☐ | REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR 12(g) OF THE SECURITIES EXCHANGE ACT OF 1934 |
☒ | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
☐ | SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Title of Each Class | Trading Symbol(s) | Name of Each Exchange on Which Registered | ||
American depositary shares (each American depositary share representing two Class A ordinary | MOMO | The Nasdaq Stock Market LLC (The Nasdaq Global Select Market) | ||
Class A ordinary shares, par value US$0.0001 per share* | The Nasdaq Stock Market LLC (The Nasdaq Global Select Market) |
* | Not for trading, but only in connection with the listing on The Nasdaq Global Select Market of American depositary shares. |
Large accelerated filer | ☒ | Accelerated filer | ☐ | |||
Non-accelerated filer | ||||||
Emerging growth company | ☐ |
† | The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April 5, 2012. |
U.S. GAAP ☒ | International Financial Reporting Standards as issued | Other ☐ | ||||||
by the International Accounting Standards Board | ☐ |
1 | |||||||
1 | |||||||
2 | |||||||
2 | |||||||
2 | |||||||
2 | |||||||
141 | |||||||
142 | |||||||
142 | |||||||
150 |
Year Ended December 31, | ||||||||||||||||||||||||
2015 RMB | 2016 RMB | 2017 RMB | 2018 RMB | 2019 RMB | 2019 US$ | |||||||||||||||||||
(in thousands, except share and share-related data) | ||||||||||||||||||||||||
Selected Data of Consolidated Statements of Operations | ||||||||||||||||||||||||
Net Revenues (1) | 843,119 | 3,707,358 | 8,886,390 | 13,408,421 | 17,015,089 | 2,444,065 | ||||||||||||||||||
Cost and expenses (2) | ||||||||||||||||||||||||
Cost of revenues | (190,900 | ) | (1,619,327 | ) | (4,373,377 | ) | (7,182,897 | ) | (8,492,096 | ) | (1,219,813 | ) | ||||||||||||
Research and development expenses | (146,292 | ) | (208,647 | ) | (346,144 | ) | (760,644 | ) | (1,095,031 | ) | (157,291 | ) | ||||||||||||
Sales and marketing expenses | (330,883 | ) | (647,238 | ) | (1,467,376 | ) | (1,812,262 | ) | (2,690,824 | ) | (386,513 | ) | ||||||||||||
General and administrative expenses | (144,135 | ) | (259,712 | ) | (422,005 | ) | (640,023 | ) | (1,527,282 | ) | (219,380 | ) | ||||||||||||
Total cost and expenses | (812,210 | ) | (2,734,924 | ) | (6,608,902 | ) | (10,395,826 | ) | (13,805,233 | ) | (1,982,997 | ) | ||||||||||||
Other operating income | 4,474 | 2,659 | 156,764 | 253,697 | 344,843 | 49,534 | ||||||||||||||||||
Income from operations | 35,383 | 975,093 | 2,434,252 | 3,266,292 | 3,554,699 | 510,602 |
Year Ended December 31, | ||||||||||||||||||||||||
2015 RMB | 2016 RMB | 2017 RMB | 2018 RMB | 2019 RMB | 2019 US$ | |||||||||||||||||||
(in thousands, except share and share-related data) | ||||||||||||||||||||||||
Interest income | 49,037 | 54,603 | 145,568 | 272,946 | 407,542 | 58,540 | ||||||||||||||||||
Interest expense | — | — | — | (56,503 | ) | (78,611 | ) | (11,292 | ) | |||||||||||||||
Impairment loss on long-term investments | — | (39,283 | ) | (30,085 | ) | (43,200 | ) | (15,711 | ) | (2,257 | ) | |||||||||||||
Income before income tax and share of income on equity method investments | 84,420 | 990,413 | 2,549,735 | 3,439,535 | 3,867,919 | 555,593 | ||||||||||||||||||
Income tax expenses | (561 | ) | (34,638 | ) | (445,001 | ) | (699,648 | ) | (883,801 | ) | (126,950 | ) | ||||||||||||
Income before share of income (loss) on equity method investments | 83,859 | 955,775 | 2,104,734 | 2,739,887 | 2,984,118 | 428,643 | ||||||||||||||||||
Share of income (loss) on equity method investments | 2,375 | 23,194 | 39,729 | 48,660 | (23,350 | ) | (3,354 | ) | ||||||||||||||||
Net income | 86,234 | 978,969 | 2,144,463 | 2,788,547 | 2,960,768 | 425,289 | ||||||||||||||||||
Less: net loss attributable to non-controlling interest | — | — | (3,635 | ) | (27,228 | ) | (10,122 | ) | (1,454 | ) | ||||||||||||||
Net income attributable to Momo Inc. | 86,234 | 978,969 | 2,148,098 | 2,815,775 | 2,970,890 | 426,743 | ||||||||||||||||||
Net income attributable to ordinary shareholders | 86,234 | 978,969 | 2,148,098 | 2,815,775 | 2,970,890 | 426,743 | ||||||||||||||||||
Net income per share attributable to ordinary shareholders | ||||||||||||||||||||||||
Basic | 0.23 | 2.54 | 5.44 | 6.92 | 7.15 | 1.03 | ||||||||||||||||||
Diluted | 0.21 | 2.41 | 5.17 | 6.59 | 6.76 | 0.97 | ||||||||||||||||||
Weighted average shares used in computing net income per ordinary share | ||||||||||||||||||||||||
Basic | 342,646,282 | 377,335,923 | 394,549,323 | 407,009,875 | 415,316,627 | 415,316,627 | ||||||||||||||||||
Diluted | 401,396,548 | 407,041,165 | 415,265,078 | 433,083,643 | 451,206,091 | 451,206,091 |
Year Ended December 31, | ||||||||||||||||||||||||
2015 RMB | 2016 RMB | 2017 RMB | 2018 RMB | 2019 RMB | 2019 US$ | |||||||||||||||||||
(in thousands) | ||||||||||||||||||||||||
Live video service | 7,846 | 2,534,604 | 7,429,906 | 10,709,491 | 12,448,131 | 1,788,062 | ||||||||||||||||||
Value-added service | 367,405 | 449,781 | 695,798 | 1,883,150 | 4,105,963 | 589,785 | ||||||||||||||||||
Mobile marketing | 245,337 | 441,644 | 514,279 | 500,321 | 331,822 | 47,663 | ||||||||||||||||||
Mobile games | 195,411 | 236,238 | 241,388 | 130,392 | 92,451 | 13,280 | ||||||||||||||||||
Other services | 27,120 | 45,091 | 5,019 | 185,067 | 36,722 | 5,275 | ||||||||||||||||||
Total | 843,119 | 3,707,358 | 8,886,390 | 13,408,421 | 17,015,089 | 2,444,065 | ||||||||||||||||||
Year Ended December 31, | ||||||||||||||||||||||||
2015 RMB | 2016 RMB | 2017 RMB | 2018 RMB | 2019 RMB | 2019 US$ | |||||||||||||||||||
(in thousands) | ||||||||||||||||||||||||
Cost of revenues | 5,772 | 18,521 | 13,547 | 21,661 | 23,972 | 3,443 | ||||||||||||||||||
Research and development expenses | 22,046 | 37,455 | 59,190 | 152,806 | 175,053 | 25,145 | ||||||||||||||||||
Sales and marketing expenses | 23,767 | 39,139 | 79,032 | 142,927 | 196,311 | 28,198 | ||||||||||||||||||
General and administrative expenses | 57,857 | 115,724 | 183,204 | 263,419 | 1,012,896 | 145,493 | ||||||||||||||||||
Total | 109,442 | 210,839 | 334,973 | 580,813 | 1,408,232 | 202,279 | ||||||||||||||||||
As of December 31, | ||||||||||||||||||||||||
2015 RMB | 2016 RMB | 2017 RMB | 2018 RMB | 2019 RMB | 2019 US$ | |||||||||||||||||||
(in thousands) | ||||||||||||||||||||||||
Selected Consolidated Balance Sheet Data: | ||||||||||||||||||||||||
Cash and cash equivalents | 1,097,783 | 1,788,268 | 4,462,194 | 2,468,034 | 2,612,743 | 375,297 | ||||||||||||||||||
Total assets | 3,511,985 | 5,344,283 | 8,471,188 | 18,965,538 | 22,483,681 | 3,229,577 | ||||||||||||||||||
Total liabilities | 477,871 | 942,289 | 1,719,088 | 7,942,679 | 8,764,899 | 1,258,997 | ||||||||||||||||||
Total equity | 3,034,114 | 4,401,994 | 6,752,100 | 11,022,859 | 13,718,782 | 1,970,580 |
Item 1. |
Item 2. |
Item 3. |
For the Year Ended December 31, 2021 | ||||||||||||||||||||
Hello Group Inc. | Other Subsidiaries | Consolidated Affiliated Entities and Their Subsidiaries | Eliminating Adjustments | Consolidated Totals | ||||||||||||||||
(in RMB thousands) | ||||||||||||||||||||
Third-party revenues | — | 239,180 | 14,336,539 | — | 14,575,719 | |||||||||||||||
Inter-company revenues (1) | — | 5,100,060 | 1,352 | (5,101,412 | ) | — | ||||||||||||||
Total costs and expenses | (248,609 | ) | (8,283,022 | ) | (13,711,014 | ) | 5,101,412 | (17,141,233 | ) | |||||||||||
Income (loss) from subsidiaries and VIEs (2) | (2,629,002 | ) | 587,881 | — | 2,041,121 | — | ||||||||||||||
Other income (loss) | (36,876 | ) | 324,513 | 182,813 | — | 470,450 | ||||||||||||||
Income (loss) before income tax expense and share of loss on equity method investments | (2,914,487 | ) | (2,031,388 | ) | 809,690 | 2,041,121 | (2,095,064 | ) | ||||||||||||
Income tax expenses | — | (597,628 | ) | (224,928 | ) | — | (822,556 | ) | ||||||||||||
Share of income (loss) on equity method investments | 779 | — | (8,863 | ) | — | (8,084 | ) | |||||||||||||
Net income (loss) | (2,913,708 | ) | (2,629,016 | ) | 575,899 | 2,041,121 | (2,925,704 | ) | ||||||||||||
Less: net loss attributable to non-controlling interests | — | (14 | ) | (11,982 | ) | — | (11,996 | ) | ||||||||||||
Net income (loss) attributable to Hello Group’s shareholders | (2,913,708 | ) | (2,629,002 | ) | 587,881 | 2,041,121 | (2,913,708 | ) | ||||||||||||
For the Year Ended December 31, 2020 | ||||||||||||||||||||
Hello Group Inc. | Other Subsidiaries | Consolidated Affiliated Entities and Their Subsidiaries | Eliminating Adjustments | Consolidated Totals | ||||||||||||||||
(in RMB thousands) | ||||||||||||||||||||
Third-party revenues | — | 121,497 | 14,902,691 | — | 15,024,188 | |||||||||||||||
Inter-company revenues (1) | — | 6,257,010 | 6,580 | (6,263,590 | ) | — | ||||||||||||||
Total costs and expenses | (340,519 | ) | (4,253,075 | ) | (14,391,526 | ) | 6,263,590 | (12,721,530 | ) | |||||||||||
Income from subsidiaries and consolidated affiliated entities (2) | 2,467,172 | 501,180 | — | (2,968,352 | ) | — | ||||||||||||||
Other income (loss) | (23,169 | ) | 367,236 | 251,809 | — | 595,876 | ||||||||||||||
Income before income tax expense and share of loss on equity method investments | 2,103,484 | 2,993,848 | 769,554 | (2,968,352 | ) | 2,898,534 | ||||||||||||||
Income tax expenses | — | (526,922 | ) | (228,698 | ) | — | (755,620 | ) | ||||||||||||
Share of income (loss) on equity method investments | — | 233 | (42,755 | ) | — | (42,522 | ) | |||||||||||||
Net income | 2,103,484 | 2,467,159 | 498,101 | (2,968,352 | ) | 2,100,392 | ||||||||||||||
Less: net loss attributable to non-controlling interests | — | (13 | ) | (3,079 | ) | — | (3,092 | ) | ||||||||||||
Net income attributable to Hello Group’s shareholders | 2,103,484 | 2,467,172 | 501,180 | (2,968,352 | ) | 2,103,484 | ||||||||||||||
For the Year Ended December 31, 2019 | ||||||||||||||||||||
Hello Group Inc. | Other Subsidiaries | Consolidated Affiliated Entities and Their Subsidiaries | Eliminating Adjustments | Consolidated Totals | ||||||||||||||||
(in RMB thousands) | ||||||||||||||||||||
Third-party revenues | — | 13,752 | 17,001,337 | — | 17,015,089 | |||||||||||||||
Inter-company revenues (1) | — | 7,807,851 | 36,786 | (7,844,637 | ) | — | ||||||||||||||
Total costs and expenses | (109,066 | ) | (5,267,956 | ) | (16,272,848 | ) | 7,844,637 | (13,805,233 | ) | |||||||||||
