platform is deemed by the mainland China government to violate any content restrictions, we would not be able to continue to display such content and could become subject to penalties, including confiscation of income, fines, suspension of business and revocation of required licenses, which could materially and adversely affect our business, financial condition and results of operations.
Regulatory authorities may conduct various reviews and inspections on our business operations, especially those related to content distribution, from time to time. If any non-compliance incidents in our business operations are identified, we may be required to take certain rectification measures in accordance with applicable laws and regulations, or we may be subject to other regulatory actions such as administrative penalties. We have been subject to administrative measures for the content posted or displayed on our platforms, which has negatively affected our business operations and financial results. We cannot guarantee that such inspections and administrative measures will not happen again in the future, the occurrence of which will adversely affect our business, financial condition and results of operations.
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We may also be subject to potential liability for any unlawful actions by our users on our platform. It may be difficult to determine the type of content or actions that may result in liability to us and, if we are found to be liable, we may be prevented from operating our business in mainland China. Moreover, staying in compliance with relevant regulatory requirements may result in limitation to our scope of service, reduction in user engagement or loss of users, diversion of our management team’s attention and increased operational costs and expenses. The costs of compliance with these regulations may continue to increase as a result of more content being made available by an increasing number of users of our social networking platform, which may adversely affect our results of operations. Although we have adopted internal procedures to monitor content and to remove offending content once we become aware of any potential or alleged violation, we may not be able to identify all the content that may violate relevant laws and regulations or third-party intellectual property rights. Even if we manage to identify and remove offensive content, we may still be held liable.
Our acquisition of Tantan, and the subsequent integration of Tantan into our business, creates significant challenges which may affect our ability to realize the benefits of the acquisition and have a material adverse effect on our business, reputation, results of operations and financial condition.
In May 2018, we completed the acquisition of Tantan, a Chinese social and dating app for approximately 5.3 million newly issued Class A ordinary shares of our company and US$613.2 million in cash. While we currently expect Tantan to remain a stand-alone brand and to largely operate independently, the process of integrating certain aspects of Tantan’s operations into our own operations is still continuing and could result in unforeseen operating difficulties, divert significant management attention and require significant resources that would otherwise have been available for the ongoing development of our existing operations. Challenges and risks from the Tantan acquisition include, among others:
the difficulty in retaining Tantan’s users following the acquisition;
the need to integrate certain operations, systems, technologies, and personnel of Tantan, the inefficiencies that may result if such integration is delayed or not implemented as expected, and unforeseen difficulties and expenditures that may arise in connection with such integration;
the difficulty in successfully evaluating and utilizing Tantan’s technology and features;
the difficulty in integrating potentially contrasting corporate cultures and management philosophies;
diversion of our management’s and personnel’s attention from our existing businesses and initiatives;
the difficulties relating to achieving the expected synergies of the transaction; and
the incurrence of unforeseen obligations or liabilities, which may entail significant expense.
Moreover, we may not be able to achieve our intended strategic goals or attain the synergies from the transaction.
The mobile social and dating industry is an evolving and competitive market, with low switching costs and a consistent stream of new products and entrants, and innovation by Tantan’s competitors may disrupt its business.
The mobile social and dating industry in mainland China is evolving and competitive, and has experienced a consistent stream of new products and market entrants within recent years. Tantan’s competitors may hold stronger competitive positions in certain geographical regions or with certain user demographics that we currently serve or may serve in the future. These advantages could enable these competitors to offer features and services that are more appealing to current users and potential users than our features and services or to respond more quickly and/or cost-effectively than us to new or changing opportunities.
In addition, within the mobile social and dating industry generally, costs for consumers to switch between products and apps are low, and consumers have demonstrated a propensity to try new approaches to connecting with people. As a result, new products, entrants and business models are likely to continue to emerge. It is possible that a new app could gain rapid scale at the expense of existing brands through harnessing a new technology or distribution channel, creating a new approach to connecting people or some other means. If we are not able to compete effectively against our current or future competitors and other apps, products and services that may emerge, the size and level of engagement of our user base may decrease, which could have a material adverse effect on our business, financial condition and results of operations.
We may be unsuccessful in monetizing Tantan’s social and dating services.
We may be unable to successfully monetize Tantan’s social and dating services due to, among other reasons, COVID-19’s negative impact on Tantan’s user retention and engagement, Tantan’s users ceasing to use mobile technology for dating and socializing, Tantan’s users opting to forgo paid services on the app, perceived or actual privacy concerns, the introduction of new regulations on the use and monetization of user data, any interruption of Tantan’s business operations from the inspection and administrative measures taken by relevant governmental authorities, and the introduction of competition offering services at lower cost or additional or different features. If we are unable to successfully monetize Tantan’s business, our business, reputation, results of operations and financial condition could be materially adversely affected.
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Tantan’s growth and profitability rely, in part, on its ability to attract and retain users, which involves considerable expenditure. Any failure in these efforts could adversely affect our business, financial condition and results of operations.
Tantan commenced monetization of its business in July 2017, and historically has not been profitable. In order to continue to grow its business and eventually become profitable, Tantan will need to continue to attract and retain users for Tantan’s app, which will involve considerable expenditures.
Tantan’s marketing expenditures consist primarily of investments in paid marketing channels to acquire more users and drive traffic to the app. To continue to reach potential users and grow the Tantan business, we must identify and invest in evolving marketing channels. The opportunities in and effectiveness of new marketing channels are relatively unproven, making it difficult to assess returns on investment associated with such channels, and there can be no assurance that we will be able to continue to appropriately manage and fine-tune our marketing efforts in response to these and other trends in the industry. Any failure to do so could have a material adverse effect on our business, results of operations and financial condition.

Negative publicity may harm our brand and reputation and have a material adverse effect on our business and operating results.

Negative publicity involving us, our users, our management, our social networking platform or our business model may tarnish our reputation and materially and adversely harm our brand and our business. We cannot assure you that we will be able to defuse negative publicity about us, our management and/or our services to the satisfaction of our investors, users, customers and platform partners. There has been negative publicity about our company and the misuse of our services, which has adversely affected our brand, public image and reputation. Such negative publicity, especially when it is directly addressed against us, may also require us to engage in defensive media campaigns. This may cause us to increase our marketing expenses and divert our management’s attention and may adversely impact our business and results of operations.

In November 2014, Mr. Yan Tang, our co-founder, chairman and chief executive officer, received a letter from a PRC law firm on behalf of Wangzhiyi Information Technology (Beijing) Co, Ltd., or Wangzhiyi, a PRC company affiliated with Netease, Inc., or Netease, where Mr. Tang was employed from December 2003 to September 2011. The letter claimed that because Mr. Tang established our consolidated affiliated entity Beijing Momo Technology Ltd., or Beijing Momo, in July 2011 and Beijing Momo launched our application in August 2011, all while Mr. Tang was still an employee of Wangzhiyi, that he breached the terms of his employment agreement with Wangzhiyi, and violated his covenants to not compete with and to devote himself to Wangzhiyi during the term of his employment. The letter requested that Mr. Tang apologize in writing to Wangzhiyi promptly and reserved Wangzhiyi’s right to pursue further action. Mr. Tang believes the claims lack merit and intends to defend himself against these claims vigorously.

On December 10, 2014, Netease posted a formal statement on its website alleging that Mr. Tang engaged in unethical conduct while employed by Netease. The statement contained several allegations, including those made in the letter described in the preceding paragraph. We note that none of the allegations put forth in Netease’s statement are directed against our company, and the allegations essentially relate to several alleged incidents that occurred before Mr. Tang joined our company. Mr. Tang has informed us that he believes the allegations are malicious and intends to vigorously defend himself against them.

We cannot predict what future action Netease or Wangzhiyi might take with respect to their claims against Mr. Tang. Nor can we predict whether additional public statements will be issued by Netease or any other party containing new allegations against Mr. Tang, other management personnel or our company. In the event that Netease or Wangzhiyi were to pursue these claims by means of court proceedings, we cannot predict the length or outcome of any such proceedings. Any legal action, regardless of its merits, could be time consuming and could divert the attention of ~~Mr. Tang~~our management away from our ~~business. Should Netease or Wangzhiyi prevail in~~business and a failure of any ~~future lawsuit against Mr. Tang, his~~legal action may bring negative impact on our reputation ~~could be harmed~~ and hecause a loss of our brand equity, which would reduce the use of our platform and demand for our services. Moreover, any attempts to rebuild our reputation and restore the value of our brand may be ~~ordered to pay damages and/or cease any actions deemed to~~costly and time consuming, and such efforts may not ultimately be wrongful by the court. Moreover, although we were not named in the letter, we cannot be sure that Netease or Wangzhiyi will not initiate proceedings against us in the future. Any such proceedings may result in negative publicity for us and divert our management’s attention and could materially and adversely affect our reputation, business and results of operations.successful.

User misconduct and misuse of our platform may adversely impact our brand image, and we may be held liable for information or content displayed on, retrieved from or linked to our platform, which may materially and adversely affect our business and operating results.

Our platform allows mobile users to freely contact and communicate with people nearby, and our live ~~music and entertainment services allow~~video service allows users to host and view live shows. Because we do not have full control over how and what users will use our platform to communicate, our platform may be misused by individuals or groups of individuals to engage in immoral, disrespectful, fraudulent or illegal activities. For example, on a daily basis we detect spam accounts through which illegal or inappropriate content is posted and illegal or fraudulent activities are conducted. Media reports and internet forums have covered some of these incidents, which ~~has~~have in some cases generated negative publicity about our brand and platform. We have implemented control procedures to detect and block illegal or inappropriate content and illegal or fraudulent activities conducted through the misuse of our platform, but such procedures may not prevent all such content from being broadcasted or posted or activities from being carried out. Moreover, as we have limited control over real-time and offline behaviors of our users, to the extent such behaviors are associated with our platform, our ability to protect our brand image and reputation may be limited. Our business and the public perception of our brand may be materially and adversely affected by misuse of our platform.

In addition, if any of our users suffers or alleges to have suffered physical, financial or emotional harm following contact initiated on our platform, we may face civil lawsuits or other liabilities initiated by the affected user, or governmental or regulatory actions against us. For example, we are or may continue to be involved in disputes relating to refunding to users’ spouses all or part of funds consumed by users for purchase of in-show virtual items in our mobile applications based on claim of unauthorized disposition of commonwealth property. We believe such type of claims is groundless and lacks merit, because from a contractual perspective, users purchase and send virtual gifts to broadcasters in exchange for the live performance delivered to them or for the interaction between them and the broadcasters, and it is entirely up to the users to purchase in-show virtual items. We therefore will defend against such claims vigorously.

In response to allegations of illegal or inappropriate activities conducted through our platform or any negative media coverage about us, ~~PRC~~mainland China government authorities may intervene and hold us liable for non-compliance with ~~PRC~~mainland China laws and regulations concerning the dissemination of information on the internet and subject us to administrative penalties or other sanctions, such as requiring us to restrict or discontinue some of the features and services provided on our mobile application. For example, in March 2015 we were fined by the PRC government authorities for certain videos and comics containing forbidden contents shared by users in certain groups. In April 2016, the Ministry of Culture of China investigated certain live broadcasts websites in China that are suspected of hosting videos or live shows containing violent or pornographic content. There can be no assurance thatTherefore, our ~~live music and entertainment shows will not~~business may be subject to ~~similar~~ investigations or subsequent penalties if contents ~~contained in such shows~~generated by our users are deemed to be illegal or inappropriate under ~~PRC~~mainland China laws and regulations. See “—“Item 3. Key Information—D. Risk Factors—Risks Related to Doing Business in Mainland China—If we fail to obtain and maintain the requisite licenses and approvals required under the complex regulatory environment applicable to our businesses in mainland China, or if we are required to take compliance actions that are time-consuming or costly, our business, financial condition and results of operations may be materially and adversely affected.” As a result, our business may suffer, ~~and~~ our user base, revenues and profitability may be materially and adversely affected, and the price of our ADSs may decline.

The market in which we operate is fragmented and highly competitive. If we are unable to compete effectively for users or user engagement, our business and operating results may be materially and adversely affected.

As a social networking platform that ~~also~~ provides multiple services, including live ~~music~~video service, value-added service, mobile marketing services and ~~entertainment broadcasting service,~~other services, we are subject to intense competition from providers of similar services, as well as potential new types of online services. Our competitors may have substantially more cash, traffic, technical, broadcasters, business networks and other resources, as well as broader product or service offerings and can leverage their relationships based on other products or services to gain a larger share of marketing budgets. We may be unable to compete successfully against these competitors or new market entrants, which may adversely affect our business and financial performance.

We believe that our ability to compete effectively depends upon many factors both within and beyond our control, including:

the popularity, usefulness, ease of use, performance and reliability of our services compared to those of our competitors, and the research and development abilities of us and our competitors;

changes mandated by, or that we elect to make to address, legislation, regulations or government policies, some of which may have a disproportionate effect on us;

acquisitions or consolidation within our industry, which may result in more formidable competitors;

our ability to monetize our services;

our ability to attract, retain, and motivate talented employees;

our ability to manage and grow our operations cost-effectively; and

our reputation and brand strength relative to our competitors.

We have limited experience in international markets. If we fail to meet the challenges presented by our international operations, our business, financial condition and results of operations may be adversely affected.

We have limited experience in international markets and we expect to enter into and expand our operations into international markets. For example, our Soulchill currently has footprint in overseas markets such as Middle East and North Africa. Tantan also has footprint beyond mainland China such as Southeast Asia, East Asia and North America. Our international operations may expose us to a number of risks, including:

lack of acceptance of our product and service offerings, and challenges of localizing our offerings to appeal to local tastes;

compliance with applicable laws and regulations in multiple jurisdictions, including, but not limited to, internet content provider licenses and other applicable licenses or governmental authorizations;

challenges in commercializing our platforms in international markets without infringing, misappropriating or otherwise violating the intellectual property rights of third parties;

challenges in formulating effective marketing strategies targeting users from various jurisdictions and cultures, who have a diverse range of preferences and demands;

challenges in replicating or adapting our company policies and procedures to operating environments that are different from each other, including technology infrastructure;
challenges in managing compliance with local labor regulations and risks associated with labor dispute across different jurisdictions;
fluctuations in currency exchange rates;
•
increased competition with local players in different markets and sub-markets;
political instability and general economic or political conditions in particular countries or regions, including territorial or trade disputes, war and terrorism;
•
exposure to different tax jurisdictions that may subject us to greater fluctuations in our effective tax rate and assessments in multiple jurisdictions on various tax-related assertions, including transfer pricing adjustments and permanent establishment;
compliance with privacy laws and data security laws, including heightened restrictions and barriers on the transfer of data between different jurisdictions; and
increased costs associated with doing business in multiple jurisdictions.
There is no assurance we will be able to manage these risks and challenges as we continue to grow our international businesses. Failure to manage these risks and challenges could negatively affect our ability to expand our international and cross-border businesses and operations as well as materially and adversely affect our business, financial condition and results of operations.

If we fail to keep up with technological developments and evolving user expectations, we may fail to maintain or attract users, customers or platform partners, and our business and operating results may be materially and adversely affected.

We operate in a market characterized by rapidly changing technologies, evolving industry standards, new product and service announcements, new generations of product enhancements and changing user expectations. Accordingly, our performance and the ability to further monetize the services on our platform will depend on our ability to adapt to these rapidly changing technologies and industry standards, and our ability to continually innovate in response to both evolving demands of the marketplace and competitive services. There may be occasions when we may not be as responsive as our competitors in adapting our services to changing industry standards and the needs of our users. Historically, new features may be introduced by one player in the industry, and if they are perceived as attractive to users, they are often quickly copied and improved upon by others.

Introducing new technologies into our systems involves numerous technical challenges, substantial amounts of capital and personnel resources and often takes many months to complete. For example, the market for mobile devices in mainland China is highly fragmented, and the lower resolution, functionality, operating system compatibility and memory currently associated with the kaleidoscopic models of mobile devices in the Chinese marketplace may make the use of our services through these devices more difficult and impair the user experience. We intend to continue to devote resources to the development of additional technologies and services. We may not be able to effectively integrate new technologies on a timely basis or at all, which may decrease user satisfaction with our services. Such technologies, even if integrated, may not function as expected or may be unable to attract and retain a substantial number of mobile device users to use our Momo mobile ~~application.~~app. We also may not be able to protect such technology from being copied by our competitors. Our failure to keep pace with rapid technological changes may cause us to fail to retain or attract users or generate revenues, and could have a material and adverse effect on our business and operating results.

If we fail to effectively ~~manage our growth and~~ control our costs and expenses, our business and operating results could be harmed.

We have experienced rapid growth in our business and operations and expansion of our platform since our inception in 2011, which places significant demands on our management, operational and financial resources. However, given our limited operating history andGiven the rapidly evolving market in which we compete, we may encounter difficulties as we establish and ~~expand~~manage our operations, product development, sales and marketing, and general and administrative capabilities. We face significant competition for talented employees from other high-growth companies, which include both publicly traded and privately held companies, and we may not be able to hire new talents quickly enough to meet our needs and support our operations. If we fail to effectively manage our hiring needs and successfully integrate our new hires, our efficiency and ability to meet our forecasts and our employee morale, productivity and retention could suffer, and our business and operating results could be adversely affected.

~~We expect~~Due to the ever-evolving market that we operate in, our costs and expenses ~~to continue to~~may increase in the future as we seek to broaden our user base and increase user engagement, and develop and implement new features and ~~services that require more complexity. In addition, our cost and expenses, such as our research and development expenses, sales and marketing expenses and general and administrative expenses,~~services. We may also have grown rapidly as we expanded our business. Historically, our costs have increased each year, and we expect to continue to incur increasing costs to support our anticipated future growth. We expect to continue to investdifficulties in ~~our infrastructure in order to enable us to provide our services rapidly and reliably to users. Continued growth could also strain our ability to maintain~~maintaining reliable service levels for our users and customers, develop and improve our operational, financial, legal and management controls, and enhance our reporting systems and procedures. If we are unable to generate adequate revenues and to manage our expenses, we may again incur significant losses in the future and may not be able to ~~maintain~~regain profitability. Our expenses may grow faster than our revenues, and our expenses may be greater than we anticipate. Managing our ~~growth~~business in the evolving and developing market will require significant expenditures and the allocation of valuable management resources. If we fail to achieve the necessary level of efficiency in our organization as we ~~grow,~~adapt, our business, operating results and financial condition could be harmed.

~~Privacy concerns relating~~We may not be able to ~~our services~~regain profitability, and the ~~use~~consolidation of ~~user information could~~the results of operations of Tantan with ours may negatively impact our ~~user base or~~financial performance and results of operations.

We believe that our future revenue growth will depend on, among other factors, the popularity of social networking applications and our ability to attract new users, increase user engagement, ~~or subject us to governmental regulation~~effectively design and ~~other legal obligations, which could have a material~~implement monetization strategies, develop new services and ~~adverse effect on our business~~compete effectively and ~~operating results.~~

We collect user profile, user location and other personal data from our users in order to better understand our users and their needs and to support our social interest graph engine and our big data analytical capabilities for more targeted services such as interest- or location-based user groups and mobile marketing services. Concerns about the collection, use, disclosure or security of personal information or chat history or other privacy-related matters, even if unfounded, could damage our reputation, cause us to lose users, customers and platform partners and subject us to regulatory investigations, all of which may adversely affect our business. While we strive to comply with applicable data protection laws and regulations,successfully, as well as our ~~privacy policies pursuant~~ability to successfully monetize Tantan’s operations. In addition, our ability to sustain profitability is affected by various factors, many of which are beyond our control, such as the continuous development of social networking, live video services, mobile marketing services, and mobile games in mainland China. We may again incur losses in the near future due to our ~~terms~~continued investments in services, technologies, research and development and our continued sales and marketing initiatives. Changes in the macroeconomic and regulatory environment or competitive dynamics and our inability to respond to these changes in a timely and effective manner may also impact our profitability. Furthermore, we completed our acquisition of ~~use~~Tantan in May 2018, and ~~other obligations~~consolidated Tantan’s results starting in the second quarter of 2018. Tantan commenced monetization of its business in July 2017 and has not been profitable historically. If Tantan continues to incur losses, this may also affect our ability to remain at our current profitability level. Accordingly, you should not rely on the revenues of any prior quarterly or annual period as an indication of our future performance.

Techniques employed by short sellers may drive down the market price of our listed securities.

Short selling is the practice of selling securities that a seller does not own but rather has borrowed from a third party with the intention of buying identical securities back at a later date to return to the lender. Short sellers hope to profit from a decline in the value of the securities between the sale of the borrowed securities and the purchase of the replacement shares, as short sellers expect to pay less in that purchase than they received in the sale. As it is in short sellers’ interest for the price of the security to decline, many short sellers publish, or arrange for the publication of, negative opinions and allegations regarding the relevant issuer and its business prospects in order to create negative market momentum and generate profits for themselves after selling a security short. These short attacks have, in the past, led to selling of shares in the market.

Public companies listed in the United States that have substantially all of their operations in mainland China have been the subject of short selling. Much of the scrutiny and negative publicity has centered on allegations of a lack of effective internal control over financial reporting resulting in financial and accounting irregularities and mistakes, inadequate corporate governance policies or a lack of adherence thereto and, in many cases, allegations of fraud. As a result, many of these companies are now conducting internal and external investigations into the allegations and, in the interim, are subject to shareholder lawsuits and/or SEC enforcement actions.

Any allegations or reports published by short sellers against our company may be followed by periods of instability in the market price of our ADSs and negative publicity. Regardless of whether such allegations and information in such reports are proven to be true or untrue, we may have to expend a significant amount of resources to investigate such allegations and/or defend ourselves against negative information in such reports, including in connection with ~~respect~~class actions or regulatory enforcement actions derivative of such allegations. While we would strongly defend against any such short seller attacks, we may be constrained in the manner in which we can proceed against the relevant short sellers by principles of freedom of speech, applicable state law or issues of commercial confidentiality. Such a situation could be costly and time-consuming, and could divert management’s attention from the day-to-day operations of our company. Even if such allegations are ultimately proven to privacy and data protection, any failure or perceived failure to comply with these laws, regulations or policies may result, and in some cases have resulted, in inquiries and other proceedings or actionsbe groundless, allegations against us ~~by government agencies or others, as well as negative publicity~~could severely impact the market price of our securities and ~~damage to our reputation and brand, each of which could cause us to lose users, customers and platform partners and have an adverse effect on~~ our business ~~and operating results.~~operations.

Any systems failure or compromise of our security that results in the unauthorized access to or release of the data or chat history of our users, customers or platform partners data or chat history could significantly limit the adoption of our services, as well as harm our reputation and brand. We expect to continue expending significant resources to protect against security breaches. The risk that these types of events could seriously harm our business is likely to increase as we expand the number of services we offer and increase the size of our user base.

Our practices may become inconsistent with new laws or regulations concerning data protection, or the interpretation and application of existing consumer and data protection laws or regulations, which is often uncertain and in flux. If so, in addition to the possibility of fines, this could result in an order requiring that we change our practices, which could have an adverse effect on our business and operating results. Complying with new laws and regulations could cause us to incur substantial costs or require us to change our business practices in a manner materially adverse to our business. See also “—Risks Related to Doing Businesses in China—Uncertainties in the interpretation and enforcement of PRC laws and regulations could limit the legal protections available to you and us.”

The continuing and collaborative efforts of our senior management and key employees are crucial to our success, and our business may be harmed if we were to lose their services.

We depend on the continued contributions of our senior management, especially the executive officers listed in “Item 6. Directors, Senior Management and Employees—A. Directors and Senior Management” section of this annual report, and other key employees, many of whom are difficult to replace. The loss of the services of any of our executive officers or other key employees could materially harm our business. Competition for qualified ~~talent~~talents in mainland China is intense. Our future success is dependent on our ability to attract a significant number of qualified employees and retain existing key employees. If we are unable to do so, our business and growth may be materially and adversely affected and the trading price of our ADSs could suffer. Our need to significantly increase the number of our qualified employees and retain key employees may cause us to materially increase compensation-related costs, including stock-based compensation.

We may not be able to adequately protect our intellectual property, which could cause us to be less competitive and third-party infringements of our intellectual property rights may adversely affect our business.

We rely on a combination of patent, copyright, trademark and trade secret laws and restrictions on disclosure to protect our intellectual property rights. See also “Item 4. Information on the Company—B. Business Overview.” Despite our efforts to protect our proprietary rights, third parties may attempt to copy or otherwise obtain and use our intellectual property or seek court declarations that they do not infringe upon our intellectual property rights. Monitoring unauthorized use of our intellectual property is difficult and costly, and we cannot be certain that the steps we have taken will prevent misappropriation of our intellectual property. From time to time, we may have to resort to litigation to enforce our intellectual property rights, which could result in substantial costs and diversion of our resources.

~~There have been instances where third parties have cloned~~ The legal regime relating to the recognition and ~~launched counterfeits~~enforcement of ~~our Momo mobile application on app stores or internet forums. Some of these counterfeits, once installed inadvertently by mobile users, were reported~~intellectual property rights in mainland China is particularly limited, and does not protect intellectual property rights to ~~automatically download~~the same extent as federal and ~~install other applications~~state laws in the United States. Legal proceedings to these users’ mobile phones, charging them various fees. These counterfeits may mislead mobile users and negatively affect their perception of our application. Moreover, we may have to expend resources in connection with any legal actions that we take to curb these counterfeiting activities in order to protectenforce our intellectual property ~~rights, user experience and brand perception.~~in mainland China may progress slowly, during which time infringement may continue largely unimpeded.

We have been and may be subject to intellectual property infringement claims or other allegations by third parties for information or content displayed on, retrieved from or linked to our platform, or distributed to our users, which may materially and adversely affect our business, financial condition and prospects.

We have been, and may in the future be, subject to intellectual property infringement claims or other allegations by third parties for services we provide or for information or content displayed on, retrieved from or linked to our platform, or distributed to our users, which may materially and adversely affect our business, financial condition and prospects.

Companies in the internet, technology and media industries are frequently involved in litigation based on allegations of infringement of intellectual property rights, unfair competition, invasion of privacy, defamation and other violations of other parties’ rights. The validity, enforceability and scope of protection of intellectual property rights in internet-related industries, particularly in mainland China, are uncertain and still evolving. We ~~face,~~have faced, from time to time, and expect to face in the future, allegations that we have infringed the trademarks, copyrights, patents and other intellectual property rights of third parties, including our competitors, or allegations that we are involved in unfair trade practices. For example, on October 22, 2015, we were served a civil complaint by Guangzhou Tian He People’s Court in which the plaintiff claimed that Xiaoyao Xiyou, a game that we operated and currently operate, infringed upon the plaintiff’s copyright in works of literature and art of a game, constituting unfair competition. The plaintiff demanded that we cease the infringement and pay compensation and legal costs totaling approximately RMB10 million (US$1.5 million). See “Item 8. Financial Information— A. Consolidated Statements and Other Financial Information—Legal Proceedings.” As we face increasing competition and as litigation becomes a more common method for resolving commercial disputes in mainland China, we face a higher risk of being the subject of intellectual property infringement claims.

We allow users to upload text, graphics, audio, video and other content to our platform and download, share, link to and otherwise access games and other content on our platform. We have procedures designed to reduce the likelihood that content might be used without proper licenses or third-party consents. However, these procedures may not be effective in preventing the unauthorized posting of copyrighted content. Therefore, we may face liability for copyright or trademark infringement, defamation, unfair competition, libel, negligence, and other claims based on the nature and content of the materials that are delivered, shared or otherwise accessed through our platform.

Defending intellectual property litigation is costly and can impose a significant burden on our management and employees, and there can be no assurances that favorable final outcomes will be obtained in all cases. Such claims, even if they do not result in liability, may harm our reputation. Any resulting liability or expenses, or changes required to our platform to reduce the risk of future liability, may have a material adverse effect on our business, financial condition and prospects.

User ~~growth~~base and engagement depend upon effective interoperation with mobile operating systems, networks, mobile devices and standards that we do not control.

We make our services available across a variety of mobile operating systems and devices. We are dependent on the interoperability of our services with popular mobile devices and mobile operating systems that we do not control, such as Android, iOS and Windows. Any changes in such mobile operating systems or devices that degrade the functionality of our services or give preferential treatment to competitive services could adversely affect usage of our services. Further, if the number of platforms for which we develop our services increases, which is typically seen in a dynamic and fragmented mobile services market such as mainland China, it will result in an increase in our costs and expenses. In order to deliver ~~high quality~~high-quality services, it is important that our services work well across a range of mobile operating systems, networks, mobile devices and standards that we do not control. We may not be successful in developing relationships with key participants in the mobile industry or in developing services that operate effectively with these operating systems, networks, devices and standards. In the event that it is difficult for our users to access and use our services, particularly on their mobile devices, our user ~~growth~~base and user engagement could be harmed, and our business and operating results could be adversely affected.

Our operations depend on the performance of the internet infrastructure and fixed telecommunications networks in mainland China.

Almost all access to the internet in mainland China is maintained through state-owned telecommunication operators under the administrative control and regulatory supervision of ~~the Ministry of Industry and Information Technology, or~~ the MIIT. Moreover, we primarily rely on a limited number of telecommunication service providers to provide us with data communications capacity through local telecommunications lines and internet data centers to host our servers. We have limited access to alternative networks or services in the event of disruptions, failures or other problems with mainland China’s internet infrastructure or the fixed telecommunications networks provided by ~~telecommunication~~telecommunications service providers. Web traffic in mainland China has experienced significant growth during the past few years. Effective bandwidth and server storage at internet data centers in large cities such as Beijing are scarce. With the expansion of our business, we may be required to upgrade our technology and infrastructure to keep up with the increasing traffic on our platform. We cannot assure you that the internet infrastructure and the fixed telecommunications networks in mainland China will be able to support the demands associated with the continued growth in internet usage. If we cannot increase our capacity to deliver our online services, we may not be able to keep up with the increases in traffic we anticipate from our expanding user base, and the adoption of our services may be hindered, which could adversely impact our business and our ADS price.

In addition, we have no control over the costs of the services provided by ~~telecommunication~~telecommunications service providers. If the prices we pay for telecommunications and internet services rise significantly, our results of operations may be materially and adversely affected. Furthermore, if internet access fees or other charges to internet users increase, some users may be prevented from accessing the mobile internet and thus cause the growth of mobile internet users to decelerate. Such deceleration may adversely affect our ability to continue to expand our user base.

Our business and operating results may be harmed by service disruptions, cybersecurity related threats or by our failure to timely and effectively scale and adapt our existing technology and infrastructure.

People use our platform for real-time communication, socializing, entertainment and information. We have experienced, and may in the future experience, service disruptions, outages and other performance problems due to a variety of factors, including infrastructure changes ~~human~~and cybersecurity related threats as follows:

our technology, system, networks and our users’ devices have been subject to, and may continue to be the target of, cyber-attacks, computer viruses, malicious code, phishing attacks or ~~software errors, hardware failure, capacity constraints~~information security breaches that could result in an unauthorized release, gathering, monitoring, misuse, loss or destruction of confidential, proprietary and other information of ours, our employees or sensitive information provided by our users, or otherwise disrupt our, our users’ or other third parties’ business operations;

we periodically encounter attempts to create false accounts or use our platform to send targeted and untargeted spam messages to our users, or take other actions on our platform for purposes such as spamming or spreading misinformation, and we may not be able to repel spamming attacks;

the use of encryption and other security measures intended to protect our systems and confidential data may not provide absolute security, and losses or unauthorized access to or releases of confidential information may still occur;

our security measures may be breached due to ~~an overwhelming number~~employee error, malfeasance or unauthorized access to sensitive information by our employees, who may be induced by outside third parties, and we may not be able to anticipate any breach of ~~people accessing~~ our ~~mobile services simultaneously, computer viruses~~security or to implement adequate preventative measures; and ~~denial of service, fraud and security attacks.~~

•

we may be subject to information technology system failures or network disruptions caused by natural disasters, accidents, power disruptions, telecommunications failures, acts of terrorism or war, computer viruses, physical or electronic break-ins, or other events or disruptions.

Any disruption or failure in our services and infrastructure could also hinder our ability to handle existing or increased traffic on our platform or cause us to lose content stored on our platform, which could significantly harm our business and our ability to retain existing users and attract new users.

As the number of our users increases and our users generate more content on our platform, we may be required to expand and adapt our technology and infrastructure to continue to reliably store and analyze this content. It may become increasingly difficult to maintain and improve the performance of our services, especially during peak usage times, as our services become more complex and our user traffic increases. If our users are unable to access ~~Momo~~our mobile application in a timely fashion, or at all, our user experience may be compromised and the users may seek other mobile social networking tools to meet their needs, and may not return to ~~Momo~~our platform or use ~~Momo~~our services as often in the future, or at all. This would negatively impact our ability to attract users and maintain the level of user engagement.

~~Future~~Existing or future strategic alliances, orlong-term investments and acquisitions may have a material and adverse effect on our business, reputation and results of operations.

We have made and intend to continue to make long-term investments in third-party companies. From time to time we evaluate and enter into discussions regarding potential long-term investments. Our existing and any future long-term investments could have a material impact on our financial condition and results of operations. If our long-term investments are unable to implement or remediate the necessary controls, procedures and policies, do not perform as we have expected or become less valuable to our business due to a change in our overall business strategy or other reasons, we may not be able to realize the anticipated benefits of investments and we may have to incur unanticipated liabilities, expenses, impairment charges or write-offs.

We may also in the future enter into strategic alliances with various third parties. Strategic alliances with third parties could subject us to a number of risks, including risks associated with sharing proprietary information, non-performance by ~~the~~a counterparty and an increase in expenses incurred in establishing new strategic alliances, any of which may materially and adversely affect our business. We may have little ability to control or monitor their actions and to the extent strategic third parties suffer negative publicity or harm to their reputation from events relating to their business, we may also suffer negative publicity or harm to our reputation by virtue of our association with such third parties.

In addition, we may acquire additional assets, technologies or businesses that are complementary to our existing business. Future acquisitions and the subsequent integration of new assets and businesses into our own would require significant attention from our management and could result in a diversion of resources from our existing business, which in turn could have an adverse effect on our business operations. Acquired assets or businesses may not generate the financial or operating results we expect. Moreover, the costs of identifying and consummating acquisitions may be significant. In addition to possible shareholders’ approval, we may also have to obtain approvals and licenses from the governmental authorities in the mainland China for the acquisitions and comply with applicable mainland China laws and regulations, which could result in increased costs and delays. Acquisitions could result in the use of substantial amounts of cash, potentially dilutive issuances of equity securities, the incurrence of debt, the incurrence of significant goodwill impairment charges, amortization expenses for other intangible assets and exposure to potential unknown liabilities of the acquired business. ~~Moreover, the costs~~Such use of ~~identifying~~cash may add significant liquidity pressure on us by materially reducing our existing cash balance and ~~consummating acquisitions~~adversely affecting our working capital. The sale of equity or equity linked securities may ~~be significant. In addition~~further dilute our existing shareholders. Debt financings may subject us to ~~possible shareholders’ approval, we may also have~~restrictive covenants limiting or restricting our ability to ~~obtain approvals and licenses from the government authorities in the PRC for the acquisitions and comply with applicable PRC laws and regulations, which could result in increased costs and delays.~~take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends.

We rely on assumptions and estimates to calculate certain key operating metrics, and real or perceived inaccuracies in such metrics may harm our reputation and negatively affect our business.

The respective number of monthly active users and paying users of Momo and Tantan is calculated using internal company data that has not been independently verified. While ~~the number of monthly active users is~~these metrics are based on what we believe to be reasonable calculations for the applicable periods of measurement, there are inherent challenges in measuring usage and user engagement across our large user base. WeFor example, there exist a number of false or spam accounts on our platforms. Although we constantly combat spam by suspending or terminating these accounts, our active user number may include a number of false or spam accounts and therefore may not accurately represent the actual number of active accounts. In addition, we treat each account as a separate user for the purposes of calculating our ~~monthly~~ active and paying users, because it may not always be possible to identify people that have set up more than one account. Accordingly, the calculations of our monthly active users and paying users may not accurately reflect the actual number of people using ~~Momo.~~Momo and Tantan, or paying for their services.

Our measures of user ~~growth~~base and user engagement may differ from estimates published by third parties or from similarly titled metrics used by our competitors due to differences in methodology. If customers or platform partners do not perceive our user metrics to be accurate representations of our user base or user engagement, or if we discover material inaccuracies in our user metrics, our reputation may be harmed and customers and platform partners may be less willing to allocate their resources or spending to Momo or Tantan, which could negatively affect our business and operating results.

We have granted, and expect to continue to grant, share options under our share incentive plans, which may result in increased share-based compensation expenses.

We have adopted ~~three~~several share incentive plans as of the date of this annual report for the purpose of granting share-based compensation awards to employees, directors and consultants to incentivize their performance and align their interests with ours. In November 2012, we adopted a share incentive plan, or the 2012 Plan, which was amended and restated in October 2013. In November 2014, we adopted the 2014 share incentive plan, or the 2014 Plan, pursuant to which a maximum aggregate of 14,031,194 Class A ordinary shares may be issued pursuant to all awards granted thereunder. Beginning in 2017, the number of shares reserved for future issuances under the 2014 Plan ~~will~~would be increased by a number equal to 1.5% of the total number of outstanding shares on the last day of the immediately preceding calendar year, or such lesser number of Class A ordinary shares as determined by our board of directors on the first day of each calendar year during the term of the 2014 Plan. With the adoption of the 2014 Plan, we will no longer grant any incentive shares under the 2012 Plan. In ~~addition, in January~~March 2015, ~~Momo Technology Overseas Holding Company Limited, or Momo BVI, our wholly owned BVI subsidiary,~~Tantan adopted ~~a share incentive plan,~~the 2015 Share Incentive Plan, or the ~~BVI~~Tantan 2015 Plan, and in July 2018, Tantan adopted the 2018 Share Incentive Plan, or the Tantan 2018 Plan. With the adoption of the Tantan 2018 Plan, we will no longer grant any incentive awards under the Tantan 2015 Plan. As of March 31, ~~2016,~~2023, options to purchase ~~30,787,026~~28,731,914 Class A ordinary shares (excluding those already forfeited) had been granted under the 2012 Plan, ~~23,013,154~~3,525,676 of which remained outstanding. In addition, as of March 31, ~~2016,~~2023, options to purchase ~~10,417,782~~44,919,207 Class A ordinary shares (excluding those already forfeited and ~~40,001~~canceled) and 960,001 restricted share units had been granted under the 2014 Plan, of which ~~9,819,232~~23,842,913 options ~~remained outstanding~~ and ~~all~~251,875 restricted share units ~~had vested. Options to purchase an aggregate of 9,600,000 shares of Momo BVI under the BVI Plan~~ remained ~~outstanding as~~outstanding. As of March 31, ~~2016.~~2023, options to purchase 955,998 ordinary shares of Tantan (adjusted retrospectively for share split and excluding those that have been forfeited or redeemed) remained outstanding under the Tantan 2015 Plan and options to purchase 3,073,826 ordinary shares of Tantan (adjusted retrospectively for share split and excluding those that have been forfeited or redeemed) remained outstanding under the Tantan 2018 Plan. See “Item 6. Directors, Senior Management and Employees—B. Compensation” for a detailed discussion. We expect to incur share-based compensation expenses of ~~US$25.1~~RMB226.8 million, ~~US$23.9~~RMB126.0 million and ~~US$22.9~~RMB65.2 million in ~~2016, 2017,~~2023, 2024, and after ~~2017,~~2024, respectively, in connection with the currently outstanding share-based awards, and we may grant additional share-based awards under our share incentive plans, which will further increase our share-based compensation expenses. We believe the granting of share-based awards is of significant importance to our ability to attract and retain our employees, and we will continue to grant share-based awards to employees in the future. As a result, our expenses associated with share-based compensation may increase, which may have an adverse effect on our results of operations.

If we fail to implement and maintain an effective system of internal controls, we may be unable to accurately report our results of operations or prevent fraud or fail to meet our reporting obligations, and investor confidence and the market price of our ADSs may be materially and adversely affected.

We are subject to reporting obligations under the U.S. securities laws. The Securities and Exchange Commission, or the SEC, as required by Section 404 of the Sarbanes-Oxley Act of 2002, has adopted rules requiring every public ~~companies~~company to include a report of management in its annual report that contains management’s assessment of the effectiveness of such company’s internal controls over financial reporting. In addition, an independent registered public accounting firm must attest to and report on the effectiveness of the company’s internal control over financial reporting.

Our management has concluded that our internal controls over financial reporting were effective as of December 31, ~~2015. We however were not subject to the requirement to provide an attestation report by our~~2022. Our independent registered public accounting firm ~~regarding~~has issued an attestation report, which has concluded that our internal control over financial reporting ~~as we were an “emerging growth company,” as such term is defined~~was effective in ~~the JOBS Act~~all material aspects as of December 31, ~~2015.~~

Once we cease to be an “emerging growth company”, our independent registered public accounting firm must attest to and report on the effectiveness of our internal control over financial reporting. If2022. However, if we fail to maintain effective internal controls over financial reporting in the future, our management and ~~if applicable,~~ our independent registered public accounting firm may not be able to conclude that we have effective internal controls over financial reporting at a reasonable assurance level. This could result in a loss of investor confidence in the reliability of our financial conditions which in turn could negatively impact the trading price of our ADSs and result in lawsuits being filed against us by our shareholders or otherwise harm our reputation. Furthermore, we have incurred and anticipate that we will continue to incur considerable costs and use significant management time and other resources in an effort to comply with Section 404 and other requirements of the Sarbanes-Oxley Act.

Our business, financial condition and results of operations may continue to be adversely affected by the effects of the COVID-19 pandemic in mainland China.

Beginning in 2020, outbreaks of COVID-19 resulted in the temporary closure of many corporate offices, retail stores, and manufacturing facilities across mainland China. Normal economic life throughout mainland China was sharply curtailed. We took a series of measures to protect our employees, including temporarily closing our offices, facilitating remote working arrangements for our employees, and canceling business meetings and travels. The operations of our suppliers were also impacted. The population in most of the major cities was locked down to a greater or lesser extent at various times and opportunities for discretionary consumption were extremely limited. In particular, our users’ demand for social network platforms, such as Momo and Tantan, had been negatively impacted by the emergency measures, which consequently impacted our user retention and engagement. These events have ~~limited insurance coverage.~~negatively affected our business since 2020 and contributed to the decrease in revenues from live video service in 2020, 2021 and 2022.

Mainland China began to modify its zero-COVID policy at the end of 2022, and most of the travel restrictions and quarantine requirements were lifted in December. There were surges of cases in many cities during this time which caused occasional interruptions to our operations due to lower employee attendance, and there remains uncertainty as to the future impact of the virus, especially in light of this change in policy. The ~~insurance industry~~extent to which the pandemic impacts our results of operations going forward will depend on future developments which are uncertain and unpredictable, including the frequency, duration and extent of outbreaks of COVID-19, the appearance of new variants with different characteristics, the effectiveness of efforts to contain or treat cases, and future actions that may be taken in ~~China is still at an early stage~~response to these developments. The subsequent outbreaks of ~~development~~COVID-19 may continue to affect our business, which will in turn adversely affect our operating metrics, revenue and ~~business and litigation insurance products offered~~financial conditions. For example, if a COVID-19 variant strikes in ~~China are limited. Other than~~a future wave, the ~~directors and officers liability insurance, we do not maintain any third-party liability, property, business interruption or key-man life insurance. The costs of insuring for these risks~~prolonged social distancing control and the ~~difficulties~~ associated ~~with acquiring~~decline in outdoor activities may limit our users’ urge to use services from social network platforms, such ~~insurance on commercially reasonable terms make it impractical for us to have such insurance. In addition, any insurance policies that we maintain may not adequately cover~~as our ~~actual loss~~Momo and weTantan mobile applications, and some of our users may not be able to ~~successfully claim~~leave their hometown or may delay the time they get back to the big cities for work due to quarantine measures. Consequently, our ~~losses~~user base may decrease and our user retention and engagement may be negatively impacted under such as scenario. In addition, the ~~insurance policies at all~~economic impact of COVID-19 may also cause the sentiment, willingness and ability to spend of our paying users, especially our high paying users, to deteriorate. Consequently, the COVID-19 pandemic may continue to negatively affect our business, financial condition and results of operations in the current and future years.

Increasing focus with respect to environmental, social and governance matters may impose additional costs on us or ~~on a timely basis. Any business disruption, litigation or natural disaster may cause~~expose us to ~~incur substantial costs~~additional risks. Failure to comply with the laws and ~~divert~~regulations on environmental, social and governance matters may subject us to penalties and adversely affect our ~~resources.~~

business, financial condition and results of operations.

The mainland China government and public advocacy groups have been increasingly focused on environment, social and governance, or ESG, issues in recent years, making our business more sensitive to ESG issues and changes in governmental policies and laws and regulations associated with environment protection and other ESG-related matters. Investor advocacy groups, certain institutional investors, investment funds, and other influential investors are also increasingly focused on ESG practices and in recent years have placed increasing importance on the implications and social cost of their investments. Regardless of the industry, increased focus from investors and the mainland China government on ESG and similar matters may hinder access to capital, as investors may decide to reallocate capital or to not commit capital as a result of their assessment of a company’s ESG practices. Any ESG concern or issue could increase our regulatory compliance costs. If we do not adapt to or comply with the evolving expectations and standards on ESG matters from investors and the mainland China government or are perceived to have not responded appropriately to the growing concern for ESG issues, regardless of whether there is a legal requirement to do so, we may suffer from reputational damage and the business, financial condition, and the price of our ADSs could be materially and adversely effected.

We face risks related to health epidemics and natural disasters.

~~Our~~In addition to the impact of COVID-19, our business could be adversely affected by the effects of ~~epidemics.~~natural disasters, other health epidemics or other public safety concerns affecting the mainland China. In recent years, there have been outbreaks of epidemics in mainland China and globally. Our business operations could be disrupted if one of our employees is suspected of having COVID-19,H1N1 flu, H7N9 flu, severe acute respiratory syndrome or SARS, Zika virus, Ebola virus, avian flu or another epidemic, since it could require our employees to be quarantined and/or our offices to be disinfected. In addition, our results of operations could be adversely affected to the extent that the ~~outbreak harms~~epidemic outbreaks harm the Chinese economy in general and the mobile internet industry in particular.

We are also vulnerable to natural disasters and other calamities. Although we have servers that are hosted in an offsite location, our backup system does not capture data on a real-time basis and we may be unable to recover certain data in the event of a server failure. We cannot assure you that any backup systems will be adequate to protect us from the effects of fire, floods, typhoons, earthquakes, power loss, telecommunications failures, break-ins, war, riots, terrorist attacks or similar events. Any of the foregoing events may give rise to server interruptions, breakdowns, system failures, technology platform failures or internet failures, which could cause the loss or corruption of data or malfunctions of software or hardware as well as adversely affect our ability to provide services on our platform.

We have limited insurance coverage.

The insurance industry in mainland China is still at an early stage of development and business and litigation insurance products offered in mainland China are limited. Other than the directors and officers liability insurance, we do not maintain any third-party liability, property, business interruption or key-man life insurance. The costs of insuring for these risks and the difficulties associated with acquiring such insurance on commercially reasonable terms make it impractical for us to have such insurance. In addition, any insurance policies that we maintain may not adequately cover our actual loss and we may not be able to successfully claim our losses under the insurance policies at all or on a timely basis. Any business disruption, litigation or natural disaster may cause us to incur substantial costs and divert our resources.

Risks Related to Our Corporate Structure

If the ~~PRC~~mainland China government finds that the agreements that establish the structure for operating certain of our ~~businesses~~operations in mainland China do not comply with ~~PRC~~mainland China regulations ~~on foreign investment in internet and other related businesses,~~relating to the relevant industries, or if these regulations or ~~their~~the interpretation of existing regulations change in the future, we could be subject to severe penalties or be forced to relinquish our interests in those operations.

~~Current PRC~~Foreign ownership of telecommunication businesses and certain other businesses, such as provision of internet video and online game services, is subject to restrictions under current mainland China laws and regulations. For example, foreign investors are generally not allowed to own more than 50% of the equity interests in a commercial internet content provider or other value-added telecommunication service provider (other than operating e-commerce, domestic multi-party communication, store-and-forward, and call center).

In addition, foreign investors are prohibited from investing in companies engaged in internet video, culture (other than music) and publishing business and film/radio and television drama production and operation (including importation) business. We are a Cayman Islands company and our mainland China subsidiaries are considered as foreign-invested enterprises. Accordingly, none of our mainland China subsidiaries are eligible to operate internet video and other businesses which foreign-owned companies are prohibited or restricted from conducting in mainland China. To comply with mainland China laws and regulations, ~~impose certain~~we conduct such business activities through the consolidated affiliated entities in mainland China, including Beijing Momo, Tantan Culture, Hainan Miaoka, Hainan Yilingliuer, Tianjin QOOL Media, Beijing Top Maker, Beijing Perfect Match, SpaceTime Beijing and Tianjin Nishuodedoudui, and their respective subsidiaries. Our wholly-owned subsidiaries, Beijing Momo IT, QOOL Media Technology (Tianjin) Co., Ltd., Beijing Yiliulinger Information Technology Co., Ltd., Tantan Technology (Beijing) Co., Ltd. and Beijing Wozaixiangxiang have entered into contractual arrangements with the consolidated affiliated entities and their respective shareholders, and such contractual arrangements enable us to exercise effective control over, receive substantially all of the economic benefits of, and have an exclusive option to purchase all or part of the equity interest and assets in the consolidated affiliated entities when and to the extent permitted by mainland China law. Because of these contractual arrangements, we are the primary beneficiary of the consolidated affiliated entities in mainland China and hence consolidate their financial results as our variable interest entities under U.S. GAAP. We conduct our operations in mainland China through (i) our mainland China subsidiaries and (ii) the consolidated affiliated entities with which we maintained these contractual arrangements and their subsidiaries in mainland China. Investors in our ADSs thus are not purchasing equity interest in the consolidated affiliated entities in mainland China but instead are purchasing equity interest in a Cayman Islands holding company with no equity ownership in the consolidated affiliated entities.

Our holding company in the Cayman Islands, the consolidated affiliated entities, and investments in our Company face uncertainty about potential future actions by the mainland China government that could affect the enforceability of the contractual arrangements with the consolidated affiliated entities and, consequently, the business, financial condition, and results of operations of the consolidated affiliated entities and our Company as a group. In addition, our ADSs may decline in value or become worthless if we are unable to assert our contractual control rights over the assets of the consolidated affiliated entities which contributed 95.7% of our revenues in 2022. If the mainland China government finds that our contractual arrangements do not comply with its restrictions ~~or prohibitions~~ on foreign ~~ownership of companies that engage~~investment in ~~internet and other related businesses, including the provision of~~ internet content and online game ~~operations. Specifically, foreign ownership~~providers and other foreign-restricted services, or if the mainland China government otherwise finds that we, the consolidated affiliated entities, or any of ~~an internet content provider may not exceed 50%. We~~their subsidiaries are ~~a company registered~~ in violation of mainland China laws or regulations or lack the ~~Cayman Islands and Beijing Momo Information Technology Ltd.,~~necessary permits or ~~Beijing Momo IT, our wholly owned PRC subsidiary, is considered a foreign-invested enterprise. To comply with PRC laws and regulations, we conduct~~licenses to operate our business, the relevant mainland China regulatory authorities, including but not limited to the CAC, the MIIT, the NRTA, the State Film Bureau, or the SFB, the National Press and Publication Administration, or the NPPA (formerly known as the General Administration of Press and Publication, or GAPP), the MCT and the Ministry of Commerce, or the MOFCOM, would have broad discretion in China through Beijing Momo, our consolidated affiliated entity, and its subsidiaries, based on a series of contractual arrangements by and among Beijing Momo IT, Beijing Momo and its shareholders. As a result of these contractual arrangements, we exert control over Beijing Momo and its subsidiaries and consolidatedealing with such violations or combine their operating results in our financial statements under U.S. GAAP. Beijing Momo and its subsidiaries hold the licenses, approvals and key assets that are essential for our business operations.failures.

In the opinion of our ~~PRC~~mainland China counsel, Han Kun Law Offices, the ownership structure of our ~~PRC subsidiary~~mainland China subsidiaries and ~~Beijing Momo, and the contractual arrangements among our PRC subsidiary, Beijing Momo and its shareholders~~consolidated affiliated entities are in compliance with existing ~~PRC~~mainland China laws, rules and regulations. There are, however, substantial uncertainties regarding the interpretation and application of current or future ~~PRC~~mainland China laws and regulations. Thus, we cannot assure you that the ~~PRC~~mainland China government will not ultimately take a view contrary to the opinion of our ~~PRC~~mainland China counsel. If we are found to be in violation of any ~~PRC~~mainland China laws or regulations or if the contractual arrangements among ~~Beijing Momo IT, Beijing Momo~~our mainland China subsidiaries, the consolidated affiliated entities and ~~its~~their respective shareholders are determined to be illegal or invalid by the ~~PRC~~mainland China court, arbitral tribunal or regulatory authorities, the relevant governmental authorities would have broad discretion in dealing with such violation, including, without limitation:

revoke our business and operating licenses;

require us to discontinue or restrict operations;

restrict our right to collect revenues;

block our websites;

•

require us to restructure the operations in such a way as to compel us to establish a new enterprise, re-apply for the necessary licenses or relocate our businesses, staff and assets;

~~require~~

requiring us to restructure our ownership structure or operations, including terminating the contractual arrangements with the consolidated affiliated entities and deregistering the equity pledges of the consolidated affiliated entities, which in turn would affect our ability to consolidate, derive economic interests from, or exert effective control over the consolidated affiliated entities;

restricting or prohibiting our use of the proceeds of any of our offshore financings to finance our business and operations in ~~such a way as to compel us to establish a new enterprise, re-apply for the necessary licenses or relocate our businesses, staff and assets;~~mainland China;

impose additional conditions or requirements with which we may not be able to comply; or

take other regulatory or enforcement actions against us that could be harmful to our business.

If the mainland China government determines that the contractual arrangements constituting part of our ownership structure do not comply with mainland China regulations, or if these regulations change or are interpreted differently in the future, our ADSs may decline in value if we are unable to assert our contractual control rights over the assets of the consolidated affiliated entities, which conducts substantially all our business operations that generate external revenues. Our holding company in the Cayman Islands, the consolidated affiliated entities, and investors of our company face uncertainty about potential future actions by the mainland China government that could affect the enforceability of the contractual arrangements with the consolidated affiliated entities and, consequently, significantly affect the financial performance of our company.

~~The imposition~~Any of the aforementioned events or penalties could cause significant disruption to our business operations and severely damage our reputation, which would in turn materially and adversely affect our business, financial condition and results of operations. If occurrences of any of these ~~penalties may result~~events results in ~~a material and adverse effect on~~ our ~~ability to conduct our business. In addition, if the imposition of any of these penalties causes us to lose the rights~~inability to direct the activities of ~~our~~the consolidated affiliated ~~entity and its subsidiaries~~entities in mainland China that most significantly impact their economic performance, or ~~the right~~our failure to receive ~~their~~the economic benefits from the consolidated affiliated entities, we ~~would no longer~~may not be able to consolidate ~~our consolidated affiliated~~the entity ~~and its subsidiaries. We do not believe that any penalties imposed or actions taken by the PRC government would result~~ in the ~~liquidation~~consolidated financial statements in accordance with U.S. GAAP.

On February 17, 2023, the CSRC released the Trial Administrative Measures of Overseas Securities Offering and Listing by Domestic Companies, or the Overseas Listing Trial Measures, and five supporting guidelines, which came into effect on March 31, 2023. Officials from the CSRC clarified that, as for companies seeking overseas listings with contractual arrangements, the CSRC will solicit opinions from relevant regulatory authorities and complete the filings of the ~~Company, Beijing Momo IT,~~overseas listings of such companies if they duly meet the compliance requirements, and support the development and growth of these companies by enabling them to utilize two markets and two kinds of resources. If we fail to complete filings with the CSRC in a timely manner or at all, for any future offshore offering or listing, or any other capital raising activities, our ~~consolidated affiliated entity~~ability to raise or utilize funds could be materially and ~~its subsidiaries.~~adversely affected, and we may even need to unwind our contractual arrangements or restructure our business operations in order to complete such filings. However, given that the Overseas Listing Trial Measures were recently promulgated, there remains substantial uncertainties as to their interpretation, application, and enforcement and how they will affect our operations and our future financing.

We rely on contractual arrangements with ~~Beijing Momo~~the consolidated affiliated entities and ~~its~~their respective shareholders for our operations in mainland China, which may not be as effective in providing operational control as direct ownership.

Due to the ~~PRC~~mainland China restrictions or prohibitions on foreign ownership of internet and other related businesses in mainland China, we operate our business in mainland China through ~~our~~a number of the consolidated affiliated ~~entity Beijing Momo and its subsidiaries,~~entities, in which we have no ownership interest. We rely on a series of contractual arrangements with ~~Beijing Momo~~the consolidated affiliated entities and ~~its~~their respective shareholders, including the powers of attorney, to control and operate ~~its~~the business.

Our ability to control the consolidated affiliated ~~entity and its subsidiaries~~entities depends on the powers of attorney, pursuant to which ~~Beijing Momo IT~~our mainland China subsidiaries can vote on all matters requiring shareholder approval in the ~~Beijing Momo.~~consolidated affiliated entities. We believe ~~this power~~these powers of attorney isare legally enforceable but may not be as effective as direct equity ownership. These contractual arrangements are intended to provide us with effective control over ~~Beijing Momo and its subsidiaries~~the consolidated affiliated entities and allow us to obtain economic benefits from them. See “Item 4. Information on the Company—C. Organizational Structure—Contractual Arrangements with ~~Beijing Momo”~~the Consolidated Affiliated Entities and Their Respective Shareholders” for more details about these contractual arrangements.

Although we have been advised by our ~~PRC~~mainland China counsel, Han Kun Law Offices, that these contractual arrangements are valid, binding and enforceable under existing ~~PRC~~mainland China laws and regulations, these contractual arrangements may not be as effective in providing control over ~~Beijing Momo and its subsidiaries~~the consolidated affiliated entities as direct ownership. If ~~Beijing Momo~~the consolidated affiliated entities or ~~its~~their respective shareholders fail to perform their respective obligations under the contractual arrangements, we may incur substantial costs and expend substantial resources to enforce our rights. All of these contractual arrangements are governed by and interpreted in accordance with ~~PRC~~mainland China law, and disputes arising from these contractual arrangements will be resolved through arbitration in mainland China. However, the legal system in mainland China, particularly as it relates to arbitration proceedings, is not as developed as in other jurisdictions, such as the United States. See “—“Item 3. Key Information—D. Risk Factors—Risks Related to Doing Business in Mainland China—Uncertainties in the interpretation and enforcement of ~~PRC~~mainland China laws and regulations could limit the legal protections available to you and us.” There are very few precedents and little official guidance as to how contractual arrangements in the context of a variable interest entity, or a consolidated affiliated entity, should be interpreted or enforced under ~~PRC~~mainland China law. There remain significant uncertainties regarding the ultimate outcome of arbitration should legal action become necessary. These uncertainties could limit our ability to enforce these contractual arrangements. In addition, arbitration awards are final and can only be enforced in ~~PRC~~mainland China courts through arbitration award recognition proceedings, which could cause additional expenses and delays. In the event we are unable to enforce these contractual arrangements or we experience significant delays or other obstacles in the process of enforcing these contractual arrangements, we may not be able to exert effective control over ~~our~~the consolidated affiliated entities and may lose control over the assets owned by ~~Beijing Momo and its subsidiaries.~~the consolidated affiliated entities. As a result, we may be unable to consolidate ~~Beijing Momo and its subsidiaries~~the consolidated affiliated entities in ~~our~~the consolidated financial statements, our ability to conduct our business may be negatively affected, and our business operations could be severely disrupted, which could materially and adversely affect our results of operations and financial condition.

We may lose the ability to use and enjoy assets held by ~~Beijing Momo and its subsidiaries~~the consolidated affiliated entities that are important to the operation of ~~our~~the business if ~~Beijing Momo or its subsidiaries declares~~the consolidated affiliated entities declare bankruptcy or ~~becomes~~become subject to a dissolution or liquidation proceeding.

~~Beijing Momo and its subsidiary, Chengdu Momo,~~The consolidated affiliated entities hold certain assets that are important to our business operations, including the ~~value-added telecommunication service~~ICP license, ~~concerning~~ the internet ~~information service, or the ICP~~culture operation license and the internet ~~culture operation~~audio/video program transmission license. Under our contractual arrangements, the respective shareholders of ~~Beijing Momo~~the consolidated affiliated entities may not voluntarily liquidate ~~Beijing Momo~~the consolidated affiliated entities or approve itthem to sell, transfer, mortgage or dispose of ~~its~~their respective assets or legal or beneficial interests exceeding certain threshold in the business in any manner without our prior consent. However, in the event that the shareholders breach this obligation and voluntarily liquidate ~~Beijing Momo,~~the consolidated affiliated entities, or ~~Beijing Momo declares~~the consolidated affiliated entities declare bankruptcy, or all or part of ~~its~~their assets become subject to liens or rights of third-party creditors, we may be unable to continue some or all of our business operations, which could materially and adversely affect our business, financial condition and results of operations. Furthermore, if ~~Beijing Momo or its subsidiary undergoes~~the consolidated affiliated entities undergo a voluntary or involuntary liquidation proceeding, ~~its~~their respective shareholders or unrelated third-party creditors may claim rights to some or all of its assets, thereby hindering our ability to operate our business, which could materially and adversely affect our business, financial condition and results of operations.

Contractual arrangements we have entered into with ~~Beijing Momo~~the consolidated affiliated entities may be subject to scrutiny by the ~~PRC~~mainland China tax authorities. A finding that we owe additional taxes could significantly reduce ~~our~~the consolidated net income and the value of your investment.

Pursuant to applicable ~~PRC~~mainland China laws and regulations, arrangements and transactions among related parties may be subject to audit or challenge by the ~~PRC~~mainland China tax authorities. We may be subject to adverse tax consequences if the ~~PRC~~mainland China tax authorities determine that the contractual arrangements among our ~~PRC subsidiary, Beijing Momo~~mainland China subsidiaries, the consolidated affiliated entities and ~~its~~their respective shareholders are not on an arm’s length basis and therefore constitute favorable transfer pricing. As a result, the ~~PRC~~mainland China tax authorities could require that ~~Beijing Momo~~the consolidated affiliated entities adjust ~~its~~their taxable income upward for ~~PRC~~mainland China tax purposes. Such an adjustment could adversely affect us by increasing ~~Beijing Momo’s~~the consolidated affiliated entities’ tax expenses without reducing the tax expenses of our ~~PRC subsidiary,~~mainland China subsidiaries, subjecting ~~Beijing Momo~~the consolidated affiliated entities to late payment fees and other penalties for under-payment of taxes, and resulting in our ~~PRC subsidiary’s~~mainland China subsidiaries’ loss of ~~its~~their preferential tax treatment. ~~Our~~The consolidated results of operations may be adversely affected if ~~Beijing Momo’s~~the consolidated affiliated entities’ tax liabilities increase or if ~~it is~~they are subject to late payment fees or other penalties.

If the chops of ~~Beijing Momo IT, Beijing Momo~~our mainland China subsidiaries and ~~Beijing Momo’s subsidiaries,~~the consolidated affiliated entities are not kept safely, are stolen or are used by unauthorized persons or for unauthorized purposes, the corporate governance of these entities could be severely and adversely compromised.

In mainland China, a company chop or seal serves as the legal representation of the company towards third parties even when unaccompanied by a signature. Each legally registered company in mainland China is required to maintain a company chop, which must be registered with the local Public Security Bureau. In addition to this mandatory company chop, companies may have several other chops which can be used for specific purposes. The chops of ~~Beijing Momo IT,~~ our ~~PRC subsidiary, Beijing Momo~~mainland China subsidiaries and ~~Beijing Momo’s subsidiaries~~the consolidated affiliated entities are generally held securely by personnel designated or approved by us in accordance with our internal control procedures. To the extent those chops are not kept safe, are stolen or are used by unauthorized persons or for unauthorized purposes, the corporate governance of these entities could be severely and adversely compromised and those corporate entities may be bound to abide by the terms of any documents so chopped, even if they were chopped by an individual who lacked the requisite power and authority to do so.

The shareholders of ~~Beijing Momo~~the consolidated affiliated entities may have potential conflicts of interest with us, which may materially and adversely affect our business.

~~The~~Some of the shareholders of ~~Beijing Momo, our~~the consolidated affiliated ~~entity, include Messrs. Yan Tang, Yong Li, Xiaoliang Lei and Zhiwei Li, who~~entities are also our ~~shareholders,~~ directors or officers. Conflicts of interest may arise between the roles of ~~Messrs. Yan Tang, Yong Li, Xiaoliang Lei and Zhiwei Li~~these individuals as ~~shareholders,~~ directors or officers of our company and as shareholders of ~~Beijing Momo.~~the consolidated affiliated entities. We rely on these individuals to abide by the laws of the Cayman Islands, which provide that directors and officers owe a fiduciary duty to our company to act in good faith and in the best interest of our company and not to use their positions for personal gain. The shareholders of ~~Beijing Momo~~the consolidated affiliated entities have executed powers of attorney to appoint ~~Beijing Momo IT,~~ our ~~PRC subsidiary,~~mainland China subsidiaries, or a person designated by ~~Beijing Momo IT~~our mainland China subsidiaries to vote on their behalf and exercise voting rights as shareholders of ~~Beijing Momo.~~the consolidated affiliated entities. We cannot assure you that when conflicts arise, shareholders of ~~Beijing Momo~~the consolidated affiliated entities will act in the best interest of our company or that conflicts will be resolved in our favor. If we cannot resolve any conflicts of interest or disputes between us and these shareholders, we would have to rely on legal proceedings, which may be expensive, time-consuming and disruptive to our operations. There is also substantial uncertainty as to the outcome of any such legal proceedings.

We may rely on dividends paid by our ~~PRC subsidiary~~mainland China subsidiaries to fund cash and financing requirements. Any limitation on the ability of our ~~PRC subsidiary~~mainland China subsidiaries to pay dividends to us could have a material adverse effect on our ability to conduct our business and to pay dividends to holders of the ADSs and our ordinary shares.

We are a holding company, and we may rely on dividends to be paid by our ~~PRC subsidiary~~mainland China subsidiaries for our cash and financing requirements, including the funds necessary to pay dividends and other cash distributions to the holders of the ADSs and our ordinary shares and service any debt we may incur. If our ~~PRC subsidiary~~mainland China subsidiaries incur debt on their own behalf in the future, the instruments governing the debt may restrict their ability to pay dividends or make other distributions to us.

Under ~~PRC~~mainland China laws and regulations, a ~~wholly foreign-owned enterprises~~foreign-invested enterprise in the ~~PRC,~~mainland China, such as Beijing Momo Information Technology Co., Ltd., or Beijing Momo IT, may pay dividends only out of its accumulated profits as determined in accordance with ~~PRC~~mainland China accounting standards and regulations. In addition, any company, including a ~~wholly foreign-owned~~foreign-invested enterprise is required to set aside ~~at least~~ 10% of its after-tax profits each year ~~after making up previous years’ accumulated losses, if any,~~ to fund certain statutory common reserve funds, until the aggregate amount of such ~~a fund reaches~~funds reach 50% of its registered capital. If the statutory common reserve funds are not sufficient to make up its losses in previous years (if any), the company shall use the profits of the current year to make up the losses before accruing the statutory common reserve funds. At the discretion of the ~~board~~shareholders of ~~director of the wholly foreign-owned~~a foreign-invested enterprise, it may, after accruing the statutory common reserve funds, allocate a portion of its after-tax profits based on ~~PRC~~mainland China accounting standards to ~~staff welfare and bonus~~discretionary common reserve funds. These statutory common reserve funds and ~~staff welfare and bonus~~discretionary common reserve funds are not distributable as cash dividends. Any limitation on the ability of our wholly-owned ~~PRC subsidiary~~mainland China subsidiaries to pay dividends or make other distributions to us could materially and adversely limit our ability to grow, make investments or acquisitions that could be beneficial to our business, pay dividends, or otherwise fund and conduct our business.

Substantial uncertainties exist with respect to the enactment timetable, interpretation and implementation of draft PRC Foreign Investment Law and how it may impact the viability of our current corporate structure, corporate governance and business operations.

The Ministry of Commerce of the People’s Republic of China, or MOFCOM, published a discussion draft of the proposed Foreign Investment Law in January 2015 aiming to, upon its enactment, replace the trio of existing laws regulating foreign investment in China, namely, the Sino-foreign Equity Joint Venture Enterprise Law, the Sino-foreign Cooperative Joint Venture Enterprise Law and the Wholly Foreign-invested Enterprise Law, together with their implementation rules and ancillary regulations. The draft Foreign Investment Law embodies an expected PRC regulatory trend to rationalize its foreign investment regulatory regime in line with prevailing international practice and the legislative efforts to unify the corporate legal requirements for both foreign and domestic investments. While the Ministry of Commerce solicited comments on this draft earlier this year, substantial uncertainties exist with respect to its enactment timetable, interpretation and implementation. The draft Foreign Investment Law, if enacted as proposed, may materially impact the viability of our current corporate structure, corporate governance and business operations in many aspects.

Among other things, the draft Foreign Investment Law expands the definition of foreign investment and introduces the principle of “actual control” in determining whether a company is considered a foreign-invested enterprise, or an FIE. The draft Foreign Investment Law specifically provides that entities established in China but “controlled” by foreign investors will be treated as FIEs, whereas an entity set up in a foreign jurisdiction would nonetheless be, upon market entry clearance by the MOFCOM, treated as a PRC domestic investor provided that the entity is “controlled” by PRC entities and/or citizens. In this connection, “control” is broadly defined in the draft law to cover the following summarized categories: (i) holding 50% of more of the voting rights of the subject entity; (ii) holding less than 50% of the voting rights of the subject entity but having the power to secure at least 50% of the seats on the board or other equivalent decision making bodies, or having the voting power to exert material influence on the board, the shareholders’ meeting or other equivalent decision making bodies; or (iii) having the power to exert decisive influence, via contractual or trust arrangements, over the subject entity’s operations, financial matters or other key aspects of business operations. Once an entity is determined to be an FIE, it will be subject to the foreign investment restrictions or prohibitions set forth in a “negative list,” to be separately issued by the State Council later, if the FIE is engaged in the industry listed in the negative list. Unless the underlying business of the FIE falls within the negative list, which calls for market entry clearance by the MOFCOM, prior approval from the government authorities as mandated by the existing foreign investment legal regime would no longer be required for establishment of the FIE.

The “variable interest entity” structure, or VIE structure, has been adopted by many PRC-based companies, including us, to obtain necessary licenses and permits in the industries that are currently subject to foreign investment restrictions in China. See “—If the PRC government finds that the agreements that establish the structure for operating our businesses in China do not comply with PRC regulations on foreign investment in internet and other related businesses, or if these regulations or their interpretation change in the future, we could be subject to severe penalties or be forced to relinquish our interests in those operations” and “Information on the Company—C. Organizational Structure—Contractual Arrangements with Beijing Momo.” Under the draft Foreign Investment Law, variable interest entities, or consolidated affiliated entities, that are controlled via contractual arrangement would also be deemed as FIEs, if they are ultimately “controlled” by foreign investors. Therefore, for any companies with a VIE structure in an industry category that is on the “negative list,” the VIE structure may be deemed legitimate only if the ultimate controlling person(s) is/are of PRC nationality (either PRC companies or PRC citizens). Conversely, if the actual controlling person(s) is/are of foreign nationalities, then the variable interest entities will be treated as FIEs and any operation in the industry category on the “negative list” without market entry clearance may be considered as illegal.

Through our dual-class share structure, our co-founder, chairman and chief executive officer, Mr. Yan Tang, a PRC citizen, possessed and controlled 77.2% of the voting power of our company as of March 31, 2016. However, the draft Foreign Investment Law has not taken a position on what actions shall be taken with respect to the existing companies with a VIE structure, whether or not these companies are controlled by Chinese parties, although a few possible options were proposed at the comment solicitation stage. Moreover, it is uncertain whether the mobile internet industry, in which our variable interest entities operate, will be subject to the foreign investment restrictions or prohibitions set forth in the “negative list” to be issued. If the enacted version of the Foreign Investment Law and the final “negative list” mandate further actions, such as MOFCOM market entry clearance, to be completed by companies with existing VIE structure like us, we face uncertainties as to whether such clearance can be timely obtained, or at all.

Risks Related to Doing Business in Mainland China

Our auditor, the independent registered public accounting firm that issues the audit report included elsewhere in this annual report, as an auditor of companies that are traded publicly in the United States and a firm registered with the PCAOB, is subject to laws in the United States pursuant to which the PCAOB conducts regular inspections to assess its compliance with the applicable professional standards. The auditor is located in mainland China, a jurisdiction where the PCAOB was historically unable to conduct inspections and investigations completely before 2022. As a result, we and investors in the ADSs were deprived of the benefits of such PCAOB inspections. The inability of the PCAOB to conduct inspections of auditors in mainland China in the past has made it more difficult to evaluate the effectiveness of our independent registered public accounting firm’s audit procedures or quality control procedures as compared to auditors outside of mainland China that are subject to the PCAOB inspections. On December 15, 2022, the PCAOB issued a report that vacated its December 16, 2021 determination and removed mainland China and Hong Kong from the list of jurisdictions where it is unable to inspect or investigate completely registered public accounting firms. However, if the PCAOB determines in the future that it no longer has full access to inspect and investigate completely accounting firms in mainland China and Hong Kong, and we use an accounting firm headquartered in one of these jurisdictions to issue an audit report on our financial statements filed with the Securities and Exchange Commission, we and investors in our ADSs would be deprived of the benefits of such PCAOB inspections again, which could cause investors and potential investors in the ADSs to lose confidence in our auditor’s audit procedures and reported financial information and the quality of our financial statements.

Pursuant to the HFCAA, if the SEC determines that we have filed audit reports issued by a registered public accounting firm that has not been subject to inspections by the PCAOB for two consecutive years, the SEC will prohibit our shares or ADSs from being traded on a national securities exchange or in the over-the-counter trading market in the United States.

On December 16, 2021, the PCAOB issued a report to notify the SEC of its determination that the PCAOB was unable to inspect or investigate completely registered public accounting firms headquartered in mainland China and Hong Kong and our auditor was subject to that determination. In May 2022, the SEC conclusively listed us as a Commission-Identified Issuer under the HFCAA following the filing of our annual report on Form 20-F for the fiscal year ended December 31, 2021. On December 15, 2022, the PCAOB removed mainland China and Hong Kong from the list of jurisdictions where it is unable to inspect or investigate completely registered public accounting firms. For this reason, we do not expect to be identified as a Commission-Identified Issuer under the HFCAA after we file this annual report on Form 20-F for the fiscal year ended December 31, 2022.

Each year, the PCAOB will determine whether it can inspect and investigate completely audit firms in mainland China and Hong Kong, among other jurisdictions. If the PCAOB determines in the future that it no longer has full access to inspect and investigate completely accounting firms in mainland China and Hong Kong and we use an accounting firm headquartered in one of these jurisdictions to issue an audit report on our financial statements filed with the Securities and Exchange Commission, we would be identified as a Commission-Identified Issuer following the filing of the annual report on Form 20-F for the relevant fiscal year. In accordance with the HFCAA, our securities would be prohibited from being traded on a national securities exchange or in the over-the-counter trading market in the United States if we are identified as a Commission-Identified Issuer for two consecutive years in the future. If our shares and ADSs are prohibited from trading in the United States, there is no certainty that we will be able to list on a non-U.S. exchange or that a market for our shares will develop outside of the United States. A prohibition of being able to trade in the United States would substantially impair your ability to sell or purchase our ADSs when you wish to do so, and the risk and uncertainty associated with delisting would have a negative impact on the price of our ADSs. Also, such a prohibition would significantly affect our ability to raise capital on terms acceptable to us, or at all, which would have a material adverse impact on our business, financial condition, and prospects.
The mainland China government’s significant oversight and discretion over our business operations could result in a material adverse change in our operations and the value of our ADSs.
We conduct our business primarily in mainland China. Our operations in mainland China are governed by mainland China laws and regulations. The mainland China government has significant oversight and discretion over the conduct of our business, and may intervene or influence our operations. The mainland China government has recently published new policies that significantly affected certain industries, and we cannot rule out the possibility that it will in the future release regulations or policies that directly or indirectly affect our industry or require us to seek additional permission to continue our operations, which could result in a material adverse change in our operation and/or the value of our ADSs. Therefore, investors of our company and our business face potential uncertainty from actions taken by the mainland China government affecting our business.

Uncertainties in the interpretation and enforcement of ~~PRC~~mainland China laws and regulations could limit the legal protections available to you and us.

The ~~PRC~~mainland China legal system is based on written statutes and court decisions have limited precedential value. The ~~PRC~~mainland China legal system evolves rapidly, and the interpretations of many laws, regulations and rules may contain inconsistencies and enforcement of these laws, regulations and rules involves uncertainties.

From time to time, we may have to resort to administrative and court proceedings to enforce our legal rights. However, since ~~PRC~~mainland China judicial and administrative authorities have significant discretion in interpreting and implementing statutory and contractual terms, it may be more difficult to predict the outcome of a judicial or administrative proceeding than in more developed legal systems. Furthermore, the ~~PRC~~mainland China legal system is based, in part, on government policies and internal rules, some of which are not published in a timely manner, or at all, but ~~which~~they may have retroactive effect. As a result, we may not always be aware of any potential violation of these policies and rules. Such unpredictability towards our contractual, property (including intellectual property) and procedural rights could adversely affect our business and impede our ability to continue our operations.

~~Regulation and censorship of information disseminated over~~

We face uncertainties with respect to the ~~mobile and internet in China may adversely affect our business and subject us to liability for content posted on our platform.~~

Internet companies in China are subject to a variety of existing and new rules, regulations, policies, and license and permit requirements. In connection with enforcing these rules, regulations, policies and requirements, relevant government authorities may suspend services by, or revoke licenses of, any internet or mobile content service provider that is deemed to provide illicit content online or on mobile devices, and such activities may be intensified in connection with any ongoing government campaigns to eliminate prohibited content online. For example, in April 2014, the Officeimplementation of the ~~Anti-Pornography~~PRC Foreign Investment Law and ~~Illegal Publications Working Group,~~how it may impact the viability of our current corporate structure, corporate governance and business operations.

On March 15, 2019, the National People’s Congress, or the NPC, approved the PRC Foreign Investment Law, which took effect on January 1, 2020 and replaced the Sino-Foreign Equity Joint Venture Enterprise Law, the Sino-Foreign Cooperative Joint Venture Enterprise Law and the Foreign Owned Enterprise Law, together with their implementation rules and ancillary regulations, to become the legal foundation for foreign investment in the mainland China. Further to the PRC Foreign Investment Law, on December 26, 2019, the State ~~Internet Information Office,~~Council of the ~~Ministry of Industry~~PRC passed the Regulation for Implementing the PRC Foreign Investment Law, which took effect on January 1, 2020. The PRC Foreign Investment Law and ~~Information Technology~~its implementing regulations embody an expected mainland China regulatory trend to rationalize its foreign investment regulatory regime in line with prevailing international practice and the ~~Ministry of Public Security jointly launched an “Anti-Pornography~~legislative efforts to unify the corporate legal requirements for both foreign and ~~Illegal Publications—Clean Up~~domestic investments. Under the Internet 2014” campaign. Based on publicly available information, the campaign aims to eliminate pornographic information and content in the internet information services industry by, among other things, holding liable individuals and corporate entities that facilitate the distribution of pornographic information and content. During the campaign, the Office of the Anti-Pornography and Illegal Publications Working Group sanctioned six companies, five of which are publicly traded, duePRC Foreign Investment Law, “foreign investment” refers to the ~~presence~~investment activities in mainland China directly or indirectly conducted by foreign individuals, enterprises or other entities. The PRC Foreign Investment Law and its implementing regulations stipulate three forms of ~~pornographic content on their respective websites~~foreign investment, and does not explicitly stipulate contractual arrangements as a form of foreign investment. However, the PRC Foreign Investment Law provides a catch-all provision under the definition of “foreign investment” to include investments made by foreign investors in mainland China through means stipulated by laws or ~~platforms. The sanctions included public criticisms, fines ranging from RMB50,000 (US$8,116) to RMB5.1 million (US$0.8 million), and~~administrative regulations, or other methods prescribed by the ~~revocation~~State Council. Therefore, there are possibilities that future laws, administrative regulations or provisions prescribed by the State Council may regard contractual arrangements as a form of online publishing and online video licenses. Further, in the case of one privately held company alleged to have directly profited from distributing pornographic and pirated videos via its streaming video player, its chief executive officer was arrested and has been transferred to the prosecuting authorities for further action.

~~We endeavor to eliminate illicit content from our platform. We have made substantial investments in resources to monitor content that users post on our platform and the way in~~foreign investment, at which ~~our users engage with each other through our platform. Since our inception, we have terminated over 36 million user accounts because we viewed content generated by those users to~~time it would be indecent and in 2015 we terminated approximately 20% of new user accounts in order to eliminate spam, fictitious accounts and indecent content from our platform. We use a variety of methods to ensure our platform remains a healthy and positive experience for our users, including a designated content management team, licensed third-party software, our own data analytics software, and our user tiering system. Although we employ these methods to filter our users and content posted by our users, we cannot be sure that our internal content control efforts will be sufficient to remove all content that may be viewed as indecent or otherwise non-compliant with PRC law and regulations. Government standards and interpretationsuncertain as to what constitutes illicit online content or behavior are subject to interpretation and may change. Although we have not received any government sanctions in connection with content posted on our platform, government standards and interpretations may change in a manner that could render our current monitoring efforts insufficient. The Chinese government has wide discretion in regulating online activities and, irrespective of our efforts to control the content on our platform, government campaigns and other actions to reduce illicit content and activities could subject us to negative press or regulatory challenges and sanctions, including fines, the suspension or revocation of our licenses to operate in China or a ban of our platform, including closure of one or more parts of or our entire business. Further, our senior management couldwhether foreign investment via contractual arrangements would be ~~held criminally liable if we are~~ deemed to be ~~profiting from illicit content on our platform. Although~~in violation of the foreign investment access requirements and how the above-mentioned contractual arrangements would be regulated. There is no guarantee that the contractual arrangements and our business ~~and operations have~~will not been materially adversely affected by government campaigns or any other regulatory actions in the past, we cannot assure you that our business and operations will be immune from government actions or sanctions in the future. If government actions or sanctions are brought against us, or if there are widespread rumors that government actions or sanctions have been brought against us, our reputation could be harmed, we may lose users, customers or platform partners, our revenues and results of operation may be materially and adversely affected ~~and the price of our ADSs could be dramatically reduced.~~

Content posted or displayed on our social networking platform, including the live music and entertainment shows hosted by us or our users, may be found objectionable by PRC regulatory authorities and may subject us to penalties and other severe consequences.

The PRC government has adopted regulations governing internet and wireless access and the distribution of information over the internet and wireless telecommunication networks. Under these regulations, internet content providers and internet publishers are prohibited from posting or displaying over the internet or wireless networks content that, among other things, violates PRC laws and regulations, impairs the national dignity of China or the public interest, or is obscene, superstitious, fraudulent or defamatory. Furthermore, internet content providers are also prohibited from displaying content that may be deemed by relevant government authorities as “socially destabilizing” or leaking “state secrets” of the PRC. Failure to comply with these requirements may result in the ~~revocation of licenses~~future due to provide internet content or other licenses, the closure of the concerned platforms and reputational harm. The operator may also be held liable for any censored information displayed on or linked to their platform. For a detailed discussion, see “Item 4. Information on the Company—B. Business Overview—Regulation.”

~~We have designed and implemented procedures to monitor content on our social networking platform, including the live music and entertainment shows hosted by us or our users,~~changes in ~~order to comply with relevant~~mainland China laws and regulations. ~~However, it~~If future laws, administrative regulations or provisions prescribed by the State Council mandate further actions to be completed by companies with existing contractual arrangements, we may ~~not~~face substantial uncertainties as to whether such actions can be ~~possible~~timely completed, or at all. Failure to ~~determine in all cases the types of content that could result in our liability as a distributor of such content~~take timely and ifappropriate measures to cope with any of ~~the content posted~~these or displayed on our social networking platform is deemed by the PRC government to violate any content restrictions, we would not be able to continue to display such content and could become subject to penalties, including confiscation of income, fines, suspension of business and revocation of required licenses, whichsimilar regulatory compliance challenges could materially and adversely affect our ~~business, financial condition~~current corporate structure and ~~results of~~business operations.

We may also be subject to potential liability for any unlawful actions by our users on our platform. It may be difficult to determine the type of content or actions that may result in liability to us and, if we are found to be liable, we may be prevented from operating our business in China. Moreover, the costs of compliance with these regulations may continue to increase as a result of more content being made available by an increasing number of users of our social networking platform, which may adversely affect our results of operations. Although we have adopted internal procedures to monitor content and to remove offending content once we become aware of any potential or alleged violation, we may not be able to identify all the content that may violate relevant laws and regulations or third-party intellectual property rights. Even if we manage to identify and remove offensive content, we may still be held liable.

If we fail to obtain and maintain the requisite licenses and approvals required under the complex regulatory environment applicable to our businesses in China, or if we are required to take compliance actions that are time-consuming or costly, our business, financial condition and results of operations may be materially and adversely affected.

The internet and mobile industries in China are highly regulated. Beijing Momo and its subsidiaries are required to obtain and maintain applicable licenses and approvals from different regulatory authorities in order to provide their current services. Under the current PRC regulatory scheme, a number of regulatory agencies, including but not limited to the State Administration of Press, Publication, Radio, Film and Television, or SARFT, the Ministry of Culture, or MOC, Ministry of Industry and Information Technology, or MIIT, and the State Council Information Office, or SCIO, jointly regulate all major aspects of the internet industry, including the mobile internet and mobile games businesses. Operators must obtain various government approvals and licenses for relevant mobile business.

We have obtained the ICP licenses for provision of internet information services and internet culture operation licenses for operation of online games. These licenses are essential to the operation of our business and are generally subject to regular government review or renewal. However, we cannot assure you that we can successfully renew these licenses in a timely manner or that these licenses are sufficient to conduct all of our present or future business.

We are also required to obtain an internet publishing license from SARFT in order to publish online games through the mobile networks. As of the date of this annual report, we have yet to obtain an internet publishing license, and are in the process of preparing the application documents. Each mobile game is also required to be approved by SARFT prior to the commencement of its operations in China. As of the date of this annual report, we have obtained approvals from the SARFT for five games, and we are still in the process of applying with the SARFT for the approvals of the remaining games. In the event of any failure to meet the above-mentioned requirements, we may no longer be able to offer games on our platform, which would have a material adverse effect on our business and results of operations. All domestic online games must be filed with the MOC within 30 days after operation, and all imported online games must be approved by the MOC. As of March 31, 2016, 14 of the 31 online games we offered had completed the filing with the MOC. If we fail to complete, obtain or maintain any of the required licenses or approvals or make the necessary filings, we may be subject to various penalties, such as confiscation of the net revenues that were generated through online games, the imposition of fines and the discontinuation or restriction of our operations of online games.

Considerable uncertainties exist regarding the interpretation and implementation of existing and future laws and regulations governing our business activities. Although we do not believe our video sharing function in the user groups requires an internet audio/video program transmission license because such function does not constitute an internet audio/video program service under the Internet Audio/Video Program Services Categories (Provisional), or the Provisional Categories, issued by SARFT, in March 2015, we were warned and penalized with a fine of RMB30,000 (US$4,800) by the Beijing Administrative Enforcement General Team on Culture Market for failing to obtain an internet audio/video program transmission license for certain video (containing forbidden contents) sharing activities conducted by our users in certain groups. In addition, certain users circulated comics containing forbidden contents in certain user groups, as a result of which we were penalized with a fine of RMB30,000 (US$4,800) in March 2015 by the Beijing Administrative Enforcement General Team on Culture Market for unauthorized operation of comic and animation products. Accordingly, we will apply for an internet audio/video program transmission license, and we have received the approval to expand the scope of our internet culture operation license to cover the operation of comic and animation products. We cannot assure you that we will not be found in violation of any future laws and regulations or any of the laws and regulations currently in effect due to changes in the relevant authorities’ interpretation of these laws and regulations. If we fail to complete, obtain or maintain any of the required licenses or approvals or make the necessary filings, we may be subject to various penalties, such as confiscation of the net revenues that were generated through the unlicensed internet or mobile activities, the imposition of fines and the discontinuation or restriction of our operations. Any such penalties may disrupt our business operations and materially and adversely affect our business, financial condition and results of operations.

Adverse changes in economic and political policies of the PRC government could have a material and adverse effect on overall economic growth in China, which could materially and adversely affect our business.

Our revenues are substantially generated in China. Accordingly, our results of operations, financial condition and prospects are influenced by economic, political and legal developments in China. Economic reforms begun in the late 1970s have resulted in significant economic growth. However, any economic reform policies or measures in China may from time to time be modified or revised. China’s economy differs from the economies of most developed countries in many respects, including with respect to the amount of government involvement, level of development, growth rate, control of foreign exchange and allocation of resources. While the PRC economy has experienced significant growth in the past 30 years, growth has been uneven across different regions and between economic sectors. The PRC government exercises significant control over China’s economic growth through strategically allocating resources, controlling the payment of foreign currency-denominated obligations, setting monetary policy and providing preferential treatment to particular industries or companies. Although the Chinese economy has grown significantly in the past decade, that growth may not continue, as evidenced by the slowing of the growth of the Chinese economy since 2012. Any adverse changes in economic conditions in China, in the policies of the Chinese government or in the laws and regulations in China could have a material adverse effect on the overall economic growth of China. Such developments could adversely affect our business and operating results, lead to reduction in demand for our services and adversely affect our competitive position.

Under the PRC Enterprise Income Tax Law, we may be classified as a PRC “resident enterprise,” which could result in unfavorable tax consequences to us and our shareholders and have a material adverse effect on our results of operations and the value of your investment.

Under the PRC Enterprise Income Tax Law, or the EIT Law, which became effective on January 1, 2008, an enterprise established outside the PRC with “de facto management bodies” within the PRC is considered a “resident enterprise” for PRC enterprise income tax purposes and is generally subject to a uniform 25% enterprise income tax rate on its worldwide income. In 2009, the State Administration of Taxation, or the SAT, issued the Notice Regarding the Determination of Chinese-Controlled Overseas Incorporated Enterprises as PRC Tax Resident Enterprise on the Basis of De Facto Management Bodies, or SAT Circular 82, which provides certain specific criteria for determining whether the “de facto management body” of a PRC-controlled enterprise that is incorporated offshore is located in China. Further to SAT Circular 82, on July 27, 2011, the SAT issued the Administrative Measures for Enterprise Income Tax of Chinese-Controlled Offshore Incorporated Resident Enterprises (Trial), or SAT Bulletin 45, to provide more guidance on the implementation of SAT Circular 82; the bulletin became effective on September 1, 2011. SAT Bulletin 45 clarified certain issues in the areas of resident status determination, post-determination administration and competent tax authorities’ procedures.

According to SAT Circular 82, an offshore incorporated enterprise controlled by a PRC enterprise or a PRC enterprise group will be considered as a PRC tax resident enterprise by virtue of having its “de facto management body” in China and will be subject to PRC enterprise income tax on its worldwide income only if all of the following conditions are met: (a) the senior management and core management departments in charge of its daily operations function have their presence mainly in the PRC; (b) its financial and human resources decisions are subject to determination or approval by persons or bodies in the PRC; (c) its major assets, accounting books, company seals, and minutes and files of its board and shareholders’ meetings are located or kept in the PRC; and (d) more than half of the enterprise’s directors or senior management with voting rights habitually reside in the PRC. SAT Bulletin 45 specifies that when provided with a copy of Chinese tax resident determination certificate from a resident Chinese controlled offshore incorporated enterprise, the payer should not withhold 10% income tax when paying the Chinese-sourced dividends, interest, royalties, among others, to the Chinese controlled offshore incorporated enterprise.

Although SAT Circular 82 and SAT Bulletin 45 only apply to offshore incorporated enterprises controlled by PRC enterprises or PRC enterprise groups and not those controlled by PRC individuals or foreigners, the determination criteria set forth therein may reflect the SAT’s general position on how the term “de facto management body” could be applied in determining the tax resident status of offshore enterprises, regardless of whether they are controlled by PRC enterprises, individuals or foreigners.

If the PRC tax authorities determine that we or any of our non-PRC subsidiaries is a PRC resident enterprise for PRC enterprise income tax purposes, then we or any such non-PRC subsidiary could be subject to PRC tax at a rate of 25% on its world-wide income, which could materially reduce our net income. In addition, we will also be subject to PRC enterprise income tax reporting obligations.

If the PRC tax authorities determine that our company is a PRC resident enterprise for PRC enterprise income tax purposes, gains realized on the sale or other disposition of ADSs or ordinary shares may be subject to PRC tax, at a rate of 10% in the case of non-PRC enterprises or 20% in the case of non-PRC individuals (in each case, subject to the provisions of any applicable tax treaty), if such gains are deemed to be from PRC sources. Any such tax may reduce the returns on your investment in the ADSs.

~~We face uncertainty with respect to indirect transfer of equity interests in PRC resident enterprises by their non-PRC holding companies.~~

We face uncertainties regarding the reporting on and consequences of previous private equity financing transactions involving the transfer and exchange of shares in our company by non-resident investors. According to the Notice on Strengthening Administration of Enterprise Income Tax for Share Transfers by Non-PRC Resident Enterprises issued by the PRC State Administration of Taxation on December 10, 2009, with retroactive effect from January 1, 2008, or SAT Circular 698, where a non-resident enterprise transfers the equity interests in a PRC resident enterprise indirectly through a disposition of equity interests in an overseas holding company (other than a purchase and sale of shares issued by a PRC resident enterprise in public securities market), or an Indirect Transfer, and such overseas holding company is located in a tax jurisdiction that: (a) has an effective tax rate less than 12.5% or (b) does not tax foreign income of its residents, the non-resident enterprise, as the seller, shall report such Indirect Transfer to the competent tax authority of the PRC resident enterprise within 30 days of execution of the equity transfer agreement for such Indirect Transfer. The PRC tax authority will examine the true nature of the Indirect Transfer, and if the tax authority considers that the foreign investor has adopted an abusive arrangement without reasonable commercial purposes and for the purpose of avoiding or reducing PRC tax, they will disregard the existence of the overseas holding company that is used for tax planning purposes and re-characterize the Indirect Transfer. As a result, gains derived from such Indirect Transfer may be subject to PRC withholding tax at the rate of up to 10%. SAT Circular 698 also points out that when a non-resident enterprise transfers its equity interests in a PRC resident enterprise to its related parties at a price lower than the fair market value, the competent tax authorities have the power to make a reasonable adjustment on the taxable income of the transaction.

On February 3, 2015, the SAT issued a Public Notice [2015] No. 7, or Public Notice 7, to supersede existing provisions in relation to the Indirect Transfer as set forth in Circular 698, while the other provisions of Circular 698 remain in force. Public Notice 7 introduces a new tax regime that is significantly different from that under Circular 698. Public Notice extends its tax jurisdiction to capture not only Indirect Transfer as set forth under Circular 698 but also transactions involving transfer of immovable property in China and assets held under the establishment and place in China of a foreign company through the offshore transfer of a foreign intermediate holding company. Public Notice 7 also addresses the transfer of the equity interest in a foreign intermediate holding company widely. In addition, Public Notice 7 provides clearer criteria than Circular 698 on how to assess reasonable commercial purposes and introduces safe harbour scenarios applicable to internal group restructurings. However, it also brings challenges to both the foreign transferor and transferee of the Indirect Transfer as they have to make self-assessment on whether the transaction should be subject to PRC tax and to file or withhold the PRC tax accordingly.

There are few guidances and practical experience as to the application of Circular 698 and Public Notice 7. Where non-resident investors were involved in our private equity financing, if such transactions were determined by the tax authorities to lack reasonable commercial purpose, we and our non-resident investors may become at risk of being taxed under Circular 698 and Public Notice 7 and may be required to expend valuable resources to comply with Circular 698 and Public Notice 7 or to establish that we should not be taxed under Circular 698 and Public Notice 7, which may have a material adverse effect on our financial condition and results of operations or the non-resident investors’ investments in us.

The PRC tax authorities have the discretion under SAT Circular 59, Circular 698 and Public Notice 7 to make adjustments to the taxable capital gains based on the difference between the fair value of the equity interests transferred and the cost of investment. We may pursue acquisitions in the future that may involve complex corporate structures. If we are considered a non-resident enterprise under the PRC Enterprise Income Tax Law and if the PRC tax authorities make adjustments to the taxable income of the transactions under SAT Circular 59, Circular 698 and Public Notice 7, our income tax costs associated with such potential acquisitions will be increased, which may have an adverse effect on our financial condition and results of operations.

Mainland China’s M&A Rules and certain other ~~PRC~~mainland China regulations establish complex procedures for some acquisitions of Chinese companies by foreign investors, which could make it more difficult for us to pursue growth through acquisitions in mainland China.