Income from subsidiaries and consolidated affiliated entities (2) | 3,070,794 | 750,887 | — | (3,821,681 | ) | — | ||||||||||||||
Other income | 9,162 | 300,146 | 348,755 | — | 658,063 | |||||||||||||||
Income before income tax expense and share of loss on equity method investments | 2,970,890 | 3,604,680 | 1,114,030 | (3,821,681 | ) | 3,867,919 | ||||||||||||||
Income tax expenses | — | (534,047 | ) | (349,754 | ) | — | (883,801 | ) | ||||||||||||
Share of loss on equity method investments | — | — | (23,350 | ) | — | (23,350 | ) | |||||||||||||
Net income | 2,970,890 | 3,070,633 | 740,926 | (3,821,681 | ) | 2,960,768 | ||||||||||||||
Less: net loss attributable to non-controlling interests | — | (161 | ) | (9,961 | ) | — | (10,122 | ) | ||||||||||||
Net income attributable to Hello Group’s shareholders | 2,970,890 | 3,070,794 | 750,887 | (3,821,681 | ) | 2,970,890 | ||||||||||||||
As of December 31, 2021 | ||||||||||||||||||||
Hello Group Inc. | Other Subsidiaries | Consolidated Affiliated Entities and Their Subsidiaries | Eliminating Adjustments | Consolidated Totals | ||||||||||||||||
(in RMB thousands) | ||||||||||||||||||||
Cash and cash equivalents | 876,917 | 2,218,672 | 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 | |||||||||||||||
Amounts due from Group companies (3) | 1,523,429 | — | — | (1,523,429 | ) | — | ||||||||||||||
Other current assets | 16,875 | 344,484 | 413,713 | — | 775,072 | |||||||||||||||
Long-term deposits | — | 6,450,000 | 750,000 | — | 7,200,000 | |||||||||||||||
Investment in subsidiaries and consolidated affiliated entities (2) | 11,751,913 | 3,085,888 | — | (14,837,801 | ) | — | ||||||||||||||
Long-term investments | 415,482 | — | 404,524 | — | 820,006 | |||||||||||||||
Other non-current assets | 76,471 | 362,401 | 241,500 | — | 680,372 | |||||||||||||||
Total assets | 14,661,087 | 14,800,361 | 5,011,020 | (16,361,230 | ) | 18,111,238 | ||||||||||||||
Accounts payable | — | 90,572 | 635,635 | — | 726,207 | |||||||||||||||
Deferred revenue | — | 20,730 | 519,237 | — | 539,967 | |||||||||||||||
Amount due to Group companies (3) | — | 1,103,742 | 419,687 | (1,523,429 | ) | — | ||||||||||||||
Other current liabilities | 77,958 | 771,947 | 399,686 | — | 1,249,591 | |||||||||||||||
Non-current liabilities | 4,588,608 | 358,173 | 63,095 | — | 5,009,876 | |||||||||||||||
Total liabilities | 4,666,566 | 2,345,164 | 2,037,340 | (1,523,429 | ) | 7,525,641 | ||||||||||||||
Total shareholders’ equity | 9,994,521 | 12,455,197 | 2,973,680 | (14,837,801 | ) | 10,585,597 | ||||||||||||||
Total liabilities and shareholders’ equity | 14,661,087 | 14,800,361 | 5,011,020 | (16,361,230 | ) | 18,111,238 | ||||||||||||||
As of December 31, 2020 | ||||||||||||||||||||
Hello Group Inc. | Other Subsidiaries | Consolidated Affiliated Entities and Their Subsidiaries | Eliminating Adjustments | Consolidated Totals | ||||||||||||||||
(in RMB thousands) | ||||||||||||||||||||
Cash and cash equivalents | 715,359 | 1,336,870 | 1,311,713 | — | 3,363,942 | |||||||||||||||
Short-term deposits | 1,761,750 | 5,200,000 | 604,500 | — | 7,566,250 | |||||||||||||||
Accounts receivable | — | 9,697 | 191,134 | — | 200,831 | |||||||||||||||
Amounts due from Group companies (3) | 733,265 | — | — | (733,265 | ) | — | ||||||||||||||
Other current assets | 87,916 | 174,429 | 353,481 | — | 615,826 | |||||||||||||||
Long-term deposits | — | 4,600,000 | 950,000 | — | 5,550,000 | |||||||||||||||
Investment in subsidiaries and consolidated affiliated entities (2) | 15,724,370 | 2,483,672 | — | (18,208,042 | ) | — | ||||||||||||||
Long-term investments | — | — | 454,996 | — | 454,996 | |||||||||||||||
Other non-current assets | — | 5,203,886 | 264,825 | — | 5,468,711 | |||||||||||||||
Total assets | 19,022,660 | 19,008,554 | 4,130,649 | (18,941,307 | ) | 23,220,556 | ||||||||||||||
Accounts payable | — | 91,964 | 607,430 | — | 699,394 | |||||||||||||||
Deferred revenue | — | 9,922 | 501,695 | — | 511,617 | |||||||||||||||
Amount due to Group companies (3) | — | 552,479 | 180,786 | (733,265 | ) | — | ||||||||||||||
Other current liabilities | 97,784 | 805,680 | 402,265 | — | 1,305,729 | |||||||||||||||
Non-current liabilities | 4,684,632 | 1,124,871 | 58,984 | — | 5,868,487 | |||||||||||||||
Total liabilities | 4,782,416 | 2,584,916 | 1,751,160 | (733,265 | ) | 8,385,227 | ||||||||||||||
Total shareholders’ equity | 14,240,244 | 16,423,638 | 2,379,489 | (18,208,042 | ) | 14,835,329 | ||||||||||||||
Total liabilities and shareholders’ equity | 19,022,660 | 19,008,554 | 4,130,649 | (18,941,307 | ) | 23,220,556 | ||||||||||||||
For the Year Ended December 31, 2021 | ||||||||||||||||||||
Hello Group Inc. | Other 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 | 1,683,825 | (149,973 | ) | — | 1,559,198 | ||||||||||||||
Loans to Hello Group companies | (820,897 | ) | (799,794 | ) | — | 1,620,691 | — | |||||||||||||
Cash dividends received from subsidiaries | 1,153,506 | — | — | (1,153,506 | ) | — | ||||||||||||||
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 | ) | (375,081 | ) | 199,593 | — | (290,540 | ) | ||||||||||||
Net cash provided by (used in) investing activities | 1,963,939 | (134,875 | ) | 254,093 | 467,185 | 2,550,342 | ||||||||||||||
Borrowings under loan from Hello Group companies | — | 820,897 | 799,794 | (1,620,691 | ) | — | ||||||||||||||
Dividends payment to Hello Group Inc. | — | (1,153,506 | ) | — | 1,153,506 | — | ||||||||||||||
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 provided by (used in) financing activities | (1,727,789 | ) | (391,729 | ) | 799,794 | (467,185 | ) | (1,786,909 | ) | |||||||||||
For the Year Ended December 31, 2020 | ||||||||||||||||||||
Hello Group Inc. | Other Subsidiaries | Consolidated Affiliated Entities and Their Subsidiaries | Eliminating Adjustments | Consolidated Totals | ||||||||||||||||
(in RMB thousands) | ||||||||||||||||||||
Net cash provided by (used in) operating activities (4) | (70,022 | ) | 2,409,483 | 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 | — | — | (1,976,631 | ) | — | ||||||||||||||
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 | (373,511 | ) | (829,809 | ) | (1,785,470 | ) | (748,466 | ) | |||||||||||
Borrowings under loan from Hello Group companies | — | 190,019 | — | (190,019 | ) | — | ||||||||||||||
Capital injection from parent company | — | 142 | 1,000 | (1,142 | ) | — | ||||||||||||||
Dividends payment to Hello Group Inc. | — | (1,976,631 | ) | — | 1,976,631 | — | ||||||||||||||
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 | ) | (25,832 | ) | — | — | (43,960 | ) | ||||||||||||
Net cash provided by (used in) financing activities | (1,472,318 | ) | (1,812,302 | ) | 1,000 | 1,785,470 | (1,498,150 | ) | ||||||||||||
For the Year Ended December 31, 2019 | ||||||||||||||||||||
Hello Group Inc. | Other Subsidiaries | Consolidated Affiliated Entities and Their Subsidiaries | Eliminating Adjustments | Consolidated Totals | ||||||||||||||||
(in RMB thousands) | ||||||||||||||||||||
Net cash provided by (used in) operating activities (4) | (3,222 | ) | 4,032,402 | 1,419,706 | — | 5,448,886 | ||||||||||||||
Loans to Hello Group companies | — | (15,182 | ) | (65,275 | ) | 80,457 | — | |||||||||||||
Capital injection to subsidiaries | (70 | ) | — | — | 70 | — | ||||||||||||||
Purchase of short-term deposits | (2,000,130 | ) | (19,005,005 | ) | (1,146,000 | ) | — | (22,151,135 | ) | |||||||||||
Cash received on maturity of short-term deposits | 2,985,425 | 15,355,005 | 346,000 | — | 18,686,430 | |||||||||||||||
Other investing activities | — | (483,386 | ) | (81,828 | ) | — | (565,214 | ) | ||||||||||||
Net cash provided by (used in) investing activities | 985,225 | (4,148,568 | ) | (947,103 | ) | 80,527 | (4,029,919 | ) | ||||||||||||
Borrowings under loan from Hello Group companies | 15,182 | 65,275 | — | (80,457 | ) | — | ||||||||||||||
Capital injection from parent company | — | 70 | — | (70 | ) | — | ||||||||||||||
Deferred payment for business acquisition | (379,507 | ) | — | — | — | (379,507 | ) | |||||||||||||
Dividends payment to Hello Group’s shareholders | (877,346 | ) | — | — | — | (877,346 | ) | |||||||||||||
Other financing activities | 187 | (28,114 | ) | 11,000 | — | (16,927 | ) | |||||||||||||
Net cash provided by (used in) financing activities | (1,241,484 | ) | 37,231 | 11,000 | (80,527 | ) | (1,273,780 | ) | ||||||||||||
(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, and consolidated affiliated entities and their subsidiaries. |
(3) | Represents the elimination of intercompany balances among Hello Group Inc., other subsidiaries, and consolidated affiliated entities and their subsidiaries. |
(4) | For the years ended December 31, 2019, 2020 and 2021, cash paid by the consolidated affiliated entities to other subsidiaries for license fee, technical service fees and non-technical service fees were RMB8,975.3 million, RMB6,317.8 million and RMB5,616.2 million (US$881.3 million), respectively. For the years ended December 31, 2019, 2020 and 2021, cash paid by the consolidated affiliated entities to other subsidiaries for other operation service fee were RMB88.9 million, RMB23.0 million and RMB64.5 million (US$10.1 million), respectively. For the years ended December 31, 2019, 2020 and 2021, cash paid by other subsidiaries to consolidated affiliated entities for other operation service fees were RMB43.9 million, RMB12.0 million and RMB nil, respectively. |
Year Ended December 31, | ||||||||||||||||||||||||
2017 RMB | 2018 RMB | 2019 RMB | 2020 RMB | 2021 RMB | 2021 US$ | |||||||||||||||||||
(in thousands, except share and share-related data) | ||||||||||||||||||||||||
Selected Data of Consolidated Statements of Operations | ||||||||||||||||||||||||
Net Revenues (1) | 8,886,390 | 13,408,421 | 17,015,089 | 15,024,188 | 14,575,719 | 2,287,248 | ||||||||||||||||||
Cost and expenses (2) | ||||||||||||||||||||||||
Cost of revenues | (4,373,377 | ) | (7,182,897 | ) | (8,492,096 | ) | (7,976,781 | ) | (8,383,431 | ) | (1,315,543 | ) | ||||||||||||
Research and development expenses | (346,144 | ) | (760,644 | ) | (1,095,031 | ) | (1,167,677 | ) | (1,131,781 | ) | (177,601 | ) | ||||||||||||
Sales and marketing expenses | (1,467,376 | ) | (1,812,262 | ) | (2,690,824 | ) | (2,813,922 | ) | (2,604,309 | ) | (408,673 | ) | ||||||||||||
General and administrative expenses | (422,005 | ) | (640,023 | ) | (1,527,282 | ) | (763,150 | ) | (624,700 | ) | (98,029 | ) | ||||||||||||
Impairment loss on goodwill and intangible assets | — | — | — | — | (4,397,012 | ) | (689,987 | ) | ||||||||||||||||
Total cost and expenses | (6,608,902 | ) | (10,395,826 | ) | (13,805,233 | ) | (12,721,530 | ) | (17,141,233 | ) | (2,689,833 | ) | ||||||||||||
Other operating income | 156,764 | 253,697 | 344,843 | 228,777 | 175,947 | 27,610 | ||||||||||||||||||
Income (loss) from operations | 2,434,252 | 3,266,292 | 3,554,699 | 2,531,435 | (2,389,567 | ) | (374,975 | ) | ||||||||||||||||
Interest income | 145,568 | 272,946 | 407,542 | 444,471 | 384,279 | 60,302 | ||||||||||||||||||
Interest expense | — | (56,503 | ) | (78,611 | ) | (78,872 | ) | (73,776 | ) | (11,577 | ) | |||||||||||||
Other gain or loss, net | (30,085 | ) | (43,200 | ) | (15,711 | ) | 1,500 | (16,000 | ) | (2,511 | ) | |||||||||||||
Income (loss) before income tax and share of income on equity method investments | 2,549,735 | 3,439,535 | 3,867,919 | 2,898,534 | (2,095,064 | ) | (328,761 | ) | ||||||||||||||||
Income tax expenses | (445,001 | ) | (699,648 | ) | (883,801 | ) | (755,620 | ) | (822,556 | ) | (129,077 | ) | ||||||||||||
Income (loss) before share of income (loss) on equity method investments | 2,104,734 | 2,739,887 | 2,984,118 | 2,142,914 | (2,917,620 | ) | (457,838 | ) | ||||||||||||||||
Share of income (loss) on equity method investments | 39,729 | 48,660 | (23,350 | ) | (42,522 | ) | (8,084 | ) | (1,269 | ) | ||||||||||||||
Net income (loss) | 2,144,463 | 2,788,547 | 2,960,768 | 2,100,392 | (2,925,704 | ) | (459,107 | ) | ||||||||||||||||
Less: net loss attributable to non-controlling interest | (3,635 | ) | (27,228 | ) | (10,122 | ) | (3,092 | ) | (11,996 | ) | (1,882 | ) | ||||||||||||
Net income (loss) attributable to Hello Group Inc. | 2,148,098 | 2,815,775 | 2,970,890 | 2,103,484 | (2,913,708 | ) | (457,225 | ) | ||||||||||||||||
Year Ended December 31, | ||||||||||||||||||||||||
2017 RMB | 2018 RMB | 2019 RMB | 2020 RMB | 2021 RMB | 2021 US$ | |||||||||||||||||||
(in thousands, except share and share-related data) | ||||||||||||||||||||||||
Net income attributable to ordinary shareholders | 2,148,098 | 2,815,775 | 2,970,890 | 2,103,484 | (2,913,708 | ) | (457,225 | ) | ||||||||||||||||
Net income (loss) per share attributable to ordinary shareholders | ||||||||||||||||||||||||
Basic | 5.44 | 6.92 | 7.15 | 5.05 | (7.20 | ) | (1.13 | ) | ||||||||||||||||
Diluted | 5.17 | 6.59 | 6.76 | 4.83 | (7.20 | ) | (1.13 | ) | ||||||||||||||||
Weighted average shares used in computing net income per ordinary share | ||||||||||||||||||||||||
Basic | 394,549,323 | 407,009,875 | 415,316,627 | 416,914,898 | 404,701,910 | 404,701,910 | ||||||||||||||||||
Diluted | 415,265,078 | 433,083,643 | 451,206,091 | 452,081,642 | 404,701,910 | 404,701,910 |
(1) | Components of our net revenues are presented in the following table: |
Year Ended December 31, | ||||||||||||||||||||||||
2017 RMB | 2018 RMB | 2019 RMB | 2020 RMB | 2021 RMB | 2021 US$ | |||||||||||||||||||
(in thousands) | ||||||||||||||||||||||||
Live video service | 7,429,906 | 10,709,491 | 12,448,131 | 9,637,579 | 8,378,945 | 1,314,839 | ||||||||||||||||||
Value-added service | 695,798 | 1,883,150 | 4,105,963 | 5,112,182 | 5,971,792 | 937,104 | ||||||||||||||||||
Mobile marketing | 514,279 | 500,321 | 331,822 | 198,197 | 159,010 | 24,952 | ||||||||||||||||||
Mobile games | 241,388 | 130,392 | 92,451 | 39,564 | 47,712 | 7,487 | ||||||||||||||||||
Other services | 5,019 | 185,067 | 36,722 | 36,666 | 18,260 | 2,866 | ||||||||||||||||||
Total | 8,886,390 | 13,408,421 | 17,015,089 | 15,024,188 | 14,575,719 | 2,287,448 | ||||||||||||||||||
(2) | Share-based compensation expenses were allocated in cost and expenses as follows: |
Year Ended December 31, | ||||||||||||||||||||||||
2017 RMB | 2018 RMB | 2019 RMB | 2020 RMB | 2021 RMB | 2021 US$ | |||||||||||||||||||
(in thousands) | ||||||||||||||||||||||||
Cost of revenues | 13,547 | 21,661 | 23,972 | 18,449 | 17,941 | 2,815 | ||||||||||||||||||
Research and development expenses | 59,190 | 152,806 | 175,053 | 175,870 | 139,571 | 21,902 | ||||||||||||||||||
Sales and marketing expenses | 79,032 | 142,927 | 196,311 | 158,902 | 70,821 | 11,113 | ||||||||||||||||||
General and administrative expenses | 183,204 | 263,419 | 1,012,896 | 325,465 | 247,438 | 38,828 | ||||||||||||||||||
Total | 334,973 | 580,813 | 1,408,232 | 678,686 | 475,771 | 74,658 | ||||||||||||||||||
As of December 31, | ||||||||||||||||||||||||
2017 RMB | 2018 RMB | 2019 RMB | 2020 RMB | 2021 RMB | 2021 US$ | |||||||||||||||||||
(in thousands) | ||||||||||||||||||||||||
Selected Consolidated Balance Sheet Data: | ||||||||||||||||||||||||
Cash and cash equivalents | 4,462,194 | 2,468,034 | 2,612,743 | 3,363,942 | 5,570,563 | 874,143 | ||||||||||||||||||
Total assets | 8,471,188 | 18,965,538 | 22,483,681 | 23,220,556 | 18,111,238 | 2,842,048 | ||||||||||||||||||
Total liabilities | 1,719,088 | 7,942,679 | 8,764,899 | 8,385,227 | 7,525,641 | 1,180,937 | ||||||||||||||||||
Total equity | 6,752,100 | 11,022,859 | 13,718,782 | 14,835,329 | 10,585,597 | 1,661,111 |
B. | Capitalization and Indebtedness |
C. | Reasons for the Offer and Use of Proceeds |
D. | Risk Factors |
Item 4. | Information on the Company |
A. | History and Development of the Company |
B. | Business Overview |
C. | Organizational Structure |
(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, each of whom holds 72.0%, 16.0%, 6.4% and 5.6% of the equity interest in Beijing Momo, respectively. Except for Zhiwei Li and Xiaoliang Lei, the shareholders of Beijing Momo are our shareholders |
(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. |
We exercise effective control over Hainan Miaoka through contractual arrangements among Beijing Yiliulinger, Hainan Miaoka and Messrs. Xiaoliang Lei and Li Wang, each of whom holds 50% and 50% of the equity interest in Hainan Miaoka, respectively. The shareholders of Hainan Miaoka are our |
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. |
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 Messrs. Kuan He and Luyu Fan, each of whom holds 99% and 1% of the equity interest in Beijing Top Maker, respectively. |
(6) | Beijing Perfect Match |
(7) | We exercise effective control over Spacetime Beijing, through contractual arrangements among Beijing Momo, Spacetime Beijing and Ms. Minyan Wang and Messrs. Yu Dong, each of whom holds 90% and 10% of the equity interest in SpaceTime Beijing, respectively. |
D. | Property, Plant and Equipment |
Item 4A. | Unresolved Staff Comments |
Item 5. | Operating and Financial Review and Prospects |
A. | Operating Results |
Year Ended December 31, | ||||||||||||||||||||||||
2017 | 2018 | 2019 | ||||||||||||||||||||||
RMB | % | RMB | % | RMB | % | |||||||||||||||||||
(in thousands, except for percentages) | ||||||||||||||||||||||||
Net revenues | 8,886,390 | 100.0 | 13,408,421 | 100.0 | 17,015,089 | 100.0 | ||||||||||||||||||
Live video service | 7,429,906 | 83.6 | 10,709,491 | 79.9 | 12,448,131 | 73.2 | ||||||||||||||||||
Value-added service | 695,798 | 7.8 | 1,883,150 | 14.0 | 4,105,963 | 24.1 | ||||||||||||||||||
Mobile marketing services | 514,279 | 5.8 | 500,321 | 3.7 | 331,822 | 2.0 | ||||||||||||||||||
Mobile games | 241,388 | 2.7 | 130,392 | 1.0 | 92,451 | 0.5 | ||||||||||||||||||
Other services | 5,019 | 0.1 | 185,067 | 1.4 | 36,722 | 0.2 | ||||||||||||||||||
Cost and expenses | ||||||||||||||||||||||||
Cost of revenues | (4,373,377 | ) | (49.2 | ) | (7,182,897 | ) | (53.6 | ) | (8,492,096 | ) | (49.9 | ) | ||||||||||||
Research and development expenses | (346,144 | ) | (3.9 | ) | (760,644 | ) | (5.7 | ) | (1,095,031 | ) | (6.4 | ) | ||||||||||||
Sales and marketing expenses | (1,467,376 | ) | (16.5 | ) | (1,812,262 | ) | (13.5 | ) | (2,690,824 | ) | (15.8 | ) | ||||||||||||
General and administrative expenses | (422,005 | ) | (4.7 | ) | (640,023 | ) | (4.8 | ) | (1,527,282 | ) | (9.0 | ) | ||||||||||||
Total cost and expenses | (6,608,902 | ) | (74.3 | ) | (10,395,826 | ) | (77.6 | ) | (13,805,233 | ) | (81.1 | ) | ||||||||||||
Other operating income | 156,764 | 1.8 | 253,697 | 1.9 | 344,843 | 2.0 | ||||||||||||||||||
Income from operations | 2,434,252 | 27.4 | 3,266,292 | 24.4 | 3,554,699 | 20.9 | ||||||||||||||||||
Interest income | 145,568 | 1.6 | 272,946 | 2.0 | 407,542 | 2.4 | ||||||||||||||||||
Interest expense | — | — | (56,503 | ) | (0.4 | ) | (78,611 | ) | (0.5 | ) | ||||||||||||||
Impairment loss on long-term investments | (30,085 | ) | (0.3 | ) | (43,200 | ) | (0.3 | ) | (15,711 | ) | (0.1 | ) | ||||||||||||
Income before income tax and share of income on equity method investments | 2,549,735 | 28.7 | 3,439,535 | 25.7 | 3,867,919 | 22.7 | ||||||||||||||||||
Income tax expense | (445,001 | ) | (5.0 | ) | (699,648 | ) | (5.2 | ) | (883,801 | ) | (5.2 | ) | ||||||||||||
Income before share of income (loss) on equity method investments | 2,104,734 | 23.7 | 2,739,887 | 20.4 | 2,984,118 | 17.5 | ||||||||||||||||||
Share of income (loss) on equity method investments | 39,729 | 0.4 | 48,660 | 0.4 | (23,350 | ) | (0.1 | ) | ||||||||||||||||
Net income | 2,144,463 | 24.1 | 2,788,547 | 20.9 | 2,960,768 | 17.4 | ||||||||||||||||||
Year Ended December 31, | ||||||||||||||||||||||||
2019 | 2020 | 2021 | ||||||||||||||||||||||
RMB | % | RMB | % | RMB | % | |||||||||||||||||||
(in thousands, except for percentages) | ||||||||||||||||||||||||
Net revenues | 17,015,089 | 100.0 | 15,024,188 | 100.0 | 14,575,719 | 100.0 | ||||||||||||||||||
Live video service | 12,448,131 | 73.2 | 9,637,579 | 64.1 | 8,378,945 | 57.5 | ||||||||||||||||||
Value-added service | 4,105,963 | 24.1 | 5,112,182 | 34.0 | 5,971,792 | 41.0 | ||||||||||||||||||
Mobile marketing services | 331,822 | 2.0 | 198,197 | 1.4 | 159,010 | 1.1 | ||||||||||||||||||
Mobile games | 92,451 | 0.5 | 39,564 | 0.3 | 47,712 | 0.3 | ||||||||||||||||||
Other services | 36,722 | 0.2 | 36,666 | 0.2 | 18,260 | 0.1 | ||||||||||||||||||
Cost and expenses | ||||||||||||||||||||||||
Cost of revenues | (8,492,096 | ) | (49.9 | ) | (7,976,781 | ) | (53.1 | ) | (8,383,431 | ) | (57.5 | ) | ||||||||||||
Research and development expenses | (1,095,031 | ) | (6.4 | ) | (1,167,677 | ) | (7.8 | ) | (1,131,781 | ) | (7.8 | ) | ||||||||||||