The Regulations on Mergers and Acquisitions of Domestic Enterprises by Foreign Investors, or the M&A Rules, and other recently adopted regulations and rules concerning mergers and acquisitions established additional procedures and requirements that could make merger and acquisition activities by foreign investors more time consuming and complex. For example, the M&A Rules require that the MOFCOM be notified in advance of any change-of-control transaction in which a foreign investor takes control of a ~~PRC~~mainland China domestic enterprise, if (i) any important industry is concerned, (ii) such transaction involves factors that impact or may impact national economic security, or (iii) such transaction will lead to a change in control of a domestic enterprise which holds a famous trademark or ~~PRC~~mainland China time-honored brand. Moreover, the PRC Anti-Monopoly Law promulgated by the Standing Committee of the ~~National People’s Congress~~NPC on August 30, 2007 and effective as of August 1, 2008, ~~requires~~and was amended on June 24, 2022, and the Provisions of the State Council on the Standard for Declaration of Concentration of Business Operators, promulgated on August 3, 2008 and amended on September 18, 2018, require that transactions which are deemed concentrations and involve parties with specified turnover thresholds (i.e., during the previous fiscal year, (i) the total global turnover of all operators participating in the transaction exceeds RMB10 billion and at least two of these operators each had a turnover of more than RMB400 million within mainland China, or (ii) the total turnover within mainland China of all the operators participating in the concentration ~~exceeded~~exceeds RMB2 billion, and at least two of these operators each had a turnover of more than RMB400 million within mainland China) must be cleared by ~~MOFCOM~~the PRC Anti-Monopoly Law enforcement authority of the State Council before they can be completed. In addition, on February 3, 2011, the General Office of the State Council promulgated a Notice on Establishing the Security Review System for Mergers and Acquisitions of Domestic Enterprises by Foreign Investors, or the Circular 6, which officially established a security review system for mergers and acquisitions of domestic enterprises by foreign investors. Further, on August 25, 2011, MOFCOM promulgated the Regulations on Implementation of Security Review System for the Merger and Acquisition of Domestic Enterprises by Foreign Investors, or the MOFCOM Security Review Regulations, which became effective on September 1, 2011, to implement the Circular 6. Under Circular 6, a security review is required for mergers and acquisitions by foreign investors having “national defense and security” concerns and mergers and acquisitions by which foreign investors may acquire the “de facto control” of domestic enterprises with “national security” concerns. Under the MOFCOM Security Review Regulations, MOFCOM ~~will focus~~focused on the substance and actual impact of the transaction when deciding whether a specific merger or acquisition iswas subject to security review. If MOFCOM ~~decides~~decided that a specific merger or acquisition is subject to security review, it ~~will~~would submit it to the Inter-Ministerial Panel, an authority established under the Circular 6 led by the National Development and Reform Commission, or NDRC, and MOFCOM under the leadership of the State Council, to carry out security review. The regulations prohibit foreign investors from bypassing the security review by structuring transactions through trusts, indirect investments, leases, loans, control through contractual arrangements or offshore transactions. There is no explicit provision or official interpretation stating that the merging or acquisition of a company engaged in the social network, live video, or mobile games business requires security review, and there is no requirement that acquisitions completed prior to the promulgation of the ~~Security Review~~ Circular 6 are subject to review. On April 30, 2019, the NDRC issued the Announcement on the Adjustment of Foreign Investment Security Review Reporting Channel, i.e., 2019 Announcement 4, stating that the security review is now subject to its review because of the government reformation. In December 2020, the NDRC and the MOFCOM ~~review.~~promulgated the Measures for the Security Review of Foreign Investment, which came into effect on January 18, 2021. The NDRC and the MOFCOM will establish a working mechanism office in charge of the security review of foreign investment. Investment in certain key areas with bearing on national security, such as important cultural products and services, important information technology and internet services and products, key technologies and other important areas with bearing on national security which results in the acquisition of de facto control of investee companies, shall be filed with a specifically established office before such investment is carried out.

In the future, we may grow our business by acquiring complementary businesses. Complying with the requirements of the above-mentioned regulations and other relevant rules to complete such transactions could be time consuming, and any required approval processes, including obtaining approval from the ~~MOFCOM~~NDRC or its local counterparts may delay or inhibit our ability to complete such transactions. It is unclear whether our business would be deemed to ~~be in an~~fall into the industry that raises “national defense and security” or “national security” concerns. However, ~~MOFCOM~~NDRC or other government agencies may publish explanations in the future determining that our business is in an industry subject to the security review, in which case our future acquisitions in the ~~PRC,~~mainland China, including those by way of entering into contractual control arrangements with target entities, may be closely scrutinized or prohibited.

The M&A Rules requires an overseas special purpose vehicle formed for listing purposes through acquisitions of mainland China domestic companies and controlled by mainland China persons or entities to obtain the approval of the CSRC prior to the listing and trading of such special purpose vehicle’s securities on an overseas stock exchange. The interpretation and application of the regulations remain unclear, and our offshore offerings may ultimately require approval of the CSRC. If the CSRC approval is required, it is uncertain whether we can or how long it will take us to obtain the approval and, even if we obtain such CSRC approval, the approval could be rescinded. Any failure to obtain or delay in obtaining the CSRC approval for any of our offshore offerings, or a rescission of such approval if obtained by us, would subject us to sanctions imposed by the CSRC or other mainland China regulatory authorities, which could include fines and penalties on our operations in mainland China, restrictions or limitations on our ability to pay dividends outside of mainland China, and other forms of sanctions that may materially and adversely affect our business, financial condition, and results of operations. On February 17, 2023, CSRC promulgated Trial Administrative Measures of the Overseas Securities Offering and Listing by Domestic Companies, or the Overseas Listing Trial Measures and relevant five guidelines, which became effective on March 31, 2023. The Overseas Listing Trial Measures comprehensively improves and reforms the existing regulatory regime for overseas offering and listing of mainland China domestic companies’ securities and regulates both direct and indirect overseas offering and listing of mainland China domestic companies’ securities by adopting a filing-based regulatory regime. According to the Overseas Listing Trial Measures, any of our offering and listing in an overseas market in future may be subject to the filing with the CSRC.

Furthermore, according to the Overseas Listing Trial Measures, if a domestic company fails to complete the filing procedure or conceals any material fact or falsifies any major content in its filing documents, such domestic company may be subject to administrative penalties, such as order to rectify, warnings, fines, and its controlling shareholders, actual controllers, the person directly in charge and other directly liable persons may also be subject to administrative penalties, such as warnings and fines. However, since the Overseas Listing Trial Measures was newly promulgated, the interpretation, application and enforcement of Overseas Listing Trial Measures remain unclear.
On February 17, 2023, CSRC also issued the Notice on Administration for the Filing of Overseas Offering and Listing by Domestic Companies, which, among others, provided that the domestic companies that have already been listed overseas on or before the effective date of the Overseas Listing Trial Measures (i.e. March 31, 2023) shall be deemed as existing issuers, or the Existing Issuers. Existing Issuers are not required to complete the filling procedures immediately, and they shall be required to file with the CSRC when subsequent matters such as refinancing are involved.
Furthermore, according to the Negative List promulgated by the MOFCOM and the NDRC that became effective on January 1, 2022, domestic enterprises engaged in activities in any field prohibited from foreign investment under the Negative List shall be subject to review and approval by the relevant authorities of the mainland China when listing and trading overseas. If it is determined that any approval, filing or other administrative procedure from the CSRC or other mainland China governmental authorities is required for any future offering or listing, we cannot assure that we can obtain the required approval or accomplish the required filings or other regulatory procedures in a timely manner, or at all. If we fail to obtain the relevant approval or complete the filings and other relevant regulatory procedures, we may face sanctions by the CSRC or other mainland China regulatory agencies, which may include fines and penalties on our operations in mainland China, limitations on our operating privileges in mainland China, restrictions on or prohibition of the payments or remittance of dividends by our subsidiaries in mainland China, or other actions that could have a material and adverse effect on our business, financial condition, results of operations, reputation and prospects, as well as the trading price of our ADSs. The CSRC or other mainland China regulatory authorities also may take actions requiring us, or making it advisable for us, to halt our offerings before settlement and delivery of the shares offered. Consequently, if investors engage in market trading or other activities in anticipation of and prior to settlement and delivery, they do so at the risk that settlement and delivery may not occur. In addition, if the CSRC or other regulatory authorities later promulgate new rules or explanations requiring that we obtain their approvals or accomplish the required filing or other regulatory procedures for our prior offshore offerings, we may be unable to obtain a waiver of such approval requirements, if and when procedures are established to obtain such a waiver. Any uncertainties or negative publicity regarding such approval requirement could materially and adversely affect our business, prospects, financial condition, reputation, and the trading price of our ADSs.
In December 2021, the CAC, together with other authorities, jointly promulgated the Cybersecurity Review Measures, which became effective on February 15, 2022 and replaces its predecessor regulation. Pursuant to the Cybersecurity Review Measures, critical information infrastructure operators that procure internet products and services, and operators of network platforms conducting data processing activities must be subject to the cybersecurity review if their activities affect or may affect national security. The Cybersecurity Review Measures further stipulates that network platform operators that hold personal information of over one million users shall apply with the Cybersecurity Review Office for a cybersecurity review before any initial public offering at a foreign stock exchange. Given that the Cybersecurity Review Measures was recently promulgated, there are substantial uncertainties as to its interpretation, application, and enforcement. On November 14, 2021, the CAC published a draft of the Administrative Regulations for Internet Data Security, or the Draft Data Security Regulations, for public comments. The Draft Data Security Regulations provides that data processors conducting the following activities must apply for cybersecurity review: (i) merger, reorganization, or division of internet platform operators that have acquired a large number of data resources related to national security, economic development, or public interests, which affects or may affect national security; (ii) a foreign listing by a data processor processing personal information of over one million users; (iii) a listing in Hong Kong which affects or may affect national security; or (iv) other data processing activities that affect or may affect national security. There have been no further clarifications from the authorities as of the date of this annual report as to the standards for determining such activities that “affects or may affect national security.” The period for which the CAC solicited comments on this draft ended on December 13, 2021, but there is no timetable as to when the draft regulations will be enacted. As such, substantial uncertainties exist with respect to the enactment timetable, final content, interpretation, and implementation of the Draft Data Security Regulations, including the standards for determining activities that “affects or may affect national security.” As the Draft Data Security Regulations has not been adopted and it remains unclear whether the formal version adopted in the future will have any further material changes, it is uncertain how the draft regulations will be enacted, interpreted or implemented and how they will affect us.
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Any failure or perceived failure by us to comply with the Anti-Monopoly Guidelines for Platforms Economy Sector and other mainland China anti-monopoly laws and regulations may result in governmental investigations or enforcement actions, litigation or claims against us and could have an adverse effect on our business, financial condition and results of operations.
The mainland China anti-monopoly enforcement agencies have strengthened enforcement under the PRC Anti-Monopoly Law in recent years. On December 28, 2018, the SAMR, issued the Notice on Anti-monopoly Enforcement Authorization, pursuant to which its provincial-level branches are authorized to conduct anti-monopoly enforcement within their respective jurisdictions. On September 11, 2020, the Anti-Monopoly Committee of the State Council issued Anti-monopoly Compliance Guideline for Operators, which requires operators to establish anti-monopoly compliance management systems under the PRC Anti-Monopoly Law to manage anti-monopoly compliance risks. On February 7, 2021, the Anti-Monopoly Committee of the State Council published Anti-Monopoly Guidelines for the Platform Economy Sector that specified circumstances where an activity of an internet platform will be identified as monopolistic act as well as concentration filing procedures for business operators, including those involving variable interest entities. On March 12, 2021, the SAMR published several administrative penalty cases about concentration of business operators that violated PRC Anti-Monopoly Law in the internet sector.
On December 24, 2021, nine authorities, including the NDRC, jointly issued the Opinions on Promoting the Healthy and Sustainable Development of Platform Economy, which provides that, among others, monopolistic agreements, abuse of dominant market position and illegal concentration of business operators in the field of platform economy will be strictly investigated and punished in accordance with the relevant laws.
On June 24, 2022, the Standing Committee of the NPC issued an amendment of the PRC Anti-Monopoly Law, which increases the fines for illegal concentration of undertakings to “up to 10% of its sales amount in the previous year if the concentration of undertakings has or may have an effect of excluding or limiting competition; or a fine of up to RMB5 million if the concentration of undertakings does not have an effect of excluding or limiting competition.” The amendment also stipulates that if a concentration does not reach the threshold prescribed by the State Council, there is evidence proving the concentration has or may have effect of excluding or limiting competition, the Anti-monopoly Law enforcement agency of the State Council may require the undertakings to complete the filings. Where the undertakings fail to complete the filings in accordance with the aforementioned provisions, the Anti-monopoly Law enforcement agency of the State Council shall conduct an investigation in accordance with the law. The amendment came into effect on August 1, 2022.
The strengthened enforcement of the PRC Anti-Monopoly Law could result in investigations on our acquisition transactions conducted in the past and make our acquisition transactions in the future more difficult due to the prior filing requirement. The mainland China anti-monopoly laws may increase our compliance burden, particularly in the context of relevant mainland China authorities recently strengthening supervision and enforcement of the PRC Anti-Monopoly Law against internet platforms. There are significant uncertainties associated with the evolving legislative activities and varied local implementation practices of anti-monopoly and competition laws and regulations in mainland China. Under the amended PRC Anti-Monopoly Law, it will be more difficult to complete the acquisition transaction. It will be costly for us to adjust our business practices in order to comply with these evolving laws, regulations, rules, guidelines and implementations. Any non-compliance or associated inquiries, investigations and other governmental actions may divert significant management time and attention and our financial resources, lead to negative publicity, liabilities or administrative penalties, therefore materially and adversely affect our financial conditions, operations and business prospects. If we are required to take any rectifying or remedial measures or are subject to any penalties, our reputation and business operations may be materially and adversely affected.
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If we fail to obtain and maintain the requisite licenses and approvals required under the complex regulatory environment applicable to our businesses in mainland China, or if we are required to take compliance actions that are time-consuming or costly, our business, financial condition and results of operations may be materially and adversely affected.
The internet and mobile industries in mainland China are highly regulated. We are required to obtain and maintain applicable licenses and approvals from different regulatory authorities in order to provide their current services. Under the current mainland China regulatory scheme, a number of regulatory agencies, including but not limited to, the NRTA, the NPPA, the MCT and the MIIT jointly regulate all major aspects of the internet industry, including the mobile internet and mobile games businesses. Operators must obtain various government approvals and licenses for relevant mobile business.
We have obtained the ICP licenses for provision of internet information services and operation of online games and the internet audio/video program transmission license for our live video service. These licenses are essential to the operation of our business and are generally subject to regular government review or renewal. However, we cannot assure you that we can successfully renew these licenses in a timely manner or that these licenses are sufficient to conduct all of our present or future business. In addition, we cannot assure you that we will be able to secure any additional licenses that we may need to conduct our operations.
We are also required to obtain an internet publishing license from NPPA in order to publish online games through the mobile networks. As of the date of this annual report, we have yet to obtain an internet publishing license, and are in the process of preparing the application documents. We have entered into several cooperation agreements with entities holding the internet publishing license in order to publish online games. Each mobile game is also required to be approved by NPPA prior to the commencement of its operations in mainland China. As of the date of this annual report, we have obtained approval from the NPPA for one of the games. In the event of any failure to meet the above-mentioned requirements, we may no longer be able to offer games on our platform, which would have an adverse effect on our business. If we fail to complete, obtain or maintain any of the required licenses or approvals, we may be subject to various penalties, such as confiscation of the net revenues that were generated through online games, the imposition of fines and the discontinuation or restriction of our operations of online games.
Failure to complete, obtain or maintain any of the required licenses or approvals has resulted in, and may in the future result in, us being subjected to various penalties, such as confiscation of the net revenues that were generated through the unlicensed internet or mobile activities, the imposition of fines and the discontinuation or restriction of our operations. Any such penalties may disrupt our business operations and materially and adversely affect our business, financial condition and results of operations.
Regulation and censorship of information disseminated over the mobile and internet in mainland China may adversely affect our business and subject us to liability for content posted on our platform.
Internet companies in mainland China are subject to a variety of existing and new rules, regulations, policies, and license and permit requirements. In connection with enforcing these rules, regulations, policies and requirements, relevant government authorities may suspend services by, or revoke licenses of, any internet or mobile content service provider that is deemed to provide illicit or pornographic information or content online or on mobile devices, and such activities may be intensified in connection with any ongoing government campaigns to eliminate prohibited content online. The competent government authorities, including the CAC, the MIIT and the MPS, may crack down on illicit and pornographic information and content in the internet information services industry from time to time. Applicable sanctions, including fines, revocation of online publishing and online video licenses, and criminal prosecution, may be imposed on the provider of such information or content or its responsible officers.
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We endeavor to eliminate illicit and pornographic information and content from our platform. We have made substantial investments in resources to monitor content that users post on our platform and the way in which our users engage with each other through our platform. Since our inception, we have terminated tens of million user accounts because we viewed content generated by those users to be indecent and we terminated a substantial percentage of new user accounts in order to eliminate spam, fictitious accounts and indecent content from our platform. We use a variety of methods to ensure our platform remains a healthy and positive experience for our users, including a designated content management team, licensed third-party software, and our own data analytics software. Although we employ these methods to filter our users and content posted by our users, we cannot be sure that our internal content control efforts will be sufficient to remove all content that may be viewed as indecent or otherwise non-compliant with mainland China law and regulations. Government standards and interpretations as to what constitutes illicit and pornographic online information, content or behavior are subject to interpretation and may change. Government standards and interpretations may change in a manner that could render our current monitoring efforts insufficient. The Chinese government has wide discretion in regulating online activities and, irrespective of our efforts to control the content on our platform, government campaigns and other actions to reduce illicit and pornographic content and activities could subject us to negative press or regulatory challenges and sanctions, including fines, the suspension or revocation of our licenses to operate in mainland China or a ban of our platform, including closure of one or more parts of or our entire business. Further, our senior management could be held criminally liable if we are deemed to be profiting from illicit and pornographic content on our platform. We cannot assure you that our business and operations will be immune from government actions or sanctions in the future. If government actions or sanctions are brought against us, or if there are widespread rumors that government actions or sanctions have been brought against us, our reputation could be harmed, we may lose users, customers or platform partners, our revenues and results of operation may be materially and adversely affected and the price of our ADSs could be dramatically reduced.
Adverse changes in economic and political policies of the mainland China government could have a material and adverse effect on overall economic growth in mainland China, which could materially and adversely affect our business.
Our revenues are substantially generated in mainland China. Accordingly, our results of operations, financial condition and prospects are influenced by economic, political and legal developments in mainland China. Economic reforms begun in the late 1970s have resulted in significant economic growth. However, any economic reform policies or measures in mainland China may from time to time be modified or revised. Mainland China’s economy differs from the economies of most developed countries in many respects, including with respect to the amount of government involvement, level of development, growth rate, control of foreign exchange and allocation of resources. While the mainland China economy has experienced significant growth in the past 30 years, growth has been uneven across different regions and between economic sectors. The mainland China government exercises significant control over mainland China’s economic growth through strategically allocating resources, controlling the payment of foreign currency-denominated obligations, setting monetary policy and providing preferential treatment to particular industries or companies. Although the Chinese economy has grown significantly in the past decade, that growth may not continue, as evidenced by the slowing of the growth of the Chinese economy since 2012. In addition, COVID-19 may continue to have a material impact on the Chinese economy in the future. Any adverse changes in economic conditions in mainland China, in the policies of the Chinese government or in the laws and regulations in mainland China could have a material adverse effect on the overall economic growth of mainland China. Such developments could adversely affect our business and operating results, lead to reduction in demand for our services and adversely affect our competitive position.
A severe or prolonged downturn in the Chinese or global economy could materially and adversely affect our business and financial condition.
The global macroeconomic environment is facing challenges. The growth rate of the Chinese economy has gradually slowed in recent years and the trend may continue. There is considerable uncertainty over the long-term effects of the monetary and fiscal policies adopted by the central banks and financial authorities of some of the world’s leading economies, including the United States and mainland China. The conflict in Ukraine and the imposition of broad economic sanctions on Russia could raise energy prices and disrupt global markets. Unrest, terrorist threats and the potential for war in the Middle East and elsewhere may increase market volatility across the globe. There have also been concerns on the relationship among mainland China and other countries, including the surrounding Asian countries, which may potentially have economic effects. In particular, there is significant uncertainty about the future relationship between the United States and mainland China with respect to trade policies, treaties, government regulations and tariffs. Economic conditions in mainland China are sensitive to global economic conditions, as well as changes in domestic economic and political policies and the expected or perceived overall economic growth rate in mainland China. Any severe or prolonged slowdown in the global or mainland China economy may materially and adversely affect our business, results of operations, and financial condition. In addition, continued turbulence in the international markets may adversely affect our ability to access capital markets to meet liquidity needs.
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Under the PRC Enterprise Income Tax Law, we may be classified as a mainland China “resident enterprise,” which could result in unfavorable tax consequences to us and our shareholders and have a material adverse effect on our results of operations and the value of your investment.
Under the PRC Enterprise Income Tax Law, or the EIT Law, which became effective on January 1, 2008, as amended on February 24, 2017 and further amended on December 29, 2018, an enterprise established outside the mainland China with “de facto management bodies” within the mainland China is considered a “resident enterprise” for mainland China enterprise income tax purposes and is generally subject to a uniform 25% enterprise income tax rate on its worldwide income. In 2009, the SAT issued the Notice Regarding the Determination of Chinese-Controlled Overseas Incorporated Enterprises as PRC Tax Resident Enterprise on the Basis of De Facto Management Bodies, or SAT Circular 82, which provides certain specific criteria for determining whether the “de facto management body” of a mainland China-controlled enterprise that is incorporated offshore is located in mainland China. Further to SAT Circular 82, on July 27, 2011, the SAT issued the Administrative Measures for Enterprise Income Tax of Chinese-Controlled Offshore Incorporated Resident Enterprises (Trial), or SAT Bulletin 45, to provide more guidance on the implementation of SAT Circular 82; the bulletin became effective on September 1, 2011. SAT Bulletin 45 clarified certain issues in the areas of resident status determination, post-determination administration and competent tax authorities’ procedures.
According to SAT Circular 82, an offshore incorporated enterprise controlled by a mainland China enterprise or a mainland China enterprise group will be considered as a mainland China tax resident enterprise by virtue of having its “de facto management body” in mainland China and will be subject to mainland China enterprise income tax on its worldwide income only if all of the following conditions are met: (a) the senior management and core management departments in charge of its daily operations function have their presence mainly in the mainland China; (b) its financial and human resources decisions are subject to determination or approval by persons or bodies in the mainland China; (c) its major assets, accounting books, company seals, and minutes and files of its board and shareholders’ meetings are located or kept in the mainland China; and (d) more than half of the enterprise’s directors or senior management with voting rights habitually reside in the mainland China. SAT Bulletin 45 specifies that when provided with a copy of Chinese tax resident determination certificate from a resident Chinese controlled offshore incorporated enterprise, the payer should not withhold 10% income tax when paying the Chinese-sourced dividends, interest, royalties, among others, to the Chinese controlled offshore incorporated enterprise.
Although SAT Circular 82 and SAT Bulletin 45 only apply to offshore incorporated enterprises controlled by mainland China enterprises or mainland China enterprise groups and not those controlled by mainland China individuals or foreigners, the determination criteria set forth therein may reflect the SAT’s general position on how the term “de facto management body” could be applied in determining the tax resident status of offshore enterprises, regardless of whether they are controlled by mainland China enterprises, individuals or foreigners.
If the mainland China tax authorities determine that we or any of our non-mainland China subsidiaries is a mainland China resident enterprise for mainland China enterprise income tax purposes, then we or any such non-mainland China subsidiary could be subject to mainland China tax at a rate of 25% on its world-wide income, which could materially reduce our net income. In addition, we will also be subject to mainland China enterprise income tax reporting obligations.
If the mainland China tax authorities determine that our company is a mainland China resident enterprise for mainland China enterprise income tax purposes, gains realized on the sale or other disposition of ADSs or ordinary shares may be subject to mainland China tax, at a rate of 10% in the case of non-mainland China enterprise holders or 20% in the case of non-mainland China individual holders, if such gains are deemed to be from mainland China sources. In addition, any payments of dividends or interest on the ADSs, ordinary shares may be subject to mainland China withholding tax at a rate of 10% in the case of non-mainland China enterprise holders or 20% in the case of non-mainland China individual holders, if such dividends or interest payments are deemed to be from mainland China sources. Any mainland China tax liability may be reduced under applicable tax treaties. However, it is unclear whether if we are considered a mainland China resident enterprise, holders of our ADSs, ordinary shares will be able to claim the benefit of income tax treaties between mainland China and other countries.
Further, if we are required to withhold mainland China tax from interest payments on the ADSs, we may be required, subject to certain exceptions, to pay additional amounts as will result in receipt by holders of ADSs of such amounts as would have been received had no such withholding been required. The requirement to pay additional amounts will increase the cost of servicing interest payments on the ADSs and could have an adverse effect on our financial condition.
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If our mainland China subsidiaries declare and distribute dividends to their respective offshore parent companies, we will be required to pay more taxes, which could have a material and adverse effect on our result of operations.
Under the EIT Law and related regulations, dividends, interests, rent or royalties payable by a foreign-invested enterprise, such as our mainland China subsidiaries, to any of its foreign non-resident enterprise investors, and proceeds from any such foreign enterprise investor’s disposition of assets (after deducting the net value of such assets) are subject to a 10% withholding tax, unless the foreign enterprise investor’s jurisdiction of incorporation has a tax treaty with mainland China that provides for a reduced rate of withholding tax. The Cayman Islands does not have such a tax treaty with mainland China. Hong Kong has a tax arrangement with mainland China that provides for a 5% withholding tax on dividends subject to certain conditions and requirements, such as the requirement that the Hong Kong resident enterprise own at least 25% of the mainland China enterprise distributing the dividend at all times within the 12-month period immediately preceding the distribution of dividends and be a “beneficial owner” of the dividends. For example, Momo Technology HK Company Limited, which directly owns our mainland China subsidiary Beijing Momo Information Technology Co., Ltd., is incorporated in Hong Kong. However, if Momo Technology HK Company Limited is not considered to be a Hong Kong tax resident enterprise or the beneficial owner of dividends paid or to be paid to it by Beijing Momo Information Technology Co., Ltd., such dividends would be subject to withholding tax at a rate of 10%. If our mainland China subsidiaries further declare and distribute profits to us in the future, such payments will be subject to withholding tax, which will further increase our tax liability and reduce the amount of cash available to our company. During the year ended December 31, 2021 and 2022, Beijing Momo Information Technology Co., Ltd. paid RMB130.0 million and RMB360.0 million (US$52.2 million), respectively, withholding tax when it paid special dividends to its parent company, Momo Technology HK Company Limited. Except for the withholding tax paid in 2022, we have accrued additional withholding tax of RMB164.3 million (US$23.8 million) on retained earnings generated in 2022 by Beijing Momo Information Technology Co., Ltd., because Beijing Momo Information Technology Co., Ltd.’s earnings is to be remitted to its offshore parent company in the foreseeable future to fund its demand on US dollar in business operations, payments of dividends, potential investments, etc. Since the first quarter of 2023 and going forward in the foreseeable future, we will continue to accrue the withholding tax of 10% of the net income generated by Beijing Momo Information Technology Co. and record as income tax expenses each quarter.
We face uncertainty with respect to indirect transfer of equity interests in mainland China resident enterprises by their non-mainland China holding companies.
We face uncertainties regarding the reporting on and consequences of previous private equity financing transactions involving the transfer and exchange of shares in our company by non-resident investors. On April 30, 2009, the Ministry of Finance, or the MOF, and the SAT jointly issued the Notice on Issues Concerning Process of Enterprise Income Tax in Enterprise Restructuring Business, or Circular 59, to enhance the scrutiny over the direct or indirect transfer of equity interests in a mainland China resident enterprise by a non-resident enterprise.
On February 3, 2015, the SAT issued a Public Notice 2015 No. 7, or Public Notice 7, which extends its tax jurisdiction to capture not only indirect transfers but also transactions involving transfer of immovable property in mainland China and assets held under the establishment and place in mainland China of a foreign company through the offshore transfer of a foreign intermediate holding company. Public Notice 7 also addresses the transfer of the equity interest in a foreign intermediate holding company widely. In addition, Public Notice 7 provides clear criteria on how to assess reasonable commercial purposes and introduces safe harbor scenarios applicable to internal group restructurings. However, it also brings challenges to both the foreign transferor and transferee (or other person who is obligated to pay for the transfer) of the indirect transfers as they have to make self-assessment on whether the transaction should be subject to mainland China tax and to file or withhold the mainland China tax accordingly. In October 2017, the SAT issued the Announcement of the State Administration of Taxation on Issues Concerning the Withholding of Non-resident Enterprise Income Tax at Source, or Bulletin 37, which came into effect in December 2017 and was amended in June 2018. The Bulletin 37 further clarifies the practice and procedures of the withholding of non-resident enterprise income tax. Where a non-resident enterprise transfers taxable assets indirectly by disposing of the equity interests of an overseas holding company, which constitutes an indirect transfer, the non-resident enterprise as either the transferor or the transferee, or the mainland China entity that directly owns the taxable assets, may report such indirect transfer to the relevant tax authority.
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Where non-resident investors were involved in our private equity financing, if such transactions were determined by the tax authorities to lack reasonable commercial purpose, we and our non-resident investors may become at risk of being taxed under Bulletin 37 and Public Notice 7 and may be required to expend valuable resources to comply with Bulletin 37 and Public Notice 7 or to establish that we should not be taxed under Bulletin 37 and Public Notice 7, which may have a material adverse effect on our financial condition and results of operations or the non-resident investors’ investments in us.
The mainland China tax authorities have the discretion under SAT Circular 59, Bulletin 37 and Public Notice 7 to make adjustments to the taxable capital gains based on the difference between the fair value of the equity interests transferred and the cost of investment. We may pursue acquisitions in the future that may involve complex corporate structures. If we are considered a non-resident enterprise under the PRC Enterprise Income Tax Law and if the mainland China tax authorities make adjustments to the taxable income of the transactions under SAT Circular 59, Bulletin 37 and Public Notice 7, our income tax costs associated with such potential acquisitions will be increased, which may have an adverse effect on our financial condition and results of operations.

Mainland China regulations relating to offshore investment activities by ~~PRC~~mainland China residents may limit our ~~PRC subsidiary’s~~mainland China subsidiaries’ ability to increase its registered capital or distribute profits to us or otherwise expose us to liability and penalties under ~~PRC~~mainland China law.

The SAFE promulgated the Circular on Relevant Issues Relating to Foreign Exchange Control on Domestic Resident’s Offshore Investment and Financing and Roundtrip Investment through Special Purpose Vehicles, or SAFE Circular 37, in July 2014 that requires ~~PRC~~mainland China residents or entities to register with SAFE or its local branch in connection with their establishment or control of an offshore entity established for the purpose of overseas investment or financing. In addition, such ~~PRC~~mainland China residents or entities must update their SAFE registrations when the offshore special purpose vehicle undergoes material events relating to any change of basic information (including change of such ~~PRC~~mainland China citizens or residents, name and operation term), increases or decreases in investment amount, transfers or exchanges of shares, or mergers or divisions. SAFE Circular 37 is issued to replace the Notice on Relevant Issues Concerning Foreign Exchange Administration for PRC Residents Engaging in Financing and Roundtrip Investments via Overseas Special Purpose Vehicles, or SAFE Circular 75.

If our shareholders who are ~~PRC~~mainland China residents or entities do not complete their registration with the local SAFE branches, our ~~PRC subsidiary~~mainland China subsidiaries may be prohibited from distributing ~~its~~their profits and proceeds from any reduction in capital, share transfer or liquidation to us, and we may be restricted in our ability to contribute additional capital to our ~~PRC subsidiary.~~mainland China subsidiaries. Moreover, failure to comply with the SAFE registration described above could result in liability under ~~PRC~~mainland China laws for evasion of applicable foreign exchange restrictions.

~~To our knowledge, Messrs. Yan Tang, Yong Li, Xiaoliang Lei and Zhiwei Li have completed SAFE registration in connection with our financings and share transfer. However, we~~We cannot compel all of our beneficial owners to comply with SAFE registration requirements. As a result, we cannot assure you that all of our shareholders or beneficial owners who are ~~PRC~~mainland China residents or entities have complied with, and will in the future make or obtain any applicable registrations or approvals required by, SAFE regulations. Failure by such shareholders or beneficial owners to comply with SAFE regulations, or failure by us to amend the foreign exchange registrations of our ~~PRC subsidiary,~~mainland China subsidiaries, could subject us to fines or legal sanctions, restrict our overseas or cross-border investment activities, limit our subsidiaries’ ability to make distributions or pay dividends or affect our ownership structure, which could adversely affect our business and prospects.

Failure to comply with ~~PRC~~mainland China regulations regarding the registration requirements for employee stock ownership plans or share option plans may subject the ~~PRC~~mainland China plan participants or us to fines and other legal or administrative sanctions.

In February 2012, SAFE promulgated the Notices on Issues Concerning the Foreign Exchange Administration for Domestic Individuals Participating in Stock Incentive Plans of Overseas Publicly-Listed Companies, or Circular 7, which replaced the Application Procedures of Foreign Exchange Administration for Domestic Individuals Participating in Employee Stock Ownership Plans or Stock Option Plans of Overseas Publicly-Listed Companies issued by SAFE on March 28, 2007.7. Under the Circular 7 and other relevant rules and regulations, ~~PRC~~mainland China residents who participate in stock incentive plan in an overseas ~~publicly-listed~~publicly listed company are required to register with SAFE or its local branches and complete certain other procedures. Participants of a stock incentive plan who are ~~PRC~~mainland China residents must retain a qualified ~~PRC~~mainland China agent, which could be a ~~PRC~~mainland China subsidiary of such overseas publicly listed company or another qualified institution selected by such ~~PRC~~mainland China subsidiary, to conduct the SAFE registration and other procedures with respect to the stock incentive plan on behalf of its participants. Such participants must also retain an overseas entrusted institution to handle matters in connection with their exercise of stock options, the purchase and sale of corresponding stocks or interests and fund transfers. In addition, the ~~PRC~~mainland China agent is required to amend the SAFE registration with respect to the stock incentive plan if there is any material change to the stock incentive plan, the ~~PRC~~mainland China agent or the overseas entrusted institution or other material changes. We and our ~~PRC~~mainland China employees who have been granted stock options are subject to these regulations. Failure of our ~~PRC~~mainland China stock option holders to complete their SAFE registrations may subject these ~~PRC~~mainland China residents to fines and legal sanctions and may also limit our ability to contribute additional capital into our ~~PRC subsidiary,~~mainland China subsidiaries, limit our ~~PRC subsidiary’s~~mainland China subsidiaries’ ability to distribute dividends to us, or otherwise materially adversely affect our business.

~~PRC~~

Mainland China regulation of loans to, and direct investment in, ~~PRC~~mainland China entities by offshore holding companies and governmental control of currency conversion may restrict or prevent us from using offshore funds to make loans to our ~~PRC subsidiary~~mainland China subsidiaries and consolidated affiliated ~~entity~~entities and ~~its~~their subsidiaries, or to make additional capital contributions to our ~~PRC subsidiary.~~mainland China subsidiaries.

We are an offshore holding company conducting our operations in mainland China through our ~~PRC subsidiary~~mainland China subsidiaries and consolidated affiliated ~~entity~~entities and ~~its~~their subsidiaries. We may make loans to our ~~PRC subsidiary~~mainland China subsidiaries and consolidated affiliated ~~entity~~entities and ~~its~~their subsidiaries, or we may make additional capital contributions to our ~~PRC subsidiary,~~mainland China subsidiaries, or we may establish new ~~PRC~~mainland China subsidiaries and make capital contributions to these new ~~PRC~~mainland China subsidiaries, or we may acquire offshore entities with business operations in mainland China in an offshore transaction.

Most of these ways are subject to ~~PRC~~mainland China regulations and approvals. For example, loans by us to our ~~wholly owned PRC subsidiary~~wholly-owned mainland China subsidiaries to finance their activities cannot exceed statutory limits and must be registered with the local counterpart of SAFE. If we decide to finance our ~~wholly owned PRC~~wholly-owned mainland China subsidiaries by means of capital contributions, these capital contributions must be ~~approved by~~filed with the ~~MOFCOM or its~~ local ~~counterpart.~~counterpart of the SAMR. Due to the restrictions imposed on loans in foreign currencies extended to any ~~PRC~~mainland China domestic companies, we are not likely to make such loans to Beijing Momo, which is ~~PRC~~mainland China domestic company. Further, we are not likely to finance the activities of Beijing Momo by means of capital contributions due to regulatory restrictions relating to foreign investment in ~~PRC~~mainland China domestic enterprises engaged in mobile internet services, online games and related businesses.

On August 29, 2008, SAFE promulgated the Circular on the Relevant Operating Issues Concerning the Improvement of the Administration of the Payment and Settlement of Foreign Currency Capital of Foreign-Invested Enterprises, or SAFE Circular 142, regulating the conversion by a foreign-invested enterprise of foreign currency registered capital into Renminbi by restricting how the converted Renminbi may be used. SAFE Circular 142 provides that Renminbi capital converted from foreign currency registered capital of a foreign-invested enterprise may only be used for purposes within the business scope approved by the applicable governmental authority and may not be used for equity investments within the PRC. In addition, SAFE strengthened its oversight of the flow and use of the Renminbi capital converted from the foreign currency registered capital of a foreign-invested company. The use of such Renminbi capital may not be altered without SAFE approval, and such Renminbi capital may not in any case be used to repay Renminbi loans if the proceeds of such loans have not been used. Violations of SAFE Circular 142 could result in severe monetary or other penalties. Furthermore, SAFE promulgated a circular on November 9, 2010, known as Circular 59, which tightens the examination of the authenticity of settlement of net proceeds from overseas offerings. SAFE further promulgated the Circular on Further Clarification and Regulation of the Issues Concerning the Administration of Certain Capital Account Foreign Exchange Businesses, or Circular 45, on November 9, 2011, which expressly prohibits foreign-invested enterprises from using registered capital settled in Renminbi converted from foreign currencies to grant loans through entrustment arrangements with a bank, repay inter-company loans or repay bank loans that have been transferred to a third party. Circular 142, Circular 59 and Circular 45 may significantly limit our ability to transfer the net proceeds from our overseas offerings, including our initial public offering consummated in December 2014, to our PRC subsidiary and to convert such proceeds into Renminbi, which may adversely affect our liquidity and our ability to fund and expand our business in the PRC.

~~On April 8,~~March 30, 2015, SAFE promulgated the Circular on Reforming the Management Approach Regarding the Foreign Exchange Capital Settlement of Foreign-invested Enterprises, or SAFE Circular 19, which ~~will,~~ upon its effective date as of June 1, ~~2015, supersedes the SAFE Circular 142.~~2015. Circular 19 provides that, among other things, the foreign-invested company may convert the foreign currency in its capital account into RMB on a “at will” basis and the RMB funds so converted can be used for equity ~~investments. However,~~investments provided that equity investment is included in the business scope of such foreign-invested company.

On June 9, 2016, SAFE promulgated the Circular on Reforming and Regulating of Administrative Policy on Settlement of Foreign Exchange of Capital Account, or SAFE Circular 16, which became effective on June 9, 2016. According to SAFE Circular 16, the foreign exchange capital of foreign-invested enterprises, or FIEs, foreign debt and funds raised through offshore listings may be settled on a discretionary basis, and can be settled at banks. The proportion of such discretionary settlement is temporarily determined as 100%. The RMB ~~funds so~~ converted from relevant foreign exchange shall be kept in a designated account, and if a domestic enterprise needs to make further payment from such account, it still must provide supporting documents and go through the review process with the banks.

On October 23, 2019, SAFE promulgated the Circular on Further Promoting the Facilitation of Cross-border Trade and Investment, or SAFE Circular 28. On the basis of continuing to allow investment FIEs (including foreign investment companies, foreign-funded venture capital enterprises and foreign-funded equity investment enterprises) to use the registered capital for domestic equity investment in accordance with the laws and regulations, SAFE Circular 28 canceled the restriction on the non-investment FIEs and allows the non-investment FIEs (like Beijing Momo IT) to use the registered capital for domestic equity investment under the premise of not ~~be used for~~violating the ~~purposes of, whether directly or indirectly, (i) paying expenditures out~~existing “Negative List” and the authenticity and compliance of the ~~ordinary course~~domestic equity investment projects. SAFE Circular 28 further clarifies the two ways of business; (ii) investing in securities; (iii) extending entrusted loans or paying off loans extended or assumed by other companies; (iv) purchasing real estate properties not for self-use except whenusing the foreign ~~invested company~~currency registered capital of non-investment FIEs for domestic equity investment, i.e., by way of transfer of the foreign currency registered capital in its original currency and by way of foreign exchange settlement of the foreign currency registered capital. On October 23, 2019, the same date, SAFE promulgated the Circular on Reducing Foreign Exchange Accounts, or SAFE Circular 29, which became effective on March 2, 2020. The Appendix B of SAFE Circular 29 provides operational guidance for SAFE Circular 28. SAFE Circular 29 further specifies that the domestic equity investment set forth in Circular 28 is not limited to direct investment in a ~~company approved to engaging in real estate development business.~~

~~Fluctuation~~domestic enterprise but also includes equity investment conducted in the ~~value~~form of “equity transfer.” According to the Circular on Improving Administration of Foreign Exchange to Support the Development of Foreign-related Business, or the SAFE Circular 8, issued by the SAFE on April 10, 2020, eligible enterprises are allowed to make domestic payments by using their capital funds, foreign credits and the income under capital accounts of overseas listing without submitting the evidentiary materials concerning authenticity of such capital to banks in advance, provided that their capital use is authentic and in compliance with administrative regulations on the use of income under capital accounts. The bank in charge shall conduct spot checking in accordance with the relevant requirements. Although SAFE Circular 19, SAFE Circular 16, SAFE Circular 28, SAFE Circular 29 and SAFE Circular 8 loosed the regulatory restrictions but there is still uncertainty regarding how the SAFE and banks will interpret and implement these regulations and whether SAFE or other government authorities will continue to promulgate new regulations that may substantially influence our ability to transfer the net proceeds from our overseas offerings to our mainland China subsidiaries and to convert such proceeds into Renminbi, which may adversely impact our ability to fund and expand our business in the mainland China.

Litigation and negative publicity surrounding mainland China-based companies listed in the U.S. may result in increased regulatory scrutiny of us and negatively impact the trading price of the ~~RMB may~~ADSs and could have a material adverse effect upon our business, including our results of operations, financial condition, cash flows and prospects.

We believe that litigation and negative publicity surrounding companies with operations in mainland China that are listed in the U.S. have negatively impacted stock prices for such companies. Various equity-based research organizations have published reports on mainland China-based companies after examining, among other things, their corporate governance practices, related party transactions, sales practices and financial statements that have led to special investigations and stock suspensions on national exchanges. Any similar scrutiny of us, regardless of its lack of merit, could result in a diversion of management resources and energy, potential costs to defend ourselves against rumors, decreases and volatility in the ADS trading price, and increased directors and officers insurance premiums and could have a material adverse effect upon our business, including our results of operations, financial condition, cash flows and prospects.

Fluctuations in exchange rates could have a material and adverse effect on our results of operations and the value of your investment.

The conversion of RMB into foreign currencies, including U.S. dollars, is based on rates set by the People’s Bank of China. The RMB has fluctuated against the U.S. dollar, at times significantly and unpredictably. The value of ~~the~~ RMB against the U.S. dollar and other currencies is affected by changes in mainland China’s political and economic conditions and by mainland China’s foreign exchange policies, among other things. ~~In July 2005, the PRC government changed its decades-old policy of pegging the~~We cannot assure you that RMB will not appreciate or depreciate significantly in value ~~of the RMB to the U.S. dollar, and the RMB appreciated more than 20%~~ against the U.S. dollar ~~over~~in the following three years. Between July 2008 and June 2010, this appreciation halted and the exchange rate between the RMB and the U.S. dollar remained within a narrow band. Since June 2010, the RMB has fluctuated against the U.S. dollar, at times significantly and unpredictably.future. It is difficult to predict how market forces or ~~PRC~~mainland China or U.S. government policy may impact the exchange rate between ~~the~~ RMB and the U.S. dollar in the future.

~~Our revenues and costs are mostly denominated in RMB, whereas our reporting currency is the U.S. dollar.~~ Any significant appreciation or depreciation of ~~the~~ RMB may materially and adversely affect our revenues, earnings and financial position, ~~as reported~~and the value of, and any dividends payable on, our ADSs in U.S. dollars. ToFor example, to the extent that we need to convert U.S. dollars ~~we received from our initial public offering~~ into RMB for ~~our operations,~~capital expenditures and working capital and other business purposes, appreciation of ~~the~~ RMB against the U.S. dollar would have an adverse effect on the RMB amount we would receive from the conversion. Conversely, if we decide to convert ~~our~~ RMB into U.S. dollars for the purpose of making payments for dividends on our ordinary shares or ADSs, strategic acquisitions or ~~for~~investments or other business purposes, appreciation of the U.S. dollar against the RMB would have a negative effect on the U.S. dollar amount available to us. In addition, a significant depreciation of the RMB against the U.S. dollar may significantly reduce the U.S. dollar equivalent of our earnings, which in turn could adversely affect the price of our ADSs.

Very limited hedging options are available in mainland China to reduce our exposure to exchange rate fluctuations. To date, we have not entered into any hedging transactions in an effort to reduce our exposure to foreign currency exchange risk. While we may decide to enter into hedging transactions in the future, the availability and effectiveness of these hedges may be limited and we may not be able to adequately hedge our exposure or at all. In addition, our currency exchange losses may be magnified by mainland China exchange control regulations that restrict our ability to convert RMB into foreign currency. As a result, fluctuations in exchange rates may have a material adverse effect on your investment.

Our leased property interests may be defective and our right to lease the properties affected by such defects may be challenged, which could cause significant disruption to our business.

Under ~~PRC~~mainland China laws, all lease agreements are required to be registered with the local housing authorities. We presently lease ~~five~~29 premises in mainland China, and all the landlords of these premises have ~~not~~ completed the registration of their ownership rights, orbut none of the landlords of these premises have completed the registration of our ~~leases~~lease with the relevant ~~authorities.~~ authority.

Failure to complete these required registrations may expose our landlords, lessors and us to potential monetary fines. If these registrations are not obtained in a timely manner or at all, we may be subject to monetary fines or may have to relocate our offices and incur the associated losses.

The audit report included in this annual report is prepared by an auditor who is not inspected by the Public Company Accounting Oversight Board and, as such, you are deprived of the benefits of such inspection.

Our independent registered public accounting firm that issues the audit reports included in this annual report filed with the US Securities and Exchange Commission, as auditors of companies that are traded publicly in the United States and a firm registered with the US Public Company Accounting Oversight Board (United States), or the PCAOB, is required by the laws of the United States to undergo regular inspections by the PCAOB to assess its compliance with the laws of the United States and professional standards. Because our auditors are located in the Peoples’ Republic of China, a jurisdiction where the PCAOB is currently unable to conduct inspections without the approval of the Chinese authorities, our auditors are not currently inspected by the PCAOB.

Inspections of other firms that the PCAOB has conducted outside China have identified deficiencies in those firms’ audit procedures and quality control procedures, which may be addressed as part of the inspection process to improve future audit quality. This lack of PCAOB inspections in China prevents the PCAOB from regularly evaluating our auditor’s audits and its quality control procedures. As a result, investors may be deprived of the benefits of PCAOB inspections.

The inability of the PCAOB to conduct inspections of auditors in China makes it more difficult to evaluate the effectiveness of our auditor’s audit procedures or quality control procedures as compared to auditors outside of China that are subject to PCAOB inspections. Investors may lose confidence in our reported financial information and procedures and the quality of our financial statements.

If additional remedial measures are imposed on the Big Four PRC-based accounting firms, including our independent registered public accounting firm, in administrative proceedings brought by the SEC alleging the firms’ failure to meet specific criteria set by the SEC, with respect to requests for the production of documents, we could be unable to timely file future financial statements in compliance with the requirements of the Exchange Act.

Starting in 2011, the Chinese affiliates of the “big four” accounting firms, including our independent registered public accounting firm, were affected by a conflict between US and Chinese law. Specifically, for certain U.S. listed companies operating and audited in mainland China, the SEC and the PCAOB sought to obtain from the Chinese firms access to their audit work papers and related documents. The firms were, however, advised and directed that under China law they could not respond directly to the US regulators on those requests, and that requests by foreign regulators for access to such papers in China had to be channeled through the China Securities Regulatory Commission, or CSRC.

In late 2012, this impasse led the SEC to commence administrative proceedings under Rule 102(e) of its Rules of Practice and also under the Sarbanes-Oxley Act of 2002 against the Chinese accounting firms, including our independent registered public accounting firm. A first instance trial of the proceedings in July 2013 in the SEC’s internal administrative court resulted in an adverse judgment against the firms. The administrative law judge proposed penalties on the firms including a temporary suspension of their right to practice before the SEC, although that proposed penalty did not take effect pending review by the Commissioners of the SEC. On February 6, 2015, before a review by the Commissioner had taken place, the firms reached a settlement with the SEC. Under the settlement, the SEC accepts that future requests by the SEC for the production of documents will normally be made to the CSRC. The firms will receive matching Section 106 requests, and are required to abide by a detailed set of procedures with respect to such requests, which in substance require them to facilitate production via the CSRC. If they fail to meet specified criteria, the SEC retains authority to impose a variety of additional remedial measures on the firms depending on the nature of the failure. Remedies for any future noncompliance could include, as appropriate, an automatic six-month bar on a single firm’s performance of certain audit work, commencement of a new proceeding against a firm, or in extreme cases the resumption of the current proceeding against all four firms.

In the event that the SEC restarts the administrative proceedings, depending upon the final outcome, listed companies in the United States with major PRC operations may find it difficult or impossible to retain auditors in respect of their operations in the PRC, which could result in financial statements being determined to not be in compliance with the requirements of the Securities Exchange Act of 1934, as amended, or the Exchange Act, including possible delisting. Moreover, any negative news about any such future proceedings against these audit firms may cause investor uncertainty regarding China-based, United States-listed companies and the market price of our ADSs may be adversely affected.

If our independent registered public accounting firm were denied, even temporarily, the ability to practice before the SEC and we were unable to timely find another registered public accounting firm to audit and issue an opinion on our financial statements, our financial statements could be determined not to be in compliance with the requirements of the Exchange Act. Such a determination could ultimately lead to the delisting of our ADSs from the NASDAQ Global Select Market or deregistration from the SEC, or both, which would substantially reduce or effectively terminate the trading of our ADSs in the United States.

Risks Related to Our ADSs

There can be no assurance that the proposed going private transaction will continue to be pursued, approved by our shareholders or successfully consummated. Potential uncertainty involving the proposed going private transaction may adversely affect our business and the market price of our ADSs.

Our board of directors received a preliminary non-binding proposal letter dated June 23, 2015 from Yan Tang, our chairman and chief executive officer, Matrix Partners China II Hong Kong Limited, Sequoia Capital China Investment Management L.P. and Huatai Ruilian Fund Management Co., Ltd., or collectively the Buyer Group, to acquire all of our outstanding Class A ordinary shares not already owned by the Buyer Group in a going private transaction for US$18.90 per ADS, or US$9.45 per Class A ordinary share, in cash. Our board of directors formed a special committee consisting of two of our independent directors, namely, Dr. Dave Daqing Qi and Mr. Benson Bing Chung Tam, on June 23, 2015 to consider and evaluate the proposal and any other alternative proposals or other strategic alternatives that may be available to our company, and to negotiate the terms of any potential definitive agreement. On April 5, 2016, Alibaba Investment Limited and Rich Moon Limited joined the Buyer Group for the proposed going private transaction. See “Item 4. Information on the Company—A. History and Development of the Company.” As of April 6, 2016, the Buyer Group and their affiliates beneficially owned an aggregate of approximately 72.6% of all of our company’s issued and outstanding shares, which represented approximately 91.6% of the aggregate voting power of our company. There can be no assurance that the going private transaction will continue to be pursued, approved by sufficient affirmative vote or consummated.

The going private transaction, whether or not pursued or consummated, presents a risk of diverting management focus, employee attention and resources from other strategic opportunities and from operational matters. In addition, if we sign any definitive agreement with the Buyer Group, we may be subject to various restrictions under those agreements on the conduct of our business prior to the completion of the transaction, which may delay or prevent us from undertaking business opportunities that may arise pending completion of the transaction. Also, any development of the transaction, such as entering into or termination of any definitive agreement, may increase volatility of the trading price of our ADSs.

The trading price of our ADSs is likely to be volatile, which could result in substantial losses to investors.

The price of our ADSs has been and is likely to continue to be volatile and could fluctuate widely due to factors beyond our control. This may happen because of broad market and industry factors, like the performance and fluctuation of the market prices of other companies with business operations located mainly in mainland China that have listed their securities in the United States. A number of Chinese companies have listed their securities on U.S. stock markets. The securities of ~~some~~many of these companies have experienced significant ~~volatility, including price declines in connection with their initial public offerings.~~volatility. The trading performances of these Chinese companies’ securities after their offerings may affect the attitudes of investors toward Chinese companies listed in the United States in general and consequently may impact the trading performance of our ADSs, regardless of our actual operating performance. Furthermore, the stock market in general has experienced extreme price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of companies like us. These broad market and industry fluctuations may adversely affect the market price of our ADSs. Volatility or a lack of positive performance in our ADS price may also adversely affect our ability to retain key employees, most of whom have been granted options or other equity incentives.

In addition to market and industry factors, the price and trading volume for our ADSs may be highly volatile for factors specific to our own operations, including the following:

variations in our revenues, earnings, cash flow and data related to our user base or user engagement;

announcements of new investments, acquisitions, strategic partnerships or joint ventures by us or our competitors;

announcements of new products, services and expansions by us or our competitors;

changes in financial estimates by securities analysts;

detrimental adverse publicity about us, our services or our industry;

additions or departures of key personnel;

~~release of lock-up or other transfer restrictions on our outstanding equity securities or sales of additional equity securities; and~~

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release of lock-up or other transfer restrictions on our outstanding equity securities or sales of additional equity securities; and

potential litigation or regulatory investigations.

Any of these factors may result in large and sudden changes in the volume and price at which our ADSs will trade.

In the past, shareholders of public companies have often brought securities class action suits against those companies following periods of instability in the market price of their securities. If we were involved in a class action suit, it could divert a significant amount of our management’s attention and other resources from our business and operations and require us to incur significant expenses to defend the suit, which could harm our results of operations. Any such class action suit, whether or not successful, could harm our reputation and restrict our ability to raise capital in the future. In addition, if a claim is successfully made against us, we may be required to pay significant damages, which could have a material adverse effect on our financial condition and results of operations.

We believe that we were a passive foreign investment company, or PFIC, for U.S. federal income tax purposes for the taxable year ended December 31, 2022, which could result in adverse U.S. federal income tax consequences to U.S. Holders of our ADSs or ordinary shares.
Under United States federal income tax law, we will be classified as a PFIC for any taxable year if either (i) 75% or more of our gross income for the taxable year is “passive” income or (ii) 50% or more of the value of our assets (generally determined on the basis of a quarterly average) is attributable to assets that produce or are held for the production of passive income (the “asset test”). Although the law in this regard is unclear, we treat Beijing Momo as being owned by us for U.S. federal income tax purposes, not only because we exercise effective control over the operation of this entity but also because we are entitled to substantially all of its economic benefits, and, as a result, we consolidate its results of operations in the consolidated U.S. GAAP financial statements.
Based upon the nature and composition of our assets (in particular, the retention of substantial amounts of cash, deposits and investments), and the market price of our ADSs, we believe that we were a PFIC for United States federal income tax purposes for the taxable year ended December 31, 2022, and we will likely be a PFIC for our current taxable year unless the market price of our ADSs increases and/or we invest a substantial amount of the cash and other passive assets we hold in assets that produce or are held for the production of active income.
If we are classified as a PFIC, a U.S. Holder (as defined in “Item 10. Additional Information—E. Taxation—United States Federal Income Tax Considerations”) will generally be subject to reporting requirements and may incur significantly increased U.S. federal income tax on gain recognized on the sale or other disposition of the ADSs or ordinary shares and on the receipt of distributions on the ADSs or ordinary shares to the extent such gain or distribution is treated as an “excess distribution” under the U.S. federal income tax rules. Further, if we are a PFIC for any year during which a U.S. Holder held our ADSs or ordinary shares, we generally would continue to be treated as a PFIC for all succeeding years during which such U.S. Holder held our ADSs or ordinary shares. You are urged to consult your tax advisor concerning the U.S. federal income tax considerations of holding and disposing of ADSs or ordinary shares if we are or become classified as a PFIC. For more information see “Item 10. Additional Information—E. Taxation—United States Federal Income Tax Considerations—Passive Foreign Investment Company Rules.”

The trading market for our ADSs will be influenced by research or reports that industry or securities analysts publish about our business. If one or more analysts who cover us downgrade our ADSs, the market price for our ADSs would likely decline. If one or more of these analysts cease to cover us or fail to regularly publish reports on us, we could lose visibility in the financial markets, which in turn could cause the market price or trading volume for our ADSs to decline.

~~We currently do not expect to pay dividends in the foreseeable future, and you must rely on price appreciation of our ADSs for return on your investment.~~

We currently intend to retain most, if not all, of our available funds and any future earnings to fund the development and growth of our business. As a result, we do not expect to pay any cash dividends in the foreseeable future. Therefore, you should not rely on an investment in our ADSs as a source for any future dividend income.

Our board of directors has complete discretion as to whether to distribute dividends subject to our memorandum and articles of association and certain restrictions under Cayman Islands law. In addition, our shareholders may by ordinary resolution declare a dividend, but no dividend may exceed the amount recommended by our directors. Even if our board of directors decides to declare and pay dividends, the timing, amount and form of future dividends, if any, will depend on, among other things, our future results of operations and cash flow, our capital requirements and surplus, the amount of distributions, if any, received by us from our subsidiary, our financial condition, contractual restrictions and other factors deemed relevant by our board of directors. Accordingly, the return on your investment in our ADSs will likely depend entirely upon any future price appreciation of our ADSs. There is no guarantee that our ADSs will appreciate in value or even maintain the price at which you purchased the ADSs. You may not realize a return on your investment in our ADSs and you may even lose your entire investment in our ADSs.

Substantial future sales or the expectation of substantial sales of our ADSs in the public market could cause the price of our ADSs to decline.

Sales of our ADSs in the public market, or the perception that these sales could occur, could cause the market price of our ADSs to decline. Such sales also might make it more difficult for us to sell equity or equity-related securities in the future at a time and price that we deem appropriate. If any existing shareholder or shareholders sell a substantial amount of ADSs, the prevailing market price for our ADSs could be adversely affected. In addition, if we pay for our future acquisitions in whole or in part with additionally issued ordinary shares, your ownership interests in our company would be diluted and this, in turn, could have a material and adverse effect on the price of our ADSs.

Because we may not continue to pay dividends in the foreseeable future, you must rely on price appreciation of our ADSs for return on your investment.
Although we declared special cash dividends to holders of our ordinary shares in the past, we may not continue to do so regularly, or at all. Therefore, you may need to rely on price appreciation of our ADSs as the sole source for return on your investment.
Our board of directors has complete discretion as to whether to distribute dividends subject to our memorandum and articles of association and certain restrictions under Cayman Islands law. In addition, our shareholders may by ordinary resolution declare a dividend, but no dividend may exceed the amount recommended by our directors. Even if our board of directors decides to declare and pay dividends, the timing, amount and form of future dividends, if any, will depend on, among other things, our future results of operations and cash flow, our capital requirements and surplus, the amount of distributions, if any, received by us from our subsidiaries, our financial condition, contractual restrictions and other factors deemed relevant by our board of directors. Accordingly, the return on your investment in our ADSs will likely depend entirely upon any future price appreciation of our ADSs. There is no guarantee that our ADSs will appreciate in value or even maintain the price at which you purchased the ADSs. You may not realize a return on your investment in our ADSs and you may even lose your entire investment in our ADSs.
Your interests may not always align with those of our shareholders, including our principal shareholder.

You are also reminded that your interests may not always align with those of other shareholders, including our principal shareholders. Mr. Yan Tang, our co-founder, ~~chairman and chief~~ executive officer, has considerable influence over important corporate matters. Our dual-class voting structure will limit your ability to influence corporate matters and could discourage others from pursuing any change of control transactions that holders of our Class A ordinary shares and ADSs may view as beneficial.

~~Mr. Yan Tang, our co-founder,~~ chairman and chief executive officer, has considerable influence over important corporate matters. We have adopted a dual-class voting structure in which our ordinary shares ~~consists~~consist of Class A ordinary shares and Class B ordinary shares. Holders of Class A ordinary shares are entitled to one vote per share in respect of matters requiring the votes of shareholders, while holders of Class B ordinary shares are entitled to ten votes per share. Each Class B ordinary share is convertible into one Class A ordinary share at any time by the holder thereof, while Class A ordinary shares are not convertible into Class B ordinary shares under any circumstances. Due to the disparate voting powers associated with our two classes of ordinary shares, Mr. Tang beneficially owned a total of ~~77.2%~~73.2% of the aggregate voting power of our company as of March 31, 2016, including 77.1% that was owned through Gallant Future Holdings Limited, a company 100% beneficially owned by Mr. Tang through a family trust. As of March 31, 2016, Gallant Future Holdings Limited held 96,886,370 Class B ordinary shares, which constitutes all of our outstanding Class B ordinary shares.

2023. As a result of his majority voting power, Mr. Tang has considerable influence over matters such as electing directors and approving material mergers, acquisitions or other business combination transactions. This concentrated control will limit ~~your~~the ability of holders of our Class A ordinary shares and ADSs to influence corporate matters and could also discourage others from pursuing any potential merger, takeover or other change of control transactions, which could have the effect of depriving the holders of our Class A ordinary shares and our ADSs of the opportunity to sell their shares at a premium over the prevailing market price.

We ~~may be classified as a passive foreign investment company under U.S. tax law, which could result in adverse U.S. federal income tax consequences to U.S. holders of our ADSs or ordinary shares.~~

Under United States federal income tax law, we will be classified as a PFIC for any taxable year if either (i) 75% or more of our gross income for the taxable year is passive income or (ii) 50% or more of the value of our assets (determined on the basis of a quarterly average) is attributable to assets that produce or are held for the production of passive income (the “asset test”). Although the law in this regard is unclear, we treat Beijing Momo as being owned by us for U.S. federal income tax purposes, not only because we exercise effective control over the operation of this entity but also because we are entitled to substantially all of its economic benefits, and, as a result, we consolidate its results of operations in our consolidated U.S. GAAP financial statements. If it were determined, however, that we are not the owner of Beijing Momo for U.S. federal income tax purposes, we would likely be treated as a PFIC for the taxable year ended December 31, 2015 and would anticipate being a PFIC for future taxable years. Assuming that we are the owner of Beijing Momo for United States federal income tax purposes and based upon our income and assets and the value of our ADSs, we do not believe that we were a PFIC for the taxable year ended December 31, 2015 and do not anticipate becoming a PFIC in the foreseeable future.

However, because PFIC status is a factual determination made annually after the close of each taxable year on the basis of the composition of our income and assets, there can be no assurance that we will not be a PFIC for current the taxable year or any future taxable year. Fluctuations in the market price of our ADSs may cause us to become a PFIC for the current or subsequent taxable years because the value of our assets for purposes of the asset test, including the value of our goodwill and unbooked intangibles, may be determined by reference to the market price of our ADSs from time to time (which may be volatile). In estimating the value of our goodwill and other unbooked intangibles, we have taken into account our current market capitalization. If our market capitalization subsequently declines, we may be or become classified as a PFIC for the current taxable year or future taxable years. In addition, the overall level of our passive assets will be affected by how, and how quickly, we spend our liquid assets. Under circumstances where our revenue from activities that produce passive income significantly increase relative to our revenue from activities that produce non-passive income, or where we determine not to deploy significant amounts of cash for active purposes, our risk of becoming classified as a PFIC may substantially increase. Furthermore, because there are uncertainties in the application of the relevant rules, it is possible that the IRS may challenge our classification of certain income or assets as non-passive, or our valuation of our goodwill and other unbooked intangibles, each of which may result in our company becoming classified as a PFIC for the current or subsequent taxable years.

If we were to be or become classified as a PFIC, a U.S. Holder (as defined in “Item 10. Additional Information—E. Taxation—United States Federal Income Tax Considerations”) will generally be subject to reporting requirements and may incur significantly increased U.S. federal income tax on gain recognized on the sale or other disposition of the ADSs or ordinary shares and on the receipt of distributions on the ADSs or ordinary shares to the extent such gain or distribution is treated as an “excess distribution” under the U.S. federal income tax rules. Further, if we were a PFIC for any year during which a U.S. Holder held our ADSs or ordinary shares, we generally would continue to be treated as a PFIC for all succeeding years during which such U.S. Holder held our ADSs or ordinary shares. You are urged to consult your tax advisor concerning the U.S. federal income tax consequences of holding and disposing of ADSs or ordinary shares if we are or become classified as a PFIC. For more information see “Item 10. Additional Information—E. Taxation—United States Federal Income Tax Considerations—Passive Foreign Investment Company Rules.”

~~The approval of the China Securities Regulatory Commission may be required in connection with our initial public offering under PRC law.~~

The M&A Rules, which were adopted in 2006 by six PRC regulatory agencies, including the CSRC, purport to require offshore special purpose vehicles that are controlled by PRC companies or individuals and that have been formed for the purpose of seeking a public listing on an overseas stock exchange through acquisitions of PRC domestic companies or assets to obtain CSRC approval prior to publicly listing their securities on an overseas stock exchange. The interpretation and application of the regulations remain unclear, and our initial public offering consummated in December 2014 may ultimately require approval from the CSRC. If CSRC approval is required, it is uncertain how long it will take us to obtain the approval and any failure to obtain or delay in obtaining CSRC approval for our initial public offering would subject us to sanctions imposed by the CSRC and other PRC regulatory agencies, which could include fines and penalties on our operations in China, restrictions or limitations on our ability to pay dividends outside of China, and other forms of sanctions that may materially and adversely affect our business, results of operations and financial condition.

Our PRC counsel, Han Kun Law Offices, has advised us that, based on its understanding of the current PRC laws and regulations, we are not required to submit an application to the CSRC for the approval of the listing and trading of our ADSs on the NASDAQ Global Select Market because (i) the CSRC currently has not issued any definitive rule or interpretation concerning whether offerings like our initial public offering are subject to this regulation, and (ii) our wholly owned PRC subsidiary was established by foreign direct investment, rather than through a merger or acquisition of a domestic company as defined under the M&A Rules. However, we cannot assure you that ~~relevant PRC government agencies, including the CSRC, would reach the same conclusion as~~actions taken by our ~~PRC counsel, and hence we may face regulatory actions~~principal shareholders will completely align with your interests, or ~~other sanctions from the CSRC or other PRC regulatory agencies. These regulatory agencies may impose fines and penalties on our operations~~that any conflicts of interest will be resolved in ~~China, limit our operating privileges in China, delay or restrict the repatriation of the proceeds from our initial public offering into China or take other actions that could have~~ a material adverse effect on our business, financial condition, results of operations and prospects, as well as the trading price of the ADSs. In addition, if the CSRC or other regulatory agencies later promulgate new rules or explanations requiring that we obtain their approvals for our initial public offering, we may be unableway beneficial to obtain a waiver of such approval requirements, if and when procedures are established to obtain such a waiver. Any uncertainties and/or negative publicity regarding such approval requirement could have a material adverse effect on the trading price of the ADSs.you.

Our memorandum and articles of association contain anti-takeover provisions that could have a material adverse effect on the rights of holders of our Class A ordinary shares and ADSs.

Our currently effective second amended and restated memorandum and articles of association contain provisions to limit the ability of others to acquire control of our company or cause us to engage in change-of-control transactions. These provisions could have the effect of depriving our shareholders of an opportunity to sell their shares at a premium over prevailing market prices by discouraging third parties from seeking to obtain control of our company in a tender offer or similar transaction. Our dual-class voting structure gives disproportionate voting power to the Class B ordinary shares held by Gallant Future Holdings Limited and New Heritage Global Limited, both of which are wholly-owned by a ~~company 100% beneficially owned~~family trust controlled by Yan Tang, our co-founder, executive chairman and chief executive officer. ~~Mr. Tang beneficially owned 77.2% of the aggregate voting power of our company as of March 31, 2016, including 77.1% of the aggregate voting power owned through Gallant Future Holdings Limited.~~ In addition, our board of directors has the authority, without further action by our shareholders, to issue preferred shares in one or more series and to fix their designations, powers, preferences, privileges, and relative participating, optional or special rights and the qualifications, limitations or restrictions, including dividend rights, conversion rights, voting rights, terms of redemption and liquidation preferences, any or all of which may be greater than the rights associated with our Class A ordinary shares, in the form of ADS or otherwise. Preferred shares could be issued quickly with terms calculated to delay or prevent a change in control of our company or make removal of management more difficult. If our board of directors decides to issue preferred shares, the price of our ADSs may fall and the voting and other rights of the holders of our Class A ordinary shares and ADSs may be materially and adversely affected.

Provisions of our convertible senior notes could discourage an acquisition of us by a third party.
In July 2018, we issued US$725 million principal amount of convertible senior notes due 2025. Certain provisions of our convertible senior notes could make it more difficult or more expensive for a third party to acquire us. The indenture for our convertible senior notes define a “fundamental change” to include, among other things: (i) any person or group becoming a direct or indirect beneficial owner of our company’s ordinary share capital (including ordinary share capital held in the form of ADSs) representing more than 50% of the voting power of our ordinary share capital or more than 50% of our issued and outstanding Class A ordinary shares (including Class A ordinary shares held in the form of ADSs); (ii) any recapitalization, reclassification or change of our Class A ordinary shares or ADSs as a result of which these securities would be converted into, or exchanged for, stock, other securities, other property or assets or any share exchange, consolidation or merger of our company pursuant to which our Class A ordinary shares or ADSs will be converted into cash, securities or other property or any sale, lease or other transfer in one transaction or a series of transaction of all or substantially all of our consolidated assets, taken as a whole, to any person other than one of our subsidiaries; (iii) the approval of any plan or proposal for the liquidation or dissolution of our company by our shareholders; (iv) our ADSs ceasing to be listed or quoted on any of The New York Stock Exchange, The Nasdaq Global Select Market or The Nasdaq Global Market (or any of their respective successors); or (v) any change in or amendment to the laws, regulations and rules in the mainland China or the official interpretation or official application thereof that prohibits us from operating substantially all of our business operations and prevents us from continuing to derive substantially all of the economic benefits from our business operations. Upon the occurrence of a fundamental change, holders of these notes will have the right, at their option, to require us to repurchase all of their notes or any portion of the principal amount of such notes in principal amounts of US$1,000 or integral multiples thereof. In the event of a fundamental change, we may also be required to issue additional ADSs upon conversion of our convertible notes.

You may face difficulties in protecting your interests, and your ability to protect your rights through U.S. courts may be limited, because we are registered by way of continuation under Cayman Islands law.

We are an exempted company limited by shares registered under the laws of the Cayman Islands. Our corporate affairs are governed by our memorandum and articles of association, the Companies ~~Law (2013 Revision)~~Act (As Revised) of the Cayman Islands (the “Companies Act”) and the common law of the Cayman Islands. The rights of shareholders to take action against the directors, actions by minority shareholders and the fiduciary responsibilities of our directors to us under Cayman Islands law are to a large extent governed by the common law of the Cayman Islands. The common law of the Cayman Islands is derived in part from comparatively limited judicial precedent in the Cayman Islands as well as from the common law of England, the decisions of whose courts are of persuasive authority, but are not binding, on a court in the Cayman Islands. The rights of our shareholders and the fiduciary responsibilities of our directors under Cayman Islands law are not as clearly established as they would be under statutes or judicial precedent in some jurisdictions in the United States. In particular, the Cayman Islands has a less developed body of securities laws than the United States. Some U.S. states, such as Delaware, have more fully developed and judicially interpreted bodies of corporate law than the Cayman Islands. In addition, Cayman Islands companies may not have standing to initiate a shareholder derivative action in a federal court of the United States.

Shareholders of Cayman Islands exempted companies like us have no general rights under Cayman Islands law to inspect corporate records (except for our memorandum and articles of association, our register of mortgages and charges and special resolutions of our shareholders) or to obtain copies of lists of shareholders of these companies. Our directors have discretion under our articles of association to determine whether or not, and under what conditions, our corporate records may be inspected by our shareholders, but are not obliged to make them available to our shareholders. This may make it more difficult for you to obtain the information needed to establish any facts necessary for a shareholder motion or to solicit proxies from other shareholders in connection with a proxy contest.

As a result of all of the above, ~~public~~ shareholders may have more difficulty in protecting their interests in the face of actions taken by management, members of the board of directors or controlling shareholders than they would as public shareholders of a company incorporated in the United States.

Certain judgments obtained against us by our shareholders may not be enforceable.

We are a Cayman Islands exempted company and ~~all~~most of our assets are located outside of the United States. Substantially all of our current operations are conducted in mainland China. In addition, a majority of our current directors and officers are nationals and residents of countries other than the United States. ~~Substantially all~~Most of the assets of these persons are located outside the United States. As a result, it may be difficult or impossible for you to effect service of process within the United States upon us or these persons or to bring an action against us or against these individuals in the United States in the event that you believe that your rights have been infringed under the U.S. federal securities laws or otherwise. Even if you are successful in bringing an action of this kind, the laws of the Cayman Islands and of mainland China may render you unable to enforce a judgment against our assets or the assets of our directors and officers. There is no statutory enforcement in the Cayman Islands of judgments obtained in the federal or state courts of the United States (and the Cayman Islands are not a party to any treaties for the reciprocal enforcement or recognition of such judgments), a judgment obtained in such jurisdiction will be recognized and enforced in the courts of the Cayman Islands at common law, without any re-examination of the merits of the underlying dispute, by an action commenced on the foreign judgment debt in the Grand Court of the Cayman Islands, provided such judgment (a) is given by a foreign court of competent jurisdiction, (b) imposes on the judgment debtor a liability to pay a liquidated sum for which the judgment has been given, (c) is final, (d) is not in respect of taxes, a fine or a penalty, and (e) was not obtained in a manner and is not of a kind the enforcement of which is contrary to natural justice or the public policy of the Cayman Islands. However, the Cayman Islands courts are unlikely to enforce a judgment obtained from the U.S. courts under civil liability provisions of the U.S. federal securities law if such judgment is determined by the courts of the Cayman Islands to give rise to obligations to make payments that are penal or punitive in nature. Because such a determination has not yet been made by a court of the Cayman Islands, it is uncertain whether such civil liability judgments from U.S. courts would be enforceable in the Cayman Islands.

~~We are an emerging growth company within the meaning of the Securities Act and may take advantage of certain reduced reporting requirements.~~

We are an “emerging growth company,” as defined in the JOBS Act, and we may take advantage of certain exemptions from requirements applicable to other public companies that are not emerging growth companies including, most significantly, not being required to comply with the auditor attestation requirements of Section 404 for so long as we are an emerging growth company until the fifth anniversary from the date of our initial listing.

The JOBS Act also provides that an emerging growth company does not need to comply with any new or revised financial accounting standards until such date that a private company is otherwise required to comply with such new or revised accounting standards. However, we had elected to “opt out” of this provision and, as a result, we will comply with new or revised accounting standards as required when they are adopted for public companies. This decision to opt out of the extended transition period under the JOBS Act was irrevocable.

We are a foreign private issuer within the meaning of the rules under the Exchange Act, and as such we are exempt from certain provisions applicable to United States domestic public companies.

Because we are a foreign private issuer under the Exchange Act, we are exempt from certain provisions of the securities rules and regulations in the United States that are applicable to U.S. domestic issuers, including:

~~the rules under the Exchange Act requiring the filing of quarterly reports on Form 10-Q or current reports on Form 8-K with the SEC;~~

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the rules under the Exchange Act requiring the filing of quarterly reports on Form 10-Q or current reports on Form 8-K with the SEC;

the sections of the Exchange Act regulating the solicitation of proxies, consents, or authorizations in respect of a security registered under the Exchange Act;

the sections of the Exchange Act requiring insiders to file public reports of their stock ownership and trading activities and liability for insiders who profit from trades made in a short period of time; and

~~the selective disclosure rules by issuers of material nonpublic information under Regulation FD.~~

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the selective disclosure rules by issuers of material nonpublic information under Regulation FD; and certain audit committee independence requirements in Rule 10A-3 of the Exchange Act.

We are required to file an annual report on Form 20-F within four months of the end of each fiscal year. In addition, we intend to publish our results on a quarterly basis through press releases, distributed pursuant to the rules and regulations of the ~~NASDAQ~~Nasdaq Global Select Market. Press releases relating to financial results and material events will also be furnished to the SEC on Form 6-K. However, the information we are required to file with or furnish to the SEC will be less extensive and less timely compared to that required to be filed with the SEC by U.S. domestic issuers. As a result, you may not be afforded the same protections or information, which would be made available to you, were you investing in a U.S. domestic issuer. As a Cayman Islands company listed on the ~~NASDAQ~~Nasdaq Global Select Market, we are subject to the ~~NASDAQ~~Nasdaq Global Select Market corporate governance listing standards. However, ~~NASDAQ~~Nasdaq Global Select Market rules permit a foreign private issuer like us to follow the corporate governance practices of its home country. Certain corporate governance practices in the Cayman Islands, which is our home country, may differ significantly from the ~~NASDAQ~~Nasdaq Global Select Market corporate governance listing standards. We followed our home country practice and did not hold an annual meeting of shareholders in 2022. In addition, we currently follow our home country practice and have a two-person audit committee. To the extent that we choose to utilize the home country exemption for corporate governance matters, our shareholders may be afforded less protection than they otherwise would under the ~~NASDAQ~~Nasdaq Global Select Market corporate governance listing standards applicable to U.S. domestic issuers. ~~We follow home country practice with respect to annual shareholders meetings and did not hold an annual meeting of shareholders in 2015.~~ As a result, you may not be afforded the same protections or information, which would be made available to you, were you investing in a U.S. domestic issuer.

We are a “controlled company” within the meaning of the Nasdaq Stock Market Rules and, as a result, may rely on certain exemptions from certain corporate governance requirements that provide protection to shareholders of other companies.
We are a “controlled company” as defined under the Nasdaq Stock Market Rules because Yan Tang, our co-founder, executive chairman and chief executive officer, beneficially owns more than 50% of our total voting power. For so long as we remain a controlled company under that definition, we are permitted to elect to rely, and may rely, on certain exemptions from corporate governance rules. Our board of directors is currently not composed of a majority of independent directors. As a result, you may not have the same protection afforded to shareholders of companies that are subject to these corporate governance requirements.

The voting rights of holders of ADSs are limited by the terms of the deposit agreement, and you may not be able to exercise your right to vote your underlying Class A ordinary shares.

As a holder of our ADSs, you will only be able to exercise the voting rights with respect to the underlying Class A ordinary shares represented by your ADSs in accordance with the provisions of the deposit agreement. Under the deposit agreement, you must vote by giving voting instructions to the depositary. Upon receipt of your voting instructions, the depositary will vote the underlying Class A ordinary shares represented by your ADSs in accordance with these instructions. You will not be able to directly exercise your right to vote with respect to the underlying Class A ordinary shares represented by your ADSs unless you ~~withdraw the shares.~~register such underlying Class A ordinary shares in your own name. Under our currently effective second amended and restated memorandum and articles of association, the minimum notice period required for convening a general meeting is ~~14 days.~~10 days, exclusive of the day on which notice is given and the day of the meeting. When a general meeting is convened, you may not receive sufficient advance notice to ~~withdraw~~register the underlying Class A ordinary shares ~~underlying~~represented by your ADSs in your own name to allow you to vote with respect to any specific matter. If we ask for your instructions, the depositary will notify you of the upcoming vote and will arrange to deliver our voting materials to you. We cannot assure you that you will receive the voting materials in time to ensure that you can instruct the depositary to vote the underlying Class A ordinary shares represented by your ~~shares.~~ADSs. In addition, the depositary and its agents are not responsible for failing to carry out voting instructions or for their manner of carrying out your voting instructions. This means that you may not be able to exercise your right to vote and you may have no legal remedy if the underlying Class A ordinary shares ~~underlying~~represented by your ADSs are not voted as you requested.

The depositary for our ADSs will give us a discretionary proxy to vote our Class A ordinary shares underlying your ADSs if you do not instruct the depositary to vote ~~at shareholders’ meetings,~~your shares, except in limited circumstances, which could adversely affect your interests.

Under the deposit agreement for the ADSs, if you do not instruct the depositary to vote the underlying Class A ordinary shares represented by your ADSs, the depositary will give us a discretionary proxy to vote ~~our~~the underlying Class A ordinary shares ~~underlying~~represented by your ADSs at shareholders’ meetings unless:

we have failed to timely provide the depositary with notice of meeting and related voting materials;

we have instructed the depositary that we do not wish a discretionary proxy to be given;

we have informed the depositary that there is substantial opposition as to a matter to be voted on at the meeting;

a matter to be voted on at the meeting would have a material adverse impact on shareholders; or

the voting at the meeting is to be made on a show of hands.

The effect of this discretionary proxy is that if you do not instruct the depositary to vote ~~at shareholders’ meetings, you cannot prevent our~~the underlying Class A ordinary shares represented by your ADSs, you cannot prevent the underlying Class A ordinary shares represented by your ADSs from being voted, except under the circumstances described above. This may make it more difficult for ~~shareholders~~holders of ADSs to influence the management of our company. Holders of our Class A ordinary shares are not subject to this discretionary proxy.

You may not receive dividends or other distributions on our Class A ordinary shares and you may not receive any value for them, if it is illegal or impractical to make them available to you.

The depositary of our ADSs has agreed to pay to you the cash dividends or other distributions it or the custodian receives on Class A ordinary shares or other deposited securities underlying our ADSs, after deducting its fees and expenses. You will receive these distributions in proportion to the number of Class A ordinary shares your ADSs represent. However, the depositary is not responsible if it decides that it is unlawful or impractical to make a distribution available to any holders of ADSs. For example, it would be unlawful to make a distribution to a holder of ADSs if it consists of securities that require registration under the Securities Act but that are not properly registered or distributed under an applicable exemption from registration. The depositary may also determine that it is not feasible to distribute certain property through the mail. Additionally, the value of certain distributions may be less than the cost of mailing them. In these cases, the depositary may determine not to distribute such property. We have no obligation to register under U.S. securities laws any ADSs, ordinary shares, rights or other securities received through such distributions. We also have no obligation to take any other action to permit the distribution of ADSs, ordinary shares, rights or anything else to holders of ADSs. This means that you may not receive distributions we make on our Class A ordinary shares or any value for them if it is illegal or impractical for us to make them available to you. These restrictions may cause a material decline in the value of our ADSs.

You may experience dilution of your holdings due to inability to participate in rights offerings.

We may, from time to time, distribute rights to our shareholders, including rights to acquire securities. Under the deposit agreement, the depositary will not distribute rights to holders of ADSs unless the distribution and sale of rights and the securities to which these rights relate are either exempt from registration under the Securities Act with respect to all holders of ADSs, or are registered under the provisions of the Securities Act. The depositary may, but is not required to, attempt to sell these undistributed rights to third parties, and may allow the rights to lapse. We may be unable to establish an exemption from registration under the Securities Act, and we are under no obligation to file a registration statement with respect to these rights or underlying securities or to endeavor to have a registration statement declared effective. Accordingly, holders of ADSs may be unable to participate in our rights offerings and may experience dilution of their holdings as a result.

You may be subject to limitations on transfer of your ADSs.

Your ADSs are transferable on the books of the depositary. However, the depositary may close its books at any time or from time to time when it deems expedient in connection with the performance of its duties. The depositary may close its books from time to time for a number of reasons, including in connection with corporate events such as a rights offering, during which time the depositary needs to maintain an exact number of ADS holders on its books for a specified period. The depositary may also close its books in emergencies, and on weekends and public holidays. The depositary may refuse to deliver, transfer or register transfers of our ADSs generally when our share register or the books of the depositary are closed, or at any time if we or the depositary thinks it is advisable to do so because of any requirement of law or of any government or governmental body, or under any provision of the deposit agreement, or for any other reason.

Item 4.
Information on the Company

A.	History and Development of the Company

We started our operations in July 2011 when our founders established ~~our consolidated affiliated entity~~Beijing Momo Technology Co., Ltd., or Beijing Momo, in mainland China. In order to facilitate foreign investment in our company, we incorporated our holding company under the name of Momo Technology Company Limited in the British Virgin Islands in November 2011. In July 2014, Momo Technology Company Limited was redomiciled in the Cayman Islands as an exempted company registered under the laws of the Cayman Islands, and was renamed Momo Inc. ~~In December 2011,~~The following outlines other major changes to our corporate structure in the last three years.

From April 2020 to March 2021, we ~~established Momo HK,~~entered into a ~~wholly owned subsidiary, in Hong Kong. Subsequently, Momo HK established a wholly-owned PRC subsidiary,~~series of contractual arrangements with Beijing Momo ~~IT in March 2012. In May 2013, we established Chengdu Momo as a wholly owned subsidiary~~and SpaceTime Beijing, and adjusted two shareholders of Beijing ~~Momo. In~~Top Maker shareholders.

From April 2021 to March ~~2014,~~2022, we ~~formed our Delaware subsidiary,~~restated a series of contractual arrangements with Beijing Momo ~~Information Technologies Corp., which conducts market research~~ and ~~new product development. In January 2015, we established Shanghai Momo Technology Co., Ltd., or Shanghai Momo, as a wholly-owned subsidiary~~Beijing Top Maker shareholders and adjusted one shareholder of Beijing ~~Momo. In October 2015,~~Top Maker.

From August 19, 2022 to March 2023, we ~~established Chengdu Biyou Technology Co., Ltd., or Chengdu Biyou, as~~entered into a ~~wholly-owned subsidiary~~series of ~~Chengdu Momo.~~contractual arrangements with Beijing Wozaixiangxiang, Tianjin Nishuodedoudui and two shareholders.

See “—C. Organizational Structure—Contractual Arrangements with the Consolidated Affiliated Entities and Their Respective Shareholders.”

In December 2014, we completed our initial public offering and listed our ADSs on the ~~NASDAQ~~Nasdaq Global Select Market under the symbol “MOMO.”

On August 2, 2021, our name change from “Momo Inc.” to “Hello Group Inc.” became effective.

Our principal executive offices are located at 20th Floor, Block B, Tower 2, Wangjing SOHO, No. 1 Futongdong Street, Chaoyang District, Beijing 100102, People’s Republic of China. Our telephone number at this address is ~~+86-10-5731-0567.~~+86-10-5731-0567. Our registered office in the Cayman Islands is located at P.O. Box 309, Ugland House, Grand Cayman KY1-1104, Cayman Islands. Our agent for service of process in the United States in connection with our Form S-8 and From F-3 filings is ~~Law Debenture Corporate Services Inc.,~~Puglisi & Associates, 850 Library Avenue, Suite 204, Newark, Delaware 19711.

SEC maintains an internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC on www.sec.gov. You can also find information on our website https://ir.hellogroup.com. The information contained on our website is not a part of ~~4th Floor, 400 Madison Avenue, New York, New York 10017.~~

~~Proposed Going Private Transaction~~

On April 5, 2016, the Buyer Group (including Alibaba Investment Limited and Rich Moon Limited) executed an amendment to the consortium agreement dated July 6, 2015 among themselves to extend the exclusivity period, pursuant to which the Buyer Group agreed that during the period beginning on July 6, 2015 and ending on the earlier of (i) April 5, 2017 and (ii) the termination of the consortium agreement by mutual written agreement of the members of the Buyer Group, members of the Buyer Group will work exclusively with each other with respect to the going private transaction.

There can be no assurance that the going private transaction will continue to be pursued, approved by sufficient affirmative vote or consummated. See “Item 3. Key Information on the Company—Risks Related to Our ADSs—There can be no assurance that the proposed going private transaction will continue to be pursued, approved by our shareholders or successfully consummated. Potential uncertainty involving the proposed going private transaction may adversely affect our business and the market price of our ADSs.”this annual report.

B.	Business Overview

We ~~operate Momo, one of~~are a leading player in mainland China’s ~~leading mobile-based~~online social networking ~~platforms. We~~space. Through Momo, Tantan and other properties within our product portfolio, we enable users to ~~establish~~discover new relationships, expand their social connections and ~~expand~~build meaningful interactions. Momo is a mobile application that connects people and facilitates social ~~relationships~~interactions based on location, ~~and interests. Our platform includes our Momo mobile application~~interests and a variety of ~~related features, functionalities, tools~~online recreational activities. Tantan, which was added into our family of applications through acquisition in May 2018, is a leading social and ~~services that we provide~~dating application. Tantan is designed to help its users ~~customers~~find and ~~platform partners.~~

We aim to offer our users an authentic social experience by encouraging them to provide detailed personal information on Momo. Leveraging our social interest graph engine and our analysis of user behavior data, we are able to provide users a customized experience based on their social preferences and needs. Momo users can maintain and strengthen their relationships through our private and group communication tools, content creation and sharing functions,establish romantic connections as well as ~~the offline social activities promoted on our platform. In order to enhance user engagement,~~meet interesting people. Starting from 2019, we ~~also started to offer live music~~have incubated a number of other new apps, such as Hertz, Soulchill, Duidui and ~~entertainment broadcasts on our Momo platform in September 2015.~~Tietie, which target more niche markets and more selective demographics.

We have built a large user base on Momo since its launch in 2011. ~~Our~~Momo’s MAUs ~~were 69.8 million and 69.3~~increased from 113.8 million in December ~~2015~~2020 to 114.1 million in December 2021, but decreased to 94.6 million in December 2022. Tantan’s MAUs decreased from 27.0 million in December 2021 to 18.4 million in December 2022. The decrease in Momo and December 2014, respectively. We had 2.9 million members as of December 31, 2015, same as the number of members as of December 31, 2014. The growth rate of our MAUs and number of members has slowed downTantan’s MAU in ~~2015~~2022 was primarily due to COVID-19,the ~~reduced growth~~social distancing and lockdown measures across China as well as the reduction in marketing investment.

Momo, Tantan and other mobile applications within our family of ~~number~~mobile applications can be downloaded and used free of ~~smartphone users~~charge, and we generate our revenues from the various services we offer on our platforms. Our revenues decreased from RMB15,024.2 million in ~~China,~~2020 to RMB14,575.7 million in 2021, and ~~upgrades~~further decreased to RMB12,704.2 million (US$1,841.9 million) in 2022. We currently generate our revenues from live video service, value-added service, mobile marketing services, mobile games and other services. Our live video service, which was launched in September 2015 on the Momo platform ~~that take time for~~and in 2020 on the Tantan platform, allows users to ~~adapt to.~~

~~Amid~~purchase and send in-show virtual gifts to other users hosting live shows, and it currently contributes the ~~fast evolving mobile internet market in China, we have focused on building~~largest share of our revenues, generating 64.1%, 57.5% and ~~growing~~51.2% of our ~~user base and improving user experience. Our Momo mobile application is free of charge. We began to generate~~net revenues in ~~July 2013~~2020, 2021 and 2022, respectively. We generated 34.0%, 41.0% and 47.3% of our net revenues from ~~our~~value-added services in 2020, 2021 and 2022, respectively, in relation to the membership subscription ~~package, which provides~~packages of Momo and Tantan that provide members with additional functions and ~~privileges. We generated 66.5%~~privileges on our platforms and, ~~43.6%~~starting in the fourth quarter of ~~our net revenues from membership subscription fees in 2014~~2016, virtual gift service, which allows Momo users to purchase and ~~2015, respectively. We also began~~send virtual gifts to ~~generate revenues from mobile games, mobile~~other users outside of the live video service. Mobile marketing services, ~~and paid emoticons in the second half of 2013. Mobile~~mobile games ~~mobile marketing services~~ and other services contributed ~~25.1%~~1.4%, ~~4.4%~~0.3% and ~~4.0%~~0.2%, respectively, of our revenues in ~~2014,~~2020, 1.1%, 0.3% and ~~23.2%, 29.0% and 4.2%~~0.1%, respectively, of our revenues in ~~2015. Our~~2021, and 1.0%, 0.4% and 0.1%, respectively, of our revenues ~~increased significantly from US$3.1 million~~ in ~~2013 to US$44.8 million in 2014 and further to US$134.0 million in 2015.~~2022. We had ~~net losses of US$9.3 million and US$25.4 million in 2013 and 2014, respectively, and~~a net income of ~~US$13.7~~RMB2,100.4 million in ~~2015.~~2020, a net loss of RMB2,925.7 million in 2021, and a net income of RMB1,480.0 million (US$214.6 million) in 2022.

The Momo Platform

Our Momo platform includes our Momo mobile application and a variety of related properties, features, functionalities, tools and ~~services that we provide to users, customers and platform partners.~~services. The Momo ~~mobile application, which is available on Android, iOS and Windows platforms,~~platform enables users to ~~establish and~~discover new relationships, expand their social ~~relationships~~connections and build meaningful interactions. We connect people and facilitate interactions over a rich collection of social experiences based on ~~locations and interests. Momo offers a personal and lively way for users to discover people nearby, and facilitates the connecting, communicating, interacting, and~~location, interests, content sharing ~~with others. Momo features various location~~ and ~~interest-based features,~~a variety of recreational activities including ~~Nearby functions~~live talent shows, short videos, social games as well as other video- and ~~other functions.~~audio-based interactive experiences, such as online parties, mobile karaoke and user participated reality shows. Communications within our platform are supported by multi-media instant messaging ~~tools.~~tools and other audio- and video-based communication tools and services.

~~Key features~~The Tantan Platform

Tantan is a leading social and ~~functionalities offered by our platform include the following:~~

~~“Nearby” Functions~~

~~Nearby People.~~ ~~This function allows~~dating application, which is designed to help its users to find ~~out their approximate distance from each other in real time~~ and ~~is the primary tool through which users can~~ establish ~~and expand their social relationships.~~

~~Nearby People~~ is organized under our default tab and presents a curated list of nearby users with their profile pictures, relative distances and the time they last checked-in on Momo. The list of nearby people is by default ordered by proximity to the application users. All users can customize the list by viewing nearby people by gender and a specific period of time within which the nearby people last checked in. Users can initiate contact with nearby users by sending greeting messages and selecting to follow their accounts in order to receive notifications on their status updates. A user who receives a greeting message may then reply and choose to become a Momo friend of the initiator by also following such user. Users can adjust their privacy settings to avoid being seen by strangers or to appear invisible. Our application also allows users to block other users and report inappropriate behaviors. Our members may further filter the list of nearby users by age group, occupation, horoscope and whether the nearby person has linked his or her Momo account with other popular social network applications.

We enhance user stickiness by providing a comprehensive suite of push notifications, which include status updates, greetings from nearby users, chat messages and location of Momo friends. Our application will also notify users when their Momo friends come within close proximity. We also keep users up-to-date on the latest postings in their groups,romantic connections, as well as ~~groups that their Momo friends have joined.~~

~~User Profile~~. This function allows users to share basic personal information and interests and encourage interactions. To begin the Momo experience, after downloading and installing the application, each user is asked to fill out a profile featuring pictures and detailed personal information, such as name, age, horoscope, occupation, employer, school, relationship status, date of registration with Momo, groups and topics joined, interests, accounts at other social network applications, frequent places of appearance and a personal note. Members can also post a voice recording as part of their profile. The profile page also contains a link to a chronologically arranged display of status updates, blogs and pictures posted by the user, allowing the user to share his or her experience and interest.

To further improve user experience, we have developed a tiering system whereby each user is assigned one of six scores based primarily on his or her behavioral patterns, profile credibility, degree of engagement, etc. Each user can monitor the score on his or her profile page. A user can generally improve his or her tiering score by demonstrating a pattern of wholesome social behavioral, a credible social profile and active engagement.

~~Message Board~~~~. An important entry point for users to interact with and learn about all other users nearby is our~~~~Message Board~~ ~~function. Our~~~~Message Board~~ contains a stream of feeds, including status updates, micro-blogs, photos, videos, music and commentaries posted by nearby users, facilitating connections between people in the same neighborhoods. The order of feeds is defined by our algorithm, which is based on both physical proximity and compatibility of user profiles. For each feed they create, users can control whether the feed may be viewed by all Momo users, only their friends or only themselves. Users can comment on or “like” the postings made by others, which are arranged by proximity.~~Message Board~~ ~~can also be linked to users’ WeChat, Weibo and QQ accounts, such that users can simultaneously share their~~~~Message Board~~ ~~updates with their friends on those accounts. Our~~~~Message Board~~ ~~function~~meet interesting people. Tantan has ~~proven to be an effective means of stimulating interaction and creating social relationships among our users. As~~become one of the ~~most frequently visited functions by~~leading choices for mobile internet users in mainland China to discover new relationships. Tantan’s users can enjoy many of the~~Message Board~~ ~~is currently grouped under our Nearby default tab together~~ core features of Tantan for free. For example, Tantan users can swipe through a pool of people to find potential matches and communicate with ~~our two other popular functions~~~~Nearby People~~ ~~and~~~~Groups~~.

~~Groups~~~~. Our application allows~~the matches through the instant messaging tool on the Tantan app. Tantan users tocan also create and participate in location-based groups across points of interest, including residential complexes, educational institutions and commercial buildings. Location-based groups are generally established aroundshare content or discover new connections via contents shared by other users. However, to enjoy certain premium features, a ~~certain topic of interest. Each group is given~~user must pay a ~~shared Momo discussion page~~monthly subscription fee or purchase the premium features on ~~which group members can discuss their common interests, post their photos and exchange messages. As of December 31, 2015, our users had created 6.1 million groups.~~

Our users can create groups by first selecting a specific location around which the group is centered, which must be associated with a specific residential complex, educational institution or commercial building, and second, selecting a topic of interest for the group. We limit the size of each group to 100 users in order to foster a closer, more engaged and interactive community. The maximum size of a particular group is determined by whether the group’s creator is a member and the activity levelan à la carte basis. Starting from 2019, we have introduced other social experiences outside of the ~~group, such as~~swipe and match mechanism to help users discover new relationships and interact in more diversified ways. Such social experiences mainly include live video, audio chatrooms and “Quick Chat” experience.

We believe that Tantan strategically complements the frequency of messaging among users. Our application displays nearby groups created by users as ranked by proximity. A user must apply to join a nearby group, and membership admission is determined by the creator and managers of the group. In addition to our default distance-based listing of nearby groups,Momo platform. First, Tantan’s users are ~~also able~~younger on average than Momo’s users, allowing us to ~~search for groups using keywords. To further enhance interaction, we also display who~~expand our footprint among ~~the people that a user has followed are members of a particular group.~~

Users can propose and organize offline events for the location-based groups. A separate page will be created for an event containing information about the activity such as type, venue and time, based on which group members can decide whether to join the event and confirm attendance. A list of confirmed attendees will be shown on the activity page as well.