Sales and marketing expenses | (2,690,824 | ) | (15.8 | ) | (2,813,922 | ) | (18.7 | ) | (2,604,309 | ) | (17.9 | ) | ||||||||||||
General and administrative expenses | (1,527,282 | ) | (9.0 | ) | (763,150 | ) | (5.1 | ) | (624,700 | ) | (4.3 | ) | ||||||||||||
Impairment loss on goodwill and intangible assets | — | — | — | — | (4,397,012 | ) | (30.1 | ) | ||||||||||||||||
Total cost and expenses | (13,805,233 | ) | (81.1 | ) | (12,721,530 | ) | (84.7 | ) | (17,141,233 | ) | (117.6 | ) | ||||||||||||
Other operating income | 344,843 | 2.0 | 228,777 | 1.5 | 175,947 | 1.2 | ||||||||||||||||||
Income (loss) from operations | 3,554,699 | 20.9 | 2,531,435 | 16.8 | (2,389,567 | ) | (16.4 | ) | ||||||||||||||||
Interest income | 407,542 | 2.4 | 444,471 | 3.0 | 384,279 | 2.6 | ||||||||||||||||||
Interest expense | (78,611 | ) | (0.5 | ) | (78,872 | ) | (0.5 | ) | (73,776 | ) | (0.5 | ) | ||||||||||||
Other gain or loss, net | (15,711 | ) | (0.1 | ) | 1,500 | 0.0 | (16,000 | ) | (0.1 | ) | ||||||||||||||
Income before income tax and share of income on equity method investments | 3,867,919 | 22.7 | 2,898,534 | 19.3 | (2,095,064 | ) | (14.4 | ) | ||||||||||||||||
Income tax expense | (883,801 | ) | (5.2 | ) | (755,620 | ) | (5.0 | ) | (822,556 | ) | (5.6 | ) | ||||||||||||
Income before share of income on equity method investments | 2,984,118 | 17.5 | 2,142,914 | 14.3 | (2,917,620 | ) | (20.0 | ) | ||||||||||||||||
Share of income (loss) on equity method investments | (23,350 | ) | (0.1 | ) | (42,522 | ) | (0.3 | ) | (8,084 | ) | (0.1 | ) | ||||||||||||
Net income (loss) | 2,960,768 | 17.4 | 2,100,392 | 14.0 | (2,925,704 | ) | (20.1 | ) | ||||||||||||||||
Year Ended December 31, | ||||||||||||||||||||||||
2017 | 2018 | 2019 | ||||||||||||||||||||||
RMB | % | RMB | % | RMB | % | |||||||||||||||||||
(in thousands, except for percentages) | ||||||||||||||||||||||||
Cost of revenues: | ||||||||||||||||||||||||
Revenue sharing | 3,523,281 | 80.6 | 5,701,563 | 79.4 | 7,153,655 | 84.2 | ||||||||||||||||||
Commission fees | 309,767 | 7.1 | 278,528 | 3.9 | 369,549 | 4.4 | ||||||||||||||||||
Bandwidth costs | 235,813 | 5.4 | 303,507 | 4.2 | 364,695 | 4.3 | ||||||||||||||||||
Production cost in connection with television content | — | — | 429,215 | 6.0 | — | — | ||||||||||||||||||
Labor costs | 109,042 | 2.5 | 176,461 | 2.5 | 244,182 | 2.9 | ||||||||||||||||||
Depreciation and amortization | 59,548 | 1.4 | 140,621 | 2.0 | 209,388 | 2.5 | ||||||||||||||||||
Other costs | 135,926 | 3.0 | 153,002 | 2.0 | 150,627 | 1.7 | ||||||||||||||||||
Total cost of revenues | 4,373,377 | 100.0 | 7,182,897 | 100.0 | 8,492,096 | 100.0 | ||||||||||||||||||
Year Ended December 31, | ||||||||||||||||||||||||
2019 | 2020 | 2021 | ||||||||||||||||||||||
RMB | % | RMB | % | RMB | % | |||||||||||||||||||
(in thousands, except for percentages) | ||||||||||||||||||||||||
Cost of revenues: | ||||||||||||||||||||||||
Revenue sharing | 7,153,655 | 84.2 | 6,630,538 | 83.1 | 7,047,050 | 84.1 | ||||||||||||||||||
Commission fees | 369,549 | 4.4 | 362,831 | 4.6 | 327,843 | 3.9 | ||||||||||||||||||
Bandwidth costs | 364,695 | 4.3 | 308,664 | 3.9 | 317,556 | 3.8 | ||||||||||||||||||
Labor costs | 244,182 | 2.9 | 306,577 | 3.8 | 335,639 | 4.0 | ||||||||||||||||||
Depreciation and amortization | 209,388 | 2.5 | 211,779 | 2.7 | 164,528 | 2.0 | ||||||||||||||||||
Other costs | 150,627 | 1.7 | 156,392 | 1.9 | 190,815 | 2.2 | ||||||||||||||||||
Total cost of revenues | 8,492,096 | 100.0 | 7,976,781 | 100.0 | 8,383,431 | 100.0 | ||||||||||||||||||
Year ended December 31, | ||||||||||||||||||||||||||||
2017 | 2018 | 2019 | ||||||||||||||||||||||||||
RMB | YoY% | RMB | YoY% | RMB | US$ | YoY% | ||||||||||||||||||||||
(in thousands, except percentages) | ||||||||||||||||||||||||||||
Revenues: | ||||||||||||||||||||||||||||
Momo | 8,884,823 | 140 | 12,812,421 | 44 | 15,740,815 | 2,261,027 | 23 | |||||||||||||||||||||
Tantan | — | — | 417,998 | N/A | 1,259,906 | 180,974 | not comparable | (1) | ||||||||||||||||||||
QOOL | 1,567 | N/A | 178,002 | 11,259 | 14,368 | 2,064 | (92 | ) |
Year ended December 31, | ||||||||||||||||||||||||||||
2017 | 2018 | 2019 | ||||||||||||||||||||||||||
RMB | YoY% | RMB | YoY% | RMB | US$ | YoY% | ||||||||||||||||||||||
(in thousands, except percentages) | ||||||||||||||||||||||||||||
Operating Costs and Expenses: | ||||||||||||||||||||||||||||
Momo | 6,595,045 | 141 | 8,928,568 | 35 | 11,025,551 | 1,583,721 | 23 | |||||||||||||||||||||
Tantan | — | — | 963,486 | N/A | 2,727,259 | 391,746 | not comparable | (1) | ||||||||||||||||||||
QOOL | 13,857 | N/A | 503,772 | 3,536 | 52,423 | 7,530 | (90 | ) |
C. | Organizational Structure |
(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, each of whom holds 72.0%, 16.0%, 6.4% and 5.6% of the equity interest in Beijing Momo, respectively. Except for Zhiwei Li and Xiaoliang Lei, the shareholders of Beijing Momo are our shareholders 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. Xiaoliang Lei and Li Wang, each of whom holds 50% and 50% of the equity interest in Hainan Miaoka, respectively. The shareholders of Hainan Miaoka are our directors or officers. |
(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 Messrs. Kuan He and Luyu Fan, 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 Mr. Yu Dong and Mr. Jianhua Wen, 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, Spacetime Beijing and Ms. Minyan Wang and Messrs. Yu Dong, each of whom holds 90% and 10% of the equity interest in SpaceTime Beijing, respectively. |
D. | Property, Plant and Equipment |
Item 4A. | Unresolved Staff Comments |
Item 5. | Operating and Financial Review and Prospects |
A. | Operating Results |
Year Ended December 31, | ||||||||||||||||||||||||
2019 | 2020 | 2021 | ||||||||||||||||||||||
RMB | % | RMB | % | RMB | % | |||||||||||||||||||
(in thousands, except for percentages) | ||||||||||||||||||||||||
Net revenues | 17,015,089 | 100.0 | 15,024,188 | 100.0 | 14,575,719 | 100.0 | ||||||||||||||||||
Live video service | 12,448,131 | 73.2 | 9,637,579 | 64.1 | 8,378,945 | 57.5 | ||||||||||||||||||
Value-added service | 4,105,963 | 24.1 | 5,112,182 | 34.0 | 5,971,792 | 41.0 | ||||||||||||||||||
Mobile marketing services | 331,822 | 2.0 | 198,197 | 1.4 | 159,010 | 1.1 | ||||||||||||||||||
Mobile games | 92,451 | 0.5 | 39,564 | 0.3 | 47,712 | 0.3 | ||||||||||||||||||
Other services | 36,722 | 0.2 | 36,666 | 0.2 | 18,260 | 0.1 | ||||||||||||||||||
Cost and expenses | ||||||||||||||||||||||||
Cost of revenues | (8,492,096 | ) | (49.9 | ) | (7,976,781 | ) | (53.1 | ) | (8,383,431 | ) | (57.5 | ) | ||||||||||||
Research and development expenses | (1,095,031 | ) | (6.4 | ) | (1,167,677 | ) | (7.8 | ) | (1,131,781 | ) | (7.8 | ) | ||||||||||||
Sales and marketing expenses | (2,690,824 | ) | (15.8 | ) | (2,813,922 | ) | (18.7 | ) | (2,604,309 | ) | (17.9 | ) | ||||||||||||
General and administrative expenses | (1,527,282 | ) | (9.0 | ) | (763,150 | ) | (5.1 | ) | (624,700 | ) | (4.3 | ) | ||||||||||||
Impairment loss on goodwill and intangible assets | — | — | — | — | (4,397,012 | ) | (30.1 | ) | ||||||||||||||||
Total cost and expenses | (13,805,233 | ) | (81.1 | ) | (12,721,530 | ) | (84.7 | ) | (17,141,233 | ) | (117.6 | ) | ||||||||||||
Other operating income | 344,843 | 2.0 | 228,777 | 1.5 | 175,947 | 1.2 | ||||||||||||||||||
Income (loss) from operations | 3,554,699 | 20.9 | 2,531,435 | 16.8 | (2,389,567 | ) | (16.4 | ) | ||||||||||||||||
Interest income | 407,542 | 2.4 | 444,471 | 3.0 | 384,279 | 2.6 | ||||||||||||||||||
Interest expense | (78,611 | ) | (0.5 | ) | (78,872 | ) | (0.5 | ) | (73,776 | ) | (0.5 | ) | ||||||||||||
Other gain or loss, net | (15,711 | ) | (0.1 | ) | 1,500 | 0.0 | (16,000 | ) | (0.1 | ) | ||||||||||||||
Income before income tax and share of income on equity method investments | 3,867,919 | 22.7 | 2,898,534 | 19.3 | (2,095,064 | ) | (14.4 | ) | ||||||||||||||||
Income tax expense | (883,801 | ) | (5.2 | ) | (755,620 | ) | (5.0 | ) | (822,556 | ) | (5.6 | ) | ||||||||||||
Income before share of income on equity method investments | 2,984,118 | 17.5 | 2,142,914 | 14.3 | (2,917,620 | ) | (20.0 | ) | ||||||||||||||||
Share of income (loss) on equity method investments | (23,350 | ) | (0.1 | ) | (42,522 | ) | (0.3 | ) | (8,084 | ) | (0.1 | ) | ||||||||||||
Net income (loss) | 2,960,768 | 17.4 | 2,100,392 | 14.0 | (2,925,704 | ) | (20.1 | ) | ||||||||||||||||
Year Ended December 31, | ||||||||||||||||||||||||
2019 | 2020 | 2021 | ||||||||||||||||||||||
RMB | % | RMB | % | RMB | % | |||||||||||||||||||
(in thousands, except for percentages) | ||||||||||||||||||||||||
Cost of revenues: | ||||||||||||||||||||||||
Revenue sharing | 7,153,655 | 84.2 | 6,630,538 | 83.1 | 7,047,050 | 84.1 | ||||||||||||||||||
Commission fees | 369,549 | 4.4 | 362,831 | 4.6 | 327,843 | 3.9 | ||||||||||||||||||
Bandwidth costs | 364,695 | 4.3 | 308,664 | 3.9 | 317,556 | 3.8 | ||||||||||||||||||
Labor costs | 244,182 | 2.9 | 306,577 | 3.8 | 335,639 | 4.0 | ||||||||||||||||||
Depreciation and amortization | 209,388 | 2.5 | 211,779 | 2.7 | 164,528 | 2.0 | ||||||||||||||||||
Other costs | 150,627 | 1.7 | 156,392 | 1.9 | 190,815 | 2.2 | ||||||||||||||||||
Total cost of revenues | 8,492,096 | 100.0 | 7,976,781 | 100.0 | 8,383,431 | 100.0 | ||||||||||||||||||
C. | Organizational Structure |
(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, each of whom holds 72.0%, 16.0%, 6.4% and 5.6% of the equity interest in Beijing Momo, respectively. Except for Zhiwei Li and Xiaoliang Lei, the shareholders of Beijing Momo are our shareholders 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. Xiaoliang Lei and Li Wang, each of whom holds 50% and 50% of the equity interest in Hainan Miaoka, respectively. The shareholders of Hainan Miaoka are our directors or officers. |
(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 Messrs. Kuan He and Luyu Fan, 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 Mr. Yu Dong and Mr. Jianhua Wen, 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, Spacetime Beijing and Ms. Minyan Wang and Messrs. Yu Dong, each of whom holds 90% and 10% of the equity interest in SpaceTime Beijing, respectively. |
D. | Property, Plant and Equipment |
Item 4A. | Unresolved Staff Comments |