~~To enhance the synergies between our social functions and mobile games offered on our platform, we have established groups for our mobile games players called~~~~Player Unions~~~~. Our~~~~Player Unions~~ ~~provide users with increased opportunities to interact and foster closer social relationships.~~

~~Other Functions~~

~~Friends’ Message Board.~~~~This function operates in a way similar to~~~~Message Board~~ ~~and contains feeds from users’ friends on their contact lists, aimed at facilitating interaction and strengthening relationships between users and their friends.~~

~~Topics~~~~. Our~~~~Topics~~ ~~is another feature aimed at enabling users to discover other users with common interests. Our~~~~Topics~~ ~~present popular themes of interest to all users. Users who have joined a certain~~~~Topic~~~~, such asFitness or Pets, can post threads and interact with other users by replying to the threads. Users can view other users who have joined the same~~~~Topic~~~~, in the order of proximity. We also recommend popular~~~~Topics~~ ~~and threads to users based on their profiles. Users can also search for~~~~Topics~~ ~~that most interest them.~~

~~Topics~~ ~~are created by us based on user feedback. Daily management of a~~~~Topic~~ ~~is delegated to the~~~~Topics~~ ~~host, who is responsible for selecting priority postings, and monitoring posted content for inappropriate, off-topic or unlawful materials.~~

~~Nearby Events~~. To facilitate offline interaction between our users and to promote our brand, we publicize events taking place in various Chinese cities close to our users, such as concerts, seminars, sport events, plays and exhibitions.

We cooperate with leading event promoters and ticketing platforms in China to upload information about popular events onto Momo. Moreover, event hosts can open a Momo account and promote their events on our platform by submitting a description of the event to us. Once we approve an event submission, it will appear on our~~Nearby Events~~ ~~page. For highly popular events, our sales team will actively seek to partner with the hosts in order to promote our brand and potentially explore monetization opportunities.~~

Our users can search and filter events by date, type, distance, popularity and number of attendees. Our users can sign up for the events and view other people who have expressed interest in attending, to whom they may send invitations to attend the event together. After a user has signed up for an event, it is added to his/her Momo event calendar in our application.

~~Chat Rooms. Chat Rooms~~ ~~allow users to create, organize and participate in group chats based on location and common interest. Compared to~~~~Groups~~,~~Chat Rooms~~ ~~are open forums where users can easily participate in conversations without pre-approval from creators of relevant chat rooms.~~

~~Gift Mall~~. Our gift mall showcases gifts that our users may purchase and send to each other. Gifts in our gift mall currently primarily include flowers, electronic products, food, cosmetics, household fittings and accessories. The gift mall is accessible via users’ personal page, and contains a library of information that facilitates customized gift purchase, including gift recommendation, birthday reminders, gift catalogue with list prices, and friends’ favorites. Users may also send customized message along with a gift. Gifts may only be sent between friends on Momo, and gift recipients may accept or reject the gifts.

~~Instant Messaging~~

Our application is supported by instant messaging function, with which users can send text, emoticons, voice recordings, pictures and video messages to other users. Many of our fun and trendy emoticons are inspired by characters in popular culture. One of the key features of our instant messaging function is that the dialogue window presents the distance between the two parties in real time. Senders can see whether their messages have been delivered to or read by the recipient. Our instant messaging feature also allows users to turn voice messages into text, share their location information and engage in multi-person group chats. Users can sync their chat histories with multiple devices. We have also embedded third-party applications such as WeChat and Alipay red envelopes in order to stimulate interaction between our users.

~~Live Music and Entertainment Broadcasts~~

In order to enhance user engagement, we started to offer live music and entertainment broadcasting service in September 2015, creating a brand new way for our users to socialize and have fun on our platform.

~~Through an entry point in~~younger demographics. Second, whereas the Momo platform ~~users are able~~has been primarily focused on connecting people in a broader sense among larger groups and communities, Tantan is primarily focused on connecting people for romantic purposes. Additionally, compared to ~~enjoy live music~~Momo, Tantan is a younger brand with strong potential to grow its user base and ~~entertainment broadcasts by performers on~~revenues. We believe that our ~~platform. Our live music~~acquisition of Tantan helps us enrich our product line, expand our user base, broaden our social scenarios and ~~entertainment broadcasting service currently comprise three major components,~~~~Momo Live~~,~~PC-based live broadcast~~strengthen our leading position in mainland China’s open social market.

Other Applications

The social and~~mobile live broadcast, through which users gather~~ dating market in China is highly fragmented. Users may have different social demand and ~~enjoy live music and entertainment shows while interacting with the performers and other users through instant messaging.~~~~Momo Live~~ ~~features professionally produced shows broadcasted from a studio room for a limited number of sessions per day. By contrast,~~~~PC-based live broadcast~~~~and~~ ~~mobile live broadcast,~~ which are broadcasted through simple PC-based video devices and mobile phones, are hosted by performers that we recruit from the public through a selective application process, and are much more flexiblepreferences in terms of ~~time~~how they discover new relationships and ~~venue for~~build interactions. Therefore, we believe a brand portfolio approach may allow us to penetrate the ~~broadcasts. We aim~~market faster and more effectively. Starting from 2019, we have incubated a number of other new apps, such as Hertz, Soulchill, Duidui and Tietie, which target more niche markets and more selective demographics. In 2022, the revenue contributed by Soulchill increased significantly due to ~~provide an open platform for ordinary people to show their talents. Users accessing our live music~~its successful operation in the Middle East and ~~entertainment shows interact with the performers by sending online messages, which are free of charge, as well as on-screen messages and virtual gifts, which are purchased using virtual currency.~~

~~Mobile Games~~

Our application offers games primarily developed by third-party developers, some of which are customized for our platform and user profile. In February 2015, we launched our first self-developed game on our platform and started to generate revenues by in-game purchases of virtual items. Games on our platform are designed with a variety of themes, cultural characteristics and features to appeal to different segments of the game player community. The games on our platform have rich social features and are developed to be enjoyed, shared and played among Momo friends. Our users log into and play our games with their Momo accounts. Such social features contribute to the high player stickiness of mobile games offered on our platform.North Africa markets.

Monetization Opportunities

We ~~started monetization in July 2013.~~offer a wide variety of products that capture the needs of users from all demographics and socioeconomic statuses. Throughout the years, we continue to create new products and services by closely following the market dynamics and users’ evolving social needs. In real life, people bond more easily and effectively by playing games together. Using a gamified experience to facilitate relationship building and enhance social experience is one of the key ideas behind our product design. Through constant product and operational innovations, we have effectively monetized through a wide variety of virtual gift experiences which not only generate revenue, but also encourage interactions among the users. We ~~currently~~have two major business lines for monetization: live video service and value-added service. In addition, we also generate revenues ~~primarily~~ from ~~membership subscription fees,~~ mobile marketing services, mobile games, and other services. ~~Because we started to monetize from the third quarter of 2013 only, we cannot confirm or otherwise describe the seasonality of our business as a result of this very short history of monetization.~~

~~Membership Subscription~~

~~We provide enhanced membership privileges to users who subscribe to our membership package by paying membership fees.~~ 62

Live Video Service

Our ~~memberships are currently divided into two tiers, basic~~live video service allows Momo and premium. Enhanced privileges for all members include VIP logos, advanced search options, discounts in our emoticon store, higher limits on the maximum number of users group and the number of users that the member can follow, the ability to add a 60 second voice recording to the profile page, to search for Momo users anywhere in the world using our location roaming services, to see a list of recent visitors to their profile page and to appear invisible to specific users. Additional privileges for our premium members include the abilities to check out visitors to their message boards and to remove advertisements from their feeds. We offer four basic membership subscription packages, priced at RMB12 (US$2) per month, RMB30 (US$5) per three months, RMB60 (US$9) per six months and RMB108 (US$17) per year, respectively, and four premium membership subscription packages, priced at RMB30 (US$5) per month, RMB88 (US$14) per three months, RMB168 (US$26) per six months and RMB298 (US$46) per year, respectively. We offer diverse payment options forTantan users to ~~pay membership subscription fees,~~livestream a variety of content and activities including ~~third-party online channels,~~talent shows such as~~Apple App Store~~ singing, dancing and~~Alipay~~, talk shows, as well as ~~through~~casual chatting and other form of interactions between broadcasters and viewers. The broadcasters are able to “go live” and connect with their audience via their mobile ~~operators, including prepaid cell-phone recharge cards.~~phones as well as PC, while audience members are able to interact on a real time basis with the broadcasters and other fellow viewers by texting for free or purchasing and sending virtual gifts. We ~~had 2.9 million members~~share a portion of the revenues generated with the broadcasters or the talent agencies. Broadcasters provide live video service on our platforms as an individual or as a member of ~~December 31, 2015.~~a talent agency. Certain broadcasters are also paying users on our platforms. The talent agencies recruit, train and retain the broadcasters. We ~~intend~~monetize live video service via virtual gifts. Currently, live video service contributes the largest share of our revenues, generating 64.1%, 57.5% and 51.2% of our net revenues in 2020, 2021 and 2022, respectively.

Value-added Service

Our value-added service primarily consists of subscription services that provide paying users with additional features and functions as well as privileges on our Momo and Tantan platforms and, starting in the fourth quarter of 2016, virtual gift services, which allow our users to ~~continue exploring different ways~~purchase and send virtual gifts to ~~expand~~other users outside of the live video service. We also introduced virtual item sales in our ~~members-only offerings so as to better serve~~virtual community services in 2019. We generated 34.0%, 41.0% and 47.3% of our ~~members~~net revenues from value-added services in 2020, 2021 and ~~attract a larger membership base.~~2022, respectively.

Mobile Marketing Services

We seek to provide advertising and marketing solutions to enable our customers to promote their brands and conduct effective marketing activities. We ~~provide our customers with analytical tools to enable them to track and improve the effectiveness~~offer a variety of ~~their~~ marketing campaigns on our platform. Our advertising and marketing customers include brand marketers, local merchants, application developers and other small and medium-sized businesses. Our mobile marketing services currently include the following:

~~Brand-oriented~~products in display ~~ads.~~~~We provide brand marketers with various ad formats for them to drive brand awareness through our platform. The forms of advertisements we offer to brand marketers currently include~~format, including full screen banner ads that appear before the application is loaded, ~~top banners on~~~~Message Board~~~~, and~~ banners on frequently visited pages onand other sponsored images displayed elsewhere within our ~~platform. As the features~~application.

Mobile marketing services contributed 1.4%, 1.1% and ~~functionalities~~1.0% of our ~~platform continue to evolve, we may offer other packages of marketing solutions that integrate multiple ad units such as banners, video ads~~revenues in 2020, 2021 and ~~sponsorships.~~2022, respectively.

~~In-feed marketing solutions.~~~~We offer advertising units that appear as feeds on~~~~Message Board~~ ~~and~~~~Nearby People~~. Powered by a proprietary self-serve advertising system with a real-time bidding mechanism, our in-feed marketing solutions are performance-based, and serve a wide range of marketers including application developers, local businesses, brand owners, as well as other small and medium-sized businesses.

~~Third-party partnerships.~~ In December 2014, we started to cooperate with 58.com to provide Momo users with easy access to 58.com’s online marketplaces through an entry point on our platform. In January 2015, we started to cooperate with Alibaba Group Holding Limited and its affiliates, or Alibaba, to place advertisements of the merchants on Alibaba’s marketplaces on our~~Nearby People~~ ~~function.~~

Mobile Games

As a social networking platform, we intend to offer games that have strong features which we believe will not only increase the interactions between users, ~~and communication within groups,~~ but also broaden our revenue sources. Such games may be developed by third parties, ~~where~~with whom we share revenues generated by in-game purchases of virtual items ~~with such developers,~~or virtual currencies, or developed in-house.

We have been scaling back from jointly operated mobile games and instead focusing on self-developed games in order to better align the games offered on our platform with the positioning and strength of Momo as an open social platform. Mobile games contributed 0.3%, 0.3% and 0.4% of our revenues in 2020, 2021 and 2022, respectively.

Other Services

Our other services include ~~paid emoticons, gift mall sales~~other revenue generating services that are immaterial in revenue contribution or are not considered as part of our strategic focus. Other services contributed 0.2%, 0.1% and ~~virtual gifts sales through~~0.1% of our ~~live music~~revenues in 2020, 2021 and ~~entertainment broadcasts.~~2022, respectively.

Technology

Our ~~proprietary networking protocols ensure fast, reliable~~research and ~~stable mobile communications under different network environments in China. Our architecture~~development efforts focus on ~~providing consistent user experience across different mobile devices, operating systems~~product development, architecture and ~~network environments, which is particularly necessary in China given the wide variety of choices of mobile devices, operating systems and mobile networks.~~

~~Social Interest Graph Recommendation Engine~~

We have developed a comprehensive database of user social interests from the activities on our platform. We create a social interest profile for each user account based on user actions, such as group and topics memberships, social relationships,technological infrastructures, as well as ~~demographic data such as age, gender~~the security and ~~location. Based on these social interest profiles,~~integrity of our ~~recommendation engine allows us~~platform to ~~push content~~protect the security and privacy of our users. Our product development endeavors revolve around continuous innovations to ~~Momo~~help users ~~who are more likely to find such content interesting and relevant. We believe that social context can improve the relevance of advertisements~~discover and make ~~them~~new connections as well as building meaningful interactions. As our user base continues to expand and consumer behaviors constantly evolve, the social demands from the users become increasingly diversified. We make significant investments in technology to optimize our existing products and services and to develop new ones so that we can expand the social product offerings to satisfy the diversifying user demands. In addition, we are also investing in building and maintaining the technological infrastructures to support the delivery and usage of our products and services in a ~~more integral~~fast and efficient manner within a safe and secured environment.

Content Moderation

As an operator of social platforms, we view content management and monitoring as a critical part of ~~the user experience, rather than an interruption of it. Therefore, we are continually refining~~ our ~~recommendation engine to improve the relevance of information we push to users.~~

Leveraging on our social interest graph recommendation engine and our analysis of user behavior data, we have developed a tiering system whereby each user is assigned one of six scores based on his or her behavioral patterns. Each user can monitor his or her tiering system score on our application. Using such a tiering system, we aim to enable users to connect with each other and maintain relationships based on their mutual social preferences and needs, thereby increasing the likelihood of establishing a new relationship and strengthening existing relationships. We use our tiering system to foster a healthy ecosystem and to deter harassment and other undesirable behaviors on our platform.

~~Scalable Distributed Storage~~

Our proprietary model optimizes and facilitates cost-effective data storage by building memory on solid state drives. This distributed storage model allows us to efficiently and securely manage a large amount of data while storing data on servers that are easily scalable.

~~Service Oriented Architecture~~

Our platform adopts service-oriented architecture that allows efficient software development and frequent upgrading of our services. Our platform is built on technologies that can facilitate cost-effective learning and joint research and development across different coding languages.

~~Precision in Locating Users~~

Location is a key attribute of our social networking platform. Our rich experience in location-based technology has allowed us to develop technology capable of precisely locating static or mobile users within units of five meters horizontally. We believe our ability to locate users with this precision is unique in our industry.

~~Content Management and Monitoring~~

operations. As of the date of this annual report, weMomo and Tantan collectively have a dedicated team of ~~over 150~~797 personnel reviewing and handling content on our mobile platform for compliance with applicable laws and regulations. They are aided by both proprietary and third-party software and technologies to sweep our ~~platform~~platforms and the data being transmitted on a real-time basis around-the-clock.

We monitor and screen user information and user generated content against a spam list, which is a list of content and behaviors that we have determined are likely to be indicative of inappropriate or illegal content or illegal activities. In addition, we take self-inspection measures to strengthen our content screening efforts and cooperate with relevant governmental authorities to stay compliant with applicable laws and regulations. As an example of such self-inspection measures, during the one-month period from May 11, 2019 to June 11, 2019, we temporarily suspended the ability of users to post social newsfeeds on the Momo platform pursuant to directives of relevant governmental authority. Additionally, ~~Momo~~our users can also easily report fraud if they come across suspicious content, and each user complaint is processed by our content management and monitoring ~~system.~~

~~Our corporate policy requires a user to accept our terms of use during the registration process before becoming a Momo user. In the user agreement, the user makes certain acknowledgments~~system and covenants, including, among others, (i) the user is solely responsible for the authenticity, legality, harmlessness and relevancy of all information submitted for registration purpose or delivered to other users, (ii) the user is not impersonating other people or spreading information in the name of others, (iii) the user alone is responsible for any losses or injuries arising from or caused by the content on our platform and (iv) the user agrees to indemnify us for our losses or injuries arising from or caused by the activities of or content generated by the user.personnel.

Branding and Marketing

~~We primarily attract our users through word-of-mouth and other free channels.~~ Our brand building activities generally comprise purchasing online advertising in the form of ~~text, banner~~texts, banners and ~~video,~~videos, placing TV commercials via offline media networks and public relations efforts. We also conduct branding and promotional activities through offline events. In addition, we acquire users for our platforms directly through online ~~and offline~~ marketing channels including mobile advertising platforms such as ~~search engines,~~ByteDance, application stores, ~~and pre-installations.~~

~~Customer Service~~

As of the date of this annual report, we have a dedicated team of over 80 customer service personnel in our customer service center in Chengdu, China, who support our members and mobile game players. Our dedicated customer service team is well-trained on our membership services and mobile games functionalities. For our users who subscribed to our membership services, our customer service personnel provide around-the-clock support through a members-only toll-free phone numbersearch engines and other online communication channels. Our customer service team helps our members with issues they encounter on our mobile platform, gathers feedback on how to improve our services and receives member complaints and suggestions. Our customer service team also addresses issues that our mobile game players encounter and gathers player feedback on the functionality and popularity of the mobile games we offer.advertising networks.

Intellectual Property

We rely on a combination of patent, copyright, trademark and trade secret laws and restrictions on disclosure to protect our intellectual property rights. As of December 31, ~~2015,~~2022, we (i) had ~~four~~10 patents and 42 pending patent applications filed with the ~~State~~National Intellectual Property ~~Office~~Administration of the ~~PRC. We~~PRC; (ii) had registered 131,573 trademarks and had applied for ~~293~~339 trademarks with the Trademark Office of the ~~State~~National Intellectual Property Administration ~~for Industry & Commerce~~ of the ~~PRC. We~~PRC, Hong Kong Intellectual Property Department and the U.S. Patent and Trademark Office, etc.; (iii) had registered 33203 software copyrights and 54109 other copyrights with the PRC National Copyright ~~Administration,~~Administration; and (iv) had ~~two pending applications for copyrights filed with the PRC National Copyright Administration. We had also~~ registered 44or acquired 262 domain names, includingimmomo.com, wemomo.com, immomogame.com and momocdn.com.

Seasonality

Historically, there were noticeable downward trends in user activities on our Momo and Tantan platforms as well as revenue growth in the weeks prior to and after the Chinese Lunar New Year. However, the seasonal trends that we have experienced in the past may not apply to, or be indicative of, our future operating results.

Our Approach to Corporate Responsibility and Sustainability

We take our environmental responsibility very seriously, beyond our own consumption and greenhouse gas emissions, which like much of our industry, are relatively low. We seek means to advance environmental best practices by aligning ourselves with positive role models and support for environmental initiatives undertaken by government and civil society organizations. A big focus of our corporate social responsibility is to support training and development of our employees so that they can reach their individual goals as well as align their achievements with our corporate goals. Finally, we have an active program of corporate philanthropy aimed at better contributing to the society and fulfilling our corporate responsibilities.

Environment

As a mobile-based social networking company, our environmental footprint is small. Our Beijing headquarters are located in a building with LEED certification at the silver level, and we encourage our employees to be environmentally friendly. We provide recycling systems in our headquarters office, including a direct drinking water system in order to reduce bottled water consumption.

Human Capital

Compensation and Benefits. We consider our employees the most valuable asset of our company. We offer competitive compensation and comprehensive benefits to attract and retain top talents in the industry. The remuneration and rewards include retention through share-based compensation and performance-based bonus. In addition to our contribution to mainland China social insurance, which is in compliance with applicable laws and regulations, we arrange annual medical checkups for employees, provide employees with various supplemental insurance benefits (including life insurance, accident insurance, critical illness insurance, medical insurance and maternity insurance) and organize various fitness sessions and a wide range of leisure and recreational activities for employees.

Engagement and Recognition. We believe that an engaged workforce is key to maintaining our ability to innovate. Newly joined employees are given an aligned start to their career at our company by attending a full-day orientation program, which helps them better understand the value of our business and learn our corporate culture. We allocate budget for department team building on a quarterly basis and organize company outings annually.

Training and Development. Investing in our employees’ career growth and development is an important focus for us. We offer learning opportunities and training programs including workshops, guest speakers and various conferences to enable our employees to advance in their chosen professional paths. We set quarterly targets for individual employees. We encourage employees to read their reviews and to have a career development conversation with their team leader thereafter. Employees’ performance ratings affect their compensation and our promotion decisions. We carry out anonymous employee satisfaction surveys on a regular basis to evaluate the fairness and effectiveness of team leaders’ conduct and better understand junior team members’ sentiment.

Health and Safety. We are committed to providing a safe work environment for our employees. We have well-established security and food safety monitoring systems. Our fire service system complies with applicable laws and regulations. To ensure good air quality in our office areas, we have installed ventilation systems to filter air pollutants. We took necessary precautions in response to the COVID-19 pandemic during its height, including offering employees flexibility to work from home, mandatory social distancing requirements in the workplace (such as adding more space between cubicles),~~wemomo.com~~,~~immomogame.com~~ regular temperature checks and~~momocdn.com~~. health monitoring for our employees, daily office disinfection and sanitization, provision of hand sanitizer and face masks to all employees, and improvement and optimization of our telecommuting system to support remote work arrangements.

Corporate Philanthropy

Since 2015, we have participated in various charitable initiatives including establishing an information system platform for missing children, making donations to regions damaged by natural disasters in Hunan province and setting up an education fund to support students and teachers in mainland China. In 2018, we established the Momo Foundation, a private charitable fund that focuses on supporting elementary education and poverty alleviation in mainland China. In the subsequent years, the Momo Foundation donated RMB20.0 million to charitable causes. In 2021, 19 Hello Hope Elementary Schools donated by us were completed and put into use. In 2020, in response to the COVID-19 pandemic, we set up a medical research fund and committed RMB10.0 million to aid frontline medical staff and vaccine research and development. In 2021, we donated RMB20.0 million to flood relief efforts in Henan and Shanxi provinces. In 2022, we donated RMB 0.7 million to a number of public welfare foundations to support animal protection and alleviate poverty. Collectively, we have donated over RMB95.2 million to charitable causes.

Competition

As a mobile social networking platform that also provides live ~~music and entertainment broadcasting~~video service, we are subject to intense competition from providers of similar services, as well as potential new types of online services.

Our competitors may have substantially more cash, traffic, technical, performer and other resources, as well as broader product or service offerings and can leverage their relationships based on other products or services to gain a larger share of marketing budgets from customers. We believe that our ability to compete effectively depends upon many factors, including the size, composition and engagement of our user base, our ad targeting capabilities, our pool of popular live broadcasters, market acceptance of our mobile marketing services and online entertainment services, our marketing and selling efforts, and the strength and reputation of our brand. See “Item 3. Key Information—D. Risk Factors—Risks Related to Our Business and Industry—The market in which we operate is fragmented and highly competitive. If we are unable to compete effectively for users or user engagement, our business and operating results may be materially and adversely affected.” We also experience significant competition for highly skilled personnel, including management, engineers, designers and product managers. Our growth strategy depends in part on our ability to retain our existing personnel and add additional highly skilled employees. See “Item 3. Key Information—D. Risk Factors—Risks Related to Our Business and Industry—The continuing and collaborative efforts of our senior management and key employees are crucial to our success, and our business may be harmed if we were to lose their services.”

Insurance

We do not maintain property insurance, business interruption insurance or general third-party liability insurance, nor do we maintain key-man life insurance.

~~Regulation~~Regulations

This section sets forth a summary of the most significant rules and regulations that affect our business activities in mainland China or our shareholders’ rights to receive dividends and other distributions from us.

Corporate Laws and ~~Industry Catalog Relating to~~ Foreign Investment Law

The establishment, operation and management of corporate entities in mainland China are governed by the PRC Company Law, ~~of the PRC,~~ or the Company Law, effective in 1994, as amended in 1999, 2004, 2005, 2013 and ~~2013,~~2018, respectively. The Company Law is applicable to our ~~PRC subsidiary~~mainland China subsidiaries and consolidated affiliated ~~entity and its subsidiaries~~entities unless the PRC Foreign Investment Law and its implementation regulations have stipulated otherwise.

On March 15, 2019, the NPC approved the PRC Foreign Investment Law, which took effect on January 1, 2020 and replaced the trio of existing laws regulating foreign investment in mainland China, namely, the PRC Sino-foreign Equity Joint Venture Enterprise Law, the PRC Sino-foreign Cooperative Joint Venture Enterprise Law and the PRC Foreign Owned Enterprise Law, together with their implementation rules and ancillary regulations. Further to the PRC Foreign Investment Law, on December 26, 2019, the State Council of the PRC passed the Regulation for Implementing the PRC Foreign Investment Law, which took effect on January 1, 2020. According to the PRC Foreign Investment Law, “foreign investment” refers to the investment activities directly or indirectly conducted by one or more natural persons, business entities, or other organizations of a foreign country (collectively referred to as “foreign investors”) in mainland China, which includes investments made by foreign investors in mainland China through means stipulated by laws or administrative regulations or other methods prescribed by the State Council. Based on the PRC Foreign Investment Law, it is possible that the prospective laws, administrative regulations or provisions of the State Council may deem contractual arrangements as a way of foreign investment.

According to the PRC Foreign Investment Law and its implementing regulations, the State Council will publish a catalog for special administrative measure, or the Negative List, to provide the scope of “restricted” or “prohibited” industries that have certain restrictions on foreign investment ~~have stipulated otherwise.~~

~~The establishment, approval, registered capital requirement and day-to-day operational matters of wholly foreign-owned enterprises,~~ such as ~~our PRC subsidiary,~~market entry clearance. Foreign investment activities in industries not included in the Negative List are ~~regulated by~~granted national treatment. The currently effective Negative List has become effective on January 1, 2022.

On February 3, 2011, the ~~Wholly Foreign-owned Enterprise Law~~General Office of the ~~PRC~~State Council promulgated a Notice on Establishing the Security Review System for Mergers and Acquisitions of Domestic Enterprises by Foreign Investors, or the Circular 6, which officially established a security review system for mergers and acquisitions of domestic enterprises by foreign investors. Further, on August 25, 2011, MOFCOM promulgated the Regulations on Implementation of Security Review System for the Merger and Acquisition of Domestic Enterprises by Foreign Investors, or the MOFCOM Security Review Regulations, which became effective ~~in 1986, as amended in 2000,~~on September 1, 2011, to implement the Circular 6. Under Circular 6, a security review is required for mergers and ~~the Implementation Rules of the Wholly Foreign-owned Enterprise Law of the PRC effective in 1990, as amended in 2001 and 2014.~~

~~Investment activities in the PRC~~acquisitions by foreign investors ~~are principally governed~~having “national defense and security” concerns and mergers and acquisitions by which foreign investors may acquire the “de facto control” of domestic enterprises with “national security” concerns. Under the MOFCOM Security Review Regulations, MOFCOM focused on the substance and actual impact of the transaction when deciding whether a specific merger or acquisition was subject to security review. If MOFCOM decided that a specific merger or acquisition is subject to security review, it would submit it to the Inter-Ministerial Panel, an authority established under the Circular 6 led by the ~~Guidance Catalog of Industries for Foreign Investment, or~~NDRC, and MOFCOM under the ~~Catalog, which was promulgated and is amended from time to time by the Ministry of Commerce and the National Development and Reform Commission. The latest version~~leadership of the ~~Catalogue went effective on April 10, 2015.~~State Council, to carry out security review. The ~~Catalog divides industries into three categories: encouraged, restricted and prohibited. Industries not listed~~regulations prohibit foreign investors from bypassing the security review by structuring transactions through trusts, indirect investments, leases, loans, control through contractual arrangements or offshore transactions. There is no explicit provision or official interpretation stating that the merging or acquisition of a company engaged in the ~~Catalog are generally open~~social network, live video, or mobile games business requires security review, and there is no requirement that acquisitions completed prior to ~~foreign investment unless specifically restricted by other PRC regulations.~~

~~Establishment~~the promulgation of wholly foreign-owned enterprises is generally permitted in encouraged industries. Some restricted industries are limited to equity or contractual joint ventures, while in some cases Chinese partners are required to hold the ~~majority interests in such joint ventures. In addition, restricted category projects~~Circular 6 are subject to ~~higher level~~review. On April 30, 2019, the NDRC issued the Announcement on the Adjustment of Foreign Investment Security Review Reporting Channel, i.e., 2019 Announcement 4, stating that the security review is now subject to its review because of the government ~~approvals.~~reformation.

In December 2020, the NDRC and the MOFCOM promulgated the Measures for the Security Review of Foreign ~~investors are not allowed to invest~~Investment, which came into effect on January 18, 2021. The NDRC and the MOFCOM will establish a working mechanism office in ~~industries~~charge of the security review of foreign investment. Such measures define foreign investment as direct or indirect investment by foreign investors in the ~~prohibited category. For example, pursuant~~mainland China, which includes (i) investment in new onshore projects or establishment of wholly foreign owned onshore companies or joint ventures with foreign investors; (ii) acquiring equity or asset of onshore companies by merger and acquisition; and (iii) onshore investment by and through any other means. Investment in certain key areas with bearing on national security, such as important cultural products and services, important information technology and internet services and products, key technologies and other important areas with bearing on national security which results in the acquisition of de facto control of investee companies, shall be filed with a specifically established office before such investment is carried out. What may constitute “onshore investment by and through any other means” or “de facto control” could be broadly interpreted under such measures. It is likely that control through contractual arrangement be regarded as de facto control based on provisions applied to security review of foreign investment in the free trade zone. Failure to make such filing may subject such foreign investor to rectification within prescribed period, and will be recorded as negative credit information of such foreign investor in the relevant national credit information system, which would then subject such investors to joint punishment as provided by relevant rules. If such investor fails to or refuses to undertake such rectification, it would be ordered to dispose of the equity or asset and to take any other necessary measures so as to return to the ~~latest Catalog amended in 2011,~~status quo and to erase the ~~provision of value-added telecommunications services falls in the restricted category and the percentage of foreign ownership cannot exceed 50%.~~impact to national security.

~~To comply with such foreign ownership restrictions, we~~We operate our businesses in mainland China through ~~Beijing Momo,~~a number the consolidated affiliated entities which ~~is owned by PRC citizens. Beijing Momo is~~are controlled by ~~Beijing Momo IT~~our mainland China subsidiaries through a series of contractual arrangements. ~~Beijing Momo holds an internet content provider, or~~The consolidated affiliated entities hold ICP ~~license~~licenses to provide value-added telecommunication services, which is an industry in which foreign investment is “restricted” under the currently effective ~~Catalog.~~

Negative List.

~~Beijing Momo IT is currently engaged in the business of software development, which is an industry in which foreign investment is “encouraged” under the currently effective Catalog.~~

Regulations Relating to Telecommunications Services

In September 2000, the State Council issued the Regulations on Telecommunications of China, or the Telecommunications Regulations, to regulate telecommunication activities in ~~China.~~mainland China, which was further amended in July 2014 and February 2016, respectively. The telecommunications industry in mainland China is governed by a licensing system based on the classifications of the telecommunications services set forth under the Telecommunications Regulations.

The ~~Ministry of Industry and Information Technology,~~MIIT, together with the provincial-level communications administrative bureaus, supervises and regulates the telecommunications industry in mainland China. The Telecommunications Regulations divide the telecommunications services into two categories: infrastructure telecommunications services and value-added telecommunications services. The operation of value-added telecommunications services is subject to the examination, approval and licenses granted by the ~~Ministry of Industry and Information Technology~~MIIT or its provincial-level communications administrative bureaus. According to the Catalog of Classification of Telecommunications Businesses effective in ~~April 2003,~~March 2016 and amended on June 6, 2019, provision of information services through the internet, such as the operation of our ~~immomo.com.com~~immomo.com website, is classified as value-added telecommunications services.

Regulations Relating to Foreign Investment in Value-Added Telecommunications Industry

According to the Administrative Rules for Foreign Investment in Telecommunications Enterprises issued by the State Council effective in January 2002, as amended in September 2008, aFebruary 2016 and March 2022, foreign ~~investor~~investors may hold no more than a 50% equity interest in a value-added telecommunications services provider in mainland China, and effective from May 1, 2022, such foreign investor ~~must~~will no longer be required to have experience in providing value-added telecommunications services overseas and maintain a good track record. Due to these regulations, we operate our website through Beijing Momo and its subsidiaries. The most updated version of ~~Guiding Catalog for Foreign Investment Industries,~~the Negative List, which was promulgated by the MOFCOM and the ~~National Development and Reform Commission~~NDRC and became effective from January ~~30, 2012, or the Guiding Catalog,~~1, 2022, imposes the 50% restrictions on foreign ownership in value-added telecommunications business except for e-commerce business, domestic multiparty communications, storage and forwarding and call center services as well.

The Circular on Strengthening the Administration of Foreign Investment in and Operation of ~~Value-added~~Value-Added Telecommunications Business, or the Circular, issued by the ~~former~~ Ministry of Information Industry in July 2006, reiterated the regulations on foreign investment in telecommunications businesses, which require foreign investors to set up ~~foreign-invested enterprises~~FIEs and obtain an ~~internet content provider, or~~ ICP license to conduct any value-added telecommunications business in mainland China. Under the Circular, a domestic company that holds an ICP license is prohibited from leasing, transferring or selling the license to foreign investors in any form, and from providing any assistance, including providing resources, sites or facilities, to foreign investors that conduct value-added telecommunications business illegally in mainland China. Furthermore, certain relevant assets, such as the relevant trademarks and domain names that are used in the value-added telecommunications business must be owned by the local ICP license holder or its shareholders. The Circular further requires each ICP license holder to have the necessary sites and facilities for its approved business operations and to maintain such sites and facilities in the regions covered by its license. In addition, all value-added telecommunications service providers are required to maintain network and information security in accordance with the standards set forth under the relevant ~~PRC~~mainland China regulations. If an ICP license holder fails to comply with the requirements in the Circular and also fails to remedy such non-compliance within a specified period of time, the ~~Ministry of Industry and Information Technology~~MIIT or its local counterparts have the discretion to take administrative measures against such license holder, including revoking its ICP license. Beijing Momo, the operator of our website, owns the relevant domain names and registered trademarks and has the necessary personnel to operate the website.

Regulations on Broadcasting Audio/Video Programs through the Internet and Online Live Broadcasting

On July 6, 2004, the State Administration of Radio Film and Television, or SARFT, promulgated ~~the Rules~~Administrative Measures for the ~~Administration of Broadcasting~~Broadcast of Audio/Video Programs ~~through~~via Information Networks such as the Internet, ~~and Other Information Networks,~~ or the Audio/Video Broadcasting ~~Rules. The~~Rules, which came into effect as of October 11, 2004 and was amended on August 28, 2015. According to the Audio/Video Broadcasting Rules, ~~apply~~enterprises intend to engage in the ~~launch, broadcasting, aggregation, transmission or download~~business of broadcast of audio/video programs via information networks must obtain a permit from the Internet and other information networks. Anyone who wishes to engage in Internet broadcasting activities must first obtain an audio/video program transmission license, with a term of two years, issued by the SARFT and operate internet broadcasting activities pursuant to the scope as provided in such license. Foreign invested enterprises are not allowed to engage in the above referenced business.SARFT.

On April 13, 2005, the State Council announced Several Decisions on Investment by Non-state-owned Companies in Culture-related Business in China. These decisions encourage and support non-state-owned companies to enter certain culture-related business in mainland China, subject to restrictions and prohibitions for investment in audio/video broadcasting, website news and certain other businesses by non-state-owned companies. These decisions authorize the SARFT, the NPPA and the Ministry of Culture, or the MOC, to adopt detailed implementing rules according to these decisions.

On December 20, 2007, the SARFT and the ~~MIIT~~Ministry of Information Industry jointly issued the Rules for the Administration of Internet Audio and Video Program Services, commonly known as Circular 56, which came into effect as of January 31, ~~2008.~~2008 and was amended on August 28, 2015. Circular 56 reiterates the requirement set forth in the Audio/Video Broadcasting Rules that online audio/video service providers must obtain a license from the SARFT. Furthermore, Circular 56 requires all online audio/video service providers to be either wholly state-owned or state-controlled. According to relevant official answers to press questions published on the SARFT’s website dated February 3, 2008, officials from the SARFT and the ~~MIIT~~Ministry of Information Industry clarified that online audio/video service providers that already had been operating lawfully prior to the issuance of Circular 56 may re-register and continue to operate without becoming state-owned or controlled, provided that such providers have not engaged in any unlawful activities. This exemption will not be granted to online audio/video service providers established after Circular 56 was issued. Such policies have been reflected in the ~~Application Procedure~~application procedure for ~~Audio/Video Program Transmission License.~~audio/video programs transmission license.

On ~~April 1,~~March 17, 2010, the SARFT issued the Internet Audio/Video Program Services Categories (Provisional), or the Provisional Categories, as further amended on March 10, 2017, which classified internet audio/video programs into four categories.

In 2009, the SARFT released a Notice on Strengthening the Administration of Online Audio/Video Content. This notice reiterated, among other things, that all movies and television shows released or published online must comply with relevant regulations on the administration of radio, film and television. In other words, these movies and television shows, whether produced in the ~~PRC~~mainland China or overseas, must be pre-approved by SARFT, and the distributors of these movies and television shows must obtain an applicable permit before releasing any such movie or television show. In 2012, the SARFT and the ~~State Internet Information Office of the PRC~~CAC issued a Notice on Improving the Administration of Online Audio/Video Content Including Internet Drama and Micro Films. In ~~2013, SARFT~~2014, the Administration of Press, Publication, Radio, Film and Television, or SAPPRFT released a Supplemental Notice on Improving the Administration of Online Audio/Video Content Including Internet Drama and Micro Films. This notice stresses that entities producing online audio/video content, such as internet dramas and micro films, must obtain a permit for radio and television program production and operation, and that online audio/video content service providers should not release any internet dramas or micro films that were produced by any entity lacking such permit. For internet dramas or micro films produced and uploaded by individual users, the online audio/video service providers transmitting such content will be deemed responsible as a producer. Further, under this notice, online audio/video service providers can only transmit content uploaded by individuals whose identity has been verified and such content shall comply with the relevant content management rules. This notice also requires that online audio/video content, including internet drama and micro films, be filed with the relevant authorities before release.

On April 25, 2016, the SAPPRFT promulgated the Provisions on the Administration of Private Network and Targeted Transmission Audio/Video Program Services to replace the Audio/Video Broadcasting Rules, which became effective as of June 1, 2016 and applies to the provision of radio, TV programs and other audio/video programs to targeted audience on fixed or mobile electronic equipment such as TV and mobile phone, which was further revised on March 23, 2021. The Provision covers the internet and other information networks as targeted transmission channels, including the provision of content, integrated broadcast control, transmission and distribution and other activities conducted in such forms as Internet protocol television (IPTV), private network mobile TV and Internet TV. Anyone who provides private network and targeted transmission audio/video program services must obtain an audio/video program transmission license, with a term of three years, issued by the SAPPRFT and operate its business pursuant to the scope as provided in such license. If a service provider intends to provide new products or engage in new services which are not specified in the business guidance catalog for private network and targeted transmission audio/video program service, it shall finish the security assessment of the NRTA in advance. FIEs are not allowed to engage in the above referenced business.

On July 1, 2016, the MOC promulgated Notice on Strengthening the Administration of Network Performance, which regulates the behavior of entities operating network performance and performers. Entities operating network performance shall be responsible for the service and content post on their website which are provided by performers, perfect the content management mechanism, and shut down the channel and stop the spreading as soon as realizing any network performance in violation of relevant laws and regulations. Network performers shall be responsible for their performances and shall not perform any program containing violence, pornography, or other similarly prohibited elements. The cultural administration authorities or cultural market enforcement authorities of relevant government supervise entities operating network performance and shall investigate all entities operating network performance in their jurisdiction thoroughly and publish any fine or action results or blacklist in time.

On September 2, 2016, the SAPPRFT issued a Notice on Issues regarding Strengthening the Administration of Internet Audio/Video Programs Live Broadcasting Services, which provides that the provision of audio/video live broadcasting of important political, military, economic, social, cultural, sports and other activities and events requires an audio/video program transmission license which covers item (5) under internet audio/video program services category I, and the provision of audio/video live broadcasting of cultural activities by general social organizations, sports events and like activities requires an audio/video program transmission license which covers item (7) under internet audio/video program services category II.

On November 4, 2016, the CAC promulgated the Provisions on the Administration of Online Live Broadcasting Services, which became effective as of December 1, 2016. Such Provisions provides that anyone who provides online live broadcasting services through online performances, internet video/audio programs and so forth, shall obtain relevant qualifications as required by laws and regulations.

In December 2016, the SAPPRFT issued a Notice on Strengthening the Administration of Audio/Video Programs Transmission on Weibo, WeChat and Other Internet Social Networking Platforms, which further clarifies that anyone who operates internet audio/video services through Weibo, WeChat and other internet social networking platforms must obtain an audio/video program transmission license and other licenses as required by laws and regulations and operate its business pursuant to the scope as provided in such license.

On November 18, 2019, the CAC, the MCT and the NRTA jointly announced the Provisions on the Administration of Internet Audio and Video Information Services, which became effective as of January 1, 2020. The internet audio and video information services as set forth therein refer to services provision of producing, issuing and disseminating audio and video information to the public through internet websites, apps, and other network platforms. Such provisions reiterate that internet audio and video information services providers shall obtain relevant qualifications required by laws and administrative regulations, and further provides that the systems for users’ registration, information issuance examination and information security management shall be established and enhanced.

On February 9, 2021, the CAC, MIIT and other five departments jointly issued the Guiding Opinions on Strengthening of Administration of Online Live Broadcast, which became effective on the same day. The guidance opinions clarified various regulatory license requirements applicable to online live broadcast platforms, and provided additional compliance requirements on broadcast platform management. As these guidance opinions are not mainland China laws or regulations, it may be expected that relevant governmental authority may enact applicable rules and regulations to implement.

On April 23, 2021, the CAC and six other departments jointly issued the Administration Measures on Online Live Broadcast Marketing Activities (Trial), which became effective on May 25, 2021, to strengthen the administration of online live broadcast performance for marketing activities. Based on the Measures, the online live broadcast marketing platforms shall go through filing procedures, carry out safety assessment and acquire necessary licenses in accordance with relevant laws and regulations, and they shall also strengthen the management of online live broadcast marketing accounts, information security, marketing behavior and network and data security, while improving the protection of minors, consumer rights and interests and personal information and establishing the mechanism of registration and de-registration of online live broadcast marketing functions. Those who violate the Measures and cause damage to others shall bear civil, administrative or criminal liability in accordance with relevant laws and regulations.

On October 8, 2021, the Administrative Provisions on Minor-oriented Programs was revised by the NRTA and has become effective on the same date. According to these provisions, network audio/video programs with minors as their main participants or recipients shall not contain any contents which are harmful to the minors, such as violence, pornography, heresy, superstition, drug taking and other illegal contents.

On March 12, 2022, the NDRC and the MOFCOM issued the Negative List for Market Access (2022 Version), which provides that, among others, non-state capital shall not engage in online live broadcasting of events and activities involving politics, economy, military affairs, diplomatic affairs, major social events, culture, science and technology, public health, education and sports and such other activities and events related to political direction, public opinion orientation and value orientation. The scope of these restricted subject matters for online live broadcasting is relatively broad and vague, and is subject to further clarifications and interpretations by the regulator.

On March 25, 2022, the CAC, SAT and SAMR jointly issued Opinions on Further Rectifying the Profit-making Online Live Broadcast to Promote the Healthy Development of the Industry, which requires the online broadcast platforms to improve the hierarchical and classified management of broadcasting accounts and the registration of new accounts, and platforms should also cooperate with the administrations of authorities. Besides, platforms and broadcasters shall together build impartial competition environment, and the rights and interests of the customers and businesses shall be protected during online live broadcast marketing activities. Tax compliance should be emphasized and cooperation of authorities shall also be enhanced to improve the quality of governance on the online live broadcast industry.

As of the date of this annual report, we ~~have not obtained~~hold an internet audio/video program transmission license ~~and~~through Zhejiang Shengdian, a wholly-owned subsidiary of Beijing Momo that we ~~plan to apply for the license.~~acquired in March 2017.

Regulations on Online Comics and Internet Cultural Products

The Interim Administrative Provisions on Internet Culture was promulgated by MOC on February 17, 2011, ~~and~~ became effective on April 1, ~~2011.~~2011 and further amended on December 15, 2017. Pursuant to the Interim Administrative Provisions on Internet Culture, online comics are deemed to be online culture products, and any entity engaged in producing, transmitting and distributing online culture products shall apply for an internet culture operation license that includes the business scope of actual online activities. As of the date of this annual report, we have obtained annine internet culture operation ~~license and received the approval to expand the scope of the license to cover the operation of comic and animation products.~~

licenses.

Regulations on Internet Publication and Cultural Products

The Administrative Measures for Internet Publication Service, or Internet Publication Measures, were jointly promulgated by the ~~SARFT~~SAPPRFT and the MIIT on February 6,4, 2016 and became effective on March 10, 2016. ~~The Internet Publication Measures superseded the Tentative Measures for Internet Publication Administration, which were jointly promulgated by the SARFT and the MIIT in 2002.~~ The Internet Publication Measures define internet publication service and internet publication item, and publication of internet publication item via the internet requires an internet publishing license. Pursuant to the Internet Publication Measures, online game constitutes an internet publication item and therefore, an online game operator shall obtain an internet publishing license so that it can directly offer its online games to the public in the ~~PRC.~~mainland China. As of the date of this annual report, we have not yet obtained an internet publishing license, and are in the process of preparing the application documents.

Regulations on Online Games and Foreign Ownership Restrictions

Pursuant to the ~~Guidance Catalog,~~Negative List, the internet culture business (other than online music business) falls within the category of industries prohibiting foreign investment. On February 17, 2011, the Ministry of Culture issued the revised Interim Provisions on the Administration of Internet Culture, or the Internet Culture Interim Provisions, effective as of April 1, 2011. According to the Internet Culture Interim Provisions, “internet cultural products” are defined as including the online games specially produced for Internet and games reproduced or provided through Internet. Provision of operating Internet cultural products and related services is subject to the approval of the Ministry of Culture or its provincial counterpart.

On June 3, 2010, the Ministry of Culture promulgated the Provisional Administration Measures of Online Games, or the Online Game Measures, which came into effect on August 1, 2010. The Online Game Measures governs the research, development and operation of online games and the issuance and trading services of virtual currency. Under the Online Game Measures, all operators of online games, issuers of virtual currencies and providers of virtual currency trading services, or Online Game Business Operators, are required to obtain internet culture operation licenses. An internet culture operation license is valid for three years and in case of renewal, the renewal application should be submitted 30 days prior to the expiry date of such license.

In addition, Online Game Business Operators should request the valid identity certificate of game users for registration, and notify the public 60 days ahead of the termination of any online game operations or the transfer of online game operational rights. Online game business operators are also prohibited from (i) setting compulsory matters in the online games without game users’ consent; (ii) advertising or promoting the online games that contain prohibited content, such as anything that compromise state security or divulges state secrets; and (iii) inducing game users to input legal currencies or virtual currencies to gain online game products or services, by way of random draw or other incidental means. The Online Game Measures also states that the state cultural administration authorities will formulate the compulsory clauses of a standard online game service agreement, which have been promulgated on July 29, 2010 and are required to be incorporated into the service agreement entered into between online game business operators and game users, with no conflicts with the rest of clauses in such service agreements.

On July 11, 2008, the General Office of the State Council promulgated the Regulation on Main Functions, Internal Organization and Staffing of the General Administration of Press and Publication, or the Regulation on Three Provisions. On September 14, 2009, the Central Organization Establishment Commission issued the corresponding interpretations, or the Interpretations on Three Provisions. The Regulation on Three Provisions and the Interpretation on Three Provisions granted the Ministry of Culture overall jurisdiction to regulate the online game industry, and granted the General Administration of Press and Publication the authority to issue approvals for the internet publication of online games. Specifically, (i) the Ministry of Culture is empowered to administrate online games (other than the pre-examination and approval before internet publication of online games); (ii) subject to the Ministry of Culture’s overall administration, General Administration of Press and Publication is responsible for the pre-examination and approval of the internet publication of online games; and (iii) once an online game is launched, the online game will be only administrated and regulated by the Ministry of Culture. As of March 31, 2016, 14 of the 31 online games we offered had completed the filing with the Ministry of Culture. If we fail to complete, obtain or maintain any of the required licenses or approvals or make the necessary filings, we may be subject to various penalties, such as confiscation of the net revenues that were generated through online games, the imposition of fines and the discontinuation or restriction of our operations of online games.

On September 28, 2009, the ~~General Administration of Press and Publication,~~NPPA, the National Copyright Administration and the ~~National Working Group to Eliminate Pornography and Illegal Publications~~NOAPIP jointly issued the Circular on Consistent Implementation of the Stipulation on ~~the~~ Three ~~Provisions~~Aspects of the State Council and the Relevant Interpretations of the State Commission ~~for~~of Public Sector Reform and the Further Strengthening the Administration of the Pre-examination and ~~approval~~Approval of Online Games and the Approval and Examination of Imported Online Games, or the ~~GAPP~~NPPA Notice. The ~~GAPP~~NPPA Notice explicitly prohibits foreign investors from directly or indirectly engaging in online game business in mainland China, including through consolidated affiliated entities. Foreign investors are not allowed to indirectly control or participate in ~~PRC~~mainland China operating companies’ online game operations, whether (i) by establishing other joint ventures, entering into contractual arrangements or providing technical support for such operating companies; or (ii) in a disguised form such as by incorporating or directing user registration, user account management or game card consumption into online game networks or platforms that are ultimately controlled or owned by foreign companies. The ~~GAPP~~NPPA Notice ~~reiterates~~provides that the ~~General Administration of Press and Publication~~NPPA is responsible for the examination and approval of the import and publication of online games and states that providing downloading ~~from~~services of the online game contents to the public through the internet is considered a publication activity, which is subject to approval from the ~~General Administration of Press and Publication.~~NPPA. Violations of the ~~GAPP~~NPPA Notice will result in severe penalties. For detailed analysis, see ~~“Risk~~“Item 3. Key Information—D. Risk Factors—Risks Related to Our Corporate Structure—If the ~~PRC~~mainland China government finds that the agreements that establish the structure for operating certain of our ~~businesses~~operations in mainland China do not comply with ~~PRC~~mainland China regulations ~~on foreign investment in internet and other related businesses,~~relating to the relevant industries, or if these regulations or ~~their~~the interpretation of existing regulations change in the future, we could be subject to severe penalties or be forced to relinquish our interests in those operations.”

On May 24, 2016, the General Office of the SAPPRFT promulgated the Circular on the Administration over Mobile Game Publishing Services, which became effective as of July 1, 2016. The Circular provides that game publishing service entities shall be responsible for examining the contents of their games and applying for game publication numbers. To apply for publication of domestically developed mobile puzzle games that are not related to political, military, national or religious topics or contents and have no or simple story lines, entities shall submit the required documents to provincial publication administrative departments at least 20 working days prior to the expected date of online publication (public beta). Entities applying for publication of domestically developed mobile games that are not included in abovementioned category shall go through stricter procedures, including submitting manager accounts for content review and testing accounts for game anti-indulgence system. Game publishing service entities must set up a specific page to display the information approved by the SAPPRFT, including copyright owner of the game, publishing service entity, approval number, publication number and others, and shall take charge of examining and recording daily updates of the game. For mobile games (including pre-installed mobile games) that have been published and operated online before implementation of this Circular, to maintain the publication and operation of such games online, relevant approval procedures shall be made up by the game publishing service entities and enterprises with the provincial publication administrative departments before December 31, 2016 as required by this Circular. Otherwise, they shall cease to be published or operated online.

On August 30, 2021, the NPPA issued the Circular of the NPPA on Further Strengthening Regulation to Effectively Prevent Online Gaming Additions among Minors, which became into effect on September 1, 2021. According to this Circular, online game companies shall provide minors only with one hour of online game services at prescribed periods, namely between 8 pm and 9 pm on Fridays, Saturdays, Sundays and public holidays. The Circular reinstates that online game companies shall strictly implement the real-name registration and login requirements for online game user accounts. All online games shall be connected to the NPPA’s real-name verification system for anti-online game addiction purpose. Online game users shall use real and valid identity information to register for game accounts and log in to online games. Online game companies shall not provide gaming services in any form (including visitor experience mode) to users who have not registered or logged in with their real names.
Regulations on Information Security
In December 2012, the Standing Committee of the NPC promulgated the Decision on Strengthening Network Information Protection, or the Network Information Protection Decision, to enhance the legal protection of information security and privacy on the internet. The Network Information Protection Decision also requires internet operators to take measures to ensure confidentiality of information of users. In July 2013, the MIIT promulgated the Provisions on Protection of Personal Information of Telecommunication and Internet Users to regulate the collection and use of users’ personal information in the provision of telecommunication service and internet information service in mainland China. In August 2015, the Standing Committee of the NPC promulgated the Ninth Amendment to the Criminal Law, which became effective in November 2015 and amended the standards of crime of infringing citizens’ personal information and reinforced the criminal culpability of unlawful collection, transaction, and provision of personal information. It further provides that any ICP provider that fails to fulfill the obligations related to internet information security administration as required by applicable laws and refuses to rectify upon orders will be subject to criminal liability under certain circumstances. In addition, Interpretations of the Supreme People’s Court and the Supreme People’s Procuratorate on Several Issues concerning the Application of Law in the Handling of Criminal Cases Involving Infringement of Personal Information, issued on May 8, 2017, and effective as of June 1, 2017, clarified certain standards for the conviction and sentencing of the criminals in relation to personal information infringement. In November 2016, the Standing Committee of the NPC promulgated the PRC Cybersecurity Law, which requires, among others, that network operators take security measures to protect the network from unauthorized interference, damage and unauthorized access and prevent data from being divulged, stolen or tampered with. Network operators are also required to collect and use personal information in compliance with the principles of legitimacy, properness and necessity, and strictly within the scope of authorization by the subject of personal information. In September 2022, the CAC released the proposed amendment to the PRC Cybersecurity Law for public comment. The amendment proposed to impose more stringent legal liabilities for certain violations of the PRC Cybersecurity Law and systematically consolidate and unify penalties for violating security protection obligations relating to network operations, network information, critical information infrastructure, and personal information.
On March 13, 2019, the Office of the Central Cyberspace Affairs Commission and the SAMR jointly issued the Notice on App Security Certification and the Implementation Rules on Security Certification of Mobile Internet Application, which encourages mobile application operators to voluntarily obtain app security certification, and search engines and app stores are encouraged to recommend certified applications to users.
The PRC Civil Code promulgated in 2020 also provides specific provisions regarding the protection of personal information. According to the PRC Civil Code, any organization or individual shall legally obtain such personal information of others when necessary and ensure the safety of such information, and shall not illegally collect, use, process or transmit personal information of others, or illegally purchase or sell, provide or make public personal information of others.
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On September 22, 2020, the MPS published the Guiding Opinions on the Implementation of Cybersecurity Hierarchical Protection System and Critical Information Infrastructure Security Protection System, which require, among others, to determine the cybersecurity protection level in a scientific manner based on the importance of network (including network facilities, information system, and data resources) in national security, economic construction, and social life, as well as factors such as the degree of harm after its destruction, to implement hierarchical protection and supervision, with emphasis on ensuring the security of critical information infrastructure and networks at or above the third level.
In June 2021, the Standing Committee of the NPC promulgated the PRC Data Security Law, which took effect in September 2021. The PRC Data Security Law, among other things, provides for security review procedure for data-related activities that may affect national security. The PRC Data Security Law provides a national data security review system, under which data processing activities that affect or may affect national security shall be reviewed. In addition, it clarifies the data security protection obligations of organizations and individuals carrying out data activities and implementing data security protection responsibility, data processors shall establish and improve the whole-process data security management rules, organize and implement data security trainings as well as take appropriate technical measures and other necessary measures to protect data security. Any organizational or individual data processing activities that violate the PRC Data Security Law shall bear the corresponding civil, administrative or criminal liabilities depending on specific circumstances.
On July 12, 2021, the MIIT and two other authorities jointly issued the Provisions on the Administration of Security Vulnerabilities of Network Products. The Provisions state that, no organization or individual may abuse the security vulnerabilities of network products to engage in activities that endanger network security, or to illegally collect, sell, or publish the information on such security vulnerabilities. Anyone who is aware of the aforesaid offenses shall not provide technical support, advertising, payment settlement and other assistance to the relevant offenders. According to the Provisions, network product providers, network operators, and platforms collecting network product security vulnerabilities shall establish and improve channels for receiving network product security vulnerability information and keep such channels available, and retain network product security vulnerability information reception logs for at least six months. The Provisions also bans provision of undisclosed vulnerabilities to overseas organizations or individuals other than to the product providers.
On July 30, 2021, the State Council promulgated the Regulations on Security and Protection of Critical Information Infrastructure, which became effective on September 1, 2021, referring “critical information infrastructures” as important network facilities and information systems in important industries including public communications and information services, as well as those that may seriously endanger national security, national economy, people’s livelihood, or public interests in the event of damage, loss of function, or data leakage.
On November 14, 2021, the CAC released the Administrative Regulations on the Internet Data Security (Draft for Comments), providing that data processors conducting the following activities shall apply for cybersecurity review: (i) merger, reorganization or division of internet platform operators that have acquired a large number of data resources related to national security, economic development or public interests affects or may affect national security; (ii) listing in a foreign country of data processors processing over one million users’ personal information; (iii) listing in Hong Kong which affects or may affect national security; or (iv) other data processing activities that affect or may affect national security. The Draft Data Security Regulations provide that data processors refer to individuals or organizations that, during their data processing activities such as data collection, storage, utilization, transmission, publication and deletion, have autonomy over the purpose and the manner of data processing. However, there have been no clarifications from the relevant authorities as of the date of this annual report as to the standards for determining whether an activity is one that “affects or may affect national security.” In addition, the draft Regulations requires that data processors that process “important data” or are listed overseas must conduct an annual data security assessment by itself or commission a data security service provider to do so, and submit the assessment report of the preceding year to the municipal cybersecurity department by the end of January each year. The CAC solicited comments until December 13, 2021, but there is no timetable as to when it will be enacted.
On December 28, 2021, the CAC, the NDRC, the MIIT, and several other mainland China governmental authorities jointly promulgated the Cybersecurity Review Measures, which took effect on February 15, 2022 and replaced the Measures for Cybersecurity Review promulgated in April 2020 and effective in June 2020. According to the Cybersecurity Review Measures, critical information infrastructure operators that intend to purchase internet products and services and internet platform operators engaging in data processing activities that affect or may affect national security must be subject to the cybersecurity review, and an internet platform operator possessing personal information of over one million users and intending to be listed on a foreign stock exchange must be subject to the cybersecurity review.
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On July 7, 2022, the CAC promulgated the Security Assessment Measures for Outbound Data Transfer, effective from September 1, 2022, or the Security Assessment Measures, to regulate outbound data transfer activities, protect the information rights and interests of individuals, safeguard national security and social public interests, and promote the safe and free cross-border flow of data. Furthermore, the Security Assessment Measures provide that the security assessment for outbound data transfers shall follow principles of the combination of pre-assessment and continuous supervision and the combination of risk self-assessment and security assessment, so as to prevent the security risks arising from outbound data transfers and ensure the orderly and free flow of data according to the law. For outbound data transfers activities that have been carried out prior to the implementation of the Security Assessment Measures, and not in compliance with the Security Assessment Measures, rectification shall be completed within six months from the implementation of the Security Assessment Measures. The Security Assessment Measures further provide that a data processor intending to implement outbound data transfer under the following circumstances shall apply for security assessment to the CAC: (a) a data processor intending to provide critical data abroad; (b) a critical information infrastructure operator or a data processor processing the personal information of more than one million individuals intending to provide personal information abroad; (c) a data processor, who has cumulatively provided personal information of 100,000 individuals or sensitive personal information of 10,000 individuals abroad since January 1st of the previous year, intending to provide personal information abroad; and (d) other circumstances prescribed by the CAC for which application for security assessment for outbound data transfers is required.
On August 31, 2022, the CAC promulgated the Guidelines for Application for the Outbound Data Transfer Security Assessment, which provides that activities of outbound data transfer shall also include: (i) overseas transmission and storage by data processors of data collected and generated during mainland China domestic operations; (ii) granting the access to, visiting, acquiring, downloading or exporting the data collected and generated by data processors and stored in mainland China to overseas institutions, organizations or individuals; and (iii) other activities as specified by the CAC.
On December 2, 2022, the Central Committee of the Communist Party of China and the State Council jointly issued Opinions on Establishing Fundamental System to Better Play the Role of Data, which provides that, among others, the governance system of data shall be improved, and security of development shall be ensured. The opinion further requires that the administrator shall coordinate development and security, implement the comprehensive national security concept, strengthen the development of a data security protection system, and ensure security throughout the entire process of data supply, transaction, and use.
On December 8, 2022, the MIIT released the Administrative Measures for Data Security in Industry and Information Technology Sectors (Trial), or the MIIT Measures, which came into effect on January 1, 2023. The measures apply to data management in certain industries, including telecommunication sectors. The MIIT Measures set out three categories of data: ordinary data, important data and core data. The processing of important data and core data is subject to certain filing and reporting obligations. Since the categories of important data and core data have not been released, it is uncertain how the measures will be interpreted and implemented.

Regulations Relating to Internet Content and Information Security

The Administrative Measures on Internet Information Services specify that internet information services regarding news, publications, education, medical and health care, pharmacy and medical appliances, among other things, are to be examined, approved and regulated by the relevant authorities. Internet information providers are prohibited from providing services beyond those included in the scope of their ICP licenses or filings. Furthermore, these measures clearly specify a list of prohibited content. Internet information providers are prohibited from producing, copying, publishing or distributing information that is humiliating or defamatory to others or that infringes the lawful rights and interests of others. Internet information providers that violate the prohibition may face criminal charges or administrative sanctions by the ~~PRC~~mainland China authorities. Internet information providers must monitor and control the information posted on their websites. If any prohibited content is found, they must remove the offensive content immediately, keep a record of it and report it to the relevant authorities. ~~Beijing Momo, as an~~The consolidated affiliated entities holding ICP ~~license holder, is~~licenses or filings are subject to these measures.

Internet information in mainland China is also regulated and restricted from a national security standpoint. The Standing Committee of the ~~National People’s Congress~~NPC has enacted the Decisions on Maintaining Internet Security on December 28, 2000, which may subject violators to criminal punishment in mainland China for any effort to: (i) gain improper entry into a computer or system of strategic importance; (ii) disseminate politically disruptive information; (iii) leak state secrets; (iv) spread false commercial information; or (v) infringe intellectual property rights. The ~~Ministry of Public Security~~MPS has promulgated measures that prohibit use of the internet in ways which, among other things, result in a leakage of state secrets or a spread of socially destabilizing content. ~~As an~~The consolidated affiliated entities holding ICP ~~license holder, Beijing Momo is~~licenses or filings are subject to the laws and regulations relating to information security.

In August 2013, the MOC issued the Administration Measures on Content ~~Review~~Self-Review by Internet Culture Operating Entities, or the Content Review Measures, which became effective on December 1, 2013. According to the Content Review Measures, an internet culture operating entity shall censor and review its products and services to be provided to the public to ensure that such products and services do not contain any content prohibited by law, and the censor record shall be kept for at least two years. Internet culture operating entities shall adopt technical measures to conduct real-time censor over the products and services, set up internal content control department and establish content control policies. If the internet culture operating entity identifies any illegal content, it shall immediately suspend the products or services containing such content and preserve relevant record, and, in the event that such illegal content ~~might lead to~~constitutes material issues, report to provincial branch of MOC.

On September 15, 2021, the CAC promulgated the Opinions on Further Enforcing Responsibilities on Website Platforms as the Main Responsible Party for Information Content Management. In accordance with the Opinions, website platforms are required to perform specific responsibilities as the main responsible party for information content management, including, among others, enhancing the platform community rules, strengthening the regulation and management of accounts, improving the content vetting mechanism, improving the quality of information content, managing the dissemination of information content, and strengthening the management of key functions.

On September 9, 2022, the Administrative Provisions on Internet Pop-up Window Information Notification Services was issued by the CAC, MIIT and SAMR, effective from September 30, 2022, which requires that providers of Internet pop-up window information notification services shall be the responsible party for the management of information content and establish and improve management systems for censoring of information content, ecological governance, data security and personal information protection, and protection of minors.

The Administrative Provisions on Comment Threading Services on the Internet, or the Comment Threading Services Provisions, was amended by the CAC on November 16, 2022, and was effective on December 15, 2022. The Comment Threading Services Provisions requires that the Comment threading service providers shall (1) verifying the real identity information of the registered users under the principle of “using real name at back end and using alias or real name voluntarily at front end” and not providing comment threading services to users who have not verified their real identity information or fraudulently use the identity information of organizations or others; (2) establishing and improving the system for the protection of the personal information of users, following the principles of “legitimacy, appropriateness, necessity and good faith” in the processing of the personal information of users, disclosing the rules for processing personal information, informing the users of the purpose and method of processing, type of personal information to be processed, storage period and other matters, and obtaining individuals’ consents according to the law, unless otherwise provided for by laws or administrative regulations; (3) establishing the system of “censorship before release” for comment threading services provided for news information; (4) providing the corresponding static version of information content at the same time on the same platform and page if the comment threading services are provided by way of bullet screens; (5) establishing and improving a system of review and management of comments posted, real-time inspection, emergency response and reporting acceptance and other information security management systems, timely identifying and disposing of illegal and negative information, and reporting to the cyberspace administration; (6) innovating the management methods for comments posted, researching and developing information security management technology for comments posted and improving the ability to dispose of illegal and negative information, timely identifying risks such as security defects and loopholes in the comment threading services, taking remedial measures and reporting the same to the cyberspace administrations; (7) being staffed with a review editorial team that adapts to the scale of service, strengthening the review trainings and improving the professionalism of review editors; (8) cooperating with the cyberspace administrations in conducting supervision and inspection in accordance with the law and providing necessary technical and data support and assistance.

Regulations on Anti-monopoly and Anti-unfair Competition
On September 2, 1993, the Standing Committee of the National People’s Congress adopted the PRC Anti-unfair Competition Law, which took effect on December 1, 1993, and was amended on April 23, 2019. According to the Anti-unfair Competition Law, unfair competition refers to that the operator disrupts the market competition order and damages the legitimate rights and interests of other operators or consumers in violation of the provisions of the Anti-unfair Competition Law in the production and operating activities. Operators shall abide by the principle of voluntariness, equality, impartiality, integrity and adhere to laws and business ethics during market transactions. Operators in violation of the Anti-unfair Competition Law shall bear corresponding civil, administrative or criminal liabilities depending on the specific circumstances.
The PRC Anti-monopoly Law promulgated by the Standing Committee of the NPC, which became effective on August 1, 2008, and was amended on June 24, 2022, and the Rules of the State Council on Filing Threshold for Concentration of Undertakings promulgated by the State Council on August 3, 2008, and amended on September 18, 2018, require that where a concentration reaches one of the following thresholds, a filing must be completed in advance with the anti-monopoly law enforcement agency under the State Council, or otherwise the concentration shall not be implemented: (i) during the previous fiscal year, the total global turnover of all undertakings participating in the concentration exceeded RMB10 billion, and at least two of these undertakings each had a turnover of more than RMB400 million within mainland China; or (ii) during the previous fiscal year, the total turnover within mainland China of all the undertakings participating in the concentration exceeded RMB2 billion, and at least two of these undertakings each had a turnover of more than RMB400 million within mainland China. If a concentration does not reach the threshold prescribed by the State Council, there is evidence proving the concentration has or may have effect of excluding or limiting competition, the Anti-monopoly Law enforcement agency of the State Council may require the undertakings to complete the filings. Where the undertakings fail to complete the filings in accordance with the aforementioned provisions, the Anti-monopoly Law enforcement agency of the State Council shall conduct an investigation in accordance with the law. If an undertaking carries out a concentration in violation of the law and the concentration has or may have the effect of excluding or limiting competition, the relevant authority shall order the undertakings to terminate the concentration, dispose of the shares or assets or transfer the business within a specified time limit, or take other measures to restore to the pre-concentration status, and a fine of up to 10% of its sales amount in the previous year will be made; if the concentration has no effect of excluding or limiting competition, a fine of up to RMB 5 million will be made. Furthermore, the Anti-monopoly Law enforcement agency of the State Council shall improve the classified and hierarchical review system for concentrations of undertakings, strengthen the review of concentrations of undertakings in important fields related to national economy and people’s livelihood pursuant to the law, and improve the quality and efficiency of review. The PRC Anti-monopoly Law further provides that undertakings shall not use data, algorithms, technologies, capital advantages and platform rules, etc. to engage in any monopolistic activities prohibited by the law.
On August 17, 2021, the SAMR issued a discussion draft of Provisions on the Prohibition of Unfair Competition on the Internet, under which undertakings should not use data or algorithms to hijack traffic or influence users’ choices, or use technical means to illegally capture or use other undertakings’ data. Furthermore, undertakings are not allowed to (i) fabricate or spread misleading information to damage the reputation of competitors, or (ii) employ marketing practices such as fake reviews or use coupons or “red envelopes” to entice positive ratings.
On September 11, 2020, the Anti-Monopoly Committee of the State Council issued Anti-Monopoly Compliance Guideline for Operators, which requires operators to establish anti-monopoly compliance management systems under the PRC Anti-Monopoly Law to manage anti-monopoly compliance risks.
On February 7, 2021, the Anti-Monopoly Committee of the State Council published Anti-Monopoly Guidelines for the Platform Economy Sector that specified circumstances where an activity of an internet platform will be identified as monopolistic act as well as concentration filing procedures for undertakings, including those involving variable interest entities.
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On December 24, 2021, the NDRC together with other eight governmental authorities jointly issued the Opinions on Promoting the Healthy and Sustainable Development of the Platform Economy, which provides that, among others, monopolistic agreements, abuse of market dominant position and illegal concentration of undertakings in the platform economy will be strictly investigated and punished in accordance with the laws.

Regulations on Anti-fatigue Compliance System and Real-name Registration System

On April 15, 2007, eight ~~PRC~~mainland China government authorities, including the ~~General Administration of Press and Publication,~~GAPP, the Ministry of Education, the ~~Ministry of Public Security~~MPS and the Ministry of ~~Industry and~~ Information ~~Technology,~~Industry, jointly issued the Notice on Protecting Minors Mental and Physical Health and Implementation of Online Game Anti-fatigue System, which requires the implementation of an anti-fatigue compliance system and a real-name registration system by all ~~PRC~~mainland China online game operators. Under the anti-fatigue compliance system, three hours or less of continuous playing by minors, defined as game players under 18 years of age, is considered to be ~~“healthy”,~~“healthy,” three to five hours is deemed ~~“fatiguing”,~~“fatiguing,” and five hours or more is deemed “unhealthy.” Game operators are required to reduce the value of in-game benefits to a game player by half if it discovers that the amount of a time a game player spends online has reached the “fatiguing” level, and to zero in the case of the “unhealthy” level.

To identify whether a game player is a minor and thus subject to the anti-fatigue compliance system, a real-name registration system should be adopted to require online game players to register their real identity information before playing online games. Pursuant to ~~a notice~~the Notice on Lunching Anti-fatigue Real-name Registration System for Online Games issued by the relevant eight government authorities on ~~August 3,~~July 1, 2011, online game operators must submit the identity information of game players to the National Citizen Identity Information Center, a subordinate public institution of the ~~Ministry of Public Security,~~MPS, for verification as of October 1, 2011.

On October 25, 2019, the NPPA issued the Notice of Preventing Minors from Being Addicted to Online Games, which reiterates the requirement to implement a real-name registration system by all mainland China online game operators. Within two months as of such notice, online game operators are required to have all existing users to complete with the real-name registration for each of their online games account. Moreover, the duration of online games played by minors shall be strictly controlled. From 22:00 to 8:00 the next day, online game operators shall not provide online game services in any form for minors. The duration for an online game operator to provide the minors with online game services shall not exceed three hours per day on any statutory holiday or one and half hours per day on any other day. In addition, online games operators must take effective measures to restrict minors from using paid services that are incompatible with their civil capacity. Failure to comply with the aforesaid requirements may subject the online games operator concerned to taking rectification measures till revocation of relevant licenses.

On October 17, 2020, the Standing Committee of the NPC revised and promulgated the Law of the mainland China on the Protection of Minors (2020 Revision), which took effect on June 1, 2021. Law of the PRC on the Protection of Minors (2020 Revision) added a new section entitled “Online Protections” which stipulates a series of provisions to further protect minors’ interests on the internet, among others, (i) online product and service providers are prohibited from providing minors with products and services that would induce minors to indulge, (ii) online service providers for products and services such as online games, live broadcasting, audio/video, and social networking are required to establish special management systems of user session duration, access authority and consumption for minors, (iii) online games service providers must request minors to register and log into online games with their valid identity information, (iv) online games service providers must categorize games according to relevant rules and standards, notify users about the appropriate ages for the players of the games, and take technical measures to keep minors from accessing inappropriate online games functions, and (v) online games service providers may not provide online games services to minors from 22:00 to 8:00.

On March 14, 2022, the CAC issued Regulations on Internet Protection of Minors (Draft for Comments). According to the draft regulations, online live broadcast service providers shall not provide account registration services for minors under the age of 16; those who provide account registration services for minors over the age of 16 shall check their identity information and obtain the consent of their guardians. Online live broadcast service providers shall establish a dynamic verification mechanism for the real identity information of the broadcasters, and shall not provide online live broadcast services for those who do meet the above requirements.
On May 7, 2022, the Central Commission for Guiding Cultural and Ethical Progress of the Communist Party of China, the MCT, NRTA and the CAC promulgated the Opinions on Regulating Virtual Gifting during Online Live Broadcasting and Strengthening the Protection of Minors, or the May 7 Opinions. According to the May 7 Opinions, online live broadcasting platforms shall, among others (1) prohibit minors from virtual gifting, and strength the implementation of real-name registration; (2) not provide online live broadcaster account registration service to minors under 16 and shall obtain the consent from guardians before allowing minors between 16 and 18 to register as a broadcaster on their platforms; (3) continue to upgrade the youth mode of the platform and establish an exclusive customer service team for minors to prioritize the settlement of complaints and disputes related to minors; (4) strengthen the administration on key functions of the platform and prohibit virtual gifting amount from being the sole criteria for the ranking of broadcasters or the criteria for the ranking of users; and (5) suspend all services under youth mode after 10:00 p.m. every day to ensure the rest time of minors.

Regulations Relating to Internet Information Services and Content of Internet Information

In September 2000, the State Council issued the Administrative Measures on Internet Information Services, or the Internet Measures, which was amended on January 8, 2011, to regulate the provision of information services to online users through the internet. According to the Internet Measures, internet information services are divided into two categories: services of an operative nature and services of a non-operative nature. Our business conducted through our immomo.com website and Momo application involves operating internet information services, which requires us to obtain an ICP license. If an internet information service provider fails to obtain an ICP license, the relevant local branch of the ~~Ministry of Industry and Information Technology~~MIIT may levy fines, confiscate its illegal income or even block its website. When the ICP service involves areas of news, publication, education, medical treatment, health, pharmaceuticals and medical equipment, and if required by law or relevant regulations, specific approval from the respective regulatory authorities must be obtained prior to applying for the ICP license from the ~~Ministry of Industry and Information Technology~~MIIT or its provincial level counterpart. Our affiliated ~~PRC~~mainland China entity, Beijing Momo, currently holds an ICP license issued by Beijing Communications Administration, a local branch of the ~~Ministry of Industry and Information Technology.~~MIIT. Our ICP license will expire in ~~February 2017~~December 2026.

According to the Circular on Strengthening the Administration of the Online Show Live Broadcast and ~~we plan~~Online E-commerce Live Broadcast issued by the NRTA on November 12, 2020, platforms providing online show live broadcast or online e-commerce live broadcast services shall register their information and business operations by November 30, 2020. The overall ratio of front-line content analysts to ~~renew~~online live broadcast rooms shall be 1:50 or higher on such ~~license~~platforms. The training for content analysts shall be strengthened and content analysts who have passed the training shall be registered in the system. A platform shall report the number of its online live broadcast rooms, broadcasters and content analysts to the provincial branch of the NRTA on a quarterly basis. Online show live broadcast platforms shall tag content and broadcasters by category. A broadcaster cannot change the category of the programs offered in his or her online live broadcast room without prior approval from the platform. Users that are minors or without real-name registration are forbidden from virtual gifting, and platforms shall limit the maximum amount of virtual gifting per time, per day, and per month. When the virtual gifting by a user reaches half of the daily/monthly limit, a consumption reminder from the platform and a confirmation from the user by text messages or other means are required before the next transaction. When the amount of virtual gifting by a user reaches the daily/monthly limit, the platform shall suspend the virtual gifting function for such user for that day or month.

According to ~~its expiration date.~~the Law of the PRC on the Protection of Minors (2020 Revision), which took effect on June 1, 2021, among others, online live broadcasting service providers are not allowed to provide minors under age sixteen with online live broadcasting publisher account registration service, and must obtain the consent from parents or guardians and verify the identity of the minors before allowing minors aged sixteen or above to register online live broadcasting publisher accounts.

Regulations Relating to Privacy Protection

As an internet content provider, we are subject to regulations relating to protection of privacy. In recent years, ~~PRC~~mainland China government authorities have enacted laws and regulations on internet use to protect personal information from any unauthorized disclosure. The Administrative Measures on Internet Information Services prohibit ICP service operators from producing, copying, publishing or distributing information that is insulting or slandering a third party or infringing upon the lawful rights and interests of a third party. Under the Several Provisions on Regulating the Market Order of Internet Information Services, issued by the ~~Ministry of Industry and Information Technology~~MIIT in 2011, an ICP service operator may not collect any user personal information or provide such information to third parties without the consent of a user. An ICP service operator must expressly inform the users of the method, content and purpose for the collection and processing of such user personal information and may only collect such information necessary for the provision of its services. An ICP service operator is also required to properly keep the user personal information, and in case of any leak or likely leak of the user personal information, the ICP service operator must take immediate remedial measures and, in severe circumstances, to make an immediate report to the telecommunications regulatory authority. In addition, pursuant to the Decision on Strengthening the Protection of Online Information issued by the Standing Committee of the ~~National People’s Congress~~NPC in December 2012 and the Order for the Protection of Telecommunication and Internet User Personal Information issued by the ~~Ministry of Industry and Information Technology~~MIIT in July 2013, any collection and use of user personal information must be subject to the consent of the user, abide by the principles of legality, rationality and necessity and be within the specified purposes, methods and scopes. An ICP service operator must also keep such information strictly confidential, and is further prohibited from divulging, tampering or destroying of any such information, or selling or illegally providing such information to other parties. Any violation of the above decision or order may subject the ICP service operator to warnings, fines, confiscation of illegal gains, revocation of licenses, ~~cancellation~~cancelation of filings, closedown of websites or even criminal liabilities. We are subject to these regulations as an online business operator.

On February 4, 2015, the CAC promulgated the Provisions on the Administrative of Account Names of Internet Users, which became effective as of March 1, 2015, setting forth the authentication requirement for the real identity of internet users by requiring users to provide their real names during the registration process. In addition, these provisions specify that internet information service providers are required by these provisions to accept public supervision, and promptly remove illegal and malicious information in account names, profile photos, introductions and other registration-related information reported by the public in a timely manner. On June 27, 2022, the CAC promulgated the Administrative Provisions on the Account Information of Internet Users, effective from August 1, 2022, or the Account Information Provisions, which applies to the registration, use, and management of internet users’ account information by internet information service providers in mainland China. The Account Information Provisions stipulates that internet information service providers shall formulate and disclose internet user account management rules and platform conventions, sign service agreements with internet users, and clarify the rights and obligations related to account information registration, use, and management. The Account Information Provisions also requires the internet information service providers shall protect and operate internet users’ account information in accordance with laws and regulations, and take measures to prevent unauthorized access and leakage, tampering, and loss of personal information. The internet information service providers shall set up convenient complaints and reporting portals in prominent locations, disclose complaints and reporting methods, improve mechanisms for acceptance, review, handling, and feedback, clarify processing procedures and time limits for feedback, and promptly handle complaints and reports from users and the public.

On January 23, 2019, the Office of the Central Cyberspace Affairs Commission, the MIIT, the MPS, and the SAMR jointly issued the Notice on Special Governance of Illegal Collection and Use of Personal Information via Apps, which restates the requirement of legal collection and use of personal information, encourages app operators to conduct security certifications, and encourages search engines and app stores to clearly mark and recommend those certified Apps.

On August 22, 2019, the CAC issued the Regulation on Cyber Protection of Children’s Personal Information, effective on October 1, 2019. Network operators are required to establish special policies and user agreements to protect children’s personal information, and to appoint special personnel in charge of protecting children’s personal information. Network operators who collect, use, transfer or disclose personal information of children are required to, in a prominent and clear way, notify and obtain consent from children’s guardians.

On November 28, 2019, the CAC, MIIT, the MPS and SAMR jointly issued the Measures to Identify Illegal Collection and Usage of Personal Information by Apps, which lists six types of illegal collection and usage of personal information, including “not publishing rules on the collection and usage of personal information” and “not providing privacy rules.”
In addition, on May 28, 2020, the NPC adopted the PRC Civil Code, or the Civil Code, which came into effect on January 1, 2021. Pursuant to the Civil Code, the personal information of a natural person shall be protected by the law. Any organization or individual shall legally obtain such personal information of others when necessary and ensure the safety of such information, and shall not illegally collect, use, process or transmit personal information of others, or illegally purchase or sell, provide or make public personal information of others.
The MIIT issued the Notice on the Further Special Rectification of App Infringing upon Users’ Personal Rights and Interests on July 22, 2020, which requires that certain conducts of App service providers should be inspected, including, among others, (i) collecting or using personal information without the user’s consent, collecting or using personal information beyond the necessary scope of providing services, and forcing users to receive advertisements; (ii) requesting user’s permission in a compulsory and frequent manner, or frequently launching third- parties Apps; and (iii) deceiving and misleading users into downloading Apps or providing personal information. It also sets forth that the period for the regulatory specific inspection on Apps and that the MIIT will order the non-compliant entities to modify their business within five business days, or otherwise the MIIT will make public announcement, remove the Apps from the Appstores or impose other administrative penalties.
On March 12, 2021, the CAC and three other authorities jointly issued the Rules on the Scope of Necessary Personal Information for Common Types of Mobile Internet Apps. The Rules specifies the scope of necessary personal information to be collected each for a variety of common mobile internet apps, such as online live broadcast Apps, instant messaging Apps, online game Apps. Operators of such Apps shall not refuse to provide basic services to users on the ground of users’ refusal to provide their personal non-essential information.
On April 26, 2021, the MIIT issued the Interim Administrative Provisions on Personal Information Protection in Internet Mobile Apps (Draft for Comment). The draft of the Interim Administrative Provisions on Personal Information Protection in Internet Mobile Apps sets forth two principles of collection and utilization of personal information, namely “explicit consent” and “minimum necessity.”
According to the Law of the PRC on the Protection of Minors (2020 Revision), which took effect on June 1, 2021, information processors must follow the principles of legality, legitimacy and necessity when processing personal information of minors via internet, and must obtain consent from minors’ parents or other guardians when processing personal information of minors under the age of 14. In addition, internet service providers must promptly alert upon the discovery of publishing private information by minors via the internet and take necessary protective measures.
On August 20, 2021, the Standing Committee of the NPC promulgated the PRC Personal Information Protection Law, which became effective on November 1, 2021. The PRC Personal Information Protection Law specifically specifies the rules for processing sensitive personal information, i.e., personal information that, once leaked or illegally used, may easily cause harm to the dignity of natural persons or grave harm to personal or property security, including information on biometric characteristics, financial accounts, individual location tracking, etc., as well as the personal information of minors under the age of 14. Personal information processors shall bear responsibility for their personal information processing activities and adopt the necessary measures to safeguard the security of the personal information they process. Otherwise, the personal information processors will be ordered to correct or suspend or terminate the provision of services, confiscation of illegal income, fines or other penalties.
On September 17, 2021, the CAC, together with eight other government authorities, jointly issued the Guidelines on Strengthening the Comprehensive Regulation of Algorithms for Internet Information Services. The guidelines provide that daily monitoring of data use, application scenarios, and effects of algorithms must be carried out by the relevant regulators, and relevant regulators should conduct security assessments of algorithms. The guidelines also provide that an algorithm filing system should be established, and classified security management of algorithms should be promoted.
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On December 31, 2021, the CAC, the MIIT, the MPS, and the SAMR jointly promulgated the Administrative Provisions on Internet Information Service Algorithm Recommendation, which took effect on March 1, 2022. The Administrative Provisions on Internet Information Service Algorithm Recommendation, among others, implements classification and hierarchical management for algorithm recommendation service providers based on various criteria, requires algorithm recommendation service providers to inform users of their provision of algorithm recommendation services in a conspicuous manner, and publicize the basic principles, purpose intentions, and main operating mechanisms of algorithm recommendation services in an appropriate manner, and requires such service providers to provide users with options that are not specific to their personal profiles, or convenient options to cancel algorithmic recommendation services.
Regulations on Mobile Internet Applications
On June 28, 2016, the CAC issued the Administrative Provisions on Mobile Internet Application Information Services, which was amended on June 14, 2022 and became effective on August 1, 2022. The amended provisions clarify the requirements in relation to the provision of application information services and application distribution services in mainland China. The amended provisions also outline the requirements for application providers, which include, among others, (i) verifying user identity information; (ii) obtaining an internet news and information services license or other administrative licenses for information services; and (iii) establishing a mechanism for examining the content of the information. In particular, the amended provisions stipulate the obligations in relation to cybersecurity, data security and personal information protection, emphasizing the necessity for personal information collection and the fact that users shall not be denied the use of the basic function services of certain applications merely on account of their refusal to provide unnecessary personal information. The amended provisions also set out the requirements for application distribution platforms, which include, among others, (i) filing the required information with the local network information administration authority within 30 days from the time the platform has become operational; and (ii) establishing classification management systems. If the applications violate the amended provisions, relevant laws and regulations, and service agreements, the application distribution platform shall take such measures as giving warnings, suspension of services, removal of the application from the platform, etc. It shall also keep relevant records and report the breach to competent authorities.

Regulations Relating to Taxation

Up until December 31, 2007, our PRC subsidiary and consolidated affiliated entity and its subsidiaries were subject to PRC enterprise income tax at the statutory rate of 33% on their PRC taxable income.

In January 2008, the PRC Enterprise Income Tax Law took effect. The PRC Enterprise Income Tax Law applies a uniform 25% enterprise income tax rate to both ~~foreign-invested enterprises~~FIEs and domestic enterprises, except where tax incentives are granted to special industries and projects. Under the PRC Enterprise Income Tax Law and its implementation regulations, dividends generated from the business of a ~~PRC~~mainland China subsidiary after January 1, 2008 and payable to its foreign investor may be subject to a withholding tax rate of 10% if the ~~PRC~~mainland China tax authorities determine that the foreign investor is a non-resident enterprise, unless there is a tax treaty with mainland China that provides for a preferential withholding tax rate. Distributions of earnings generated before January 1, 2008 are exempt from ~~PRC~~mainland China withholding tax.

Under the PRC Enterprise Income Tax Law, an enterprise established outside mainland China with “de facto management bodies” within mainland China is considered a “resident enterprise” for ~~PRC~~mainland China enterprise income tax purposes and is generally subject to a uniform 25% enterprise income tax rate on its worldwide income. A circular issued by the ~~State Administration of Taxation~~SAT in April 2009 regarding the standards used to classify certain Chinese-invested enterprises controlled by Chinese enterprises or Chinese enterprise groups and established outside of mainland China as “resident enterprises” clarified that dividends and other income paid by such ~~PRC~~mainland China “resident enterprises” will be considered ~~PRC-source~~mainland China-source income and subject to ~~PRC~~mainland China withholding tax, currently at a rate of 10%, when paid to ~~non-PRC~~non-mainland China enterprise shareholders. This circular also subjects such ~~PRC~~mainland China “resident enterprises” to various reporting requirements with the ~~PRC~~mainland China tax authorities. Under the implementation regulations to the PRC Enterprise Income Tax Law, a “de facto management body” is defined as a body that has material and overall management and control over the manufacturing and business operations, personnel and human resources, finances and properties of an enterprise. In addition, the tax circular mentioned above specifies that certain ~~PRC-invested~~mainland China-invested overseas enterprises controlled by a Chinese enterprise or a Chinese enterprise group in the ~~PRC~~mainland China will be classified as ~~PRC~~mainland China resident enterprises if the following are located or resided in the ~~PRC:~~mainland China: senior management personnel and departments that are responsible for daily production, operation and management; financial and personnel decision making bodies; key properties, accounting books, the company seal, and minutes of board meetings and shareholders’ meetings; and half or more of the senior management or directors who have the voting rights.

Pursuant to the Arrangement between Mainland China and the Hong Kong Special Administrative Region for the Avoidance of Double Taxation and Tax Evasion on Income, the withholding tax rate in respect to the payment of dividends by a ~~PRC~~mainland China enterprise to a Hong Kong enterprise is reduced to 5% from a standard rate of 10% if the Hong Kong enterprise directly holds at least 25% of the ~~PRC~~mainland China enterprise. Pursuant to the Notice of the State Administration of Taxation on the Issues concerning the Application of the Dividend Clauses of Tax Agreements, or Circular 81, a Hong Kong resident enterprise must meet the following conditions, among others, in order to enjoy the reduced withholding tax: (i) it must be a company; (ii) it must directly own the required percentage of equity interests and voting rights in the ~~PRC~~mainland China resident enterprise; and (iii) it must have directly owned such required percentage in the ~~PRC~~mainland China resident enterprise throughout the 12 months prior to receiving the dividends. Furthermore, the ~~Administrative~~ Measures for ~~Non-Resident Enterprises to Enjoy Treatments under Tax Treaties (For Trial Implementation),~~the Administration of Non-resident Taxpayers’ Enjoyment of Treaty Benefits, which became effective in ~~October 2009, require~~January 2020, provide that non-resident ~~enterprises must obtain approval from~~ taxpayers’ enjoyment of treaty benefits shall be handled in the manner of “self-assessment, claim for and enjoyment of treaty benefits and retention of relevant ~~tax authority in order~~materials for review,” thus, where non-resident taxpayers determine on their own that the conditions for them to enjoy the ~~reduced~~treatments under tax treaties are meet, may enjoy treatments under tax treaties on their own during the tax filings by themselves or through withholding agents, and shall collect and retain relevant materials for future inspection, and be subject to administration by relevant tax ~~rate.~~authorities afterwards. There are also other conditions for enjoying the reduced withholding tax rate according to other relevant tax rules and regulations. Accordingly, Momo Technology HK Company Limited may be able to benefit from the 5% withholding tax rate for the dividends it receives from Beijing Momo IT, if it satisfies the conditions prescribed under Circular 81 and other relevant tax rules and regulations, and obtain the approvals as required. However, according to Circular 81, if the relevant tax authorities consider the transactions or arrangements we have are for the primary purpose of enjoying a favorable tax treatment, the relevant tax authorities may adjust the favorable withholding tax in the future.

In January 2009, the SAT promulgated the Provisional Measures for the Administration of Withholding of Enterprise Income Tax for Non-resident Enterprises, or the Non-resident Enterprises Measures, pursuant to which entities that have direct obligation to make certain payments to a non-resident enterprise shall be the relevant tax withholders for such non-resident enterprise. Further, the Non-resident Enterprises Measures provides that, in case of an equity transfer between two non-resident enterprises which occurs outside mainland China, the non-resident enterprise which receives the equity transfer payment shall, by itself or engage an agent to, file tax declaration with the ~~PRC~~mainland China tax authority located at place of the ~~PRC~~mainland China company whose equity has been transferred, and the ~~PRC~~mainland China company whose equity has been transferred shall assist the tax authorities to collect taxes from the relevant non-resident enterprise. On April 30, 2009, the MOF and the SAT jointly issued the Notice on Issues Concerning Process of Enterprise Income Tax in Enterprise Restructuring Business, or Circular 59. On December 10, 2009, the SAT issued the Notice on Strengthening the Administration of the Enterprise Income Tax concerning Proceeds from Equity Transfers by Non-resident Enterprises, or Circular 698. Both Circular 59 and Circular 698 became effective retroactively as of January 1, 2008. By promulgating and implementing these two circulars, the PRC tax authorities have enhanced their scrutiny over the direct or indirect transfer of equity interests in a PRC resident enterprise by a non-resident enterprise.

On February 3, 2015, the SAT issued a Public Notice ~~[2015] No. 7,~~on Several Issues Relating to Enterprise Income Tax on Transfer of Assets between Non-resident Enterprises, or Public Notice ~~7, to supersede existing provisions in relation to the Indirect Transfer as set forth in Circular 698, while the other provisions of Circular 698 remain in force.~~7. Public Notice 7 introduces a new tax regime, ~~that is significantly different from that under Circular 698. Public Notice~~and extends its tax jurisdiction to capture not only ~~Indirect Transfer as set forth under Circular 698~~indirect transfers but also transactions involving transfer of immovable property in mainland China and assets held under the establishment and place, in mainland China of a foreign company through the offshore transfer of a foreign intermediate holding company. Public Notice 7 also addresses transfer of the equity interest in a foreign intermediate holding company widely. In addition, Public Notice 7 provides ~~clearer~~clear criteria ~~than Circular 698~~ on how to assess reasonable commercial purposes and introduces safe harbor scenarios applicable to internal group restructurings. However, it also brings challenges to both the foreign transferor and transferee of the ~~Indirect Transfer~~indirect transfers as they have to make self-assessment on whether the transaction should be subject to ~~PRC~~mainland China tax and to file or withhold the ~~PRC~~mainland China tax accordingly.

~~There are few guidances~~ In October 2017, the SAT issued the Announcement of the State Administration of Taxation on Issues Concerning the Withholding of Non-resident Enterprise Income Tax at Source, or Bulletin 37, which came into effect in December 2017 and ~~practical experience~~was amended in June 2018. The Bulletin 37 further clarifies the practice and procedures of the withholding of non-resident enterprise income tax. Where a non-resident enterprise transfers taxable assets indirectly by disposing of the equity interests of an overseas holding company, which is an indirect transfer, the non-resident enterprise as either the transferor or the transferee, or the mainland China entity that directly owns the taxable assets, may report such indirect transfer to the ~~application of Circular 698 and Public Notice 7.~~ relevant tax authority.

~~PRC Business Tax~~

Pursuant to applicable PRC tax regulations, any entity or individual conducting business in the service industry is generally required to pay a business tax at the rate of 5% on the revenues generated from providing such services. However, if the services provided are related to technology development and transfer, such business tax may be exempted subject to the approval of relevant tax authorities.

Value Added Tax

On January 1, 2012, the ~~Chinese~~PRC State Council officially launched a pilot value-added tax (“VAT”) reform program, or Pilot Program, applicable to businesses in selected industries. Businesses in the Pilot Program would pay VAT instead of business tax. The ~~Pilot Industries~~pilot industries in Shanghai included industries involving the leasing of tangible movable property, transportation services, research and development and technical services, information technology services, cultural and creative services, logistics and ancillary services, certification and consulting services. Revenues generated by advertising services, a type of “cultural and creative services,” are subject to the VAT tax rate of 6%. According to official announcements made by competent authorities in Beijing and Guangdong province, Beijing launched the same Pilot Program on September 1, 2012, and Guangdong province launched it on November 1, 2012. On May 24, 2013, the ~~Ministry of Finance~~MOF and the ~~State Administration of Taxation~~SAT issued the Circular on Tax Policies in the Nationwide Pilot Collection of Value Added Tax in Lieu of Business Tax in the Transportation Industry and Certain Modern Services Industries, or the ~~Pilot Collection Circular.~~Circular 37. The scope of certain modern services industries under the ~~Pilot Collection~~ Circular 37 extends to the inclusion of radio and television services. On August 1, 2013, the Pilot Program was implemented throughout mainland China. ~~We currently pay~~On December 12, 2013, the ~~pilot~~MOF and the SAT issued the Circular on the Inclusion of the Railway Transport Industry and Postal Service Industry in the Pilot Collection of Value-added Tax in Lieu of Business Tax, or Circular 106. Among the other things, Circular 106 abolished Circular 37, and refined the policies for the Pilot Program. On April 29, 2014, the MOF and the SAT issued the Circular on the Inclusion of Telecommunications Industry in the Pilot Collection of Value-added Tax in Lieu of Business Tax, or Circular 43. On March 23, 2016, the MOF and the SAT issued the Circular on Comprehensively Promoting the Pilot Program of the Collection of Value-added Tax in Lieu of Business Tax, which replaced and superseded Circular 106 and Circular 43. Effective from May 1, 2016, the mainland China tax authorities collect VAT ~~instead~~in lieu of ~~business taxes for our advertising activities,~~Business Tax in all regions and ~~for any other parts~~industries. All of our ~~business~~entities were subject to VAT at the rate of 6% for services provided and 16% for goods sold, as adjusted to 13% starting from April 1, 2019. On March 20, 2019, the MOF, the SAT and the General Administration of Customs jointly issued the Announcement on Relevant Policies for Deepening Value-added Tax Reform, or the Announcement 39, which took effect as of April 1, 2019. In accordance with the Announcement 39, with effect from April 1, 2019 to December 31, 2021, taxpayers in service industry relating to production and life-support services are allowed to deduct additional 10% of the deductible input tax for the current period. The above VAT preferential policy was then extended until December 31, 2022 according to Announcement 11 of 2022. The Announcement 39 further illustrates that ~~are deemed by the local tax authorities~~a taxpayer in service industry relating to ~~belong~~production and life-support services refer to ~~the applicable industries.~~

taxpayer whose sales generated from postal services, telecommunications services, modern services and life-support services account for more than 50% of its total sales.

Regulations Relating to Copyright and Trademark Protection

Mainland China has adopted legislation governing intellectual property rights, including copyrights and trademarks. Mainland China is a signatory to major international conventions on intellectual property rights and is subject to the Agreement on Trade Related Aspects of Intellectual Property Rights as a result of its accession to the World Trade Organization in December 2001.

Copyright. The ~~National People’s Congress~~NPC amended the PRC Copyright Law in 2001, 2010 and ~~2010 to widen the scope~~2020, which became effective as of works and rights that are eligible for copyright protection. The amended Copyright Law extends copyright protection to Internet activities, products disseminated over the Internet and software products. In addition, thereJune 2021. There is a voluntary registration system administered by the ~~China~~ Copyright Protection ~~Center.~~Center of China. To address copyright infringement related to content posted or transmitted over the internet, the National Copyright Administration and ~~former~~ Ministry of Information Industry jointly promulgated the ~~Administrative~~ Measures for Copyright Administrative Protection Related to the Internet in April 2005. These measures became effective in May 2005. Provisions of the Supreme People’s Court on Certain Issues Related to the Application of Law in the Trial of Civil Cases Involving Disputes over Infringement of the Right of Dissemination through Information Networks, promulgated by the Supreme People’s Court in December 2012 and further revised on December 29, 2020 and took effect on January 1, 2021, stipulate that internet users or internet service providers who provide works, performances or audio/video products, for which others have the right of dissemination through information networks or make these available on any information network without authorization shall be deemed to have infringed upon the right of dissemination through information networks. To comply with these laws and regulations, we have implemented internal procedures to monitor and review the content we have been licensed from content providers before they are released on our ~~website~~platform and remove any infringing content promptly after we receive notice of infringement from the legitimate rights holder.

On December 20, 2001, the State Council promulgated the new Regulations on Computer Software Protection, effective from January 1, 2002 and as amended in 2011 and 2013, which are intended to protect the rights and interests of the computer software copyright holders and encourage the development of software industry and information economy. In the ~~PRC,~~mainland China, software developed by ~~PRC~~mainland China citizens, legal persons or other organizations is automatically protected immediately after its development, without an application or approval. Software copyright may be registered with the designated agency and if registered, the certificate of registration issued by the software registration agency will be the primary evidence of the ownership of the copyright and other registered matters. On February 20, 2002, the National Copyright Administration of the PRC introduced the Measures on Computer Software Copyright Registration, which outline the operational procedures for registration of software copyright, as well as registration of software copyright license and transfer contracts. The Copyright Protection Center of China is mandated as the software registration agency under the regulations.

The State Council and the National Copyright Administration have promulgated various rules and regulations and rules relating to protection of software in mainland China, including the aforementioned Regulations on Protection of Computer Software ~~promulgated by State Council on January 30, 2013 and effective since March 1, 2013,~~ and the Measures ~~for Registration of Copyright of~~on Computer Software ~~promulgated by SARFT on February 20, 2002 and effective since the same date.~~Copyright Registration. According to these rules and regulations, software owners, licensees and transferees may register their rights in software with the National Copyright Administration or its local branches and obtain software copyright registration certificates. Although such registration is not mandatory under ~~PRC~~mainland China law, software owners, licensees and transferees are encouraged to go through the registration process and registered software rights may be entitled to better protections. As of December 31, ~~2015,~~2022, we had registered 33203 software copyrights in mainland China.

Trademark. The PRC Trademark Law, adopted in 1982 and revised in 1993, 2001, 2013 and ~~2013~~2019 respectively, protects the proprietary rights to registered trademarks. The Trademark Office ~~under~~of the ~~State~~National Intellectual Property Administration ~~for Industry and Commerce~~ handles trademark registrations and may grant a term of ten years for registered trademarks, which may be extended for another ten years upon request. Trademark license agreements shall be filed with the Trademark Office for record. In addition, if a registered trademark is recognized as a well-known trademark, the protection of the proprietary right of the trademark holder may reach beyond the specific class of the relevant products or services. As of December 31, ~~2015,~~2022, we had 131,573 registered trademarks and ~~293~~339 trademark applications in ~~China.~~mainland China, Hong Kong, the United States, Japan and Korea, etc.

Regulations Relating to Foreign Exchange

Pursuant to the Regulations on the Administration of Foreign Exchange issued by the State Council and effective in 1996, as amended in January 1997 and August 2008, respectively, current account transactions, such as the sale or purchase of goods, are not subject to ~~PRC~~mainland China governmental approvals. Certain organizations in the ~~PRC,~~mainland China, including ~~foreign-invested enterprises,~~FIEs, may purchase, sell and/or remit foreign currencies at certain banks authorized to conduct foreign exchange business upon providing valid commercial documents. However, approval of the ~~PRC State Administration of Foreign Exchange, or~~ SAFE is required for capital account transactions.

In August 2008, SAFE issued a circular on the conversion of foreign currency into Renminbi by a foreign-invested company that regulates how the converted Renminbi may be used, or the SAFE Circular 142. The circular requires that the registered capital of a foreign-invested enterprise converted into Renminbi from foreign currencies may only be utilized for purposes within its business scope. For example, such converted amounts may not be used for investments in or acquisitions of other companies, which can inhibit the ability of companies to consummate such transactions. In addition, SAFE strengthened its oversight of the flow and use of the Renminbi registered capital of foreign-invested enterprises converted from foreign currencies. The use of such Renminbi capital may not be changed without SAFE’s approval, and may not in any case be used to repay Renminbi loans if the proceeds of such loans have not been utilized. Furthermore, SAFE promulgated a circular in November 2010, which, among other things, requires the authenticity of settlement of net proceeds from offshore offerings to be closely examined and the net proceeds to be settled in the manner described in the offering documents. Violations may result in severe penalties, such as heavy fines.

In November 2012, SAFE promulgated the Circular of Further Improving and Adjusting Foreign Exchange Administration Policies on Foreign Direct Investment which substantially amends and simplifies the ~~current~~ foreign exchange procedure. Pursuant to this circular, the opening of various special purpose foreign exchange accounts (e.g. pre-establishment expenses account, foreign exchange capital account, guarantee account), the reinvestment of RMB proceeds by foreign investors in the ~~PRC,~~mainland China, and remittance of foreign exchange profits and dividends by a ~~foreign-invested enterprise~~FIE to its foreign shareholders no longer require the approval or verification of SAFE, and multiple capital accounts for the same entity may be opened in different provinces, which was not possible before. In addition, SAFE promulgated the Circular on Printing and Distributing the Provisions on Foreign Exchange Administration over Domestic Direct Investment by Foreign Investors and the Supporting Documents in May 2013, which specifies that the administration by SAFE or its local branches over direct investment by foreign investors in the ~~PRC~~mainland China shall be conducted by way of registration and banks shall process foreign exchange business relating to the direct investment in the ~~PRC~~mainland China based on the registration information provided by SAFE and its branches.

~~In April 8,~~

On March 30, 2015, SAFE promulgated the Circular on Reforming the Management Approach Regarding the Foreign Exchange Capital Settlement of Foreign-invested Enterprises, which ~~will,~~has, upon its effective date as of June 1, ~~2015, supersedes the SAFE Circular 142.~~2015. This circular provides that, among other things, the foreign-invested company may convert the foreign currency in its capital account into RMB on a “at will” basis and the RMB funds so converted can be used for equity ~~investments. However,~~investments provided that equity investment is included in the business scope of such foreign-invested company.

On June 9, 2016, SAFE promulgated the Circular on Reforming and Regulating of Administrative Policy on Settlement of Foreign Exchange of Capital Account, or SAFE Circular 16, which became effective on the same date. According to SAFE Circular 16, the foreign exchange capital of FIEs, foreign debt and funds raised through offshore listing may be settled on a discretionary basis, and can be settled at the banks. The proportion of such discretionary settlement is temporarily determined as 100%. The RMB ~~funds so~~ converted ~~shall~~from relevant foreign exchange will be kept in a designated account, and if a domestic enterprise needs to make further payment from such account, it still must provide supporting documents and go through the review process with the banks.

Furthermore, SAFE Circular 16 reiterates that the use of capital by domestic enterprises must adhere to the principles of authenticity and self-use within the business scope of enterprises. The foreign exchange income of capital account and RMB obtained by domestic enterprise from foreign exchange settlement must not be used ~~for the purposes of, whether~~(i) directly or indirectly ~~(i) paying expenditures out~~for payment beyond the business scope of the ~~ordinary course~~enterprises or payment prohibited by relevant laws and regulations; (ii) directly or indirectly for investment in securities and investment in wealth management products except for principal-guaranteed bank wealth management products, unless otherwise explicitly provided; (iii) for extending loans to non-affiliate enterprises, unless permitted by the scope of business; ~~(ii) investing in securities; (iii) extending entrusted loans or paying off loans extended or assumed by other companies;~~ and/or (iv) ~~purchasing~~for construction or purchase of real estate ~~properties~~that is not for self-use, except ~~when~~for foreign-invested real estate enterprises.

On October 23, 2019, SAFE promulgated the Circular on Further Promoting the Facilitation of Cross-border Trade and Investment, or SAFE Circular 28. On the basis of continuing to allow investment FIEs (including foreign investment companies, foreign-funded venture capital enterprises and foreign-funded equity investment enterprises) to use the registered capital for domestic equity investment in accordance with the laws and regulations, SAFE Circular 28 canceled the restriction on the non-investment FIEs and allows the non-investment FIEs (like Beijing Momo IT) to use the registered capital for domestic equity investment under the premise of not violating the existing Negative List and the authenticity and compliance of the domestic equity investment projects. SAFE Circular 28 further clarifies the two ways of using the foreign ~~invested company~~currency registered capital of non-investment FIEs for domestic equity investment, i.e., by way of transfer of the foreign currency registered capital in its original currency and by way of foreign exchange settlement of the foreign currency registered capital. On October 23, 2019, the same date, SAFE promulgated the Circular on Reducing Foreign Exchange Accounts, or SAFE Circular 29, which became effective on March 2, 2020. The Appendix B of SAFE Circular 29 provides operational guidance for SAFE Circular 28. SAFE Circular 29 further specifies that the domestic equity investment set forth in Circular 28 is not limited to direct investment in a ~~company approved~~domestic enterprise but also includes equity investment conducted in the form of “equity transfer.”

According to ~~engaging~~the Circular on Improving Administration of Foreign Exchange to Support the Development of Foreign-related Business, issued by the SAFE on April 10, 2020, eligible enterprises are allowed to make domestic payments by using their capital funds, foreign credits and the income under capital accounts of overseas listing, without submitting the evidentiary materials concerning authenticity of such capital for banks in ~~real estate development business.~~advance; provided that their capital use is authentic and in compliance with administrative regulations on the use of income under capital accounts. The bank in charge shall conduct post spot checking in accordance with the relevant requirements.

Regulations Relating to Labor

Pursuant to the PRC Labor Law effective in 1995, as amended in 2009 and 2018, and the PRC Labor Contract Law effective in 2008, as amended in 2012, a written labor contract is required when an employment relationship is established between an employer and an employee. Other labor-related regulations and rules of the ~~PRC~~mainland China stipulate the maximum number of working hours per day and per week as well as the minimum wages. An employer is required to set up occupational safety and sanitation systems, implement the national occupational safety and sanitation rules and standards, educate employees on occupational safety and sanitation, prevent accidents at work and reduce occupational hazards.

In the ~~PRC,~~mainland China, workers dispatched by an employment agency are normally engaged in temporary, auxiliary or substitute work. Pursuant to the PRC Labor Contract Law, an employment agency is the employer for workers dispatched by it and shall perform an employer’s obligations toward them. The employment contract between the employment agency and the dispatched workers ~~and the placement agreement between the employment agency and the company that receives the dispatched workers~~ shall be in writing. Furthermore, the ~~company that accepts the dispatched workers~~employment agencies shall be jointly and severally liable for any damage caused to the dispatched workers due to violation of the PRC Labor Contract Law by the ~~employment agencies arising from their contracts with~~company that accepts the dispatched workers. An employer is obligated to sign an indefinite term labor contract with an employee if the employer continues to employ the employee after two consecutive fixed-term labor contracts. The employer also has to pay compensation to the employee if the employer terminates an indefinite term labor contract. Except where the employer proposes to renew a labor contract by maintaining or raising the conditions of the labor contract and the employee is not agreeable to the renewal, an employer is required to compensate the employee when a definite term labor contract expires. Furthermore, under the Regulations on Paid Annual Leave for Employees issued by the State Council in December 2007 and effective as of January 2008, an employee who has served an employer for more than one year and less than ten years is entitled to a five-day paid vacation, those whose service period ranges from 10 to 20 years is entitled to a 10-day paid vacation, and those who has served for more than 20 years is entitled to a 15-day paid vacation. An employee who does not use such vacation time at the request of the employer shall be compensated at three times their normal salaries for each waived vacation day.

Pursuant to the ~~Regulations on Occupational Injury~~PRC Social Insurance Law, effective in ~~2004,~~2011, as amended in ~~2010, and the Interim Measures concerning the Maternity Insurance for Enterprise Employees effective in 1995, PRC companies must pay~~2018, basic pension insurance, basic medical insurance, occupational injury insurance, ~~premiums and~~ maternity insurance premiums for their employees. Pursuant to the Interim Regulations on the Collection and Payment of Social Insurance Premiums effective in 1999 and the Interim Measures concerning the Administration of the Registration of Social Insurance effective in 1999, basic pension insurance, medical insurance and unemployment insurance are collectively referred to as social insurance. Both ~~PRC~~mainland China companies and their employees are required to contribute to the social insurance plans. Pursuant to the Regulations on the Administration of Housing Fund effective in 1999, as amended in 2002 ~~PRC~~and 2019 respectively, mainland China companies must register with applicable housing fund management centers and establish a special housing fund account in an entrusted bank. Both ~~PRC~~mainland China companies and their employees are required to contribute to the housing funds.

According to the PRC Social Insurance Law, an employer that fails to make social insurance contributions may be ordered to pay the required contributions within a stipulated deadline and be subject to a late fee. If the employer still fails to rectify the failure to make social insurance contributions within the stipulated deadline, it may be subject to a fine ranging from one to three times the amount overdue. According to the Regulations on Administration of Housing Fund, an enterprise that fails to make housing fund contributions may be ordered to rectify the noncompliance and pay the required contributions within a stipulated deadline; otherwise, an application may be made by housing fund management centers to a local court for compulsory enforcement.

Regulations Relating to Dividend Distribution

~~Wholly foreign-owned companies~~FIEs in the ~~PRC~~mainland China may pay dividends only out of their accumulated profits after tax as determined in accordance with ~~PRC~~mainland China accounting standards. Remittance of dividends by a ~~wholly foreign-owned enterprise~~FIE out of mainland China is subject to examination by the banks designated by SAFE. ~~Wholly foreign-owned companies~~FIEs may not pay dividends unless they set aside ~~at least~~ 10% of their respective accumulated profits after tax each year, if any, to fund certain statutory common reserve funds, until such time as the accumulative amount of such ~~fund reaches~~funds reach 50% of the ~~wholly foreign-owned company’s~~FIE’s registered capital. If the statutory common reserve funds are not sufficient to make up their losses in previous years (if any), the FIEs shall use the profits of the current year to make up the losses before accruing the statutory common reserve funds. At the discretion of the shareholders of the FIEs, it may, after accruing the statutory common reserve funds, allocate a portion of its after-tax profits based on mainland China accounting standards to discretionary common reserve funds. These statutory common reserve funds and discretionary common reserve funds are not distributable as cash dividends.

SAFE Regulations on Offshore Special Purpose Companies Held by ~~PRC~~Mainland China Residents or Citizens

SAFE Circular on Relevant Issues Relating to Domestic Resident’s Investment and Financing and Roundtrip Investment through Special Purpose Vehicles, or Circular 37, issued by SAFE and effective in July 2014, regulates foreign exchange matters in relation to the use of special purpose vehicles, or SPVs, by ~~PRC~~mainland China residents or entities to seek offshore investment and financing and conduct round trip investment in mainland China. Under Circular 37, a SPV refers to an offshore entity established or controlled, directly or indirectly, by ~~PRC~~mainland China residents or entities for the purpose of seeking offshore financing or making offshore investment, using legitimate domestic or offshore assets or interests, while “round trip investment” refers to the direct investment in mainland China by ~~PRC~~mainland China residents or entities through SPVs, namely, establishing ~~foreign-invested enterprises~~FIEs to obtain the ownership, control rights and management rights. Circular 37 requires that, before making contribution into an SPV, ~~PRC~~mainland China residents or entities are required to complete foreign exchange registration with the SAFE or its local branch. SAFE Circular 37 further provides that option or share-based incentive tool holders of a non-listed SPV can exercise the options or share incentive tools to become a shareholder of such non-listed SPV, subject to registration with SAFE or its local branch.

~~PRC~~Mainland China residents or entities who have contributed legitimate domestic or offshore interests or assets to SPVs but have yet to obtain SAFE registration before the implementation of the Circular 37 shall register their ownership interests or control in such SPVs with SAFE or its local branch. An amendment to the registration is required if there is a material change in the SPV registered, such as any change of basic information (including change of such ~~PRC~~mainland China residents, name and operation term), increases or decreases in investment amount, transfers or exchanges of shares, or mergers or divisions. Failure to comply with the registration procedures set forth in Circular 37, or making misrepresentation on or failure to disclose controllers of ~~foreign-invested enterprise~~FIE that is established through round-trip investment, may result in restrictions on the foreign exchange activities of the relevant ~~foreign-invested enterprises,~~FIEs, including payment of dividends and other distributions, such as proceeds from any reduction in capital, share transfer or liquidation, to its offshore parent or affiliate, and the capital inflow from the offshore parent, and may also subject relevant ~~PRC~~mainland China residents or entities to penalties under ~~PRC~~mainland China foreign exchange administration regulations.

We have completed the foreign exchange registration of ~~PRC~~mainland China resident shareholders offor Mr. Yan Tang, Mr. Yong Li, Mr. Zhiwei Li, and Mr. Xiaoliang Lei ~~and Mr. Zhiwei Li for~~with respect to our financings and share transfer.

M&A ~~Rule~~Rules and Overseas Listing

In August 2006, six ~~PRC~~mainland China regulatory agencies, including ~~China Securities Regulatory Commission, or~~ CSRC, jointly adopted the ~~Provisions Regarding Mergers and Acquisitions of Domestic Enterprises by Foreign Investors, or the~~ M&A ~~Rule,~~Rules, which became effective in September ~~2006.~~2006 and was further amended by MOFCOM on June 22, 2009. This M&A Rule purports to require, among other things, offshore SPVs, formed for listing purposes through acquisition of ~~PRC~~mainland China domestic companies and controlled by ~~PRC~~mainland China companies or individuals, to obtain the approval of the CSRC prior to publicly listing their securities on an overseas stock exchange.

We believe that CSRC approval is not required in the context of our initial public offering as we are not a special purpose vehicle formed for listing purpose through acquisition of domestic companies that are controlled by our ~~PRC~~mainland China individual shareholders, as we acquired contractual control rather than equity interests in our domestic affiliated entities.

However, we cannot assure you that the relevant ~~PRC~~mainland China government agency, including the CSRC, would reach the same conclusion as we do. If the CSRC or other ~~PRC~~mainland China regulatory agency subsequently determines that we need to obtain the CSRC’s approval for our initial public offering or if CSRC or any other ~~PRC~~mainland China government authorities will promulgate any interpretation or implementing rules before our listing that would require CSRC or other governmental approvals for our initial public offering, we may face sanctions by the CSRC or other ~~PRC~~mainland China regulatory agencies. In such event, these regulatory agencies may impose fines and penalties on our operations in the ~~PRC,~~mainland China, limit our operating privileges in the ~~PRC,~~mainland China, delay or restrict the repatriation of the proceeds from our initial public offering into the ~~PRC,~~mainland China, or take other actions that could have a material adverse effect on our business, financial condition, results of operations, and prospects, as well as the trading price of our ADSs.

The relevant mainland China government authorities issued Opinions on Strictly Cracking Down Illegal Securities Activities in accordance with the Law around July 2021. These opinions emphasized the need to strengthen the administration over illegal securities activities and the supervision on overseas listings by mainland China-based companies and proposed to take effective measures, such as promoting the construction of relevant regulatory systems to deal with the risks and incidents faced by mainland China-based overseas-listed companies.

On February 17, 2023, the CSRC promulgated Trial Administrative Measures of the Overseas Securities Offering and Listing by Domestic Companies, or the Overseas Listing Trial Measures and relevant five guidelines, which became effective on March 31, 2023. The Overseas Listing Trial Measures comprehensively improves and reforms the existing regulatory regime for overseas offering and listing of mainland China domestic companies’ securities and regulates both direct and indirect overseas offering and listing of mainland China domestic companies’ securities by adopting a filing-based regulatory regime. According to the Overseas Listing Trial Measures, any of our offering and listing in an overseas market in future may be subject to the filing with the CSRC.

According to the Overseas Listing Trial Measures, mainland China domestic companies that seek to offer and list securities in overseas markets, either in direct or indirect means, are required to fulfill the filing procedure with the CSRC and report relevant information. The Overseas Listing Trial Measures provides that an overseas listing or offering is explicitly prohibited, if any of the following: (i) such securities offering and listing is explicitly prohibited by provisions in laws, administrative regulations and relevant state rules; (ii) the intended securities offering and listing may endanger national security as reviewed and determined by competent authorities under the State Council in accordance with law; (iii) the domestic company intending to make the securities offering and listing, or its controlling shareholder(s) and the actual controller, have committed relevant crimes such as corruption, bribery, embezzlement, misappropriation of property or undermining the order of the socialist market economy during the latest three years; (iv) the domestic company intending to make the securities offering and listing is currently under investigations for suspicion of criminal offenses or major violations of laws and regulations, and no conclusion has yet been made thereof; or (v) there are material ownership disputes over equity held by the domestic company’s controlling shareholder(s) or by other shareholder(s) that are controlled by the controlling shareholder(s) and/or actual controller.

The Overseas Listing Trial Measures provides that if the issuer meets the following criteria, the overseas securities offering and listing conducted by such issuer will be deemed as indirect overseas offering by mainland China domestic companies: (i) 50% or more of any of the issuer’s operating revenue, total profit, total assets or net assets as documented in its audited consolidated financial statements for the most recent fiscal year is accounted for by domestic companies; and (ii) the main parts of the issuer’s business activities are conducted in mainland China, or its main place(s) of business are located in mainland China, or the majority of senior management staff in charge of its business operations and management are mainland China citizens or have their usual place(s) of residence located in mainland China. Where an issuer submits an application for initial public offering to competent overseas regulators, such issuer must file with the CSRC within three business days after such application is submitted. The Overseas Listing Trial Measures also requires subsequent reports to be filed with the CSRC on material events, such as change of control or voluntary or forced delisting of the issuer(s) who have completed overseas offerings and listings. Subsequent securities offerings of an issuer in the same overseas market where it has previously offered and listed securities shall be filed with the CSRC within three working days after offerings are completed.

On February 17, 2023, CSRC also issued the Notice on Administration for the Filing of Overseas Offering and Listing by Domestic Companies, which, among others, provided that (1) the domestic companies that have already been listed overseas on or before the effective date of the Overseas Listing Trial Measures (i.e. March 31, 2023) shall be deemed as existing issuers, or the Existing Issuers. Existing Issuers are not required to complete the filling procedures immediately, and they shall be required to file with the CSRC when subsequent matters such as refinancing are involved; (2) on or prior to the effective date of the Overseas Listing Trial Measures, domestic companies that have already submitted valid applications for overseas offering and listing but have not obtained approval from overseas regulatory authorities or stock exchanges may reasonably arrange the timing for submitting their filing applications with the CSRC, and must complete the filings before the completion of their overseas offering and listing; (3) a six-month transition period will be granted to domestic companies which, prior to the effective date of the Overseas Listing Trial Measures, have already obtained the approval from overseas regulatory authorities or stock exchanges (such as the completion of hearing in the market of Hong Kong or the completion of registration in the market of the United States), but have not completed the indirect overseas listing; if domestic companies fail to complete the overseas listing within such six-month transition period, they shall file with the CSRC according to the requirements; and (4) the CSRC will solicit opinions from relevant regulatory authorities and complete the filings of the overseas listing of companies with contractual arrangements which duly meet the compliance requirements, and support the development and growth of these companies by enabling them to utilize two markets and two kinds of resources.

On February 24, 2023, the CSRC, together with other authorities, jointly issued the Provisions on Strengthening the Confidentiality and Archives Administration Related to the Overseas Securities Offering and Listing by Domestic Enterprises, or the Confidentiality and Archives Administration Provisions, which came into effect on March 31, 2023. The Confidentiality and Archives Administration Provisions requires mainland China domestic enterprises or its overseas listing vehicles, among others, seeking to offer or list its securities in overseas markets either directly or indirectly, to establish and improve their confidentiality and archives administration systems and take other necessary measures to prevent them from disclosing state secrets, secrets related to state authorities’ affairs or undermining national or public interests. It further stipulates that it shall be subject to approval or filing procedures of competent authorities in accordance with relevant laws and regulations that mainland China domestic enterprises or its overseas listing vehicles, among others, provide or publicly disclose documents or materials involving state secrets or secrets of state authorities or causing possible adverse effect on national security or public interests etc. to relevant securities companies, securities service institutions, overseas regulatory agencies and other entities and individuals.

Furthermore, according to the Negative List promulgated by the MOFCOM and the NDRC that became effective on January 1, 2022, domestic enterprises engaged in activities in any field prohibited from foreign investment under the Negative List shall be subject to review and approval by the relevant authorities of the mainland China when listing and trading overseas. If it is determined that any approval, filing or other administrative procedure from the CSRC or other mainland China governmental authorities is required for any future offering or listing, we cannot assure that we can obtain the required approval or accomplish the required filings or other regulatory procedures in a timely manner, or at all. If we fail to obtain the relevant approval or complete the filings and other relevant regulatory procedures, we may face sanctions by the CSRC or other mainland China regulatory agencies, which may include fines and penalties on our operations in mainland China, limitations on our operating privileges in mainland China, restrictions on or prohibition of the payments or remittance of dividends by our subsidiaries in mainland China, or other actions that could have a material and adverse effect on our business, financial condition, results of operations, reputation and prospects, as well as the trading price of our ADSs. The CSRC or other mainland China regulatory authorities also may take actions requiring us, or making it advisable for us, to halt our offerings before settlement and delivery of the shares offered. Consequently, if investors engage in market trading or other activities in anticipation of and prior to settlement and delivery, they do so at the risk that settlement and delivery may not occur. In addition, if the CSRC or other regulatory authorities later promulgate new rules or explanations requiring that we obtain their approvals or accomplish the required filing or other regulatory procedures for our prior offshore offerings, we may be unable to obtain a waiver of such approval requirements, if and when procedures are established to obtain such a waiver. Any uncertainties or negative publicity regarding such approval requirement could materially and adversely affect our business, prospects, financial condition, reputation, and the trading price of our ADSs.

In December 2021, the CAC, together with other authorities, jointly promulgated the Cybersecurity Review Measures, which became effective on February 15, 2022 and replaces its predecessor regulation. Pursuant to the Cybersecurity Review Measures, critical information infrastructure operators that procure internet products and services and operators of network platforms conducting data processing activities must be subject to the cybersecurity review if their activities affect or may affect national security. The Cybersecurity Review Measures further stipulates that network platform operators that hold personal information of over one million users shall apply with the Cybersecurity Review Office for a cybersecurity review before any initial public offering at a foreign stock exchange. Given that the Cybersecurity Review Measures was recently promulgated, there are substantial uncertainties as to its interpretation, application, and enforcement. On November 14, 2021, the CAC published a draft of the Administrative Regulations for Internet Data Security, or the Draft Data Security Regulations, for public comments. The Draft Data Security Regulations provides that data processors conducting the following activities must apply for cybersecurity review: (i) merger, reorganization, or division of internet platform operators that have acquired a large number of data resources related to national security, economic development, or public interests, which affects or may affect national security; (ii) a foreign listing by a data processor processing personal information of over one million users; (iii) a listing in Hong Kong which affects or may affect national security; or (iv) other data processing activities that affect or may affect national security. There have been no further clarifications from the authorities as of the date of this annual report as to the standards for determining such activities that “affects or may affect national security.” The period for which the CAC solicited comments on this draft ended on December 13, 2021, but there is no timetable as to when the draft regulations will be enacted. As such, substantial uncertainties exist with respect to the enactment timetable, final content, interpretation, and implementation of the Draft Data Security Regulations, including the standards for determining activities that “affects or may affect national security.” As the Draft Data Security Regulations has not been adopted and it remains unclear whether the formal version adopted in the future will have any further material changes, it is uncertain how the draft regulations will be enacted, interpreted or implemented and how they will affect us.

SAFE Regulations on Employee Share Options

Pursuant to the Notice on Issues Concerning the Foreign Exchange Administration for Domestic Individuals Participating in Stock Incentive Plan of Overseas Publicly Listed Company, or Circular 7, issued by SAFE in February 2012, employees, directors, supervisors and other senior management participating in any stock incentive plan of an overseas publicly listed company who are ~~PRC~~mainland China citizens or who are ~~non-PRC~~non-mainland China citizens residing in mainland China for a continuous period of not less than one year, subject to a few exceptions, are required to register with SAFE through a domestic qualified agent, which could be a ~~PRC~~mainland China subsidiary of such overseas listed company, and complete certain other procedures. Failure to complete the SAFE registrations may subject them to fines and legal sanctions and may also limit our ability to contribute additional capital into our ~~wholly foreign-owned~~wholly-owned subsidiaries in mainland China and limit these subsidiaries’ ability to distribute dividends to us.

In addition, the ~~State Administration for Taxation~~SAT has issued certain circulars concerning employee share options or restricted shares. Under these circulars, the employees working in the ~~PRC~~mainland China who exercise share options or are granted restricted shares will be subject to ~~PRC~~mainland China individual income tax. The ~~PRC~~mainland China subsidiaries of such overseas listed company have obligations to file documents related to employee share options or restricted shares with relevant tax authorities and to withhold individual income taxes of those employees who exercise their share options. If the employees fail to pay or the ~~PRC~~mainland China subsidiaries fail to withhold their income taxes according to relevant laws and regulations, the ~~PRC~~mainland China subsidiaries may face sanctions imposed by the tax authorities or other ~~PRC~~mainland China government authorities. These registrations and filings are a matter of foreign exchange control and tax procedure and the grant of share incentive awards to employees is not subject to the government’s discretionary approval. Compliance with ~~PRC~~mainland China regulations on employee incentive plans has not had, and we believe will not in the future have, any material adverse effect on the implementation of our 2012 Plan, ~~and~~ 2014 Plan, Tantan 2015 Plan or Tantan 2018 Plan.

C.	Organizational Structure

The following diagram illustrates our corporate structure, including our principal subsidiaries, consolidated affiliated ~~entity~~entities and ~~its~~their subsidiaries as of the date of this annual report.

LOGO

~~Note:~~Notes:

(1)

We exercise effective control over Beijing Momo through contractual arrangements among Beijing Momo IT, Beijing Momo and Messrs. Yan Tang, Yong Li, Xiaoliang Lei and Zhiwei Li, ~~who hold~~each of whom holds 72.0%, 16.0%, 6.4% and 5.6% of the equity interest in Beijing Momo, respectively. ~~The~~Except for Zhiwei Li and Xiaoliang Lei, the shareholders of Beijing Momo are our shareholders ~~directors or officers of Momo Inc.~~and directors.

(2)	We exercise effective control over Tantan Culture through contractual arrangements among Tantan Technology (Beijing) Co., Ltd., or Tantan Technology, Tantan Culture and Beijing Momo.

(3)	We exercise effective control over Hainan Miaoka through contractual arrangements among Beijing Yiliulinger, Hainan Miaoka and Messrs. Li Wang and Yong Liu, each of whom holds 50% and 50% of the equity interest in Hainan Miaoka, respectively.

(4)

QOOL Media (Tianjin) Co., Ltd. was established in November 2016. We exercise effective control over Tianjin QOOL Media through contractual arrangements among Tianjin QOOL Media, QOOL Media Technology (Tianjin) Co., Ltd., Beijing Momo and Tianjin Mingqiao Media Partnership (Limited Partner), or Tianjin Mingqiao, each of which holds 70% and 30% of the equity interest in Tianjin QOOL Media, respectively. Mr. Chen Feng and Mr. Ridan Da are two partners of Tianjin Mingqiao.

(5)

Beijing Top Maker was established in March 2019, and changed to its current name in March 2021. We exercise effective control over Beijing Top Maker through contractual arrangements among Beijing Top Maker, Beijing Momo IT, and Mr. Kuan He and Ms. Fei Dai, each of whom holds 99% and 1% of the equity interest in Beijing Top Maker, respectively.

(6)

Beijing Perfect Match was established in April 2019. We exercise effective control over Beijing Perfect Match through contractual arrangements among Beijing Perfect March, Beijing Momo IT, and Ms. Ying Zhang and Ms. Shasha Li, each of whom holds 99% and 1% of the equity interest in Beijing Perfect Match, respectively.

(7)	We exercise effective control over SpaceTime Beijing, through contractual arrangements among Beijing Momo IT, SpaceTime Beijing and Ms. Minyan Wang and Ms. Shasha Li, each of whom holds 90% and 10% of the equity interest in SpaceTime Beijing, respectively.

(8)	We exercise effective control over Hainan Yilingliuer through contractual arrangements among Beijing Yiliulinger, Hainan Yilingliuer and Messrs. Li Wang and Ms. Ying Zhang, each of whom holds 50% and 50% of the equity interest in Hainan Yilingliuer, respectively.

(9)	We exercise effective control over Tianjin Nishuodedoudui, through contractual arrangements among Beijing Wozaixiangxiang, Tianjin Nishuodedoudui and Messrs. Yong Liu and Messrs. Jie Chen, each of whom holds 99% and 1% of the equity interest in Tianjin Nishuodedoudui, respectively.

Contractual Arrangements with ~~Beijing Momo~~the Consolidated Affiliated Entities and Their Respective Shareholders

~~PRC~~Mainland China laws and regulations place certain restrictions on foreign investment in and ownership of internet-based businesses. Accordingly, we conduct our operations in mainland China principally through Beijing Momo and its subsidiaries, ~~over which we exercise effective control through contractual arrangements among~~Tantan Culture, Hainan Miaoka, Hainan Yilingliuer, Tianjin QOOL Media, Beijing Top Maker, Beijing Perfect Match, SpaceTime Beijing and Tianjin Nishuodedoudui. Beijing Momo IT entered into contractual arrangements with Beijing Momo, Beijing Top Maker, Beijing Perfect Match and SpaceTime Beijing, and their respective shareholders. Beijing Yiliulinger, a wholly-owned subsidiary of Beijing Momo IT, entered into contractual arrangements with Hainan Miaoka, Hainan Yilingliuer and their respective shareholders. QOOL Media Technology (Tianjin) Co., Ltd. entered into contractual arrangements with Tianjin QOOL Media and its shareholders. Tantan Technology entered into contractual arrangements with Tantan Culture and its shareholder. Beijing Wozaixiangxiang entered into contractual arrangements with Tianjin Nishuodedoudui. Beijing Momo, Tantan Culture, Hainan Miaoka, Hainan Yilingliuer and Tianjin QOOL Media, Beijing Top Maker, Beijing Perfect Match, SpaceTime Beijing and Tianjin Nishuodedoudui are all of the consolidated affiliated entities.

The contractual arrangements allow us to:

exercise effective control over ~~Beijing Momo;~~the consolidated affiliated entities;

receive substantially all of the economic benefits of ~~Beijing Momo;~~the consolidated affiliated entities; and

have an option to purchase all or part of the equity interests in ~~Beijing Momo~~the consolidated affiliated entities when and to the extent permitted by ~~PRC~~mainland China law.

As a result of these contractual arrangements, we are the primary beneficiary of ~~Beijing Momo~~the consolidated affiliated entities and ~~its~~their subsidiaries, and, therefore, have consolidated the financial results of ~~Beijing Momo~~the consolidated affiliated entities and ~~its~~their subsidiaries in our consolidated financial statements in accordance with U.S. GAAP.

The following is a summary of the currently effective contractual arrangements by and among our wholly-owned subsidiary, Beijing Momo IT, Beijing Momo and the shareholders of Beijing Momo. We also entered into contractual arrangements with Tantan Culture, Hainan Miaoka, Hainan Yilingliuer, Tianjin QOOL Media, Beijing Top Maker, Beijing Perfect Match, SpaceTime Beijing and Tianjin Nishuodedoudui. The contractual arrangements entered into by our other mainland China subsidiaries with our other consolidated affiliated entities and their respective shareholders contain substantially the same terms as described below.

Business operation ~~agreement.~~agreement. Under the business operation agreement entered into among Beijing Momo IT, Beijing Momo and the shareholders of Beijing Momo on April 18, 2012, as supplemented on June 9, 2014, the shareholders of Beijing Momo agreed that Beijing Momo would not enter into any transaction that could materially or adversely affect its assets, business, interests or operations without prior written consent from Beijing Momo IT, including conducting business beyond the usual and normal scope, entering into any loan or other debtor-creditor relationship with third party, selling or disposing of assets or rights, including intellectual property rights, and creating guarantees or any other security on any of its assets or intellectual property rights in favor of a third party. In addition, the shareholders of Beijing Momo agreed to vote for or appoint nominees designated by Beijing Momo IT to serve as Beijing Momo’s directors, chairman, general managers, financial controllers and other senior managers. Furthermore, Beijing Momo’s shareholders agreed to accept and implement proposals set forth by Beijing Momo IT regarding employment, day-to-day business operations and financial management. Beijing Momo IT is entitled to any dividends or other interests declared by Beijing Momo and the shareholders of Beijing Momo have agreed to promptly transfer such dividends or other interests to Beijing Momo IT. ~~These agreements~~This original business operation agreement has expired on April 17, 2022 and Beijing Momo IT and Beijing Momo have entered into a new business operation agreement on April 18, 2022, which contains substantially the same terms as the original agreement. The new agreement has an initial term of ten years from the date of execution and ~~may~~shall be ~~extended at~~automatically renewed by another ten years upon every expiry of the ~~discretion of~~original ten-year term, unless objected by Beijing Momo IT. Beijing Momo IT may terminate this agreement at any time by giving a prior written notice to Beijing ~~Momo and its shareholders. Neither Beijing Momo nor its shareholders may terminate this agreement.~~Momo.

Exclusive call option agreements. Under the exclusive call option agreements between Beijing Momo IT, Beijing Momo and each of the shareholders of Beijing Momo entered into on April 18, 2012, and amended and restated on April 18, 2014, each of the shareholders of Beijing Momo irrevocably granted Beijing Momo IT an exclusive option to purchase, to the extent permitted under ~~PRC~~mainland China law, all or part of their equity interests in Beijing Momo for a nominal price of RMB10 or the lowest price permitted under ~~PRC~~mainland China law. In addition, Beijing Momo irrevocably granted Beijing Momo IT an exclusive and irrevocable option to purchase any or all of the assets owned by Beijing Momo at the lowest price permitted under ~~PRC~~mainland China law. Without Beijing Momo IT’s prior written consent, Beijing Momo and its shareholders will not sell, transfer, mortgage or otherwise dispose of Beijing Momo’s material assets, legal or beneficial interests or revenues of more than RMB500,000, or allow an encumbrance on any interest in Beijing Momo. These agreements will remain effective until all equity interests held in Beijing Momo by its shareholders are transferred or assigned to Beijing Momo IT.

Equity interest pledge agreements. Under the equity interest pledge agreements between Beijing Momo IT, Beijing Momo and the shareholders of Beijing Momo entered into on April 18, 2012, and amended and restated on April 18, 2014, the shareholders of Beijing Momo pledged all of their equity interests in Beijing Momo (including any equity interest subsequently acquired) to Beijing Momo IT to guarantee the performance by Beijing Momo and its shareholders of their respective obligations under the contractual arrangements, including the payments due to Beijing Momo IT for services provided. If Beijing Momo or any of its shareholders breach their obligations under these contractual arrangements, Beijing Momo IT, as the pledgee, will be entitled to certain rights and remedies, including priority in receiving the proceeds from the auction or disposal of the pledged equity interests in Beijing Momo. Beijing Momo IT has the right to receive dividends generated by the pledged equity interests during the term of the pledge. The pledge becomes effective on the date when the pledge of equity interests contemplated under the agreement is registered with the relevant local administration for industry and commerce and will remain binding until Beijing Momo and its shareholders discharge all their obligations under the contractual arrangements. We have registered the equity interest pledge agreements with Chaoyang Branch of Beijing Administration for ~~Industry and Commerce~~Market Regulation in Beijing.

Powers of attorney. Pursuant to the powers of attorney entered into on April 18, 2012 and amended and restated on April 18, 2014, each shareholder of Beijing Momo irrevocably appointed Beijing Momo IT as their attorney-in-fact to act for all matters pertaining to Beijing Momo and to exercise all of their rights as shareholders of Beijing Momo, including attending shareholders’ meetings and designating and appointing legal representatives, directors and senior management members of Beijing Momo. Beijing Momo IT may authorize or assign its rights under this appointment to any other person or entity at its sole discretion without prior notice to or prior consent from the shareholders of Beijing Momo. Each power of attorney remains in force until the shareholder ceases to hold any equity interest in Beijing Momo.

Spousal consent letters. Under the spousal consent letters, each spouse of the married shareholders of Beijing Momo unconditionally and irrevocably agreed that the equity interest in Beijing Momo held by and registered in the name of their spouse will be disposed of pursuant to the equity interest pledge agreement, the exclusive call option agreement, and the power of attorney. Each spouse agreed not to assert any rights over the equity interest in Beijing Momo held by their spouse. In addition, in the event that the spouses obtain any equity interest in Beijing Momo held by their spouse for any reason, they agreed to be bound by the contractual arrangements.

Exclusive cooperation agreements. Pursuant to various exclusive cooperation agreements, each as amended, Beijing Momo IT, ~~entered into an exclusive cooperation agreement~~its Chengdu branch and a supplemental agreement with Beijing Momo on August 31, 2014 to supersede the exclusive technology consulting and management services agreement signed in April 2012 between Beijing Momo IT and Beijing Momo. Under the agreement, Beijing Momo IT hasHainan branch have the exclusive right to provide, among other things, licenses, copyrights, technical and non-technical services to Beijing Momo, Chengdu Momo, Tianjin Heer, Loudi Momo and Hainan Miaoka and can receive ~~license~~service fees and ~~service~~license fees as consideration. ~~Without Beijing Momo IT’s prior written consent, Beijing Momo may not engage any third party~~Tantan Technology have the exclusive right to provide ~~the same or similar~~ licenses, copyrights, technical and non-technicalservices ~~provided by Beijing Momo IT under the agreement. Beijing Momo IT also solely~~to Tantan Culture and ~~exclusively owns any intellectual property rights arising from the performance of the agreement. Beijing Momo IT agrees to charge the licensing~~Tianjin Apollo, and can receive service fees ~~only if the operating profit rate,~~and license fees as such term is defined in the agreement, of Beijing Momo exceeds a specified threshold, which is initially set at 3.5% and will be adjusted from time to time. Any amount over the operating profit rate will be paid to Beijing Momo IT in the form of licensing and service fees. A breakdown of licensing and service fees will be exchanged between the parties each month and paid within 60 days from the end of such month. The licensing fee for the mobile social networking software owned by Beijing Momo IT will be 12.5% of Beijing Momo’s revenues generated from its principal business, while the licensing fee for the emoticons owned by Beijing Momo IT and licensed to Beijing Momo will be 12.5% of Beijing Momo’s revenues from emoticon sales, both to be adjusted from time to time. The agreement has retrospective effect starting from January 1, 2014 with respect to the licensing and service fees. Theconsideration.

Each agreement has an initial term of ten years from the date of execution, and may be extended at the sole discretion of Beijing Momo ~~IT.~~IT (with its Chengdu branch and Hainan branch) and Tantan Technology. Beijing Momo IT (with its Chengdu branch and Hainan branch) and Tantan Technology may terminate the agreement at any time with a 30-day notice to Beijing Momo, Chengdu Momo, Tianjin Heer, Loudi Momo, Hainan Miaoka, Tantan Culture and Tianjin Apollo, as applicable, but Beijing Momo, Chengdu Momo, Tianjin Heer, Loudi Momo, Hainan Miaoka, Tantan Culture and Tianjin Apollo, may not terminate the agreement.

In the opinion of Han Kun Law Offices, our ~~PRC~~mainland China counsel:

the ownership structures of Beijing Momo IT and Beijing Momo will not result in any violation of ~~PRC~~mainland China laws or regulations currently in effect; and

the contractual arrangements among Beijing Momo IT, Beijing Momo and the shareholders of Beijing Momo governed by ~~PRC~~mainland China law are valid, binding and enforceable, and do not and will not result in any violation of ~~PRC~~mainland China laws or regulations currently in effect.

We are further advised by Han Kun Law Offices that the ownership structures of our other wholly-owned entities in mainland China and our other consolidated affiliated entities in mainland China do not violate any applicable mainland China law, regulation or rule currently in effect, and the contractual arrangements among our other wholly-owned entities in mainland China, our other consolidated affiliated entities in mainland China and their respective shareholders governed by mainland China law are valid, binding and enforceable in accordance with their terms and applicable mainland China laws and regulations currently in effect. However, there are substantial uncertainties regarding the interpretation and application of current and future ~~PRC~~mainland China laws, regulations and rules. Accordingly, the ~~PRC~~mainland China regulatory authorities may in the future take a view that is contrary to the above opinion of our ~~PRC~~mainland China counsel. If the ~~PRC~~mainland China government finds that the agreements that establish the structure for operating our business do not comply with ~~PRC~~mainland China government restrictions on foreign investment in our businesses, we could be subject to severe penalties, including being prohibited from continuing operations. See “Item 3. Key Information—D. Risk Factors—Risks Related to Our Corporate Structure—If the ~~PRC~~mainland China government finds that the agreements that establish the structure for operating certain of our ~~businesses~~operations in mainland China do not comply with ~~PRC~~mainland China regulations ~~on foreign investment in internet and other related businesses,~~relating to the relevant industries, or if these regulations or ~~their~~the interpretation of existing regulations change in the future, we could be subject to severe penalties or be forced to relinquish our interests in those operations,” and “Item 3. Key Information—D. Risk Factors—Risks Related to Doing Business in Mainland China—Uncertainties in the interpretation and enforcement of ~~PRC~~mainland China laws and regulations could limit the legal protections available to you and us.”

Beijing Momo IT also entered into an exclusive cooperation agreement and a supplemental agreement with Chengdu Momo on August 31, 2014, which agreements are substantially similar to the ones entered into between Beijing Momo IT and Beijing Momo described above.

D.	Property, Plant and Equipment

Our headquarters and our principal service development facilities are located in Beijing. We ~~have~~ leased an aggregate of approximately ~~9,841~~41,366 square meters of office space in Beijing, Chengdu, ~~Shanghai~~Tianjin, Haikou, Guangzhou and ~~San Francisco~~Hong Kong as of March 31, ~~2016.~~2023. These leases vary in duration from ~~two~~one year to ~~three~~five years.

The servers that we use to provide our services are primarily maintained at various third-party internet data centers in Beijing.

Item 4A.

Unresolved Staff Comments

None.

Item 5.

Operating and Financial Review and Prospects

The following discussion of our financial condition and results of operations is based upon, and should be read in conjunction with, our audited consolidated financial statements and the related notes included in this annual report on Form 20-F. This report contains forward-looking statements. See “Forward-Looking Information.” In evaluating our business, you should carefully consider the information provided under the caption “Item 3. Key Information—D. Risk Factors” in this annual report on Form 20-F. We caution you that our businesses and financial performance are subject to substantial risks and uncertainties.

A.	Operating Results

Major Factors Affecting Our Results of Operations

User ~~Growth~~Base. We monitor our MAU and number of paying users on quarterly basis, as they are, among other things, metrics to help us ensure that our business is on the right track. If we see a decline in MAU or number of paying users, we may consider measures to boost user activities and user spending willingness, including adjustment to our sales and marketing spending, organization of more special events and activities for users on our applications, and modification of our product strategies to feature more functions that reward users for regularly using and paying on our applications.

Our revenues are driven by the number of our paying users ~~which include~~and average revenue per paying user for the various services we offer to users, including live video service and value-added service. For 2022, we generated our ~~members as well as~~revenues primarily from live video service and value-added service. The numbers of Momo MAUs, quarterly paying users ~~who purchase emoticons, virtual gifts or virtual items in mobile games~~for our live video service and ~~live music and entertainment shows offered~~value-added services on our ~~platform.~~Momo application, without double counting the overlap (Momo Paying Users), the numbers of Tantan MAUs and the numbers of quarterly paying users on our Tantan application (Tantan Paying Users) are presented by the charts below for the periods indicated. The number of our paying users is ~~in turn~~ affected by the growth in our active user base, and strategies we pursue to achieve active user growth that may affect our costs and expenses and results of operations. We have experienced rapid user growth since our inception, although such rate of growth slowed significantly in 2015. Currently, membership subscription fees are the largest component of our revenues. The growth of our member base is driven primarily by the growth of the number of active users and our ability to convert a greater portion of our users into ~~members.~~

paying users, and the strategies we pursue to achieve active user growth at reasonable costs and expenses.

Note: We started to disclose Tantan MAUs from the fourth quarter of 2021.
96

User Engagement. Changes in user engagement could affect our revenues and financial results. Active user engagement powered by diverse functionalities and rich ~~content enables us to secure an abundant supply of user profiles and behavioral data, which~~contents is essential for our ~~mobile marketing services and our~~ ability to ~~improve our service features,~~generate revenues from the various services we offer to users, including our ~~user tiering system.~~live video business, value-added service, among others.

Monetization. We started monetization in the ~~third quarter~~second half of 2013 by introducing mobile games and membership services to our users, and we are continuing to refine the ways to monetize our service offerings without adversely affecting user experience. In 2015, we started to offer premium membership services, in-feed marketing solutions and live video service and in the fourth quarter of 2016, we launched a virtual gift service which allows our users to ~~our premium members,~~purchase and send virtual gifts to other users outside of live video service, which all contributed to our revenue growth. ~~We plan~~In 2018, we produced a television program. Our live video service currently contributes to ~~continue~~the largest share of our revenues, generating 51.2% of our net revenues in 2022. For mobile games, we started to ~~partner with third-party~~scale back from licensed mobile game ~~developers~~services and instead focus on self-developed games in early 2017 in order to ~~develop~~better align the games ~~in-house to offer more games tailored to~~offered on our platform with the positioning and ~~our users. To further monetize our large user base, in 2015 we have launched our live music and entertainment broadcasting services and our in-feed marketing solutions.~~strength of Momo as a location-based social platform. Our future revenue growth will be affected by our ability to effectively execute our monetization strategies.

Investment in Technology Infrastructure and Talent. Our technology infrastructure is critical for us to retain and attract users, customers and platform partners. We must continue to upgrade and expand our technology infrastructure to keep pace with the growth of our business, to ~~further enhance our big data analytical capabilities, and to~~ develop new features and services for our ~~platform.~~platform and to further enhance our big data analytical capabilities.

~~Our employee headcount has increased significantly as our business has grown and we expect this trend to continue for the foreseeable future.~~ The number of our employees ~~increased~~decreased from ~~209~~2,394 as of December 31, ~~2013~~2020 to ~~456~~2,051 as of December 31, ~~2014~~2021, and further decreased to ~~779~~1,705 as of December 31, ~~2015.~~2022. There is strong demand in mainland China’s internet industry for talented and experienced personnel from fast-growing, ~~and~~ large-scale social networking platforms. We must recruit, retain and motivate talented employees while controlling our personnel-related expenses, including share-based compensation expenses.

Marketing and Brand Promotion. Our marketing strategy and its execution is key to growing our user base and increasing the overall level of user engagement on our social networking platform, which are critical to our business. On top of brand promotions, we make ongoing efforts to optimize our channel investment strategy along with relevant product and operational efforts, to focus on growing our user base, enhancing user engagement and improving user acquisition efficiency with disciplined sales and marketing spending.

Taxation

Cayman Islands

We are registered by way of continuation into the Cayman Islands. Under the current law of the Cayman Islands, we are not subject to income or capital gains tax in the Cayman Islands. In addition, our payment of dividends to our shareholders, if any, is not subject to withholding tax in the Cayman Islands.

British Virgin Islands

Our ~~subsidiary~~subsidiaries incorporated in the British Virgin Islands and all dividends, interest, rents, royalties, compensation and other amounts paid by such subsidiaries to persons who are not resident in the British Virgin Islands and any capital gains realized with respect to any shares, debt obligations, or other securities of our company by persons who are not resident in the British Virgin Islands are exempt from all provisions of the Income Tax Ordinance in the British Virgin Islands.

No estate, inheritance, succession or gift tax, rate, duty, levy or other charge is ~~a tax-exempted company.~~payable by persons who are not resident in the British Virgin Islands with respect to any shares, debt obligation or other securities of such subsidiaries.

~~United States~~All instruments relating to transfers of property to or by such subsidiaries and all instruments relating to transactions in respect of the shares, debt obligations or other securities of such subsidiaries and all instruments relating to other transactions relating to the business of our company are exempt from payment of stamp duty in the British Virgin Islands. This assumes that such subsidiaries does not hold an interest in real estate in the British Virgin Islands.

There are currently no withholding taxes or exchange control regulations in the British Virgin Islands applicable to such subsidiaries or its members.

Hong Kong

Our ~~subsidiary incorporated~~subsidiaries domiciled in ~~the United States is~~Hong Kong are subject to ~~state~~a two-tiered income tax ~~and federal~~rate for taxable income earned in Hong Kong effectively since April 1, 2018. The first 2 million Hong Kong dollars of profits earned by the company are subject to be taxed at an income tax rate of 8.25%, while the remaining profits will continue to be taxed at ~~different~~the existing tax ~~rates, depending on taxable income levels. As our US subsidiary did not have any taxable income, no~~rate, 16.5%. In addition, to avoid abuse of the two-tiered tax regime, each group of connected entities can nominate only one Hong Kong entity to benefit from the two-tiered income tax ~~expense was provided for~~rate. In 2020, Momo HK received special dividends of RMB2,200.0 million. Withholding taxes of RMB220.0 million in connection with the dividends were fully paid during the year ended December 31, ~~2015.~~2020. In 2021, Momo HK received special dividends of RMB1,300.0 million from Beijing Momo IT. Withholding taxes of RMB130.0 million in connection with the dividends were fully paid during the year ended December 31, 2021. Except for the withholding tax paid in 2021, we accrued additional withholding tax of RMB207.4 million on retained earnings generated in 2021 by Beijing Momo IT, because Beijing Momo IT’s earnings are to be remitted to Momo HK in the foreseeable future to fund its demand on US dollar in business operations, payments of dividends, potential investments, etc. In 2022, Momo HK received special dividends of RMB3,600.0 million (US$522.0 million) from Beijing Momo IT. Withholding taxes of RMB360.0 million (US$52.2 million) in connection with the dividends were fully paid during the year ended December 31, 2022. Except for the withholding tax paid in 2022, we have accrued additional withholding tax of RMB164.3 million (US$23.8 million) on retained earnings generated in 2022 by Beijing Momo IT.

~~Hong Kong~~Singapore

Our ~~subsidiary incorporated~~subsidiaries domiciled in ~~Hong Kong is~~Singapore are subject to ~~the uniform~~ tax rate of ~~16.5%. Under the Hong Kong tax laws, it is exempted from the Hong Kong income tax~~17% on its foreign-derived income and there are no withholding taxes in Hong Kong on the remittance of dividends. No provision for Hong Kong tax has been made in our consolidated financial statements, as our Hong Kong subsidiary had not generated any assessable income in 2013, 2014 or 2015.their taxable income.

People’s Republic of China

Pursuant to the EIT Law, which became effective on January 1, 2008, ~~foreign-invested enterprises~~FIEs and domestic companies are subject to enterprise income tax at a uniform rate of 25%. ~~In August 2014,~~Beijing Momo IT applied for the qualification of Key Software Enterprise (“KSE”) for calendar year 2019 and was approved in 2020. Therefore, Beijing Momo IT was entitled to a preferential tax rate of 10% for the year 2019. Beijing Momo IT was qualified as “High and New Technology Enterprises” (“HNTEs”) in 2020 and was accordingly entitled to a ~~software enterprise. As such,~~preferential tax rate of 15% from 2020 to 2022. If Beijing Momo IT does not meet the requirements of KSE, it will be ~~exempt from income taxes for two years beginning in its first profitable year followed by~~entitled to a preferential tax rate of ~~12.5%~~15% as a high and new technology enterprise. Chengdu Momo was qualified as a Western China Development Enterprise and the income tax rate applicable to it was 15% since 2014. According to No. 23 announcement of the SAT of PRC in April 2018, Chengdu Momo was no longer required to submit the preferential tax rate application to the tax authority, but only required to keep the relevant materials for future tax inspection instead. Based on experience, we believe Chengdu Momo will most likely continue to qualify as a Western China Development Enterprise and accordingly be entitled to a preferential income tax rate of 15%, because Chengdu Momo’s business nature has no significant changes. Therefore, we applied an enterprise income tax rate of 15% to determine the ~~succeeding three years. For~~tax liabilities for Chengdu Momo in the years ended December 31, ~~2013~~2020, 2021 and ~~2014,~~2022. In July 2019 and December 2022, Tantan Technology qualified as ~~Beijing Momo IT was in accumulated loss position, the applicable tax rate was 25%. Beijing Momo IT was eligible for income tax exemptions for 2015~~a high and ~~2016, followed by~~new technology enterprise, and is accordingly entitled to a ~~reduced~~preferential enterprise income tax rate of ~~12.5%~~15% from 2019 to 2024. Tantan Technology applied for ~~each of 2017, 2018~~Software Enterprise (“SE”) status for fiscal year 2020 and ~~2019. Chengdu Momo qualified as a western China development enterprise~~2021 and ~~the~~was approved in 2021 and 2022, which entitled Tantan Technology to enjoy an income tax exemption in 2020 and 2021. Accordingly, in 2021 and 2022 Tantan Technology recorded the preferential tax rate ~~was~~adjustment from 15% ~~in 2014. Chengdu Momo applied the same~~to 0% for income tax ~~rate in 2015~~expense of the fiscal year of 2020 and ~~we are in the process of renewing Chengdu Momo’s qualification as a western China development enterprise.~~2021. The other entities incorporated in the ~~PRC~~mainland China were subject to an enterprise income tax at a rate of 25%. for the years ended December 31, 2020, 2021 and 2022.

We have recognized income tax expense of ~~nil, nil~~RMB755.6 million, RMB822.6 million and ~~$92~~RMB562.3 million (US$81.5 million) for the years ended December 31, ~~2013, 2014~~2020, 2021 and ~~2015,~~2022, respectively.

Effective January 1, 2012, the ~~PRC Ministry of Finance~~MOF and the ~~State Administration of Taxation~~SAT launched a Business Tax to Value-Added Tax Transformation Pilot Program, or the VAT Pilot Program, which imposes VAT in lieu of business tax for certain “modern service industries” in certain regions and eventually expands to nation-wide in 2013. According to the implementation circulars released by the ~~Ministry of Finance~~MOF and the ~~State Administration of Taxation~~SAT on the VAT Pilot Program, the “modern service industries” include research, development and technology services, information technology services, cultural innovation services, logistics support, lease of corporeal properties, attestation and consulting services. Effective from May 1, 2016, mainland China tax authorities collect VAT in lieu of business tax in all regions and industries. All of our entities were subject to ~~the VAT Pilot Program as of December 31, 2015, or specifically,~~ VAT at rate of 6% for services provided and 16% for goods sold, as adjusted to 13% starting from April 1, 2019. With the imposition of VAT in lieu of business ~~tax. With the adoption of the VAT Pilot Program,~~tax, our revenues are subject to VAT payable on goods sold or taxable services provided by a general VAT taxpayer for a taxable period, which is the net balance of the output VAT for the period after crediting the input VAT for the period. Hence, the amount of VAT payable does not result directly from output VAT generated from goods sold or taxable services provided. ~~Therefore,~~In addition, according to the prevailing mainland China tax regulations, the input VAT caused by purchasing goods or services can be credited against output VAT by general taxpayer when calculating VAT payable, provided that the general taxpayer obtained and verified the relevant VAT special invoices corresponding to the cost or expenditures within a defined time period. On March 20, 2019, the MOF, the SAT and the General Administration of Customs jointly issued the Announcement on Relevant Policies for Deepening Value-added Tax Reform, or the Announcement 39, which took effect as of April 1, 2019. In accordance with the Announcement 39, with effect from April 1, 2019 to December 31, 2021, taxpayers in service industry relating to production and life-support services are allowed to deduct additional 10% of the deductible input tax for the current period. The above VAT preferential policy was then extended until December 31,2022 according to Announcement 11 of 2022. The Announcement 39 further illustrates that a taxpayer in service industry relating to production and life-support services refers to a taxpayer whose sales generated from postal services, telecommunications services, modern services and life-support services account for more than 50% of its total sales. All of our entities have obtained the VAT special invoices as the deduction vouchers, and therefore, we have adopted the net presentation of VAT.

Pursuant to applicable ~~PRC~~mainland China laws and regulations, arrangements and transactions among related parties may be subject to audit or challenge by the ~~PRC~~mainland China tax authorities. We may be subject to adverse tax consequences and our consolidated results of operations may be adversely affected if the ~~PRC~~mainland China tax authorities determine that the contractual arrangements among our ~~PRC subsidiary, Beijing Momo~~mainland China subsidiaries, consolidated affiliated entities and ~~its~~their shareholders or their subsidiaries are not on an arm’s length basis and therefore constitute favorable transfer pricing. See “Item 3. Key Information—D. Risk Factors—Risks Related to Our Corporate Structure—Contractual arrangements we have entered into with ~~Beijing Momo~~the consolidated affiliated entities may be subject to scrutiny by the ~~PRC~~mainland China tax authorities. A finding that we owe additional taxes could significantly reduce ~~our~~the consolidated net income and the value of your investment.”

Results of Operations

The following table sets forth a summary of our consolidated results of operations for the periods indicated, both in absolute amounts and as percentages of our total net revenues. This information should be read together with our consolidated financial statements and related notes included elsewhere in this annual report. The results of operations in any period are not necessarily indicative of the results that may be expected for any future period.

   Year Ended December 31,
   2013 2014 2015
   US$ % US$ % US$ %
   (in US$ thousands, except for percentages)
Net revenues
   3,129    100.0    44,755    100.0    133,988    100.0
Membership subscription
   2,808    89.7    29,756    66.5    58,462    43.6
Mobile marketing services
   12    0.4    1,975    4.4    38,885    29.0
Mobile games
   92    2.9    11,237    25.1    31,082    23.2
Other services
   217    7.0    1,787    4.0    5,559    4.2
Cost and expenses

Cost of revenues
   (2,927 ) (93.5 ) (15,762 ) (35.2 ) (30,312 ) (22.6 )
Research and development expenses
   (3,532 ) (112.9 ) (9,264 ) (20.7 ) (23,265 ) (17.4 )
Sales and marketing expenses
   (3,018 ) (96.5 ) (35,538 ) (79.4 ) (52,631 ) (39.3 )
General and administrative expenses
   (3,010 ) (96.2 ) (10,354 ) (23.2 ) (22,879 ) (17.0 )


Total cost and expenses
   (12,487 ) (399.1 ) (70,918 ) (158.5 ) (129,087 ) (96.3 )


Other operating income
   —      —      26    0.1    713    0.5
(Loss) Income from operations
   (9,358 ) (299.1 ) (26,137 ) (58.4 ) 5,614    4.2
Interest income
   32    1.0    722    1.6    7,805    5.8


(Loss) Income before income tax and share of income on equity method investments
   (9,326 ) (298.1 ) (25,415 ) (56.8 ) 13,419    10.0
Income tax expense
   —      —      —      (92 ) (0.1 )


(Loss) Income before share of income on equity method investments
   (9,326 ) (298.1 ) (25,415 ) (56.8 ) 13,327    9.9
Share of income on equity method investments
   —      —      —      —      370    0.3


Net (loss) income
   (9,326 ) (298.1 ) (25,415 ) (56.8 ) 13,697    10.2


	Year Ended December 31,
	2020						2021						2022
	RMB			%			RMB			%			RMB			%
	(in thousands, except for percentages)
Net revenues		15,024,188			100.0			14,575,719			100.0			12,704,172			100.0
Live video service		9,637,579			64.1			8,378,945			57.5			6,510,460			51.2
Value-added service		5,112,182			34.0			5,971,792			41.0			6,007,018			47.3
Mobile marketing services		198,197			1.4			159,010			1.1			124,956			1.0
Mobile games		39,564			0.3			47,712			0.3			55,732			0.4
Other services		36,666			0.2			18,260			0.1			6,006			0.1
Cost and expenses
Cost of revenues		(7,976,781	)		(53.1	)		(8,383,431	)		(57.5	)		(7,421,419	)		(58.4	)
Research and development expenses		(1,167,677	)		(7.8	)		(1,131,781	)		(7.8	)		(1,006,219	)		(7.9	)
Sales and marketing expenses		(2,813,922	)		(18.7	)		(2,604,309	)		(17.9	)		(2,073,617	)		(16.3	)
General and administrative expenses		(763,150	)		(5.1	)		(624,700	)		(4.3	)		(596,006	)		(4.7	)
Impairment loss on goodwill and intangible assets		—			—			(4,397,012	)		(30.1	)		—			—

Total cost and expenses		(12,721,530	)		(84.7	)		(17,141,233	)		(117.6	)		(11,097,261	)		(87.3	)

Other operating income		228,777			1.5			175,947			1.2			20,632			0.2

Income (loss) from operations		2,531,435			16.8			(2,389,567	)		(16.4	)		1,627,543			12.9
Interest income		444,471			3.0			384,279			2.6			368,879			2.9
Interest expense		(78,872	)		(0.5	)		(73,776	)		(0.5	)		(83,530	)		(0.7	)
Other gain or loss, net		1,500			0.0			(16,000	)		(0.1	)		118,325			0.9

Income before income tax and share of income on equity method investments		2,898,534			19.3			(2,095,064	)		(14.4	)		2,031,217			16.0
Income tax expense		(755,620	)		(5.0	)		(822,556	)		(5.6	)		(562,281	)		(4.4	)

Income before share of income on equity method investments		2,142,914			14.3			(2,917,620	)		(20.0	)		1,468,936			11.6
Share of income (loss) on equity method investments		(42,522	)		(0.3	)		(8,084	)		(0.1	)		11,073			0.0

Net income (loss)		2,100,392			14.0			(2,925,704	)		(20.1	)		1,480,009			11.6

Comparison of the Years Ended December 31, ~~2013, 2014~~2020, 2021 and ~~2015~~2022

Net revenues

~~We started to generate revenues in the second half of 2013.~~ We currently generate revenues primarily from ~~membership subscription,~~live video service, value-added service, mobile marketing services, mobile games, and other services. ~~Membership subscription~~Revenues from live video service, value-added service and other ~~service revenues~~services are presented net of ~~surcharges~~value-added taxes and ~~taxes.~~surcharges. Mobile marketing services are presented net of agency rebates, ~~surcharges~~value-added taxes and ~~taxes.~~surcharges. Mobile games revenues include revenues generated from self-developed mobile games ~~developed by third-party game developers~~ and ~~from self-developed~~licensed mobile game. Mobile games revenues generated by third-party game developers are presented net of revenue sharing with game developers, commission fees made to third-party application stores and other payment channels, surcharges and taxes. Mobile games revenues derived from self-developed game are recorded on a gross basis. Net revenues ~~increased significantly~~decreased from ~~US$44.8~~RMB15,024.2 million in ~~2014~~2020 to ~~US$134.0~~RMB14,575.7 million in ~~2015,~~2021, primarily due to ~~a significant increase~~the decrease in net revenues from ~~membership subscription, mobile marketing services~~Momo’s live video service as a result of Momo’s structural reform in the second half of 2020 and ~~mobile games.~~the challenging macro headwinds starting in the third quarter 2021, as well as the decrease in Tantan’s revenues due to our strategy to lower monetization level of Tantan in order to improve user experience and retention. Net revenues ~~increased significantly~~decreased from ~~US$3.1~~RMB14,575.7 million in ~~2013~~2021 to ~~US$44.8~~RMB12,704.2 million (US$1,841.9 million) in ~~2014,~~2022, primarily due to the significant pressure on both Momo and Tantan’s live video business caused by COVID-19 related factors and regulatory factors.

100

Live video service

We started to offer live video services on our Momo platform in September 2015 and on our Tantan platform in early 2020. We generate revenues when users purchase and send in-show virtual items to broadcasters.

2022 compared to 2021. Our live video service revenues decreased from RMB8,378.9 million in 2021 to RMB6,510.5 million (US$943.9 million) in 2022, primarily due to (i) the macro headwinds and consumption softness as a ~~significant increase~~result of COVID-19, (ii) products adjustments to meet regulatory changes, and (iii) to a lesser extent, the reduction in ~~net~~Tantan’s marketing investments in 2022 and strategic adjustments to lower Tantan’s monetization level in the second half of 2021.

2021 compared to 2020. Our live video service revenues decreased from RMB9,637.6 million in 2020 to RMB8,378.9 million in 2021, primarily due to (i) our structural reform on Momo’s core live video business to revive the long tail content ecosystem and to a lesser extent, (ii) our strategic decision to lower Tantan’s monetization level in the second half of the year to improve user experience and retention.

Value-added service

Value-added service primarily comprises virtual gift service and membership ~~subscription~~subscription. We started to offer virtual gift service on our Momo platform in the fourth quarter of 2016 to enhance users’ interaction and ~~mobile games.~~

~~Membership subscription~~

social networking with each other. Both Momo and Tantan users can become members by paying ~~monthly, quarterly, semi-annual or annual~~ membership ~~fees.~~fees per contract period, which ranges from one month to one year. Both Momo and Tantan members are entitled to additional functionalities and privileges on ~~our~~Momo and Tantan mobile ~~application.~~applications, respectively.

~~2015~~2022 compared to ~~2014~~2021. ~~Our membership subscription revenues~~Revenues from our value-added service increased by 0.6% to ~~US$58.5~~RMB6,007.0 million (US$870.9 million) in 2022 from RMB5,971.8 million in ~~2015 from US$29.8 million in 2014,~~2021, primarily ~~driven by the increase in the number of our members and the increase in average revenue per paying user,~~ due to the ~~premium membership introduced~~rapid revenue growth from our standalone apps, such as Soulchill, Hertz and Duidui. The increase was largely offset by the decrease in ~~June 2015.~~Tantan’s value-added service revenues caused by the negative impact of COVID-19 and reduction in channel investments, which put pressure on user traffic and paying conversion, as well as the demonetization process to improve user experience and retention, and to a less extent the decrease in Momo core’s value-added service revenue caused by the impact of the pandemic on traffic and users’ propensity to pay.

~~2014~~2021 compared to ~~2013.~~~~Our membership subscription revenues were US$29.8~~2020. Revenues from our value-added service increased by 16.8% to RMB5,971.8 million in ~~2014, compared to US$2.8~~2021 from RMB5,112.2 million in ~~2013, all~~2020, primarily attributable to the continued growth of ~~which were generated~~the virtual gift business on our Momo application, driven by more innovative products launched and operational efforts in the ~~second half of 2013. The~~audio and video social entertainment experiences and the rapid growth in ~~membership subscription fees~~the revenues generated by new standalone apps, such as Soulchill, Hertz and Duidui. The increase was ~~primarily driven~~partially offset by the ~~significant increase~~decrease in the ~~number~~value-added service revenues of Tantan, due to our ~~members since we started monetization. Our members increased from 0.6 million as of December 31, 2013~~strategy to ~~2.9 million as of December 31, 2014. The increase in~~lower the ~~number of our members was in turn driven by the growth in our active~~monetization level to improve user ~~base~~experience and ~~increased user engagement. Our MAUs increased from 33.7 million in December 2013 to 69.3 million in December 2014.~~retention.

Mobile marketing services

~~We began to offer~~Our mobile marketing services ~~in the third quarter of 2013. As of December 31, 2015, our mobile marketing services included brand-oriented display ads,~~ currently include in-feed marketing solutions powered by a proprietary self-serve advertising system, brand-oriented display ads, and advertising services provided through third-party partnerships.

~~2015~~2022 compared to ~~2014~~2021. Mobile marketing services revenues ~~increased~~decreased by 21.4% to ~~US$38.9~~RMB125.0 million (US$18.1 million) in 2022 from RMB159.0 million in ~~2015 from US$2.0 million in 2014,~~2021, primarily due to ~~improving efficiency~~the negative impact of macro headwind on clients’ advertising budget, and our ~~proprietary in-feed marketing system launched~~products adjustment to address new regulation requirement in the second quarter of 2015, stronger demand for display banners from brand marketers and, to a lesser extent, increase in mobile marketing revenues from third-party strategic partnerships with Alibaba and 58.com.

2021.

~~2014~~2021 compared to ~~2013.~~2020. Mobile marketing services revenues ~~were US$2.0~~decreased by 19.8% to RMB159.0 million in ~~2014, compared to approximately US$12,000~~2021 from RMB198.2 million in ~~2013. The growth in mobile marketing services revenues from 2013 to 2014 was~~2020, primarily due to ~~increased placement~~our product adjustment to address new regulation requirement as well as our strategy to underweight this revenue stream in terms of ~~display banners in our mobile application and the launch of our~~~~Dao Dian Tong~~ ~~service in the third quarter of 2014.~~resource allocation.

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Mobile games

~~We began to generate mobile games revenues in the fourth quarter of 2013, when we introduced two games on our platform.~~ As of December 31, ~~2015,~~2022, we had ~~three types of mobile game services, namely, non-exclusive licensed mobile game services, exclusive licensed mobile game services and~~ self-developed mobile game ~~services. For non-exclusive~~and licensed mobile game services, we offer our mobile game platform for mobile games developed by third-party game developers, and we share user payments with such game developers. Game developers may offer their games on other platforms in addition to ours. For exclusive licensed mobile game services, we offer our mobile game platform for mobile games developed by third-party game developers, and our platform is the only one through which players can access such games. In addition to licensed mobile games, we also operate self-developed mobile games on our mobile game platform. As of December 31, 2015, we operated 22 non-exclusive licensed games, seven exclusive licensed games and one self-developed game. ~~We expect the number of games operated on our platform to increase in the future.~~ Our revenues from mobile games depend on the number of paying ~~users, which ultimately is determined by our ability to select and offer engaging games tailored to our platform and our user profiles.~~users.

~~2015~~2022 compared to ~~2014~~2021. Our mobile games revenues increased by 16.8% to ~~US$31.1~~RMB55.7 million (US$8.1 million) in 2022 from RMB47.7 million in ~~2015 from US$11.2 million in 2014,~~2021, primarily due to the launch of 22a new ~~games~~mobile game in ~~2015 resulting in more paying users.~~the second half year of 2021.

~~2014~~2021 compared to ~~2013.~~2020. Our mobile games revenues ~~were US$11.2~~increased by 20.6% to RMB47.7 million in ~~2014, compared to US$92,000~~2021 from RMB39.6 million in ~~2013. The growth in mobile games revenues was~~2020, primarily due to the launch of 11a new ~~games~~mobile game in ~~2014 resulting in more paying users.~~the second half year of 2021.

Other services

Our other services mainly include ~~paid emoticons~~film and ~~our live~~television series investment and distribution promotion business, music service and ~~entertainment broadcasting service.~~peripheral products.

~~2015~~2022 compared to ~~2014~~2021. Other services revenues ~~were US$5.6~~decreased by 67.1% to RMB6.0 million (US$0.9 million) in 2022 from RMB18.3 million in ~~2015,~~2021, primarily attributable to less sales from peripheral products and less music services provided.

2021 compared to US$1.8 million in 2014. The growth in other services revenues from 2014 to 2015 was primarily due to revenues from our live music and entertainment broadcasting services launched in the third quarter of 2015 and increase in revenues from the sale of paid emoticons.

~~2014 compared to 2013.~~2020. Other services revenues ~~which comprised revenues from sales of paid emoticons, were US$1.8~~decreased by 50.2% to RMB18.3 million in ~~2014, compared to US$0.2~~2021 from RMB36.7 million in ~~2013. Our virtual store began to generate revenues from stylish and trendy emoticons for sale in the third quarter of 2013. The growth of our paid emoticon revenues was~~2020, primarily attributable to ~~the increase in our paying users, which was in turn driven by the size of our active user base.~~less music service provided.

Cost and expenses

Cost of revenues

Cost of revenues consists primarily of costs associated with the operation and maintenance of our platform, including ~~bandwidth~~revenue sharing, production costs in connection with television content, commission fees, ~~depreciation, SMS~~bandwidth costs, labor costs, depreciation and ~~professional fees.~~other costs.

Revenue sharing primarily includes payments to broadcasters and talent agencies for our live video service as well as payments to virtual gift recipients and other influencers for our virtual gift service. Commission fees are payments made to third-party application stores and other payment channels for distributing our live video service, value-added service, and our mobile marketing services. Users can make payments for such services through third-party application stores and other payment channels. These third-party application stores and other payment channels typically charge a handling fee for their services. Bandwidth costs, including internet data center and content delivery network fees, consist of fees that we pay to telecommunication carriers and other service providers for telecommunication services, hosting our servers at their internet data centers, and providing content and application delivery services. Commission fees are payments made to third-party application stores and other payment channels for distributing our membership subscription services, self-developed mobile games, paid emotions and our mobile marketing services. Users and customers can make payments for such services through third-party online and mobile phone payment channels. These third-party payment channels typically charge a handling fee for their services. Depreciation mainly consists of depreciation cost on our servers, computers and other equipment. SMS costs consist of fees that we pay to telecommunication carriers for text message services provided to our users for verification purpose. Labor costs consist of salaries and benefits, including share-based compensation expenses, for our employees involved in the operation of our platform. ~~Service fees~~Depreciation mainly consists of depreciation cost on our servers, computers and other equipment. Other costs mainly consist of ~~service costs~~office rental expenses and professional fees related to ~~our~~ live music and entertainment broadcasting services. We expect our cost of revenues to increase in the future as we continue to enhance the capability and reliability of our infrastructure to support user growth and increased activity on our platform.

video service.

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The following table sets forth the components of our cost of revenues by amounts and percentages of our total cost of revenues for the periods presented:


													Year Ended December 31,
	Year Ended December 31,												2020				2021				2022
	2013				2014				2015				RMB		%		RMB		%		RMB		%
	US$		%		US$		%		US$		%
			(in US$ thousands, except for percentages)										(in thousands, except for percentages)
Cost of revenues:
Revenue sharing														6,630,538		83.1		7,047,050		84.1		6,362,092		85.7
Commission fees														362,831		4.6		327,843		3.9		298,810		4.0
Bandwidth costs		1,265		43.2		6,425		40.7		8,064		26.6		308,664		3.9		317,556		3.8		282,123		3.8
Commission fees		339		11.6		4,202		26.7		7,348		24.2
Labor costs		412		14.1		1,395		8.9		4,848		16.0		306,577		3.8		335,639		4.0		278,735		3.8
Depreciation		387		13.2		1,748		11.1		4,637		15.3
SMS costs		445		15.2		1,493		9.5		2,007		6.6
Service fees		—		—		40		0.3		1,448		4.8
Depreciation and amortization														211,779		2.7		164,528		2.0		73,836		1.0
Other costs		79		2.7		459		2.8		1,960		6.5		156,392		1.9		190,815		2.2		125,823		1.7

Total cost of revenues		2,927		100.0		15,762		100.0		30,312		100.0		7,976,781		100.0		8,383,431		100.0		7,421,419		100.0

~~2015~~2022 compared to ~~2014~~2021. Our cost of revenues decreased from RMB8,383.4 million in 2021 to RMB7,421.4 million (US$1,076.0 million) in 2022. The decrease was primarily due to an RMB974.2 million (US$141.2 million) decrease in revenue sharing from a decrease in live video service revenue, an RMB90.7 million (US$13.1 million) decrease in depreciation and amortization due to less amortization on acquired intangible assets resulting from the impairment recorded in 2021, an RMB56.9 million (US$8.3 million) decrease in labor costs resulting from our continuous optimization in personnel costs in 2022, and an RMB29.0 million (US$4.2 million) decrease in commission fees paid to payment channels due to a lower volume of cash collection through such channels, partially offset by an RMB296.6 million (US$43.0 million) increase in revenue sharing from an increase in virtual gift service revenue.

2021 compared to 2020. Our cost of revenues increased ~~92.3%~~ from ~~US$15.8~~RMB7,976.8 million in ~~2014~~2020 to ~~US$30.3~~RMB8,383.4 million in ~~2015,~~2021. The increase was primarily due to ~~a US$3.5~~an RMB562.3 million increase in revenue sharing from an increase in virtual gift service revenue, an RMB29.1 million increase in labor costs resulting from the increase of salary and service fee of content management and monitoring in 2021, partially offset by an ~~increase~~RMB145.8 million decrease in ~~the number of employees involved~~revenue sharing from a decrease in ~~the operation of our platform, a US$3.1~~live video service revenue, and an RMB35.0 million ~~increase~~decrease in commission fees ~~which was driven by the growth~~paid to payment channels due to a lower volume of ~~our revenues, a US$2.9~~cash collection through such channels, and an RMB47.3 million ~~increase~~decrease in depreciation ~~costs~~ and a US$2.2 million in bandwidth costs and SMS costs, which were driven by strong traffic growth, and a US$1.4 million increase in the service costs related to our newly launched live music and entertainment broadcasting service.

~~2014 compared to 2013.~~~~Our cost of revenues was US$2.9 million and US$15.8 million in 2013 and 2014, respectively. The significant increase in cost of revenues was primarily~~amortization due to ~~our rapid business expansion. Prior to generating revenues~~less amortization on acquired intangible assets resulting from the impairment in ~~the third quarter of 2013, we recorded US$0.8 million of bandwidth costs and SMS costs in general and administrative expenses in the first half of 2013.~~2021.

Research and development expenses

Research and development expenses consist primarily 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. Expenditures incurred during the research phase are expensed as incurred. We expect our research and development expenses to increase as we expand our research and development team to further enhance our big data analytical capabilities and to develop new features and services for our platform.

~~2015~~2022 compared to ~~2014~~2021. Our research and development expenses ~~increased~~decreased by ~~151.1%~~11.1% from ~~US$9.3~~RMB1,131.8 million in ~~2014~~2021 to ~~US$23.3~~RMB1,006.2 million (US$145.9 million) in ~~2015.~~2022. This ~~increase~~decrease was primarily due to ~~a US$13.2~~an RMB110.5 million ~~increase in salaries and benefits for research and development personnel. Our research and development headcount increased from 213 as of December 31, 2014 to 319 as of December 31, 2015.~~

~~2014 compared to 2013~~~~. Our research and development expenses increased by 162.3% from US$3.5 million in 2013 to US$9.3 million in 2014. This increase was primarily due to a US$4.6 million increase~~(US$16.0 million) decrease in salaries and benefits for research and development personnel, and ~~a US$0.6~~an RMB15.6 million ~~increase~~(US$2.3 million) decrease in ~~rental~~depreciation and amortization expenses associated with research and development ~~activities as a result of our moving into a new headquarters office in May 2014.~~activities. Our research and development headcount ~~increased~~decreased from ~~101~~1,274 as of December 31, ~~2013~~2021 to ~~213~~1,071 as of December 31, ~~2014.~~

2022.

2021 compared to 2020. Our research and development expenses decreased by 3.1% from RMB1,167.7 million in 2020 to RMB1,131.8 million in 2021. This decrease was primarily due to an RMB23.5 million decrease in salaries and benefits for research and development personnel, and an RMB12.0 million decrease in depreciation and amortization expenses associated with research and development activities. Our research and development headcount decreased from 1,367 as of December 31, 2020 to 1,274 as of December 31, 2021.

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Sales and marketing expenses

Sales and marketing expenses consist primarily of general marketing and promotional expenses, as well as salaries and benefits, including share-based compensation expenses, for our sales and marketing personnel. ~~We expect our sales and marketing expenses to increase as we plan to enhance our brand awareness, attract new users and promote our new services.~~

~~2015~~2022 compared to ~~2014~~2021. Our sales and marketing expenses ~~increased~~decreased by 20.4% from ~~US$35.5~~RMB2,604.3 million in ~~2014~~2021 to ~~US$52.6~~RMB2,073.6 million (US$300.6 million) in ~~2015,~~2022, primarily due to an RMB411.5 million (US$59.7 million) decrease in marketing and promotional expenses of Tantan as a ~~US$13.7~~result of our initiatives to control cost and optimize Tantan’s channel marketing strategy, an RMB61.2 million ~~increase~~(US$8.9 million) decrease in salaries and ~~other~~ benefits for our sales and marketing ~~personnel. Our~~personnel primarily driven by our continuous optimization of personnel costs, and an RMB49.4 million (US$7.2 million) decrease in depreciation and amortization expenses associated with sales and marketing ~~headcount increased from 148 as of December 31, 2014~~expenses. The decrease was partially offset by an RMB116.1 million (US$16.8 million) increase in marketing and promotional expenses due to ~~274 as of December 31, 2015.~~an effort to promote our new apps.

~~2014~~2021 compared to ~~2013~~2020. Our sales and marketing expenses ~~increased~~decreased by 7.4% from ~~US$3.0~~RMB2,813.9 million in ~~2013~~2020 to ~~US$35.5~~RMB2,604.3 million in ~~2014,~~2021, primarily ~~due~~attributable to ~~a US$26.2~~an RMB133.6 million ~~increase in marketing and promotional expenses to enhance our brand awareness and a US$4.7 million increase~~decrease in salaries and ~~other~~ benefits for our sales and marketing ~~personnel. Our~~personnel due to a downsized sales force, and an RMB63.0 million decrease in marketing ~~headcount increased from 57 as of December 31, 2013~~and promotional expenses, primarily due to ~~148 as of December 31, 2014.~~lower user acquisition investment for Tantan.

General and administrative expenses

General and administrative expenses consist primarily of salaries and ~~expenses,~~other benefits, including share-based compensation expense, professional fees and rental expenses. ~~We expect our general and administrative expenses to increase as our business grows and as we comply with our reporting obligations under U.S. securities laws as a public company.~~

~~2015~~2022 compared to ~~2014~~2021. Our general and administrative expenses ~~increased~~decreased from ~~US$10.4~~RMB624.7 million in ~~2014~~2021 to ~~US$22.9~~RMB596.0 million (US$86.4 million) in ~~2015.~~2022. This ~~increase~~decrease was primarily due to ~~a US$7.7~~an RMB9.2 million ~~increase~~(US$1.3 million) decrease in lease expenses related to the decrease of office space, and an RMB7.3 million (US$1.1 million) decrease in salaries and ~~other~~ benefits ~~including share-based compensation expenses~~ for our ~~general and~~ administrative personnel ~~a US$1.6 million increase~~driven by our continuous optimization of personnel costs in ~~professional fees for legal, auditing~~2022 and ~~other services and a US$1.4 million increase~~the decreased fair value of the share options granted in ~~expense of writing off prepayments to game developers due to termination of certain game licensing contracts.~~2022.

~~2014~~2021 compared to ~~2013~~2020. Our general and administrative expenses ~~increased~~decreased from ~~US$3.0~~RMB763.2 million in ~~2013~~2020 to ~~US$10.4~~RMB624.7 million in ~~2014.~~2021. This ~~increase~~decrease was primarily due to a ~~US$6.6 million increase~~decrease in ~~salaries and other benefits including~~ share-based compensation expenses ~~for~~of RMB84.4 million due to the fair value remeasurement of liability classified options granted to Tantan’s founders upon settlement in the second quarter of 2021.

Impairment loss on goodwill and intangible assets

As of December 31, 2021, as part of our ~~general~~annual impairment testing and ~~administrative personnel,~~based on (i) a ~~US$1.3 million increase~~decline in ~~professional fees for legal, auditing~~our share price which caused our market capitalization to drop significantly below our net book value of equity and ~~other services,~~(ii) the adjustment in the monetization approach of Tantan to improve user experience and ~~a US$0.4 million increase~~retention which has further caused Tantan’s near term revenue to decrease and net loss to widen, we determined that it was more likely than not that goodwill was impaired. Accordingly, we determined the fair value of ~~rental expenses as~~each respective reporting unit using the income-based approach, such that Tantan’s cash flows forecasts mainly factored in the lower-than-projected business outlook. As a result, the fair value of ~~moving into~~the reporting units was estimated to be below the carrying value and therefore indicated an impairment. We recorded a ~~new headquarters office~~RMB4,397.0 million goodwill and intangible assets impairment during the year ended December 31, 2021.

Other operating income

Other operating income mainly consisted of government incentives and additional input VAT deduction.

2022 compared to 2021. Our other operating income decreased from RMB175.9 million in ~~May 2014, offset by~~2021 to RMB20.6 million (US$3.0 million) in 2022. The decrease was mainly due to a contingent loss of RMB92.9 million (US$13.5 million) in 2022 related to an ongoing investigation of the alleged illegal activity on the source of the funding consumed on Momo’s platform. There is no suspected or alleged wrongdoing on the part of our company. Based on our evaluation of the situation in connection with such investigation, an unfavorable outcome is probable and the amount is reasonably estimable. Our bank balance of RMB92.9 million (US$13.5 million) as of December 31, 2022 was restricted for withdrawal related to the ongoing investigation. Therefore, we determined that RMB92.9 million should be recorded as other operating loss. Other than the contingent loss, the year over year decrease in ~~costs associated with~~other operating income in 2022 was also attributable to a RMB40.0 million (US$5.8 million) decrease in government incentives.

104

2021 compared to 2020. Our other operating income decreased from RMB228.8 million in 2020 to RMB175.9 million in 2021. This decrease was primarily due to the ~~maintenance~~decrease of government incentives.

Other gain or loss, net

2022 compared to 2021. Our other gain or loss, net was a net gain of RMB118.3 million (US$17.2 million) in 2022, compared to a net loss of RMB16.0 million in 2021. In 2022, we had a gain of RMB129.6 million (US$18.8 million), which resulted from repurchase of some of our ~~platform. We included bandwidth costs and SMS costs in an amount~~convertible senior notes from certain bond holders. The net loss of ~~US$0.8~~RMB16.0 million in ~~the first half of 2013 in~~2021 was mainly caused by our ~~general and administrative expenses prior to our monetization in the third quarter of 2013, but have included them in cost of revenues since then.~~impairment loss on some long-term investments.

~~Net (loss) income~~

~~2015~~2021 compared to ~~2014~~2020. Our other gain or loss, net was a net loss of RMB16.0 million in 2021, compared to a net gain of RMB1.5 million in 2020. The other gain or loss mainly included the impairment loss on some long-term investments and the gain from disposal of some long-term investments.

Net income (loss)

2022 compared to 2021. Primarily as a result of the foregoing, we ~~recorded~~have incurred a net income of ~~US$13.7~~RMB1,480.0 million (US$214.6 million) in ~~2015,~~2022, compared to a net loss of ~~US$25.4~~RMB2,925.7 million in ~~2014.~~2021.

~~2014~~2021 compared to ~~2013~~2020. Primarily as a result of the foregoing, we ~~recorded~~have incurred a net loss of ~~US$9.3~~RMB2,925.7 million in ~~2013 and US$25.4~~2021, compared to a net income of RMB2,100.4 million in ~~2014.~~2020.

Segment Revenues

The following table sets forth our revenues by segment and year-over-year change rate for the periods indicated:


	Year ended December 31,
	2020					2021					2022
	RMB		YoY%			RMB		YoY%			RMB		US$		YoY%


	(in thousands, except percentages)
Revenues:
Momo		12,631,119		(20	)		12,541,205		(1	)		11,335,094		1,643,434		(10	)
Tantan		2,368,314		88			2,029,184		(14	)		1,367,853		198,320		(33	)
QOOL		24,755		72			5,330		(78	)		1,225		178		(77	)

Momo

2022 compared to 2021. Momo revenues decreased from RMB12,541.2 million in 2021 to RMB11,335.1 million (US$1,643.4 million) in 2022, primarily due to the decrease of RMB1,509.5 million (US$218.9 million) in net revenues from live video service caused by the macro headwinds and consumption softness as a result of COVID-19, and products adjustments to meet regulatory changes. The decrease was partially offset by the increase of RMB337.6 million (US$48.9 million) in net revenues from value-added service generated by our standalone apps, such as Soulchill, Hertz and Duidui.

2021 compared to 2020. Momo revenues decreased from RMB12,631.1 million in 2020 to RMB12,541.2 million in 2021, primarily due to the decrease of RMB1,163.0 million in net revenues from live video service as a result of our structural reform on Momo’s live video business as well as the macro headwinds in the second half of the year, which was partially offset by the increase of RMB1,103.1 million in net revenues from value-added service.

Tantan

2022 compared to 2021. Tantan revenues decreased from RMB2,029.2 million in 2021 to RMB1,367.9 million (US$198.3 million) in 2022, which was driven by a decrease of RMB359.0 million (US$52.0 million) in its live video service revenues and a decrease of RMB302.3 million (US$43.8 million) in its value-added service revenues. The decrease was primarily due to the negative impact of COVID-19 as well as marketing investment reduction and the strategy to lower Tantan’s monetization level in the second half of 2021.

105

2021 compared to 2020. Tantan revenues decreased from RMB2,368.3 million in 2020 to RMB2,029.2 million in 2021, which was driven by a decrease of RMB243.5 million in its value-added service revenues and a decrease of RMB95.6 million in its live video service revenues. The decrease was primarily due to our strategic decision to lower Tantan’s monetization level in the second half of 2021 to improve user experience and retention to drive overall user growth.

QOOL

2022 compared to 2021. QOOL revenues decreased from RMB5.3 million in 2021 to RMB1.2 million (US$0.2 million) in 2022, mainly due to less services rendered in respect of music production and copyright permission in 2022.

2021 compared to 2020. QOOL revenues decreased from RMB24.8 million in 2020 to RMB5.3 million in 2021, mainly as a result of less services rendered in respect of music production and copyright permission in 2021.

Segment Cost and Expenses

The following table sets forth our costs and expenses by segment and year-over-year change rate for the periods indicated:


	Year ended December 31,
	2020					2021					2022
	RMB		YoY%			RMB		YoY%			RMB		US$		YoY%

	(in thousands, except percentages)
Costs and Expenses:
Momo		9,829,243		(11	)		10,169,788		3			9,335,890		1,353,577		(8	)
Tantan		2,844,395		4			2,509,690		(12	)		1,738,898		252,117		(31	)
QOOL		47,892		(9	)		64,743		35			22,473		3,258		(65	)
Unallocated		—		—			4,397,012		100			—		—		(100	)

Momo

Costs and expenses of Momo mainly consist of revenue sharing, salaries and benefits, marketing and promotion expenses, bandwidth costs, professional fees and commission fees.

Cost of revenues

Cost of revenues 2022 compared to 2021. The cost of revenues of Momo decreased by 8.2% from RMB7,301.0 million in 2021 to RMB6,704.0 million (US$972.0 million) in 2022, primarily due to the decrease in revenue sharing from the decrease in live video service revenue, which was partially offset by an increase in revenue sharing from an increase in virtual gift service revenue.

Cost of revenues 2021 compared to 2020. The cost of revenues of Momo increased by 6.3% from RMB6,865.8 million in 2020 to RMB7,301.0 million in 2021, primarily due to an increase in revenue sharing from an increase in virtual gift service revenue, which was partially offset by the decrease in revenue sharing from the decrease in live video service revenue.

Research and development expense

2022 compared to 2021. The research and development expenses of Momo decreased by 11.0% from RMB828.7 million in 2021 to RMB737.4 million (US$106.9 million) in 2022, primarily due to a decrease in salaries and benefits for research and development personnel.

2021 compared to 2020. The research and development expenses of Momo decreased by 1.9% from RMB844.8 million in 2020 to RMB828.7 million in 2021, primarily due to a decrease in salaries and benefits for research and development personnel.

106

Sales and marketing expenses

2022 compared to 2021. The sales and marketing expenses of Momo decreased by 5.2% from RMB1,420.1 million in 2021 to RMB1,346.7 million (US$195.3 million) in 2022, primarily due to a decrease of RMB37.8 million (US$5.5 million) in the salaries and benefits for sales and marketing personnel, and a decrease of RMB10.3 million (US$1.5 million) in marketing and promotional expense due to our improving marketing efficiency of Momo, which was partially offset by an increased effort to promote our new apps.

2021 compared to 2020. The sales and marketing expenses of Momo decreased by 2.3% from RMB1,454.1 million in 2020 to RMB1,420.1 million in 2021, primarily due to a decrease of RMB133.9 million in the salaries and benefits for sales and marketing personnel, partially offset by an increase of RMB93.5 million in marketing and promotional expenses to attract users to our new standalone apps.

General and administrative expense

2022 compared to 2021. The general and administrative expenses of Momo decreased by 11.6% from RMB619.9 million in 2021 to RMB547.8 million (US$79.4 million) in 2022, primarily due to a decrease of RMB67.2 million (US$9.7 million) in salary expenses and share-based compensation expenses, due to our continuous optimization in personnel costs and the decreased fair value of the share options granted in 2022.

2021 compared to 2020. The general and administrative expenses of Momo decreased by 6.7% from RMB664.5 million in 2020 to RMB619.9 million in 2021, primarily due to the recovery of RMB32.0 million from a fully impaired loan to a third-party entity in 2020, partially offset by an increase of RMB53.1 million in personnel related costs.

Tantan

Cost and expenses of Tantan mainly consist of marketing and promotion expenses, labor costs, revenue sharing, commission fees, depreciation and other costs.

Cost of revenues

2022 compared to 2021. The cost of revenues of Tantan decreased by 31.6% from RMB1,044.9 million in 2021 to RMB714.9 million (US$103.7 million) in 2022, which was primarily due to a decrease in revenue sharing from a decrease in live video service revenue.

2021 compared to 2020. The cost of revenues of Tantan decreased by 4.0% from RMB1,088.8 million in 2020 to RMB1,044.9 million in 2021, which was primarily due to a decrease in commission fees paid to payment channels.