Item 5. | Operating and Financial Review and Prospects |
A. | Operating Results |
Year Ended December 31, | ||||||||||||||||||||||||
2019 | 2020 | 2021 | ||||||||||||||||||||||
RMB | % | RMB | % | RMB | % | |||||||||||||||||||
(in thousands, except for percentages) | ||||||||||||||||||||||||
Net revenues | 17,015,089 | 100.0 | 15,024,188 | 100.0 | 14,575,719 | 100.0 | ||||||||||||||||||
Live video service | 12,448,131 | 73.2 | 9,637,579 | 64.1 | 8,378,945 | 57.5 | ||||||||||||||||||
Value-added service | 4,105,963 | 24.1 | 5,112,182 | 34.0 | 5,971,792 | 41.0 | ||||||||||||||||||
Mobile marketing services | 331,822 | 2.0 | 198,197 | 1.4 | 159,010 | 1.1 | ||||||||||||||||||
Mobile games | 92,451 | 0.5 | 39,564 | 0.3 | 47,712 | 0.3 | ||||||||||||||||||
Other services | 36,722 | 0.2 | 36,666 | 0.2 | 18,260 | 0.1 | ||||||||||||||||||
Cost and expenses | ||||||||||||||||||||||||
Cost of revenues | (8,492,096 | ) | (49.9 | ) | (7,976,781 | ) | (53.1 | ) | (8,383,431 | ) | (57.5 | ) | ||||||||||||
Research and development expenses | (1,095,031 | ) | (6.4 | ) | (1,167,677 | ) | (7.8 | ) | (1,131,781 | ) | (7.8 | ) | ||||||||||||
Sales and marketing expenses | (2,690,824 | ) | (15.8 | ) | (2,813,922 | ) | (18.7 | ) | (2,604,309 | ) | (17.9 | ) | ||||||||||||
General and administrative expenses | (1,527,282 | ) | (9.0 | ) | (763,150 | ) | (5.1 | ) | (624,700 | ) | (4.3 | ) | ||||||||||||
Impairment loss on goodwill and intangible assets | — | — | — | — | (4,397,012 | ) | (30.1 | ) | ||||||||||||||||
Total cost and expenses | (13,805,233 | ) | (81.1 | ) | (12,721,530 | ) | (84.7 | ) | (17,141,233 | ) | (117.6 | ) | ||||||||||||
Other operating income | 344,843 | 2.0 | 228,777 | 1.5 | 175,947 | 1.2 | ||||||||||||||||||
Income (loss) from operations | 3,554,699 | 20.9 | 2,531,435 | 16.8 | (2,389,567 | ) | (16.4 | ) | ||||||||||||||||
Interest income | 407,542 | 2.4 | 444,471 | 3.0 | 384,279 | 2.6 | ||||||||||||||||||
Interest expense | (78,611 | ) | (0.5 | ) | (78,872 | ) | (0.5 | ) | (73,776 | ) | (0.5 | ) | ||||||||||||
Other gain or loss, net | (15,711 | ) | (0.1 | ) | 1,500 | 0.0 | (16,000 | ) | (0.1 | ) | ||||||||||||||
Income before income tax and share of income on equity method investments | 3,867,919 | 22.7 | 2,898,534 | 19.3 | (2,095,064 | ) | (14.4 | ) | ||||||||||||||||
Income tax expense | (883,801 | ) | (5.2 | ) | (755,620 | ) | (5.0 | ) | (822,556 | ) | (5.6 | ) | ||||||||||||
Income before share of income on equity method investments | 2,984,118 | 17.5 | 2,142,914 | 14.3 | (2,917,620 | ) | (20.0 | ) | ||||||||||||||||
Share of income (loss) on equity method investments | (23,350 | ) | (0.1 | ) | (42,522 | ) | (0.3 | ) | (8,084 | ) | (0.1 | ) | ||||||||||||
Net income (loss) | 2,960,768 | 17.4 | 2,100,392 | 14.0 | (2,925,704 | ) | (20.1 | ) | ||||||||||||||||
Year Ended December 31, | ||||||||||||||||||||||||
2019 | 2020 | 2021 | ||||||||||||||||||||||
RMB | % | RMB | % | RMB | % | |||||||||||||||||||
(in thousands, except for percentages) | ||||||||||||||||||||||||
Cost of revenues: | ||||||||||||||||||||||||
Revenue sharing | 7,153,655 | 84.2 | 6,630,538 | 83.1 | 7,047,050 | 84.1 | ||||||||||||||||||
Commission fees | 369,549 | 4.4 | 362,831 | 4.6 | 327,843 | 3.9 | ||||||||||||||||||
Bandwidth costs | 364,695 | 4.3 | 308,664 | 3.9 | 317,556 | 3.8 | ||||||||||||||||||
Labor costs | 244,182 | 2.9 | 306,577 | 3.8 | 335,639 | 4.0 | ||||||||||||||||||
Depreciation and amortization | 209,388 | 2.5 | 211,779 | 2.7 | 164,528 | 2.0 | ||||||||||||||||||
Other costs | 150,627 | 1.7 | 156,392 | 1.9 | 190,815 | 2.2 | ||||||||||||||||||
Total cost of revenues | 8,492,096 | 100.0 | 7,976,781 | 100.0 | 8,383,431 | 100.0 | ||||||||||||||||||
Year ended December 31, | ||||||||||||||||||||||||||||
2019 | 2020 | 2021 | ||||||||||||||||||||||||||
RMB | YoY% | RMB | YoY% | RMB | US$ | YoY% | ||||||||||||||||||||||
(in thousands, except percentages) | ||||||||||||||||||||||||||||
Revenues: | ||||||||||||||||||||||||||||
Momo | 15,740,815 | 23 | 12,631,119 | (20 | ) | 12,541,205 | 1,967,989 | (1 | ) | |||||||||||||||||||
Tantan | 1,259,906 | not comparable | (1) | 2,368,314 | 88 | 2,029,184 | 318,423 | (14 | ) | |||||||||||||||||||
QOOL | 14,368 | (92 | ) | 24,755 | 72 | 5,330 | 836 | (78 | ) |
(1) | After our acquisition of Tantan in May 2018, we consolidated its financial information into ours. As such, the revenue for 2018 only includes seven months of operations. |
Year ended December 31, | ||||||||||||||||||||||||||||
2019 | 2020 | 2021 | ||||||||||||||||||||||||||
RMB | YoY% | RMB | YoY% | RMB | US$ | YoY% | ||||||||||||||||||||||
(in thousands, except percentages) | ||||||||||||||||||||||||||||
Costs and Expenses: | ||||||||||||||||||||||||||||
Momo | 11,025,551 | 23 | 9,829,243 | (11 | ) | 10,169,788 | 1,595,862 | 3 | ||||||||||||||||||||
Tantan | 2,727,259 | not comparable | (1) | 2,844,395 | 4 | 2,509,690 | 393,825 | (12 | ) | |||||||||||||||||||
QOOL | 52,423 | (90 | ) | 47,892 | (9 | ) | 64,743 | 10,160 | 35 | |||||||||||||||||||
Unallocated | — | — | — | — | 4,397,012 | 689,987 | 100 |
(1) | After our acquisition of Tantan in May 2018, we consolidated its financial information into ours. As such, the costs and expenses for 2018 only includes seven months of operations. |
B. | Liquidity and Capital Resources |
Year Ended December 31, | ||||||||||||
2019 | 2020 | 2021 | ||||||||||
(in RMB thousands) | ||||||||||||
Net cash provided by operating activities | 5,448,886 | 3,080,889 | 1,559,198 | |||||||||
Net cash provided by (used in) investing activities | (4,029,919 | ) | (748,466 | ) | 2,550,342 | |||||||
Net cash used in financing activities | (1,273,780 | ) | (1,498,150 | ) | (1,786,909 | ) | ||||||
Effect of exchange rate changes | (478 | ) | (80,944 | ) | (41,669 | ) | ||||||
Net (decrease) increase in cash and cash equivalents | 144,709 | 753,329 | 2,280,962 | |||||||||
Cash and cash equivalents and restricted cash at beginning of period | 2,468,034 | 2,612,743 | 3,366,072 | |||||||||
Cash and cash equivalents and restricted cash at end of period | 2,612,743 | 3,366,072 | 5,647,034 |
Years ending December 31, | ||||||||||||||||
Total | 2022 | 2023 | 2024 and thereafter | |||||||||||||
(RMB in thousands) | ||||||||||||||||
Convertible senior note obligations (1) | 4,822,266 | 57,752 | 57,752 | 4,706,762 | ||||||||||||
Operating lease obligations (2) | 276,071 | 165,812 | 75,327 | 34,932 | ||||||||||||
(1) | Including estimated interest payments of RMB202.2 million in total (RMB57.8 million, RMB57.8 million and RMB86.6 million over the periods of less than one year, one to two years, and more than two years from December 31, 2021, respectively) and principal payments of RMB4,620.1 million, with the principal of the convertible senior note to be due in 2025. Please see “Convertible Senior Notes” under Note 9 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 10 to our audited consolidated financial statements included in this annual report beginning on page F-1. |
C. | Research and Development |
D. | Trend Information |
E. | Critical Accounting Estimates |
Years ending December 31, | ||||||||||||||||
Total | 2022 | 2023 | 2024 and thereafter | |||||||||||||
(RMB in thousands) | ||||||||||||||||
Convertible senior note obligations (1) | 4,822,266 | 57,752 | 57,752 | 4,706,762 | ||||||||||||
Operating lease obligations (2) | 276,071 | 165,812 | 75,327 | 34,932 | ||||||||||||
(1) | Including estimated interest payments of RMB202.2 million in total (RMB57.8 million, RMB57.8 million and RMB86.6 million over the periods of less than one year, one to two years, and more than two years from December 31, 2021, respectively) and principal payments of RMB4,620.1 million, with the principal of the convertible senior note to be due in 2025. Please see “Convertible Senior Notes” under Note 9 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 10 to our audited consolidated financial statements included in this annual report beginning on page F-1. |
Holding Company Structure |
C. | Research and Development |
D. | Trend Information |
E. | Critical Accounting Estimates |
Year Ended December 31, | ||||||||||||
2017 | 2018 | 2019 | ||||||||||
(in RMB thousands) | ||||||||||||
Net cash provided by operating activities | 2,886,107 | 3,327,718 | 5,448,886 | |||||||||
Net cash used in investing activities | (188,174 | ) | (10,034,004 | ) | (4,029,919 | ) | ||||||
Net cash provided by (used in) financing activities | 2,833 | 4,687,951 | (1,273,780 | ) | ||||||||
Effect of exchange rate changes | (26,840 | ) | 24,175 | (478 | ) | |||||||
Net increase in (decrease by) cash and cash equivalents | 2,673,926 | (1,994,160 | ) | 144,709 | ||||||||
Cash and cash equivalents at beginning of period | 1,788,268 | 4,462,194 | 2,468,034 | |||||||||
Cash and cash equivalents at end of period | 4,462,194 | 2,468,034 | 2,612,743 |
Years ending December 31, | ||||||||||||||||
Total | 2022 | 2023 | 2024 and thereafter | |||||||||||||
(RMB in thousands) | ||||||||||||||||
Convertible senior note obligations (1) | 4,822,266 | 57,752 | 57,752 | 4,706,762 | ||||||||||||
Operating lease obligations (2) | 276,071 | 165,812 | 75,327 | 34,932 | ||||||||||||
(1) | Including estimated interest payments of RMB202.2 million in total (RMB57.8 million, RMB57.8 million and RMB86.6 million over the periods of less than one year, one to two years, and more than two years from December 31, 2021, respectively) and principal payments of RMB4,620.1 million, with the principal of the convertible senior note to be due in 2025. Please see “Convertible Senior Notes” under Note 9 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 10 to our audited consolidated financial statements included in this annual report beginning on page F-1. |
C. | Research and Development |
D. | Trend Information |
E. |
Years ending December 31, | ||||||||||||||||
Total | 2020 | 2021 | 2022 and thereafter | |||||||||||||
(RMB in thousands) | ||||||||||||||||
Convertible senior note obligations (1) | 5,394,307 | 63,091 | 63,091 | 5,268,125 | ||||||||||||
Operating lease obligations (2) | 198,863 | 141,324 | 53,769 | 3,770 | ||||||||||||
Investment commitment obligations (3) | 13,500 | — | — | — | ||||||||||||
Item 6. |
Directors, Senior Management and Employees |
A. | Directors and Senior Management |
Directors and Executive Officers | Age | Position/Title | ||||||