Research and development expenses

2022 compared to 2021. The research and development expenses of Tantan decreased by 11.3% from RMB303.1 million in 2021 to RMB268.8 million (US$39.0 million) in 2022, which was primarily due to a decrease in salaries and benefits for research and development personnel.

2021 compared to 2020. The research and development expenses of Tantan decreased by 6.1% from RMB322.9 million in 2020 to RMB303.1 million in 2021, which was primarily due to a decrease in salaries and benefits for research and development personnel and service fees related to research and development.

Sales and marketing expenses

2022 compared to 2021. The sales and marketing expenses of Tantan decreased by 38.8% from RMB1,180.1 million in 2021 to RMB721.9 million (US$104.7 million) in 2022, which was primarily due to a decrease in marketing and promotional expenses, as a result of our initiatives to control cost and optimize Tantan’s channel marketing strategy in the second half of 2022.

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2021 compared to 2020. The sales and marketing expenses of Tantan decreased by 13.2% from RMB1,359.7 million in 2020 to RMB1,180.1 million in 2021, which was primarily due to a decrease in marketing and promotional expenses as a result of lower user acquisition investment for Tantan.

General and administrative expenses

2022 compared to 2021. The general and administrative expenses of Tantan increased by 280.6% from RMB(18.4) million in 2021 to RMB33.2 million (US$4.8 million) in 2022, which was mainly caused by less share-based compensation expenses charged in 2021, due to the fair value remeasurement of liability classified options granted to Tantan’s founders upon settlement in the second quarter of 2021.

2021 compared to 2020. The general and administrative expenses of Tantan decreased by 125.2% from RMB73.0 million in 2020 to RMB(18.4) million in 2021, which was mainly caused by a decrease in share-based compensation expenses of RMB84.4million, due to the fair value remeasurement of liability classified options granted to Tantan’s founders upon settlement in the second quarter of 2021.

QOOL

Costs and expenses of QOOL mainly consist of production costs in connection with television content and film music, and staff related costs.

Cost of revenues

2022 compared to 2021. The cost of revenues of QOOL were RMB2.5 million (US$0.4 million) in 2022, and RMB37.5 million in 2021, which consisted primarily of personnel related costs.

2021 compared to 2020. The cost of revenues of QOOL were RMB37.5 million in 2021, and RMB22.1 million in 2020, which consisted primarily of production costs in connection with television content and film music.

Sales and marketing expenses

2022 compared to 2021. The sales and marketing expenses of QOOL were RMB5.0 million (US$0.7 million) in 2022, and RMB4.0 million in 2021.

2021 compared to 2020. The sales and marketing expenses of QOOL were RMB4.0 million in 2021, and RMB90,000 in 2020.

General and administrative expenses

2022 compared to 2021. The general and administrative expenses of QOOL were RMB15.0 million (US$2.2 million) in 2022, and RMB23.2 million in 2021, which consisted primarily of personnel related costs.

2021 compared to 2020. The general and administrative expenses of QOOL were RMB23.2 million in 2021, and RMB25.7 million in 2020, which consisted primarily of personnel related costs.

Unallocated

The unallocated is the impairment loss on goodwill and intangible assets, which was presented as an unallocated item in the segment information because we do not consider this as part of the segment operating performance measure.

Inflation

Since our inception, inflation in mainland China has not materially impacted our results of operations. According to the National Bureau of Statistics of China, the year-over-year percent changes in the consumer price index for December ~~2013, 2014~~2020, 2021 and ~~2015~~2022 were increases of ~~2.5%~~0.2%, 1.5% and ~~1.6%~~1.8%, respectively. Although we have not ~~in the past~~ been materially affected by inflation ~~since our inception,~~in the past, we can provide no assurance that we will not be affected ~~in the future~~ by higher rates of inflation in ~~China.~~

mainland China in the future.

~~Critical Accounting Policies~~108

B.	Liquidity and Capital Resources

As of December 31, 2022, we have financed our operations primarily through net cash provided by operating activities, as well as the issuance of equity and convertible note securities. As of December 31, 2020, 2021 and 2022, we had RMB3,363.9 million, RMB5,570.6 and RMB5,018.1 million (US$727.6 million), respectively, in cash and cash equivalents. Our cash and cash equivalents primarily consist of cash on hand and highly liquid investments, which are unrestricted from withdrawal or use, or which have original maturities of three months or less when purchased. We believe that our current cash and cash equivalents and our anticipated cash flows from operations will be sufficient to meet our anticipated working capital requirements and capital expenditures for the next 12 months. We may, however, need additional capital in the future to fund our continued operations.

In July 2018, we issued US$725 million principal amount of convertible senior notes due 2025. We will not have the right to redeem the notes prior to maturity, except in the event of certain changes to the laws or their application or interpretation; see “Item 3. Key Information—D. Risk Factors—Risks Related to Our ADSs—Provisions of our convertible senior notes could discourage an acquisition of us by a third party.” Holders of the notes will have the right to require us to repurchase all or part of their notes in cash on July 1, 2023 or in the event of certain fundamental changes. Satisfying the obligations of the notes could adversely affect the amount or timing of any distributions to our shareholders. We may choose to satisfy, repurchase, or refinance the notes through public or private equity or debt financings if we deem such financings available on favorable terms.

In the future, we may rely significantly on dividends and other distributions paid by our mainland China subsidiaries for our cash and financing requirements. There may be restrictions on the dividends and other distributions by our mainland China subsidiaries. The mainland China tax authorities may require us to adjust our taxable income under the contractual arrangements that our mainland China subsidiaries currently have in place with the consolidated affiliated entities in a way that could materially and adversely affect the ability of our mainland China subsidiaries to pay dividends and make other distributions to us. In addition, under mainland China laws and regulations, our mainland China subsidiaries may pay dividends only out of its accumulated profits as determined in accordance with mainland China accounting standards and regulations. Our mainland China subsidiaries are required to set aside 10% of their accumulated after-tax profits each year, if any, to fund a statutory common reserve fund, until the aggregate amount of such fund reaches 50% of its respective registered capital. If the statutory common reserve fund is not sufficient to make up its losses in previous years (if any), our mainland China subsidiaries shall use the profits of the current year to make up the losses before accruing such statutory common reserve fund. At the discretion of the shareholders of our mainland China subsidiaries, they may, after accruing the statutory common reserve fund, allocate a portion of their after-tax profits based on mainland China accounting standards to discretionary common reserve fund. The statutory common reserve fund and the discretionary common reserve fund cannot be distributed as cash dividends. See “Item 3. Key Information—D. Risk Factors—Risks Related to Our Corporate Structure—We may rely on dividends paid by our mainland China subsidiaries to fund cash and financing requirements. Any limitation on the ability of our mainland China subsidiaries to pay dividends to us could have a material adverse effect on our ability to conduct our business and to pay dividends to holders of the ADSs and our ordinary shares.” Furthermore, our investments made as registered capital and additional paid-in capital of our mainland China subsidiaries, consolidated affiliated entities and their subsidiaries are also subject to restrictions on their distribution and transfer according to mainland China laws and regulations.

As a result, our mainland China subsidiaries, consolidated affiliated entities and their subsidiaries in mainland China are restricted in their ability to transfer their net assets to us in the form of cash dividends, loans or advances. As of December 31, 2022, the amount of the restricted net assets, which represents registered capital and additional paid-in capital cumulative appropriations made to statutory reserves, was RMB1,509.1 million (US$218.8 million). As of December 31, 2022, we held cash and cash equivalents of RMB715.5 million (US$103.7 million) in aggregate outside of the mainland China and RMB4,302.6 million (US$623.8 million) in aggregate in the mainland China, of which RMB4,302.5 million (US$623.8 million) was denominated in RMB and RMB136,676 (US$19,816) was denominated in U.S. dollars. Of such cash and cash equivalents held in the mainland China, our mainland China subsidiaries held cash and cash equivalents in the amount of RMB2,194.4 million (US$318.2 million), and the consolidated affiliated entities and their subsidiaries held cash and cash equivalents in the amount of RMB2,108.2 million (US$305.7 million).

109

As an offshore holding company, we are permitted under mainland China laws and regulations to provide funding from the proceeds of our offshore fund raising activities to our mainland China subsidiaries only through loans or capital contributions, and to the consolidated affiliated entities and their subsidiaries only through loans, in each case subject to the satisfaction of the applicable government registration and/or approval requirements. See “Item 3. Key Information—D. Risk Factors—Risks Related to Doing Business in Mainland China—mainland China regulation of loans to, and direct investment in, mainland China entities by offshore holding companies and governmental control of currency conversion may restrict or prevent us from using offshore funds to make loans to our mainland China subsidiaries and consolidated affiliated entities and their subsidiaries, or to make additional capital contributions to our mainland China subsidiaries.” As a result, there is uncertainty with respect to our ability to provide prompt financial support to our mainland China subsidiaries and consolidated affiliated entities when needed. Notwithstanding the foregoing, our mainland China subsidiaries may use their own retained earnings (rather than RMB converted from foreign currency denominated capital) to provide financial support to the consolidated affiliated entities either through entrustment loans from our mainland China subsidiaries to the consolidated affiliated entities or direct loans to such consolidated affiliated entities’ nominee shareholders, which would be contributed to the consolidated variable entities as capital injections. Such direct loans to the nominee shareholders would be eliminated in our consolidated financial statements against the consolidated affiliated entities’ share capital.

Our full-time employees in the mainland China participate in a government-mandated contribution plan pursuant to which certain pension benefits, medical care, unemployment insurance, maternity insurance, employee housing fund and other welfare benefits are provided to such employees. We accrue for these benefits based on certain percentages of the employees’ salaries. The total provisions for such employee benefits were RMB209.9 million, RMB241.7 million and RMB228.1 million (US$33.1 million) in 2020, 2021 and 2022, respectively.

The following table sets forth a summary of our cash flows for the periods indicated:


	Year Ended December 31,
	2020			2021			2022

	(in RMB thousands)
Net cash provided by operating activities		3,080,889			1,559,198			1,226,891
Net cash (used in) provided by investing activities		(748,466	)		2,550,342			1,715,845
Net cash used in financing activities		(1,498,150	)		(1,786,909	)		(3,432,559	)
Effect of exchange rate changes		(80,944	)		(41,669	)		41,390
Net increase (decrease) in cash and cash equivalents		753,329			2,280,962			(448,433	)
Cash and cash equivalents and restricted cash at beginning of period		2,612,743			3,366,072			5,647,034
Cash and cash equivalents and restricted cash at end of period		3,366,072			5,647,034			5,198,601

Anticipated Use of Cash

We intend to continue to invest in our research and development capabilities to grow our user base and enhance user experience. We intend to continue to market our services, promote our brand, strengthen our customer service capabilities and enhance monetization. In order to support our overall business expansion, we also expect to continue to make investments in our corporate facilities and information technology infrastructure. We may pursue strategic alliances and acquisitions that complement our social networking platforms. We plan to fund these expenditures with cash and cash equivalents that we have. From September 2020 to September 2021, we repurchased approximately 14.15 million ADSs for approximately US$182.4 million in the open market pursuant to our 2020 share repurchase plan. On June 7, 2022, our board of directors authorized a share repurchase program under which we may repurchase up to US$200.0 million of our shares over the next 24 months (“2022 Share Repurchase Plan”). From June 2022 to the date of this annual report, we repurchased approximately 12.1 million ADSs for approximately US$57.2 million in the open market pursuant to our 2022 Share Repurchase Plan. In March 2020, we declared a special cash dividend in the amount of US$0.76 per ADS, or US$0.38 per ordinary share. The aggregate amount of cash dividends paid was US$158.6 million, which was funded by surplus cash on our balance sheet. In March 2021, we declared another special cash dividend in the amount of US$0.64 per ADS, or US$0.32 per ordinary share. The aggregate amount of cash dividends paid was US$132.0 million, which was funded by surplus cash on our balance sheet. In March 2022, we declared a special cash dividend in the amount of US$0.64 per ADS, or US$0.32 per ordinary share. The aggregate amount of cash dividends paid was US$127.3 million, which was funded by surplus cash on our balance sheet. In March 2023, we declared a special cash dividend in the amount of US$0.72 per ADS, or US$0.36 per ordinary share. The aggregate amount of cash dividends to be paid is approximately US$137.0 million, which will funded by surplus cash on our balance sheet.

110

Operating Activities

Net cash provided by operating activities amounted to RMB1,226.9 million (US$177.9 million) in 2022, which was primarily attributable to a net income of RMB1,480.0 million (US$214.6 million), adjusted for non-cash items of RMB384.6 million (US$55.8 million) and an increase of RMB637.7 million (US$92.5 million) in working capital. The non-cash items primarily include RMB401.5 million (US$58.2 million) in share-based compensation expenses and RMB107.0 million (US$15.5 million) in depreciation of property and equipment, partially offset by RMB129.6 million (US$18.8 million) in gain from repurchase of convertible note. The increase in working capital was primarily attributable to a decrease in deferred tax liabilities of RMB187.1 million (US$27.1 million), a decrease in other current liabilities of RMB182.7 million (US$26.5 million) and a decrease in accounts payable of RMB115.4 million (US$16.7 million), partially offset by a decrease in other non-current assets of RMB60.9 million (US$8.8 million). The decrease in deferred tax liabilities was mainly because we paid withholding income tax of RMB360.0 million (US$52.2 million) in 2022, which was more than RMB164.3 million (US$23.8 million), the withholding income tax we accrued in 2022. The decrease in other current liabilities was mainly attributable to (i) a decrease in marketing promotional fees payable, (ii) a decrease in lease liabilities due within one year, (iii) a decrease in amount payable to repurchase our subsidiary’s share options and (iv) a decrease in payroll and welfare payable due to downsize, partially offset by an increase of contingent loss related to an ongoing investigation of the alleged illegal activity on the source of the funding consumed on Momo’s platform. The decrease in accounts payable was mainly due to a decrease in unpaid revenue sharing related to live video service, as a result of the decrease of live video service revenue. The decrease in other non-current assets was mainly attributable to the amortization of the net right-of-use assets.

Net cash provided by operating activities amounted to RMB1,559.2 million in 2021, which was primarily attributable to a net loss of RMB2,925.7 million, adjusted for non-cash items of RMB5,146.9 million and an increase of RMB662.0 million in working capital. The non-cash items primarily include RMB4,397.0 million in goodwill and intangible assets impairment, RMB475.8 million in share-based compensation expenses, RMB155.5 million in depreciation of property and equipment and RMB109.1 million in amortization of intangible assets. The increase in working capital was primarily attributable to a decrease in share-based compensation liabilities of RMB 678.2 million, an increase in other current assets of RMB151.2 million and a decrease in income tax payable of RMB110.7 million, partially offset by an increase in deferred tax liabilities of RMB180.2 million and an increase in other current liabilities of RMB60.7 million. The decrease in share-based compensation liability was mainly due to the cash payment of RMB678.2 million we made to Tantan’s founders to settle the previously granted liability-classified share options upon their termination of services with Tantan during the year of 2021. The increase in other current assets was mainly attributable to an increase in interest receivable for increased long-term deposits. The decrease in income tax payable was mainly due to the lower profit of 2021. The increase in deferred tax liabilities was mainly attributable to a withholding income tax accrued on undistributed earnings generated in 2021 by our WFOE, because we plan to remit WFOE’s earnings to its offshore parent company in the foreseeable future to fund its demand on US dollar in business operations, payments of dividends, potential investments, etc. The increase in other current liabilities was mainly attributable to (i) an increase in amount payable to repurchase our subsidiary’s share options, (ii) an increase in lease liabilities due within one year, partially offset by a decrease in payroll and welfare payable due to decreased bonus and downsized headcount.

Net cash provided by operating activities amounted to RMB3,080.9 million in 2020, which was primarily attributable to a net income of RMB2,100.4 million, adjusted for non-cash items of RMB1,126.2 million and an increase of RMB145.7 million in working capital. The non-cash items primarily include RMB678.7 million in share-based compensation expenses, RMB209.0 million in depreciation of property and equipment and RMB157.3 million in amortization of intangible assets. The increase in working capital was primarily attributable to an increase in other non-current assets of RMB138.5 million, a decrease in accrued expenses and other current liabilities of RMB120.4 million, and an increase in prepaid expenses and other current assets of RMB59.1 million, partially offset by an increase in other non-current liabilities of RMB85.1 million, an increase income tax payable of RMB82.5 million, and a decrease in accounts receivable of RMB52.2 million. The increase in other non-current assets was mainly attributable to (i) an increase in net right-of-use assets mainly due to new lease contracts for internet data center facilities and one of our major offices, and (ii) an increase in accumulated cost of films in the process of production or in the state of being unreleased. The decrease in accrued expenses and other current liabilities was mainly attributable to (i) a decrease in payroll and welfare payable due to decreased bonus, and (ii) a decrease in marketing promotional fees payable. The increase in prepaid expenses and other current assets was mainly attributable to (i) an increase in deposits at a third-party broker for repurchase of ordinary shares, and (ii) an increase in customer payment through third-party payment channels and cash deposited at third-party payment channels by us for the broadcasters and virtual gift recipients to withdraw their shared revenue, partially offset by a decrease in VAT input, mainly due to less revenue sharing with talent agencies. The increase in other non-current liabilities was mainly attributable to an increase in lease liabilities due in over one year. The increase in income tax payable was mainly attributable to a higher preferential tax rate to which one of our major profit generating entities is entitled for the year 2020. The decrease in accounts receivable was mainly attributable to a decrease in revenue from live video, mobile marketing and other services.

111

Investing Activities

Net cash provided by investing activities amounted to RMB1,715.8 million (US$248.8 million) in 2022, which was primarily due to cash received on maturity of short-term deposits, partially offset by the purchase of long-term deposits and short-term deposits.

Net cash provided by investing activities amounted to RMB2,550.3 million in 2021, which was primarily due to cash received on maturity of short-term deposits, partially offset by the purchase of long-term deposits and short-term deposits and payment of long-term investments.

Net cash used in investing activities amounted to RMB748.5 million in 2020, which was primarily due to the purchase of long-term deposits and short-term deposits, payment for short-term investments, purchase of servers, computers and other office equipment, and payment and prepayment of long-term investments, partially offset by cash received on maturity of short-term deposits and from sales of short-term and long-term investments.

Financing Activities

Net cash used in financing activities amounted to RMB3,432.6 million (US$497.7 million) in 2022, which was primarily attributable to the repurchase of our convertible notes, payment of our declared special cash dividend and repurchase of our ordinary shares.

Net cash used in financing activities amounted to RMB1,786.9 million in 2021, which was primarily attributable to the repurchase of our ordinary shares, payment of our declared special cash dividend and deferred payment for our business acquisition of Tantan.

Net cash used in financing activities amounted to RMB1,498.2 million in 2020, which was primarily attributable to payment of our declared special cash dividend, deferred payment for our business acquisition of Tantan, and repurchase of our ordinary shares and our subsidiary’s share options.

Material Cash Requirements

Our material cash requirements as of December 31, 2022 and any subsequent interim period primarily include our convertible notes obligations, operating lease obligations and investment commitment obligations.

Our convertible notes obligations primarily consist of the senior note we issued in July 2018, which bears an interest rate of 1.25% per year. In 2022, we repurchased US$338.0 million aggregate principal amount of the convertible senior note for an aggregate repurchase price of US$320.0 million including accrued and unpaid interest. Outstanding balance as of December 31, 2022 for our convertible notes obligations amounted to RMB2,752.4 million (US$399.1 million).

112

Our operating lease commitments consist of lease of offices under operating lease agreements, where a significant portion of the risks and rewards of ownership are retained by the lessor. Outstanding balance as of December 31, 2022 for our operating lease commitments amounted to RMB125.1 million (US$18.1 million).

Our investment commitment obligations consist of capital contribution obligations under certain investment arrangements which we entered into in 2022. The outstanding balance as of December 31, 2022 for our investment commitment obligations amounted to RMB85.0 million (US$12.3 million).

The following table sets forth our contractual obligations by specified categories as of December 31, 2022.


			Years ending December 31,
	Total		2023		2024		2025 and thereafter

	(RMB in thousands)
Convertible senior note obligations⁽¹⁾		2,752,366		33,362		33,362		2,685,642
Operating lease obligations⁽²⁾		125,097		89,642		22,245		13,210
Investment commitment obligations⁽³⁾		85,000		85,000		—		—

Notes:

(1)

Including estimated interest payments of RMB83.5 million in total (RMB33.4 million, RMB33.4 million and RMB16.7 million over the periods of less than one year, one to two years, and more than two years from December 31, 2022, respectively) and principal payments of RMB2,669.0 million, with the principal of the convertible senior note to be due in 2025. The holder of the convertible senior note will have the right to require us to repurchase all or part of their notes in cash on July 1, 2023. Please see “Convertible Senior Notes” under Note 10 to our audited consolidated financial statements included in this annual report beginning on page F-1.

(2)

Operating lease obligations represent our obligations for leasing internet data center facilities and office spaces, which include all future cash outflows under ASC Topic 842, Leases. Please see “Leases” under Note 11 to our audited consolidated financial statements included in this annual report beginning on page F-1.

(3)	Our investment commitment obligations primarily relate to capital contribution obligations under certain investment arrangements which are expected to be fulfilled by the end of 2023.

Other than the convertible senior note, operating lease and investment commitment shown above, we did not have any significant other commitments, long-term obligations, or guarantees as of December 31, 2022.

Holding Company Structure

Our company is a holding company with no material operations of its own. We conduct our operations primarily through our subsidiaries and the consolidated affiliated entities and their subsidiaries in mainland China. As a result, our ability to pay dividends depends upon dividends paid by our subsidiaries. If our subsidiaries or any newly formed subsidiaries incur debt on their own behalf in the future, the instruments governing their debt may restrict their ability to pay dividends to us. In addition, our subsidiaries are permitted to pay dividends to us only out of their retained earnings, if any, as determined in accordance with mainland China accounting standards and regulations. Under mainland China law, each of our mainland China subsidiaries and the consolidated affiliated entities is required to set aside 10% of their after-tax profits each year, if any, to fund a statutory common reserve until such reserve reaches 50% of their registered capital. Although the statutory common reserves can be used, among other ways, to increase the registered capital and eliminate future losses in excess of retained earnings of the respective companies, the reserve funds are not distributable as cash dividends except in the event of liquidation. As a result of these mainland China laws and regulations, the capital and statutory common reserves restricted which represented the amount of net assets of our relevant subsidiaries in mainland China not available for distribution were RMB1,509.1 million (US$218.8 million) as of December 31, 2022.

113

Capital Expenditures

Our capital expenditures amounted to RMB124.1 million, RMB95.3 million and RMB80.4 million (US$11.7 million) in 2020, 2021 and 2022, respectively. In the past, our capital expenditures were principally incurred to purchase servers, computers and other office equipment, and to pay for leasehold improvements for our offices. As our business expands, we may purchase new servers, computers and other equipment in the future, as well as make leasehold improvements.

C.	Research and Development

We focus our research and development efforts on the continual improvement and enhancement of our platform’s features and services, architecture and technological infrastructures, as well as security and integrity of our platform to protect the security and privacy of our users. We have a large team of engineers and developers, which accounted for approximately 63.0% of our employees as of December 31, 2022. Most of our engineers and developers are based in our headquarters in Beijing.

For the three years ended December 31, 2020, 2021 and 2022, our research and development expenditures, including share-based compensation expenses for research and development personnel, were RMB1,167.7 million, RMB1,131.8 million and RMB1,006.2 million (US$145.9 million), respectively. For the year ended December 31, 2022, our research and development expenditures represented 7.9% of our total net revenues. Our research and development expenses primarily consist of salaries and benefits, including share-based compensation expenses, for research and development personnel, depreciation and office rental fees. Expenditures incurred during the research phase are expensed as incurred.

D.	Trend Information

Other than as disclosed elsewhere in this annual report, we are not aware of any trends, uncertainties, demands, commitments or events for the year ended December 31, 2022 that are reasonably likely to have a material and adverse effect on our net revenues, income, profitability, liquidity or capital resources, or that would cause the disclosed financial information to be not necessarily indicative of future results of operations or financial conditions.

E.	Critical Accounting Estimates

We prepare our financial statements in conformity with U.S. GAAP, which requires us to make estimates and assumptions that affect our reporting of, among other things, assets and liabilities, revenues and expenses and contingent assets and liabilities. We continually evaluate these estimates and assumptions based on the most recently available information, our own historical experience and other factors that we believe to be relevant under the circumstances. Since our financial reporting process inherently relies on the use of estimates and assumptions, our actual results could differ from what we expect. ~~This is especially true with some accounting policies that require higher degrees of judgment than others in their application.~~

We consider ~~the policies discussed below~~an accounting estimate to be critical if: (i) the accounting estimate requires us to ~~an understanding~~make assumptions about matters that were highly uncertain at the time the accounting estimate was made, and (ii) changes in the estimate that are reasonably likely to occur from period to period or use of different estimates that we reasonably could have used in the current period, would have a material impact on our financial condition or results of operations. There are other items within our financial statements that require estimation but are not deemed critical, as defined above. Changes in estimates used in these and other items could have a material impact on our financial statements. For a detailed discussion of our ~~audited consolidated financial statements because they involve the greatest reliance on our management’s judgment.~~significant accounting policies and related judgments, see “Notes to Consolidated Financial Statements – Note 2 Significant Accounting Policies.”

~~Revenue Recognition~~Impairment of Long-Lived Assets Other Than Goodwill

We ~~recognize revenues when persuasive evidence~~review our long-lived assets, including intangible assets with finite lives, for impairment whenever events or changes in circumstances indicate that the carrying amount of an ~~arrangement exists, delivery has occurred,~~asset (asset group) may no longer be recoverable. When these events occur, we test the ~~sales price is fixed or determinable, and collectability is reasonably assured. We principally derive our revenues~~recoverability of the asset (asset group) by comparing the carrying value of the long-lived assets (asset group) to the estimated undiscounted future cash flows expected to result from ~~membership subscriptions, mobile marketing services, mobile games, and other services, including~~ the use of ~~paid emoticons~~the assets and ~~live music and entertainment broadcasting services.~~

~~Membership Subscription~~~~. Membership subscription~~their eventual disposition. If the sum of the expected undiscounted cash flow is ~~a service package that enables members to enjoy additional functions and privileges. The contract periods for~~less than the membership subscription are one month, one quarter, six months and one year. All membership subscription is non-refundable. We collect membership subscription in advance and record it as deferred revenue. Revenues are recognized ratably overcarrying amount of the ~~contract period for the membership subscription services.~~

~~Mobile Marketing.~~ ~~We provide advertising and marketing solutions to customers, enabling them to promote their brands and to conduct effective marketing activities through our mobile application.~~

~~(i) Display-based online advertising services~~

~~For display-based online advertising services such as banners and location-based advertising on mobile applications,~~assets, we would recognize revenue ratably over the period that the advertising service is provided commencing on the date the customer’s advertisement is displayed, or on the number of times that the advertisement has been displayed for advertising arrangements based on cost per thousand impressions.

~~(ii) Performance-based mobile marketing services~~

We enable advertising customers to place links on our mobile platform on a pay-for-effectiveness basis, which is referred as cost for performance model. We charge fees directly from advertising customersan impairment loss based on the ~~effectiveness of advertising links, which is measured by active clicks. We estimate revenue based on our internal data, which are confirmed by the respective customers.~~

~~Our revenue transactions are based on standard business terms and conditions, which are recognized net of agency rebates, if applicable.~~

~~Mobile Games.~~ ~~We publish licensed mobile games developed by third-party game developers and our self-developed mobile games to game players through our mobile application.~~

~~Licensed mobile games services~~

~~We generate revenue by offering mobile games services developed by third-party game developers. All~~fair value of the ~~licensed games can be accessed and played by game players directly through our mobile game platform. We primarily view~~assets. Judgment is required to determine key assumptions adopted in the ~~game developers to be our customers and consider our responsibility under our agreements with the game developers to be promotion~~cash flow projections, such as internal forecasts, estimation of the ~~game developers’ games. We generally collect payments from game players in connection with~~long-term rate of growth for our business and determination of our weighted average cost of capital, and changes to key assumptions can significantly affect these cash flow projections and the ~~sale of in-game virtual currencies and remit certain agreed-upon percentages~~results of the ~~proceeds to~~impairment tests.

114

Impairment of Goodwill

Goodwill represents the ~~game developers~~excess of the purchase price over the fair value of identifiable net assets acquired in business combinations. Goodwill is not amortized but is tested for impairment annually, or more frequently if events or changes in circumstances indicate that it might be impaired. The impairment loss on goodwill was nil, RMB3,993.4 million and ~~records revenues net~~nil, respectively for the years ended December 31, 2020, 2021 and 2022. There was no goodwill balance as of ~~remittances. Purchases of in-game currencies are not refundable after they have been sold unless there are unused in-game currencies~~December 31, 2022.

Goodwill is tested for impairment at the ~~time~~reporting unit level on an annual basis and between annual tests, if an event occurs or circumstances change that would more likely than not reduce the fair value of a ~~game~~reporting unit below its carrying value. These events or circumstances could include a significant change in the stock prices, business climate, legal factors, operating performance indicators, competition, or sale or disposition of a significant portion of a reporting unit. If it is ~~discontinued. Typically,~~more likely than not that the fair value of a ~~game will only be discontinued when~~reporting unit is less than its carrying amount, the monthly revenues generated by a game become consistently insignificant. We do not currently expect to pay any material cash refunds to game players or game developers in connection with a discontinued game.

~~Licensed mobile game revenue recognition involves certain management judgments, such as determining who~~quantitative impairment test is performed. The quantitative impairment test compares the ~~principal in providing game services to our players, estimating the consumption date~~fair value of the ~~in-game currencies and~~reporting unit with its carrying amount, including goodwill. If the ~~period~~carrying amount of ~~player relationship. We concluded~~a reporting unit exceeds its fair value, an impairment loss shall be recognized in an amount equal to that ~~licensed game developers are the principals based on the fact that the games are primarily hosted by the game developers and such developers are responsible for the maintenance~~excess.

Application of the ~~games~~goodwill impairment test requires judgment, including the identification of reporting units, assignment of assets and liabilities to reporting units, assignment of goodwill to reporting units, and determination of the ~~prices~~fair value of each reporting unit. The estimation of fair value of each reporting unit using a discounted cash flow methodology also requires significant judgments, including estimation of future cash flows, which is dependent on internal forecasts of revenue and operating margin, estimation of the ~~virtual items used in the games. Our primary responsibility is to promote the games~~long-term rate of ~~the third-party developers, provide virtual currency exchange services,~~growth for our business, and offer customer support to resolve registration, log-in, virtual currency exchange and other related issues. Therefore, we report such revenues net of predetermined revenue-sharing with the game developers and commission fees made to third-party application stores and other payment channels.

~~(i) Non-exclusive licensed mobile games services~~

We enter into non-exclusive agreements with game developers and offer our mobile game platform for the mobile games developed by such game developers. We have determined that we have no additional performance obligation to the developers or game players upon players’ completion of the corresponding in-game purchase. Therefore, revenues from the sale of in-game currencies are primarily recorded net of remittances to game developers and commission fees made to third-party application stores and other payment channels and deferred until the estimated consumption date by individual games (i.e., the estimated date in-game currencies are consumed within the game), which is typically within a short period of time ranging from one to six days after purchase of the in-game currencies.

~~We estimate the in-game virtual currency consumption date based on the consumption behavior of game players for each reporting period. The amount and timing~~determination of our ~~game revenues could be materially different for any period if management made different judgments or utilized different estimates. Any adjustments arising from changes in~~weighted average cost of capital. Specifically, the ~~estimate would be applied prospectively on the basis that such changes are caused by new information indicating~~discount cash flow methodology included a ~~change in the user behavior pattern.~~

~~(ii) Exclusive licensed mobile games services~~

~~We enter into exclusive agreements with game developers~~weighted average cost of capital of 20% and provide our mobile game platform for the mobile games developed by such game developers. Under the exclusive agreements, players can access the games only through our platform. We have determined that we are obligated to provide mobile games services to game players who purchased virtual items to gain an enhanced game-playing experience over an average perioda terminal value growth rate of player relationship. We believe that our performance for, and obligation to, the game developers correspond to the game developers’ services to the players. We do not have access to the data on the consumption details and the types of virtual items purchased by game players. Therefore, we cannot estimate the economic life of the virtual items. However, we maintain historical data of a particular player when the player makes a purchase and logs into the relevant games. We have adopted a policy to recognize revenues net of remittances to game developers and commission fees made to third-party application stores and other payment channels over the estimated period of player relationship on a game-by-game basis.

~~We estimate the period of player relationship based on an assessment of our historical data, user behavioral patterns~~3% as well as industry research data. The period of player relationship is estimated based on data collected from those players who have purchased in-game currencies. We estimate the life of the player relationship to be the average period from the first purchase of in-game currencies to the date the player ceases to play the game.

To estimate the last login date the player plays the game, we selected all paying players that logged into the game during a particular period and continue to track these players’ log-on behaviors over a period to determine if each user is “active” or “inactive,” which is determined based on a review of the period of inactivity or idle period from the user’s last log-in. We observe the behaviors of these players to see whether they subsequently return to a game based on different inactive periods (e.g. not logging in) of one month. The percentage of players calculated that do not log back in is estimated to be the probability that players will not return to the game after a certain period of inactivity.

We consider a paying player to be inactive once he or she has reached a period of inactivity for which it is probable (defined as at least 80%) that a player will not return to a specific game. We believe that using an 80% threshold for the likelihood that a player will not return to a game is a reasonable estimate. We have consistently applied this threshold to our analysis.

If a new game is launched and only a limited period of paying player data is available, then we consider other qualitative factors, such as the playing patterns for paying players for other games with similar characteristics in the market. As of December 31, ~~2015, we operated seven games under exclusive arrangements and~~2021. The estimates used to calculate the ~~estimated period~~fair value of ~~the player relationship ranged~~a reporting unit change from 20year to ~~75 days.~~

Future usage patterns may differ from historical usage patterns and therefore the estimated period of player relationship with us may change in the future. The consideration of player relationship with each game isyear based on ~~our best estimate that takes into account all known~~operating results and ~~relevant information at~~market conditions. Changes in these estimates and assumptions could materially affect the ~~time~~determination of assessment. We assess the estimated period of player relationships on a quarterly basis. Any adjustments arising from changes in the estimated period of player relationships are applied prospectively as such change results from new information indicating a change in the game player’s behavioral patterns.

~~Self-developed mobile games~~

~~In February 2015, we launched the first self-developed game on our platform~~fair value and started to generate revenues by in-game sales of virtual item. We have determined that we have an implied obligation to the players who purchased the virtual items to gain an enhanced game-playing experience over the average playing period of the paying players, and accordingly, we recognize the revenues ratably over the estimated period of player relationship starting from the point in time when the players purchase the virtual items and when all other revenue recognition criteria are met. The estimated period of player relationship of our only self-developed game is 56 daysgoodwill impairment for the year ended December 31, 2015. We recognize revenue derived from our self-developed mobile games on a gross basis as we act as a principal to fulfill all obligations related to the mobile game operation. Commission fees paid to third-party application stores and other payment channels are recorded as cost of revenues.reporting unit.

~~Paid Emoticons~~. All paid emoticons are durable with indefinite lives and each of them is effective upon purchase payment made and download completed by a user. The price of each emoticon is fixed and identifiable. The revenues are recognized ratably over the estimated usage life of the emoticon (i.e. 180 days) by the user from the date when the emoticon is downloaded.

Revenue recognition from emoticons also involves certain management judgments. We performed the analysis to estimate the usage life of the emoticons based on the historical attrition pattern of the usage frequency per day from the launching date to December 31, 2015, weighted by the sales amount from each selected emoticon sample during such period. We reassess the estimated life periodically. Any adjustments arising from changes in the estimate would be applied prospectively to all existing emoticons which are not fully amortized on the basis that such changes are caused by new information indicating a change in the frequency of usage pattern.

~~Consolidation of Affiliated Entities~~

PRC regulations currently limit direct foreign ownership of business entities providing value-added telecommunications services, advertising services and internet services in the PRC where certain licenses are required for the provision of such services. To comply with these PRC regulations, we conduct a substantial majority of our business through Beijing Momo and its subsidiaries.

Beijing Momo IT, our wholly-owned PRC subsidiary, holds the power to direct the activities of Beijing Momo and its subsidiaries that most significantly affect our economic performance and bears the economic risks and receives the economic benefits of Beijing Momo and its subsidiaries through a series of contractual agreements with Beijing Momo and/or their nominee shareholders, including:

~~Exclusive cooperation agreements, as supplemented;~~

~~Equity interest pledge agreement;~~

~~Business operation agreement;~~

~~Exclusive call option agreement;~~

~~Powers of attorney; and~~

~~Based on the advice of Han Kun Law Offices, our PRC legal counsel, we believe above contractual agreements are currently legally enforceable under PRC law and regulations.~~

More specifically, through these contractual agreements, we believe that the nominee shareholders of Beijing Momo do not have the direct or indirect ability to make decisions regarding the activities of Beijing Momo that could have a significant impact on the economic performance of Beijing Momo because all of the voting rights of Beijing Momo’s nominee shareholders have been contractually transferred to Beijing Momo. Therefore, we have effective control over Beijing Momo. In addition, we believe that our ability to exercise effective control, together with the exclusive cooperation agreements, as supplemented, exclusive call option agreement and equity interest pledge agreement, give us the rights to receive substantially all of the economic benefits from Beijing Momo. Hence, we believe that the nominee shareholders of Beijing Momo do not have the rights to receive the expected residual returns of Beijing Momo, as such rights have been transferred to Beijing Momo. We evaluated the rights we obtained through entering into these contractual agreements and concluded we have the power to direct the activities that most significantly affect Beijing Momo’s economic performance and also have the rights to receive the economic benefits of Beijing Momo that could be significant to Beijing Momo.

~~Accordingly, we are the primary beneficiary of Beijing Momo and have consolidated the financial results of Beijing Momo and its subsidiaries in our consolidated financial statements.~~

The shareholders of Beijing Momo are also our shareholders, directors or officers and therefore have no current interest in acting contrary to the contractual arrangements. However, uncertainties in the PRC legal system could limit our ability to enforce these contractual arrangements and if the shareholders of Beijing Momo were to reduce their shareholdings in our company, their interests may diverge from our interests, which may increase the risk that they would act contrary to the contractual arrangements, such as causing Beijing Momo to not pay service fees under the contractual arrangements when required to do so. See “Item 3. Key Information—D. Risk Factors—Risks Related to Our Corporate Structure—We rely on contractual arrangements with Beijing Momo and its shareholders for our operations in China, which may not be as effective in providing operational control as direct ownership.”

Income Taxes

In preparing our consolidated financial statements, we must estimate our income taxes in each of the jurisdictions in which we operate. We estimate our actual tax exposure and assess temporary differences resulting from different treatment of items for tax and accounting purposes. These differences result in deferred tax assets and liabilities, which we include in our consolidated balance sheet. We must then assess the likelihood that we will recover our deferred tax assets from future taxable income. If we believe that recovery is not likely, we must establish a valuation allowance. To the extent we establish a valuation allowance or increase this allowance, we must include an expense within the tax provision in our consolidated statement of operations.

Management must exercise significant judgment to determine our provision for income taxes, our deferred tax assets and liabilities and any valuation allowance recorded against our net deferred tax assets. We base the valuation allowance on our estimates of taxable income in each jurisdiction in which we operate and the period over which our deferred tax assets will be recoverable. If actual results differ from these estimates or we adjust these estimates in future periods, we may need to establish an additional valuation allowance, which could materially impact our financial position and results of operations.

~~U.S. GAAP requires~~Impairment Assessment on Equity securities without readily determinable fair value

Equity securities without readily determinable fair values that ~~an entity recognize~~are accounted for using the ~~impact of an uncertain income tax position~~measurement alternative are subject to periodic impairment reviews. Our impairment analysis considers both qualitative and quantitative factors that may have a significant effect on the ~~income tax return at the largest amount that is more likely than not to be sustained upon audit by the relevant tax authority. If we ultimately determine that payment~~fair value of these ~~liabilities will be unnecessary,~~equity securities. Qualitative factors considered may include market environment and conditions, financial performance, business prospects, and other relevant events and factors. When indicators of impairment exist, we will reverse the liability and recognize a tax benefit during that period. Conversely, we record additional tax charges in a period in which we determine that a recorded tax liability is less than the expected ultimate assessment. We did not recognize any significant unrecognized tax benefits during the periods presented in this annual report.

~~Uncertainties exist with respect to the application~~perform quantitative assessments of the ~~New EIT Law to our operations, specifically with respect to our tax residency status. The New EIT Law specifies that legal entities organized outside~~fair value, which may include the use of market and income valuation approaches and the PRC will be considered residents for PRC income tax purposes if their “de facto management bodies” are located within the PRC. The New EIT Law’s implementation rules define the term “de facto management bodies” as “establishments that carry out substantialuse of estimates, which may include discount rates, investees’ liquidity and ~~overall management~~financial performance, and ~~control over the manufacturing and business operations, personnel, accounting, properties, etc.~~market data of ~~an enterprise.”~~

Because of the uncertainties resulted from limited PRC tax guidance on the issue, it is uncertain whether our legal entities organized outside of the PRC constitute residents under the New EIT Law. If one or more of our legal entities organized outside of the PRC were characterized as PRC tax residents, the impact would adversely affect our results of operations. See “Item 3. Key Information—D. Risk Factors—Risks Related to Doing Businesscomparable companies in ~~China.”~~

~~The useful lives and impairment of property and equipment~~

Property and equipment are stated at historical cost less accumulated depreciation. Depreciation is computed using the straight-line method over the estimated useful lives of the assets, generally from three to five years.similar industries. Judgment is required to determine the ~~estimated useful lives~~appropriateness of ~~assets, especially for computer equipment, including determining how long existing equipment~~the valuation approaches and the weighting and impact of the abovementioned factors. Changes to this determination can function and when new technologies will be introduced at cost-effective price points to replace existing equipment. Changes in these estimates and assumptions could materially impact our financial position andsignificantly affect the results of ~~operations.~~the quantitative assessments.

115

Impairment Assessment on Equity method investments

We ~~review our long-lived assets~~evaluate the equity method investments for impairment ~~whenever~~at each reporting date, or more frequently if events or changes in circumstances indicate that the carrying amount of ~~an asset may no longer~~the investment might not be recoverable. ~~When these events occur, we measure impairment~~Factors considered by ~~comparing~~us when determining whether an investment has been other-than-temporarily-impaired, includes, but are not limited to, the ~~carrying value~~length of the ~~long-lived assets~~time and the extent to which the ~~estimated undiscounted future cash flows expected to result from~~market value has been less than cost, the ~~use~~financial condition and near-term prospects of the ~~assets~~investee, and ~~their eventual disposition. If~~our intent and ability to retain the ~~sum~~investment until the recovery of ~~the expected undiscounted cash flow~~its carrying value.

An impairment change is ~~less than~~recorded if the carrying amount of the ~~assets, we would recognize an impairment loss based on~~investment exceeds its fair value and this condition is determined to be other-than-temporary.

We estimate the fair value of the ~~assets.~~

~~Fair value~~investee company based on comparable quoted price for similar investment in active market, if applicable, or discounted cash flow approach which requires significant judgments, including the estimation of ~~our ordinary shares~~

~~Prior to our initial public offering in December 2014, we were~~future cash flows, which is dependent on internal forecasts, the estimation of long-term growth rate of a ~~private company with no quoted market prices for our ordinary shares. We therefore needed to make estimates~~company’s business, the estimation of the ~~fair value of our ordinary shares at various dates for~~useful life over which cash flows will occur, and the ~~following purposes:~~

~~Determining the fair value of our ordinary shares at the date of issuance of convertible instruments as one~~determination of the ~~inputs into determining~~weighted average cost of capital. Changes to this determination can significantly affect the ~~intrinsic value~~results of the ~~beneficial conversion feature, if any.~~

impairment test.

Share-based Compensation

~~Determining the fair value of our ordinary shares at the date of the grant of a share-based compensation awards to our~~

Share-based payment transactions with employees, ~~as one of the inputs into determining~~executives and consultants are measured based on the grant date fair value of the ~~award.~~

~~Determining the fair value of our ordinary shares at the date of the grant~~equity instrument issued and recognized as compensation expense net of a ~~share-based compensation awards to non-employees as one of the inputs into determining the grant date fair value of the award and fair value as of each period end thereafter.~~

~~In determining the estimated fair value of our ordinary shares, we have considered the guidance prescribed by the~~~~AICPA Audit and Accounting Practice Aid, Valuation of Privately-Held-Company Equity Securities Issued as Compensation~~, or the Practice Aid, which sets forth the preferred types of valuation that should be used. These estimates are not necessary for determining the fair value of our ordinary shares after our ADSs began trading.

~~The following table sets forth the fair value of our ordinary shares estimated at different dates in 2012, 2013 and 2014:~~

Date
   Class of Shares    Fair Value
Purpose of Valuation
   DLOM Discount Rate
April 12, 2012
   Ordinary shares       US$ 0.01       To determine potential beneficial conversion feature in connection with the issuance of Series A-1 and Series A-2 preferred shares    33.5 % 40.0 %
June 11, 2012
   Ordinary shares       US$ 0.03       To determine potential beneficial conversion feature in connection with the issuance of Series A-3 preferred shares    33.5 % 38.0 %
July 13, 2012
   Ordinary shares       US$ 0.09       To determine potential beneficial conversion feature in connection with the issuance of Series B preferred shares    33.5 % 38.0 %
November 1, 2012
   Ordinary shares       US$ 0.19       Share option grant    33.0 % 35.0 %
October 8, 2013
   Ordinary shares       US$ 0.40       To determine potential beneficial conversion feature in connection with the issuance of Series C preferred shares    20.0 % 30.0 %
March 1, 2014
   Ordinary shares       US$ 4.00       Share option grant    16.0 % 21.0 %
April 22, 2014
   Ordinary shares       US$ 4.22       To determine potential beneficial conversion feature in connection with the issuance of Series D preferred shares    14.0 % 21.0 %
October 29, 2014
   Ordinary shares       US$ 6.75       Share option grant    5.0 % 18.0 %

~~Note: the fair values of ordinary shares stated above were adjusted by 1:10 share split that occurred in September 2012.~~

In determining the fair value of our equity interest in 2012, 2013 and 2014 prior to the completion of our initial public offering, we used both the market approach, also known as backsolve method, and the income approach, also known as the discounted cash flow method.

The backsolve method takes into consideration of the rights and preferences of each class of equity and solves for the total equity value that is comparable with a recent transaction in our own securities, considering the rights and preferences of each class of equity. The method was used when we completed financing transactions with investors on arm’s length basis.

The discounted cash flow, or DCF method, incorporates the projected cash flow of our management’s best estimation as of each measurement date. The projected cash flow estimation includes, among others, analysis of projected revenue growth, gross margins and terminal value. The assumptions used in deriving the fair value of ordinary shares are consistent with our business plan.

~~The DCF method of the income approach involves applying appropriate discount rates to discount the future cash flows forecast to present value. In determining an appropriate discount~~forfeiture rate ~~we have considered (i) the weighted-average cost of capital, or WACC and (ii) the rate of return expected by venture capitalists, or VCR.~~

~~Weighted Average Cost of Capital~~. We calculated the cost of equity of the business as of the valuation dates using the capital asset pricing model, or CAPM, the most commonly adopted method for estimating the required rate of return for equity. Under CAPM, the cost of equity is determined with consideration of, the risk-free rate, systematic risk, equity market premium, size of our company, the scale of our business and our ability in achieving forecasted projections. In deriving the WACCs, certain publicly traded companies involving social network were selected for reference as our guideline companies. To reflect the operating environment in China and the general sentiment in the U.S. capital markets towards the social network, the guideline companies were selected with consideration of the following factors: (i) the guideline companies should provide similar services, and (ii) the guideline companies should either have their principal operations in Asia Pacific region, as we operate in China, and/or are publicly listed companies in the United States as we planned to list our shares in the United States.

~~VCR~~. According to guidance prescribed by the AICPA Audit and Accounting Practice Aid, “Valuation of Privately-Held-Company Equity Securities Issued as Compensation,” because private enterprises often seek financing from private equity investors, including venture capital firms, the venture capital arena provides an observable market for the cost of capital for privately held enterprises. The expected return from venture capitalists for investing in our company when we were in expansion stage ranges from 35% to 50%. As we progress through early stage of development towards our initial public offering, the expected return from venture capitalists for investing in our company gradually declines when we were in bridge and IPO stage, which generally range from 25% to 35%.

After considering the WACC, VCR, the relative risk of the industry and the characteristics of our company, we used a discount rate of 40% as of the valuation dates in April 2012 and 18% as of October 2014. The decrease in discount rates was primarily due to our business growth and additional funding from multiple series of preferred shares investments.

~~The above assumptions used in determining the fair values were consistent with our business plan and major milestones we achieved. We also applied general assumptions, including the following:~~

~~there will be no major changes in the existing political, legal, fiscal and economic conditions in countries in which we will carry on our business;~~

there will be no major changes in the current taxation law in countries in which we operates, that the rates of tax payable remain unchanged and that all applicable laws and regulations will be complied with;

~~exchange rates and interest rates will not differ materially from those presently prevailing;~~

~~the availability of financing will not be a constraint on the future growth of our operation;~~

~~we will retain and have competent management, key personnel, and technical staff to support our ongoing operation; and~~

~~industry trends and market conditions for related industries will not deviate significantly from economic forecasts.~~

Since our capital structure comprised convertible preferred shares and ordinary shares at each grant date, we used the option-pricing method to allocate equity value of our company to preferred and ordinary shares, taking into account the guidance prescribed by the Practice Aid. This method involves making estimates of the anticipated timing of a potential liquidity event, such as a sale of our company or an initial public offering, and estimates of the volatility of our equity securities. The anticipated timing is based on the plans of our board and management. Estimating the volatility of the share price of a privately held company is complex because there is no readily available market for the shares. We estimated the volatility of our shares based on historical volatility of guideline companies’ shares. Had we used different estimates of volatility, the allocations between preferred and ordinary shares would have been different.

We also applied a discount for lack of marketability, or DLOM, ranging from 33.5% to 5.0%, to reflect the fact that there is no ready market for shares in a closely-held company like us. When determining the DLOM, the Black-Scholes option pricing model was used. Under this option-pricing method, the cost of the put option, which can hedge the price change before the privately held shares can be sold, was considered as a basis to determine the discount for lack of marketability. This option pricing method was used because it takes into account certain company-specific factors, including the timing of our initial public offering and the volatility of the share price of the guideline companies engaged in the same industry.

Since our initial public offering in December 2014, the determination of the fair value of the ordinary shares is based on the market price of our ADSs, each representing two Class A ordinary shares, traded on the NASDAQ Global Select Market.

~~Share-based Compensation~~

All share-based awards to employees and non-employee, including share options, restricted shares and restricted share units, are measured at the grant date based on the fair value of the awards. Share-based compensation, net of forfeitures, is recognized as an expense on a straight-line basis, over the requisite service period, ~~which~~with a corresponding impact reflected in additional paid-in capital.

The estimate of forfeiture rate is adjusted over the ~~vesting period.~~

requisite service period to the extent that actual forfeiture rate differs, or is expected to differ, from such estimates. We recognize changes in estimated forfeiture rate through a cumulative catch-up adjustment in the period of change.

~~The following table sets forth certain information regarding~~Changes in the terms or conditions of share options are accounted as a modification. We calculate the excess of the fair value of the modified option over the fair value of the original option immediately before the modification, measured based on the share price and other pertinent factors at the modification date. For vested options, ~~granted under our 2012 Plan~~we recognize incremental compensation cost in the period that the modification occurred. For unvested options, we recognize, over the remaining requisite service period, the sum of the incremental compensation cost and ~~2014 Plan to our employees and advisors at different dates in 2013, 2014 and 2015.~~the remaining unrecognized compensation cost for the original award on the modification date.

Grant Date
   Category    No. of Options
Grant    Exercise Price
per Option    Weighted
Average Fair
Value per
Option at the
Grant Dates    Intrinsic
Value per
Option at the
Grant Dates    Type of Valuation
October 10, 2013
   Staff    8,580,000       US$ 0.1404       US$ 0.29       US$ 0.26       Retrospective
October 10, 2013
   Management    5,500,000       US$ 0.1404       US$ 0.30       US$ 0.26       Retrospective
March 1, 2014
   Management    4,048,660       US$ 0.1404       US$ 3.87       US$ 3.86       Retrospective
March 1, 2014
   Staff    444,866       US$ 0.1404       US$ 3.87       US$ 3.86       Retrospective
March 1, 2014
   Non-employee    100,000       US$ 0.1404       US$ 3.87       US$ 3.86       Retrospective
October 29, 2014
   Staff    2,583,500       US$ 0.0002       US$ 6.75       US$ 6.75       Contemporaneous
October 29, 2014
   Management    380,000       US$ 0.0002       US$ 6.75       US$ 6.75       Contemporaneous
April 22, 2015
   Staff    1,680,800       US$ 0.0002       US$ 5.60       US$ 5.60       Contemporaneous
April 22, 2015
   Management    1,294,597       US$ 0.0002       US$ 5.60       US$ 5.60       Contemporaneous
May 4, 2015
   Staff    2,752,000       US$ 0.0002       US$ 5.63       US$ 5.63       Contemporaneous
August 13, 2015
   Staff    476,000       US$ 0.0002       US$ 7.86       US$ 7.86       Contemporaneous
October 15, 2015
   Staff    1,535,525       US$ 0.0002       US$ 6.51       US$ 6.51       Contemporaneous
November 13, 2015
   Staff    93,000       US$ 0.0002       US$ 6.34       US$ 6.34       Contemporaneous

Determining the fair value of share-based awards requires significant judgment. We ~~estimated~~estimate the fair value of share options using the Black-Scholes valuation model or binomial tree ~~or Black-Sholes option-pricing~~pricing model, ~~with~~which requires inputs such as the ~~assistance from an independent valuation firm. The~~ fair value of ~~each option grant is estimated on~~our ordinary shares, risk-free interest rate, expected dividend yield, expected life and expected volatility. If the ~~date~~fair value of ~~grant~~the underlying equity and any of the assumptions used in the Black-Scholes valuation model or binomial tree pricing model changes significantly, share-based compensation expense for future awards may differ materially compared with the ~~following key assumptions:~~awards granted previously.

   2013    2014    2015
Risk-free interest rate
   3.09%    2.44%-3.25%    2.15%-2.19%
Contractual term (number of years)
   10       10       10
Expected volatility
   54.40%    53.70%-57.50%    55.30%-55.70%
Expected dividend yield
   0.00%    0.00%    0.00%

~~The following table sets forth certain information regarding the restricted share units granted under our 2014 Plan to certain directors on December 11, 2014.~~116

Grant Date
   Category    No. of Restricted
Share Units
Grant    Weighted Average Fair
Value per Restricted
Share Units at the
Grant Date    Type of Valuation
December 11, 2014
   Management       40,001       US$ 8.51       Contemporaneous

~~Recent Accounting Pronouncements~~

~~A list of recent accounting pronouncements that are relevant to us is included in note 2 to our consolidated financial statements, which are included in this annual report.~~

B.	~~Liquidity and Capital Resources~~

As of December 31, 2015, we have financed our operations primarily through the issuance of preferred shares in private placements and net cash provided by operating activities. As of December 31, 2013 and 2014 and 2015, we had US$55.4 million, US$451.0 million and US$169.5 million, respectively, in cash and cash equivalents. Our cash and cash equivalents primarily consist of cash on hand and highly liquid investments, which are unrestricted from withdrawal or use, or which have original maturities of three months or less when purchased. We believe that our current cash and cash equivalents and our anticipated cash flows from operations will be sufficient to meet our anticipated working capital requirements and capital expenditures for the next 12 months. We may, however, need additional capital in the future to fund our continued operations.

In the future, we may rely significantly on dividends and other distributions paid by our PRC subsidiary for our cash and financing requirements. There may be restrictions on the dividends and other distributions by our PRC subsidiary. The PRC tax authorities may require us to adjust our taxable income under the contractual arrangements that our PRC subsidiary currently has in place with our consolidated affiliated entity in a way that could materially and adversely affect the ability of our PRC subsidiary to pay dividends and make other distributions to us. In addition, under PRC laws and regulations, our PRC subsidiary may pay dividends only out of its accumulated profits as determined in accordance with PRC accounting standards and regulations. Our PRC subsidiary is required to set aside at least 10% of its accumulated after-tax profits each year, if any, to fund a statutory reserve fund, until the aggregate amount of such fund reaches 50% of its respective registered capital. At its discretion, our PRC subsidiary may allocate a portion of its after-tax profits based on PRC accounting standards to staff welfare and bonus funds. The reserve fund and the staff welfare and bonus funds cannot be distributed as cash dividends. See “Item 3. Key Information—D. Risk Factors—Risks Related to Our Corporate Structure—We may rely on dividends paid by our PRC subsidiary to fund cash and financing requirements. Any limitation on the ability of our PRC subsidiary to pay dividends to us could have a material adverse effect on our ability to conduct our business and to pay dividends to holders of the ADSs and our ordinary shares.” Furthermore, our investments made as registered capital and additional paid-in capital of our PRC subsidiary, consolidated affiliated entity and its subsidiaries are also subject to restrictions on their distribution and transfer according to PRC laws and regulations.

As a result, our PRC subsidiary, consolidated affiliated entity and its subsidiaries in China are restricted in their ability to transfer their net assets to us in the form of cash dividends, loans or advances. As of December 31, 2015, the amount of the restricted net assets, which represents registered capital and additional paid-in capital cumulative appropriations made to statutory reserves, was US$91.0 million. As of December 31, 2015, we held cash and cash equivalents of US$82.4 million in aggregate outside of the PRC and US$87.1 million in aggregate in the PRC, of which US$75.8 million was denominated in RMB and US$11.3 million was in U.S. dollars. Of such cash and cash equivalents held in the PRC, our PRC subsidiary held cash and cash equivalents in the amount of US$11.3 million and RMB98.7 million (US$15.3 million), and our consolidated affiliated entity and its subsidiaries held cash and cash equivalents in the amount of RMB392.1 million (US$60.5 million).

As an offshore holding company, we are permitted under PRC laws and regulations to provide funding from the proceeds of our offshore fund raising activities to our PRC subsidiary only through loans or capital contributions, and to our consolidated affiliated entity and its subsidiaries only through loans, in each case subject to the satisfaction of the applicable government registration and approval requirements. See “Item 3. Key Information—D. Risk Factors—Risks Related to Doing Business in China—PRC regulation of loans to, and direct investment in, PRC entities by offshore holding companies and governmental control of currency conversion may restrict or prevent us from using offshore funds to make loans to our PRC subsidiary and consolidated affiliated entity and its subsidiaries, or to make additional capital contributions to our PRC subsidiary.” As a result, there is uncertainty with respect to our ability to provide prompt financial support to our PRC subsidiary and consolidated affiliated entity when needed. Notwithstanding the foregoing, our PRC subsidiary may use its own retained earnings (rather than RMB converted from foreign currency denominated capital) to provide financial support to our consolidated affiliated entity either through entrustment loans from our PRC subsidiary to our consolidated affiliated entity or direct loans to such consolidated affiliated entity’s nominee shareholders, which would be contributed to the consolidated variable entity as capital injections. Such direct loans to the nominee shareholders would be eliminated in our consolidated financial statements against the consolidated affiliated entity’s share capital.

Our full-time employees in the PRC participate in a government-mandated contribution plan pursuant to which certain pension benefits, medical care, unemployment insurance, employee housing fund and other welfare benefits are provided to such employees. We accrue for these benefits based on certain percentages of the employees’ salaries. The total provisions for such employee benefits were US$1.0 million, US$2.6 million and US$6.5 million in 2013, 2014 and 2015, respectively. We expect our contribution towards such employee benefits to increase in the future as we continue to expand our workforce and as salary levels of our employees continue to increase.

~~The following table sets forth a summary of our cash flows for the periods indicated:~~

   Year Ended December 31,
   2013 2014 2015
   (in US$ thousands)
Net cash (used in) provided by operating activities
   (5,135 ) (5,933 ) 57,252
Net cash used in investing activities
   (3,181 ) (9,549 ) (333,380 )
Net cash provided by (used in) financing activities
   45,000    412,256    (2,233 )
Effect of exchange rate changes on cash and cash equivalents
   151    (1,180 ) (3,138 )


Net increase in (decrease by) cash and cash equivalents
   36,835    395,594    (281,499 )
Cash and cash equivalents at beginning of period
   18,539    55,374    450,968


Cash and cash equivalents at end of period
   55,374    450,968    169,469

~~Anticipated Use of Cash~~

We intend to invest in our research and development capabilities to grow our user base and enhance user experience. We intend to continue to market our services, promote our brand, strengthen our customer service capabilities and enhance monetization. In order to support our overall business expansion, we also expect to make investments in our corporate facilities and information technology infrastructure. We may pursue strategic alliances and acquisitions that complement our social networking platform. We plan to fund these expenditures with cash and cash equivalents that we have.

~~Operating Activities~~

Net cash provided by operating activities amounted to US$57.3 million in 2015, which was primarily attributable to a net income of US$13.7 million, adjusted for non-cash items of US$23.7 million and an increase of US$19.9 million in working capital. The non-cash items primarily included US$17.4 million in share-based compensation expenses and US$6.6 million in depreciation on property and equipment. The increase in working capital was primarily attributable to an increase in accrued expenses and other current liabilities of US$20.7 million, an increase in deferred revenue of US$13.0 million, an increase in accounts payable of US$5.3 million and an increase in other non-current liabilities of US$1.8 million, which was partially offset by an increase in prepaid expenses and other current assets of US$11.2 million, an increase in accounts receivable of US$8.5 million and an increase in amount due from related parties of US$1.2 million. The increase in accrued expenses and other current liabilities was mainly attributable to (i) an increase in payable to employees for exercise of stock options, (ii) an increase in payroll and welfare payable due to increased headcount and increased salaries, and (iii) an increase in marketing promotional fees payable. The increase in deferred revenue was mainly attributable to the increase of our members and membership subscription fees that our members paid in advance, as well as the increase in mobile games revenues and mobile marketing revenues paid in advance. The increase in accounts payable was mainly attributable to the increase in revenue-sharing payable to game developers. The increase in prepaid expenses and other current assets was mainly attributable to (i) an increase in interest receivable, (ii) an increase in advance payment made to third-party game developers, (iii) an increase in VAT resulting primarily from the purchase of property and equipment as well as advertising activities; and (iv) an increase in commission fees we paid to third-party application stores and other payment channels for distributing our mobile application and services.

Net cash used in operating activities amounted to US$5.9 million in 2014, which was primarily attributable to a net loss of US$25.4 million, adjusted for non-cash items of US$9.5 million and increase of US$10.0 million in working capital. The non-cash items primarily included US$6.6 million in share-based compensation expenses and US$2.8 million in depreciation on property and equipment. The increase in working capital was primarily attributable to an increase in deferred revenue of US$12.8 million, an increase in accounts payable of US$4.5 million and an increase in accrued expenses and other current liabilities of US$5.9 million, which was partially offset by an increase in prepaid expenses and other current assets of US$7.5 million and an increase in accounts receivable of US$5.2 million. The increase in deferred revenue was mainly attributable to the increase of our members and membership subscription fees that our members paid in advance, as well as the increase in mobile games revenues paid in advance. The increase in accounts payable was mainly attributable to the increase in revenue-sharing payable to game developers. The increase in accrued expenses and other current liabilities was mainly attributable to (i) an increase in payroll and welfare payable due to an increased headcount and increased salaries, (ii) an increase in marketing promotional fees payable, and (iii) an increase in fees payable for professional services. The increase in prepaid expenses and other current assets is mainly attributable to (i) an increase in VAT resulting primarily from the purchase of property and equipment as well as advertising activities; (ii) an increase in commission fees we paid to third-party application stores and other payment channels for distributing our mobile application and membership subscription services; and (iii) an increase in advance payment made to third-party game developers.

Net cash used in operating activities amounted to US$5.1 million in 2013, which was primarily attributable to a net loss of US$9.3 million, adjusted for non-cash items of US$1.8 million and increase of US$2.4 million in working capital. The non-cash items included US$1.0 million in share-based compensation expenses and US$0.8 million in depreciation. The increase in working capital was primarily attributable to an increase in deferred revenue of US$3.7 million and an increase in accrued expenses and other current liabilities of US$1.3 million, which was partially offset by an increase in accounts receivable of US$1.9 million and an increase in prepaid expenses and other current assets of US$0.8 million. The increase in deferred revenue was mainly attributable to the increase of our members and membership subscription fees that our members paid in advance. The increase in accrued expenses and other current liabilities was mainly attributable to (i) increase in payroll and welfare payable relating to our increased headcount and increased salaries; and (ii) increased deferred government subsidy. The increase in accounts receivable is mainly attributable for the revenues collected through third-party payment channels. The increase in prepaid expenses and other current assets is mainly attributable to the increase in commission fees we paid to third-party application stores and other payment channels for distributing our mobile application and membership subscription services.

~~Investing Activities~~

Net cash used in investing activities amounted to US$333.4 million in 2015, which was primarily attributable to purchase of term deposits, purchase of servers, computers and other equipments, and payment and prepayment of long term equity investments.

Net cash used in investing activities amounted to US$9.5 million in 2014, which was primarily attributable to our purchase of servers, computers and other equipment and payments for leasehold improvements for our new office in Beijing, which we have occupied since June 2014.

~~Net cash used in investing activities amounted to US$3.2 million in 2013, which was primarily attributable to our purchase of servers, computer and other equipment.~~

~~Financing Activities~~

~~Net cash used in financing activities amounted to US$2.2 million in 2015, which was primarily attributable to payment of our costs incurred in connection with our initial public offering.~~

Net cash provided by financing activities amounted to US$412.3 million in 2014, which was primarily attributable to proceeds from our issuance of preferred shares to investors and proceeds from our initial public offering.

~~Net cash provided by financing activities amounted to US$45.0 million in 2013, which was attributable to proceeds from our issuance of preferred shares to investors.~~

~~Holding Company Structure~~

Our company is a holding company with no material operations of its own. We conduct our operations primarily through our wholly owned subsidiaries and our consolidated affiliated entity and its subsidiaries in China. As a result, our ability to pay dividends depends upon dividends paid by our wholly owned subsidiaries. If our wholly owned subsidiaries or any newly formed subsidiaries incur debt on their own behalf in the future, the instruments governing their debt may restrict their ability to pay dividends to us. In addition, our wholly owned subsidiaries are permitted to pay dividends to us only out of their retained earnings, if any, as determined in accordance with PRC accounting standards and regulations. Under PRC law, each of our wholly owned PRC subsidiaries and our consolidated affiliated entity is required to set aside at least 10% of its after-tax profits each year, if any, to fund a statutory reserve until such reserve reaches 50% of its registered capital. Although the statutory reserves can be used, among other ways, to increase the registered capital and eliminate future losses in excess of retained earnings of the respective companies, the reserve funds are not distributable as cash dividends except in the event of liquidation. As a result of these PRC laws and regulations, the capital and statutory reserves restricted which represented the amount of net assets of our relevant subsidiaries in PRC not available for distribution were US$91.0 million as of December 31, 2015.

~~Capital Expenditures~~

Our capital expenditures amounted to US$3.2 million, US$8.7 million and US$13.5 million in 2013, 2014 and 2015, respectively. In the past, our capital expenditures were principally incurred to purchase servers, computers and other office equipment, and to pay for leasehold improvements for our offices. As our business expands, we may purchase new servers, computers and other equipment in the future, as well as make leasehold improvements.

C. ~~Research and Development~~

We focus our research and development efforts on the continual improvement and enhancement of our platform’s features and services, as well as the design and development of games that are suitable for publishing on our own platform. We have a large team of engineers and developers, which accounted for over 40% of our employees as of December 31, 2015. Most of our engineers and developers are based in our headquarters in Beijing.

In the three years ended December 31, 2013, 2014 and 2015, our research and development expenditures, including share-based compensation expenses for research and development staff, were US$3.5 million, US$9.3 million and US$23.3 million. For the year ended December 31, 2015, our research and development expenditures represented 17.4% of our total revenues. Our research and development expenses primarily consist of salaries and benefits, including share-based compensation expenses, for research and development personnel and rental expenses. Expenditures incurred during the research phase are expensed as incurred. We expect our research and development expenses to increase as we expand our research and development team to develop new features and services for our platform and further enhance our big data analytical capabilities.

D.	~~Trend Information~~

Other than as disclosed elsewhere in this annual report, we are not aware of any trends, uncertainties, demands, commitments or events for the year ended December 31, 2015 that are reasonably likely to have a material and adverse effect on our net revenues, income, profitability, liquidity or capital resources, or that would cause the disclosed financial information to be not necessarily indicative of future results of operations or financial conditions.

E.	~~Off-Balance Sheet Arrangements~~

We have not entered into any financial guarantees or other commitments to guarantee the payment obligations of any third parties. We have not entered into any derivative contracts that are indexed to our shares and classified as shareholder’s equity or that are not reflected in our consolidated financial statements. Furthermore, we do not have any retained or contingent interest in assets transferred to an unconsolidated entity that serves as credit, liquidity or market risk support to such entity for such assets. We do not have any obligation, including a contingent obligation, arising out of a variable interest in any unconsolidated entity that we hold and material to us, where such entity provides financing, liquidity, market risk or credit risk support to us or engages in leasing, hedging or research and development services with us.

F.	~~Contractual Obligations~~

We lease certain of our facilities and offices under non-cancellable operating lease agreements. The rental expenses were US$0.9 million, US$3.0 million and US$3.7 million during the years ended December 31, 2013, 2014 and 2015, respectively.

~~As of December 31, 2015, future minimum commitments under non-cancelable agreements were as follows:~~

   Total    2016    2017    2018    2019 and
thereafter
   (in US$ thousands)
Operating lease
   2,047       1,605       416       26       —

~~We were also obligated to subscribe US$2.7 million for partnership interest of the equity-method investees under various arrangements as of December 31, 2015.~~

~~Other than the operating lease and investment commitments shown above, we did not have any significant other commitments, long-term obligations, or guarantees as of December 31, 2015.~~

G. ~~Safe Harbor~~

~~See “Forward-Looking Information.”~~

Item 6.

Directors, Senior Management and Employees

A.	Directors and Senior Management

The following table sets forth information regarding our executive officers and directors as of the date of this annual report.


Directors and Executive Officers	Age				Position/Title
Yan Tang	37	44			Chairman and Chief Executive Officer

~~Yong~~ Li Wang	41	39		~~Independent~~	Executive Director and President

Ho Kee Harry Man		46			Director

Sichuan Zhang	32	39			Director and ~~President of U.S. Operations~~Chief Operating Officer
~~David Ying Zhang~~				42		~~Director~~
~~Joseph C. Tsai~~	52		~~Director~~
~~Neil Nanpeng Shen~~	48		~~Independent Director~~
~~Feng Yu~~	52		~~Independent Director~~
Benson Bing Chung Tam	52	59			Independent Director

Dave Daqing Qi	52	59			Independent Director

~~Xiaoliang Lei~~Yongming Wu	32	48		~~Co-president~~	Independent Director

~~Jingping Zhang~~Cathy Hui Peng	41	44		~~Co-president~~
~~Zhiwei Li~~	30		~~Chief Technology Officer~~
~~Jonathan Xiaosong Zhang~~	52		Chief Financial Officer
~~Li Wang~~	32		~~Chief Operating Officer~~

Mr. Yan Tang is our co-founder, chairman and ~~has~~chief executive officer. Mr. Tang had served as our ~~director and~~ chief executive officer since our inception infrom July ~~2011.~~2011 to October 2020, and he resumed the chief executive role since October 2022. Mr. Tang was appointed to be the chairman of our board of directors in November 2014. Prior to founding our company, from 2003 to 2011, Mr. Tang worked at NetEase, Inc. ~~(NASDAQ:~~(Nasdaq: NTES), ~~or NetEase,~~ initially as editor and later editor-in-chief. Mr. Tang was named byFortune Magazine as one of its “40 Under 40,” a list of the most powerful, influential and important business elites under the age of 40, in October 2014. Mr. Tang received his bachelor of science degree from Chengdu University of Technology in China in 2000.

Mr. ~~Yong~~ Li is Wang has served as our ~~co-founder~~executive director and president since October 2022. Mr. Wang previously served as our director and chief executive officer between November 2020 and October 2022. Mr. Wang served as our chief operating officer from June 2014 to October 2020 and our president from April 2018 to October 2020. Mr. Wang joined the company as a core member of the founding team in 2011. Prior to joining us, Mr. Wang was the managing director of Laoluo English Training School, a start-up education service business from November 2008 to May 2011. He was the general administration staff at NEC China Co., Ltd. from April 2005 to April 2007. Mr. Wang received a bachelor’s degree in management from Beijing University of Aeronautics and Astronautics in China in 2004.

Mr. Ho Kee Harry Man has been our director since ~~April 2012~~June 2021 and had served as our ~~independent~~ director ~~since~~from October 2013 to December ~~2015.~~2014. Mr. ~~Li founded Fenbi Inc. (Cayman), a provider of online education services, in May 2011, in which he now serves~~Man joined Matrix Partners China as a ~~board director~~founding member of the team with a focus on investments in the mobile internet sector in 2008. Prior to Matrix, Mr. Man was Partner at WI Harper Group and ~~chief executive officer. In April 2012, he founded Beijing Jingguanyu Technology Co.,~~led investments in their China office in the TMT sector. Before WI Harper, Mr. Man led the corporate development teams of two US listed internet and mobile companies, and helped Linktone Ltd., (Nasdaq: LTON) and chinadotcom (Nasdaq: CHINA) in their investments in various sectors respectively. Mr. Man started his career as a ~~software service company, and~~management consultant with Arthur Andersen in 1998. Mr. Man has been its chief executive officer since then. From May 2005 to May 2010, Mr. Li was the editor-in-chief and vice president at NetEase, and then the vice president at NetEase and president of NetEase career portal business unit. Between February 2001 and May 2005, Mr. Li served as an executive editor, executive editor-in-chief and then general manager of Global Entrepreneur, a Chinese magazine. Mr. Li is also a director of two privately held companies. Mr. Li received his MBA degree from Peking University in 2004 and bachelor’s degree in law from Renmin Universityinvesting in China since 2000, and always focuses on early stage internet and mobile sectors. During the past 15 years, Mr. Man led investments in ~~1996.~~Momo (Nasdaq: MOMO), XPENG (US: XPEV), 21Vianet (Nasdaq: VNET), iKang (Nasdaq: KANG), Sungy Mobile (Nasdaq: GOMO), Editgrid (sold to Apple), Career International (SZ: 300662), Didi Chuxing.

Ms. Sichuan Zhang has been our director and chief operating officer since March 2023. She previously served as our director from April 2012 ~~and the president of our U.S. operations since June 2014.~~to November 2017. Ms. Zhang founded PUPUPULA, a children’s furniture and design company, in 2017, and served as its Chief Executive Officer until 2022. Ms. Zhang first joined the ~~company~~Company in July 2011 and was responsible for product design, then marketing strategies and executions. Prior to joining our company, from June 2009 to February 2011, she co-founded 4 Degrees Motion Design, an advertising design firm. She was an art director of Modern Media, a Chinese media company, from January 2009 to May 2009, a senior designer of Phoenix New Media Limited (NYSE: FENG) from January 2008 to January 2009, and a web designer of NetEase, Inc. from March 2006 to April 2007. Ms. Zhang received her bachelor’s degree in South China Normal University in 2005. Ms. Zhang is the ~~wife~~spouse of Mr. Yan ~~Tang.~~Tang, our co-founder, chairman and Chief Executive Officer.

~~Mr. David Ying Zhang~~ has been our director since April 2012. Mr. Zhang is a founding managing partner of Matrix Partners China, where he oversees all of the venture capital investment firm’s operations. Mr. Zhang is currently also a director of Cheetah Mobile Inc. (NYSE: CMCM). In 2002, Mr. Zhang established and has since expanded WI Harper Group’s Beijing operations and co-managed its China portfolios. Prior to joining WI Harper Group, Mr. Zhang worked at Salomon Smith Barney, where he was responsible for analyzing, structuring and marketing companies in the internet, software and semiconductor sectors. Before then, Mr. Zhang worked at ABN AMRO Capital as a senior venture associate. Mr. Zhang received master of science degree in biotechnology and business from Northwestern University in 1999 and bachelor of science degree in clinical science with minor in chemistry from California State University in 1997.

117

~~Mr. Joseph C. Tsai~~has been our director since February 2016. Mr. Tsai joined Alibaba Group in 1999 as a member of its founding team and has served as Alibaba Group’s executive vice chairman since May 2013. He has been a non-executive director of Alibaba Health Information Technology Limited since September 2015. Mr. Tsai previously served as Alibaba Group’s chief financial officer and has been a member of Alibaba Group’s board of directors since its formation. From 1995 to 1999, Mr. Tsai worked in Hong Kong with Investor AB, the main investment vehicle of Sweden’s Wallenberg family, where he was responsible for Asian private equity investments. Prior to that, Mr. Tsai was vice president and general counsel of Rosecliff, Inc., a management buyout firm based in New York. From 1990 to 1993, Mr. Tsai was an associate attorney in the tax group of Sullivan & Cromwell LLP, a New York-based international law firm. Mr. Tsai serves on the boards of directors of several of Alibaba Group’s investee companies. Mr. Tsai is qualified to practice law in the State of New York. He received his bachelor’s degree in economics and East Asian studies from Yale College and a juris doctor degree from Yale Law School.

~~Mr. Neil Nanpeng Shen~~ has been our director since May 2014 and our independent director since December 2015. Mr. Shen is the founding managing partner of Sequoia Capital China. Mr. Shen is a co-founder and director of Ctrip.com International, Ltd. (NASDAQ: CTRP), or Ctrip, a leading online travel services provider in China. Mr. Shen served as the chief financial officer of Ctrip from 2000 to October 2005 and as president from August 2003 to October 2005. Mr. Shen also co-founded Home Inns & Hotels Management Inc. (NASDAQ: HMIN), or Home Inns, a leading economy hotel chain in China. Prior to founding Ctrip and Home Inns, Mr. Shen had worked for more than eight years in the investment banking industry in New York and Hong Kong. Currently, Mr. Shen is the co-chairman of Home Inns, a non-executive director of E-House (China) Holdings Limited (NYSE: EJ), and a director of Qihoo 360 Technology Co. Ltd. (NYSE: QIHU) and Noah Holdings Limited (NYSE: NOAH). Mr. Shen received his master’s degree from the Yale University in 1992 and his bachelor’s degree from Shanghai Jiao Tong University in 1988.

~~Mr. Feng Yu~~ has been our director since May 2014 and our independent director since December 2015. Mr. Yu is the co-founder and chairman of Yunfeng Capital, a private equity fund established in 2010. Between 2006 and 2008, Mr. Yu was the co-chairman and president of Focus Media Holding Limited, which was previously listed on NASDAQ. Prior to that, in 2003, Mr. Yu founded Shanghai Target Media Co., Ltd., which operated out-of-home television advertising network, and served as its chief executive officer. Mr. Yu currently is also a director of Huayi Brothers Media Group, a company listed on the Shenzhen Stock Exchange (Stock Code: 300027) and Media Asia Group Holdings Limited, a company listed on the Hong Kong Stock Exchange (Stock Code: 8075). Mr. Yu is also an independent director of ZhongAn Online P&C Insurance Co., Ltd. and Beijing Vantone Real Estate Co., Ltd. listed on the Shenzhen Stock Exchange (Stock Code: 600246). Mr. Yu received an EMBA degree from China Europe International Business School in 2001, master’s degree in philosophy from Fudan University in 1991 and a bachelor’s degree in philosophy from the same university in 1986.

Mr. Benson Bing Chung Tam has served as our independent director since December 2014. Mr. Tam is a chartered accountant. ~~He is the founder and chairman of~~In March 2012, Mr. Tam founded Venturous Group, a global CEO network based in ~~Beijing.~~Beijing, and has been serving as its chairman since then. From 2002 to February 2012, Mr. Tam was a partner and head of technology investments at Fidelity Growth Partners Asia (formerly named Fidelity Asia Ventures)., where he led a team of five professionals focused on technology investment. Prior to joining Fidelity Growth Partners Asia, Mr. Tam was a partner of Electra Partners Asia from 1998 to 2002, and was the founding director of Hellman & Friedman Asia from 1992 to 1998. Mr. Tam worked in M&A corporate finance at S.G. Warburg from 1989 to 1992. Mr. Tam ishas been a Chartered Accountant since 1989. Mr. Tam currently also serves as a director of certain privately held companies. Mr. Tam received his master’s degree in computer science from Oxford University in 1986 and his bachelor’s degree in civil engineering from Imperial College of London University in 1984.

Dr. Dave Daqing Qi has served as our independent director since December 2014. Dr. Qi is a professor of accounting and the former associate dean of the Cheung Kong Graduate School of Business. He began teaching at the Cheung Kong Graduate School of Business in 2002 and was the founding director of the Executive MBA program. Prior to that, Dr. Qi was an associate professor at the School of Accounting of the Chinese University of Hong Kong. Dr. Qi also serves as director of a number of public companies, such as Sohu.com ~~(NASDAQ:~~(Nasdaq: SOHU), ~~iKang Healthcare Group (NASDAQ: KANG), Jutal Offshore Oil Services Limited (HKEx: 3303), Wanda Commercial Properties (Group) Co., Limited (HKEx: 0169) and Reorient~~Yunfeng Financial Group Limited (HKEx: 0376), Sinomedia Holding Limited (HKEx: 0623), Boison Finance Group Limited (HKEx: 0888) and Dalian Haidao International Holding Limited (HKEx: 6862). He received his Ph.D. degree in accounting from the Eli Broad Graduate School of management of Michigan State University in 1996, MBA degree from the University of Hawaii at Manoa in 1992 and bachelor of science and bachelor of arts degrees from Fudan University in 1985 and 1987, respectively. ~~Dr. Qi is currently a member of the American Accounting Association.~~

Mr. ~~Xiaoliang Lei~~ ~~is our co-founder and~~Yongming Wu has been our ~~co-president~~independent director since ~~June 2014.~~December 2018. Mr. ~~Lei~~Wu is ~~responsible for product development. Prior to co-founding our company, Mr. Lei was the product management staff then manager at NetEase, from 2008 to 2011. Mr. Lei was an editor in charge~~also a director and founding partner of content development and team management at 21CN Game Channel, a game information exchange platform in China from 2004 to 2008. Mr. Lei received his bachelor of science degree in software engineering from South China University of Technology in 2004.

~~Mr. Jingping Zhang~~ ~~has been our co-president since March 2014. Prior to joining us, Mr. Zhang was a partner at Concord & Partners, a PRC law firm, from June 2012 to March 2014,~~Vision Plus Capital and a ~~lawyer at King & Wood Mallesons from August 2008 to June 2012.~~co-founder of Alibaba Group. Mr. ~~Zhang had served as a legal counsel for a number of large companies and had participated~~Wu founded Vision Plus Capital in private equity fund formation and investments, M&As, corporate restructuring, domestic and offshore initial public offerings, as well as outbound investments by Chinese companies. Mr. Zhang was a journalist, chief reporter, columnist and editor-in-chief at various media organizations, including Nanfang Media Group from August 2007 to August 2009, Economic Observer from August 2005 to August 2007 and Guangzhou Media Group from August 2003 to August 2005. Mr. Zhang received a Ph.D. from Soochow University Law School in July 2007 and a bachelor’s degree of media and mass communication from Anhui Normal University in July 1998.

~~Mr. Zhiwei Li~~ ~~is our co-founder~~2015 and has ~~been our chief technology officer since our inception. Mr. Li is in charge~~led several key business segments of overseeing the technical architecture of our company. From July 2009 to March 2011, Mr. Li was the technology director in the finance channel at NetEase. He received his bachelor of science degree in software engineering from South China University of Technology in 2008.Alibaba Group.

~~Mr. Jonathan Xiaosong Zhang~~Ms. Cathy Hui Peng has ~~served as~~been our chief financial officer since ~~May 2014. From~~ July ~~2010~~2022. Prior to ~~April 2014, Mr. Zhang~~the current role, Ms. Peng served as ~~the chief~~our senior vice president of corporate finance. In this role she was responsible for our financial ~~officer~~planning and analysis, strategic investment and acquisitions, as well as corporate strategy and investor communications. Ms. Peng joined us in 2015 as vice president of ~~iSoftStone Holdings Limited,~~investor relations. Since then, she has played a key role in driving our success in various capital market transactions. From 2007 to 2015, Ms. Peng worked for Sina Corporation as director of investor relations and ~~was the company’s independent director between February 2010 and July 2010.~~a corporate treasurer. Prior to ~~joining iSoftStone Holdings Limited, Mr. Zhang~~that, she worked for several public and private companies in technology, media and telecom space where she served ~~as the chief~~various roles in accounting, financial ~~officer of several companies, including BJB Career Education Company Limited from June 2009 to June 2010,~~planning and ~~Vimicro International Corporation (NASDAQ: VIMC) from September 2004 to January 2007. From 2000 to 2004, Mr. Zhang worked as a manager~~analysis, mergers and then a senior manager at the Beijing office of PricewaterhouseCoopers. From 1995 to 1999, Mr. Zhang was an auditor and then a senior auditor at the Los Angeles office of KPMG LLP. Mr. Zhang is also an independent director, the chairman of audit committee, and a member of the compensation committee and the nominatingacquisitions and corporate ~~governance committee of Tarena International Inc. (NASDAQ: TEDU). Mr. Zhang~~communications. Ms. Peng started her career in auditing at Ernst &Young in 2001. Ms. Peng received ~~his master’s~~her bachelor degree in ~~accountancy from the University of Illinois in 1994, his master’s degree in meteorology from Saint Louis University in 1992, and his bachelor’s degree in meteorology~~Economics from Peking University in ~~1986. Mr. Zhang is a Certified Public Accountant in the State of California.~~

~~Mr. Li Wang~~ has been our chief operation officer since June 2014. Mr. Wang joined the company as our operation director in July 2011. Prior to joining us, Mr. Wang was the managing director of Laoluo English Training School, a start-up education service business from November 2008 to May 2011. He was the general administration staff at NEC China Co., Ltd. from April 2005 to April 2007. Mr. Wang received a bachelor’s degree in management from Beijing University of Aeronautics and Astronautics in China in 2004.2001.

B.	Compensation

For the fiscal year ended December 31, ~~2015,~~2022, we paid an aggregate of ~~approximately US$2.6~~RMB48.1 million (US$7.0 million) in cash to our executive officers, and we ~~did not pay any compensation~~paid an aggregate of RMB0.6 million (US$90,000) in cash to our non-executive directors. For share incentive grants to our directors and executive officers, see “—Share Incentive Plans.” We have not set aside or accrued any amount to provide pension, retirement or other similar benefits to our executive officers and directors. In accordance with the ~~PRC~~mainland China law, our ~~PRC subsidiary~~mainland China subsidiaries and consolidated affiliated ~~entity~~entities and ~~its~~their subsidiaries are required by law to make contributions equal to certain percentages of each employee’s salary for his or her pension insurance, medical insurance, unemployment insurance, ~~and other statutory benefits~~maternity insurance, work-related injury insurance and a housing provident fund.

Share Incentive Plans

2012 Plan

In November 2012, we adopted ~~a share incentive plan, or~~ the 2012 Plan, which was amended and restated in October 2013. The maximum aggregate number of shares which may be issued pursuant to all awards under the 2012 Plan is 44,758,220 Class A ordinary shares. With the adoption of our 2014 Plan, we no longer issue incentive shares under the 2012 Plan.

As of March 31, ~~2016,~~2023, options to purchase ~~30,787,026~~28,731,914 Class A ordinary shares (excluding those that have been forfeited) had been granted under the 2012 Plan, of which options to purchase an aggregate of ~~23,013,154~~3,525,676 Class A ordinary shares remained outstanding. The following paragraphs summarize the principal terms of the 2012 Plan.

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Plan Administration. Our board of directors or one or more committees consisting solely of directors designated by our board will administer the 2012 Plan. The committee or the full board of directors, as applicable, will determine the participants to receive awards, the type and number of awards to be granted to each participant, and the terms and conditions of each grant. The board or such committee(s) may also delegate, to the extent permitted by applicable laws, to one or more officers of our company, its powers under the 2012 Plan to determine the officers and employees who will receive awards, the number of such awards, and the terms and conditions thereof. Subject to the limitations under the 2012 Plan, the plan administrator from time to time may authorize, generally or in specific cases only, for the benefit of any participant, any adjustment in exercise or purchase price, vesting schedule, and ~~regranting~~re-granting of awards by waiver or by other legally valid means.

Award Agreement. Awards granted under the 2012 Plan are evidenced by an award agreement that sets forth terms, provisions and restrictions for each award, which may include the type of award, the term of the award, vesting provisions, the exercise or purchase price, and the provisions applicable in the event that the recipient’s employment or service terminates. Under the plan, each recipient of option award shall duly sign a power of attorney delegating the voting rights and signing rights of ordinary shares issued upon the exercise of the option award.

Eligibility. We may grant awards to our officers, directors, employees, consultants and advisors of our company.

Acceleration of Awards upon Change in Control. If a change in control of our company occurs, the plan administrator may, in its sole discretion, accelerate the awards so that they may immediately vest without any forfeiture restrictions, unless the plan administrator has otherwise provided for substitution, assumption, exchange or other continuation or settlement of the award.

Vesting Schedule.In general, the plan administrator determines the vesting schedule, which is specified in the relevant award agreement.

Exercise of Options. The plan administrator determines the exercise price for each option award, which is stated in the award agreement and shall in no case be lower than the par value of our ordinary shares. Once vested, an option award will remain exercisable until the date of expiration or termination, unless otherwise provided by the plan administrator. However, each option award shall expire no more than 10 years after its date of grant.

Transfer Restrictions.Awards may not be transferred in any manner by the recipient, save for certain exceptions including transfers to our company, transfers by gift to an affiliate or an immediately family member, transfer by will or the laws of descent and distribution, and other exceptions provided for by the plan administrator.

Amendment and Termination of the 2012 Plan. Subject to any shareholder approval, our board of directors may, at any time, terminate or, from time to time, amend, modify or suspend this 2012 Plan. Unless terminated earlier, the 2012 Plan will terminate at the close of business on October 31, 2022.

2014 Plan

We adopted ~~the 2014 share incentive plan, or~~ the 2014 Plan in November 2014. The maximum aggregate number of shares which may be issued pursuant to all awards under the 2014 Plan is initially 14,031,194 Class A ordinary shares. Beginning in 2017, the number of shares reserved for future issuances under the 2014 Plan ~~will~~would be increased by a number equal to 1.5% of the total number of outstanding shares on the last day of the immediately preceding calendar year, or such lesser number of Class A ordinary shares as determined by our board of directors, on the first day of each calendar year during the term of the 2014 Plan. As a result, the maximum aggregate number of shares which may be issued pursuant to all awards under the 2014 Plan has been increased to 56,071,439 Class A ordinary shares. As of March 31, ~~2016,~~2023, we have granted options to purchase ~~10,417,782~~44,919,207 Class A ordinary shares (excluding those that have been forfeited and ~~40,001~~canceled) and 960,001 restricted share units under our 2014 Plan, of which options to purchase an aggregate of ~~9,819,232~~23,842,913 Class A ordinary shares remained outstanding and ~~all~~251,875 restricted share units ~~had vested.~~remained outstanding. The following paragraphs summarize the terms of the 2014 Plan.

Types of ~~Awards~~.Awards. The 2014 Plan permits the awards of options, restricted shares and restricted share units.

Plan Administration. Our board or a committee of one or more members of our board duly authorized for the purpose of the 2014 Plan can act as the plan administrator.

Award Agreement. Options, restricted shares or restricted share units granted under the 2014 Plan are evidenced by an award agreement that sets forth the terms, conditions and limitations for each grant.

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Eligibility. We may grant awards to our employees, directors, consultants, or other individuals as determined, authorized and approved by the plan administrator. However, we may grant options that are intended to qualify as incentive share options only to our employees and employees of our parent companies and subsidiaries.

Acceleration of Awards upon Change in Control. If a change in control, liquidation or dissolution of our company occurs, the plan administrator may, in its sole discretion, provide for (i) all awards outstanding to terminate at a specific time in the future and give each participant the right to exercise the vested portion of such awards during a specific period of time, or (ii) the purchase of any award for an amount of cash equal to the amount that could have been attained upon the exercise of such award, or (iii) the replacement of such award with other rights or property selected by the plan administrator in its sole discretion, or (iv) payment of award in cash based on the value of Class A ordinary shares on the date of the change-in-control transaction plus reasonable interest.

Exercise of Options. The plan administrator determines the exercise price for each award, which is stated in the award agreement. The vested portion of option will expire if not exercised prior to the tenth anniversary after the date of a grant, unless extended by the plan administrator.

Exercise Price of Options. The exercise price in respect of any option shall be determined by the plan administrator and set forth in the award agreement which may be a fixed or variable price related to the fair market value of the shares. The exercise price per share subject to an option may be amended or adjusted in the absolute discretion of the plan administrator, the determination of which shall be final, binding and conclusive.

Vesting Schedule. In general, the plan administrator determines the vesting schedule, which is set forth in the award agreement.

Transfer Restrictions. Awards may not be transferred in any manner by the recipient other than by will or the laws of descent and distribution, except as otherwise provided by the plan administrator.

~~Termination~~.Termination. Unless terminated earlier, the 2014 Plan will terminate automatically in 2024.

The following table summarizes, as of March 31, ~~2016,~~2023, the outstanding options under the 2012 Plan and 2014 Plan granted to certain officers, directors, employees and consultants.

Name
   Class A
Ordinary Shares
Underlying
Options
Awarded    Exercise Price
(US$/Share)    Date of Grant    Date of Expiration
Yan Tang
   4,500,000       0.1404       October 10, 2013       October 9, 2023
   *       0.0002       October 29, 2014       October 28, 2024
   *       0.0002       April 22, 2015       April 21, 2025
   *       0.0002       March 31, 2016       March 30, 2026
Sichuan Zhang
   *       0.0327       November 1, 2012       October 31, 2022
   *       0.1404       October 10, 2013       October 9, 2023
David Ying Zhang
   *       0.1404       October 10, 2013       October 9, 2023
Xiaoliang Lei
   *       0.1404       October 10, 2013       October 9, 2023
   *       0.0002       October 29, 2014       October 28, 2024
   *       0.0002       April 22, 2015       April 21, 2025
   *       0.0002       March 31, 2016       March 30, 2026
Jingping Zhang
   *       0.1404       March 1, 2014       February 28, 2024
   *       0.0002       October 29, 2014       October 28, 2024
   *       0.0002       April 22, 2015       April 21, 2025
Zhiwei Li
   *       0.1404       October 10, 2013       October 9, 2023
   *       0.0002       October 29, 2014       October 28, 2024
   *       0.0002       April 22, 2015       April 21, 2025
   *       0.0002       March 31, 2016       March 30, 2026
Jonathan Xiaosong Zhang
   *       0.1404       March 1, 2014       February 28, 2024
   *       0.0002       October 29, 2014       October 28, 2024
   *       0.0002       April 22, 2015       April 21, 2025
   *       0.0002       March 31, 2016       March 30, 2026
Li Wang
   *       0.0327       November 1, 2012       October 31, 2022
   *       0.1404       October 10, 2013       October 9, 2023
   *       0.0002       October 29, 2014       October 28, 2024
   *       0.0002       April 22, 2015       April 21, 2025
   *       0.0002       March 31, 2016       March 30, 2026
Other individuals as a group
   4,174,116       0.0327       November 1, 2012       October 31, 2022
   1,906,496       0.1404       October 10, 2013       October 9, 2023
   262,434       0.1404       March 1, 2014       February 28, 2024
   1,741,448       0.0002       October 29, 2014       October 28, 2024
   1,532,500       0.0002       April 22, 2015       April 21, 2025
   2,502,000       0.0002       May 4, 2015       May 3, 2025
   432,000       0.0002       August 13, 2015       August 12, 2025
   1,379,275       0.0002       October 15, 2015       October 14, 2025
   93,000       0.0002       November 13, 2015       November 12, 2025



Total
   32,832,386

Name

Class A Ordinary
Shares Underlying
Outstanding Options

Exercise
Price
(US$/Share)

Date of Grant

Date of
Expiration

Yan Tang

0.1404

October 10, 2013

October 9, 2023

0.0002

October 29, 2014

October 28, 2024

0.0002

April 22, 2015

April 21, 2025

0.0002

March 31, 2016

March 30, 2026

0.0002

December 30, 2016

December 29, 2026

0.0002

March 7, 2017

March 6, 2027

0.0002

May 2, 2018

May 1, 2028

0.0002

April 15, 2019

April 14, 2029

0.0002

April 15, 2020

April 14, 2030

0.0002

April 15, 2021

April 14, 2031

0.0002

April 15, 2022

April 14, 2032

Li Wang

0.0002

October 29, 2014

October 28, 2024

0.0002

April 22, 2015

April 21, 2025

0.0002

March 31, 2016

March 30, 2026

0.0002

December 30, 2016

December 29, 2026

0.0002

March 7, 2017

March 6, 2027

0.0002

May 2, 2018

May 1, 2028

0.0002

April 15, 2019

April 14, 2029

0.0002

April 15, 2020

April 14, 2030

0.0002

April 15, 2021

April 14, 2031

0.0002

April 15, 2022

April 14, 2032

Cathy Hui Peng

0.0002

April 22, 2015

April 21, 2025

0.0002

June 16, 2016

June 15, 2026

0.0002

May 17, 2017

May 16, 2027

0.0002

December 5, 2017

December 4, 2027

120

Name

Class A Ordinary
Shares Underlying
Outstanding Options

Exercise
Price
(US$/Share)

Date of Grant

Date of
Expiration

0.0002

May 17, 2019

May 16, 2029

0.0002

May 28, 2020

May 27, 2030

0.0002

July 1, 2021

June 30, 2031

0.0002

April 15, 2022

April 14, 2032

Other individuals as a group

0.0327

November 1, 2012

October 31, 2022

0.1404

October 10, 2013

October 9, 2023

0.1404

March 1, 2014

February 28, 2024

0.0002

October 29, 2014

October 28, 2024

0.0002

April 22, 2015

April 21, 2025

0.0002

May 4, 2015

May 3, 2025

0.0002

August 13, 2015

August 12, 2025

0.0002

October 15, 2015

October 14, 2025

0.0002

November 13, 2015

November 12, 2025

0.0002

March 31, 2016

March 30, 2026

0.0002

June 16, 2016

June 15, 2026

0.0002

July 6, 2016

July 5, 2026

0.0002

October 15, 2016

October 14, 2026

0.0002

December 30, 2016

December 29, 2026

0.0002

January 3, 2017

January 2, 2027

0.0002

April 13, 2017

April 12, 2027

0.0002

May 17, 2017

May 16, 2027

0.0002

July 13, 2017

July 12, 2027

0.0002

September 1, 2017

August 31, 2027

0.0002

October 13, 2017

October 12, 2027

0.0002

December 5, 2017

December 4, 2027

0.0002

December 29, 2017

December 28, 2027

0.0002

April 13, 2018

April 12, 2028

0.0002

May 2, 2018

May 1, 2028

0.0002

July 13, 2018

July 12, 2028

0.0002

October 15, 2018

October 14, 2028

0.0002

December 29, 2018

December 28, 2028

0.0002

April 15, 2019

April 14, 2029

0.0002

May 17, 2019

May 16, 2029

0.0002

July 12, 2019

July 11, 2029

0.0002

October 15, 2019

October 14, 2029

0.0002

December 26, 2019

December 25, 2029

0.0002

April 15, 2020

April 14, 2030

0.0002

May 28, 2020

May 27, 2030

0.0002

July 8, 2020

July 7, 2030

0.0002

October 15, 2020

October 14, 2030

0.0002

December 30, 2020

December 29, 2030

0.0002

April 15, 2021

April 14, 2031

0.0002

July 1, 2021

June 30, 2031

0.0002

October 15, 2021

October 14, 2031

0.0002

November 1, 2021

October 31, 2031

0.0002

December 7, 2021

December 6, 2031

0.0002

January 7, 2022

January 6, 2032

0.0002

April 15, 2022

April 14, 2032

0.0002

July 1, 2022

June 30, 2032

0.0002

October 14, 2022

October 13, 2032

0.0002

December 28, 2022

December 27, 2032

0.0002

January 5, 2023

January 4, 2033

Total

27,368,589

*	Aggregate number of shares represented by all ~~grants of~~outstanding options ~~or restricted share units~~granted to the person account for less than 1% of our total outstanding ordinary shares on an as-converted basis.

~~BVI~~

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The following table summarizes, as of March 31, 2023, the outstanding restricted share units granted to certain directors under the 2014 Plan.
Name Restricted Share
Units for Class A
Ordinary Shares Date of Grant
Benson Bing Chung Tam
* May 17, 2016
* March 7, 2017
* May 2, 2018
* April 15, 2019
* April 15, 2020
* April 15, 2021
* April 15, 2022
Dave Daqing Qi
* May 17, 2016
* March 7, 2017
* May 2, 2018
* April 15, 2019
* April 15, 2020
* April 15, 2021
* April 15, 2022
Yongming Wu
* April 15, 2019
* April 15, 2020
* April 15, 2021
* April 15, 2022
Total
251,875
*
Aggregate number of shares represented by all restricted share units granted to the person account for less than 1% of our total outstanding ordinary shares on an as-converted basis.

Tantan 2015 Plan

In ~~January~~March 2015, ~~Momo Technology Overseas Holding Company Limited, or Momo BVI, our wholly owned BVI subsidiary,~~Tantan adopted the 2015 Share Incentive Plan, pursuant to which a ~~share incentive plan, or~~maximum aggregate of 1,000,000 ordinary shares are issuable upon exercise of awards. The board of directors of Tantan may in its discretion make adjustments to the ~~BVI Plan. The~~numbers of ordinary shares to be issued. In April 2016 and March 2017, the board of directors of Tantan approved to adjust the maximum aggregate number of ordinary shares issuable ~~pursuant~~upon exercise of awards to ~~awards granted~~2,000,000 and 2,793,812, respectively. Tantan split its shares 1-for-5 on August 30, 2019. As a result, the board of directors of Tantan approved the amended and restated 2015 share incentive plan (“Amended and Restated 2015 Plan”) and adjusted the maximum aggregate number of shares that may be issued under the ~~BVI~~Tantan 2015 Plan ~~is 30,000,000.~~to 9,039,035 shares. The ~~BVI~~Tantan 2015 Plan is administered by the board of directors of ~~Momo BVI~~Tantan or ~~one~~any committee or ~~more committees thereof,~~director appointed by the board of directors of Tantan, which shall determine the grantees to receive awards, the type and number of awards to be granted to each grantee, and the terms and conditions of each grant. Under the Tantan 2015 Plan, Tantan may grant options, ordinary shares, cash or other rights or benefits to its directors, officers, employees, consultants or “related entities” as defined in the Tantan 2015 Plan. As of March 31, 2023, options to purchase 955,998 ordinary shares of Tantan (adjusted retrospectively for share split and excluding those already forfeited or redeemed) granted under the Tantan 2015 Plan remained outstanding.

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Tantan 2018 Plan

In July 2018, Tantan adopted the 2018 Share Incentive Plan, pursuant to which the maximum aggregate number of ordinary shares to be issued was initially 5,963,674, plus the number of ordinary shares authorized for issuance under the Tantan 2015 Plan, in an amount equal to (i) the number of ordinary shares that were not granted pursuant to the Tantan 2015 Plan, plus (ii) the number of ordinary shares that were granted pursuant to the Tantan 2015 Plan that have expired without having been exercised in full or have otherwise become not exercisable. Tantan split its shares 1-for-5 on August 30, 2019. As a result, the board of directors of Tantan approved the amended and restated 2018 share incentive plan and adjusted the maximum aggregate number of shares that may be issued under the Tantan 2018 Plan to 29,818,370 shares, plus the number of ordinary shares authorized for issuance under Tantan’s Amended and Restated 2015 Plan, in an amount equal to (i) the number of ordinary shares that were not granted pursuant to the Amended and Restated 2015 Plan, plus (ii) the number of ordinary shares that were granted pursuant to the Amended and Restated 2015 Plan that have expired without having been exercised in full or have otherwise become unexercisable. The Tantan 2018 Plan is administered by the board of directors of Tantan or a committee designated by the board of directors of Tantan, which shall determine the participants to receive awards, the type and number of awards to be granted to each participant, and the terms and conditions of each grant. Under the ~~BVI~~Tantan 2018 Plan, ~~Momo BVI~~Tantan may grant options, restricted shares or ~~unrestricted ordinary shares~~restricted share units to its directors, officers, employees, consultants, shareholders, subsidiaries or “related entities” as defined in the Tantan 2018 Plan. The term of ~~Momo BVI, officers or employees~~the options granted under the Tantan 2018 Plan may not exceed ten years from the date of ~~Momo BVI or~~grant, except for any amendment, modification and termination of the Tantan 2018 Plan approved by its ~~affiliates, or consultants to Momo BVI or its affiliates.~~

~~In 2015, Momo BVI granted~~board. As of March 31, 2023, options to purchase ~~a total~~3,073,826 ordinary shares of ~~5,550,000~~Tantan (adjusted retrospectively for share split and 5,000,000 of its shares to employees and an executive of Momo Information Technologies Corp., its wholly owned subsidiary incorporated in Delaware, respectively, with exercise prices ranging from US$0.10 to US$0.11 per share forexcluding those already forfeited or redeemed) granted under the ~~awards granted to the employees and $0.11 per share for the award granted to the executive. Of such awards, options to purchase an aggregate of 9,600,000 shares~~Tantan 2018 Plan remained ~~outstanding as of March 31, 2016.~~outstanding.

Employment Agreements and Indemnification Agreements

We have entered into employment agreements with each of our executive officers. Under these agreements, each of our executive officers is employed for a specified time period. We may terminate employment for cause, at any time, without advance notice or remuneration, for certain acts of the executive officer, such as conviction or plea of guilty to a felony or any crime involving moral turpitude, negligent or dishonest acts to our detriment, or misconduct or a failure to perform agreed duties. We may also terminate an executive officer’s employment without cause upon three-month advance written notice. In such case of termination by us, we will provide severance payments to the executive officer as expressly required by applicable law of the jurisdiction where the executive officer is based. The executive officer may resign at any time with a three-month advance written notice.

Each executive officer has agreed to hold, both during and after the termination or expiry of his or her employment agreement, in strict confidence and not to use, except as required in the performance of his or her duties in connection with the employment or pursuant to applicable law, any of our confidential information or trade secrets, any confidential information or trade secrets of our clients or prospective clients, or the confidential or proprietary information of any third party received by us and for which we have confidential obligations. The executive officers have also agreed to disclose in confidence to us all inventions, designs and trade secrets which they conceive, develop or reduce to practice during the executive officer’s employment with us and to assign all right, title and interest in them to us, and assist us in obtaining and enforcing patents, copyrights and other legal rights for these inventions, designs and trade secrets.

In addition, each executive officer has agreed to be bound by non-competition and non-solicitation restrictions during the term of his or her employment and typically for one year following the last date of employment. Specifically, each executive officer has agreed not to (i) approach our suppliers, clients, customers or contacts or other persons or entities introduced to the executive officer in his or her capacity as a representative of us for the purpose of doing business with such persons or entities that will harm our business relationships with these persons or entities; (ii) assume employment with or provide services to any of our competitors, or engage, whether as principal, partner, licensor or otherwise, any of our competitors, without our express consent; or (iii) seek directly or indirectly, to solicit the services of any of our employees who is employed by us on or after the date of the executive officer’s termination, or in the year preceding such termination, without our express consent.

We have also entered into indemnification agreements with each of our directors and executive officers. Under these agreements, we agree to indemnify our directors and executive officers against certain liabilities and expenses incurred by such persons in connection with claims made by reason of their being a director or officer of our company.

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C.	Board Practices

Board of Directors

Our board of directors consists of ~~nine~~seven directors. A director is not required to hold any shares in our company to qualify to serve as a director. A director who is in any way, whether directly or indirectly, interested in a contract or transaction or proposed contract or transaction with our company must declare the nature of his or her interest at a meeting of the directors. Subject to applicable ~~NASDAQ~~Nasdaq Stock Market Rules and disqualification by the chairman of the relevant board meeting, a director may vote in respect of any contract or transaction or proposed contract or transaction notwithstanding that he or she may be interested therein, and if he or she does so his or her vote shall be counted and he or she may be counted in the quorum at the relevant board meeting at which such contract or transaction or proposed contract or transaction is considered. The directors may exercise all the powers of the company to borrow money, to mortgage or charge its undertaking, property and assets (present and future) and uncalled capital, and to issue debentures or other securities ~~whenever money is borrowed~~whether outright or as collateral security for any debt, liability or obligation of the company or of any third party. None of our non-executive directors has a service contract with us that provides for benefits upon termination of service.

Committees of the Board of Directors

We have established an audit committee, a compensation committee and a nominating and corporate governance committee under the board of directors. We have adopted a charter for each of the three committees. Each committee’s members and functions are described below.

Audit Committee

Our audit committee consists of Benson Bing Chung Tam and Dr. Dave Daqing ~~Qi and Yong Li.~~Qi. Mr. Tam is the chairman of our audit committee. We have determined that each member satisfies the “independence” requirements of the ~~NASDAQ~~Nasdaq Stock Market Rules and Rule 10A-3 under the Exchange Act, and that each of Mr. Tam and Dr. Qi qualifies as an “audit committee financial expert.” The audit committee oversees our accounting and financial reporting processes and the audits of the financial statements of our company. The audit committee is responsible for, among other things:

~~appointing the independent auditors and pre-approving all auditing and non-auditing services permitted to be performed by the independent auditors;~~

•

appointing the independent auditors and pre-approving all auditing and non-auditing services permitted to be performed by the independent auditors;

reviewing with the independent auditors any audit problems or difficulties and management’s response;

discussing the annual audited financial statements with management and the independent auditors;

reviewing the adequacy and effectiveness of our accounting and internal control policies and procedures and any steps taken to monitor and control major financial risk exposures;

reviewing and approving all proposed related party transactions;

meeting separately and periodically with management and the independent auditors; and

monitoring compliance with our code of business conduct and ethics, including reviewing the adequacy and effectiveness of our procedures to ensure proper compliance.

124

Compensation Committee

Our compensation committee consists of ~~Yong Li,~~ Benson Bing Chung Tam and Dr. Dave Daqing Qi. ~~Mr. Li is the chairman of our compensation committee.~~ We have determined that each member satisfies the “independence” requirements of the ~~NASDAQ~~Nasdaq Stock Market Rules. The compensation committee assists the board in reviewing and approving the compensation structure, including all forms of compensation, relating to our directors and executive officers. Our chief executive officer may not be present at any committee meeting during which his compensation is deliberated. The compensation committee is responsible for, among other things:

reviewing and approving, or recommending to the board for its approval, the compensation for our chief executive officer and other executive officers;

~~reviewing and recommending to the board for determination with respect to the compensation of our non-employee directors;~~

•

reviewing and recommending to the board for determination with respect to the compensation of our non-employee directors;

reviewing periodically and approving any incentive compensation or equity plans, programs or similar arrangements; and

selecting compensation consultant, legal counsel or other adviser only after taking into consideration all factors relevant to that person’s independence from management.

Nominating and Corporate Governance Committee

Our nominating and corporate governance committee consists of ~~Yong Li,~~ Benson Bing Chung Tam and Dr. Dave Daqing Qi. ~~Mr. Li is the chairperson of our nominating and corporate governance committee.~~ We have determined that each member satisfies the “independence” requirements of the ~~NASDAQ~~Nasdaq Stock Market Rules. The nominating and corporate governance committee assists the board of directors in selecting individuals qualified to become our directors and in determining the composition of the board and its committees. The nominating and corporate governance committee is responsible for, among other things:

selecting and recommending to the board nominees for election by the shareholders or appointment by the board;

reviewing annually with the board the current composition of the board with regards to characteristics such as independence, knowledge, skills, experience and diversity;

making recommendations on the frequency and structure of board meetings and monitoring the functioning of the committees of the board; and

advising the board periodically with regards to significant developments in the law and practice of corporate governance as well as our compliance with applicable laws and regulations, and making recommendations to the board on all matters of corporate governance and on any remedial action to be taken.

Duties of Directors

Under Cayman Islands law, our directors have a fiduciary duty to act honestly, in good faith and with a view to our best interests. Our directors must also exercise their powers only for a proper purpose. Our directors also owe to our company a duty to ~~act with skill~~exercise skills they actually possess and ~~care.~~such care and diligence that a reasonably prudent person would exercise in comparable circumstances. It was previously considered that a director need not exhibit in the performance of his duties a greater degree of skill than may reasonably be expected from a person of his knowledge and experience. However, English and Commonwealth courts have moved towards an objective standard with regard to the required skill and care and these authorities are likely to be followed in the Cayman Islands. In fulfilling their duty of care to us, our directors must ensure compliance with our memorandum and articles of association, as amended and restated from time to time, and the class rights vested thereunder in the holders of the shares. Our company has the right to seek damages if a duty owed by our directors is breached. A shareholder may in certain circumstances have rights to damages if a duty owed by the directors is breached.

125

Our board of directors has all the powers necessary for managing, and for directing and supervising, our business affairs. The functions and powers of our board of directors include, among others:

convening shareholders’ annual general meetings and reporting its work to shareholders at such meetings;

declaring dividends and distributions;

appointing officers and determining the term of office of the officers;

exercising the borrowing powers of our company and mortgaging the property of our company; and

approving the transfer of shares in our company, including the registration of such shares in our share register.

Terms of Directors and Executive Officers

Our officers are elected by and serve at the discretion of the board of directors. ~~Our directors are not subject to~~An appointment of a director may be on terms that the director shall automatically retire from office (unless he or she has sooner vacated office) at the next or a subsequent annual general meeting or upon any specified event or after any specified period; but no such term shall be implied in the absence of express provision. Each director whose term of office ~~and hold office until such time as they are~~expires shall be eligible for re-election at a meeting of the shareholders or re-appointment by the board of directors. Our directors may be removed from office by ordinary resolution of the shareholders or(including by the unanimous written resolution of all the ~~shareholders.~~shareholders). A director will cease to be a director automatically if, among other things, the director (i) becomes bankrupt or makes any arrangement or composition with his creditors; (ii) dies or is found by our company to be or becomes of unsound mind; (iii) resigns his or her office by notice in writing to our company; (iv) without special leave of absence from our board of directors, is absent from meetings of our board of directors for three consecutive meetings and the board resolves that his or her office be vacated; or (v) is removed from office pursuant to any other provision of our memorandum and articles of association.

Board Diversity Matrix

D.
Board Diversity Matrix (As of March 31, 2023)
Country of Principal Executive Offices			Beijing
Foreign Private Issuer			Yes
Disclosure Prohibited Under Home Country Law			No
Total Number of Directors			7


	Female		Male		Non-Binary		Did Not Disclose Gender
Part I: Gender Identity
Directors		1		6		0		0
Part II: Demographic Background
Underrepresented Individual in Home Country Jurisdiction		0
LGBTQ+		0
Did Not Disclose Demographic Background		0

126

Employees

We had ~~209, 456~~2,394, 2,051 and ~~779~~1,705 employees as of December 31, ~~2013, 2014~~2020, 2021 and ~~2015,~~2022, respectively. AsGeographically, as of December 31, ~~2015,~~2022, we had ~~779 employees, including 627~~1,636 employees in Beijing, 8835 employees in Chengdu, 55three employees in ~~Shanghai and nine~~Hong Kong, eight employees in ~~the United States.~~Guangzhou, 16 employees in Tianjin and seven employees in Hainan. The following table sets forth the numbers of our employees categorized by function as of December 31, ~~2015.~~2022.


	As of December 31, ~~2015~~ 2022
Function:
~~Operations~~		~~108~~
~~Service~~Research and development		~~319~~1,071
~~General administration and human resources~~		78
~~Sales, customer~~Customer service, sales and marketing		~~274~~205
Operations and cost		199
General administration		230

Total		~~779~~1,705

In addition to our ~~full-time~~ employees, we used ~~196~~1,173 contract workers dispatched to us by staffing agencies as of December 31, ~~2015.~~2022. These contract workers are primarily responsible for content management and monitoring and for customer service.

As required by laws and regulations in mainland China, we participate in various employee social security plans that are organized by municipal and provincial governments, including housing, pension, medical insurance and unemployment insurance. We are required under Chinese law to make contributions to employee benefit plans at specified percentages of the salaries, bonuses and certain allowances of our employees, up to a maximum amount specified by the local government from time to time.

We typically enter into standard confidentiality and employment agreements with our management and service development personnel. These contracts include a standard non-compete covenant that prohibits the employee from competing with us, directly or indirectly, during his or her employment and for up to two years after the termination of his or her employment, provided that we pay compensation equal to a certain percentage of the employee’s salary during the restriction period in accordance with applicable laws.

We believe that we maintain a good working relationship with our employees, and we have not experienced any significant labor disputes. None of our employees are represented by labor unions.

E.	Share Ownership

For information regarding the share ownership of our directors and officers, see “Item 7. Major Shareholders and Related Party Transactions—A. Major Shareholders.” For information as to stock options granted to our directors, executive officers and other employees, see “Item 6. Directors, Senior Management and Employees—B. Compensation—Share Incentive Plans.”

F.	Disclosure of Registrant’s Action to Recover Erroneously Awarded Compensation

Not applicable.

Item 7.

Major Shareholders and Related Party Transactions

A.	Major Shareholders

The following table sets forth information with respect to the beneficial ownership of our shares as of March 31, ~~2016~~2023 by:

each of our current directors and executive officers; and

each person known to us to own beneficially 5% or more ~~than 5%~~ of our total outstanding ordinary shares.

127

Percentage of beneficial ownership is based on a total of ~~384,253,289~~377,655,265 outstanding ordinary shares of our company as of the date of March 31, ~~2016,~~2023, comprising (i) ~~287,366,919~~297,290,799 Class A ordinary shares, excluding the ~~10,002,822~~5,454,480 Class A ordinary shares issued to our depositary bank for bulk issuance of ADSs reserved for future issuances upon the exercise or vesting of awards granted under our share incentive plans, and (ii) ~~96,886,370~~80,364,466 Class B ordinary shares.

Beneficial ownership is determined in accordance with the rules and regulations of the SEC. These rules generally provide that a person is the beneficial owner of securities if such person has or shares the power to vote or direct the voting of securities, or to dispose or direct the disposition of securities or has the right to acquire such powers within 60 days. In computing the number of shares beneficially owned by a person and the percentage ownership of that person, we have included shares that the person has the right to acquire within 60 days, including through the exercise of any option, warrant or other right or the conversion of any other security, in both the numerator and the denominator. These shares, however, are not included in the computation of the percentage ownership of any other person.

   Shares Beneficially Owned    Ordinary Shares
Beneficially
Owned    Voting Power
   Class A
Ordinary Shares    Class B
Ordinary Shares
Directors and executive officers**:
         %⁽¹⁾    %⁽²⁾
Yan Tang⁽³⁾
   *       96,886,370       25.9       77.2
Yong Li⁽⁴⁾
   14,846,899       —         3.9       1.2
Sichuan Zhang⁽⁵⁾
   *       96,886,370       25.9       77.2
David Ying Zhang⁽⁶⁾
   66,377,147       —         17.3       5.3
Joseph C. Tsai⁽⁷⁾
   —         —         —         —
Neil Nanpeng Shen⁽⁸⁾
   18,570,966       —         4.8       1.5
Feng Yu⁽⁹⁾
   18,570,966       —         4.8       1.5
Benson Bing Chung Tam⁽¹⁰⁾
   *       —         *       *
Dave Daqing Qi⁽¹¹⁾
   *       —         *       *
Xiaoliang Lei⁽¹²⁾
   9,960,127       —         2.6       *
Jingping Zhang⁽¹³⁾
   *       —         *       *
Zhiwei Li⁽¹⁴⁾
   8,401,037       —         2.2       *
Jonathan Xiaosong Zhang⁽¹⁵⁾
   *       —         *       *
Li Wang⁽¹⁶⁾
   *       —         *       *
All directors and executive officers as a group
   144,817,949       96,886,370       61.4       88.0
Principal Shareholders:

Gallant Future Holdings Limited⁽¹⁷⁾
   —         96,886,370       25.2       77.1
Alibaba Investment Limited⁽¹⁸⁾
   77,749,140       —         20.2       6.2
Matrix Partners China II Hong Kong Limited⁽¹⁹⁾
   65,970,897       —         17.2       5.3


	Shares Beneficially Owned				Ordinary Shares Beneficially Owned		Voting Power
Directors and executive officers**:	Class A Ordinary Shares		Class B Ordinary Shares		Ordinary Shares Beneficially Owned		Voting Power
Directors and executive officers**:	Class A Ordinary Shares		Class B Ordinary Shares		%(1)		%(2)
Yan Tang⁽³⁾		8,161,576		80,364,466		22.9		73.2
Li Wang⁽⁴⁾		*		—		*		*
Ho Kee Harry Man⁽⁵⁾		*		—		*		*
Sichuan Zhang⁽⁶⁾		8,161,576		80,364,466		22.9		73.2
Benson Bing Chung Tam⁽⁷⁾		*		—		*		*
Dave Daqing Qi⁽⁸⁾		*		—		*		*
Cathy Hui Peng⁽⁹⁾		*		—		*		*
Yongming Wu⁽¹⁰⁾		*		—		*		*
All directors and executive officers as a group		11,375,994		80,364,466		23.6		73.3

Principal Shareholders:
Gallant Future Holdings Limited⁽¹¹⁾		—		72,364,466		19.2		65.7
J O Hambro Capital Management Limited⁽¹²⁾		23,260,894		—		6.2		2.1
Renaissance Technologies LLC⁽¹³⁾		19,794,796		—		5.2		1.8
Invesco Ltd.⁽¹⁴⁾		18,859,080		—		5.0		1.7

Notes:

*	Less than 1% of our total outstanding Class A and Class B ordinary shares.

Except for ~~Messrs. David Ying Zhang, Joseph C. Tsai, Neil Nanpeng Shen, Feng Yu,~~ Mr. Benson Bing Chung Tam, ~~and~~ Mr. Dave Daqing Qi and Mr. Yongming Wu, the business address for our executive officers and directors is 20^th Floor, Block B, Tower 2, Wangjing SOHO, ~~No.1~~No. 1 Futongdong Street, Chaoyang District, Beijing 100102, People’s Republic of China.

(1)

Percentage ownership is calculated by dividing the number of Class A and Class B ordinary shares beneficially owned by a given person or group by the sum of (i) ~~384,253,289~~377,655,265 ordinary shares and (ii) and the number of shares such person or group has the right to acquire upon exercise of option, warrant or other right within 60 days after March 31, ~~2016.~~2023. Our Class B ordinary shares are convertible at any time by the holder thereof into Class A ordinary shares on a one-for-one basis.

(2)

For each person and group included in this column, percentage of voting power is calculated by dividing the voting power beneficially owned by such person or group by the voting power of all of our Class A and Class B ordinary shares as a single class. Each holder of Class A ordinary shares is entitled to one vote per share and each holder of our Class B ordinary shares is entitled to ten votes per share on all matters submitted to them for vote.

(3)

~~Includes~~

Represent (i) ~~96,886,370~~72,364,466 Class B ordinary shares held by Gallant Future Holdings Limited, (ii) 8,000,000 Class B ordinary shares held by New Heritage Global Limited, and (iii) 8,161,576 Class A ordinary shares that Mr. Tang is entitled to acquire within 60 days from March 31, ~~2016~~2023 upon exercise of share options held by him under our share incentive plans, and (iii) Class A ordinary shares that Ms. Sichuan Zhang, the wife of Mr. Tang, is entitled to acquire within 60 days from March 31, 2016 upon exercise of share options held by Ms. Zhang under our share incentive plans. Gallant Future Holdings Limited is incorporated in the British Virgin Islands and is ~~wholly owned~~wholly-owned by a family trust controlled by Mr. Tang.

~~(4)~~ ~~Represents 14,846,899 Class A ordinary shares held by Joyous Harvest Holdings~~ New Heritage Global Limited is a limited company incorporated in the British Virgin Islands and is wholly beneficially owned by Mr. Tang through a family ~~trust controlled by Mr. Li.~~trust.

128

~~(5)~~(4)

~~Includes (i) 96,886,370 Class B ordinary shares held by Gallant Future Holdings Limited, (ii)~~

Represents 2,151,790 Class A ordinary shares that Mr. ~~Yan Tang, the husband of Ms. Zhang,~~Wang is entitled to acquire within 60 days from March 31, ~~2016~~2023 upon exercise of share options held by him under our share incentive ~~plans,~~plans.

(5)	Represents 1 Class A ordinary share held by Matrix Partners China II Hong Kong Limited, as reported on the Amendment No. 8 to the Schedule 13D filed by Matrix Partners China II Hong Kong Limited, among others, on March 21, 2018.

(6)

Includes (i) 72,364,466 Class B ordinary shares held by Gallant Future Holdings Limited, (ii) 8,000,000 Class B ordinary shares held by New Heritage Global Limited, and (iii) 8,161,576 Class A ordinary shares that ~~Ms. Zhang~~Mr. Tang is entitled to acquire within 60 days from March 31, ~~2016~~2023 upon exercise of share options held by ~~her~~him under our share incentive plans. Gallant Future Holdings Limited is incorporated in the British Virgin Islands and is ~~wholly owned~~wholly-owned by a family trust controlled by Ms. Zhang’s husband, Mr. Yan Tang. New Heritage Global Limited is a limited company incorporated in the British Virgin Islands and is wholly beneficially owned by Mr. Tang through a family trust.

~~(6)~~(7)

Represents ~~(i) 52,770,897~~325,348 Class A ordinary shares held by ~~Matrix Partners China II Hong Kong Limited~~Mr. Tam and (ii) 13,200,000 Class A ordinary shares represented by ADSs held by Matrix Partners China II Hong Kong Limited, as reported on the Amendment No. 1 to Schedule 13D filed by Matrix Partners China II Hong Kong Limited, among others, on April 6, 2016, and (iii)21,875 Class A ordinary shares that Mr. ~~Zhang~~Tam is entitled to acquire within 60 days from March 31, ~~2016~~2022 upon the exercise of share options held by ~~him~~Mr. Tam under our share incentive plans. Matrix Partners China II Hong Kong Limited is a limited company incorporated in Hong Kong. Matrix Partners China II Hong Kong Limited is controlled and 90%-owned by Matrix Partners China II, L.P., and the remaining 10% shares is held by Matrix Partners China II-A, L.P. The general partner of Matrix Partners China II, L.P. and Matrix Partners China II-A, L.P. is Matrix China II GP GP, Ltd. The directors of Matrix China II GP GP, Ltd. are David Ying Zhang, Timothy A. Barrows, David Su and Yibo Shao. The business address of Mr. Zhang is Suite 2601, Taikang Financial Tower, No. 38 Yard East 3^rd ~~Ring Road North, Chaoyang District, Beijing 100026, People’s Republic of China.~~

~~(7)~~

~~The business address of Mr. Tsai is 26/F, Tower 1, Times Square, 1 Matheson Street, Causeway Bay, Hong Kong.~~

~~(8)~~

Represents, as reported on the Amendment No. 1 to Schedule 13D jointly filed by the Sequoia Funds (as defined below) on April 7, 2016: (i) 2,063,441 Class A ordinary shares held by SCC Growth I Holdco A, Ltd., a Cayman Islands exempted company, (ii) 11,348,923 Class A ordinary shares held by Sequoia Capital China GF Holdco III-A, Ltd., a Cayman Islands exempted company, and (iii) 5,158,602 Class A ordinary shares held by SC China Growth III Co-Investment 2014-A, L.P., a Cayman Islands exempted limited partnership. SCC Growth I Holdco A, Ltd., Sequoia Capital China GF Holdco III-A, Ltd. and SC China Growth III Co-Investment 2014-A, L.P. are herein collectively referred to as the Sequoia Funds. The shareholders of SCC Growth I Holdco A, Ltd. are Sequoia Capital China Growth Fund I, L.P., Sequoia Capital China Growth Partners Fund I, L.P. and Sequoia Capital China GF Principals Fund I, L.P. (collectively, the “GF I Funds”). The general partner of each of the GF I Funds is Sequoia Capital China Growth Fund Management I, L.P., whose general partner is SC China Holding Limited. The sole shareholder of Sequoia Capital China GF Holdco III-A, Ltd. is Sequoia Capital China Growth Fund III, L.P. The general partner of Sequoia Capital China Growth Fund III, L.P. is SC China Growth III Management, L.P., whose general partner is SC China Holding Limited. The general partner of SC China Growth III Co-Investment 2014-A, L.P. is SC China Growth III Management L.P., whose general partner is SC China Holding Limited. SC China Holding Limited is wholly owned by SNP China Enterprises Limited, a company wholly owned by Mr. Shen. As a result, Mr. Shen may be deemed to share voting and investment power with respect to the shares held by the Sequoia Funds. The business address of Mr. Shen is Room 3606, China Central Place Tower 3, 77 Jianguo Road Chaoyang District, Beijing 100027, China.

~~(9)~~

Represents 18,570,966 Class A ordinary shares held by Rich Moon Limited. Rich Moon Limited is 77.8% owned by Yunfeng Fund II, L.P., or YF Fund II, and 22.2% owned by Yunfeng Moon Co-invest, L.P., or YF Moon. The general partner of YF Fund II is Yunfeng Investment II, L.P. and the general partner of YF Moon is Yunfeng Moon Co-Invest GP, Ltd. Both general partners are in turn managed by their general partner, Yunfeng Investment GP II, Ltd. Mr. Yu has the sole power to direct the voting and disposition of shares of our company directly or indirectly held by Yunfeng Investment GP II, Ltd. The business address of Mr. Yu is Room 3501, 35/F, 1010 Huaihaizhong Road, Shanghai, People’s Republic of China.

~~(10)~~

The business address of Mr. Tam is Room 1-4-2503, No. 2 East Xibahe, Chaoyang District, Beijing, China.

~~(11)~~(8)

Represents 420,903 Class A ordinary shares and ADSs held by Mr. Qi and 21,875 Class A ordinary shares that Mr. Qi is entitled to acquire within 60 days from March 31, 2022 upon the exercise of share options held by Mr. Qi under our share incentive plans. The business address of Dr. Qi is Room 332, Tower E3, Oriental Plaza, 1 East Chang An Avenue, Dong Cheng District, Beijing 100738, China.

~~(12)~~(9)
Represents ~~(i)~~197,626 Class A ordinary shares that ~~Mr. Lei~~Ms. Peng is entitled to acquire within 60 days from March 31, ~~2016~~2023 upon exercise of share options held by her under our share incentive plans.
(10)
Represents 61,875 Class A ordinary shares held by Mr. Wu and 13,125 Class A ordinary shares that Mr. Wu is entitled to acquire within 60 days from March 31, 2023 upon exercise of share options held by him under our share incentive ~~plans, and (ii) 9,587,116~~plans. The business address of Mr. Wu is 8 Shenton Way, AXA Tower, #45-01, Singapore 068811.
(11)
Represents 72,364,466 Class AB ordinary shares held by ~~First Optimal~~Gallant Future Holdings Limited. Gallant Future Holdings Limited is a company incorporated in the British Virgin Islands and ~~wholly owned by a family trust controlled by Mr. Lei.~~
~~(13)~~ ~~Represents Class A ordinary shares that Mr. Zhang is entitled to acquire within 60 days from March 31, 2016 upon exercise of share options held by him under our share incentive plans.~~
~~(14)~~ Represents (i) Class A ordinary shares that Mr. Li is entitled to acquire within 60 days from March 31, 2016 upon exercise of share options held by him under our share incentive plans, and (ii) 8,028,026 Class A ordinary shares held by Fast Prosperous Holdings Limited, a company incorporated in the British Virgin Islands and wholly owned by a family trust controlled by Mr. Li.
~~(15)~~ ~~Represents Class A ordinary shares that Mr. Zhang is entitled to acquire within 60 days from March 31, 2016 upon exercise of share options held by him under our share incentive plans.~~
~~(16)~~ ~~Represents Class A ordinary shares that Mr. Wang has the right to acquire within 60 days from March 31, 2016 upon exercise of share options held by him under our share incentive plans.~~
~~(17)~~ ~~Represents 96,886,370 Class B ordinary shares held by Gallant Future Holdings Limited, a company incorporated in the British Virgin Islands and wholly owned~~wholly-owned by a family trust controlled by Mr. Yan Tang. Mr. Tang has sole power to direct the voting and disposition of shares of our company directly or indirectly held by Gallant Future Holdings Limited. The registered address of Gallant Future Holdings Limited is Sertus Chambers, P.O. Box 905, Quasticky Building, Road Town, Tortola, British Virgin Islands.
~~(18)~~(12)
Represents 77,749,140 Class A ordinary shares, including 1,480,000 Class A ordinary shares in the form of ADSs, held by Alibaba Investment Limited, as reported on the Schedule 13D jointly filed by Alibaba Investment Limited and Alibaba Group Holding Limited on April 7, 2016. The percentage of beneficial ownership in this annual report was calculated based on the total number of our Class A and Class B ordinary shares outstanding as of March 31, 2016. Alibaba Investment Limited is a limited liability company incorporated under the laws of the British Virgin Islands, and is wholly owned by Alibaba Group Holding Limited, which is listed on the New York Stock Exchange. The registered address of Alibaba Investment Limited is Trident Chambers, P.O. Box 146 Road Town, Tortola, British Virgin Islands.
~~(19)~~ ~~Represents (i) 52,770,897 Class A ordinary shares held by Matrix Partners China II Hong Kong Limited and (ii) 13,200,000~~23,260,894 Class A ordinary shares represented by ~~ADSs~~American depositary receipts held by ~~Matrix Partners China II Hong Kong~~J O Hambro Capital Management Limited, as reported on the Amendment No. 1 to Schedule 13D filed by Matrix Partners China II Hong Kong Limited, among others, on April 6, 2016. The percentage of beneficial ownership in this annual report was calculated based on the total number of our Class A and Class B ordinary shares outstanding as of March 31, 2016. Matrix Partners China II Hong Kong Limited is a ~~limited~~ company incorporated in ~~Hong Kong. Matrix Partners China II Hong Kong~~England and Wales with its business address at Level 3, 1 St James’s Market, London SW1Y 4AH, United Kingdom, based on a Schedule 13G filed by J O Hambro Capital Management Limited ~~is controlled and 90%-owned~~on February 11, 2020.
(13)
Represents 19,794,796 Class A ordinary shares represented by ~~Matrix Partners China II, L.P., and the remaining 10% shares is~~American depositary receipts held by ~~Matrix Partners China II-A, L.P. The general partner of Matrix Partners China II, L.P.~~Renaissance Technologies Holdings Corporation, a company incorporated in Delaware with its business address at 800 Third Avenue, New York, New York 10022, United States and Matrix Partners China II-A, L.P. is Matrix China II GP GP, Ltd. The directors of Matrix China II GP GP, Ltd. are David Ying Zhang, Timothy A. Barrows, David Su and Yibo Shao. Mr. Zhang, Mr. Barrows, Mr. Su and Mr. Shao share power to directmajority-owned by Renaissance Technologies LLC, based on a Schedule 13G/A jointly filed by the ~~voting and disposition of~~two entities on February 13, 2023.
(14)
Represents 18,859,080 Class A ordinary shares ~~of our company directly or indirectly~~represented by American depositary receipts held by ~~Matrix China II GP GP,~~Invesco Ltd. ~~The registered~~, a company incorporated in Bermuda with its business address ~~of Matrix Partners China II Hong Kong Limited is~~at 1555 Peachtree Street NE, Suite ~~3701, 37/F, Jardine House, 1 Connaught Place, Central, Hong Kong.~~1800, Atlanta, GA 30309, based on a Schedule 13G filed by Invesco Ltd. on February 2, 2023.

To our knowledge, on the same basis of calculation as above, ~~approximately 25.7%~~91.9% of our total issued and outstanding Class A ordinary shares were held by one record shareholder in the United States, namely, Deutsche Bank Trust Company Americas, the depositary of our ADS program, which held ~~98,725,728~~347,118,720 Class A ordinary shares represented by ~~49,362,864~~173,559,360 ADSs, including ~~10,002,822~~5,454,480 Class A ordinary shares underlying ~~5,001,411~~2,727,240 ADSs that it held on reserve for our company for the purposes of future issuances upon the exercise or vesting of awards granted under our share incentive plans.

The number of beneficial owners of our ADSs in the United States is likely to be much larger than the number of record holders of our ordinary shares in the United States.

Our ordinary shares are divided into Class A ordinary shares and Class B ordinary shares. Holders of Class A ordinary shares are entitled to one vote per share, while holders of Class B ordinary shares are entitled to ten votes per share. We are not aware of any arrangement that may, at a subsequent date, result in a change of control of our company. None of our major shareholders have different voting rights apart from any Class B ordinary shares that they may hold in our company.

B.	Related Party Transactions

Contractual Arrangements with Beijing Momo and Its Shareholders

~~PRC~~Mainland China laws and regulations currently limit foreign ownership of companies that engage in a value-added telecommunications service business in mainland China. As a result, we operate our relevant business through contractual arrangements ~~between Beijing Momo IT,~~among our ~~PRC subsidiary, Beijing Momo~~mainland China subsidiaries, the consolidated affiliated entities and the shareholders of ~~Beijing Momo.~~the consolidated affiliated entities. For a description of these contractual arrangements, see “Item 4. Information on the Company—C. Organizational Structure—Contractual Arrangements with ~~Beijing Momo.~~the Consolidated Affiliated Entities and Their Respective Shareholders.”

129

Transactions with ~~our Founders~~Certain Related Parties

~~On April 22, 2014, Joyous Harvest Holdings Limited, First Optimal Holdings Limited~~We provided RMB5.6 million for mobile marketing services in 2020 to Hunan Qindao Network Media Technology Co., Ltd., which is a subsidiary of Hunan Qindao Cultural Spread Ltd., a company in which we own 26.4% of its equity interest.

In connection with revenue sharing with talent agencies of live video service, we paid RMB354.3 million, RMB253.7 million and ~~Fast Prosperous Holdings Limited, which are companies wholly owned by family trusts controlled by Yong Li, Xiaoliang Lei~~RMB176.7 million (US$25.6 million) to Hunan Qindao Network Media Technology Co., Ltd. in 2020, 2021 and ~~Zhiwei Li, three~~2022, respectively. In addition, we owed RMB19.5 million, RMB5.0 million and RMB9.2 million (US$$1.3 million) in unpaid revenue sharing of ~~our founders, respectively, surrendered a total of 15,651,589 ordinary shares~~live video service to our company at no consideration. On the same date, we declared a special dividend of US$64.5 million in aggregate to these shareholders, of which US$58.0 million was paid in May 2014. US$6.5 million remained unpaid to these shareholdersHunan Qindao Network Media Technology Co., Ltd. as of ~~the date~~December 31, 2020, 2021 and 2022, respectively.

In 2020, we paid RMB164,169 to Beijing Shiyue Haofeng Media Co. Ltd., a company in which we own 30.0% of ~~this annual report. The special dividend was approved by the shareholders.~~

~~Pursuant to the third amended and restated shareholders’ agreement dated May 15, 2014 executed~~its equity interests, in connection with revenue sharing with talent agencies of live video service.

For the ~~private placement of our Series D preferred shares, each of our founders including Messrs. Yan Tang, Yong Li, Xiaoliang Lei and Zhiwei Li agreed~~period from April to subject the ordinary shares respectively held by their 100% beneficially owned BVI companies, Gallant Future Holdings Limited, Joyous Harvest Holdings Limited, First Optimal Holdings Limited and Fast Prosperous Holdings Limited, to our repurchase rights upon termination of employment of the founders with us. The shares subject to our repurchase rights include 96,886,370 ordinary shares held by Gallant Future Holdings Limited, 16,846,899 ordinary shares held by Joyous Harvest Holdings Limited, 9,587,116 ordinary shares held by First Optimal Holdings Limited and 8,028,026 ordinary shares held by Fast Prosperous Holdings Limited. If a founder terminates his employment or consulting relationship with us before April 17, 2015,November 2020, we are entitled to repurchase 50% of the shares beneficially owned by such founder through the BVI holding company at a price of US$0.0001 per share or the lowest price permitted under applicable laws. If the termination takes place after April 17, 2015 but before April 17, 2016, we are entitled to repurchase 25% of such shares on the same terms. Our repurchase rights over the ordinary shares held by Joyous Harvest Holdings Limited has terminated upon the completion of our initial public offering in December 2014. Upon completion of our initial public offering, the 96,886,370 ordinary shares held by Gallant Future Holdings Limited were redesignated as Class B ordinary shares, while the 9,587,116 ordinary shares held by First Optimal Holdings Limited and the 8,028,026 ordinary shares held by Fast Prosperous Holdings Limited were redesignated as Class A ordinary shares.

~~Transactions with Affiliates of Certain Major Shareholder~~

~~In 2015, we provided mobile marketing services to Hangzhou Alimama~~purchased bandwidth service for RMB8.9 million from Beijing Santi Cloud Union Technology Co., Ltd. and ~~purchased cloud computing services from Alibaba~~its wholly-owned subsidiary, Beijing Santi Cloud ~~Computing Ltd. For the year ended December 31, 2015, the total amount of service fees from Hangzhou Alimama~~Time Technology. We sold our entire equity interests in Beijing Santi Cloud Union Technology Co., Ltd. was US$6.0 million, and the total amount of service fees to Alibaba Cloud Computing Ltd. was US$0.3 million. Hangzhou Alimama Technology Co., Ltd. and Alibaba Cloud Computing Ltd. are affiliates of Alibaba Investment Limited.

~~Registration Rights~~

~~Pursuant to the third amended and restated shareholders agreement that we entered into on May 15, 2014 with all our then shareholders~~ in connection with our issuance of Series D preferred shares prior to our initial public offering, we have granted certain registration rights to holders of our registrable securities, which include our ordinary shares issued or issuable upon conversion of our preferred shares, ordinary shares issued as a dividend for our preferred shares, or any other ordinary shares thereafter owned or acquired by purchasers of our preferred shares in our pre-IPO private placements, subject to certain exceptions. Set forth below is a description of the registration rights granted under the agreement.

~~Demand Registration Rights.~~ Holders of at least 10% of registrable securities have the right to demand in writing, at any time after the effectiveness of a registration statement for our initial public offering, that we file a registration statement to register their registrable securities and other holders of registrable securities who choose to participate in the offering. We, however, are not obligated to effect a demand registration if we have already effected (i) two demand registrations or (ii) one registration pursuant to the same demand registration rights or the F-3 registration rights within the six-month period preceding the date of such request. We have the right to defer the filing of a registration statement up to 90 days if our board of directors determines in good faith that the registration at such time would be materially detrimental to us and our shareholders, provided that we may not utilize this right more than twice in any 12-month period.

~~Form F-3 Registration Rights.~~ When we are eligible for registration on Form F-3, upon a written request from the holders of at least 10% of the registrable securities then outstanding, we must file a registration statement on Form F-3 covering the offer and sale of the registrable securities by the requesting shareholders and other holders of registrable securities who choose to participate in the offering. There is no limit on the number of the registration made pursuant to this registration right. We, however, are not obligated to effect such registration if, among other things, (i) the aggregate anticipated price of such offering is less than US$1,000,000, or (ii) we have, within six months period preceding the date of such request, already effected a registration pursuant to an exercise of demand registration rights or piggyback registration rights. We may defer filing of a registration statement on Form F-3 no more than once during any twelve month period for up to 60 days if our board of directors determines in good faith that filing such registration statement will be materially detrimental to us and our shareholders.

~~Piggyback Registration Rights.~~ If we propose to file a registration statement for a public offering of our securities other than relating to a demand registration right, F-3 registration right, an employee benefit plan or a corporate reorganization, then we must offer holders of registrable securities an opportunity to include in this registration all or any part of their registrable securities. The underwriters of any underwritten offering may in good faith allocate the shares to be included in the registration statement first to us, and second to each requesting holder of registrable securities on a pro rata basis, subject to certain limitations.

~~Expenses of Registration.~~ We will pay all registration expenses and all participating holders of registrable securities will pay the underwriting discounts and selling commissions relating to any demand, Form F-3, or piggyback registration. However, we are not obligated to pay any expenses relating to a demand registration if the registration request is subsequently withdrawn at the request of holders of a majority of the registrable securities to be registered, subject to certain exceptions.

~~Termination of Obligations.~~ The registration rights set forth above shall terminate on the earlier of (i) the date that is five years after the completion of our initial public offering, (ii) the date of the completion of a liquidation event, or (iii) as to any holder of registrable securities, the time when all registrable securities held by such holder may be sold in any three-month period without restriction pursuant to Rule 144 under the Securities Act.November 2020.

Employment Agreements and Indemnification Agreements

See “Item 6. Directors, Senior Management and Employees—B. Compensation—Employment Agreements and Indemnification Agreements.”

Share Incentive Plans

~~“Item~~See “Item 6. Directors, Senior Management and Employees—B. Compensation—Share Incentive Plans.”

C.	Interests of Experts and Counsel

Not applicable.

Item 8.

Financial Information

A.	Consolidated Statements and Other Financial Information

We have appended consolidated financial statements filed as part of this annual report.

Legal Proceedings

~~Other than a civil complaint in China, we~~We are currently not a party to any material legal or administrative proceedings. On October 22, 2015, we were served a civil complaint by Guangzhou Tian He People’s Court in which the plaintiff claimed that Xiaoyao Xiyou, a game that we operated and currently operate, infringed upon the plaintiff’s copyright in works of literature and art of a game, constituting unfair competition. The plaintiff demanded that we cease the infringement and pay compensation and legal costs totalling approximately RMB10 million (US$1.5 million). Previously, on December 25, 2014, in the Beijing Intellectual Property Court located in Beijing, China, in which the plaintiff claimed that our use of the Chinese characters “ ” in marketing our brand infringed upon the trademark of the plaintiff, and demanded that we cease using the Chinese characters and pay for the plaintiff’s litigation-related costs in the amount of RMB11 million (US$1.8 million). The plaintiff withdrew the complaint in October 2015.

We may from time to time be subject to various legal or administrative claims and proceedings arising in the ordinary course of business. Litigation or any other legal or administrative proceeding, regardless of the outcome, is likely to result in substantial cost and diversion of our resources, including our management’s time and attention. See also “Item 3. Key Information on the Company—D. Risk Factors—Risks Related to Our Business and Industry—User misconduct and misuse of our platform may adversely impact our brand image, and we may be held liable for information or content displayed on, retrieved from or linked to our platform, which may materially and adversely affect our business and operating results,” “Item 3. Key Information on the Company—D. Risk Factors—Risks Related to Our Business and Industry—We have been and may be subject to intellectual property infringement claims or other allegations by third parties for information or content displayed on, retrieved from or linked to our platform, or distributed to our users, which may materially and adversely affect our business, financial condition and ~~prospects”~~prospects.” and “Item 3. Key Information on the Company—D. Risk Factors—Risks Related to Doing Business in Mainland China—If we fail to obtain and maintain the requisite licenses and approvals required under the complex regulatory environment applicable to our businesses in mainland China, or if we are required to take compliance actions that are time-consuming or costly, our business, financial condition and results of operations may be materially and adversely affected.”

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Dividend Policy

Our board of directors has discretion on whether to distribute dividends, subject to our memorandum and articles of association and certain restrictions under Cayman Islands law, namely that our company may only pay dividends out of profits or share premium, and provided always that it is able to pay its debts as they fall due in the ordinary course of business. In addition, our shareholders may by ordinary resolution declare a dividend, but no dividend may exceed the amount recommended by our directors. Even if our board of directors decides to pay dividends, the form, frequency and amount will depend upon our future operations and earnings, capital requirements and surplus, general financial condition, contractual restrictions and other factors that the board of directors may deem relevant.

~~With shareholders’ approval, we~~In March 2020, our board of directors declared a special cash dividend ~~to certain holders of our ordinary shares~~ in the amount of US$~~64.5 million in April 2014, of which~~0.76 per ADS, or US$~~58.0 million was paid.~~0.38 per ordinary share. The ~~special~~cash dividend was paid ~~out~~on April 30, 2020 to shareholders of record at the close of business on April 8, 2020. The ex-dividend date was April 7, 2020. The aggregate amount of cash dividends paid was US$158.6 million, which was funded by surplus cash on our balance sheet. In March 2021, our board of directors declared another special cash dividend in the amount of US$0.64 per ADS, or US$0.32 per ordinary share. The cash dividend was paid on April 30, 2021 to shareholders of record at the close of business on April 13, 2021. The ex-dividend date was April 12, 2021. The aggregate amount of cash dividends paid was US$132.0 million, which was funded by surplus cash on our balance sheet. Our board of directors declared a special cash dividend in the amount of US$0.64 per ADS, or US$0.32 per ordinary share, ~~premium.~~in March 2022. The cash dividend was paid in April 2022 to shareholders of record at the close of business on April 13, 2022. The ex-dividend date was April 12, 2022. The aggregate amount of cash dividends paid was approximately US$127.3 million, which was funded by surplus cash on our balance sheet. Our board of directors declared a special cash dividend in the amount of US$0.72 per ADS, or US$0.36 per ordinary share, in March 2023. The cash dividend is to be paid in May 2023 to shareholders of record at the close of business on April 28, 2023. The ex-dividend date will be April 27, 2023. The aggregate amount of cash dividends to be paid is approximately US$137.0 million, which will be funded by surplus cash on our balance sheet.

Our board of directors decides the timing, amount and form of any future dividends, if any, based on, among other things, our future results of operations and cash flow, our capital requirements and surplus, the amount of distributions, if any, received by us from our subsidiaries, our financial condition, contractual restrictions and other factors deemed relevant by our board of directors. We had declared special cash dividends in the past and may do so in the future. However, we do not have any ~~present~~committed plan to pay ~~any~~ cash dividends ~~on our ordinary shares~~ in the foreseeable future. ~~We currently intend to retain most, if not all, of our available funds and any future earnings to operate and expand our business.~~

We are a holding company registered by way of continuation into the Cayman Islands. We may rely on dividends from our subsidiary in mainland China for our cash requirements, including any payment of dividends to our shareholders. ~~PRC~~mainland China regulations may restrict the ability of our ~~PRC subsidiary~~mainland China subsidiaries to pay dividends to us. See “Item 4. Information on the Company—B. Business Overview—~~Regulation—~~Regulations—Regulations Relating to Dividend Distribution” and ~~“—Regulation—~~“Item 4. Information on the Company—B. Business Overview—Regulations—Regulations Relating to Taxation.”

If we pay any dividends, we will pay our ADS holders to the same extent as holders of our ordinary shares, subject to the terms of the deposit agreement, including the fees and expenses payable thereunder. See “Item 12. Description of Securities Other than Equity Securities—D. American Depositary Shares.” Cash dividends on our Class A ordinary shares, if any, will be paid in U.S. dollars.

B.	Significant Changes

Except as disclosed elsewhere in this annual report, we have not experienced any significant changes since the date of our audited consolidated financial statements included in this annual report.

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Item 9.

The Offer and Listing

A.	Offering and Listing Details

Our ADSs have been listed on The ~~NASDAQ~~Nasdaq Global Select Market since December 11, 2014. Our ADSs currently trade on The ~~NASDAQ~~Nasdaq Global Select Market under the symbol “MOMO.” One ADS represented two Class A ordinary shares.

~~The following table provides the high and low trading prices for our ADSs on the NASDAQ Global Select Market for the time periods indicated.~~

   Trading Price
   High    Low
Annual Highs and Lows

2014
   17.50       10.82
2015
   19.89       9.50
Quarterly Highs and Lows

Fourth Quarter 2014
   17.50       10.82
First Quarter 2015
   13.63       9.70
Second Quarter 2015
   19.89       9.50
Third Quarter 2015
   17.00       10.55
Fourth Quarter 2015
   16.59       12.16
First Quarter 2016
   16.07       6.72
Monthly Highs and Lows

October 2015
   13.64       12.36
November 2015
   14.42       12.16
December 2015
   16.59       13.57
January 2016
   16.07       11.55
February 2016
   12.45       6.72
March 2016
   14.72       11.09
April 2016 (through April 22, 2016)
   16.74       10.57

B.	Plan of Distribution

Not applicable.

C.	Markets

Our ADSs have been listed on ~~NASDAQ~~Nasdaq Global Select Market since December 11, 2014 under the symbol “MOMO.”

D.	Selling Shareholders

~~Not applicable.~~

E. ~~Dilution~~

Not applicable.

F.E.	~~Expenses of the Issue~~ Dilution

Not applicable.

F.	Expenses of the Issue

Not applicable.

Item 10.

Additional Information

A.	Share Capital

Not applicable.

B.	Memorandum and Articles of Association

The following are summaries of material provisions of our currently effective second amended and restated memorandum and articles of association and of the Companies Act, insofar as they relate to the material terms of our ordinary shares.

Board of Directors

See “Item 6. Directors, Senior Management and Employees—C. Board Practices.”

Ordinary Shares

General. Our ordinary shares are divided into Class A ordinary shares and Class B ordinary shares. Holders of our Class A ordinary shares and Class B ordinary shares have the same rights except for voting and conversion rights. Our ordinary shares are issued in registered form. Our shareholders who are non-residents of the Cayman Islands may freely hold and vote their shares.

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Conversion. Our Class B ordinary shares may be converted into the same number of Class A ordinary shares by the holders thereof at any time, while Class A ordinary shares cannot be converted into Class B ordinary shares under any circumstances. Upon any sale, transfer, assignment or disposition of beneficial ownership of any Class B ordinary shares by a holder thereof or a beneficial owner of such Class B ordinary shares to any person or entity that is not an affiliate of such holder or the beneficial owner, each of such Class B ordinary shares will be automatically and immediately converted into one Class A ordinary share.

Dividends. The holders of our ordinary shares are entitled to such dividends as may be declared by our board of directors or declared by our shareholders by ordinary resolution (provided that no dividend may be declared by our shareholders which exceeds the amount recommended by our directors). Our second amended and restated memorandum and articles of association provide that dividends may be declared and paid out of funds legally available therefor, namely out of either profit, retained earnings or our share premium account, provided that a dividend may not be paid if this would result in our company being unable to pay its debts as they fall due in the ordinary course of business. Under the laws of the Cayman Islands, our company may pay a dividend out of either profit or share premium account, provided that in no circumstances may a dividend be paid if this would result in our company being unable to pay its debts as they fall due in the ordinary course of business.

Voting Rights. Holders of Class A ordinary shares and Class B ordinary shares shall, at all times, vote together as one class on all matters submitted to a vote by the members at any of our general meetings. Each Class A ordinary share shall be entitled to one (1) vote on all matters subject to the vote at general meetings of our company, and each Class B ordinary share shall be entitled to ten (10) votes on all matters subject to the vote at general meetings of our company. At any general meeting a resolution put to the vote at the meeting shall be decided on a show of hands, unless a poll is (before or on the declaration of the result of the show of hands) demanded by the chairman of such meeting or any one shareholder present in person or by proxy.

A quorum required for a meeting of shareholders consists of at least two shareholders present in person or by proxy and holding not less than fifty percent (50%) of the votes attaching to all shares in issue in our company. Shareholders may be present in person or by proxy or, if the shareholder is a legal entity, by its duly authorized representative. Shareholders’ meetings may be convened by the chairman or a majority of our board of directors on its own initiative or upon a request to the directors by shareholders holding not less than one-third of our voting share capital in issue. Advance notice of at least ten calendar days is required for the convening of our annual general shareholders’ meeting and any other general shareholders’ meeting.

An ordinary resolution to be passed at a general meeting by the shareholders requires the affirmative vote of a simple majority of the votes attached to the ordinary shares cast by those shareholders entitled to vote who are present in person or by proxy (or, in the case of corporations, by their duly authorized representatives) at a general meeting, while a special resolution requires the affirmative vote of no less than two-thirds of the votes attached to the ordinary shares cast by those shareholders who are present in person or by proxy (or, in the case of corporations, by their duly authorized representatives) at a general meeting. Both ordinary resolutions and special resolutions may also be passed by a unanimous written resolution signed by all the shareholders of our company, as permitted by the Companies Act and our second amended and restated memorandum and articles of association. A special resolution will be required for important matters such as a change of name or making changes to our second amended and restated memorandum and articles of association. Holders of the ordinary shares may, among other things, divide or consolidate shares in the capital of our company by an ordinary resolution.

Transfer of Ordinary Shares. Subject to the restrictions set out in our second amended and restated memorandum and articles of association as set out below, any of our shareholders may transfer all or any of his or her ordinary shares by an instrument of transfer in writing and in any usual or common form approved by our board, and shall be executed by or on behalf of the transferor, and if in respect of any nil or partly paid up share or if so required by our directors, shall also be executed by or on behalf of by the transferee.

However, our board of directors may, in its absolute discretion, decline to register any transfer of any ordinary share which is not fully paid up or on which our company has a lien. Our board of directors may also decline to register any transfer of any ordinary share unless:

the instrument of transfer is lodged with us, accompanied by the certificate for the ordinary shares to which it relates and such other evidence as our board of directors may reasonably require to show the right of the transferor to make the transfer;

the instrument of transfer is in respect of only one class of ordinary shares;

the instrument of transfer is properly stamped, if required;

in the case of a transfer to joint holders, the number of joint holders to whom the ordinary share is to be transferred does not exceed four;

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the ordinary shares transferred are free of any lien in favor of our Company; and

a fee of such maximum sum as the Nasdaq Global Select Market may determine to be payable or such lesser sum as our directors may from time to time require is paid to us in respect thereof.

If our directors refuse to register a transfer they shall, within three months after the date on which the instrument of transfer was lodged, send to each of the transferor and the transferee notice of such refusal.

The registration of transfers may, on fourteen calendar days’ notice being given by advertisement in such one or more newspapers, by electronic means or by any other means in accordance with the rules of the Nasdaq Global Select Market, be suspended and the register closed at such times and for such periods as our board of directors may from time to time determine, provided, however, that the registration of transfers shall not be suspended nor the register closed for more than 30 days in any year as our board may determine.

Liquidation. If our company shall be wound up, and the assets available for distribution among the shareholders shall be insufficient to repay of the whole of the share capital, the assets will be distributed so that, as nearly as may be, the losses are borne by our shareholders in proportion to the par value of the shares held by them. If in a winding up the assets available for distribution among the shareholders shall be more than sufficient to repay the whole of the share capital at the commencement of the winding up, the surplus shall be distributed among our shareholders in proportion to the par value of the shares held by them at the commencement of the winding up subject to a deduction from those shares in respect of which there are monies due, of all monies payable to our company for unpaid calls or otherwise.

Calls on Shares and Forfeiture of Shares. Our board of directors may from time to time make calls upon shareholders for any amounts unpaid on their shares in a notice served to such shareholders at least 14 days prior to the specified time and place of payment. The shares that have been called upon and remain unpaid are subject to forfeiture.

Redemption, Repurchase and Surrender of Shares.We ~~incorporate~~may issue shares on terms that such shares are subject to redemption, at our option or at the option of the holders thereof, on such terms and in such manner as may be determined, before the issue of such shares, by ~~reference into this~~our board of directors or by a special resolution of our shareholders. Our company may also repurchase any of our shares provided that the manner and terms of such purchase have been approved by our board of directors or by ordinary resolution of our shareholders, or are otherwise authorized by our second amended and restated memorandum and articles of association. Under the Companies Act, the redemption or repurchase of any share may be paid out of our Company’s profits or out of the proceeds of a new issue of shares made for the purpose of such redemption or repurchase, or out of capital (including share premium account and capital redemption reserve) if our company can, immediately following such payment, pay its debts as they fall due in the ordinary course of business. In addition, under the Companies Act no such share may be redeemed or repurchased (a) unless it is fully paid up, (b) if such redemption or repurchase would result in there being no shares outstanding or (c) if the company has commenced liquidation. In addition, our company may accept the surrender of any fully paid share for no consideration.

Variations of Rights of Shares. The rights attached to any class (unless otherwise provided by the terms of issue of the shares of that class) may be materially adversely varied with the consent in writing of all the holders of three-fourths of the issued shares of that class or with the sanction of a special resolution passed at a separate meeting of the holders of the shares of that class. The rights conferred upon the holders of the shares of any class issued with preferred or other rights shall not, unless otherwise expressly provided by the terms of issue of the shares of that class, be deemed to be materially adversely varied by the creation or issue of further shares ranking pari passu with or subsequent to such existing class of shares or the redemption or purchase of any shares of any class by our company. The rights of the holders of shares shall not be deemed to be materially adversely varied by the creation or issue of shares with preferred or other rights including, without limitation, the creation of shares with enhanced or weighted voting rights.

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Issuance of Additional Shares. Our second amended and restated memorandum and articles of association authorize our board of directors to issue additional ordinary shares from time to time as our board of directors shall determine, to the extent of available authorized but unissued shares.

Our second amended and restated memorandum and articles of association also authorize our board of directors to establish from time to time one or more series of preferred shares and to determine, with respect to any series of preferred shares, the terms and rights of that series, including:

the designation of the series;

the number of shares of the series;

the dividend rights, dividend rates, conversion rights, voting rights; and

the rights and terms of redemption and liquidation preferences.

Our company may by special resolution reduce its share capital and any capital redemption reserve in any manner authorized by law.

Inspection of Books and Records. Holders of our ordinary shares will have no general right under Cayman Islands law to inspect or obtain copies of our list of shareholders or our corporate records (save for our memorandum and articles of association, our register of mortgages and charges and special resolutions of our shareholders). However, we will provide our shareholders with annual ~~report the description~~audited financial statements.

Anti-Takeover Provisions. Some provisions of our second amended and restated memorandum and articles of association ~~contained~~may discourage, delay or prevent a change of control of our company or management that shareholders may consider favorable, including provisions that:

authorize our board of directors to issue preferred shares in one or more series and to designate the price, rights, preferences, privileges and restrictions of such preferred shares without any further vote or action by our ~~F-1 registration statement (File No. 333-199996), as amended, initially filed with~~shareholders; and

limit the ~~SEC on November 7, 2014. The~~ability of shareholders to requisition and convene general meetings of shareholders.

However, under Cayman Islands law, our directors may only exercise the rights and powers granted to them under our second amended and restated memorandum and articles of association for a proper purpose and for what they believe in good faith to be in the best interests of our company.

Exempted Company

We are an exempted company with limited liability under the Companies Act. The Companies Act distinguishes between ordinary resident companies and exempted companies. Any company that is registered in the Cayman Islands but conducts business mainly outside of the Cayman Islands may apply to be registered as an exempted company. The requirements for an exempted company are essentially the same as for an ordinary company except that an exempted company:

does not have to file an annual return of its shareholders with the Registrar of Companies;

is not required to open its register of members for inspection;

does not have to hold an annual general meeting;

may obtain an undertaking against the imposition of any future taxation (such undertakings are usually given for 20 years in the first instance);

may register by way of continuation in another jurisdiction and be deregistered in the Cayman Islands;

may register as a limited duration company; and

may register as a segregated portfolio company.

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“Limited liability” means that the liability of each shareholder is limited to the amount unpaid by the shareholder on the shares of the company (except in exceptional circumstances, such as involving fraud, the establishment of an agency relationship or an illegal or improper purpose or other circumstances in which a court may be prepared to pierce or lift the corporate veil).

Under the Companies Act, we must keep a register of members and there should be entered therein:

the names and addresses of our members, together with a statement of the shares held by each member, and such statement shall confirm (i) the amount paid or agreed to be considered as paid, on the shares of each member, (ii) the number and category of shares held by each member, and (iii) whether each relevant category of shares held by a member carries voting rights under the articles of association of the company, and if so, whether such voting rights are conditional;

the date on which the name of any person was ~~adopted~~entered on the register as a member; and

the date on which any person ceased to be a member.

Under Cayman Islands law, the register of members of our company is prima facie evidence of the matters set out therein (i.e. the register of members will raise a presumption of fact on the matters referred to above unless rebutted) and a member registered in the register of members is deemed as a matter of Cayman Islands law to have legal title to the shares as set against its name in the register of members.

If the name of any person is incorrectly entered in or omitted from our register of members, or if there is any default or unnecessary delay in entering on the register the fact of any person having ceased to be a member of our company, the person or member aggrieved (or any member of our company or our company itself) may apply to the Grand Court of the Cayman islands for an order that the register be rectified, and the Court may either refuse such application or it may, if satisfied of the justice of the case, make an order for the rectification of the register.

Registered Office and Objects

Our registered office in the Cayman Islands is located at the offices of Maples Corporate Services Limited, PO Box 309, Ugland House, Grand Cayman KY1-1104, Cayman Islands, or at such other location within the Cayman Islands as our directors may from time to time decide. The objects for which our company is established are unrestricted and we have full power and authority to carry out any object not prohibited by the Companies Act or any other law of the Cayman Islands.

Differences in Corporate Law

The Companies Act is derived, to a large extent, from the older Companies Acts of England but does not follow recent English statutory enactments and accordingly there are significant differences between the Companies Act and the current Companies Act of England. In addition, the Companies Act differs from laws applicable to U.S. corporations and their shareholders. Set forth below is a summary of certain significant differences between the provisions of the Companies Act applicable to us and the laws applicable to companies incorporated in the United States and their shareholders.

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Mergers and Similar Arrangements. The Companies Act permits mergers and consolidations between Cayman Islands companies and between Cayman Islands companies and non-Cayman Islands companies. For these purposes, (i) “merger” means the merging of two or more constituent companies and the vesting of their undertaking, property and liabilities in one of such companies as the surviving company, and (ii) a “consolidation” means the combination of two or more constituent companies into a consolidated company and the vesting of the undertaking, property and liabilities of such companies in the consolidated company. In order to effect such a merger or consolidation, the directors of each constituent company must approve a written plan of merger or consolidation, which must then be authorized by (a) a special resolution of the shareholders of each constituent company, and (b) such other authorization, if any, as may be specified in such constituent company’s articles of association. The written plan of merger or consolidation must be filed with the Registrar of Companies of the Cayman Islands together with a declaration as to the solvency of the consolidated or surviving company, a list of the assets and liabilities of each constituent company and an undertaking that a copy of the certificate of merger or consolidation will be given to the members and creditors of each constituent company and that notification of the merger or consolidation will be published in the Cayman Islands Gazette. Court approval is not required for a merger or consolidation which is effected in compliance with these statutory procedures.

A merger between a Cayman parent company and its Cayman subsidiary or subsidiaries does not require authorization by a resolution of shareholders of that Cayman subsidiary if a copy of the plan of merger is given to every member of that Cayman subsidiary to be merged unless that member agrees otherwise. For this purpose a company is a “parent” of a subsidiary if it holds issued shares that together represent at least ninety percent (90%) of the votes at a general meeting of the subsidiary.

The consent of each holder of a fixed or floating security interest over a constituent company is required unless this requirement is waived by a court in the Cayman Islands.

Save in certain limited circumstances, a shareholder of a Cayman constituent company who dissents from the merger or consolidation is entitled to payment of the fair value of his shares (which, if not agreed between the parties, will be determined by the Cayman Islands court) upon dissenting to the merger or consolidation, provide the dissenting shareholder complies strictly with the procedures set out in the Companies Act. The exercise of dissenter rights will preclude the exercise by the dissenting shareholder of any other rights to which he or she might otherwise be entitled by virtue of holding shares, save for the right to seek relief on the grounds that the merger or consolidation is void or unlawful.

Separate from the statutory provisions relating to mergers and consolidations, the Companies Act also contains statutory provisions that facilitate the reconstruction and amalgamation of companies by way of schemes of arrangement, provided that the arrangement is approved by(a) 75% in value of the shareholders or class of shareholders, as the case may be, or (b) a majority in number representing 75% in value of the creditors or class of creditors, as the case may be, with whom the arrangement is to be made that are, in each case, present and voting either in person or by proxy at a meeting, or meetings, convened for that purpose. The convening of the meetings and subsequently the arrangement must be sanctioned by the Grand Court of the Cayman Islands. While a dissenting shareholder has the right to express to the court the view that the transaction ought not to be approved, the court can be expected to approve the arrangement if it determines that:

the statutory provisions as to the required majority vote have been met;

the shareholders have been fairly represented at the meeting in question and the statutory majority are acting bona fide without coercion of the minority to promote interests adverse to those of the class;

the arrangement is such that may be reasonably approved by an intelligent and honest man of that class acting in respect of his interest; and

the arrangement is not one that would more properly be sanctioned under some other provision of the Companies Act.

The Companies Act also contains a statutory power of compulsory acquisition which may facilitate the “squeeze out” of dissentient minority shareholder upon a tender offer. When a tender offer is made and accepted by holders of 90.0% of the shares affected within four months, the offeror may, within a two-month period commencing on the expiration of such four-month period, require the holders of the remaining shares to transfer such shares to the offeror on the terms of the offer. An objection can be made to the Grand Court of the Cayman Islands but this is unlikely to succeed in the case of an offer which has been so approved unless there is evidence of fraud, bad faith or collusion.

If an arrangement and reconstruction by way of scheme of arrangement is thus approved and sanctioned, or if a tender offer is made and accepted in accordance with the foregoing statutory procedures, a dissenting shareholder would have no rights comparable to appraisal rights, which would otherwise ordinarily be available to dissenting shareholders of Delaware corporations, providing rights to receive payment in cash for the judicially determined value of the shares.

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Shareholders’ Suits. In principle, we will normally be the proper plaintiff to sue for a wrong done to us as a company, and as a general rule a derivative action may not be brought by a minority shareholder. However, based on English authorities, which would in all likelihood be of persuasive authority in the Cayman Islands, the Cayman Islands court can be expected to follow and apply the common law principles (namely the rule in Foss v. Harbottle and the exceptions thereto) so that a non-controlling shareholder may be permitted to commence a class action against or derivative actions in the name of the company to challenge actions where:

a company acts or proposes to act illegally or ultra vires (and is therefore incapable of ratification by the shareholders);

the act complained of, although not ultra vires, could only be effected duly if authorized by more than a simple majority vote that has not been obtained; and

those who control the company are perpetrating a “fraud on the minority.”

Indemnification of Directors and Executive Officers and Limitation of Liability. Cayman Islands law does not limit the extent to which a company’s memorandum and articles of association may provide for indemnification of officers and directors, except to the extent any such provision may be held by the Cayman Islands courts to be contrary to public policy, such as to provide indemnification against civil fraud or the consequences of committing a crime. Our second amended and restated memorandum and articles of association provide that our directors shall be indemnified and secured harmless against all actions, proceedings, costs, charges, expenses, losses, damages or liabilities incurred or sustained, other than by reason of such director’s own dishonesty, willful default or fraud in or about the conduct of the company’s business or affairs (including as a result of any mistake of judgment) or in the execution or discharge of his duties, powers, authorities or discretions, including without prejudice to the generality of the foregoing, any costs, expenses, losses or liabilities incurred in defending (whether successfully or otherwise) any civil proceedings concerning our company or its affairs in any court whether in the Cayman Islands or elsewhere. This standard of conduct is generally the same as permitted under the Delaware General Corporation Law for a Delaware corporation. In addition, we have entered into indemnification agreements with each of our directors and executive officers that will provide such persons with additional indemnification beyond that provided in our second amended and restated memorandum and articles of association.

Insofar as indemnification for liabilities arising under the Securities Act may be permitted to our directors, officers or persons controlling us under the foregoing provisions, we have been informed that in the opinion of the SEC, such indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable.

Directors’ Fiduciary Duties. Under Delaware corporate law, a director of a Delaware corporation has a fiduciary duty to the corporation and its shareholders. This duty has two components: the duty of care and the duty of loyalty. The duty of care requires that a director act in good faith, with the care that an ordinarily prudent person would exercise under similar circumstances. Under this duty, a director must inform himself of, and disclose to shareholders, all material information reasonably available regarding a significant transaction. The duty of loyalty requires that a director acts in a manner he reasonably believes to be in the best interests of the corporation. He must not use his corporate position for personal gain or advantage. This duty prohibits self-dealing by a director and mandates that the best interest of the corporation and its shareholders take precedence over any interest possessed by a director, officer or controlling shareholder and not shared by the shareholders generally. In general, actions of a director are presumed to have been made on an informed basis, in good faith and in the honest belief that the action taken was in the best interests of the corporation. However, this presumption may be rebutted by evidence of a breach of one of the fiduciary duties. Should such evidence be presented concerning a transaction by a director, the director must prove the procedural fairness of the transaction, and that the transaction was of fair value to the corporation.

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As a matter of Cayman Islands law, a director of a Cayman Islands company is in the position of a fiduciary with respect to the company and therefore it is considered that he owes the following duties to the company—a duty to act bona fide in the best interests of the company, a duty not to make a profit based on his position as director (unless the company permits him to do so), a duty not to put himself in a position where the interests of the company conflict with his personal interest or his duty to a third party, and a duty to exercise powers for the purpose for which such powers were intended. A director of a Cayman Islands company owes to the company a duty to exercise the skill they actually possess and such care and diligence that a reasonably prudent person would exercise in comparable circumstances. It was previously considered that a director need not exhibit in the performance of his duties a greater degree of skill than may reasonably be expected from a person of his knowledge and experience. However, English and Commonwealth courts have moved towards an objective standard with regard to the required skill and care and these authorities are likely to be followed in the Cayman Islands.

Shareholder Action by Written Consent. Under the Delaware General Corporation Law, a corporation may eliminate the right of shareholders to act by written consent by amendment to its certificate of incorporation. Cayman Islands law and our second amended and restated memorandum and articles of association provide that our shareholders may approve corporate matters by way of a unanimous written resolution signed by or on behalf of each shareholder who would have been entitled to vote on such matter at a general meeting without a meeting being held.

Shareholder Proposals. Under the Delaware General Corporation Law, a shareholder has the right to put any proposal before the annual meeting of shareholders; provided that it complies with the notice provisions in the governing documents. A special meeting may be called by the board of directors or any other person authorized to do so in the governing documents, but shareholders may be precluded from calling special meetings.

The Companies Act provides shareholders with only limited rights to requisition a general meeting, and does not provide shareholders with any right to put any proposal before a general meeting. However, these rights may be provided in a company’s articles of association. Our second amended and restated memorandum and articles of association provide that, on the requisition of shareholders holding shares representing in aggregate not less than one-third (1/3) of all votes attaching to all issued and outstanding shares of our company that as at the date of the deposit of such requisition carry the right to vote at general meetings of our company, the board shall convene an extraordinary general meeting. Other than this right to requisition a shareholders’ meeting, our second amended and restated memorandum and articles of association do not provide our shareholders other right to put proposal before a meeting. As an exempted Cayman Islands company, we are not obliged by law to call shareholders’ annual general meetings.

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Cumulative Voting. Under the Delaware General Corporation Law, cumulative voting for elections of directors is not permitted unless the corporation’s certificate of incorporation specifically provides for it. Cumulative voting potentially facilitates the representation of minority shareholders on a board of directors since it permits the minority shareholder to cast all the votes to which the shareholder is entitled on a single director, which increases the shareholder’s voting power with respect to electing such director. There are no prohibitions in relation to cumulative voting under the laws of the Cayman Islands but our second amended and restated memorandum and articles of association do not provide for cumulative voting.

Removal of Directors. Under the Delaware General Corporation Law, a director of a corporation with a classified board may be removed only for cause with the approval of a majority of the issued and outstanding shares entitled to vote, unless the certificate of incorporation provides otherwise. Under our second amended and restated memorandum and articles of association, directors may be removed with or without cause, by an ordinary resolution of our shareholders. An appointment of a director may be on terms that the director shall automatically retire from office (unless he has sooner vacated office) at the next or a subsequent annual general meeting or upon any specified event or after any specified period in a written agreement between the company and the director, if any; but no such term shall be implied in the absence of express provision. In addition, a director’s office shall be vacated if the director (i) becomes bankrupt or makes any arrangement or composition with his creditors; (ii) dies or is found to be or becomes of unsound mind; (iii) resigns his office by notice in writing to the company; (iv) without special leave of absence from our board of directors, is absent from three consecutive meetings of the board and the board resolves that his office be vacated or; (v) is removed from office pursuant to any other provisions of our second amended and restated memorandum and articles of association.

Transactions with Interested Shareholders. The Delaware General Corporation Law contains a business combination statute applicable to Delaware corporations whereby, unless the corporation has specifically elected not to be governed by such statute by amendment to its certificate of incorporation, it is prohibited from engaging in certain business combinations with an “interested shareholder” for three years following the date that such person becomes an interested shareholder. An interested shareholder generally is a person or a group who or which owns or owned 15% or more of the target’s outstanding voting shares within the past three years. This has the effect of limiting the ability of a potential acquirer to make a two-tiered bid for the target in which all shareholders would not be treated equally. The statute does not apply if, among other things, prior to the date on which such shareholder becomes an interested shareholder, the board of directors approves either the business combination or the transaction which resulted in the person becoming an interested shareholder. This encourages any potential acquirer of a Delaware corporation to negotiate the terms of any acquisition transaction with the target’s board of directors.

Cayman Islands law has no comparable statute. As a result, we cannot avail ourselves of the types of protections afforded by the Delaware business combination statute. However, although Cayman Islands law does not regulate transactions between a company and its significant shareholders, it does provide that such transactions must be entered into bona fide in the best interests of the company and not with the effect of constituting a fraud on the minority shareholders.

Restructuring. A company may present a petition to the Grand Court of the Cayman Islands for the appointment of a restructuring officer on the grounds that the company:

(a) is or is likely to become unable to pay its debts; and

(b) intends to present a compromise or arrangement to its creditors (or classes thereof) either pursuant to the Companies Act, the law of a foreign country or by way of a consensual restructuring.

The Grand Court may, among other things, make an order appointing a restructuring officer upon hearing of such petition, with such powers and to carry out such functions as the court may order. At any time (i) after the presentation of a petition for the appointment of a restructuring officer but before an order for the appointment of a restructuring officer has been made, and (ii) when an order for the appointment of a restructuring officer is made, until such order has been discharged, no suit, action or other proceedings (other than criminal proceedings) shall be proceeded with or commenced against the company, no resolution to wind up the company shall be passed, and no winding up petition may be presented against the company, except with the leave of the court. However, notwithstanding the presentation of a petition for the appointment of a restructuring officer or the appointment of a restructuring officer, a creditor who has security over the whole or part of the assets of the company is entitled to enforce the security without the leave of the court and without reference to the restructuring officer appointed.

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Dissolution; Winding Up. Under the Delaware General Corporation Law, unless the board of directors approves the proposal to dissolve, dissolution must be approved by shareholders holding 100% of the total voting power of the corporation. Only if the dissolution is initiated by the board of directors may it be approved by a simple majority of the corporation’s outstanding shares. Delaware law allows a Delaware corporation to include in its certificate of incorporation a supermajority voting requirement in connection with dissolutions initiated by either an order of the courts of the Cayman Islands or by the board of directors.

Under Cayman Islands law, a company may be wound up by either an order of the courts of the Cayman Islands or by a special resolution of its members or, if the company is unable to pay its debts as they fall due, by an ordinary resolution of its members. The court has authority to order winding up in a number of specified circumstances including where it is, in the opinion of the court, just and equitable to do so.

Variation of Rights of Shares. Under the Delaware General Corporation Law, a corporation may vary the rights of a class of shares with the approval of a majority of the outstanding shares of such class, unless the certificate of incorporation provides otherwise. Under our second amended and restated memorandum and articles of association, the rights attached to any class (unless otherwise provided by the terms of issue of the shares of that class) may be materially adversely varied with the consent in writing of the holders of three-fourths of the issued shares of that class or with the sanction of a special resolution passed at a separate meeting of the holders of the shares of that class. The rights conferred upon the holders of the shares of any class issued with preferred or other rights shall not, unless otherwise expressly provided by the terms of issue of the shares of that class, be deemed to be materially adversely varied by the creation or issue of further shares ranking pari passu with or subsequent to such existing class of shares or the redemption or purchase of any shares of any class by our ~~shareholders~~company. The rights of the holders of shares shall not be deemed to be materially adversely varied by ~~unanimous resolutions~~the creation or issue of shares with preferred or other rights including, without limitation, the creation of shares with enhanced or weighted voting rights.

Amendment of Governing Documents. Under the Delaware General Corporation Law, a corporation’s governing documents may be amended with the approval of a majority of the outstanding shares entitled to vote, unless the certificate of incorporation provides otherwise. As permitted by Cayman Islands law, our second amended and restated memorandum and articles of association may only be amended with a special resolution of our shareholders.

Rights of Non-Resident or Foreign Shareholders. There are no limitations imposed by our second amended and restated memorandum and articles of association on the ~~November 28, 2014,~~rights of non-resident or foreign shareholders to hold or exercise voting rights on our shares. In addition, there are no provisions in our second amended and ~~became effective upon completion~~restated memorandum and articles of association that require our ~~initial public offering of our Class A ordinary shares represented by ADSs.~~company to disclose shareholder ownership above any particular ownership threshold.

C.	Material Contracts

We have not entered into any material contracts other than in the ordinary course of business and other than those described in “Item 4. Information on the Company” or elsewhere in this annual report on Form 20-F.

D.	Exchange Controls

See “Item 4. Information on the Company—B. Business Overview—~~Regulation—~~Regulations—Regulations Relating to Foreign Exchange.”

E.	Taxation

Cayman Islands Taxation

The Cayman Islands currently levies no taxes on individuals or corporations based upon profits, income, gains or appreciation and there is no taxation in the nature of inheritance tax or estate duty. There are no other taxes likely to be material to us levied by the government of the Cayman Islands except for stamp duties which may be applicable on instruments executed in, or after execution brought within the jurisdiction of the Cayman Islands. The Cayman Islands is not party to any double tax treaties that are applicable to any payments made to or by our company. There are no exchange control regulations or currency restrictions in the Cayman Islands.

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Payments of dividends and capital in respect of the shares of our company will not be subject to taxation in the Cayman Islands and no withholding will be required on the payment of a dividend or capital to any holder of the shares, nor will gains derived from the disposal of the shares be subject to Cayman Islands income or corporation tax.

People’s Republic of China Taxation

Under ~~the PRC Enterprise Income Tax Law, or~~ the EIT Law, which became effective on January 1, 2008, as amended on February 24, 2017 and further amended on December 29, 2018, an enterprise established outside the ~~PRC~~mainland China with “de facto management bodies” within the ~~PRC~~mainland China is considered a “resident enterprise” for ~~PRC~~mainland China enterprise income tax purposes and is generally subject to a uniform 25% enterprise income tax rate on its worldwide income.

On April 22, 2009, ~~the State Administration of Taxation, or~~ the SAT issued the Notice Regarding the Determination of Chinese-Controlled Overseas Incorporated Enterprises as PRC Tax Resident Enterprise on the Basis of De Facto Management Bodies, or SAT Circular 82, which provides certain specific criteria for determining whether the “de facto management body” of a ~~PRC~~mainland China controlled enterprise that is incorporated offshore is located in mainland China. Further to SAT Circular 82, on July 27, 2011, the SAT issued the Administrative Measures for Enterprise Income Tax of Chinese-Controlled Offshore Incorporated Resident Enterprises (Trial), or SAT Bulletin 45, to provide more guidance on the implementation of SAT Circular 82; the bulletin became effective on September 1, ~~2011.~~2011 as recently amended on June 15, 2018. SAT Bulletin 45 clarified certain issues in the areas of resident status determination, post-determination administration and competent tax authorities procedures. According to SAT Circular 82, an offshore incorporated enterprise controlled by a ~~PRC~~mainland China enterprise or a ~~PRC~~mainland China enterprise group will be considered as a ~~PRC~~mainland China tax resident enterprise by virtue of having its “de facto management body” in mainland China only if all of the following conditions are met: (a) the senior management and core management departments in charge of its daily operations function have their presence mainly in the ~~PRC;~~mainland China; (b) its financial and human resources decisions are subject to determination or approval by persons or bodies in the ~~PRC;~~mainland China; (c) its major assets, accounting books, company seals, and minutes and files of its board and shareholders’ meetings are located or kept in the ~~PRC;~~mainland China; and (d) more than half of the enterprise’s directors or senior management with voting rights habitually reside in the ~~PRC.~~mainland China. Although SAT Circular 82 and SAT Bulletin 45 only apply to offshore incorporated enterprises controlled by ~~PRC~~mainland China enterprises or ~~PRC~~mainland China enterprise groups and not those controlled by ~~PRC~~mainland China individuals or foreigners, the determination criteria set forth therein may reflect the SAT’s general position on how the term “de facto management body” could be applied in determining the tax resident status of offshore enterprises, regardless of whether they are controlled by ~~PRC~~mainland China enterprises, individuals or foreigners.

We do not believe ~~Momo~~Hello Group Inc. meets all of the criteria described above. We believe that none of ~~Momo~~Hello Group Inc. and its subsidiaries outside of mainland China is a ~~PRC~~mainland China tax resident enterprise, because none of them is controlled by a ~~PRC~~mainland China enterprise or ~~PRC~~mainland China enterprise group, and because some of their records ~~(including the resolutions of its board of directors and the resolutions of shareholders)~~ are maintained outside the ~~PRC.~~mainland China. However, as the tax resident status of an enterprise is subject to determination by the ~~PRC~~mainland China tax authorities and uncertainties remain with respect to the interpretation of the term “de facto management body” when applied to our offshore entities, we may be considered as a resident enterprise and may therefore be subject to ~~PRC~~mainland China enterprise income tax at 25% on our global income. In addition, if the ~~PRC~~mainland China tax authorities determine that our company is a ~~PRC~~mainland China resident enterprise for ~~PRC~~mainland China enterprise income tax purposes, dividends paid by us to ~~non-PRC~~non-mainland China holders may be subject to ~~PRC~~mainland China withholding tax, and gains realized on the sale or other disposition of ADSs or ordinary shares may be subject to ~~PRC~~mainland China tax, at a rate of 10% in the case of ~~non-PRC~~non-mainland China enterprises or 20% in the case of ~~non-PRC~~non-mainland China individuals (in each case, subject to the provisions of any applicable tax treaty), if such dividends or gains are deemed to be from ~~PRC~~mainland China sources. Any such tax may reduce the returns on your investment in the ADSs.

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If we are considered a ~~“non-resident~~“non-resident enterprise” by the ~~PRC~~mainland China tax authorities, the dividends paid to us by our ~~PRC~~mainland China subsidiaries will be subject to a 10% withholding tax. The EIT Law also imposes a withholding income tax of 10% on dividends distributed by ana foreign invested enterprise to its immediate holding company outside of mainland China, if such immediate holding company is considered as a non-resident enterprise without any establishment or place within mainland China or if the received dividends have no connection with the establishment or place of such immediate holding company within mainland China, unless such immediate holding company’s jurisdiction of incorporation has a tax treaty with mainland China that provides for a different withholding arrangement. The Cayman Islands, where our Company is incorporated does not have such tax treaty with mainland China. Our US subsidiary is not an immediate holding company of any of our ~~PRC~~mainland China subsidiaries. Under the Arrangement Between ~~the PRC~~Mainland China and the Hong Kong Special Administrative Region onfor the Avoidance of Double Taxation and ~~Prevention of Fiscal~~Tax Evasion ~~with Respect to Taxes~~ on Income, ~~and Capital,~~ the dividend withholding tax rate may be reduced to 5%, if a Hong Kong resident enterprise that receives a dividend is considered a ~~non-PRC~~non-mainland China tax resident enterprise and holds at least 25% of the equity interests in the ~~PRC~~mainland China enterprise distributing the dividends, subject to approval of the ~~PRC~~mainland China local tax authority. However, if the Hong Kong resident enterprise is not considered to be the beneficial owner of such dividends under applicable ~~PRC~~mainland China tax regulations, such dividends may remain subject to withholding tax at a rate of 10%. Accordingly, Momo Technology HK Company Limited may be able to enjoy the 5% withholding tax rate for the dividends it receives from its ~~PRC~~mainland China subsidiaries if it satisfies the relevant conditions under tax rules and regulations, and obtains the approvals as required.

According to the Notice on Strengthening Administration of Enterprise Income Tax for Share Transfers by Non-PRC Resident Enterprises issued by the PRC State Administration of Taxation on December 10, 2009, with retroactive effect from January 1, 2008, or SAT Circular 698, where a non-resident enterprise transfers the equity interests in a PRC resident enterprise indirectly through a disposition of equity interests in an overseas holding company (other than a purchase and sale of shares issued by a PRC resident enterprise in public securities market), or an Indirect Transfer, and such overseas holding company is located in a tax jurisdiction that: (a) has an effective tax rate less than 12.5% or (b) does not tax foreign income of its residents, the non-resident enterprise, as the seller, shall report such Indirect Transfer to the competent tax authority of the PRC resident enterprise within 30 days of execution of the equity transfer agreement for such Indirect Transfer. The PRC tax authority will examine the true nature of the Indirect Transfer, and if the tax authority considers that the foreign investor has adopted an abusive arrangement without reasonable commercial purposes and for the purpose of avoiding or reducing PRC tax, they will disregard the existence of the overseas holding company that is used for tax planning purposes and re-characterize the Indirect Transfer. As a result, gains derived from such Indirect Transfer may be subject to PRC withholding tax at the rate of up to 10%. SAT Circular 698 also points out that when a non-resident enterprise transfers its equity interests in a PRC resident enterprise to its related parties at a price lower than the fair market value, the competent tax authorities have the power to make a reasonable adjustment on the taxable income of the transaction.

On February 3, 2015, the SAT issued a Public Notice ~~[2015] No. 7,~~on Several Issues Relating to Enterprise Income Tax on Transfer of Assets between Non-resident Enterprises, or Public Notice 7, to supersede existing provisions in relation to the Indirect Transfer as set forth in Circular 698, while the other provisions of Circular 698 remain in force. Public Notice 7 introduces a new tax regime that is significantly different from that under Circular 698. Public Noticewhich extends its tax jurisdiction to capture not only ~~Indirect Transfer as set forth under Circular 698~~indirect transfers but also transactions involving transfer of immovable property in mainland China and assets held under the establishment and place in mainland China of a foreign company through the offshore transfer of a foreign intermediate holding company. Public Notice 7 also addresses transfer of the equity interest in a foreign intermediate holding company widely. In addition, Public Notice 7 provides ~~clearer~~clear criteria ~~than Circular 698~~ on how to assess reasonable commercial purposes and introduces safe ~~harbour~~harbor scenarios applicable to internal group restructurings. However, it also brings challenges to both the foreign transferor and transferee of the ~~Indirect Transfer~~indirect transfers as they have to make self-assessment on whether the transaction should be subject to ~~PRC~~mainland China tax and to file or withhold the ~~PRC~~mainland China tax accordingly.

~~There are few guidances~~ In October 2017, the SAT issued the Announcement of the State Administration of Taxation on Issues Concerning the Withholding of Non-resident Enterprise Income Tax at Source, or Bulletin 37, which came into effect in December 2017 and ~~practical experience~~was amended in June 2018. The Bulletin 37 further clarifies the practice and procedure of the withholding of non-resident enterprise income tax. Where a non-resident enterprise transfers taxable assets indirectly by disposing of the equity interests of an overseas holding company, which is an indirect transfer, the non-resident enterprise as either the transferor or the transferee, or the mainland China entity that directly owns the taxable assets, may report such indirect transfer to the ~~application of Circular 698 and Public Notice 7.~~ relevant tax authority.

The ~~PRC~~mainland China tax authorities have the discretion under SAT Circular 59, ~~Circular 698~~Bulletin 37 and Public Notice 7 to make adjustments to the taxable capital gains based on the difference between the fair value of the equity interests transferred and the cost of investment. We may pursue acquisitions in the future that may involve complex corporate structures. If we are considered a non-resident enterprise under the PRC Enterprise Income Tax Law and if the ~~PRC~~mainland China tax authorities make adjustments to the taxable income of the transactions under SAT Circular 59, ~~Circular 698~~Bulletin 37 and Public Notice 7, our income tax costs associated with such potential acquisitions will be increased, which may have an adverse effect on our financial condition and results of operations.

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United States Federal Income Tax Considerations

The following discussion is a summary of United States federal income tax considerations relating to the ownership and disposition of our ADSs or ordinary shares by a U.S. Holder (as defined below) that holds our ADSs or ordinary shares as “capital assets” (generally, property held for investment) under the United States Internal Revenue Code of 1986, as amended, or the Code. This discussion is based upon existing United States federal tax law, which is subject to differing interpretations or change, possibly with retroactive ~~effect. No ruling has been sought from the Internal Revenue Service, or the IRS, with respect to any United States federal income tax consequences described below,~~effect, and there can be no assurance that the Internal Revenue Service, or the IRS, or a court will not take a contrary position. This discussion does not discuss all aspects of United States federal income taxation that may be important to particular investors in light of their individual investment circumstances, including investors subject to special tax rules that may differ significantly from those discussed below (including for example, financial institutions, insurance companies, regulated investment companies, real estate investment trusts, broker-dealers, traders in securities that elect mark-to-market treatment, partnerships and their partners, tax-exempt organizations (including private foundations), holders who are not U.S. Holders, holders who own (directly, indirectly or constructively) 10% or more of our ~~voting~~ stock (by vote or value), holders who acquire their ADSs or ordinary shares pursuant to any employee share option or otherwise as compensation, investors that will hold their ADSs or ordinary shares as part of a straddle, hedge, conversion, constructive sale or other integrated transaction for United States federal income tax purposes, or investors that have a functional currency other than the United States dollar). This discussion, moreover, does not address the United States federal estate, gift, Medicare or alternative minimum tax, or any non-United States, state, or local tax considerations of the ownership and disposition of our ADSs or ordinary shares. Each U.S. Holder is urged to consult its tax advisor regarding the United States federal, state, local, non-United States income, and other tax considerations of an investment in our ADSs or ordinary shares.

General

For purposes of this discussion, a “U.S. Holder” is a beneficial owner of our ADSs or ordinary shares that is, for United States federal income tax purposes, (i) an individual who is a citizen or resident of the United States, (ii) a corporation (or other entity treated as a corporation for United States federal income tax purposes) created in, or organized under the law of, the United States or any state thereof or the District of Columbia, (iii) an estate the income of which is includible in gross income for United States federal income tax purposes regardless of its source, or (iv) a trust (A) the administration of which is subject to the primary supervision of a United States court and which has one or more United States persons who have the authority to control all substantial decisions of the trust or (B) that has otherwise validly elected to be treated as a United States person under the Code.

If a partnership (or other entity treated as a partnership for United States federal income tax purposes) is a beneficial owner of our ADSs or ordinary shares, the tax treatment of a partner in the partnership will generally depend upon the status of the partner and the activities of the partnership. Partnerships holding our ADSs or ordinary shares and their partners are urged to consult their tax advisors regarding an investment in our ADSs or ordinary shares.

For United States federal income tax purposes, it is generally expected that a U.S. Holder of ADSs will be treated as the beneficial owner of the underlying shares represented by the ADSs. The remainder of this discussion assumes that a U.S. Holder of our ADSs will be treated in this manner. Accordingly, deposits or withdrawals of ordinary shares for ADSs will generally not be subject to United States federal income tax.

Passive Foreign Investment Company Considerations

A non-United States corporation, such as our company, will be classified as a ~~“passive foreign investment company,” or~~ PFIC for United States federal income tax purposes for any taxable year, if either (i) 75% or more of its gross income for such year consists of certain types of “passive” income or (ii) 50% or more of the value of its assets ~~(determined~~(generally determined on the basis of a quarterly average) during such year is attributable to assets that produce or are held for the production of passive income (the “asset test”). For this purpose, cash and assets readily convertible into cash are categorized as passive assets, and the company’s goodwill and other unbooked intangibles associated with our active business are taken into account as ~~nonpassive~~non-passive assets. Passive income generally includes, among other things, dividends, interest, rents, royalties, and gains from the disposition of passive assets. We will be treated as owning a proportionate share of the assets and earning a proportionate share of the income of any other corporation in which we own, directly or indirectly, 25% or more ~~than 25%~~ (by value) of the stock.