Yan Tang | 43 | Executive Chairman | ||||||
38 | Director and Chief Executive Officer | |||||||
Yong Li | 47 | Independent Director | ||||||
Director | ||||||||
Benson Bing Chung Tam | 58 | Independent Director | ||||||
Dave Daqing Qi | 58 | Independent Director | ||||||
Yongming Wu | 47 | Independent Director | ||||||
Jonathan Xiaosong Zhang | ||||||||
Chief Financial Officer |
(1) | Jonathon Xiaosong Zhang will retire effective June 30, 2022. Cathy Hui Peng, Senior Vice President of corporate finance, will assume the role of Chief |
B. | Compensation |
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 | ||||||||||||||
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 | ||||||||||||||
Jonathan Xiaosong Zhang | * | 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 | ||||||||||||||
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 |
Name | Class A Ordinary Shares Underlying Outstanding Options | Exercise Price (US$/Share) | Date of Grant | Date of Expiration | ||||||||||||
* | 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 | |||||||||||||
Total | 27,999,429 | |||||||||||||||
Shares Underlying Outstanding Options | Price (US$/Share) | Expiration | ||||||||||||||
Name | Class A Ordinary Shares Underlying Outstanding Options | Exercise Price (US$/Share) | Date of Grant | Date of Expiration | ||||||||||||
* | 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 | |||||||||||||
195,000 | 0.0002 | April 15,2019 | April 14,2029 | |||||||||||||
2,161,000 | 0.0002 | May 17, 2019 | May16,2029 | |||||||||||||
50,000 | 0.0002 | July 12,2019 | July 11,2029 | |||||||||||||
137,000 | 0.0002 | October 15,2019 | October 14,2029 | |||||||||||||
181,000 | 0.0002 | December 26,2019 | December 25,2029 | |||||||||||||
Total | 23,256,773 | |||||||||||||||
* | Aggregate number of shares represented by all outstanding options granted to the person account for less than 1% of our total outstanding ordinary shares on an as-converted basis. |
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 | |||||||||||
Dave Daqing Qi | * | May 17, 2016 | ||||||||||
* | ||||||||||||
* | May 2, 2018 | |||||||||||
* | April 15,2019 | |||||||||||
* | April 15,2020 | |||||||||||
* | April 15,2021 | |||||||||||
Yongming Wu | * | April 15,2019 | ||||||||||
* | April 15,2020 | |||||||||||
* | April 15,2021 | |||||||||||
Total | ||||||||||||
* | 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. |
C. | Board Practices |
Board Diversity Matrix (As of March 31, 2022) | ||||||||
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 | 0 | 7 | 0 | 0 | ||||||||||||
Part II: Demographic Background | ||||||||||||||||
Underrepresented Individual in Home Country Jurisdiction | | 0 | | |||||||||||||
LGBTQ+ | 0 | |||||||||||||||
Did Not Disclose Demographic Background | 0 |
D. | Employees |
As of December 31, 2021 | |||||
Function: | |||||
Research and development | |||||
Customer service, sales and marketing | |||||
Operations and cost | |||||
General administration | |||||
Total | |||||
E. | Share Ownership |
Item 7. | Major Shareholders and Related Party Transactions |
A. | Major Shareholders |
Shares Beneficially Owned | Ordinary Shares Beneficially Owned | Voting Power | ||||||||||||||
Directors and executive officers**: | Class A Ordinary Shares | Class B Ordinary Shares | % (1) | % (2) | ||||||||||||
Yan Tang(3) | 5,713,394 | 80,364,466 | 20.3 | 70.6 | ||||||||||||
Yong Li(4) | 8,046,899 | — | 1.9 | * | ||||||||||||
David Ying Zhang(5) | * | — | * | * | ||||||||||||
Benson Bing Chung Tam(6) | * | — | * | * | ||||||||||||
Dave Daqing Qi(7) | * | — | * | * | ||||||||||||
Xiaoliang Lei(8) | 9,759,603 | — | 2.3 | * | ||||||||||||
Jonathan Xiaosong Zhang(9) | * | — | * | * | ||||||||||||
Li Wang(10) | * | — | * | * | ||||||||||||
Yongming Wu(11) | * | — | * | * | ||||||||||||
Chunlai Wang(12) | * | — | * | * | ||||||||||||
All directors and executive officers as a group | 26,907,382 | 80,364,466 | 25.1 | 72.2 | ||||||||||||
Principal Shareholders: | ||||||||||||||||
Gallant Future Holdings Limited(13) | — | 72,364,466 | 17.3 | 63.4 | ||||||||||||
Renaissance entities(14) | 26,704,806 | — | 6.4 | 2.3 | ||||||||||||
J O Hambro Capital Management Limited(15) | 23,260,894 | — | 5.6 | 2.0 |
Shares Beneficially Owned | Ordinary Shares Beneficially Owned | Voting Power | ||||||||||||||
Directors and executive officers**: | Class A Ordinary Shares | Class B Ordinary Shares | ||||||||||||||
% (1) | % (2) | |||||||||||||||
Yan Tang (3) | 7,030,065 | 80,364,466 | 21.6 | 71.9 | ||||||||||||
Li Wang (4) | * | — �� | * | * | ||||||||||||
Yong Li (5) | 8,046,899 | — | 2.0* | |||||||||||||
Ho Kee Harry Man (6) | * | — | * | * | ||||||||||||
Benson Bing Chung Tam (7) | * | — | * | * | ||||||||||||
Dave Daqing Qi (8) | * | — | * | * | ||||||||||||
Jonathan Xiaosong Zhang (9) | * | — | * | * | ||||||||||||
Yongming Wu (10) | * | — | * | * | ||||||||||||
All directors and executive officers as a group | 20,598,861 | 80,364,466 | 24.2 | 72.8 | ||||||||||||
Principal Shareholders: | ||||||||||||||||
Gallant Future Holdings Limited (11) | — | 72,364,466 | 18.2 | 64.6 | ||||||||||||
J O Hambro Capital Management Limited (12) | 23,260,894 | — | 5.9 | 2.1 | ||||||||||||
Renaissance Technologies LLC (13) | 20,583,396 | — | 5.2 | 1.8 | ||||||||||||
Invesco Ltd. (14) | 20,007,084 | — | 5.0 | 1.8 |
* | Less than 1% of our total outstanding Class A and Class B ordinary shares. |
** | Except for Messrs. Yong Li, th Floor, Block B, Tower 2, Wangjing SOHO, 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) one-for-one |
(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) | Represent (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) |
(4) | Represents Class A ordinary shares that Mr. Wang is entitled to acquire within 60 days from March 31, 2022 upon exercise of share options held by him under our share incentive plans. |
(5) | Represents 8,046,899 Class A ordinary shares held by Joyous Harvest Holdings Limited, a company incorporated in the British Virgin Islands and wholly owned by a family trust controlled by Mr. Li. The business address of Mr. Li is 5/F, Block A, Lingxinghang Center, No. 8, Guangshun South Avenue, Chaoyang District, Beijing. |
Represents |
Represents Class A ordinary shares held by Mr. Tam and Class A ordinary shares that Mr. Tam is entitled to acquire within 60 days from March 31, 1-4-2503, |
Represents Class A ordinary shares and ADSs held by Mr. Qi and Class A ordinary shares that Mr. Qi is entitled to acquire within 60 days from March 31, |
(9) | Represents Class A ordinary shares that Mr. Zhang is entitled to acquire within 60 days from March 31, |
(10) |
Represents Class A ordinary shares that Mr. Wu is entitled to acquire within 60 days from March 31, #45-01, Singapore 068811. |
Represents 72,364,466 Class B ordinary shares held by 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. 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. |
Represents 23,260,894 Class A ordinary shares represented by American depositary receipts held by J O Hambro Capital Management Limited, a company incorporated in 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 on February 11, 2020. |
(13) | Represents 20,583,396 Class A ordinary shares represented by American depositary receipts held by 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 majority-owned by Renaissance Technologies LLC, based on a Schedule 13G/A jointly filed by the two entities on February 11, 2022. |
(14) | Represents 20,007,084 Class A ordinary shares represented by American depositary receipts held by Invesco Ltd., a company incorporated in Bermuda with its business address at 1555 Peachtree Street NE, Suite 1800, Atlanta, GA 30309, based on a Schedule 13G filed by Invesco Ltd. on February 14, 2022. |
B. | Related Party Transactions |
C. | Interests of Experts and Counsel |
Item 8. | Financial Information |
A. | Consolidated Statements and Other Financial Information |
B. | Significant Changes |
Item 9. | The Offer and Listing |
A. | Offering and Listing Details |
B. | Plan of Distribution |
C. | Markets |
D. | Selling Shareholders |
E. | Dilution |
F. | Expenses of the Issue |
Item 10. | Additional Information |
A. | Share Capital |
B. | Memorandum and Articles of Association |
C. | Material Contracts |
D. | Exchange Controls |
E. | Taxation |
F. | Dividends and Paying Agents |
G. | Statement by Experts |
H. | Documents on Display |
I. | Subsidiary Information |
Item 11. | Quantitative and Qualitative Disclosures about Market Risk |
Item 12. | Description of Securities Other than Equity Securities |
A. | Debt Securities |
B. | Warrants and Rights |
C. | Other Securities |
D. | American Depositary Shares |
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 | ||
• Cancelation of ADSs, including termination of the deposit agreement | Up to US$0.05 per ADS 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 |
Item 13. | Defaults, Dividend Arrearages and Delinquencies |
Item 14. | Material Modifications to the Rights of Security Holders and Use of Proceeds |
Item 15. | Controls and Procedures |
Item 16A. | Audit Committee Financial Expert |
Item 16B. |
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 Number333-199996), 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
The following table sets forth the aggregate fees by categories specified below in connection with certain professional services rendered by
140
Notes:
The policy of our audit committee is to pre-approve all audit andnon-audit services provided by our independent registered public accounting firm, including audit services, audit-related services and tax services as described above, other than those forde minimis
Not applicable.
On September 3, 2020, our board of directors authorized a share repurchase program under which we may repurchase up to US$300 million of our shares over the next 12 months. As of September 3, 2021, we had repurchased approximately 14.15 million ADSs for approximately US$182.4 million, including commissions paid to the brokers, on the open market under this program, at an average purchase price of US$12.87 per ADS. The table below is a summary of the shares repurchased by us in 2021. All shares were repurchased in the open market pursuant to the 2020 share repurchase program.