Although the law in this regard is not entirely clear, we treat Beijing Momo as being owned by us for United States federal income tax purposes, because we control its management decisions and we are entitled to substantially all of the economic benefits associated with this entity, and, as a result, we consolidate the results of its operations in our consolidated U.S. GAAP financial statements. ~~If it were determined, however,~~

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Based upon the nature and composition of our assets (in particular, the retention of substantial amounts of cash, deposits and investments), and the market price of our ADSs, we believe that we ~~do not own the stock of Beijing Momo~~were a PFIC for United States federal income tax purposes ~~we would likely be treated as a PFIC~~ for the taxable year ended December 31, ~~2015~~2022, and ~~would anticipate being~~we will likely be a PFIC for ~~future taxable years. Assuming that we are the owner of Beijing Momo for United States federal income tax purposes and based upon~~ our ~~income and assets and the value of our ADSs, we do not believe that we were a PFIC for the taxable year ended December 31, 2015 and do not anticipate becoming a PFIC in the foreseeable future.~~

~~While we do not anticipate being a PFIC in the~~ current taxable year or the foreseeable future, there can be no assurance in this regard because the determination of whether we will be or become a PFIC is a factual determination made annually that will depend, in part, upon the composition of our income and assets. Fluctuations inunless the market price of our ADSs ~~may cause us to become~~increases and/or we invest a ~~PFIC~~substantial amount of the cash and other passive assets we hold in assets that produce or are held for the ~~current or subsequent taxable years because the value~~production of our assets for purposes of the asset test, including the value of our goodwill and unbooked intangibles, may be determined by reference to the market price of our ADSs from time to time (which may be volatile). In estimating the value of our goodwill and other unbooked intangibles, we have taken into account our current market capitalization. If our market capitalization subsequently declines, we may be or become classified as a PFIC for the current taxable year or future taxable years. In addition, the composition of our income and our assets will be affected by how, and how quickly, we spend our liquid assets. Under circumstances where our revenue from activities that produce passive income significantly increase relative to our revenue from activities that produce non-passive income, or where we determine not to deploy significant amounts of cash for active ~~purposes, our risk of becoming classified as a PFIC may substantially increase.~~

income.

Furthermore, because there are uncertainties in the application of the relevant rules, it is possible that the IRS may challenge our classification of certain income or assets as non-passive, or our valuation of our goodwill and other unbooked intangibles, each of which may result in our company becoming classified as a PFIC for the current or subsequent taxable years. For example, the IRS may challenge the classification of certain of our non-passive revenues as passive royalty income, which would result in a portion of our goodwill as being treated as a passive asset. If we are classified as a PFIC for any year during which a U.S. Holder holds our ADSs or ordinary shares, we generally will continue to be treated as a PFIC for all succeeding years during which such U.S. Holder holds our ADSs or ordinary shares.

The discussion below under “Dividends” and “Sale or Other Disposition of ADSs or Ordinary Shares” is written on the basis that we will not be classified as a PFIC for United States federal income tax purposes. The United States federal income tax rules that apply if we are treated as a PFIC are generally discussed below under “Passive Foreign Investment Company Rules.”

Dividends

Subject to the discussion below under “Passive Foreign Investment Company Rules,” any cash distributions (including the amount of any ~~PRC~~mainland China tax withheld) paid on our ADSs or ordinary shares out of our current or accumulated earnings and profits, as determined under United States federal income tax principles, will generally be includible in the gross income of a U.S. Holder as dividend income on the day actually or constructively received by the U.S. Holder, in the case of ordinary shares, or by the depositary, in the case of ADSs. Because we do not intend to determine our earnings and profits on the basis of United States federal income tax principles, any distribution we pay will generally be treated as a “dividend” for United States federal income tax purposes. A non-corporate U.S. Holder will be subject to tax on dividend income from a “qualified foreign corporation” at a lower applicable capital gains rate rather than the marginal tax rates generally applicable to ordinary income provided that certain holding period requirements are met. A non-United States corporation (other than a corporation that is classified as a PFIC for the taxable year in which the dividend is paid or the preceding taxable year) will generally be considered to be a qualified foreign corporation (i) if it is eligible for the benefits of a comprehensive tax treaty with the United States which the Secretary of Treasury of the United States determines is satisfactory for purposes of this provision and which includes an exchange of information program, or (ii) with respect to any dividend it pays on stock (or ADSs in respect of such stock) which is readily tradable on an established securities market in the United States. Our ADSs are listed on the NASDAQ Global Select Market, which is an established securities market in the United States, and the ADSs are readily tradable. Thus, the dividends we pay on our ADSs are expected to satisfy the conditions required for the reduced tax rates, but there can be no assurance that our ADSs will continue to be considered readily tradable on an established securities market in later years. Since we do not expect that our ordinary shares will be listed on an established securities market, it is unclear whether dividends that we pay on our ordinary shares that are not represented by ADSs will meet the conditions required for the reduced tax rate. However, in the event we are deemed to be a PRC resident enterprise under the PRC Enterprise Income Tax Law (see “People’s Republic of China Taxation” above), we may be eligible for the benefits of the United States-PRC income tax treaty. If we are eligible for such benefits (which the Secretary of the Treasury of the United States has determined is satisfactory for this purpose), dividends we pay on our ADSs or ordinary shares, regardless of whether such shares are represented by the ADSs, would be eligible for the reduced rates of taxation. U.S. Holders are urged to consult their tax advisors regarding the availability of the reduced tax rate on dividends with respect to our ADSs or ordinary shares in their particular circumstances. Dividends received on our ADSs or ordinary shares will not be eligible for the ~~dividends-received~~dividends received deduction allowed to corporations.

With respect to individuals and certain other non-corporate U.S. Holders, dividends may constitute “qualified dividend income” that is subject to tax at the lower applicable capital gains rates provided that (1) the ADSs or ordinary shares on which the dividends are paid are readily tradable on an established securities market in the United States, or, in the event that we are deemed to be a resident enterprise under the mainland China tax law, we are eligible for the benefit of the United States-PRC income tax treaty (the “Treaty”), (2) we are not a PFIC for either our taxable year in which the dividend was paid or the preceding taxable year, and (3) certain holding period requirements are met. The ADSs, but not our ordinary shares, are listed on the Nasdaq Global Select Market so we anticipate that the ADSs should qualify as readily tradable on an established securities market in the United States, although there can be no assurances in this regard. In the event we are deemed to be a mainland China resident enterprise under the PRC Enterprise Income Tax Law, we may be eligible for the benefits of the Treaty. If we are eligible for such benefits, dividends we pay on our ordinary shares, regardless of whether such shares are represented by the ADSs, and regardless of whether our ADSs are readily tradable on an established securities market in the United States, would be eligible for the reduced rates of taxation applicable to qualified dividend income. U.S. Holders should consult their tax advisors regarding the availability of the lower capital gains rate applicable to qualified dividend income for dividends paid with respect to the ADSs or ordinary shares.

Dividends will generally be treated as income from foreign sources for United States foreign tax credit purposes and will generally constitute passive category income. In the event that we are deemed to be a ~~PRC~~mainland China resident enterprise under the PRC Enterprise Income Tax Law, a U.S. Holder may be subject to ~~PRC~~mainland China withholding taxes on dividends paid on our ADSs or ordinary shares. Depending on the U.S. Holder’s individual facts and circumstances, a U.S. Holder may be eligible, subject to a number of complex limitations, to claim a foreign tax credit not in excess of any applicable treaty rate in respect of any foreign withholding taxes imposed on dividends received on our ADSs or ordinary shares. A U.S. Holder who does not elect to claim a foreign tax credit for foreign tax withheld may instead claim a deduction, for United States federal income tax purposes, in respect of such withholding, but only for a year in which such holder elects to do so for all creditable foreign income taxes. The rules governing the foreign tax credit are complex and their outcome depends in large part on the U.S. Holder’s individual facts and circumstances. Accordingly, U.S. Holders are urged to consult their tax advisors regarding the availability of the foreign tax credit under their particular circumstances.

As mentioned above, we believe that we were a PFIC for the taxable year ended December 31, 2022, and we will likely be classified as a PFIC for our current taxable year. U.S. Holders are urged to consult their tax advisors regarding the availability of the reduced tax rate on dividends with respect to our ADSs or ordinary shares under their particular circumstances.

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Sale or Other Disposition of ADSs or Ordinary Shares

Subject to the discussion below under “Passive Foreign Investment Company Rules,” a U.S. Holder will generally recognize ~~capital~~ gain or loss upon the sale or other disposition of our ADSs or ordinary shares in an amount equal to the difference between the amount realized upon the disposition and the ~~U.S. Holder’s~~holder’s adjusted tax basis in such ADSs or ordinary shares. ~~Any capital~~The gain or loss will generally be ~~long-term if~~capital gain or loss. Individuals and other non-corporate U.S. Holders who have held the ~~ADSs~~ADS or ordinary shares ~~have been held~~ for more than one year ~~and~~ will generally be ~~United States-source gain or loss for United States foreign tax credit purposes. Long-term capital gains of non-corporate taxpayers are currently~~ eligible for reduced ~~rates taxation. In the event that gain from the disposition of the ADSs or ordinary shares is subject to~~ tax ~~in the PRC, such gain may be treated as PRC-source gain under the United States-PRC income tax treaty.~~rates. The deductibility of a capital loss may be subject to limitations. Any such gain or loss that the U.S. Holder recognizes will generally be treated as U.S. source income or loss for foreign tax credit limitation purposes, which will generally limit the availability of foreign tax credits.

As described in “Item 10. Additional Information—E. Taxation—People’s Republic of China Taxation,” if we are deemed to be a mainland China resident enterprise under the PRC Enterprise Income Tax Law, gains from the disposition of the ADSs or ordinary shares may be subject to mainland China income tax and will generally be U.S. source, which may limit the ability to receive a foreign tax credit. If a U.S. Holder is eligible for the benefits of the Treaty, such holder may be able to elect to treat such gain as mainland China source income under the Treaty. Pursuant to recently issued United States Treasury regulations, however, if a U.S. Holder is not eligible for the benefits of the Treaty or does not elect to apply the Treaty, then such holder may not be able to claim a foreign tax credit arising from any mainland China tax imposed on the disposition of the ADSs or ordinary shares. The rules regarding foreign tax credits and deduction of foreign taxes are complex. U.S. Holders should consult their tax advisors regarding the availability of a foreign tax credit or deduction in light of their particular circumstances, including their eligibility for benefits under the Treaty, and the potential impact of the recently issued United States Treasury regulations.

As mentioned above, we believe that we were a PFIC for the taxable year ended December 31, 2022, and we will likely be classified as a PFIC for our current taxable year. U.S. Holders are urged to consult their tax advisors regarding the tax ~~consequences if a foreign tax is imposed on a~~considerations of the sale or other disposition of our ADSs or ordinary shares ~~including the availability of the foreign tax credit~~ under their particular circumstances.

Passive Foreign Investment Company Rules

As mentioned above, we believe that we were a PFIC for the taxable year ended December 31, 2022, and we will likely be classified as a PFIC for our current taxable year. If we are classified as a PFIC for any taxable year during which a U.S. Holder holds our ADSs or ordinary shares, and unless the U.S. Holder makes a mark-to-market election (as described below), the U.S. Holder will generally be subject to special tax rules that have a penalizing effect, regardless of whether we remain a PFIC, on (i) any excess distribution that we make to the U.S. Holder (which generally means any distribution paid during a taxable year to a U.S. Holder that is greater than 125 percent of the average annual distributions paid in the three preceding taxable years or, if shorter, the U.S. Holder’s holding period for the ADSs or ordinary shares), and (ii) any gain realized on the sale or other disposition, including a pledge, of ADSs or ordinary shares. Under the PFIC rules:

the excess distribution or gain will be allocated ratably over the U.S. Holder’s holding period for the ADSs or ordinary shares;

the amount allocated to the current taxable year and any taxable years in the U.S. Holder’s holding period prior to the first taxable year in which we are classified as a PFIC (each, a “pre-PFIC year”), will be taxable as ordinary income;

•

~~the amount allocated to each prior taxable year, other than a pre-PFIC year, will be subject to tax at the highest tax rate in effect applicable to the U.S. Holder for that year; and~~

~~an additional tax equal to the interest charge generally applicable to underpayments of tax will be imposed on the tax attributable to each prior taxable year, other than a pre-PFIC year.~~

•

the amount allocated to each prior taxable year, other than a pre-PFIC year, will be subject to tax at the highest tax rate in effect applicable to the U.S. Holder for that year; and an additional tax equal to the interest charge generally applicable to underpayments of tax will be imposed on the tax attributable to each prior taxable year, other than a pre-PFIC year.

If we are a PFIC for any taxable year during which a U.S. Holder holds our ADSs or ordinary shares and any of our subsidiaries is also a PFIC, such U.S. Holder would be treated as owning a proportionate amount (by value) of the shares of the lower-tier PFIC for purposes of the application of these rules. U.S. Holders are urged to consult their tax advisors regarding the application of the PFIC rules to any of our subsidiaries.

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As an alternative to the foregoing rules, a U.S. Holder of “marketable stock” in a PFIC may make a mark-to-market election with respect to such stock, provided that such stock is “regularly traded” within the meaning of applicable United States Treasury regulations. For those purposes, our ADSs, but not our ordinary shares, are treated as marketable stock on the ~~NASDAQ~~Nasdaq Global Select Market. We believe that our ADSs should qualify as being regularly traded, but no assurances may be given in this regard. If a U.S. Holder makes ~~this~~a mark-to-market election, the U.S. Holder will generally (i) include as ordinary income for each taxable year that we are a PFIC the excess, if any, of the fair market value of ADSs held at the end of the taxable year over the adjusted tax basis of such ADSs and (ii) deduct as an ordinary loss the excess, if any, of the adjusted tax basis of the ADSs over the fair market value of such ADSs held at the end of the taxable year, but such deduction will only be allowed to the extent of the amount previously included in income as a result of the mark-to-market election. The U.S. Holder’s adjusted tax basis in the ADSs would be adjusted to reflect any income or loss resulting from the mark-to-market election. If a U.S. Holder makes a mark-to-market election in respect of a corporation classified as a PFIC and such corporation ceases to be classified as a PFIC, the U.S. Holder will not be required to take into account the gain or loss described above during any period that such corporation is not classified as a PFIC.

If a U.S. Holder makes a mark-to-market election, any gain such U.S. Holder recognizes upon the sale or other disposition of our ADSs in a year when we are a PFIC will be treated as ordinary income and any loss will be treated as ordinary loss, but such loss will only be treated as ordinary loss to the extent of the net amount previously included in income as a result of the mark-to-market election. If a U.S. Holder makes a mark-to-market election it will be effective for the taxable year for which the election is made and all subsequent taxable years unless the ADSs are no longer regularly traded on a qualified exchange or the IRS consents to the revocation of the election. Only our ADSs, and not our ordinary shares, are listed on the Nasdaq Global Select Market. Consequently, if a U.S. Holder holds ordinary shares that are not represented by ADSs, such holder generally will not be eligible to make a mark-to-market election if we are or were to become a PFIC.

Because a mark-to-market election cannot be made for any lower-tier PFICs that we may own, a U.S. Holder may continue to be subject to the PFIC rules with respect to such U.S. Holder’s indirect interest in any investments held by us that are treated as an equity interest in a PFIC for United States federal income tax purposes.

We do not intend to provide information necessary for U.S. Holders to make qualified electing fund elections which, if available, would result in tax treatment different from the general tax treatment for PFICs described above.

If a U.S. Holder owns our ADSs or ordinary shares during any taxable year that we are a PFIC, the U.S. Holder must generally file an annual IRS Form 8621 or such other form as is required by the United States Treasury Department. Each U.S. Holder is urged to consult its tax advisor concerning the United States federal income tax consequences of holding and disposing ADSs or ordinary shares if we are or become treated as a PFIC, including the possibility of making a mark-to-market election and the unavailability of the election to treat us as a qualified electing fund.

~~Information Reporting~~

Certain U.S. Holders are required to report information to the IRS relating to an interest in “specified foreign financial assets,” including shares issued by a non-United States corporation, for any year in which the aggregate value of all specified foreign financial assets exceeds US$50,000 (or a higher dollar amount prescribed by the IRS), subject to certain exceptions (including an exception for shares held in custodial accounts maintained with a United States financial institution). These rules also impose penalties if a U.S. Holder is required to submit such information to the IRS and fails to do so.

In addition, U.S. Holders may be subject to information reporting to the IRS with respect to dividends on and proceeds from the sale or other disposition of our ADSs or ordinary shares. Each U.S. Holder is advised to consult with its tax advisor regarding the application of the United States information reporting rules to their particular circumstances.

F.	Dividends and Paying Agents

Not applicable.

G.	Statement by Experts

Not applicable.

H.
Documents on Display

We previously filed with the SEC our registration statement on Form F-1, as amended, and the related prospectus under the Securities Act of 1933, with respect to our Class A ordinary shares. We are subject to the periodic reporting and other informational requirements of the Exchange Act. Under the Exchange Act, we are required to file reports and other information with the SEC. Specifically, we are required to file annually a Form 20-F within four months after the end of each fiscal year, which is December 31. Copies of reports and other information, when so filed, may be inspected without charge and may be obtained at prescribed rates at the public reference facilities maintained by the SEC at 100 F Street, N.E., Room 1580, Washington, D.C. 20549. The public may obtain information regarding the Washington, D.C. Public Reference Room by calling the Commission at 1-800-SEC-0330.

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The SEC also maintains a website at www.sec.gov that contains reports, proxy and information statements, and other information regarding registrants that make electronic filings with the SEC using its EDGAR system. As a foreign private issuer, we are exempt from the rules under the Exchange Act prescribing the furnishing and content of quarterly reports and proxy statements, and officers, directors and principal shareholders are exempt from the reporting and short-swing profit recovery provisions contained in Section 16 of the Exchange Act.

We will furnish Deutsche Bank Trust Company Americas, the depositary of our ADSs, with our annual reports, which will include a review of operations and annual audited consolidated financial statements prepared in conformity with U.S. GAAP, and all notices of shareholders’ meetings and other reports and communications that are made generally available to our shareholders. The depositary will make such notices, reports and communications available to holders of ADSs and, upon our request, will mail to all record holders of ADSs the information contained in any notice of a shareholders’ meeting received by the depositary from us.

In accordance with ~~NASDAQ~~Nasdaq Stock Market Rule 5250(d), we will post this annual report on Form 20-F on our website at~~http:~~https://~~ir.immomo.com~~ir.hellogroup.com. In addition, we will provide hardcopies of our annual report free of charge to shareholders and ADS holders upon request.

I.	Subsidiary Information

Not applicable.

J.	Annual Report to Security Holders

Not applicable.

Item 11.

Quantitative and Qualitative Disclosures about Market Risk

Interest Rate Risk

Our exposure to interest rate risk primarily relates to the interest income generated by excess cash, which is mostly held in interest-bearing bank deposits. We generated interest income of ~~US$32 thousand, US$722 thousand~~RMB444.5 million, RMB384.3 million and ~~US$7.8~~RMB368.9 million (US$53.5 million) for the years ended December 31, ~~2013, 2014~~2020, 2021 and ~~2015,~~2022, respectively. We had cash, ~~and~~ cash equivalents, restricted cash, short-term investment, short-term deposits and long-term deposits in total of ~~US$169.5~~RMB13,398.8 million (US$1,942.7 million) as of December 31, ~~2015.~~2022. Assuming such amount of cash, ~~and~~ cash equivalents, restricted cash, short-term investment and term deposits were held entirely in interest-bearing bank deposits, a hypothetical one percentage point (100 basis-point) decrease in interest rates would decrease our interest income from these interest-bearing bank deposits for one year by approximately ~~US$1.7 million.~~RMB134.0 million (US$19.4 million). Interest-earning instruments carry a degree of interest rate risk. We have not been exposed to, nor do we anticipate being exposed to, material risks due to changes in market interest rates. However, our future interest income may fall short of expectations due to changes in market interest rates.

Foreign Exchange Risk

Our revenues and costs are mostly denominated in RMB, and a significant portion of our financial assets are also denominated in ~~RMB, whereas our reporting currency is the U.S. dollar. The Renminbi is~~RMB. We do not freely convertible into foreign currencies for capital account transactions. The value of the Renminbi against the U.S. dollar and other currencies is affected by, among other things, changes in China’s political and economic conditions and China’sbelieve that we currently have any significant direct foreign exchange ~~policies. On July 21, 2005, the PRC government changed its decade-old policy of pegging~~risk and have not used any derivative financial instruments to hedge exposure to such risk. Although in general our exposure to foreign exchange risks should be limited, the value of ~~the RMB to the U.S. dollar, and the Renminbi appreciated more than 20% against the U.S. dollar over the following three years. Between July 2008 and June 2010, this appreciation halted and~~your investment in our ADSs will still be affected by the exchange rate between ~~the RMB and the~~ U.S. dollar ~~remained within a narrow band. Since June 2010,~~and RMB because the value of our business is effectively denominated in RMB, while our ADSs are traded in U.S. dollars.

The conversion of RMB into foreign currencies, including U.S. dollars, is based on rates set by the People’s Bank of China. The RMB has fluctuated against the U.S. dollar, at times significantly and unpredictably. It is difficult to predict how market forces or ~~PRC~~mainland China or U.S. government policy may impact the exchange rate between ~~the~~ RMB and the U.S. dollar in the future.

148

To ~~date, we have not entered into any hedging transactions in an effort to reduce our exposure to foreign currency exchange risk.~~

~~Our net revenues, as denominated in RMB, was RMB843.1 million in 2015. Assuming~~the extent that we need to convert U.S. dollars into RMB for our operations, appreciation of the ~~full~~RMB against the U.S. dollar would have an adverse effect on the RMB amount ~~of our net revenues in 2015~~we receive from the conversion. Conversely, if we decide to convert RMB into U.S. dollars ~~a 10%~~for the purpose of making payments for dividends on our ordinary shares or ADSs or for other business purposes, appreciation of the U.S. dollar against RMB, from a rate of RMB6.2925 to US$1.00, which was the average RMB to U.S. dollars exchange rate in 2015, to a rate of RMB6.9217 to US$1.00, will result in a decrease of US$12.2 million in our net revenues in 2015. Conversely, a 10% depreciation of the U.S. dollar against the RMB ~~from~~would have a ~~rate of RMB6.2925 to US$1.00 to a rate of RMB5.6632 to US$1.00, will result in an increase of US$14.9 million in our net revenues in 2015.~~

~~Our net income, as denominated in RMB, was RMB189.4 million in 2015. Assuming that we convert the full amount of our net income in 2015 into U.S. dollars, a 10% appreciation of~~negative effect on the U.S. dollar ~~against RMB, from~~amounts available to us. In 2020, 2021 and 2022, we incurred foreign currency translation adjustment of a ~~rate~~loss of ~~RMB6.2925 to US$1.00 to a rate~~RMB141.7 million, RMB39.2 million and RMB274.8 million (US$39.8 million), respectively.

As of ~~RMB6.9217 to US$1.00, will result in a decrease~~December 31, 2022, we had U.S. dollar-denominated cash and cash equivalents and short-term deposits of US$~~2.7 million in our net income in 2015. Conversely, a 10% depreciation of~~94.6 million. If the U.S. dollar had appreciated or depreciated by 10% against the RMB, ~~from a rate~~our U.S. dollar-denominated cash and cash equivalents and time deposits as of ~~RMB6.2925 to US$1.00 to a rate of RMB5.6632 to US$1.00, will result in an increase of US$3.4~~December 31, 2022 would have increased or decreased by RMB65.2 million in ~~our net income in 2015.~~RMB terms.

Item 12.

Description of Securities Other than Equity Securities

A.	Debt Securities

Not applicable.

B.	Warrants and Rights

Not applicable.

C.	Other Securities

Not applicable.

D.	American Depositary Shares

Fees and Charges Our ADS holders May Have to Pay

Deutsche Bank Trust Company Americas, the depositary of our ADS program, collects its fees for delivery and surrender of ADSs directly from investors depositing shares or surrendering ADSs for the purpose of withdrawal or from intermediaries acting for them. The depositary collects fees for making distributions to investors by deducting those fees from the amounts distributed or by selling a portion of distributable property to pay the fees. The depositary may collect its annual fee for depositary services by deductions from cash distributions or by directly billing investors or by charging the book-entry system accounts of participants acting for them. The depositary may generally refuse to provide fee-attracting services until its fees for those services are paid. The depositary’s principal office at which the ADSs will be administered is located at ~~60 Wall Street,~~1 Columbus Circle, New York, NY ~~10005,~~10019, USA. The principal executive office of the depositary is located at ~~60 Wall Street,~~1 Columbus Circle, New York, NY ~~10005,~~10019, USA.


Service		Fees
• To any person to which ADSs are issued or to any person to which a distribution is made in respect of ADS distributions pursuant to stock dividends or other free distributions of stock, bonus distributions, stock splits or other distributions (except where converted to cash)		Up to US$0.05 per ADS issued

• ~~Cancellation~~Cancelation of ADSs, including termination of the deposit agreement		Up to US$0.05 per ADS ~~cancelled~~canceled

• Distribution of cash dividends		Up to US$0.05 per ADS held

• Distribution of cash entitlements (other than cash dividends) and/or cash proceeds, including proceeds from the sale of rights, securities and other entitlements		Up to US$0.05 per ADS held

• Distribution of ADSs pursuant to exercise of rights.		Up to US$0.05 per ADS held

• Depositary services		Up to US$0.05 per ADS held on the applicable record date(s)established by the depositary bank

149

Fees and Other Payments Made by the Depositary to Us

The depositary has agreed to reimburse us annually for our expenses incurred in connection with the administration and maintenance of our ADS facility including, but not limited to, investor relations expenses, other program related expenses related to our ADS facility and the travel expense of our key personnel in connection with such programs. The depositary has also agreed to provide additional payments to us based on the applicable performance indicators relating to our ADS facility. There are limits on the amount of expenses for which the depositary will reimburse us, but the amount of reimbursement available to us is not necessarily tied to the amount of fees the depositary collects from investors. ~~We did not receive any fee or other direct and indirect payment from the depositary for~~For the year ended December 31, ~~2015.~~2022, we were entitled to receive RMB28.2 million (US$4.1 million) (after withholding tax) from the depositary as reimbursement for our expenses incurred in connection with, among other things, investor relationship programs related to the ADS facility and the travel expense of our key personnel in connection with such programs. This amount has been fully paid to us as of the date of this annual report.

PART II

Item 13.

Defaults, Dividend Arrearages and Delinquencies

None.

Item 14.

Material Modifications to the Rights of Security Holders and Use of Proceeds

The following “Use of Proceeds” information relates to our initial public offering of 18,400,000 ADSs representing 36,800,000 of our Class A ordinary shares, including 2,400,000 ADSs representing 4,800,000 Class A ordinary shares sold pursuant to the full exercise of over-allotment option by the underwriters, at an initial offering price of US$13.50 per ADS, which was completed in December 2014.

After deducting the total expenses of ~~approximately~~ US$17.4 million and other expenses of ~~approximately~~ US$4.4 million, we received net proceeds of ~~approximately~~ US$226.7 million from our initial public offering. Concurrently with the initial public offering, we completed a private placement and received an additional US$60.0 million. As of December 31, ~~2015,~~2022, we had used ~~an insignificant amount~~all of the net proceeds received from ~~the~~our initial public offering ~~because the net~~to repurchase our ordinary shares and pay cash ~~provided by our operations was sufficient to cover our capital needs.~~dividends.

None of the net proceeds from our initial public offering were directly or indirectly paid to the directors, officers, general partners of our company or their associates, persons owning 10% or more of our ordinary shares, or our affiliates.

Item 15.

Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our chief executive officer and chief financial officer, has performed an evaluation of the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act) as of the end of the period covered by this report, as required by Rule 13a-15(b) under the Exchange Act.

150

Based upon that evaluation, our management has concluded that, as of December 31, ~~2015,~~2022, our disclosure controls and procedures were effective in ensuring that the information required to be disclosed by us in the reports that we file and furnish under the Exchange Act was recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms, and that the information required to be disclosed by us in the reports that we file or submit under the Exchange Act is accumulated and communicated to our management, including our chief executive officer and chief financial officer, as appropriate, to allow timely decisions regarding required disclosure.

Management’s Annual Report on Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Rule 13a-15(f) under the Exchange Act. Our management evaluated the effectiveness of our internal control over financial reporting, as required by Rule 13a-15(c) of the Exchange Act, based on criteria established in the framework in Internal Control—Integrated Framework ~~(1992)~~(2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this evaluation, our management has concluded that our internal control over financial reporting was effective as of December 31, ~~2015.~~2022.

Designing and implementing an effective financial reporting system is a continuous effort that requires us to devote significant resources to maintain a financial reporting system that adequately satisfies our reporting obligations. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. In addition, projections of any evaluation of effectiveness of our internal control over financial reporting to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies and procedures may deteriorate.

~~Attestation Report of the Registered Public Accounting Firm~~

~~This annual report on Form 20-F does not include an attestation report of our~~Our independent registered public accounting firm, ~~because we qualified as~~Deloitte Touche Tohmatsu Certified Public Accountants LLP, has issued an ~~“emerging growth company” as defined under~~attestation report on our internal control over financial reporting. That attestation report appears below.

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the ~~JOBS Act~~Board of Directors and Shareholders of Hello Group Inc.

Opinion on Internal Control over Financial Reporting

We have audited the internal control over financial reporting of Hello Group Inc. and its subsidiaries (the “Company”) as of December 31, ~~2015.~~2022, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2022, based on criteria established in Internal Control — Integrated Framework (2013) issued by COSO.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated financial statements as of and for the year ended December 31, 2022, of the Company and our report dated April 25, 2023, expressed an unqualified opinion on those financial statements and included an explanatory paragraph regarding the convenience translation of Renminbi amounts into United States dollar amounts.

Basis for Opinion

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Annual Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

151

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

Definition and Limitations of Internal Control over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ Deloitte Touche Tohmatsu Certified Public Accountants LLP

Deloitte Touche Tohmatsu Certified Public Accountants LLP

Shanghai, the People’s Republic of China

April 25, 2023

Changes in Internal Control over Financial Reporting

There were no significant changes in our internal controls over financial reporting during the year ended December 31, ~~2015~~2022 that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting. We may identify additional control deficiencies in the future. Should we discover such deficiencies, we intend to remediate them as soon as possible.

Item 16A.

Audit Committee Financial Expert

Our board of directors has determined that each of Mr. Benson Bing Chung Tam and Dr. Dave Daqing Qi, independent directors (under the standards set forth in ~~NASDAQ~~Nasdaq Stock Market Rule 5605(a)(2) and Rule 10A-3 under the Exchange Act) and members of our audit committee, is an audit committee financial expert.

Item 16B.

Code of Ethics

Our board of directors has adopted a code of ethics that applies to our directors, officers and employees, including certain provisions that specifically apply to our senior officers, including our chief executive officer, chief financial officer, other chief senior officers, senior finance officer, controller, senior vice presidents, vice presidents and any other persons who perform similar functions for us. We have filed our code of business conduct and ethics as Exhibit 99.1 to our registration statement on Form F-1 (File Number 333-199996), as amended, initially filed with the SEC on November 7, 2014. The code is also available on our official website under the corporate governance section at our investor relations website~~http:~~https://~~ir.immomo.com~~ir.hellogroup.com.

A copy of our code of business conduct and ethics will be provided at no cost to each person on the written or oral request of that person made to:

Hello Group Inc.

20th Floor, Block B

Tower 2, Wangjing SOHO

No. 1 Futongdong Street

Chaoyang District, Beijing 100102

People’s Republic of China

Tel: +86-10-5731-0538

Attention: Investor Relations Department

152

Item 16C.

Principal Accountant Fees and Services

The following table sets forth the aggregate fees by categories specified below in connection with certain professional services rendered by Deloitte Touche Tohmatsu Certified Public Accountants LLP ~~our principal external accounting firm,~~(PCAOB ID:

1113

) for the periods indicated.

   2014    2015
Audit fees⁽¹⁾
   US$ 735,000       US$ 800,000
Audit-related fees⁽²⁾
   US$ —         US$ —
Tax fees⁽³⁾
   US$ 226,000       US$ 44,157


	2021		2022

	(in RMB thousands)
Audit fees (1)		17,500		18,568
Tax and other service fees (2)		871		1,289

Notes:

(1)

“Audit fees” represents the aggregate fees billed for each of the fiscal years listed for professional services rendered by our principal accounting firm for the audit of our annual financial statements or services that are normally provided by the auditors in connection with statutory and regulatory filings or engagements.

(2)	“~~Audit-related fees” represents the aggregate fees billed for professional services rendered by our principal accounting firm for the assurance~~Tax and ~~related services, which mainly included the audit and review of financial statements and are not reported under “Audit Fees” above.~~

~~(3)~~

~~“Tax~~other service fees” represents the aggregate fees billed for professional services rendered by our principal accounting firm for tax compliance, tax advice, tax planning, assurance and ~~tax planning.~~related services.

The policy of our audit committee is to

pre-approve

all audit and

non-audit

services provided by ~~Deloitte Touche Tohmatsu Certified Public Accountants LLP,~~our independent registered public accounting firm, including audit services, audit-related services and tax services as described above, other than those forde minimis services which are approved by the audit committee prior to the completion of the audit.

153

Item 16D.

Exemptions from the Listing Standards for Audit Committees

~~Not applicable.~~As described under Item 16G, we currently follow home country practice and our audit committee consists of two members (both of whom are independent directors) instead of three members as required by Nasdaq listing rules. Other than above, we have not asked for, nor have we been granted, an exemption from the applicable listing standards for our audit committee.

Item 16E.

Purchases of Equity Securities by the Issuer and Affiliated Purchasers

~~None.~~On June 7, 2022, our board of directors authorized a share repurchase program under which we may repurchase up to US$200 million of our shares over the next 24 months. As of the date of this annual report, we had repurchased a total of approximately 12.1 million ADSs for approximately US$57.2 million on the open market under this program, at an average purchase price of US$4.72 per ADS. The table below is a summary of the shares repurchased by us in 2022. All shares were repurchased in the open market pursuant to the 2022 share repurchase program.

154


Period	Total Number of ADSs Purchased		Average Price Paid Per ADS		Total Number of ADSs Purchased as Part of the Publicly Announced Plan		Approximate Dollar Value of ADSs that May Yet Be Purchased Under the Plan
			(U.S. dollar)				(U.S. dollar)
June 2022		70,772		4.97		70,772		199,646,685
July 2022		2,183,299		4.69		2,183,299		189,368,204
August 2022		1,925,957		4.45		1,925,957		180,760,471
September 2022		1,991,184		4.77		1,991,184		171,222,222
October 2022		3,802,289		4.73		3,802,289		153,146,531
November 2022		2,015,535		4.87		2,015,535		143,285,610
March 2023		67,946		6.94		67,946		142,812,414
Total		12,056,982		4.72		12,056,982		142,812,414

Item 16F.

Change in Registrant’s Certifying Accountant

Not applicable.

Item 16G.

Corporate Governance

~~NASDAQ~~Nasdaq Stock Market Rule 5620 requires each issuer to hold an annual meeting of shareholders no later than one year after the end of the issuer’s fiscal year-end. Nasdaq Stock Market Rule 5605(c) requires each issuer to have an audit committee of at least three members. Nasdaq Stock Market Rule 5605(b) requires that a majority of the board of directors must be comprised of independent directors. However, ~~NASDAQ~~Nasdaq Stock Market Rule 5615(a)(3) permits foreign private issuers like us to follow “home country practice” in certain corporate governance matters. Maples and Calder, our Cayman Islands counsel, has provided a letter to the NASDAQ Stock Market certifying that under Cayman Islands law, we are not required to hold annual shareholders meetings every year. We followed home country practice and did not hold an annual meeting of shareholders in ~~2015.~~2022. We ~~may, however, hold annual shareholders meetings~~currently follow our home country practice and have a two-person audit committee. In addition, our board of directors is currently not composed of a majority of independent directors. Maples and Calder (Hong Kong) LLP, our Cayman Islands counsel, has provided a letter to the Nasdaq Stock Market certifying that under Cayman Islands law, we are permitted to follow home country practice in lieu of the ~~future.~~relevant requirements of the Rule 5600 Series of the Nasdaq Stock Market Rules.

Other than the ~~annual meeting practice~~practices described above, there are no significant differences between our corporate governance practices and those followed by U.S. domestic companies under ~~NASDAQ~~Nasdaq Stock Market Rules.

Item 16H.

Mine Safety Disclosure

Not applicable.

Item 16I.

Disclosure Regarding Foreign Jurisdictions that Prevent Inspections

In May 2022, Hello Group Inc. was conclusively listed by the SEC as a Commission-Identified Issuer under the HFCAA following the filing of our annual report on Form 20-F for the fiscal year ended December 31, 2021. Our auditor, a registered public accounting firm that the PCAOB, was unable to inspect or investigate completely in 2021, issued the audit report for us for the fiscal year ended December 31, 2021. On December 15, 2022, the PCAOB issued a report that vacated its December 16, 2021 determination and removed mainland China and Hong Kong from the list of jurisdictions where it is unable to inspect or investigate completely registered public accounting firms. For this reason, we do not expect to be identified as a Commission-Identified Issuer under the HFCAA after we file this annual report on Form 20-F.

~~PART III~~As of the date of this annual report, to our knowledge, (i) no governmental entities in the Cayman Islands or in China own shares of Hello Group Inc. or the VIEs in China, (ii) the governmental entities in China do not have a controlling financial interest in Hello Group Inc. or the VIEs, (iii) none of the members of the board of directors of Hello Group Inc. or our operating entities, including the VIEs, is an official of the Chinese Communist Party, and (iv) none of the currently effective memorandum and articles of association (or equivalent organizing document) of Hello Group Inc. or the VIEs contains any charter of the Chinese Communist Party.

155

PART III

Item 17.

Financial Statements

We have elected to provide financial statements pursuant to Item 18.

Item 18.

Financial Statements

For the year ended December 31, 2022, we identified three operating segments, including Momo’ service lines, Tantan’s service lines and QOOL’s service line. We primarily operate in the mainland China and substantially all of our long-lived assets are located in the mainland China. Our chief operating decision maker evaluates our performance based on each reporting segment’s net revenue, cost and expenses, operating income, as well as net income.

The consolidated financial statements of ~~Momo Inc., its subsidiaries~~our company and ~~its consolidated affiliated entity and its subsidiaries~~our three operating segments are included at the end of this annual report.

Item 19.

Exhibits


Exhibit Number		Description of Document

1.1		Second amended and restated memorandum and articles of association of the Registrant, as amended (incorporated by reference to Exhibit ~~3.2~~1.1 of our ~~registration statement~~annual report on Form ~~F-1, as amended~~20-F (file no. ~~333-199996),~~001-36765) filed with the SEC on ~~November 28, 2014)~~April 27, 2022)

2.1		Registrant’s specimen American depositary receipt (included in Exhibit 2.3)

2.2		Registrant’s specimen certificate for ordinary shares (incorporated by reference to Exhibit 4.2 of our registration statement on Form F-1, as amended (file no. 333-199996), filed with the SEC on November 28, 2014)

2.3		Deposit agreement dated December 10, 2014 among the Registrant, the depositary and holders and beneficial owners of American depositary shares evidenced by American depositary receipts issued thereunder (incorporated by reference to Exhibit 4.3 of our registration statement on Form S-8 (file no. 333-201769) filed with the SEC on January 30, 2015)

2.4		Description of Securities (incorporated by reference to Exhibit 2.4 of our annual report on Form 20-F (file no. 001-36765) filed with the SEC on April 27, 2022)

4.1		Third amended and restated shareholders agreement among the Registrant, shareholders of the Registrant and other parties thereto, dated May 15, 2014 (incorporated by reference to Exhibit 4.4 of our registration statement on Form F-1 (file no. 333-199996) filed with the SEC on November 7, 2014)

~~4.2~~		Amended and restated 2012 share incentive plan (incorporated by reference to Exhibit 10.1 of our registration statement on Form F-1 (file no. 333-199996) filed with the SEC on November 7, 2014)

~~4.3~~4.2		2014 share incentive plan (incorporated by reference to Exhibit 10.2 of our registration statement on Form F-1 (file no. 333-199996) filed with the SEC on November 7, 2014)

~~4.4~~4.3		Series C preferred share purchase agreement by and among the Registrant, Matrix Partners China II Hong Kong Limited, Gothic Partners, L.P., PJF Acorn I Trust, Gansett Partners, L.L.C, PH momo investment Ltd., Tenzing Holding 2011 Ltd., Alibaba Investment Limited and DST Team Fund Limited, as investors, and other parties thereto, dated October 8, 2013 (incorporated by reference to Exhibit 10.3 of our registration statement on Form F-1 (file no. 333-199996) filed with the SEC on November 7, 2014)

~~4.5~~		Series D preferred share purchase agreement by and among the Registrant, SCC Growth I Holdco A, Ltd. (formerly known as Sequoia Capital China Investment Holdco II Ltd.), Sequoia Capital China GF Holdco III-A, Ltd., SC China Growth III Co-Investment 2014-A, L.P., Rich Moon Limited and Tiger Global Eight Holdings, as investors, and other parties thereto, dated April 22, 2014 (incorporated by reference to Exhibit 10.5 of our registration statement on Form F-1 (file no. 333-199996) filed with the SEC on November 7, 2014)

~~4.6~~		Form of indemnification agreement between the Registrant and each of its directors and executive officers (incorporated by reference to Exhibit 10.5 of our registration statement on Form F-1 (file no. 333-199996) filed with the SEC on November 7, 2014)

~~4.7~~4.4		Form of employment agreement between the Registrant and each of its Executive Officers (incorporated by reference to Exhibit 10.6 of our registration statement on Form F-1 (file no. 333-199996) filed with the SEC on November 7, 2014)

~~4.8~~4.5		English translation of business operation agreement by and among Beijing Momo IT, Beijing Momo and its shareholders, dated April 18, 2012, and confirmation letter by Yan Tang, dated June 9, 2014 (incorporated by reference to Exhibit 10.7 of our registration statement on Form F-1 (file no. 333-199996) filed with the SEC on November 7, 2014)

~~Exhibit~~
~~Number~~
~~Description of Document~~
~~4.9~~ ~~English translation of exclusive~~Exclusive cooperation agreement by and between Beijing Momo IT and ~~Beijing Momo,~~Tianjin Heer, and a supplemental agreement thereto, dated ~~August 31, 2014~~May 1, 2016 (incorporated by reference to Exhibit ~~10.8~~4.11 of our ~~registration statement~~annual report on Form ~~F-1~~20-F (file no. ~~333-199996)~~001-36765) filed with the SEC on ~~November 7, 2014)~~April 26, 2017)
~~4.10~~4.6 English translation of exclusive cooperation agreement by and between Beijing Momo IT and Chengdu Momo, and a supplemental agreement thereto, dated August 31, 2014 (incorporated by reference to Exhibit 10.9 of our registration statement on Form F-1 (file no. 333-199996) filed with the SEC on November 7, 2014)
~~4.10~~ English translation of exclusive cooperation agreement by and between Beijing Momo IT and Chengdu Momo, and a supplemental agreement thereto, dated August 31, 2014 (incorporated by reference to Exhibit 10.9 of our registration statement on Form F-1 (file no. 333-199996) filed with the SEC on November 7, 2014)
~~4.11~~ Exclusive call option agreement by and among Beijing Momo IT, Beijing Momo and each of its shareholders, dated April 18, 2014 (incorporated by reference to Exhibit 10.10 of our registration statement on Form F-1 (file no. 333-199996) filed with the SEC on November 7, 2014)
~~4.12~~4.7 Power of attorney by each shareholder of Beijing Momo, dated April 18, 2014 (incorporated by reference to Exhibit 10.11 of our registration statement on Form F-1 (file no. 333-199996) filed with the SEC on November 7, 2014)

156


Exhibit Number		Description of Document

~~4.13~~4.8		Equity interest pledge agreement by and among Beijing Momo IT, Beijing Momo and each of its shareholders, dated April 18, 2014 (incorporated by reference to Exhibit 10.12 of our registration statement on Form F-1 (file no. 333-199996) filed with the SEC on November 7, 2014)

~~4.14~~4.9		Spousal consent letter by the spouse of each of Yong Li, Zhiwei Li and Yan Tang (incorporated by reference to Exhibit 10.13 of our registration statement on Form F-1 (file no. 333-199996) filed with the SEC on November 7, 2014)

~~4.15~~4.10		Shareholder confirmation letter by each of the shareholders of Beijing Momo, dated April 18, 2014 (incorporated by reference to Exhibit 10.14 of our registration statement on Form F-1 (file no. 333-199996) filed with the SEC on November 7, 2014)

4.11		Exclusive cooperation agreement between Beijing Momo IT and Loudi Momo, dated December 1, 2017 (incorporated by reference to Exhibit 4.18 of our annual report on Form 20-F (file no. 001-36765) filed with the SEC on April 26, 2018)

4.12		Supplemental agreement to the exclusive cooperation agreement between Beijing Momo IT and Loudi Momo, dated December 1, 2017 (incorporated by reference to Exhibit 4.19 of our annual report on Form 20-F (file no. 001-36765) filed with the SEC on April 26, 2018)

4.13		Indenture between the Registrant and The Bank of New York Mellon dated July 2, 2018 (incorporated by reference to Exhibit 4.20 of our annual report on Form 20-F (file no. 001-36765) filed with the SEC on April 26, 2019)

4.14		Exclusive business operation agreement by and among Tantan Technology and Tantan Culture, dated May 27, 2015 (incorporated by reference to Exhibit 4.21 of our annual report on Form 20-F (file no. 001-36765) filed with the SEC on April 26, 2019)

4.15		Equity interest pledge agreement by and among Tantan Technology (Beijing) Co., Ltd., Tantan Culture and its shareholder, dated August 16, 2019 (incorporated by reference to Exhibit 4.18 of our annual report on Form 20-F (file no. 001-36765) filed with the SEC on April 28, 2020)

4.16		~~Subscription~~Exclusive option agreement by and ~~between the Registrant~~among Tantan Technology (Beijing) Co., Ltd., Tantan Culture and ~~58.com Inc.,~~its shareholder, dated ~~November 28, 2014~~August 16, 2019 (incorporated by reference to Exhibit ~~10.15~~4.19 of our ~~registration statement~~annual report on Form ~~F-1~~20-F (file no. ~~333-199996)~~001-36765) filed with the SEC on ~~November 7, 2014)~~April 28, 2020)

4.17		~~Subscription agreement~~Power of attorney by ~~and between the Registrant and Alibaba Investment Limited,~~shareholder of Tantan Culture, dated ~~November 28, 2014~~August 16, 2019 (incorporated by reference to Exhibit ~~10.16~~4.20 of our ~~registration statement~~annual report on Form ~~F-1~~20-F (file no. ~~333-199996)~~001-36765) filed with the SEC on ~~November 7, 2014)~~April 28, 2020)

4.18		Business operation agreement by and between QOOL Media Technology (Tianjin) Co., Ltd. and Tianjin QOOL Media, dated December 18, 2018 (incorporated by reference to Exhibit 4.37 of our annual report on Form 20-F (file no. 001-36765) filed with the SEC on April 26, 2019)

4.19		Exclusive option agreement by and among QOOL Media Technology (Tianjin) Co., Ltd. and Beijing Momo and Tianjin Mingqiao, the shareholders of Tianjin QOOL Media, dated December 18, 2018 (incorporated by reference to Exhibit 4.38 of our annual report on Form 20-F (file no. 001-36765) filed with the SEC on April 26, 2019)

4.20		Equity interest pledge agreement by and among QOOL Media Technology (Tianjin) Co., Ltd. and Beijing Momo and Tianjin Mingqiao, the shareholders of Tianjin QOOL Media, dated December 18, 2018 (incorporated by reference to Exhibit 4.39 of our annual report on Form 20-F (file no. 001-36765) filed with the SEC on April 26, 2019)

4.21		Power of attorney by Beijing Momo and Tianjin Mingqiao, the shareholders of Tianjin QOOL Media, dated December 18, 2018 (incorporated by reference to Exhibit 4.40 of our annual report on Form 20-F (file no. 001-36765) filed with the SEC on April 26, 2019)

4.22		Shareholder confirmation letter by Beijing Momo and Tianjin Mingqiao, the shareholders of Tianjin QOOL Media, dated December 18, 2018 (incorporated by reference to Exhibit 4.41 of our annual report on Form 20-F (file no. 001-36765) filed with the SEC on April 26, 2019)

4.23		Exclusive cooperation agreement by and between QOOL Media Technology (Tianjin) Co., Ltd. and Tianjin QOOL Media, dated December 18, 2018 (incorporated by reference to Exhibit 4.42 of our annual report on Form 20-F (file no. 001-36765) filed with the SEC on April 26, 2019)

4.24		Exclusive cooperation agreement by and among Beijing Momo IT, its Chengdu Branch and Chengdu Momo, dated January 6, 2020 (incorporated by reference to Exhibit 4.59 of our annual report on Form 20-F (file no. 001-36765) filed with the SEC on April 28, 2020)

157


Exhibit Number		Description of Document

4.25		Supplemental agreement to the exclusive cooperation agreement between Beijing Momo IT, its Chengdu Branch and Beijing Momo, dated January 6, 2020 (incorporated by reference to Exhibit 4.60 of our annual report on Form 20-F (file no. 001-36765) filed with the SEC on April 28, 2020)

4.26		Business Operation Agreement by and between Beijing Momo IT and Beijing Momo, dated April 18, 2022 (incorporated by reference to Exhibit 4.81 of our annual report on Form 20-F (file no. 001-36765) filed with the SEC on April 27, 2022)

4.27		Supplemental Agreement to Exclusive Technology Consulting and Management Services Agreement by and between Beijing Momo IT and Beijing Momo, dated April 18, 2022 (incorporated by reference to Exhibit 4.82 of our annual report on Form 20-F (file no. 001-36765) filed with the SEC on April 27, 2022)

4.28*		Exclusive Technical Consulting and Management Services Agreement by and between Beijing Yiliulinger and Hainan Yilingliuer, dated June 21, 2022

4.29*		Exclusive Business Cooperation Agreement by and between Beijing Yiliulinger and Hainan Yilingliuer, dated June 21, 2022

4.30*		Power of attorney by Li Wang, the shareholder of Hainan Yilingliuer, dated June 21, 2022

4.31*		Power of attorney by Ying Zhang, the shareholder of Hainan Yilingliuer, dated June 21, 2022

4.32*		Exclusive option Agreement by and between Beijing Yiliulinger and Li Wang, the shareholder of Hainan Yilingliuer, dated June 21, 2022

4.33*		Exclusive option Agreement by and between Beijing Yiliulinger and Ying Zhang, the shareholder of Hainan Yilingliuer, dated June 21, 2022

4.34*		Shareholder confirmation letter by Li Wang, the shareholder of Hainan Yilingliuer, dated June 21, 2022

4.35*		Shareholder confirmation letter by Ying Zhang, the shareholder of Hainan Yilingliuer, dated June 21, 2022

4.36*		Equity interest pledge agreement by and among Beijing Yiliulinger, Hainan Yilingliuer and Li Wang, dated June 21, 2022

4.37*		Equity interest pledge agreement by and among Beijing Yiliulinger, Hainan Yilingliuer and Ying Zhang, dated June 21, 2022

4.38*		Exclusive Technical Consulting and Management Services Agreement by and between Beijing Yiliulinger and Hainan Miaoka, dated June 21, 2022

4.39*		Exclusive Business Cooperation Agreement by and between Beijing Yiliulinger and Hainan Miaoka, dated June 21, 2022

4.40*		Power of attorney by Li Wang, the shareholder of Hainan Miaoka, dated June 21, 2022

4.41*		Power of attorney by Yong Liu, the shareholder of Hainan Miaoka, dated June 21, 2022

4.42*		Exclusive option Agreement by and between Beijing Yiliulinger and Li Wang, the shareholder of Hainan Miaoka, dated June 21, 2022

4.43*		Exclusive option Agreement by and between Beijing Yiliulinger and Yong Liu, the shareholder of Hainan Miaoka, dated June 21, 2022

4.44*		Shareholder confirmation letter by Li Wang, the shareholder of Hainan Miaoka, dated June 21, 2022

4.45*		Shareholder confirmation letter by Yong Liu, the shareholder of Hainan Miaoka, dated June 21, 2022

4.46*		Equity interest pledge agreement by and among Beijing Yiliulinger, Hainan Miaoka and Li Wang, dated June 21, 2022

4.47*		Equity interest pledge agreement by and among Beijing Yiliulinger, Hainan Miaoka and Yong Liu, dated June 21, 2022

4.48*		Exclusive Technical Consulting and Management Services Agreement by and between Beijing Wozaixiangxiang and Tianjin Nishuodedoudui, dated August 19, 2022

4.49*		Exclusive Business Cooperation Agreement by and between Beijing Wozaixiangxiang and Tianjin Nishuodedoudui, dated August 19, 2022

4.50*		Power of attorney by Jie Chen, the shareholder of Tianjin Nishuodedoudui, dated August 19, 2022

4.51*		Power of attorney by Yong Liu, the shareholder of Tianjin Nishuodedoudui, dated August 19, 2022

4.52*		Exclusive option Agreement by and between Beijing Wozaixiangxiang and Jie Chen, the shareholder of Tianjin Nishuodedoudui, dated August 19, 2022

4.53*		Exclusive option Agreement by and between Beijing Wozaixiangxiang and Yong Liu, the shareholder of Tianjin Nishuodedoudui, dated August 19, 2022

158


Exhibit Number		Description of Document

4.54*		Shareholder confirmation letter by Jie Chen, the shareholder of Tianjin Nishuodedoudui, dated August 19, 2022

4.55*		Shareholder confirmation letter by Yong Liu, the shareholder of Tianjin Nishuodedoudui, dated August 19, 2022

4.56*		Equity interest pledge agreement by and among Beijing Wozaixiangxiang, Tianjin Nishuodedoudui and Jie Chen, dated August 19, 2022

4.57*		Equity interest pledge agreement by and among Beijing Wozaixiangxiang, Tianjin Nishuodedoudui and Yong Liu, dated August 19, 2022

4.58*		Exclusive Technical Consulting and Management Services Agreement by and between Beijing Momo IT and Beijing Perfect Match, dated September 15, 2022

4.59*		Exclusive Business Cooperation Agreement by and between Beijing Momo IT and Beijing Perfect Match, dated September 15, 2022

4.60*		Power of attorney by Shasha Li, the shareholder of Beijing Perfect Match, dated September 15, 2022

4.61*		Power of attorney by Ying Zhang, the shareholder of Beijing Perfect Match, dated September 15, 2022

4.62*		Exclusive option Agreement by and between Beijing Momo IT and Shasha Li, the shareholder of Beijing Perfect Match, dated September 15, 2022

4.63*		Exclusive option Agreement by and between Beijing Momo IT and Ying Zhang, the shareholder of Beijing Perfect Match, dated September 15, 2022

4.64*		Shareholder confirmation letter by Shasha Li, the shareholder of Beijing Perfect Match, dated September 15, 2022

4.65*		Shareholder confirmation letter by Ying Zhang, the shareholder of Beijing Perfect Match, dated September 15, 2022

4.66*		Equity interest pledge agreement by and among Beijing Momo IT, Beijing Perfect Match and Shasha Li, dated September 15, 2022

4.67*		Equity interest pledge agreement by and among Beijing Momo IT, Beijing Perfect Match and Ying Zhang, dated September 15, 2022

4.68*		Exclusive Technical Consulting and Management Services Agreement by and between Beijing Momo IT and SpaceTime Beijing, dated September 15, 2022

4.69*		Exclusive Business Cooperation Agreement by and between Beijing Momo IT and SpaceTime Beijing, dated September 15, 2022

4.70*		Power of attorney by Minyan Wang, the shareholder of SpaceTime Beijing, dated September 15, 2022

4.71*		Power of attorney by Shasha Li, the shareholder of SpaceTime Beijing, dated September 15, 2022

4.72*		Exclusive option Agreement by and between Beijing Momo IT and Minyan Wang, the shareholder of SpaceTime Beijing, dated September 15, 2022

4.73*		Exclusive option Agreement by and between Beijing Momo IT and Shasha Li, the shareholder of SpaceTime Beijing, dated September 15, 2022

4.74*		Shareholder confirmation letter by Minyan Wang, the shareholder of SpaceTime Beijing, dated September 15, 2022

4.75*		Shareholder confirmation letter by Shasha Li, the shareholder of SpaceTime Beijing, dated September 15, 2022

4.76*		Equity interest pledge agreement by and among Beijing Momo IT, SpaceTime Beijing and Minyan Wang, dated September 15, 2022

4.77*		Equity interest pledge agreement by and among Beijing Momo IT, SpaceTime Beijing and Shasha Li, dated September 15, 2022

4.78*		Exclusive Technical Consulting and Management Services Agreement by and between Beijing Momo IT and Beijing Top Maker, dated February 16, 2023

4.79*		Exclusive Business Cooperation Agreement by and between Beijing Momo IT and Beijing Top Marker, dated February 16, 2023

4.80*		Power of attorney by Fei Dai, the shareholder of Beijing Top Maker, dated February 16, 2023

4.81*		Power of attorney by Kuan He, the shareholder of Beijing Top Maker, dated February 16, 2023

4.82*		Exclusive option Agreement by and between Beijing Momo IT and Fei Dai, the shareholder of Beijing Top Maker, dated February 16, 2023

159


Exhibit Number		Description of Document

4.83*		Exclusive option Agreement by and between Beijing Momo IT and Kuan He, the shareholder of Beijing Top Marker, dated February 16, 2023

4.84*		Shareholder confirmation letter by Fei Dai, the shareholder of Beijing Top Maker, dated February 16, 2023

4.85*		Shareholder confirmation letter by Kuan He, the shareholder of Beijing Top Marker, dated February 16, 2023

4.86*		Equity interest pledge agreement by and among Beijing Momo IT, Beijing Top Marker and Fei Dai, dated February 16, 2023

4.87*		Equity interest pledge agreement by and among Beijing Momo IT, Beijing Top Marker and Kuan he, dated February 16, 2023

8.1*		List of subsidiaries and consolidated entities of the Registrant

11.1		Code of business conduct and ethics of the Registrant (incorporated by reference to Exhibit 99.1 of our Registration Statement on Form F-1 (file no. 333-199996) filed with the Securities and Exchange Commission on November 7, 2014)

12.1*		Certification by Principal Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

12.2*		Certification by Principal Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

13.1**		Certification by Principal Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

13.2**		Certification by Principal Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

15.1*		Consent of ~~Han Kun Law Offices~~Maples and Calder (Hong Kong) LLP

15.2*		Consent of Han Kun Law Offices

15.3*		Consent of Deloitte Touche Tohmatsu Certified Public Accountants LLP, an independent registered public accounting firm

101.INS*		Inline XBRL Instance Document — the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document

101.SCH*.		Inline XBRL Taxonomy Extension Schema Document

101.CAL*		Inline XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF*		Inline XBRL Taxonomy Extension Definition Linkbase Document

101.LAB*		Inline XBRL Taxonomy Extension Label Linkbase Document

101.PRE*		Inline XBRL Taxonomy Extension Presentation Linkbase Document

104.*		Cover Page Interactive Data File — the cover page XBRL tags are embedded within the Exhibit 101 Inline XBRL document set

*	Filed herewith

**	Furnished herewith

160

SIGNATURES

The registrant hereby certifies that it meets all of the requirements for filing its annual report on Form 20-F and that it has duly caused and authorized the undersigned to sign this annual report on its behalf.


~~Momo~~Hello Group Inc.

By:	/s/ ~~Yan Tang~~
	~~Name:~~ Yan Tang
	Name:	Yan Tang
	Title: ~~Chairman and~~	Chief Executive Officer

Date: April 25, ~~2016~~

2023

~~MOMO INC.~~

161

Hello Group Inc.

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, ~~2013, 2014~~2020, 2021 AND ~~2015~~

2022


CONTENTS	~~PAGE(S)~~Pages

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM		~~F-2~~F - 2 - F - 3

CONSOLIDATED BALANCE SHEETS AS OF DECEMBER 31, ~~2014~~2021 AND ~~2015~~2022		~~F-3~~F - 4

CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE YEARS ENDED DECEMBER 31, ~~2013, 2014~~2020, 2021 AND ~~2015~~2022		~~F-4~~F - 5

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) ~~INCOME~~ FOR THE YEARS ENDED DECEMBER 31, ~~2013, 2014~~2020, 2021 AND ~~2015~~2022		~~F-5~~F - 6

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY ~~(DEFICIT)~~ FOR THE YEARS ENDED DECEMBER 31, ~~2013, 2014~~2020, 2021 AND ~~2015~~2022		~~F-6~~F - 7

CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, ~~2013, 2014~~2020, 2021 AND ~~2015~~2022		~~F-7~~F - 8

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, ~~2013, 2014~~2020, 2021 AND ~~2015~~2022		~~F-8~~ F - ~~F-57~~9 - F - 5 6

F-1

Table of Contents

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

~~TO THE BOARD OF DIRECTORS AND~~

~~SHAREHOLDERS OF MOMO INC.~~

To the Board of Directors and Shareholders of Hello Group Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of ~~Momo~~Hello Group Inc. ~~(the “Company”),~~and its subsidiaries ~~its variable interest entity (“VIE”), and its VIE’s subsidiaries (collectively, the “Group”~~(the “Company”) as of December 31, ~~2014~~2021 and ~~2015 and~~2022, the related consolidated statements of operations, comprehensive income (loss) ~~income,~~, changes in ~~(deficit)~~ equity and cash flows for each of the three years in the period ended December 31, ~~2015. These~~2022, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements ~~are~~present fairly, in all material respects, the ~~responsibility~~financial position of the ~~Group’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.~~

Company as of December 31, 2021 and 2022, and the results of its operations and its cash flows for each of the three years ended December 31, 2022, in conformity with accounting principles generally accepted in the United States of America.

We ~~conducted our audits~~have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States). (PCAOB), the Company’s internal control over financial reporting as of December 31, 2022, based on criteria established in

Internal Control—Integrated Framework (2013)

issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated April 25, 2023, expressed an unqualified opinion on the Company’s internal control over financial reporting.

Convenience translation

Our audits also comprehended the translation of Renminbi amounts into United States dollar amounts and, in our opinion, such translation has been made in conformity with the basis stated in Note 2. Such United States dollar amounts are presented solely for the convenience of readers in the United States of America.

Basis for Opinion

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the ~~consolidated~~ financial statements are free of material ~~misstatement. The Group is not required~~misstatement, whether due to ~~have, nor were we engaged to perform, an audit of its internal control over financial reporting.~~error or fraud. Our audits ~~include consideration~~included performing procedures to assess the risks of ~~internal control over~~material misstatement of the financial ~~reporting as a basis for designing audit~~statements, whether due to error or fraud, and performing procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includesrespond to those risks. Such procedures included examining, on a test basis, evidence ~~supporting~~regarding the amounts and disclosures in the ~~consolidated~~ financial ~~statements, assessing~~statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall ~~consolidated~~presentation of the financial ~~statement presentation.~~statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of the critical audit matter does not alter in any way our opinion ~~such consolidated~~on the financial statements, ~~present fairly, in all material respects,~~taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it

relates.

F-2

Table of Contents

Revenue Recognition - live video service revenue and virtual gift service revenue - Refer to Note 2 of the financial ~~position~~statements

Critical Audit Matter Description

The Company generates live video service revenue and virtual gift service revenues from sales of virtual items to users of the ~~Group as of December 31, 2014 and 2015, and~~Group’s platform which can be consumed on the ~~results of its operations and its cash flows for~~platform. Revenue related to each of the ~~three years~~virtual items is recognized at the point-in-time when the virtual item is consumed by paying users. Because of the nature of the Company’s virtual items, the Company uses automated systems to process and record its revenue transactions. We identified live video service revenue and virtual gift service revenue as a critical audit matter considering the nature of the audit evidence obtained is highly dependent on the Company’s information technology (“IT”) systems. This required an increased extent of effort to determine the nature, timing and extent of audit evidence required to be obtained, including the need for us to involve IT professionals and data analytics specialists to assist with the performance of certain procedures.

How the Critical Audit Matter Was Addressed in the ~~period ended December 31, 2015, in conformity with accounting principles generally accepted in~~Audit

Our audit procedures related to this critical audit matter included the ~~United States~~following, among others:

With the assistance of ~~America.~~

our IT specialists and data analytics specialists, we:

—

Identified the significant systems used to process the revenue transactions related to the virtual items and tested the general IT controls over each of these systems, including testing of user access controls, change management controls, and IT operations controls.

—

Performed testing of automated controls over revenue recognition with respect to the revenue recognition related to the virtual items.

—

Tested the operating effectiveness of internal controls related to the approval of the underlying calculation logic to the automated revenue recognition process, the daily reconciliation over the consumption data between systems, and the review of the monthly revenue recognized.

—

Performed procedures to reconcile the cash received and recorded in the payment system with the collection records of major third-party online payment channels.

—

On a sample basis, recalculated the live video service revenue and virtual gift service revenue amount recognized by utilizing computer-assisted audit techniques.

—

Performed data analytics on users’ behaviors in the platform and evaluated trends in the recorded revenue.

/s/ Deloitte Touche Tohmatsu Certified Public Accountants LLP

~~Beijing,~~

Shanghai, the People’s Republic of China

April 25, ~~2016~~

~~MOMO INC.~~

2023

We have served as the Company’s auditor since 2014.

F-3

Table of Contents

Hello Group Inc.

CONSOLIDATED BALANCE SHEETS

(In thousands, ~~of U.S. dollars,~~ except share and share related data, or otherwise noted)

   As of December 31,
   2014 2015
Assets

Current assets

Cash and cash equivalents
   $ 450,968    $ 169,469
Term deposits
   —      300,000
Accounts receivable, net of allowance for doubtful accounts of $nil and $nil as of December 31, 2014 and 2015, respectively
   7,038    14,896
Amount due from related parties
   —      1,175
Prepaid expenses and other current assets
   8,009    18,297


Total current assets
   466,015    503,837
Property and equipment, net
   9,936    16,259
Rental deposits
   793    743
Long term investments
   1,760    19,318
Other non-current assets
   —      2,000


Total assets
   478,504    542,157


Liabilities and equity

Current liabilities

Accounts payable (including accounts payable of the consolidated VIE without recourse to the Company of $3,728 and $9,040 as of December 31, 2014 and 2015, respectively)
   5,900    10,445
Deferred revenue (including deferred revenue of the consolidated VIE without recourse to the Company of $16,348 and $28,274 as of December 31, 2014 and 2015, respectively)
   16,348    28,274
Accrued expenses and other current liabilities (including accrued expenses and other current liabilities of the consolidated VIE without recourse to the Company of $1,100 and $1,954 as of December 31, 2014 and 2015, respectively)
   9,415    26,694
Amount due to related parties (including amount due to related parties of the consolidated VIE without recourse to the Company of $nil and $nil as of December 31, 2014 and 2015, respectively)
   6,450    6,532


Total current liabilities
   38,113    71,945
Other non-current liabilities
   —      1,826


Total liabilities
   38,113    73,771


Commitments and contingencies (Note14)

Equity

Class A ordinary shares ($0.0001 par value; 800,000,000 and 800,000,000 shares authorized as of December 31, 2014 and 2015 respectively; 280,869,740 and 286,865,033 shares issued and outstanding as of December 31, 2014 and 2015, respectively)
   30    31
Class B ordinary shares ($0.0001 par value; 100,000,000 and 100,000,000 shares authorized as of December 31, 2014 and 2015, respectively; 96,886,370 and 96,886,370 shares issued and outstanding as of December 31, 2014 and 2015, respectively)
   10    10
Treasury stock
   (64,494 ) (64,494 )
Additional paid-in capital
   613,678    631,474
Accumulated deficit
   (107,806 ) (94,109 )
Accumulated other comprehensive loss
   (1,027 ) (4,526 )


Total equity
   440,391    468,386


Total liabilities and equity
   $ 478,504    $ 542,157


	As of December 31,

	2021			2022			2022
	RMB			RMB			US$
Assets
Current assets
Cash and cash equivalents		5,570,563			5,018,129			727,560
Short-term deposits		2,860,000			5,300,000			768,428
Restricted cash		—			97,706			14,166
Short-term investments		—			300,240			43,531
Accounts receivable, net of allowance for doubtful accounts of RMB15,127 and RMB5,870 as of December 31, 2021 and 2022, respectively		205,225			188,711			27,361
Amounts due from related parties		—			55			8
Prepaid expenses and other current assets		775,072			819,706			118,846

Total current assets		9,410,860			11,724,547			1,699,900
Long-term deposits		7,200,000			2,600,000			376,965
Long-term restricted cash		76,471			82,766			12,000
Right-of-use assets, net		257,934			115,520			16,749
Property and equipment, net		180,664			172,984			25,080
Intangible assets, net		27,320			22,203			3,219
Rental deposits		19,204			20,737			3,007
Long-term investments		820,006			893,988			129,616
Other non-current assets		83,930			162,499			23,560
Deferred tax assets		34,849			34,343			4,979

Total assets		18,111,238			15,829,587			2,295,075

Liabilities and equity
Current liabilities
Accounts payable (including accounts payable of the consolidated VIEs without recourse to the Company of RMB635,635 and RMB509,042 as of December 31, 2021 and 2022, respectively)		726,207			617,022			89,460
Deferred revenue (including deferred revenue of the consolidated VIEs without recourse to the Company of RMB519,237 and RMB469,076 as of December 31, 2021 and 2022, respectively)		539,967			484,775			70,286
Accrued expenses and other current liabilities (including accrued expenses and other current liabilities of the consolidated VIEs without recourse to the Company of RMB304,892 and RMB381,220 as of December 31, 2021 and 2022, respectively)		911,050			797,504			115,627
Amount due to related parties (including amount due to related parties of the consolidated VIEs without recourse to the Company of RMB5,016 and RMB9,178 as of December 31, 2021 and 2022, respectively)		5,016			9,178			1,331
Lease liabilities due within one year (including lease liabilities due within one year of the consolidated VIEs without recourse to the Company of RMB31,595 and RMB23,558 as of December 31, 2021 and 2022, respectively)		162,950			88,352			12,810
Income tax payable (including income tax payable of the consolidated VIEs without recourse to the Company of RMB58,183 and RMB37,837 as of December 31, 2021 and 2022, respectively)		125,773			68,765			9,970
Deferred consideration in connection with business acquisitions (including deferred consideration in connection with business acquisitions of the consolidated VIEs without recourse to the Company of RMB nil and RMB nil as of December 31, 2021 and 2022, respectively)		44,802			26,483			3,840
Convertible senior notes-current (including accounts payable of the consolidated VIEs without recourse to the Company of RMB nil and RMB nil as of December 31, 2021 and 2022, respectively)		—			2,646,168			383,658

Total current liabilities		2,515,765			4,738,247			686,982
Deferred tax liabilities		213,384			22,011			3,191
Convertible senior notes		4,565,292			—			—
Lease liabilities		103,105			33,281			4,825
Other non-current liabilities		128,095			105,410			15,283

Total liabilities		7,525,641			4,898,949			710,281

Commitments and contingencies (Note 18)
Equity
Class A ordinary shares ($0.0001 par value; 800,000,000 and 800,000,000 shares authorized as of December 31, 2021 and 2022, respectively; 343,142,810 shares issued, 314,836,418 shares outstanding as of December 31, 2021 and 348,891,334 shares issued, 296,606,870 shares outstanding as of December 31, 2022, respectively)		226			230			34
Class B ordinary shares ($0.0001 par value; 100,000,000 and 100,000,000 shares authorized as of December 31, 2021 and 2022, respectively; 80,364,466 and 80,364,466 shares issued and outstanding as of December 31, 2021 and 2022 respectively)		51			51			8
Treasury stock		(1,595,339	)		(1,991,185	)		(288,695	)
Additional paid-in capital		7,214,698			7,587,543			1,100,090
Retained earnings		4,677,635			5,320,921			771,461
Accumulated other comprehensive income (loss)		149,368			(140,253	)		(20,335	)
Non-controlling interest		138,958			153,331			22,231

Total equity		10,585,597			10,930,638			1,584,794

Total liabilities and equity		18,111,238			15,829,587			2,295,075

The accompanying notes are an integral part of these consolidated financial statements.

~~MOMO INC.~~

F-4

Table of Contents

Hello Group Inc.

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, ~~of U.S. dollars,~~ except share and share related data, or otherwise noted)

   For the years ended December 31,
   2013 2014 2015
Net revenues
   $ 3,129    $ 44,755    $ 133,988
Cost and expenses:

Cost of revenues (including share-based compensation of $34, $155 and $915 in 2013, 2014 and 2015, respectively)
   (2,927 ) (15,762 ) (30,312 )
Research and development (including share-based compensation of $269, $674 and $3,502 in 2013, 2014 and 2015, respectively)
   (3,532 ) (9,264 ) (23,265 )
Sales and marketing (including share-based compensation of $128, $736 and $3,780 in 2013, 2014 and 2015, respectively)
   (3,018 ) (35,538 ) (52,631 )
General and administrative (including share-based compensation of $532, $5,073 and $9,185 in 2013, 2014 and 2015, respectively)
   (3,010 ) (10,354 ) (22,879 )


Total cost and expenses
   (12,487 ) (70,918 ) (129,087 )


Other operating income
   —      26    713


(Loss) Income from operations
   (9,358 ) (26,137 ) 5,614
Interest income
   32    722    7,805


(Loss) Income before income tax and share of income on equity method investments
   (9,326 ) (25,415 ) 13,419
Income tax expense
   —      —      (92 )


(Loss) Income before share of income on equity method investments
   (9,326 ) (25,415 ) 13,327
Share of income on equity method investments
   —      —      370


Net (loss) income attributable to Momo Inc.
   (9,326 ) (25,415 ) 13,697
Deemed dividend to preferred shareholders
   (8,120 ) (57,663 ) —


Net (loss) income attributable to ordinary shareholders
   $ (17,446 ) $ (83,078 ) 13,697


Net (loss) income per share attributable to ordinary shareholders

Basic
   $ (0.26 ) $ (0.97 ) $ 0.04
Diluted
   $ (0.26 ) $ (0.97 ) $ 0.03


Weighted average shares used in calculating net (loss) income per ordinary share

Basic
   67,190,411    85,293,775    342,646,282
Diluted
   67,190,411    85,293,775    401,396,548


	For the years ended December 31,

	2020			2021			2022			2022
	RMB			RMB			RMB			US$
Net revenues		15,024,188			14,575,719			12,704,172			1,841,932
Cost and expenses:
Cost of revenues (including share-based compensation of RMB18,449, RMB17,941 and RMB14,195 in 2020, 2021 and 2022, respectively)		(7,976,781	)		(8,383,431	)		(7,421,419	)		(1,076,005	)
Research and development (including share-based compensation of RMB175,870, RMB139,571 and RMB88,797 in 2020, 2021 and 2022, respectively)		(1,167,677	)		(1,131,781	)		(1,006,219	)		(145,888	)
Sales and marketing (including share-based compensation of RMB158,902, RMB70,821 and RMB38,432 in 2020, 2021 and 2022, respectively)		(2,813,922	)		(2,604,309	)		(2,073,617	)		(300,646	)
General and administrative (including share-based compensation of RMB325,465, RMB247,438 and RMB260,060 in 2020, 2021 and 2022, respectively)		(763,150	)		(624,700	)		(596,006	)		(86,413	)
Impairment loss on goodwill and intangible assets		—			(4,397,012	)		—			—

Total cost and expenses		(12,721,530	)		(17,141,233	)		(11,097,261	)		(1,608,952	)
Other operating income		228,777			175,947			20,632			2,991

Income (loss) from operations		2,531,435			(2,389,567	)		1,627,543			235,971
Interest income		444,471			384,279			368,879			53,482
Interest expense		(78,872	)		(73,776	)		(83,530	)		(12,111	)
Other gain or (loss), net		1,500			(16,000	)		118,325			17,156

Income (loss) before income tax and share of loss on equity method investments		2,898,534			(2,095,064	)		2,031,217			294,498
Income tax expense		(755,620	)		(822,556	)		(562,281	)		(81,523	)

Income (loss) before share of loss on equity method investments		2,142,914			(2,917,620	)		1,468,936			212,975
Share of (loss) income on equity method investments		(42,522	)		(8,084	)		11,073			1,605

Net income (loss)		2,100,392			(2,925,704	)		1,480,009			214,580

Less: net loss attributable to non-controlling interest		(3,092	)		(11,996	)		(4,274	)		(620	)

Net income (loss) attributable to the shareholders of Hello Group Inc.		2,103,484			(2,913,708	)		1,484,283			215,200

Net income (loss) per share attributable to ordinary shareholders
Basic		5.05			(7.20	)		3.80			0.55
Diluted		4.83			(7.20	)		3.65			0.53
Weighted average shares used in calculating net income (loss) per ordinary share
Basic		416,914,898			404,701,910			390,176,367			390,176,367
Diluted		452,081,642			404,701,910			423,810,279			423,810,279

The accompanying notes are an integral part of these consolidated financial statements.

~~MOMO INC.~~

F-5

Table of Contents

Hello Group Inc.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) ~~INCOME~~

(In thousands, ~~of U.S. dollars,~~ except share and share related ~~data)~~

   For the years ended December 31,
   2013 2014 2015
Net (loss) income attributable to Momo Inc.
   $ (9,326 ) $ (25,415 ) $ 13,697
Other comprehensive income (loss), net of tax:

Foreign currency translation adjustment
   181    (1,185 ) (3,499 )


Comprehensive (loss) income attributable to Momo Inc.
   $ (9,145 ) $ (26,600 ) $ 10,198

data, or otherwise noted)


	For the years ended December 31,

	2020			2021			2022			2022
	RMB			RMB			RMB			US$
Net income (loss)		2,100,392			(2,925,704	)		1,480,009			214,580
Other comprehensive loss, net of tax:
Foreign currency translation adjustment		(141,677	)		(39,161	)		(274,791	)		(39,841	)

Comprehensive income (loss)		1,958,715			(2,964,865	)		1,205,218			174,739
Less: comprehensive (loss) income attributed to the non-controlling interest		(26,004	)		(16,603	)		10,556			1,530

Comprehensive income (loss) attributable to Hello Group Inc.		1,984,719			(2,948,262	)		1,194,662			173,209

The accompanying notes are an integral part of these consolidated financial statements.

~~MOMO INC.~~

F-6

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Hello Group Inc.

CONSOLIDATED STATEMENTS OF CHANGES IN ~~(DEFICIT)~~ EQUITY

(In thousands, ~~of U.S. dollars,~~ except share and share related ~~data)~~

Additional Accumulated
other Total
Ordinary shares paid-in Treasury Subscription Accumulated comprehensive shareholders’
Shares Amount capital stock receivable deficit income (loss) (deficit) equity
Balance as of January 1, 2013
147,000,000    15    747    —      (15 ) (7,282 ) (23 ) (6,558 )
Net loss
—      —      —      —      —      (9,326 ) —      (9,326 )
Share-based compensation
—      —      963    —      —      —      —      963
Deemed dividend to preferred shareholders
—      —      —      —      —      (8,120 ) —      (8,120 )
Foreign currency translation adjustment
—      —      —      —      —      —      181    181

Balance as of December 31, 2013
147,000,000    15    1,710    —      (15 ) (24,728 ) 158    (22,860 )
Net loss
—      —      —      —      —      (25,415 ) —      (25,415 )
Share-based compensation
—      —      6,638    —      —      —      —      6,638
Repurchase of ordinary shares
(15,651,589 ) —      —      (64,494 ) —      —      —      (64,494 )
Issuance of ordinary shares upon Initial public offering (“IPO”), net of offering costs of $4,361
45,688,888    5    286,646    —      —      —      —      286,651
Conversion of participating convertible redeemable preferred shares to ordinary shares
200,718,811    20    318,684    —      —      —      —      318,704
Deemed dividend to preferred shareholders
—      —      —      —      —      (57,663 ) —      (57,663 )
Subscription Receivable
—      —      —      —      15    —      —      15
Foreign currency translation adjustment
—      —      —      —      —      —      (1,185 ) (1,185 )

Balance as of December 31, 2014
377,756,110    $ 40    $ 613,678    $ (64,494 ) $ —      $ (107,806 ) $ (1,027 ) $ 440,391
Net income
—      —      —      —      —      13,697    —      13,697
Share-based compensation
—      —      17,382    —      —      —      —      17,382
Issuance of ordinary shares in connection with exercise of options and vesting of restricted share units
5,995,293    1    414    —      —      —      —      415
Foreign currency translation adjustment
—      —      —      —      —      (3,499 ) (3,499 )

Balance as of December 31, 2015
383,751,403    $ 41    $ 631,474    $ (64,494 ) $ —      $ (94,109 ) $ (4,526 ) $ 468,386

data, or otherwise noted)


					Additional paid-in capital		Treasury stock			Retained earning			Accumulated other comprehensive income (loss)			Non-controlling interests			Total shareholders’ equity
	Ordinary shares
	Shares		Amount
			RMB		RMB		RMB			RMB			RMB			RMB			RMB
Balance as of January 1, 2020		417,279,310		272		6,164,781		(402,267	)		7,464,585			302,687			188,724			13,718,782
Net income		—		—		—		—			2,103,484			—			(3,092	)		2,100,392
Repurchase of shares		—		—		—		(330,207	)		—			—			—			(330,207	)
Share-based compensation		—		—		578,167		—			—			—			33,629			611,796
Issuance of ordinary shares in connection with exercise of options and vesting of restricted share units		1,883,774		2		224		—			—			—			—			226
Cash Dividends		—		—		—		—			(1,123,983	)		—			—			(1,123,983	)
Foreign currency translation adjustment		—		—		—		—			—			(118,765	)		(22,912	)		(141,677	)

Balance as of December 31, 2020		419,163,084		274		6,743,172		(732,474	)		8,444,086			183,922			196,349			14,835,329
Net income		—		—		—		—			(2,913,708	)		—			(11,996	)		(2,925,704	)
Repurchase of shares		—		—		—		(862,865	)		—			—			—			(862,865	)
Share-based compensation		—		—		470,739		—			—			—			(40,788	)		429,951
Issuance of ordinary shares in connection with exercise of options and vesting of restricted share units		4,344,192		3		787		—			—			—			—			790
Cash Dividends		—		—		—		—			(852,743	)		—			—			(852,743	)
Foreign currency translation adjustment		—		—		—		—			—			(34,554	)		(4,607	)		(39,161	)

Balance as of December 31, 2021		423,507,276		277		7,214,698		(1,595,339	)		4,677,635			149,368			138,958			10,585,597
Net income		—		—		—		—			1,484,283			—			(4,274	)		1,480,009
Repurchase of shares		—		—		—		(395,846	)		—			—			—			(395,846	)
Share-based compensation		—		—		372,696		—			—			—			3,817			376,513
Issuance of ordinary shares in connection with exercise of options and vesting of restricted share units		5,748,524		4		149		—			—			—			—			153
Cash Dividends		—		—		—		—			(840,997	)		—			—			(840,997	)
Foreign currency translation adjustment		—		—		—		—			—			(289,621	)		14,830			(274,791	)

Balance as of December 31, 2022		429,255,800		281		7,587,543		(1,991,185	)		5,320,921			(140,253	)		153,331			10,930,638

The accompanying notes are an integral part of these consolidated financial statements.

~~MOMO INC.~~

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CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands, ~~of U.S. dollars,~~ except share and share related ~~data)~~

   For the years ended December 31,
   2013 2014 2015
Cash flows from operating activities

Net (loss) income
   $ (9,326 ) $ (25,415 ) $ 13,697
Adjustments to reconcile net (loss) income to net cash (used in) provided by operating activities

Depreciation of property and equipment
   842    2,805    6,646
Share-based compensation
   963    6,638    17,382
Share of income on equity method investments
   —      —      (370 )
Loss on disposal of property and equipment
   —      64    5
Changes in operating assets and liabilities

Accounts receivable
   (1,906 ) (5,205 ) (8,538 )
Prepaid expenses and other current assets
   (846 ) (7,489 ) (11,247 )
Amount due from related parties
   (198 ) 198    (1,218 )
Rental deposits
   —      (797 ) 38
Accounts payable
   338    4,494    5,274
Deferred revenue
   3,657    12,825    12,996
Accrued expenses and other current liabilities
   1,341    5,949    20,671
Amount due to related parties
   —      —      88
Other non-current liabilities
   —      —      1,828


Net cash (used in) provided by operating activities
   (5,135 ) (5,933 ) 57,252


Cash flows from investing activities

Purchase of property and equipment
   (3,181 ) (8,740 ) (13,521 )
Payment for long term investments
   —      (809 ) (17,859 )
Prepayment for long term investments
   —      —      (2,000 )
Purchase of term deposits
   —      —      (450,000 )
Cash received on maturity of term deposits
   —      —      150,000


Net cash used in investing activities
   (3,181 ) (9,549 ) (333,380 )


Cash flows from financing activities

Proceeds from issuance of convertible redeemable participating preferred shares
   45,000    211,750    —
Repurchase of convertible redeemable participating preferred shares
   —      (30,750 ) —
Proceeds from issuance of ordinary shares
   —      291,012    —
Payment for IPO costs
   —      (1,727 ) (2,634 )
Capital contribution from shareholders
   —      15    —
Repurchase of ordinary shares
   —      (58,044 ) —
Proceeds from exercise of share options
   —      —      401


Net cash provided by (used in) financing activities
   45,000    412,256    (2,233 )


Effect of exchange rate on cash and cash equivalents
   151    (1,180 ) (3,138 )


Net increase (decrease) in cash and cash equivalents
   36,835    395,594    (281,499 )
Cash and cash equivalents at the beginning of year
   18,539    55,374    450,968


Cash and cash equivalents at the end of year
   $ 55,374    $ 450,968    $ 169,469


Non-cash investing and financing activities

Payable for purchase of property and equipment
   —      1,105    765
Payable for deferred IPO cost
   —      2,634    —
Payable for repurchase of ordinary shares
   —      6,450    6,450

data, or otherwise noted)


	For the years ended December 31,

	2020			2021			2022			2022
	RMB			RMB			RMB			US$
Cash flows from operating activities
Net income (loss)		2,100,392			(2,925,704	)		1,480,009			214,580
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation of property and equipment		208,990			155,537			107,015			15,516
Amortization of intangible assets		157,258			109,062			5,116			742
Share-based compensation		678,686			475,771			401,484			58,209
Share of loss (income) on equity method investments		42,522			8,084			(11,073	)		(1,605	)
Impairment loss on goodwill and intangible assets		—			4,397,012			—			—
Gain on repurchase of convertible senior notes		—			—			(129,575	)		(18,787	)
Gain or loss on long-term investments		(1,500	)		16,000			11,250			1,631
Gain on subsidiary deconsolidation		(6,676	)		—			—			—
Gain on disposal of subsidiaries		—			(15,526	)		—			—
Gain or loss on disposal of property and equipment		(282	)		1,236			(779	)		(113	)
Provision of losses (income) on receivable and other assets		46,075			(263	)		(528	)		(77	)
Cash received on investment income distribution		1,153			—			1,708			248
Changes in operating assets and liabilities
Accounts receivable		52,247			(10,374	)		20,338			2,949
Prepaid expenses and other current assets		(59,117	)		(151,162	)		(52,928	)		(7,674	)
Amount due from a related party		4,382			—			(55	)		(8	)
Deferred tax assets		4,569			(2,354	)		507			74
Rental deposits		(4,265	)		(343	)		1,399			203
Other non-current assets		(138,484	)		34,075			60,913			8,832
Accounts payable		(11,716	)		30,475			(115,384	)		(16,729	)
Income tax payable		82,514			(110,717	)		(57,004	)		(8,265	)
Deferred revenue		8,910			35,106			(56,387	)		(8,175	)
Accrued expenses and other current liabilities		(120,363	)		60,668			(182,708	)		(26,490	)
Amount due to related parties		(10,144	)		(14,446	)		4,162			603
Deferred tax liabilities		(39,315	)		180,173			(187,119	)		(27,130	)
Share-based compensation liability		—			(678,153	)		—			—
Other non-current liabilities		85,053			(34,959	)		(73,470	)		(10,652	)

Net cash provided by operating activities		3,080,889			1,559,198			1,226,891			177,882

Cash flows from investing activities
Purchase of property and equipment		(124,143	)		(95,323	)		(80,445	)		(11,663	)
Payment for long-term investments		(13,500	)		(415,052	)		(70,343	)		(10,199	)
Purchase of short-term deposits		(14,949,665	)		(4,976,688	)		(1,700,000	)		(246,477	)
Cash received on maturity of short-term deposits		19,577,159			9,667,570			5,410,000			784,376
Cash received on investment income distribution		—			5,610			3,523			511
Cash of disposed subsidiaries		—			(8,750	)		—			—
Purchase of long-term deposits		(5,250,000	)		(1,850,000	)		(2,750,000	)		(398,713	)
Cash received on maturity of long-term deposits		—			200,000			1,200,000			173,984
Payment for short-term investments		(10,000	)		—			(300,000	)		(43,496	)
Cash received from sales of short-term investment		10,000			—			—			—
Cash received from sales of long-term investment		12,000			20,000			—			—
Other investing activities		(317	)		2,975			3,110			451

Net cash (used in) provided by investing activities		(748,466	)		2,550,342			1,715,845			248,774

Cash flows from financing activities
Deferred payment for business acquisition		(18,354	)		(12,957	)		(21,421	)		(3,106	)
Proceeds from exercise of share options		226			776			163			24
Repurchase of ordinary shares		(330,207	)		(862,865	)		(392,374	)		(56,889	)
Repurchase of subsidiary’s share options		(25,832	)		(59,120	)		(40,943	)		(5,936	)
Dividends payment		(1,123,983	)		(852,743	)		(840,997	)		(121,933	)
Payment for redemption of convertible bonds		—			—			(2,136,987	)		(309,834	)

Net cash used in financing activities		(1,498,150	)		(1,786,909	)		(3,432,559	)		(497,674	)

Effect of exchange rate changes		(80,944	)		(41,669	)		41,390			6,001

Net increase (decrease) in cash, cash equivalent and restricted cash		753,329			2,280,962			(448,433	)		(65,017	)
Cash and cash equivalents and restricted cash at the beginning of year		2,612,743			3,366,072			5,647,034			818,743

Cash, cash equivalent and restricted cash at the end of year		3,366,072			5,647,034			5,198,601			753,726

Non-cash investing and financing activities
Payable for purchase of property and equipment		8,403			4,878			9,467			1,373
Right-of-use assets acquired in operating lease		236,499			166,844			22,238			3,224

The accompanying notes are an integral part of these consolidated financial statements.

~~MOMO INC.~~

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, ~~2013, 2014~~2020, 2021 AND ~~2015~~

2022

(~~In U.S. dollars~~ in thousands, except share ~~data)~~

data, or otherwise noted)

1.	ORGANIZATION AND PRINCIPAL ACTIVITIES

~~Momo~~

Hello Group Inc. (the ~~“Company”, formerly known as Momo Technology Company Limited)~~ “Company

”)

is the holding company for a group of companies, which iswas incorporated in the British Virgin Islands (“BVI”) on November 23, 2011. In July 2014, the Company was redomiciled in the Cayman Islands (“Cayman”) as an exempted company registered under the laws of the Cayman Islands, and was renamed Momo Inc. In August 2021, the Company changed its name from “Momo Inc.” to “Hello Group Inc.”. The Company, its subsidiaries, which include the wholly-foreign owned enterprises (“WFOEs”), its consolidated variable interest ~~entity~~entities (“~~VIE”~~VIEs”) and ~~VIE’s~~VIEs’ subsidiaries (collectively the “Group”) are principally engaged in providing mobile-based social ~~networking~~and entertainment services. The Group started its operation in July 2011. The Group started its monetization ~~by introducing fee based membership subscription services and emoticons~~ in the third quarter of 2013, by offering a platform for live video services, value-added services, mobile marketing services, mobile games and other services.

In May 2018, the Company completed the acquisition of 100% equity stake of Tantan Limited (“Tantan”). Tantan is a leading social and dating app that was founded in 2014. Tantan is designed to help its users find and establish romantic connections as well as ~~by offering~~meet interesting people. The total consideration consisted of cash consideration of RMB3,930,246 (US$613,181) and 5,328,853 Class A ordinary shares of the ~~platform for mobile games and mobile marketing services in the fourth quarter of 2013.~~

Company.

As of December 31, ~~2015,~~2022, details of the Company’s major subsidiaries, ~~VIE~~VIEs and ~~VIE’s~~VIEs’ subsidiaries are as follows:


Major subsidiaries			~~Percentage~~
	~~Date of~~	~~Place of~~	~~of economic~~
	~~incorporation~~	~~incorporation~~	~~ownership~~
~~Subsidiaries~~
Momo Technology HK Company Limited (“Momo HK”)	~~December 5, 2011~~	~~Hong Kong~~		~~100~~	%
Beijing Momo Information Technology Co., Ltd. (“Beijing Momo IT”)	~~March 9, 2012~~	~~PRC~~		~~100~~	%
~~Momo Technology Overseas Holding Company~~Tantan Limited (“~~Momo BVI”~~Tantan”)	~~March 5, 2014~~	~~BVI~~		~~100~~	%
~~Momo Information Technologies Corp.~~Tantan Hong Kong Limited (“~~Momo US”~~Tantan HK”)	~~March 7, 2014~~	US		~~100~~	%
~~VIE~~ Tantan Technology (Beijing) Co., Ltd. (“Tantan Technology”)
QOOL Media Inc. (“QOOL Inc.”)
QOOL Media Technology (Tianjin) Co., Ltd.
SpaceCape Technology Pte. Ltd.
Major VIEs
Beijing Momo Technology Co., Ltd. (“Beijing Momo”)	~~July 7, 2011~~	~~PRC~~ *		~~N/A~~	*
~~VIE’s subsidiaries~~ QOOL Media (Tianjin) Co., Ltd. (“QOOL Tianjin”) *
Tantan Culture Development (Beijing) Co., Ltd. (“Tantan Culture”) *
Hainan Miaoka Network Technology Co., Ltd. (“Miaoka”) *
Beijing Top Maker Culture Co, Ltd. (“Beijing Top Maker”) *
Beijing Perfect Match Technology Co, Ltd. (“Beijing Perfect Match”) *
SpaceTime (Beijing) Technology Co, Ltd. (“SpaceTime Beijing”) *
Tianjin Nishuodedoudui Technology Co., Ltd. (“Tianjin Nishuodedoudui”) *
Hainan Yilingliuer Network Technology Co., Ltd. (“Hainan Yilingliuer”) *
Major VIEs’ subsidiaries
Chengdu Momo Technology Co., Ltd. (“Chengdu Momo”)	~~May 9, 2013~~	~~PRC~~ *		~~N/A~~	*
~~Shanghai~~Tianjin Heer Technology Co., Ltd. (“Tianjin Heer”) *
Loudi Momo Technology Co., Ltd. (“~~Shanghai~~Loudi Momo”)	~~January 19, 2015~~	~~PRC~~ *		~~N/A~~	*
~~Chengdu Biyou Technology~~Tianjin Apollo Exploration Culture Co., Ltd. (“~~Chengdu Biyou”~~Tantan Apollo”)	~~October 16, 2015~~	~~PRC~~ *		~~N/A~~	*

*	These entities are controlled by the Company pursuant to the contractual arrangements disclosed below.

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Hello Group Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

- continued

FOR THE YEARS ENDED DECEMBER 31, 2020, 2021 AND 2022

(in thousands, except share data

, or otherwise noted)

1.	ORGANIZATION AND PRINCIPAL ACTIVITIES - continued

The Company was established on November 23, 2011 with share capital of $15, which was 65% owned by Mr. Yan Tang, 20% owned by Mr. Yong Li, 8% owned by Mr. Xiaoliang Lei, and 7% owned by Mr. Zhiwei Li, (Yan Tang, Yong Li, Xiaoliang Lei and Zhiwei Li are collectively referred to as “Founders”) as a vehicle for the group reorganization.

~~The Group commenced its business in China in July 2011 through Beijing Momo which has subsequently become the Group’s~~ VIE ~~through the contractual~~ arrangements ~~described below in “the VIE arrangements”.~~

~~Beijing Momo was established by the Founders in Beijing, the~~

The People’s Republic of China (“PRC”), as a limited liability company on July 7, 2011, which was 65% owned by Mr. Yan Tang, 20% owned by Mr. Yong Li, 8% owned by Mr. Xiaoliang Lei, and 7% owned by Mr. Zhiwei Li. Beijing Momo and its subsidiaries principally engaged in the provision of substantially all of the Group’s services in the PRC.

~~MOMO INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued~~

~~FOR THE YEARS ENDED DECEMBER 31, 2013, 2014 AND 2015~~

~~(In U.S. dollars in thousands, except share data)~~

1.	~~ORGANIZATION AND PRINCIPAL ACTIVITIES - continued~~

The Company owns 100% of the equity interests in Momo HK, an intermediate holding company incorporated in Hong Kong on December 5, 2011, which owns 100% of the equity interests in Beijing Momo IT, a wholly foreign-owned enterprise (“WFOE”), incorporated in the PRC by the Company on March 9, 2012.

The Company entered into group reorganization by way of entering into a series of contractual arrangements between its WFOE, VIE and the Company on April 18, 2012. Immediately after the reorganization, the Founders controlled the Company, WFOE and Beijing Momo; therefore, the reorganization was accounted for as a transaction among entities under common control. Accordingly, the accompanying audited consolidated financial statements have been prepared by using historical cost basis and include the assets, liabilities, revenue, expenses and cash flows that were directly attributable to Beijing Momo for all periods presented.

In December 2014, the Company completed its IPO and a concurrent private placement, upon which the Company’s ordinary shares were divided into Class A ordinary shares and Class B ordinary shares. Holders of Class A ordinary shares are entitled to one vote per share, while holders of Class B ordinary shares are entitled to ten votes per share. Each Class B ordinary share is convertible into one Class A ordinary share at any time by the holder thereof, while Class A ordinary shares are not convertible to Class B ordinary shares under any circumstances. The Company newly issued 45,688,888 Class A ordinary shares, consisting of (i) 36,800,000 Class A ordinary shares offered through IPO, and (ii) 8,888,888 Class A ordinary shares issued in connection with the concurrent private placement. All of the Company’s Series A, Series B, Series C and Series D shares were automatically converted upon IPO into 200,718,811 Class A ordinary shares.