Note:
Not applicable.
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. However, Nasdaq Stock Market Rule 5615(a)(3) permits foreign private issuers like us to follow “home country practice” in certain corporate governance matters. Other than the practices described above, there are no significant differences between our corporate governance practices and those followed by U.S. domestic companies under Nasdaq Stock Market Rules.
Not applicable. 141
Not applicable. PART III
We have elected to provide financial statements pursuant to Item 18.
For the year ended December 31, The consolidated financial statements of our company and our three operating segments are included at the end of this annual report.
142
143
144
145
146 147 148
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.
Date: April Hello Group Inc. INDEX TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31,
F-1 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Directors and Shareholders of Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of Hello Group Inc. (previously named Momo Inc.) and its subsidiaries (the “Company”) as of December 31, We 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, Internal 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 financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial 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 on the financial statements, 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 Goodwill Critical Audit Matter Description The Company’s evaluation of goodwill for impairment involves the comparison of the fair value of each reporting unit to its carrying value. The Company used the discounted cash flow model to estimate fair value, which requires management to make significant estimates and assumptions related to discount rates and forecasts of future revenues and operating margins. Changes in these assumptions could have a significant impact on either the fair value, the amount of any goodwill impairment charge, or both. The Company performed annual goodwill We identified goodwill impairment for the Tantan How the Critical Audit Matter Was Addressed in the Audit Our audit procedures related to the discount rate and forecasts of future revenue and operating margin used by management to estimate the fair value of the Tantan We tested the effectiveness of controls over management’s goodwill impairment evaluation, including those over the determination of the fair value of the Tantan We evaluated management’s ability to accurately forecast future revenues and operating margins by comparing actual results to management’s historical forecasts. We evaluated the reasonableness of management’s revenue and operating margin forecasts by comparing the forecasts to:
With the assistance of our fair value specialists, we evaluated the reasonableness of the (1) valuation methodology and (2) discount rate by:
/s/ Deloitte Touche Tohmatsu Certified Public Accountants LLP Beijing, the People’s Republic of China April We have served as the Company’s auditor since 2014. F-3 CONSOLIDATED BALANCE SHEETS (In thousands, except share and share related data, or otherwise noted)
The accompanying notes are an integral part of these consolidated financial statements. Hello Group Inc. CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except share and share related data, or otherwise noted)
The accompanying notes are an integral part of these consolidated financial statements. Hello Group Inc. CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (In thousands, except share and share related data)
The accompanying notes are an integral part of these consolidated financial statements. Hello Group Inc. CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (In thousands, except share and share related data)
The accompanying notes are an integral part of these consolidated financial statements. Hello Group Inc. CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands, except share and share related data)
The accompanying notes are an integral part of these consolidated financial statements. Hello Group Inc. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, (in thousands, except share data)
Hello Group Inc. (the “Company”), previously named “Momo Inc.”, is the holding company for a group of companies, which 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 renamedMomo 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 entities (“VIEs”) and VIEs’ subsidiaries (collectively the “Group”) are principally engaged in providing mobile-based social and entertainment services. The Group started its operation in July 2011. The Group started its monetization 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 for the younger generation that was founded in 2014. Tantan is designed to help its users find and establish romantic connections as well as 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 Company. As of December 31,
F-9 Hello Group Inc. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, (in thousands, except share data)
The VIE arrangements The People’s Republic of China (“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. The Group provides substantially all of its services in China through 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, The Company obtained control over its VIEs by entering into a series of contractual arrangements with the VIEs and 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 VIEs, and (2) receive the economic benefits of the VIEs that could be significant to the VIEs. Accordingly, the Company is considered the primary beneficiary of VIEs and has consolidated the 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 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 VIEs economic performance. The Company also believes that this ability to exercise control ensures that the VIEs will continue to execute and renew the Exclusive 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 Cooperation Agreements is executed and renewed indefinitely, the Company has the rights to receive substantially all of the economic benefits from the VIEs. Details of the typical structure of the Company’s significant VIEs are set forth below: Agreements that provide the Company effective control over the VIEs:
Pursuant to the Power of attorney-in-fact Hello Group Inc. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, (in thousands, except share data)
The VIE arrangements Agreements that provide the Company effective control over the VIEs: - continued
Under the Exclusive Call Option The WFOEs or their designated representative(s) have sole discretion as to when to exercise such options, either in part or in full. Without the WFOEs’ written consent, the Nominee Shareholders of the VIEs shall not transfer, donate, pledge, or otherwise dispose any equity interests of the VIEs in any way. In addition, any consideration paid by the WFOEs to the Nominee Shareholders of the VIEs in exercising the option shall be transferred back to the respective WFOE or its designated representative(s). This In addition, the VIEs irrevocably granted the WFOEs an exclusive and irrevocable option to purchase any or all of the assets owned by the VIEs at the lowest price permitted under PRC law. Without the WFOEs’ prior written consent, the VIEs and their Nominee Shareholders will not sell, transfer, mortgage or otherwise dispose of the VIEs’ material assets, legal or beneficial interests or revenues of more than certain amount or allow an encumbrance on any interest in the VIEs.
Each spouse of the married Nominee Shareholders of the VIEs entered into a Spousal Consent Letter, which unconditionally and irrevocably agreed that the equity interests in the VIEs held by and registered in the name of their spouse will be disposed of pursuant to the Equity Interest Pledge Agreements that transfer economic benefits to the Company:
Each relevant VIEs has entered into an exclusive technology services Hello Group Inc. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, (in thousands, except share data)
The VIE arrangements Agreements that transfer economic benefits to the Company: - continued
Under the equity interest pledge agreement among the WFOEs and each of the Nominee Shareholders of the VIEs, the Nominee Shareholders pledged all of their equity interests in the VIEs to the respective WFOEs to guarantee the VIEs’ and their shareholders’ payment obligations arising from the Exclusive Cooperation Agreements, Business If any VIEs or any of their Nominee Shareholders breaches their contractual obligations under the above agreements, 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 the VIEs in accordance with PRC legal procedures. During the term of the pledge, the shareholders of the VIEs shall cause 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 the respective parties according to the instruction of the respective WFOEs. The pledge will remain binding until the VIEs and their Nominee Shareholders have fully performed all their obligations under the Exclusive Cooperation Agreements, Business Operations Agreements and Exclusive Call Option Agreements.
Under the Business Operations Agreements among the WFOEs, the VIEs and the Nominee Shareholders of the VIEs, without the prior written consent of the WFOEs or their designated representative(s), the VIEs shall not conduct any transaction that may substantially affect the assets, business, operation or interest of the WFOEs. The VIEs and Nominee Shareholders shall also follow the WFOEs’ instructions on management of the VIEs’ daily operation, finance and employee matters and appoint the nominee(s) designated by the WFOEs as the director(s) and senior management members of the VIEs. In the event that any agreements between the WFOEs and the VIEs terminates, the WFOEs have the sole discretion to determine whether to continue any other agreements with the VIEs. The WFOEs are entitled to any dividends or other interests declared by the VIEs and the shareholders of the VIEs have agreed to promptly transfer such dividends or other interests to the WFOEs. The agreement shall remain effective for 10 years. At the discretion of the WFOEs, this agreement will be renewed on applicable expiration dates, or the WFOEs and the VIEs will enter into another exclusive agreement. Through these contractual agreements, the Company has the ability to effectively control the VIEs and is also able to receive substantially all the economic benefits of the VIEs. Hello Group Inc. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, (in thousands, except share data)
Risk in relation to the VIE structure The Company believes that the WFOEs’ contractual arrangements with the VIEs are in compliance with PRC law and are legally enforceable. The shareholders of 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 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 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 VIEs may encounter in their capacity as the beneficial owners and director of the 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 VIEs will not act contrary to any of the contractual arrangements and the Exclusive Call Option The Company’s ability to control the VIEs also depends on the Power of 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. Hello Group Inc. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - FOR THE YEARS ENDED DECEMBER 31, (in thousands, except share data)
Risk in relation to the VIE structure 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 to lose the rights to direct the activities of the VIEs or the right to receive their economic benefits, the Group would no longer be able to consolidate the 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, WFOEs, or the VIEs. The following consolidated financial statements amounts and balances of the 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:
F-14
Hello Group Inc. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - FOR THE YEARS ENDED DECEMBER 31, 2019, 2020 AND 2021 (in thousands, except share data)
Risk in relation to the VIE structure - continued
The unrecognized revenue-producing assets that are held by the VIEs are primarily self-developed intangible assets such as domain names, trademark and various licenses which are un-recognized on the consolidated balance sheets.The VIEs contributed an aggregate of 99.9%, 98.4% of the consolidated net revenues for each of the years ended December 31, 2019, 2020 and short-term deposits, There
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 Certain amounts in the prior periods presented have been reclassified to conform to the current period financial statement presentation. These reclassifications have no effect on previously reported net income, total assets, total liabilities, or total shareholders’ equity. F-15 Hello Group Inc. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2019, 2020 AND 2021 (in thousands, except share data)
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 the 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. Short-term deposits Short-term deposits consist of bank deposits with an original maturity of over three months but within one year. Long-term restricted cash 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 F-16 Hello Group Inc. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2019, 2020 AND 2021 (in thousands, except share data)
Financial instruments Financial instruments of the Group primarily consist of cash and cash equivalents, short-term deposits, restricted cash, long-term deposits, accounts receivable, equity securities without readily determinable fair value, fair value option investment, accounts payable, deferred revenue, convertible senior notes, income tax payable 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 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 of the Group included aggregate amounts of Concentration of credit risk Financial instruments that potentially expose the Group to concentration of credit risk consist primarily of cash and cash equivalents, short-term deposits, Third-party application stores and other payment channels accounting for 10% or more of accounts receivables are as follows:
Users or customers accounting for 10% or more of accounts receivables is asfollows:
As of December 31, 2021, 0 user or customer accounted for 10% or more of accounts receivable. Concentration of revenue NaN user or customer accounted for 10% or more of net revenues for the years ended December 31, Hello Group Inc. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, (in thousands, except share data)
Equity securities without readily determinable fair value The Equity method investments The investee 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%. 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. Accordingly, the Group accounts for these investments as equity method 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 (loss) on equity method investments” in the consolidated statements of operations. An impairment change is recorded if the carrying amount of the investment exceeds its fair value and this condition is determined to be 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. The Group elected the fair value option to account for a new 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 recognized in the consolidated statements of operations. F-18 Hello Group Inc. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, (in thousands, except share data)
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:
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:
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 Hello Group Inc. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, (in thousands, except share data)
Goodwill Goodwill represents the excess of the purchase consideration over the fair value of the identifiable tangible and intangible assets acquired and liabilities assumed of the acquired entity as a result of the Company’s acquisitions of interests in its subsidiaries. Goodwill is not amortized but is tested for impairment on an annual basis, or more frequently if events or changes in circumstances indicate that it might be impaired. The Company has an option to first assess qualitative factors to determine whether it is necessary to perform the The quantitative impairment test 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. F-20 Hello Group Inc. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - FOR THE YEARS ENDED DECEMBER 31, 2019, 2020 AND 2021 (in thousands, except share data)
Fair value - continuedAuthoritative 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. 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 principally derives its revenue from live video services, value-added services, mobile marketing services, mobile games and other services. The Group recognizes revenue when control of the 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, F-21 Hello Group Inc. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - FOR THE YEARS ENDED DECEMBER 31, 2019, 2020 AND 2021 (in thousands, except share data)
Revenue recognition - continuedThe following table provides information about disaggregated revenue by types, including a reconciliation of the disaggregated revenue with the Group’s reportable segments:
Hello Group Inc. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - FOR THE YEARS ENDED DECEMBER 31, (in thousands, except share data)
Revenue recognition
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 isnon-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 arenon-refundable, consumed at apoint-in-time 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- 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. Hello Group Inc. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - FOR THE YEARS ENDED DECEMBER 31, (in thousands, except share data)
Revenue recognition
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 as the membership subscription services are delivered. Virtual gift service point-in-time 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.