~~The VIE arrangements~~

~~PRC~~ regulations currently limit direct foreign ownership of business entities providing value-added telecommunications services, advertising services and internet services in the PRC where certain licenses are required for the provision of such services. To comply with these PRC regulations, Beijing Momo IT and Beijing Momo’s shareholders entered into various contractual arrangements whereby the shareholders’ claim to the economic benefits of Beijing Momo and their ability to control the activities of Beijing Momo were transferred to Beijing Momo IT.

The Group provides substantially all of its services in China through ~~Beijing Momo and Chengdu Momo,~~certain PRC domestic companies, which hold the operating licenses and approvals to enable the Group to provide such mobile internet content services in the PRC. Specifically, these PRC domestic companies that are material to the Company’s business are Beijing Momo, Chengdu Momo, Tianjin Heer, Loudi Momo, QOOL Tianjin, Miaoka, Tantan Culture, Beijing Top Maker, Beijing Perfect Match, SpaceTime Beijing, Tantan Apollo, Tianjin Nishuodedoudui and Hainan Yilingliuer. The equity interests of ~~Beijing Momo~~these PRC domestic companies are ~~legally~~ held by ~~certain employees and shareholders of the Company (“Nominee Shareholders”).~~

~~MOMO INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued~~

~~FOR THE YEARS ENDED DECEMBER 31, 2013, 2014 AND 2015~~

~~(In U.S. dollars in thousands, except share data)~~

1.	~~ORGANIZATION AND PRINCIPAL ACTIVITIES - continued~~

~~The VIE arrangements~~ ~~- continued~~

PRC citizens or by PRC entities owned and/or controlled by PRC citizens.

The Company obtained control over ~~Beijing Momo through Beijing Momo IT on April 18, 2012~~its VIEs by entering into a series of contractual arrangements ~~between Beijing Momo IT, Beijing Momo~~with the VIEs and ~~its Nominee Shareholders that~~their equity holders (the “Nominee Shareholders”), which enable the Company to (1) have power to direct the activities that most significantly affects the economic performance of the ~~VIE,~~VIEs, and (2) receive the economic benefits of the ~~VIE~~VIEs that could be significant to the ~~VIE.~~VIEs. Accordingly, the Company is considered the primary beneficiary of ~~the VIE~~VIEs and has consolidated the ~~VIE’s~~VIEs’ financial results of operations, assets and liabilities in the Company’s consolidated financial statements. In making the conclusion that the Company is the primary beneficiary of the ~~VIE,~~VIEs, the Company’s rights under the Power of Attorney also provide the Company’s abilities to direct the activities that most significantly impact the ~~VIE’s~~VIEs economic performance. The Company also believes that this ability to exercise control ensures that the ~~VIE~~VIEs will continue to execute and renew the Exclusive ~~Technology Consulting and Management Services Agreement~~Cooperation Agreements and pay service fees to the Company. By charging service fees in whatever amounts the Company deems fit, and by ensuring that the Exclusive ~~Technology Consulting and Management Services Agreement~~Cooperation Agreements is executed and renewed indefinitely, the Company has the rights to receive substantially all of the economic benefits from the ~~VIE.~~

~~To further strengthen~~VIEs.

Details of the typical structure of the Company’s corporate structure, the Group amended its Power of Attorney, Exclusive Call Option Agreement and Equity Interest Pledge Agreement with the Nominee Shareholders and also entered into the Spousal Consent Letters with the Nominee Shareholders in April 2014, and amended the Exclusive Cooperation Agreements and Supplemental Agreements in August 2014. There was no substantial change to the term and condition of the VIE agreements and the change had no impact on to the Company’s VIE consolidation.

The following is a summary of the contractual agreements that the Company, through Beijing Momo IT, entered into with Beijing Momo and its Nominee Shareholders, as amended and entered into on April 18, 2014 and August 31, 2014:

significant VIEs are set forth below:

Agreements that provide the Company effective control over the ~~VIE:~~

VIEs:

(1)

Power of ~~Attorney~~Attorneys

Pursuant to the Power of ~~Attorney,~~Attorneys, the Nominee Shareholders of ~~Beijing Momo~~the VIEs each irrevocably appointed ~~Beijing Momo IT~~respective WFOEs as the

attorney-in-fact

to act on their behalf on all matters pertaining to ~~Beijing Momo~~the VIEs and to exercise all of their rights as a shareholder of ~~Beijing Momo,~~the VIEs, including but not limited to convene, attend and vote on their behalf at shareholders’ meetings, designate and appoint directors and senior management members. ~~Beijing Momo IT~~The WFOEs may authorize or assign ~~its~~their rights under this appointment to a person as approved by its board of directors at its sole discretion. Each power of attorney will remain in force until the shareholder ceases to hold any equity interest in ~~Beijing Momo.~~the VIEs. The Company believes the Powers of ~~Attorney~~Attorneys can demonstrate the power of its ~~PRC subsidiary (Beijing Momo IT)~~WFOEs to direct how the ~~VIE~~VIEs should conduct ~~its~~their daily operations.

~~MOMO INC.~~

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Hello Group Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

- continued

FOR THE YEARS ENDED DECEMBER 31, ~~2013, 2014~~2020, 2021 AND ~~2015~~

2022

(~~In U.S. dollars~~ in thousands, except share ~~data)~~

data

, or otherwise noted)

1.	ORGANIZATION AND PRINCIPAL ACTIVITIES - continued

The VIE arrangements

- continued

Agreements that provide the Company effective control over the VIEs: - continued

(2)

Exclusive Call Option ~~Agreement~~Agreements

Under the Exclusive Call Option ~~Agreement~~Agreements among ~~Beijing Momo IT, Beijing Momo~~the WFOEs, the VIEs and their Nominee Shareholders, ~~of Beijing Momo,~~ each of the Nominee Shareholders irrevocably granted ~~Beijing Momo IT~~the respective WFOE or its designated representative(s) an exclusive option to purchase, to the extent permitted under PRC law, all or part of his, her or its equity interests in ~~Beijing Momo~~the VIEs at the consideration equal to the nominal price or at lowest price as permitted by PRC laws.

~~Beijing Momo IT~~

The WFOEs or ~~its~~their designated representative(s) have sole discretion as to when to exercise such options, either in part or in full. Without ~~Beijing Momo IT’s~~the WFOEs’ written consent, the Nominee Shareholders of ~~Beijing Momo~~the VIEs shall not transfer, donate, pledge, or otherwise dispose any equity interests of ~~Beijing Momo~~the VIEs in any way. In addition, any consideration paid by ~~Beijing Momo IT~~the WFOEs to the Nominee Shareholders of ~~Beijing Momo~~the VIEs in exercising the option shall be transferred back to ~~Beijing Momo IT~~the respective WFOE or its designated representative(s). This agreement could be terminated when all the shareholders’ equity were acquired by ~~WFOE~~the WFOEs or ~~its~~their designated representative(s) subject to the law of ~~People’s Republic of China.~~

PRC.

In addition, ~~Beijing Momo~~the VIEs irrevocably granted ~~Beijing Momo IT~~the WFOEs an exclusive and irrevocable option to purchase any or all of the assets owned by ~~Beijing Momo~~the VIEs at the lowest price permitted under PRC law. Without ~~Beijing Momo IT’s~~the WFOEs’ prior written consent, ~~Beijing Momo~~the VIEs and ~~its~~their Nominee Shareholders will not sell, transfer, mortgage or otherwise dispose of ~~Beijing Momo’s~~the VIEs’ material assets, legal or beneficial interests or revenues of more than ~~RMB500,000~~certain amount or allow an encumbrance on any interest in ~~Beijing Momo.~~

the VIEs.

(3)

Spousal Consent Letters

~~On April 18, 2014, each~~

Each spouse of the married Nominee Shareholders of ~~Beijing Momo~~the VIEs entered into a Spousal Consent Letter, which unconditionally and irrevocably agreed that the equity interests in ~~Beijing Momo~~the VIEs held by and registered in the name of their spouse will be disposed of pursuant to the Equity Interest Pledge ~~Agreement,~~Agreements, the Exclusive Call Option ~~Agreement,~~Agreements, and the Power of ~~Attorney.~~Attorneys. Each spouse agreed not to assert any rights over the equity interests in ~~Beijing Momo~~the VIEs held by their spouse. In addition, in the event that the spouse obtains any equity interests in ~~Beijing Momo~~the VIEs held by their spouse for any reason, they agreed to be bound by the contractual arrangements.

~~MOMO INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued~~

~~FOR THE YEARS ENDED DECEMBER 31, 2013, 2014 AND 2015~~

~~(In U.S. dollars in thousands, except share data)~~

1.	~~ORGANIZATION AND PRINCIPAL ACTIVITIES - continued~~

~~The VIE arrangements~~ ~~- continued~~

Agreements that transfer economic benefits to the Company:

(1)

Exclusive Cooperation Agreements ~~and Supplemental Agreements~~

~~In August 2014, Beijing Momo IT~~

Each relevant VIEs has entered into an ~~Exclusive Cooperation Agreements and a Supplemental Agreement~~exclusive technology services agreement or an exclusive services agreement with ~~Beijing Momo and Chengdu Momo, respectively,~~the respective WFOEs, pursuant to ~~supersede~~which the ~~Exclusive Technology Consulting and Management Services Agreements signed in April 2012 by Beijing Momo IT and Beijing Momo. Pursuant~~relevant WFOEs provides exclusive services to the ~~amended agreements, Beijing Momo IT has~~VIEs. In exchange, the exclusive right to provide, among other things, licenses, copyrights, technical and non-technical services to Beijing Momo and Chengdu Momo and receive service fees and license fees as consideration. Beijing Momo and Chengdu Momo will maintain a pre-determined level of operating profit and remit the excess operating profit, if any, to Beijing Momo IT as the consideration of the licenses, copyrights, technical and non-technical services provided by Beijing Momo IT. The agreements will remain effective for 10 years. At the sole discretion of Beijing Momo IT, the agreements could be renewed on applicable expirations dates, or Beijing Momo IT, Beijing Momo and Chengdu Momo could enter into other exclusive agreements.

~~For the years ended December 31, 2013, 2014 and 2015, Beijing Momo IT charged Beijing Momo and Chengdu Momo~~VIEs pay a service fee to the WFOEs, the amount of ~~$3,356, $35,188 and $112,043 at~~which shall be determined, to the ~~WFOE’s discretion, respectively.~~

~~Since Beijing Momo IT has effectively controlled Beijing Momo through Power~~extent permitted by applicable PRC laws as proposed by the WFOEs, resulting in a transfer of ~~Attorney, Equity Interest Pledge Agreement and Exclusive Call Option Agreement, Beijing Momo IT has~~substantially all of the ~~right~~profits from the VIEs to ~~adjust~~ the ~~service fees at its sole discretion. The agreement shall remain effective for ten years. At the discretion~~WFOEs.

F-11

Table of ~~Beijing Momo IT, this agreement could be renewed on applicable expiration dates, or Beijing Momo IT and Beijing Momo could enter into another exclusive agreement.~~

~~MOMO INC.~~

Contents

Hello Group Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

- continued

FOR THE YEARS ENDED DECEMBER 31, ~~2013, 2014~~2020, 2021 AND ~~2015~~

2022

(~~In U.S. dollars~~ in thousands, except share ~~data)~~

data

, or otherwise noted)

1.	ORGANIZATION AND PRINCIPAL ACTIVITIES - continued

The VIE arrangements

- continued

Agreements that transfer economic benefits to the Company: - continued

(2)

Equity Interest Pledge ~~Agreement~~Agreements

Under the equity interest pledge agreement among ~~Beijing Momo IT~~the WFOEs and each of the Nominee Shareholders of ~~Beijing Momo,~~the VIEs, the Nominee Shareholders pledged all of their equity interests in ~~Beijing Momo~~the VIEs to ~~Beijing Momo IT~~the respective WFOEs to guarantee ~~Beijing Momo’s~~the VIEs’ and ~~its~~their shareholders’ payment obligations arising from the Exclusive ~~Technology Consulting~~Cooperation Agreements, Business Operations Agreements and ~~Management Service Agreement, Business Operation Agreement and~~the Exclusive Call Option ~~Agreement,~~Agreements, including but not limited to, the payments due to ~~Beijing Momo IT~~the respective WFOEs for services provided.

If ~~Beijing Momo~~any VIEs or any of ~~its~~their Nominee Shareholders breaches ~~its~~their contractual obligations under the above agreements, ~~Beijing Momo IT,~~the respective WFOEs, as the pledgee, will be entitled to certain rights and entitlements, including receiving priority proceeds from the auction or sale of whole or part of the pledged equity interests of ~~Beijing Momo~~the VIEs in accordance with PRC legal procedures. During the term of the pledge, the shareholders of ~~Beijing Momo~~the VIEs shall cause ~~Beijing Momo~~the VIEs not to distribute any dividends and if they receive any dividends generated by the pledged equity interests, they shall transfer such received amounts to an account designated by ~~Beijing Momo IT~~the respective parties according to the instruction of ~~Beijing Momo IT.~~

the respective WFOEs.

The pledge will remain binding until ~~Beijing Momo~~the VIEs and ~~its~~their Nominee Shareholders ~~has~~have fully performed all their obligations under the Exclusive Cooperation Agreements, ~~and Supplemental Agreements,~~ Business Operations ~~Agreement~~Agreements and Exclusive Call Option ~~Agreement.~~

Agreements.

(3)

Business Operations ~~Agreement~~Agreements

Under the Business Operations ~~Agreement~~Agreements among ~~Beijing Momo IT, Beijing Momo~~the WFOEs, the VIEs and the Nominee Shareholders of ~~Beijing Momo,~~the VIEs, without the prior written consent of ~~Beijing Momo IT~~the WFOEs or ~~its~~their designated representative(s), ~~Beijing Momo~~the VIEs shall not conduct any transaction that may substantially affect the assets, business, operation or interest of ~~Beijing Momo IT. Beijing Momo~~the WFOEs. The VIEs and Nominee Shareholders shall also follow ~~Beijing Momo IT’s~~the WFOEs’ instructions on management of ~~Beijing Momo’s~~the VIEs’ daily operation, finance and employee matters and appoint the nominee(s) designated by ~~Beijing Momo IT~~the WFOEs as the director(s) and senior management members of ~~Beijing Momo.~~the VIEs. In the event that any agreements between ~~Beijing Momo IT~~the WFOEs and ~~Beijing Momo~~the VIEs terminates, ~~Beijing Momo IT has~~the WFOEs have the sole discretion to determine whether to continue any other agreements with ~~Beijing Momo. Beijing Momo IT is~~the VIEs. The WFOEs are entitled to any dividends or other interests declared by ~~Beijing Momo~~the VIEs and the shareholders of ~~Beijing Momo~~the VIEs have agreed to promptly transfer such dividends or other interests to ~~Beijing Momo IT.~~the WFOEs. The agreement shall remain effective for 10 years. At the discretion of ~~Beijing Momo IT,~~the WFOEs, this agreement will be renewed on applicable expiration dates, or ~~Beijing Momo IT~~the WFOEs and ~~Beijing Momo~~the VIEs will enter into another exclusive agreement.

Through these contractual agreements, the Company has the ability to effectively control the ~~VIE~~VIEs and is also able to receive substantially all the economic benefits of the ~~VIE.~~

~~MOMO INC.~~

VIEs.

F-12

Table of Contents

Hello Group Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

- continued

FOR THE YEARS ENDED DECEMBER 31, ~~2013, 2014~~2020, 2021 AND ~~2015~~

2022

(~~In U.S. dollars~~ in thousands, except share ~~data)~~

data

, or otherwise noted)

1.	ORGANIZATION AND PRINCIPAL ACTIVITIES - continued

Risk in relation to the VIE structure

The Company believes that ~~Beijing Momo IT and Beijing Momo’s~~the WFOEs’ contractual arrangements with the ~~VIE~~VIEs are in compliance with PRC law and are legally enforceable. ~~Certain~~The shareholders of ~~Beijing Momo~~the VIEs are also shareholders of the Company and therefore have no current interest in seeking to act contrary to the contractual arrangements. However, uncertainties in the PRC legal system could limit the Company’s ability to enforce these contractual arrangements and if the shareholders of the ~~VIE~~VIEs were to reduce their interest in the Company, their interests may diverge from that of the Company and that may potentially increase the risk that they would seek to act contrary to the contractual terms, for example by influencing the ~~VIE~~VIEs not to pay the service fees when required to do so.

However, the Company cannot assure that when conflicts of interest arise, the shareholders will act in the best interests of the Company or that conflicts of interests will be resolved in the Company’s favor. Currently, the Company does not have existing arrangements to address potential conflicts of interest the shareholders of the ~~VIE~~VIEs may encounter in their capacity as the beneficial owners and director of the ~~VIE~~VIEs on the one hand, and as beneficial owners and directors or officer of the Company, on the other hand. The Company believes the shareholders of the ~~VIE~~VIEs will not act contrary to any of the contractual arrangements and the Exclusive Call Option ~~Agreement~~Agreements provides the Company with a mechanism to remove the shareholders as the beneficial shareholders of the ~~VIE~~VIEs should they act to the detriment of the Company. The Company relies on the ~~VIE’s~~VIEs’ shareholders, as directors and officer of the Company, to fulfill their fiduciary duties and abide by laws of the PRC and the Cayman and act in the best interest of the Company. If the Company cannot resolve any conflicts of interest or disputes between the Company and the ~~VIE’s~~VIEs’ shareholders, the Company would have to rely on legal proceedings, which could result in disruption of its business, and there is substantial uncertainty as to the outcome of any such legal proceedings.

The Company’s ability to control the ~~VIE~~VIEs also depends on the Power of ~~Attorney. Beijing Momo IT~~Attorneys. The WFOEs and ~~Beijing Momo~~VIEs have to vote on all matters requiring shareholder approval in the ~~VIE.~~VIEs. As noted above, the Company believes ~~this power~~these Power of ~~attorney is~~Attorneys are legally enforceable but may not be as effective as direct equity ownership.

In addition, if the legal structure and contractual arrangements were found to be in violation of any existing PRC laws and regulations, the PRC government could:

revoke the Group’s business and operating licenses;

require the Group to discontinue or restrict operations;

restrict the Group’s right to collect revenues;

block the Group’s websites;

require the Group to restructure the operations in such a way as to compel the Group to establish a new enterprise,

re-apply

for the necessary licenses or relocate our businesses, staff and assets;

requiring the Group to restructure the ownership structure or operations, including terminating the contractual arrangements with the VIEs and deregistering the equity pledges of the VIEs, which in turn would affect the ability to consolidate, derive economic interests from, or exert effective control over VIEs;

restricting or prohibiting the use of the proceeds of any of offshore financings to finance the business and operations in china;

impose additional conditions or requirements with which the Group may not be able to comply; or

take other regulatory or enforcement actions against the Group that could be harmful to the Group’s business.

~~MOMO INC.~~

F-13

Table of Contents

Hello Group Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

- continued

FOR THE YEARS ENDED DECEMBER 31, ~~2013, 2014~~2020, 2021 AND ~~2015~~

2022

(~~In U.S. dollars~~ in thousands, except share ~~data)~~

data

, or otherwise noted)

1.	ORGANIZATION AND PRINCIPAL ACTIVITIES - continued

Risk in relation to the VIE structure

- continued

The imposition of any of these penalties may result in a material and adverse effect on the Group’s ability to conduct the Group’s business. In addition, if the imposition of any of these penalties causes the ~~Group~~Company to lose the rights to direct the activities of the ~~VIE~~VIEs or the right to receive their economic benefits, the ~~Group~~Company would no longer be able to consolidate the ~~VIE.~~VIEs. The Group does not believe that any penalties imposed or actions taken by the PRC government would result in the liquidation of the Company, ~~Beijing Momo IT,~~WFOEs, or the ~~VIE.~~

VIEs.

The following consolidated financial statements amounts and balances of the ~~VIE~~VIEs were included in the accompanying consolidated financial statements after the elimination of intercompany balances and transactions as of and for the years ended December 31:

   As of December 31,
   2014    2015
Cash and cash equivalents
   $ 9,867       $ 60,526
Accounts receivable, net of allowance for doubtful accounts of $nil and $nil as of December 31, 2014 and 2015, respectively
   7,038       14,896
Amount due from related parties
   —         1,175
Prepaid expenses and other current assets
   5,306       9,495




Total current assets
   22,211       86,092




Property and equipment, net
   1,318       1,538
Rental deposits
   312       244
Long term investments
   809       19,318




Total assets
   24,650       107,192




Accounts payable
   3,728       9,040
Deferred revenue
   16,348       28,274
Accrued expenses and other current liabilities
   1,100       1,954




Total current liabilities
   21,176       39,268




Total liabilities
   $ 21,176       $ 39,268

   For the years ended December 31,
   2013    2014    2015
Net revenues
   $ 3,129       $ 44,755       $ 133,988
Net (loss) income
   $ (2,179 )    $ 32,945       $ 118,404

~~MOMO INC.~~


	As of December 31,

	2021		2022
	RMB		RMB
Cash and cash equivalents		2,474,974		2,108,248
Short-term deposits		550,000		850,000
Other current assets		590,022		654,109

Total current assets		3,614,996		3,612,357
Long-term deposits		750,000		—
Long-term investments		404,524		380,187
Other non-current assets		241,500		291,841

Total assets		5,011,020		4,284,385

Accounts payable		635,635		509,042
Deferred revenue		519,237		469,076
Other current liabilities		399,686		451,793

Total current liabilities		1,554,558		1,429,911
Other non-current liabilities		63,095		34,059

Total liabilities		1,617,653		1,463,970

F-14

Table of Contents

Hello Group Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

- continued

FOR THE YEARS ENDED DECEMBER 31, ~~2013, 2014~~2020, 2021 AND ~~2015~~

2022

(~~In U.S. dollars~~ in thousands, except share ~~data)~~

data

, or otherwise noted)

1.	ORGANIZATION AND PRINCIPAL ACTIVITIES - continued

Risk in relation to the VIE structure

- continued

   For the years ended December 31,
   2013    2014    2015
Net cash (used in) provided by operating activities
   $ (2,956 )    $ 40,383       $ 124,786
Net cash used in investing activities
   $ (723 )    $ (1,921 )    $ (19,435 )
Net cash used in financing activities
   $ —         $ —         $ —


	For the years ended December 31,

	2020			2021		2022
	RMB			RMB		RMB
Net revenues		14,902,691			14,336,539		12,152,997
Net income		6,734,471			5,674,607		4,593,510
Net cash provided by operating activities		6,906,938			5,748,529		4,445,523
Net cash (used in) provided by investing activities		(757,949	)		254,093		451,928
Net cash provided by financing activities		—			—		—

The unrecognized revenue-producing assets that are held by the ~~VIE~~VIEs are primarily self-developed intangible assets such as domain names, trademark and various licenses which are

un-recognized at

on the consolidated balance sheets.

The ~~VIE~~VIEs contributed an aggregate of ~~100%~~99.2%, ~~100%~~98.4% and ~~100%~~95.7% of the consolidated net revenues for each of the years ended December 31, ~~2013, 2014~~2020, 2021 and ~~2015,~~2022, respectively. As of the fiscal years ended December 31, ~~2014~~2021 and ~~2015,~~2022, the ~~VIE~~VIEs accounted for an aggregate of ~~5.2%~~27.7% and ~~19.8%~~27.1%, respectively, of the consolidated total assets, and ~~55.6%~~21.5% and ~~53.2%~~29.9%, respectively, of the consolidated total liabilities. The assets that were not associated with the ~~VIE~~VIEs primarily consist of cash and cash equivalents, short-term deposits and ~~term~~long-term deposits.

There are no consolidated ~~VIE’s~~VIEs’ assets that are collateral for the ~~VIE’s~~VIEs’ obligations and can only be used to settle the ~~VIE’s~~VIEs’ obligations. There are no creditors (or beneficial interest holders) of the ~~VIE~~VIEs that have recourse to the general credit of the Company or any of its consolidated subsidiaries. There are no terms in any arrangements, considering both explicit arrangements and implicit variable interests that require the Company or its subsidiaries to provide financial support to the ~~VIE.~~VIEs. However, if the ~~VIE~~VIEs ever ~~needs~~need financial support, the Company or its subsidiaries may, at its option and subject to statutory limits and restrictions, provide financial support to its ~~VIE~~VIEs through loans to the shareholders of the ~~VIE~~VIEs or entrustment loans to the ~~VIE.~~VIEs. Relevant PRC laws and regulations restrict the ~~VIE~~VIEs from transferring a portion of ~~its~~their net assets, equivalent to the balance of ~~its~~their statutory reserve and ~~its~~their share capital, to the Company in the form of loans and advances or cash dividends. Please refer to Note 1822 for disclosure of restricted net assets. The Group may lose the ability to use and enjoy assets held by the ~~VIE~~VIEs that are important to the operation of business if the ~~VIE declares~~VIEs declare bankruptcy or ~~becomes~~become subject to a dissolution or liquidation proceeding.

~~MOMO INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~~~- continued~~

~~FOR THE YEARS ENDED DECEMBER 31, 2013, 2014 AND 2015~~

~~(In U.S. dollars in thousands, except share data)~~

2.	SIGNIFICANT ACCOUNTING POLICIES

Basis of presentation

The consolidated financial statements of the Group have been prepared in accordance with the accounting principles generally accepted in the United States of America (“U.S. GAAP”).

Basis of consolidation

The consolidated financial statements of the Group include the financial statements of ~~Momo~~Hello Group Inc., its subsidiaries, its ~~VIE~~VIEs and ~~VIE’s~~VIEs’ subsidiaries. All inter-company transactions and balances have been eliminated upon consolidation.

F-15

Table of Contents

Hello Group Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

- continued

FOR THE YEARS ENDED DECEMBER 31, 2020, 2021 AND 2022

(in thousands, except share data

, or otherwise noted)

2.	SIGNIFICANT ACCOUNTING POLICIES - continued

Use of estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and revenues, cost and expenses in the financial statements and accompanying notes. Significant accounting estimates reflected in the Group’s consolidated financial statements include ~~revenue recognition,~~ the useful lives and impairment of property and equipment and intangible assets, the impairment of long-term investments and goodwill, the valuation allowance for deferred tax assets, and share-based ~~compensation and fair value of the ordinary shares and convertible redeemable participating preferred shares.~~

compensation.

Cash and cash equivalents

Cash and cash equivalents consist of cash on hand and highly liquid investments, which are unrestricted from withdrawal or use, or which have original maturities of three months or less when purchased.

~~Term~~

Short-term restricted cash

Short-term restricted cash represents RMB deposits

~~Term~~ in restricted bank accounts that cannot be withdrawn related to an ongoing investigation of the alleged illegal activity on the source of the funding consumed on Momo’s platform. The Company considers the expected timing of the release of the restrictions to determine the appropriate financial statement classification.

Short-term deposits

Short-term deposits consist of bank deposits with an original maturity of over three months but within one year.

Short-term investments

Short-term investments include wealth management products with a variable interest rate indexed to performance of underlying assets, which are with an original maturity of less than 12 months.

The Group elects the fair value option to record the investments at fair value in accordance with ASC 825 Financial Instruments. Changes in the fair value are recorded under “interest income” in the consolidated statements of operations.

Long-term restricted cash

Long-term restricted cash represents US dollar deposits held in escrow account related to payable to Tantan’s founders in accordance with its share options repurchase agreement. The Company considers the expected timing of the release of the restrictions is more than one year.

Long-term deposits

Long-term deposits represent time deposits placed in banks with original maturities of more than one year. Interest earned is recorded as interest income in the consolidated statements of operations during the periods presented.

Accounts receivable

Accounts receivable primarily represents the cash due from third-party application stores and other payment channels and advertising customers, net of allowance for doubtful accounts. The Group ~~makes estimates~~evaluates its accounts receivable for ~~the~~expected credit losses on a regular basis. The Group maintains an estimated allowance for ~~doubtful accounts~~credit losses based upon its assessment of various factors, including the historical loss experience, the age of accounts receivable balances, credit quality of ~~third party~~third-party application stores and other payment channels, ~~and~~ advertising customers and other customers, current and future economic conditions and other factors that may affect their ability to ~~pay. No allowance for doubtful~~pay, to reduce its accounts asreceivable to the amount that it believes will be collected.

F-16

Table of ~~December 31, 2014 and 2015, respectively, was provided as there was no risk of collecting this account receivable.~~

~~MOMO INC.~~

Contents

Hello Group Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

- continued

FOR THE YEARS ENDED DECEMBER 31, ~~2013, 2014~~2020, 2021 AND ~~2015~~

2022

(~~In U.S. dollars~~ in thousands, except share ~~data)~~

data

, or otherwise noted)

2.	SIGNIFICANT ACCOUNTING POLICIES - continued

Financial instruments

Financial instruments of the Group primarily consist of cash and cash equivalents, ~~term~~short-term deposits, short-term investments, restricted cash, long-term deposits, accounts receivable, equity securities without readily determinable fair value, fair value option investment, accounts payable, ~~cost method investments,~~ deferred revenue, ~~amount due from related parties~~convertible senior notes, income tax payable and amount due to related parties.

The Group carries its fair value option investment at fair value. Cash and cash equivalents are recorded at fair value based on the quoted market price in an active market. The carrying values of restricted cash, ~~and cash equivalents, term deposits,~~ accounts receivable, accounts payable, deferred revenue, ~~amount due from related parties~~income tax payable and amount due to related parties approximate their fair ~~values due to short-term maturities.~~values. It is not practical to estimate the fair value of the Group’s ~~cost method investments~~equity securities without readily determinable fair value because of the lack of quoted market price and the inability to estimate fair value without incurring excessive costs.

The fair value of the Company’s convertible senior notes and term deposits are discussed in Note 12.

Foreign currency risk

The Renminbi (“RMB”) is not a freely convertible currency. The State Administration for Foreign Exchange, under the authority of the People’s Bank of China, controls the conversion of RMB into foreign currencies. The value of the RMB is subject to changes in central government policies and to international economic and political developments affecting supply and demand in the China Foreign Exchange Trading System market. Cash and cash equivalents

, restricted cash, short-term investments and term deposits

of the Group included aggregate amounts of ~~$20,181~~RMB14,691 million and ~~$75,759~~RMB12,600 million as of December 31, ~~2014~~2021 and ~~2015,~~2022, respectively, which were denominated in RMB.

Concentration of credit risk

Financial instruments that potentially expose the Group to concentration of credit risk consist primarily of cash and cash equivalents, ~~term~~short-term deposits,

short-term

investments, restricted cash, long-term deposits and accounts receivable. The Group places their cash with financial institutions with high-credit ratings and quality.

Third-party application stores and other payment channels accounting for 10% or more of accounts receivables are as follows:

   December 31,
   2014 2015
A
   34 % 31 %
B
   26 % 6 %

~~No user~~


	As of December 31,

	2021			2022
A		20	%		18	%
B		16	%		15	%

Users or ~~advertising customer accounted~~customers accounting for 10% or more of accounts receivables ~~for the years ended December 31, 2014 and 2015, respectively.~~

~~MOMO INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued~~

~~FOR THE YEARS ENDED DECEMBER 31, 2013, 2014 AND 2015~~

~~(In U.S. dollars in thousands, except share data)~~

2.	~~SIGNIFICANT ACCOUNTING POLICIES - continued~~

is as follows:


	As of December 31,

	2021			2022
C		8	%		12	%

Concentration of revenue

~~The following table summarizes sales generated from games that individually accounting for 10% or more of net revenues:~~

   For the years ended December 31,
   2013    2014 2015
Game C
   —         14 % 2 %

No user or ~~advertising~~ customer accounted for 10% or more of net revenues for the years ended December 31, ~~2013, 2014~~2020, 2021 and ~~2015,~~2022, respectively.

~~Cost method~~

F-17

Table of Contents

Hello Group Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

- continued

FOR THE YEARS ENDED DECEMBER 31, 2020, 2021 AND 2022

(in thousands, except share data

, or otherwise noted)

2.	SIGNIFICANT ACCOUNTING POLICIES - continued

Equity securities without readily determinable fair value

The Group accounts for equity investments

~~For~~ that do not have a readily determinable fair value under the measurement alternative in accordance with ASC Topic 321, Investments—Equity Securities, to the extent such investments are not subject to consolidation or the equity method. Under the measurement alternative, these financial instruments are carried at cost, less any impairment, plus or minus changes resulting from observable price changes in orderly transactions for an ~~investee over which~~identical or similar investment of the same issuer. If the fair value is less than the investment’s carrying value, the Company ~~does not have significant influence, the Company carries the investment at cost and~~ recognizes income as any dividends declared from distribution of investee’s earnings. The Company reviews the cost method investments for impairment whenever events or changes in circumstances indicate that the carrying value may no longer be recoverable. Anan impairment loss ~~is recognized~~ in ~~earnings~~net income equal to the difference between the ~~investment’s cost~~carrying value and ~~its~~ fair ~~value at the balance sheet date of the reporting period for which the assessment is made. The fair value of the investment would then become the new cost basis of the investment.~~

value.

Equity method investments

The investee ~~company~~companies over which the Group has the ability to exercise significant influence, but does not have a controlling interest are accounted for using the equity method. Significant influence is generally considered to exist when the Group has an ownership interest in the voting stock of the investee between 20% and 50%~~, and other~~. Other factors, such as representation in the investee’s Board of Directors, voting rights and the impact of commercial arrangements, are also considered in determining whether the equity method of accounting is appropriate. For the investment in limited partnerships, where the Group holds less than a 20% equity or voting interest, the Group’s influence over the partnership operating and financial policies is determined to be more than ~~minor, thus,~~minor. Accordingly, the Group accounts for these investments as ~~subject to~~ equity method ~~as well.~~

investments.

Under the equity method of accounting, the affiliated company’s accounts are not reflected within the Group’s consolidated balance sheets and consolidated statements of operations; however, the Group’s share of the earnings or losses of the affiliated company is reflected in the caption “share of income ~~or loss~~(loss) on equity method investments” in the consolidated statements of operations.

An impairment charge is recorded under “share of (loss) income on equity method investments” in the consolidated statements of operations if the carrying amount of the investment exceeds its fair value and this condition is determined to be ~~other-than temporary.~~

~~MOMO INC.~~

other-than-temporary.

The Group estimates the fair value of the investee company based on comparable quoted price for similar investment in active market, if applicable, or discounted cash flow approach which requires significant judgments, including the estimation of future cash flows, which is dependent on internal forecasts, the estimation of long term growth rate of a company’s business, the estimation of the useful life over which cash flows will occur, and the determination of the weighted average cost of capital.

Fair value option investments

The Group elected the fair value option to account for certain partnership units investment in a private fund, and measured the investment using the net asset value per share based on the practical expedient in ASC Topic 820, Fair Value Measurements and Disclosures (“ASC 820”) (“NAV practical expedient”), whereby the change in fair value is reco

ized under “share of (loss) income on equity method investments” in the consolidated statements of

operations.

F-18

Table of Contents

Hello Group Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

- continued

FOR THE YEARS ENDED DECEMBER 31, ~~2013, 2014~~2020, 2021 AND ~~2015~~

2022

(~~In U.S. dollars~~ in thousands, except share ~~data)~~

data

, or otherwise noted)

2.	SIGNIFICANT ACCOUNTING POLICIES - continued

Property and equipment, net

Property and equipment are stated at cost less accumulated depreciation. Depreciation is calculated on a straight-line basis over the following estimated useful lives:


Office equipment			3-5 years
Computer equipment			3 years
Vehicles			5 years
Leasehold improvement			Shorter of the lease term or estimated useful lives

Intangible assets

Intangible assets acquired through business acquisitions are recognized as assets separate from goodwill if they satisfy either the “contractual-legal” or “separability” criterion. Purchased intangible assets and intangible assets arising from acquisitions are recognized and measured at fair value upon acquisition. Separately identifiable intangible assets that have determinable lives continue to be amortized over their estimated useful lives using the straight-line method as follows:


License			~~estimated useful lives~~3.2-10 years
Technology			3 years
Active user			5 years
Trade name			10 years

Impairment of long-lived assets

with finite lives

The Group reviews its long-lived assets, including intangible assets with finite lives, for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset (asset group) may no longer be recoverable. When these events occur, the Group ~~measures impairment~~tests the recoverability of the asset (asset group) by comparing the carrying value of the long-lived assets (asset group) to the estimated undiscounted future cash flows expected to result from the use of the assets and their eventual disposition. If the sum of the expected undiscounted cash flow is less than the carrying amount of the assets, the Group ~~would recognize~~recognizes an impairment loss based on the fair value of the assets.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

- continued

FOR THE YEARS ENDED DECEMBER 31, 2020, 2021 AND 2022

(in thousands, except share data

, or otherwise noted)

2.	SIGNIFICANT ACCOUNTING POLICIES - continued

Convertible senior notes

The Group determines the appropriate accounting treatment of its convertible senior notes in accordance with the terms in relation to the conversion feature, call and put options, and beneficial conversion feature. After considering the impact of such features, the Group may account for such instrument as a liability in its entirety, or separate the instrument into debt and equity components following the respective guidance described under ASC 815 “Derivatives and Hedging” and ASC 470 “Debt”. The debt discount, if any, together with the related issuance cost are subsequently amortized as interest expense, using the effective interest method, from the issuance date to the earliest maturity date. Interest expenses are recognized in the consolidated statements of operations in the period in which they are incurred.

Fair value

Fair value is the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required or permitted to be recorded at fair value, the Group considers the principal or most advantageous market in which it would transact and it considers assumptions that market participants would use when pricing the asset or liability.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

- continued

FOR THE YEARS ENDED DECEMBER 31, 2020, 2021 AND 2022

(in thousands, except share data

, or otherwise noted)

2.	SIGNIFICANT ACCOUNTING POLICIES - continued

Fair value

- continued

Authoritative literature provides a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. An asset or liability categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement as follows:

Level 1

Level 1 applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities.

~~MOMO INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued~~

~~FOR THE YEARS ENDED DECEMBER 31, 2013, 2014 AND 2015~~

~~(In U.S. dollars in thousands, except share data)~~

2.	~~SIGNIFICANT ACCOUNTING POLICIES - continued~~

~~Fair value~~ ~~- continued~~

Level 2

Level 2 applies to assets or liabilities for which there are inputs other than quoted prices included within Level 1 that are observable for the assets or liabilities such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data.

Level 3

Level 3 applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities.

Revenue recognition

~~The Group recognizes revenue when persuasive evidence of an arrangement exists, delivery has occurred, the sales price is fixed or determinable, and collectability is reasonably assured.~~

The Group principally derives its revenue from ~~membership subscription~~live video services, value-added services, mobile marketing services, mobile games and other ~~services, including the use~~services. The Group recognizes revenue when control of the ~~paid emoticons.~~

promised goods or services are transferred to the customers, in an amount that reflects the consideration that the Group expects to receive in exchange for those goods or services. The Group applied the five steps method outlined in ASC Topic 606, Revenue from Contracts with Customers (“Topic 606”) to all revenue streams. In addition, the standard requires disclosures of the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers.

For the years ended December 31, 2020, 2021 and 2022, the Group’s revenue is reported net of discounts, value added tax and surcharges.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

- continued

FOR THE YEARS ENDED DECEMBER 31, 2020, 2021 AND 2022

(in thousands, except share data

, or otherwise noted)

2.	SIGNIFICANT ACCOUNTING POLICIES - continued

Revenue recognition

- continued

The following table provides information about disaggregated revenue by types, including a reconciliation of the disaggregated revenue with the Group’s reportable segments:


	For the year ended December 31, 2022

	Momo		Tantan		QOOL
	RMB		RMB		RMB
Live video service		5,966,323		544,137		—
Value-added services		5,183,302		823,716		—
Mobile marketing		124,956		—		—
Mobile games		55,732		—		—
Other services		4,781		—		1,225

Total		11,335,094		1,367,853		1,225


	For the year ended December 31, 2021

	Momo		Tantan		QOOL
	RMB		RMB		RMB
Live video service		7,475,809		903,136		—
Value-added services		4,845,744		1,126,048		—
Mobile marketing		159,010		—		—
Mobile games		47,712		—		—
Other services		12,930		—		5,330

Total		12,541,205		2,029,184		5,330


	For the year ended December 31, 2020

	Momo		Tantan		QOOL
	RMB		RMB		RMB
Live video service		8,638,810		998,769		—
Value-added services		3,742,637		1,369,545		—
Mobile marketing		198,197		—		—
Mobile games		39,564		—		—
Other services		11,911		—		24,755

Total		12,631,119		2,368,314		24,755

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

- continued

FOR THE YEARS ENDED DECEMBER 31, 2020, 2021 AND 2022

(in thousands, except share data

, or otherwise noted)

2.	SIGNIFICANT ACCOUNTING POLICIES - continued

Revenue recognition

- continued

(a)

~~Membership subscription~~Live video service

The Group is principally engaged in providing live video services whereby users can enjoy live performances and interact with the broadcasters for free during the performance. Broadcasters can either host the performance on their own or join a talent agency. The Group generates revenue from sales of virtual items to its customers. The Group designs, creates and offers various virtual items for sales to users with

pre-determined

stand-alone selling price, which if users chose to, can be purchased and be presented to the broadcasters to show their support during their live video performance. The Group has a recharge system for users to purchase the Group’s virtual currency that can then be used to purchase virtual items on the Group’s platform. Users can recharge via various third-party application stores and other payment channels. Virtual currency is

non-refundable

and does not have any expiration date. Based on the turnover history of virtual currency, the Group determined that the virtual currency is often consumed soon after it is purchased and accordingly, the Group concluded that any breakage would be insignificant. Unconsumed virtual currency is recorded as deferred revenue. Virtual currencies used to purchase virtual items are recognized as revenue according to the prescribed revenue recognition policies of virtual items addressed below unless otherwise stated. All virtual items are

non-refundable,

consumed at a

point-in-time

and expire in a few days after the purchase. Under arrangements entered into with broadcasters and talent agencies, the Group shares a portion of the revenues derived from the sales of virtual items with them (“Revenue Sharing”).

The Group has evaluated and determined that it is the principal and views the users to be its customers. Specifically, the Group controls the virtual items before they are transferred to users. Its control is evidenced by the Group’s sole ability to monetize the virtual items before they are transferred to users, and is further supported by the Group being primarily responsible to the users for the delivery of the virtual items as well as having full discretion in establishing pricing for the virtual items. Accordingly, the Group reports its live video service revenues on a gross basis with amounts billed to users for the virtual items recorded as revenues and the Revenue Sharing paid to broadcasters and talent agencies recorded as cost of revenues. Sales proceeds are initially recorded as deferred revenue and recognized as revenue based on the consumption of the virtual items. The Group has determined that the virtual items represent one performance obligation in the live video service. Revenue related to each of the virtual items is recognized at the

point-in-

time when the virtual item is transferred directly to the broadcasters and consumed by users. Although some virtual items have expiry dates, the Group considers that the impact of breakage for the virtual items is insignificant as historical data shows that virtual items are consumed shortly after they are released to users and the forfeiture rate remains relatively low for the periods presented. The Group does not have further performance obligations to the users after the virtual items are consumed.

Users also have the right to purchase various combinations of virtual items and virtual item coupons in the live video, which are generally capable of being distinct. Specifically, the Group enters into certain contracts with its users where virtual item coupons are granted to users with a purchase. The virtual item coupons can be used by the users to exchange for free virtual items in the future. Such virtual item coupons typically expire a few days after being granted. The Group has determined that the virtual item coupons represent a material right under Topic 606 which is recognized as a separate performance obligation at the outset of the arrangement. Judgment is required to determine the standalone selling price for each distinct virtual item and virtual item coupon. The Group allocates the consideration to each distinct virtual item and virtual item coupon based on their relative standalone selling prices. In instances where standalone selling price is not directly observable as the Group does not sell the virtual items or virtual item coupons separately, the Group determines the standalone selling price based on pricing strategies, market factors and strategic objectives. The Group recognizes revenue for each of the distinct virtual item in accordance with the revenue recognition method discussed above unless otherwise stated. Revenue for the virtual item coupons is recognized when the virtual items purchased with the virtual item coupons are consumed. Although virtual item coupons have expiry dates, the Group considers that the impact of breakage for the virtual item coupons is insignificant as historical data shows that virtual item coupons are consumed shortly after they are released to users.

The Group does not provide any right of return and does not provide any other credit or incentive to its users.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

- continued

FOR THE YEARS ENDED DECEMBER 31, 2020, 2021 AND 2022

(in thousands, except share data

, or otherwise noted)

2.	SIGNIFICANT ACCOUNTING POLICIES - continued

Revenue recognition

- continued

(b)

Value-added services

Value-added services revenues mainly include membership subscription revenue and virtual gift service revenue. Membership subscription is a service package which enables members to enjoy additional functions and privileges. The contract period for the membership subscription ranges from one month to one year. All membership subscription is nonrefundable. The Group has determined that its membership subscription services represent one performance obligation. The Group collects membership subscription in advance and records it as deferred revenue. Revenue is recognized ratably over the contract period ~~for~~as the membership subscription ~~services.~~

~~Net~~services are delivered.

Virtual gift service enhances users’ experience of interaction and social networking with each other. Generally, users are able to purchase virtual items and send them to other users The Group shares a portion of the revenues derived from the sales of ~~$2,808, $29,756~~ virtual items with the recipients of the virtual items. All virtual items are nonrefundable, typically consumed at a

point-in-time

and ~~$58,462 were recognized for membership subscription~~expire a few days after the purchase. Although some virtual items have expiry dates, the Group considers that the impact of breakage for the ~~years ended December 31, 2013, 2014~~virtual items is insignificant as historical data shows that virtual items are consumed shortly after they are released to users, and ~~2015, respectively.~~

the forfeiture rate remains relatively low for the periods presented. The Group collects the cash from the purchase of virtual items and recognized the sales of virtual items when the performance obligation is satisfied. The Group has determined that it has one single performance obligation which is the display of the virtual item for the users who purchase them. Revenues derived from the sales of virtual items are recorded on a gross basis as the Group has determined that it is the principal in providing the virtual gift services for the same reasons outlined in the revenue recognition policy for its live video services. The portion paid to gift recipients is recognized as cost of revenues.

For virtual gift service, the Group also provides various combinations of virtual items for users to purchase and grant virtual item coupons with the purchase, similar to its live video service. For the same reasons and with the same methods outlined in the revenue recognition policy for its live video services, the Group recognizes revenue for each of the distinct virtual item and recognizes revenue for the virtual item coupons when the virtual items purchased with the virtual item coupons are consumed. Although virtual item coupons have expiry dates, the Group considers that the impact of breakage for the virtual item coupons is insignificant as historical data shows that virtual item coupons are consumed shortly after they are released to users.

~~(b)~~(c)

Mobile marketing

The Group provides advertising and marketing solutions to customers for promotion of their brands and conduction of effective marketing activities through its mobile application.

~~MOMO INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued~~

~~FOR THE YEARS ENDED DECEMBER 31, 2013, 2014 AND 2015~~

~~(In U.S. dollars in thousands, except share data)~~

2.	~~SIGNIFICANT ACCOUNTING POLICIES - continued~~

~~Revenue recognition~~ ~~- continued~~

~~(b)~~

~~Mobile marketing - continued~~

Display-based mobile marketing services

For display-based online advertising services, ~~such as banners and location-based advertising on~~ the Group has determined that its mobile ~~applications,~~marketing services represent one performance obligation. Accordingly, the Group recognizes mobile marketing revenue ratably over the period that the advertising is provided commencing on the date the customer’s advertisement is displayed, or based on the number of times that the advertisement has been displayed for cost per thousand impressions advertising arrangements.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

- continued

FOR THE YEARS ENDED DECEMBER 31, 2020, 2021 AND 2022

(in thousands, except share data

, or otherwise noted)

2.	SIGNIFICANT ACCOUNTING POLICIES - continued

Revenue recognition

- continued

(c)

Mobile marketing - continued

Performance-based mobile marketing services

The Group also enables advertising customers to place ~~link~~links on its mobile platform on a

pay-for-effectiveness

basis, which is referred to as the cost for performance model. The Group charges fees to advertising customers based on the effectiveness of advertising links, which is measured by active clicks. The Group has determined that its mobile marketing services represent one performance obligation. Accordingly, the Group recognizes mobile marketing revenue based on sales of effective clicks. Revenue is estimated by the Group based on its internal data, which is confirmed with respective ~~customers.~~

customers periodically.

The Group’s ~~revenue transactions are based on standard business terms and conditions, which~~mobile marketing revenues are recognized net of agency rebates, if applicable.

~~Net revenues of $12, $1,975 and $38,885 were recognized for mobile marketing~~ Agency rebates have not been material for the years ended December 31, ~~2013, 2014~~2020, 2021 and ~~2015, respectively.~~

2022.

~~(c)~~(d)

Mobile games

The Group ~~publishes~~operates mobile games including both self-developed and licensed mobile games ~~developed by third-party~~and generates mobile game ~~developers and its self-developed~~revenues from the sales of

in-game

virtual currencies or virtual items.

The Group records revenue generated from mobile games on a gross basis if the Group acts as the principal in the mobile game arrangements under which the Group controls the specified services before they are provided to the ~~game players through its mobile application.~~

~~Licensed mobile games~~

customers. The Group generates revenue from offering services of mobile games developed by third-party game developers. All of the licensed games can be accessed and played by game players directly through the Group’s mobile game platform. The Group primarily views the game developers to be its customers and considers its responsibility under its agreements with the game developers to be promotion of the game developers’ games. The Group generally collects payments from game players in connection with the sale of in-game currencies and remits certain agreed-upon percentages of the proceeds to the game developers and records revenue net of remittances. Purchases of in-game currencies are not refundable after they have been sold unless there is unused in-game currencies at the time a game is discontinued. Typically, a game will only be discontinued when the monthly revenue generated by a game becomes consistently insignificant. The Group does not currently expect to pay any material cash refunds to game players or game developers in connection with a discontinued game.

~~MOMO INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued~~

~~FOR THE YEARS ENDED DECEMBER 31, 2013, 2014 AND 2015~~

~~(In U.S. dollars in thousands, except share data)~~

2.	~~SIGNIFICANT ACCOUNTING POLICIES - continued~~

~~Revenue recognition~~ ~~- continued~~

~~(c)~~

~~Mobile games - continued~~

~~Licensed mobile games - Non-exclusive mobile games services~~

~~The Group enters into non-exclusive agreements with the game developers and offers the Group’s mobile game platform for the mobile games developed by the game developers. The Group has determined~~determines that it has ~~no additional~~a single performance obligation to the developers or game players upon players’ completion of the corresponding in-game purchase. Therefore, revenues from the sale of in-game currencies are primarily recorded net of remittances to game developers and commission fees made to third-party application stores and other payment channels and deferred until the estimated consumption date by individual game (i.e., the estimated date in-game currencies are consumed within the game), which is typically within a short period of time ranging from one to six days after the purchase of the in-game currencies.

~~Licensed mobile games - Exclusive mobile games services~~

The Group enters into exclusive agreements with the game developers and provides the Group’s mobile game platform for the mobile games developed by the game developers. Under the exclusive agreements, the players can access to the games only through the Group’s platform. The Group has determined that it is obligated to provide mobile games services to game players who purchased virtual items to gain an enhanced game-playing experience over an average period of player relationship. Hence, the Group believes that its performance for, and obligation to, the game developers correspond to the game developers’ services to the players. The Group does not have access to the data on the consumption details and the types of virtual items purchased by the game players. Therefore, the Group cannot estimate the economic life of the virtual item. However, the Group maintains data of when a particular player purchases the virtual items and logs into the games. The Group has adopted a policy to recognize revenues net of remittances to game developers and commission fees made to third-party application stores and other payment channels over the estimated period of player relationship on a game-by-game basis. As of December 31, 2014 and 2015, the Company operated three and seven games under exclusive arrangements and the estimated periods of the player relationship is in a range of 45 to 69 and 20 to 75 days, respectively.

~~Self-developed mobile game~~

~~In February 2015, the Group launched one self-developed game on its platform and started to generate revenues by in-game sales of virtual item. The Group has determined that an obligation exists~~ to the players who purchased the virtual items to gain an enhanced game-playing experience over the playing period of the paying ~~players,~~players. Specially, the Group is primarily responsible for fulfilling the promise to provide maintenance services and ~~accordingly, recognized~~has discretion in setting the price for virtual currencies or virtual items to the customers. Accordingly, the Group recognizes revenues ratably over the estimated average period of player relationship starting from the point in time when the players purchase the virtual items and once all other revenue recognition criteria are met. ~~The estimated average period of player relationship~~

For arrangements that the Group has determined that it is not the principal, the Group considers the game developers to be its customers and records revenue on a net basis based on the ratios

pre-determined

with the online game developers when all the revenue recognition criteria set forth in Topic 606 are met, which is generally when the user consumes virtual currencies issued by the game developers. Specifically, the Group has determined that it has no additional performance obligation to the developers or game players upon completion of the ~~self-developed game is 56 days during~~corresponding

in-game

purchase.

(e)

Other services

Revenues from other services mainly consisted of music service revenues, film distribution service, film promotion service and peripheral products.

Practical expedients and exemptions

The Group’s contracts have an original duration of one year or less. Accordingly, the Group does not disclose the value of unsatisfied performance obligations. Additionally, the Group generally expenses sales commissions when incurred because the amortization period would have been one year ~~presented.~~

~~MOMO INC.~~

or less. These costs are recorded within selling and marketing expenses.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

- continued

FOR THE YEARS ENDED DECEMBER 31, ~~2013, 2014~~2020, 2021 AND ~~2015~~

2022

(~~In U.S. dollars~~ in thousands, except share ~~data)~~

data

, or otherwise noted)

2.	SIGNIFICANT ACCOUNTING POLICIES - continued

~~Revenue recognition~~ ~~- continued~~

~~(c)~~

~~Mobile games - continued~~

~~Self-developed mobile game~~ ~~- continued~~

~~Revenues derived~~

Contract balances

Contract balances include accounts receivable and deferred revenue. Accounts receivable represent cash due from ~~the self-developed game are recorded on a gross basis as the Group acts as a principal to fulfill all obligations related to the mobile game operation. Commission fees paid to~~ third-party application stores and other payment channels as well as from advertising customers and are recorded ~~as cost of revenues.~~

~~Net revenues of $92, $11,237 and $31,082 were recognized for mobile games for~~when the ~~years ended December 31, 2013, 2014 and 2015, respectively.~~

~~(d)~~

~~Paid emoticons~~

~~All paid emoticons are durable with indefinite lives and each of them~~right to consideration is effective upon purchase payment made by a user and complete download. The price of each emoticon is fixed and identifiable. The revenue is recognized ratably over the estimated usage life of the emoticon (i.e. 180 days) by the user from the date the emoticon is downloaded.

unconditional. The Group ~~reassesses the estimated lives periodically. If there are indications of any significant changes~~evaluates its accounts receivable for expected credit losses on a regular basis. The Group recorded no material impairment charges related to ~~their estimated lives, the revised estimates will be applied prospectively~~contract assets in the ~~period of change to all existing emoticons which are not totally amortized.~~

~~Net revenues of $217, $1,787 and $3,698 were recognized for the use of emoticons on its platform for the years ended December 31, 2013, 2014 and 2015, respectively.~~

~~Advertising barter transactions~~

The Group engages in barter transactions where it trades advertising resources with certain third parties for other advertising resources. The Group recognizes revenues and expenses at fair value only if the fair value of the services exchanged in the transaction is determinable based on the Group’s own historical practice of receiving cash or other consideration that is readily convertible to a known amount of cash for similar advertising resources from customers unrelated to the party in the barter transaction. The Group engaged in advertising barter transactions with independent counterparties, for which the Group shall display the counterparty’s brand or product promotion information in exchange for advertising to be displayed on the counterparty’s advertising media. The fair value of the transactions were not determinable due to the lack of the Group’s similar historical practice. Therefore, the advertising barter transactions shall be recorded based on the carrying amount of the advertising surrendered, which is the estimated cost to be incurred. For the years ended December 31, 2013, 2014 and 2015, the Group did not record any expenses or revenue because the estimated cost to be incurred is insignificant.

~~MOMO INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued~~

~~FOR THE YEARS ENDED DECEMBER 31, 2013, 2014 AND 2015~~

~~(In U.S. dollars in thousands, except share data)~~

2.	~~SIGNIFICANT ACCOUNTING POLICIES - continued~~

~~Deferred revenue~~

period. Deferred revenue primarily includes cash received ~~in advance~~ from paying users related to the Group’s live video service and value-added service as well as cash received from the Group’s advertising customers. ~~The unused cash balances remaining in users’ and advertising customers’ accounts are recorded as a liability.~~ Deferred revenue ~~related to prepayments from users and advertising customers will be~~is recognized as revenue over the estimated service period or when all of the revenue recognition criteria ~~are~~have been met.

Revenue recognized in 2021 and 2022 that was included in the deferred revenue balance as of January 1, 2021 and 2022 were RMB511,617 and RMB539,967, respectively.

Cost of revenues

Cost of revenues consist of expenditures incurred in the generation of the Group’s revenues, including but not limited to ~~salaries and benefits paid to employee,~~revenue sharing with the broadcasters, talent agencies, gift recipients resulting from the sales of virtual items, commission fee paid to third-party application stores and other payment channels, ~~except for those paid related to licensed mobile games which are recorded net of revenue,~~ bandwidth costs, ~~short messaging service charges,~~salaries and ~~depreciation.~~benefits paid to employees, depreciation and amortization and production cost in connection with the television content and films. These costs are expensed as incurred except for the direct and incremental platform commission fees to third-party application stores and other payment channels and production cost in connection with the television content and films which are deferred in “Prepaid expenses and other current assets” on the consolidated balance sheets. ~~The~~Such deferred ~~platform commissions~~costs are recognized in the consolidated statements of operations in “Cost of revenues” in the period in which the related revenues are recognized.

Government subsidies

Government subsidies primarily consist of financial subsidies received from provincial and local governments for operating a business in their jurisdictions and compliance with specific policies promoted by the local governments. For certain government subsidies, there are no defined rules and regulations to govern the criteria necessary for companies to receive such benefits, and the amount of financial subsidy is determined at the discretion of the relevant government authorities.

The Group records ~~such~~ government subsidies ~~as a liability when it is received and records it~~ as other operating income when ~~there is no~~received from the local government authority, because the government subsidies are not subject to further performance ~~obligation.~~

~~The Group received government~~obligations or future returns. Government subsidies ~~$330, $nil~~recorded as other operating income amounted to RMB142,061, RMB63,615 and ~~$nil in relation to a government sponsored project on development and research of games~~RMB23,593 for the years ended December 31, ~~2013, 2014~~2020, 2021 and ~~2015, respectively, and recorded $nil, $nil and $nil government subsidies as other operating income for the years ended December 31, 2013, 2014 and 2015,~~2022, respectively.

Research and development expenses

Research and development expenses primarily consist of (i) salaries and benefits for research and development personnel, and (ii) technological service fee, depreciation and office rental ~~general expenses and depreciation~~ expenses associated with the research and development activities. The Group’s research and development activities primarily consist of the research and development of new features for its mobile platform and its self-developed mobile games. The Group has expensed all research and development expenses when incurred.

~~MOMO INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued~~

~~FOR THE YEARS ENDED DECEMBER 31, 2013, 2014 AND 2015~~

~~(In U.S. dollars in thousands, except share data)~~

2.	~~SIGNIFICANT ACCOUNTING POLICIES - continued~~

Value added taxes

(“VAT”)

Entities that are VAT general taxpayers are allowed to offset qualified input VAT paid to suppliers against their output VAT liabilities. Net VAT balance between input VAT and output VAT is recorded in ~~the line item of~~ accrued expenses and other current liabilities on the consolidated balance sheets. ~~VAT~~Revenue is ~~also reported as a deduction to revenue when incurred and~~recognized net of VAT amounted to ~~$392, $5,436~~RMB1,266,603, RMB1,136,147 and ~~$16,951~~RMB977,780 for the years ended December 31, ~~2013, 2014~~2020, 2021 and ~~2015,~~2022, respectively.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

- continued

FOR THE YEARS ENDED DECEMBER 31, 2020, 2021 AND 2022

(in thousands, except share data

, or otherwise noted)

2.	SIGNIFICANT ACCOUNTING POLICIES - continued

Income taxes

Current income taxes are provided for in accordance with the laws of the relevant tax authorities. Deferred income taxes are recognized when temporary differences exist between the tax bases of assets and liabilities and their reported amounts in the consolidated financial statements. Net operating loss carry forwards and credits are applied using enacted statutory tax rates applicable to future years. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is

more-likely-than-not

that a portion of or all of the deferred tax assets will not be realized. ~~The components~~

Deferred income taxes are recognized on the undistributed earnings of subsidiaries, which are presumed to be transferred to the ~~deferred tax assets~~parent company and ~~liabilities~~ are ~~individually classified as current and non-current based on their characteristics.~~

subject to withholding taxes, unless there is sufficient evidence to show that the subsidiary has invested or will invest the undistributed earnings indefinitely or that the earnings will be remitted in a

tax-free

liquidation.

The impact of an uncertain income tax position on the income tax return is recognized at the largest amount that is ~~more-likely-than-not~~more-likely-than- not to be sustained upon audit by the relevant tax authority. An uncertain income tax position will not be recognized if it has less than a 50% likelihood of being sustained. Interest and penalties on income taxes will be classified as a component of the provisions for income taxes. ~~The Group recognize income tax expense amounted to $nil, $nil and $92 for the years ended December 31, 2013, 2014 and 2015, respectively.~~

~~MOMO INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued~~

~~FOR THE YEARS ENDED DECEMBER 31, 2013, 2014 AND 2015~~

~~(In U.S. dollars in thousands, except share data)~~

2.	~~SIGNIFICANT ACCOUNTING POLICIES - continued~~

Foreign currency translation

The ~~functional and~~ reporting currency of the Company is the ~~United States dollar~~Renminbi (“~~U.S. dollar”~~RMB”). The ~~financial records~~functional currency of the ~~Group’s~~Company is the US dollar (“US$”). The Company’s operations are principally conducted through the subsidiaries, ~~VIE~~its VIEs and ~~VIE’s~~VIEs’ subsidiaries located in the PRC ~~are maintained in their~~where the local ~~currencies, the RMB, which are also~~currency is the functional ~~currencies of these entities.~~

currency.

Monetary assets and liabilities denominated in currencies other than the functional currency are translated into the functional currency at the rates of exchange ~~ruling~~in place at the balance sheet date. Transactions in currencies other than the functional currency during the year are converted into the functional currency at the applicable rates of exchange prevailing when the transactions occurred. Transaction gains and losses are recognized in the consolidated statement of operations.

~~The Group’s entities with functional currency of RMB, translate their operating results and financial positions into the U.S. dollar, the Group’s reporting currency.~~

Assets and liabilities of the Group companies are translated ~~using~~from their respective functional currencies to the reporting currency at the exchange rates at the balance sheet dates, equity accounts are translated at historical exchange rates and revenues and expenses are translated at the average exchange rates in effect during the reporting period. The resulting foreign currency translation adjustments are recorded in other comprehensive income (loss).

Translations of amounts from RMB into US$ for the convenience of the reader were calculated at the noon buying rate of US$1.00 = RMB6.8972 on the last trading day of 2022 (December 30, 2022) representing the certificated exchange rate published by the Federal Reserve Board. No representation is made that the RMB amounts could have been, or could be, converted, realized or settled into US$ at such rate, or at any other rates.

F-27

Table of Contents

Hello Group Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

- continued

FOR THE YEARS ENDED DECEMBER 31, 2020, 2021 AND 2022

(in thousands, except share data

, or otherwise noted)

2.	SIGNIFICANT ACCOUNTING POLICIES - continued

Leases

The Group leases administrative office spaces and internet data center (“IDC”) facilities in different cities in the PRC under operating leases. The Group determines whether an arrangement constitutes a lease and records lease liabilities and

right-of-use

assets on its consolidated balance ~~sheet date. Revenues, expenses, gains~~sheets at the lease commencement. The Group elected the practical expedient not to separate lease and ~~losses are translated using~~

non-lease

components of contracts, except for bandwidth service included in IDC facilities lease contracts. The Group measures its lease liabilities based on the ~~average~~present value of the total lease payments not yet paid discounted based on its incremental borrowing rate, as the rate implicit in the lease is not readily available. The Group’s incremental borrowing rate is the estimated rate the Group would be required to pay for a collateralized borrowing equal to the ~~year. Translation adjustments are report as cumulative translation adjustments~~total lease payments over the term of the lease. The Group estimates an incremental borrowing rate based on the credit quality of the Group and ~~are shown as a separate component~~by comparing interest rates available in the market for similar borrowings, and adjusting this amount based on the impact of ~~comprehensive loss.~~

~~Operating~~collateral over the term of each lease. The Group measures

right-of-use

assets based on the corresponding lease liability adjusted for payments made to the lessor at or before the commencement date, and initial direct costs it incurs under the lease. The Group begins recognizing rental expense when the lessor makes the underlying asset available to the Group. The Group’s leases

~~Leases where~~ have remaining lease terms of up to approximately three years, some of which include options to extend the ~~rewards and risks of ownership of assets primarily remain~~leases for an additional period which has to be agreed with the ~~lessor are accounted~~lessors based on mutual negotiation. After considering the factors that create an economic incentive, the Group did not include renewal option periods in the lease term for ~~as operating leases. Payments made under operating~~which it is not reasonably certain to exercise.

For short-term leases, ~~are charged to~~ the Group records rental expense in its consolidated statements of operations on a straight-line basis over the lease ~~periods.~~

~~Advertising expenses~~

term. The Group also elected the exemption for contracts with lease terms of 12 months or less.

Advertising expenses

Advertising expenses, ~~advertising expenses as~~including advertisements through various forms of media and marketing and promotional activities, are included in “sales and marketing expense” in the consolidated statements of operations and are expensed when incurred. Total advertising expenses incurred were ~~$1,162, $27,408~~RMB2,255,519, RMB2,192,512 and ~~$27,793~~RMB1,766,995 for the years ended December 31, ~~2013, 2014~~2020, 2021 and ~~2015, respectively, and have been included in sales and marketing expenses in the consolidated statements of operations.~~

2022, respectively.

Comprehensive income (loss) ~~income~~

Comprehensive income (loss) ~~income~~ includes net income (loss) ~~income~~ and foreign currency translation adjustments. Comprehensive income (loss) ~~income~~ is reported in the consolidated statements of comprehensive income (loss) ~~income.~~

~~MOMO INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued~~

~~FOR THE YEARS ENDED DECEMBER 31, 2013, 2014 AND 2015~~

~~(In U.S. dollars in thousands, except share data)~~

2.	~~SIGNIFICANT ACCOUNTING POLICIES - continued~~

Share-based compensation

Share-based payment transactions with employees, executives and ~~executives~~consultants are measured based on the ~~grant date~~grant-date fair value of the equity instrument issued and recognized as compensation expense net of a forfeiture rate on a straight-line basis, over the requisite service period, with a corresponding impact reflected in additional

paid-in

capital.

~~Share awards issued to nonemployees are measured at fair value at the earlier~~

F-28

Table of ~~the commitment date~~Contents

Hello Group Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

- continued

FOR THE YEARS ENDED DECEMBER 31, 2020, 2021 AND 2022

(in thousands, except share data

, or ~~the date the services is completed and recognized over the period the service is provided.~~

otherwise noted)

2.	SIGNIFICANT ACCOUNTING POLICIES - continued

Share-based compensation

- continued

The estimate of forfeiture rate ~~will be~~is adjusted over the requisite service period to the extent that actual forfeiture rate differs, or is expected to differ, from such estimates. Changes in estimated forfeiture rate ~~will be~~is recognized through a cumulative

catch-up

adjustment in the period of change.

~~Earnings~~

Changes in the terms or conditions of share options are accounted as a modification. The Group calculates the excess of the fair value of the modified option over the fair value of the original option immediately before the modification, measured based on the share price and other pertinent factors at the modification date. For vested options, the Group recognizes incremental compensation cost in the period that the modification occurred. For unvested options, the Group recognizes, over the remaining requisite service period, the sum of the incremental compensation cost and the remaining unrecognized compensation cost for the original award on the modification date.

Net income (loss) per share

Basic ~~earnings~~net income (loss) per ordinary share is computed by dividing net income (loss) attributable to ordinary shareholders by the weighted average number of ordinary shares outstanding during the period.

The Group’s convertible redeemable participating preferred shares are participating securities as they participate in undistributed earnings on an as-if-converted basis. The Group determined that the nonvested restricted shares are participating securities as the holders of the nonvested restricted shares have a nonforfeitable right to receive dividends with all ordinary shares but the nonvested restricted shares do not have a contractual obligation to fund or otherwise absorb the Company’s losses. Accordingly, the Group uses the two-class method whereby undistributed

Diluted net income is allocated on a pro rata basis to the ordinary shares, preferred shares and nonvested restricted shares to the extent that each class may share in income for the period; whereas the undistributed net loss for the period is allocated to ordinary shares only because the convertible redeemable participating preferred shares and nonvested restricted shares are not contractually obligated to share the loss.

~~Diluted earnings~~ (loss) per ordinary share ~~reflects~~reflect the potential dilution that could occur if securities were exercised or converted into ordinary shares. The Group had ~~convertible redeemable participating preferred shares, and~~ share options, restricted share units and convertible senior notes, which could potentially dilute basic earnings ~~(loss)~~ per share in the future. To calculate the number of shares for diluted ~~earnings~~net income (loss) per ordinary share, the effect of the ~~convertible redeemable participating preferred shares is computed using the as-if-converted method; the effect of the~~ share options and restricted share units is computed using the treasury stock method, and the effect of the convertible senior notes is computed using the

as-if-converted

method.

~~MOMO INC.~~

F-29

Table of Contents

Hello Group Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

- continued

FOR THE YEARS ENDED DECEMBER 31, ~~2013, 2014~~2020, 2021 AND ~~2015~~

2022

(~~In U.S. dollars~~ in thousands, except share ~~data)~~

data

, or otherwise noted)

2.	SIGNIFICANT ACCOUNTING POLICIES - continued

Recent accounting pronouncements adopted

In ~~February 2015,~~August 2020, the FASB issued ASU 2020-06, Debt — Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging — Contracts in Entity’s Own Equity (Subtopic 815-40) (“ASU 2020-06”). ASU 2020-06 simplifies the accounting for certain financial instruments with characteristics of liabilities and equity, including convertible instruments and contracts on an entity’s own equity. The key amendments in ASU 2020-06 include: a. removing from U.S. GAAP the separation models for (1) convertible debt with a ~~new pronouncement ASU 2015-02 which~~CCF and (2) convertible instruments with a BCF; b. amending diluted EPS calculations for convertible instruments to require if-converted method; and c. amending the requirements for a contract (or embedded derivative) that is ~~intended~~potentially settled in an entity’s own shares to ~~improve targeted areas of consolidation guidance for legal~~be classified in equity. For public business entities such as limited partnerships, limited liability corporations, and securitization structures (collateralized debt obligations, collateralized loan obligations, and mortgage-backed security transactions). The ASU focuses on the consolidation evaluation for reporting organizations (public and private companies and not-for-profit organizations) that are ~~required to evaluate whether they should consolidate certain legal entities. In addition to reducing~~not smaller reporting companies, the ~~number of consolidation models from four to two, the new standard simplifies the FASB Accounting Standards Codification (“Codification”) and improves current GAAP by:~~

~~Placing more emphasis on risk of loss when determining a controlling financial interest. A reporting organization may no longer have to consolidate a legal entity~~amendments in ~~certain circumstances based solely on its fee arrangement, when certain criteria~~ASU 2020-06 are ~~met.~~

~~Reducing the frequency of the application of related-party guidance when determining a controlling financial interest in a variable interest entity (VIE).~~

~~Changing consolidation conclusions for public and private companies in several industries that typically make use of limited partnerships or VIEs.~~

~~The ASU is~~ effective for ~~periods~~fiscal years beginning after December 15, ~~2015, for public companies. Early~~2021, and interim periods within those fiscal years. The Group adopted ASU 2020-06 on January 1, 2022 and the adoption ~~is permitted, including adoption in an interim period. The Company early adopted this guidance. The adoption of this guidance~~ did not have a ~~significant effect~~material impact on the Group’s consolidated financial statements.

In May 2021, the FASB issued ASU No. 2021-04, Earnings Per Share (Topic 260), Debt — Modifications and Extinguishments (Subtopic 470-50), Compensation — Stock Compensation (Topic 718), and Derivatives and Hedging — Contracts in Entity’s Own Equity (Subtopic 815-40) to clarify and reduce diversity in an issuer’s accounting for modifications or exchanges of freestanding equity classified written call options (for example, warrants) that remain equity classified after modification or exchange. The a

endments in this update are effective for all entities for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. An entity should apply the amendments prospectively to modifications or exchanges occurring on or after the effective date of the amendments. The Group adopted ASU 2021-04 on January 1, 2022 and the adoption did not have a material impact on the Group’s consolidated financial statements.

In November 2021, FASB issued ASU 2021-10, Government Assistance (Topic 832): Disclosures by Business Entities about Government Assistance, which requires business entities to provide certain disclosures when they have received government assistance and use a grant or contribution accounting model by analogy to other accounting guidance. The ASU 2021-10 requires a business entity that has received government assistance must disclose: (a) the nature of the transactions, including a general description of the transactions and the form in which the assistance has been received; (b)the accounting policies used to account for the transactions; and (c) the line items on the balance sheet and income statement that are affected by the transactions, and the amounts applicable to each financial statement line item in the current reporting period. The guidance in ASU 2021-10 is effective for all entities for fiscal years beginning after December 15, 2021. The Group adopted ASU 2021-10 on January 1, 2022 and the adoption did not have a material impact on the Group’s consolidated financial statements.

Recent accounting pronouncements not yet adopted

In ~~May 2014,~~October 2021, the FASB issued ASU ~~2014-09, “Revenue~~No. 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers (Topic 606)”. The guidance substantially converges final standards on revenue recognition between the FASB and the International Accounting Standards Board providing a framework on addressing revenue recognition issues and, upon its effective date, replaces almost all exiting revenue recognition guidance, including industry-specific guidance, in current U.S. generally accepted accounting principles.

~~The core principle of the guidance is~~(ASU 2021-08), which clarifies that an ~~entity~~acquirer of a business should recognize ~~revenue~~and measure contract assets and contract liabilities in a business combination in accordance with Topic 606, Revenue from Contracts with Customers The new amendments are effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. The amendments should be applied prospectively to ~~depict the transfer of promised goods~~business combinations occurring on or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. To achieve that core principle, an entity should apply the following steps:

~~Step 1: Identify the contract (s) with a customer.~~

~~Step 2: Identify the performance obligations in the contract.~~

~~Step 3: Determine the transaction price.~~

~~Step 4: Allocate the transaction price to the performance obligations in the contract.~~

~~Step 5: Recognize revenue when (or as) the entity satisfies a performance obligation.~~

~~MOMO INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued~~

~~FOR THE YEARS ENDED DECEMBER 31, 2013, 2014 AND 2015~~

~~(In U.S. dollars in thousands, except share data)~~

2.	~~SIGNIFICANT ACCOUNTING POLICIES - continued~~

~~Recent accounting pronouncements not yet adopted~~ ~~- continued~~

~~In August 2015, FASB issued its final standard formally amending~~after the effective date of the ~~new revenue recognition guidance. The~~ amendments, in this ASU are effective for annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period. Earlier application is permitted only as of annual reporting periods beginning after December 15, 2016, including interim reporting periods within that reporting period. The new revenue guidance may be applied retrospectively to each prior period presented or retrospectively with ~~the cumulative effect recognized as of the date of adoption.~~early adoption permitted. The Group is in the process of evaluating the impact of the adoption of this ~~guidance~~pronouncement on its consolidated financial statements.

~~In November, 2015, the FASB issued a new pronouncement ASU 2015-17 which changes how deferred taxes are classified on organizations’ balance sheets.~~

The ASU eliminates the current requirement for organizations to present deferred tax liabilities and assets as current and noncurrent in a classified balance sheet. Instead, organizations will be required to classify all deferred tax assets and liabilities as noncurrent.

The amendments apply to all organizations that present a classified balance sheet. For public companies, the amendments are effective for financial statements issued for annual periods beginning after December 15, 2016, and interim periods within those annual periods. Earlier application is permitted for all entities as

F-30

Table of ~~the beginning of an interim or annual reporting period. This ASU may be applied prospectively to all deferred tax liabilities and assets or retrospectively to all periods presented. The~~Contents

Hello Group ~~does not expect the adoption of this guidance will have a significant effect on the Group’s consolidated financial statements.~~

In January, 2016, the FASB issued a new pronouncement ASU 2016-01 which is intended to improve the recognition and measurement of financial instruments. The ASU affects public and private companies, not-for-profit organizations, and employee benefit plans that hold financial assets or owe financial liabilities.

~~The new guidance makes targeted improvements to existing U.S. GAAP by:~~

Inc.

Requiring equity investments (except those accounted for under the equity method of accounting, or those that result in consolidation of the investee) to be measured at fair value with changes in fair value recognized in net income;

~~Requiring public business entities to use the exit price notion when measuring the fair value of financial instruments for disclosure purposes;~~

Requiring separate presentation of financial assets and financial liabilities by measurement category and form of financial asset (i.e., securities or loans and receivables) on the balance sheet or the accompanying notes to the financial statements;

~~MOMO INC.~~

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

- continued

FOR THE YEARS ENDED DECEMBER 31, ~~2013, 2014~~2020, 2021 AND ~~2015~~

2022

(~~In U.S. dollars~~ in thousands, except share ~~data)~~

data, or otherwise noted)

2.	SIGNIFICANT ACCOUNTING POLICIES - continued

~~Recent accounting pronouncements not yet adopted~~ ~~- continued~~

~~Eliminating the requirement to disclose the fair value of financial instruments measured at amortized cost for organizations that are not public business entities;~~

Eliminating the requirement for public business entities to disclose the method(s) and significant assumptions used to estimate the fair value that is required to be disclosed for financial instruments measured at amortized cost on the balance sheet; and

Requiring a reporting organization to present separately in other comprehensive income the portion of the total change in the fair value of a liability resulting from a change in the instrument-specific credit risk (also referred to as “own credit”) when the organization has elected to measure the liability at fair value in accordance with the fair value option for financial instruments.

The new guidance is effective for public companies for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. The new guidance permits early adoption of the own credit provision. Adoption of the amendment must be applied by means of a cumulative-effect adjustment to the balance sheet as of the beginning of the fiscal year of adoption, except for amendments related to equity instruments that do not have readily determinable fair values which should be applied prospectively. The Group does not expect the adoption of this guidance will have a significant effect on the Group’s consolidated financial statements.

In ~~February 2016,~~

June 2022, the FASB issued ASU ~~No. 2016-02, Leases~~

2022-03,

“Fair Value Measurement (Topic ~~842). The guidance supersedes existing guidance~~820): Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions”, which clarifies that a contractual restriction on ~~accounting for leases with~~ the ~~main difference being that operating leases are to be recorded in the statement~~sale of ~~financial position as right-of-use assets and lease liabilities, initially measured at the present value~~an equity security is not considered part of the ~~lease payments. For operating leases with~~unit of account of the equity security and, therefore, is not considered in measuring fair value. The amendments also clarify that an entity cannot, as a ~~term~~separate unit of ~~12 months or less,~~account, recognize and measure a ~~lessee is permitted~~contractual sale restriction. This guidance also requires certain disclosures for equity securities subject to ~~make an accounting policy election not to recognize lease assets and liabilities. For public business entities, the~~contractual sale restrictions. This guidance is effective for fiscal years beginning after December 15, ~~2018, including~~2023, and interim periods within those fiscal ~~years. Early application of the guidance is~~years, with early adoption permitted. ~~In transition, entities are required to recognize and measure leases at the beginning of the earliest period presented using a modified retrospective approach.~~

The Group is in the process of evaluating the impact ~~that~~of the adoption of this ~~guidance will have~~pronouncement on its consolidated financial statements.

~~In March 2016, the FASB issued ASU 2016-09, Compensation - Stock Compensation (Topic 718).~~

3.	SHORT-TERM INVESTMENTS


	As of December 31,
	2021		2022
	RMB		RMB
Variable-rate financial instruments		—		300,240

		—		300,240

Short-term investments include wealth management products with a variable interest rate indexed to performance of underlying assets, which are with an original maturity of less than 12 months. The ~~new guidance simplifies certain aspects related to income taxes, statement~~Group accounted for it at fair value and recognized a gain of ~~cash flows, and forfeitures when accounting for share-based payment transactions. This new guidance will be effective~~RMB240 resulting from changes in fair value for the ~~Company for the first reporting period beginning after~~year ended December ~~15, 2016, with earlier adoption permitted. Certain~~31, 2022.

F-3

Table of the amendments related to timing of the recognition of tax benefits and tax withholding requirements should be applied using a modified retrospective transition method. Amendments related to the presentation of the statement of cash flows should be applied retrospectively. All other provisions may be applied on a prospective or modified retrospective basis. The Company is in the process of evaluating the impacts of the adoption of this ASU.

3.	~~ACCOUNTS RECEIVABLE, NET~~

~~Accounts receivable, net consisted of the following:~~

   As of December 31,
   2014    2015
Accounts receivable
   $ 7,038       $ 14,896
Less: allowance for doubtful accounts
   —         —




Accounts receivable, net
   $ 7,038       $ 14,896

~~MOMO INC.~~

Contents


Title of ~~each class~~ Each Class	Trading Symbol(s)	Name of ~~each exchange~~Each Exchange on ~~which registered~~ Which Registered
American depositary shares (each American depositary share representing two Class A ordinary shares, par value US$0.0001 per share)	MOMO	The ~~NASDAQ~~Nasdaq Stock Market LLC (The ~~NASDAQ~~Nasdaq Global Select Market)

Class A ordinary shares, par value US$0.0001 per share*		The Nasdaq Stock Market LLC (The Nasdaq Global Select Market)


INTRODUCTION		1

FORWARD-LOOKING INFORMATION		1

~~PART~~Part I		2
	Item 1.		Identity of Directors, Senior Management and Advisers		2
	Item 2.		Offer Statistics and Expected Timetable		2
	Item 3.		Key Information		32
	Item 4.		Information on the Company		3760
	Item 4A.		Unresolved Staff Comments		59
	~~Item 5.~~		~~Operating and Financial Review and Prospects~~		59
	~~Item 6.~~		~~Directors, Senior Management and Employees~~		78
	~~Item 7.~~		~~Major Shareholders and Related Party Transactions~~		87
	~~Item 8.~~		~~Financial Information~~		93
	~~Item 9.~~		~~The Offer and Listing~~		94
	Item ~~10.~~5. Operating and Financial Review and Prospects		~~Additional Information~~		9594
	Item ~~11.~~6. Directors, Senior Management and Employees			117
Item 7. Major Shareholders and Related Party Transactions		127
Item 8. Financial Information		130
Item 9. The Offer and Listing		132
Item 10. Additional Information		132
Item 11. Quantitative and Qualitative Disclosures about Market Risk		~~102~~148
	Item 12.		Description of Securities Other than Equity Securities		~~103~~
~~PART II~~					~~104~~149

~~Item 13.~~Part II		150
Item 13. Defaults, Dividend Arrearages and Delinquencies		~~104~~150
	Item 14.		Material Modifications to the Rights of Security Holders and Use of Proceeds		~~104~~150
	Item 15.		Controls and Procedures		~~104~~150
	Item 16A.		Audit Committee Financial Expert		~~105~~152
	Item 16B.		Code of Ethics		~~105~~152
	Item 16C.		Principal Accountant Fees and Services		~~105~~153
	Item 16D.		Exemptions from the Listing Standards for Audit Committees		~~106~~154
	Item 16E.		Purchases of Equity Securities by the Issuer and Affiliated Purchasers		~~106~~154
	Item 16F.		Change in Registrant’s Certifying Accountant		~~106~~155
Item 16G. Corporate Governance		155
Item 16H. Mine Safety Disclosure		155
Item 16I. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections		155

~~Item 16G.~~Part III	~~Corporate Governance~~			~~106~~156
Item 17. Financial Statements		156
Item 18. Financial Statements		156
Item 19. Exhibits		156

~~Item 16H.~~SIGNATURES	~~Mine Safety Disclosure~~			~~106~~
~~PART III~~					~~107~~
	~~Item 17.~~		~~Financial Statements~~		~~107~~
	~~Item 18.~~		~~Financial Statements~~		~~107~~
	~~Item 19.~~		~~Exhibits~~		~~107~~
~~SIGNATURES~~					~~109~~161


Date	Class of Shares		Fair Value		Purpose of Valuation	DLOM			Discount Rate
April 12, 2012		Ordinary shares	US$	0.01	To determine potential beneficial conversion feature in connection with the issuance of Series A-1 and Series A-2 preferred shares		33.5	%		40.0	%
June 11, 2012		Ordinary shares	US$	0.03	To determine potential beneficial conversion feature in connection with the issuance of Series A-3 preferred shares		33.5	%		38.0	%
July 13, 2012		Ordinary shares	US$	0.09	To determine potential beneficial conversion feature in connection with the issuance of Series B preferred shares		33.5	%		38.0	%
November 1, 2012		Ordinary shares	US$	0.19	Share option grant		33.0	%		35.0	%
October 8, 2013		Ordinary shares	US$	0.40	To determine potential beneficial conversion feature in connection with the issuance of Series C preferred shares		20.0	%		30.0	%
March 1, 2014		Ordinary shares	US$	4.00	Share option grant		16.0	%		21.0	%
April 22, 2014		Ordinary shares	US$	4.22	To determine potential beneficial conversion feature in connection with the issuance of Series D preferred shares		14.0	%		21.0	%
October 29, 2014		Ordinary shares	US$	6.75	Share option grant		5.0	%		18.0	%


	Total		2016		2017		2018		2019 and thereafter
	(in US$ thousands)
Operating lease		2,047		1,605		416		26		—


Name	Restricted Share Units for Class A Ordinary Shares		Date of Grant
Benson Bing Chung Tam		*		May 17, 2016
		*		March 7, 2017
		*		May 2, 2018
		*		April 15, 2019
		*		April 15, 2020
		*		April 15, 2021
		*		April 15, 2022
Dave Daqing Qi		*		May 17, 2016
		*		March 7, 2017
		*		May 2, 2018
		*		April 15, 2019
		*		April 15, 2020
		*		April 15, 2021
		*		April 15, 2022
Yongming Wu		*		April 15, 2019
		*		April 15, 2020
		*		April 15, 2021

		*		April 15, 2022

Total		251,875


	Shares Beneficially Owned				Ordinary Shares Beneficially Owned		Voting Power
	Class A Ordinary Shares		Class B Ordinary Shares		Ordinary Shares Beneficially Owned		Voting Power
Directors and executive officers**:	Class A Ordinary Shares		Class B Ordinary Shares		%⁽¹⁾		%⁽²⁾
Yan Tang⁽³⁾		*		96,886,370		25.9		77.2
Yong Li⁽⁴⁾		14,846,899		—		3.9		1.2
Sichuan Zhang⁽⁵⁾		*		96,886,370		25.9		77.2
David Ying Zhang⁽⁶⁾		66,377,147		—		17.3		5.3
Joseph C. Tsai⁽⁷⁾		—		—		—		—
Neil Nanpeng Shen⁽⁸⁾		18,570,966		—		4.8		1.5
Feng Yu⁽⁹⁾		18,570,966		—		4.8		1.5
Benson Bing Chung Tam⁽¹⁰⁾		*		—		*		*
Dave Daqing Qi⁽¹¹⁾		*		—		*		*
Xiaoliang Lei⁽¹²⁾		9,960,127		—		2.6		*
Jingping Zhang⁽¹³⁾		*		—		*		*
Zhiwei Li⁽¹⁴⁾		8,401,037		—		2.2		*
Jonathan Xiaosong Zhang⁽¹⁵⁾		*		—		*		*
Li Wang⁽¹⁶⁾		*		—		*		*
All directors and executive officers as a group		144,817,949		96,886,370		61.4		88.0

Principal Shareholders:
Gallant Future Holdings Limited⁽¹⁷⁾		—		96,886,370		25.2		77.1
Alibaba Investment Limited⁽¹⁸⁾		77,749,140		—		20.2		6.2
Matrix Partners China II Hong Kong Limited⁽¹⁹⁾		65,970,897		—		17.2		5.3


	Trading Price
	High		Low
Annual Highs and Lows
2014		17.50		10.82
2015		19.89		9.50

Quarterly Highs and Lows
Fourth Quarter 2014		17.50		10.82
First Quarter 2015		13.63		9.70
Second Quarter 2015		19.89		9.50
Third Quarter 2015		17.00		10.55
Fourth Quarter 2015		16.59		12.16
First Quarter 2016		16.07		6.72

Monthly Highs and Lows
October 2015		13.64		12.36
November 2015		14.42		12.16
December 2015		16.59		13.57
January 2016		16.07		11.55
February 2016		12.45		6.72
March 2016		14.72		11.09
April 2016 (through April 22, 2016)		16.74		10.57


	2014		2015
Audit fees⁽¹⁾	US$	735,000	US$	800,000
Audit-related fees⁽²⁾	US$	—	US$	—
Tax fees⁽³⁾	US$	226,000	US$	44,157


~~Exhibit~~ ~~Number~~		~~Description of Document~~

~~4.9~~		~~English translation of exclusive~~Exclusive cooperation agreement by and between Beijing Momo IT and ~~Beijing Momo,~~Tianjin Heer, and a supplemental agreement thereto, dated ~~August 31, 2014~~May 1, 2016 (incorporated by reference to Exhibit ~~10.8~~4.11 of our ~~registration statement~~annual report on Form ~~F-1~~20-F (file no. ~~333-199996)~~001-36765) filed with the SEC on ~~November 7, 2014)~~April 26, 2017)

~~4.10~~4.6		English translation of exclusive cooperation agreement by and between Beijing Momo IT and Chengdu Momo, and a supplemental agreement thereto, dated August 31, 2014 (incorporated by reference to Exhibit 10.9 of our registration statement on Form F-1 (file no. 333-199996) filed with the SEC on November 7, 2014)

~~4.10~~		English translation of exclusive cooperation agreement by and between Beijing Momo IT and Chengdu Momo, and a supplemental agreement thereto, dated August 31, 2014 (incorporated by reference to Exhibit 10.9 of our registration statement on Form F-1 (file no. 333-199996) filed with the SEC on November 7, 2014)

~~4.11~~		Exclusive call option agreement by and among Beijing Momo IT, Beijing Momo and each of its shareholders, dated April 18, 2014 (incorporated by reference to Exhibit 10.10 of our registration statement on Form F-1 (file no. 333-199996) filed with the SEC on November 7, 2014)

~~4.12~~4.7		Power of attorney by each shareholder of Beijing Momo, dated April 18, 2014 (incorporated by reference to Exhibit 10.11 of our registration statement on Form F-1 (file no. 333-199996) filed with the SEC on November 7, 2014)


						Additional											Accumulated other			Total
	Ordinary shares					paid-in		Treasury			Subscription			Accumulated			comprehensive			shareholders’
	Shares			Amount		capital		stock			receivable			deficit			income (loss)			(deficit) equity
Balance as of January 1, 2013		147,000,000			15		747		—			(15	)		(7,282	)		(23	)		(6,558	)
Net loss		—			—		—		—			—			(9,326	)		—			(9,326	)
Share-based compensation		—			—		963		—			—			—			—			963
Deemed dividend to preferred shareholders		—			—		—		—			—			(8,120	)		—			(8,120	)
Foreign currency translation adjustment		—			—		—		—			—			—			181			181

Balance as of December 31, 2013		147,000,000			15		1,710		—			(15	)		(24,728	)		158			(22,860	)
Net loss		—			—		—		—			—			(25,415	)		—			(25,415	)
Share-based compensation		—			—		6,638		—			—			—			—			6,638
Repurchase of ordinary shares		(15,651,589	)		—		—		(64,494	)		—			—			—			(64,494	)
Issuance of ordinary shares upon Initial public offering (“IPO”), net of offering costs of $4,361		45,688,888			5		286,646		—			—			—			—			286,651
Conversion of participating convertible redeemable preferred shares to ordinary shares		200,718,811			20		318,684		—			—			—			—			318,704
Deemed dividend to preferred shareholders		—			—		—		—			—			(57,663	)		—			(57,663	)
Subscription Receivable		—			—		—		—			15			—			—			15
Foreign currency translation adjustment		—			—		—		—			—			—			(1,185	)		(1,185	)

Balance as of December 31, 2014		377,756,110		$	40	$	613,678	$	(64,494	)	$	—		$	(107,806	)	$	(1,027	)	$	440,391
Net income		—			—		—		—			—			13,697			—			13,697
Share-based compensation		—			—		17,382		—			—			—			—			17,382
Issuance of ordinary shares in connection with exercise of options and vesting of restricted share units		5,995,293			1		414		—			—			—			—			415
Foreign currency translation adjustment		—			—				—			—			—			(3,499	)		(3,499	)

Balance as of December 31, 2015		383,751,403		$	41	$	631,474	$	(64,494	)	$	—		$	(94,109	)	$	(4,526	)	$	468,386


For the year ended December 31,	Amounts
2023		5,116
2024		5,116
2025		5,116
2026		5,116
2027		1,358
Thereafter		381

Total		22,203


	For the years ended December 31
	2021			2022
	RMB			RMB
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases		165,373			161,743
Non-cash right-of-use assets obtained in exchange for new lease obligations:
Operating leases		166,844			22,238
Weighted average remaining lease term
Operating leases		2.11			1.63
Weighted average discount rate
Operating leases		3.48	%		3.57	%


	Fair Value Measured as of December 31,
Description	2021		Quoted Prices in Active Market for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs
	RMB		(Level 1)		(Level 2)		(Level 3)
Cash and cash equivalents		5,570,563		5,570,563		—		—

Total		5,570,563		5,570,563		—		—


	Number of options			Weighted average exercise price per option (US$)		Weighted average remaining contractual life (years)		Aggregated intrinsic Value (US$)
Outstanding as of December 31, 2021		29,676,253			0.0157		6.69		132,783

Granted		5,601,640			0.0002
Exercised		(5,622,274	)		0.0039
Forfeited		(1,410,996	)		0.0011

Outstanding as of December 31, 2022		28,244,623			0.0157		6.40		126,375

Exercisable as of December 31, 2022		16,636,567			0.0265		4.78		74,260


	Options outstanding								Options exercisable
	Number outstanding		Weighted average remaining contractual term		Exercise price per option		Aggregate intrinsic value as of December 31, 2015		Number exercisable		Exercise price per option		Aggregate intrinsic value as of December 31, 2015
November 1, 2012		5,620,990		6.84	$	0.0327	$	44,840		3,433,490	$	0.0327	$	27,390
October 10, 2013		11,292,400		7.78	$	0.1404	$	88,867		4,952,400	$	0.1404	$	38,973
March 01, 2014		4,370,758		8.16	$	0.1404	$	34,396		1,854,400	$	0.1404	$	14,593
October 29, 2014		2,244,736		8.83	$	0.0002	$	17,980		283,186	$	0.0002	$	2,268
April 22, 2015		2,910,597		9.31	$	0.0002	$	23,313		—		—		—
May 4, 2015		2,558,000		9.34	$	0.0002	$	20,489		—		—		—
August 13, 2015		458,000		9.62	$	0.0002	$	3,668		—		—		—
October 15, 2015		1,535,525		9.79	$	0.0002	$	12,299		—		—		—
November 13, 2015		93,000		9.87	$	0.0002	$	745		—		—		—

		31,084,006					$	246,597		10,523,476			$	83,224


	Risk-free interest rate of return			Contractual term		Volatility			Dividend yield		Exercise price
2012		2.31	%		10 years		61.7	%		—	$	0.0327
2013		3.09	%		10 years		54.4	%		—	$	0.1404
2014		2.44%~3.25	%		10 years		53.7%~57.5	%		—	$	0.0002~$0.1404
2015		2.15%~2.19	%		10 years		55.3%~55.7	%		—	$	0.0002


	Number of options			Weighted average exercise price per option		Weighted average remaining contractual life		Aggregated intrinsic Value
				(US$)		(years)		(US$)
Outstanding as of December 31, 2021		4,848,671			1.6232		6.76		—

Granted		926,300			0.0001
Repurchased		(769,889	)		1.0237
Forfeited		(384,066	)		0.8650

Outstanding as of December 31, 2022		4,621,016			1.4607		6.58		—

Exercisable as of December 31, 2022		3,002,020			2.1096		5.20		—


	~~Number of shares~~
~~Outstanding as of January 1, 2013~~		~~94,937,500~~
~~Granted~~		—
~~Forfeited~~		—
~~Vested~~		~~(36,750,000~~	)

~~Outstanding as of December 31, 2013~~		~~58,187,500~~
~~Granted~~		—
~~Modification~~		~~19,736,705~~
~~Vested~~		~~(20,673,449~~	)

~~Outstanding as of December 31, 2014~~		~~57,250,756~~
~~Granted~~		—
~~Forfeited~~		—
~~Vested~~		~~(28,625,378~~	)

~~Outstanding as of December 31, 2015~~		~~28,625,378~~


	~~Number of shares~~
~~Outstanding as of January 1, 2014~~		—
~~Granted~~		~~40,001~~
~~Forfeited~~		—
~~Vested~~		—

~~Outstanding as of December 31, 2014~~		~~40,001~~
~~Granted~~		—
~~Forfeited~~		—
~~Vested~~		~~(40,001~~	)

~~Outstanding as of December 31, 2015~~		—


Major related parties		Relationship with the Group
Hunan Qindao Network Media Technology Co., Ltd.		Affiliate of a long-term investee
Beijing Shiyue Haofeng Media Co., Ltd.		Long-term investee
Beijing Santi Cloud Union Technology Co., Ltd. (i)		Long-term investee
Beijing Santi Cloud Time Technology Co., Ltd. (i)		Affiliate of a long-term investee


	For the year ended December 31,
	2020		2021		2022
	RMB		RMB		RMB
Hunan Qindao Network Media Technology Co., Ltd. (iii)		5,627		—		—

Total		5,627		—		—

Large accelerated filer

Accelerated filer

Non-accelerated
filer

Emerging growth company