The Group provides advertising and marketing solutions to customers for promotion of their brands and conduction of effective marketing activities through its mobile application. Display-based mobile marketing services For display-based online advertising services, the Group has determined that its mobile 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. F-24 Hello Group Inc. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2019, 2020 AND 2021 (in thousands, except share data)
Revenue recognition - continued
Performance-based mobile marketing services The Group also enables advertising customers to place links on its mobile platform on a pay-for-effectiveness The Group’s mobile marketing revenues are recognized net of agency rebates, if applicable. Agency rebates have not been material for the years ended December 31,
The 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 customers. The Group determines that it has a single performance obligation to the players who purchased the virtual items to gain an enhanced game-playing experience over the playing period of the paying players. Specially, the Group is primarily responsible for fulfilling the promise to provide maintenance services and 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. 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 correspondingin-game purchase.
Revenues from other services 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 or less. These costs are recorded within selling and marketing expenses. F-25 Hello Group Inc. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2019, 2020 AND 2021 (in thousands, except share data)
Contract balances Contract balances include accounts receivable and deferred revenue. Accounts receivable represent cash due from third-party application stores and other payment channels as well as from advertising customers and are recorded when the right to consideration is unconditional. The charges related to contract assets in the period. Deferred revenue primarily includes cash received 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 Cost of revenues Cost of revenues consist of expenditures incurred in the generation of the Group’s revenues, including but not limited to revenue sharing with the broadcasters, talent agencies, gift recipients resulting from the Government subsidies The Group records income amounted to RMB255,750, RMB142,061 and RMB63,615 for the years ended December 31, 2019, 2020 and 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 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. 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 accrued expenses and other current liabilities on the consolidated balance sheets. RMB1,484,651, RMB 1,266,603 and F-26 Hello Group Inc. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2019, 2020 AND 2021 (in thousands, except share data)
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 realized. Deferred income taxes are recognized on the undistributed earnings of subsidiaries, which are presumed to be transferred to the parent company and are 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 Foreign currency translation The reporting currency of the Company is the Renminbi (“RMB”). The functional currency of the Company is the US dollar (“US$”). The Company’s operations are principally conducted through the subsidiaries, its VIEs and VIEs’ subsidiaries located in the PRC where the local currency is the functional currency. Monetary assets and liabilities denominated in currencies other than the functional currency are translated into the functional currency at the rates of exchange 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. Assets and liabilities of the Group companies are translated 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 Translations of amounts from RMB into US$ for the convenience of the reader were calculated at the noon buying rate of US$1.00 = F-27 Hello Group Inc. FOR THE YEARS ENDED DECEMBER 31, 2019, (in thousands, except
Leases The Group leases administrative office spaces and right-of-use right-of-use For short-term leases, the Group records Advertising expenses Advertising expenses, 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 RMB1,960,002, RMB2,255,519 and RMB2,192,512 for the years ended December 31, 2019, 2020 and 2021, respectively. Comprehensive income (loss)Comprehensive income (loss) includes net income Share-based compensation Share-based payment transactions with employees, executives and paid-in capital.Share-based compensation with cash settlement features specific period, upon F-28 Hello Group Inc. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - FOR THE YEARS ENDED DECEMBER 31, 2019, 2020 AND 2021 (in thousands, except share data)
Share-based compensation - continuedThe estimate of forfeiture rate 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 is recognized through a cumulative catch-up adjustment in the period of change.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. Basic Diluted as-if-converted Hello Group Inc. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, (in thousands, except share data)
Recent accounting pronouncements adopted In 2020-01, Investments—Equity Securities (Topic 321), Investments—Equity Method and Joint Ventures (Topic 323), which clarifies that a company should consider observable transactions that require a company to either apply or discontinue the equity method of accounting under Topic 323, Investments—Equity Method and Joint Ventures, for the purposes of applying the measurement alternative in accordance with Topic 321 immediately before applying or upon discontinuing the equity method. The yet been issued. The Group adopted 2020-01 on January 1, Recent accounting pronouncements not yet adopted In 2020-06, Debt — Debt with Conversion and 470-20) and Derivatives and Hedging — Contracts in 815-40) (“ASU2020-06”). ASU2020-06 simplifies the accounting for 2020-06 include: a. removing from U.S. GAAP the separation models for (1) convertible debt with a CCF and (2) convertible instruments with a BCF; b. amending diluted EPS calculations for convertible instruments to requireif-converted method, and; c. amending the 2020-06 are effective for fiscal years beginning after December 15, In May 2021, the FASB issued ASU No. 2021-04, Earnings Per Share (Topic 260), Debt — Modifications and Extinguishments (Subtopic470-50), Compensation — Stock Compensation (Topic 718), and Derivatives and Hedging — Contracts in Entity’s Own Equity (Subtopic815-40) 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 amendments 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 In October 2021, the FASB issued ASU No. 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers (ASU 2021-08), which clarifies that an acquirer of a business should recognize 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 business combinations occurring on or after the effective date of the amendments, with early In November 2021, FASB issued ASU Hello Group Inc. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, (in thousands, except share data)
Prepaid expenses and other current assets consisted of the following:
Hello Group Inc. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, (in thousands, except share data)
The Group performed impairment analysis for equity method investments and equity securities without readily determinable fair values periodically. Impairment respectively. F-32 Hello Group Inc. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2019, 2020 AND 2021 (in thousands, except share data)
Property and equipment, net consisted of the following:
Depreciation expenses charged to the consolidated statements of operations for the years ended December 31, Hello Group Inc. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, (in thousands, except share data)
Intangible assets, net consisted of the following:
Amortization expenses Refer to Note 7 for further details. The estimated aggregate amortization expenses for each of the five succeeding fiscal years and thereafter are as follows:
F-34 Hello Group Inc. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2019, 2020 AND 2021 (in thousands, except share data)
To assess potential impairment of goodwill, the Group performs an assessment of the carrying value of the reporting units at least on an annual basis or when events occur or circumstances change that would more likely than not reduce the estimated fair value of the reporting units below its carrying value. The Group performed a goodwill impairment analysis as of December 31, Beginning in mid of 2021, with the departure of Tantan’s founders, management undertook a comprehensive review of Tantan’s strategy and operations, and determined to lower Tantan’s monetization level to improve user experience and retention to drive overall user growth, which resulted in a decline in the revenue and earnings estimates due to an overall reduced future growth expectations. As of December 31, 2021, combined with a decline in Group’s share price which resulted in the market capitalization of the Group being significantly below its book value, the Group has determined that it was more likely than not that goodwill was impaired. Accordingly, the Group determined the fair value of 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. Key assumptions used to determine the estimated fair value include: (a) internal cash flows forecasts including expected revenue growth, operating margins and estimated capital needs, (b) an estimated terminal value using a terminal year long-term future growth rate of 3% determined based on the growth prospects of the reporting units; and (c) a discount rate of 20% that reflects the weighted-average cost of capital adjusted for the relevant risk associated with the Momo and Tantan reporting units’ operations and the uncertainty inherent in the Group’s internally developed forecasts. a
Accrued expenses and other current liabilities consisted of the following:
In July 2018, the Company issued RMB4,985 million (US$725 million) of convertible senior notes (the “Notes”) which will mature on July 1, 2025. The Notes will be convertible into the Company’s American depositary shares (“ADSs”), at the option of the holders, based on an initial conversion rate of 15.4776 of the Company’s ADSs per US$1,000 principal amount of Notes (which is equivalent to an initial conversion price of approximately US$64.61 per ADS and represents an approximately 42.5% conversion premium over the closing trading price of the Company’s ADSs on June 26, 2018, which was US$45.34 per ADS). The conversion rate for the Notes is subject to adjustments upon the occurrence of certain events. During the year ended December 31, 61.37 per ADS) due to the cash dividend paid in April 2020. During the year ended December 31, 2021, the conversion rate was adjusted to 16.9816 of the Company’s ADSs per US$1,000 principal amount of Notes (which is equivalent to a conversion price of approximately US$58.89 per ADS) due to the cash dividend paid in April 2021. The holders of the Notes may convert their notes, in integral multiples of US$1,000 principal amount, at any time prior to the day immediately preceding the maturity date. The Company will not have the right to redeem the Notes prior to maturity, except in the F-35 Hello Group Inc. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2019, 2020 AND 2021 (in thousands, except share data)
event of certain changes to the tax laws or their application or interpretation. The holders of the Notes will have the right to require the Company to repurchase all or part of their Notes in cash on July 1, 2023, or in the event of certain fundamental changes. As of December 31, 2020 and The Notes bear interest at a rate of 1.25% per year and will be payable semiannually. As of December 31, years ended December 31, years ended December 31, The conversion option meets the definition of a derivative. However, since the conversion option is considered indexed to the Company’s own stock and classified in stockholders’ equity, the scope exception is met and accordingly the bifurcation of the conversion option from the Notes is not required. There is no beneficial conversion feature attributable to the Notes as the set conversion prices for the Notes are greater than the respective fair values of the ordinary share price at date of issuance. Additionally, the feature of mandatory redemption upon maturity is clearly and closely related to the debt host and does not need to be bifurcated. Based on above, the Company accounted for the Notes in accordance with ASC 470 “Debt”, as a single instrument under long-term debt. Issuance costs related to the Notes is recorded in consolidated balance sheet as a direct deduction from the principal amount of the Notes.
Operating leases The Group’s leases consist of operating leases for administrative office spaces and IDC facilities in different cities in the PRC. For leases with terms greater than 12 months, the Company records the related asset and lease liability at the present value of lease payments over the lease term. The Company elected the practical expedient not to separate lease and non-lease components of contracts, except for bandwidth service included in IDC facilities lease contracts. As of December 31, Total operating lease expense was RMB154,368 and RMB190,561, including RMB20,418 and RMB11,270 short-term lease expense for the years ended December 31,
F-36 Hello Group Inc. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - FOR THE YEARS ENDED DECEMBER 31, 2019, 2020 AND 2021 (in thousands, except share data) Operating leases - continuedAs of December 31,
Payments under operating leases are expensed on a straight-line basis over the periods of their respective leases. The terms of the leases do not contain rent escalation or contingent rents.
Measured The Group measures its financial assets and liabilities including cash and cash equivalents and fair value option investment at fair value on a recurring basis as of December 31, As of December 31,
Disclosed on a recurring basis The fair value of the Notes was determined based on inputs that are observable in the market or that could be derived from, or corroborated with, observable market data, including the trading price of the Company’s convertible notes, when available, the Company’s stock price and interest rates based on similar debt issued by parties with credit ratings similar to the Company (Level 2). As of December 31, was RMB13,235,006 and RMB10,336,316, respectively, and the interest rates were determined based on the prevailing interest rates in the market (Level 2). F-37 Hello Group Inc. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, (in thousands, except share data)
Measured on nonrecurring basis The Group measures its equity method investments at fair value on a nonrecurring basis whenever events or changes in circumstances indicate that the carrying value may not be recoverable. For equity securities without readily determinable fair value for which the Group elected to use the measurement alternative, Such impairments are considered level 3 fair value measurements because the Group used unobservable inputs such as the management projection of discounted future cash flow and the discount rate. The Group’s goodwill and intangible assets are primarily acquired through business acquisitions. The group measures its goodwill and intangible assets at fair value on a nonrecurring basis annually or whenever events or changes in circumstances indicate that carrying amount of a reporting unit exceeds its fair value. Acquired intangible assets are measured using the income approach — discounted cash flow method when events or changes in circumstance indicate that the carrying amount of an asset may no longer be recoverable. For goodwill impairment testing, refer to Note
Cayman In July 2014, the Company was redomiciled in the Cayman Islands as an exempted company registered under the laws of the Cayman Islands. Under the current laws of the Cayman Islands, it is not subject to tax on either income or capital gain. BVI Momo BVI is a tax-exempted company incorporated in the BVI.Hong Kong The Company’s subsidiaries domiciled in Hong Kong are subject to a two-tiered income tax rate for taxable income earned in Hong Kong effective 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 the existing tax rate of 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 thetwo-tiered tax rate. Momo HK received special dividend of RMB2,200 million and RMB1,300 million during the years ended December 31, 2020 and 2021, respectively. Withholding taxes of RMB220 million and RMB130 million in connection with these dividends were fully paid during the years ended December 31, 2020 and 2021.Singapore The Company’s subsidiary domiciled in Singapore is subject to a tax rate of 17% on its taxable income. F-38 Hello Group Inc. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2019, 2020 AND 2021 (in thousands, except share data)
PRC In August 2014, Beijing Momo IT was qualified as a software enterprise. As such, Beijing Momo IT will be exempt from income taxes for two years beginning in its first profitable year which was from 2015 to 2016 followed by a tax rate of 12.5% for the succeeding three years which is from 2017 to 2019. Beijing Momo IT was qualified “High and New Technology Enterprises” (“HNTEs”) and was accordingly entitled to a preferential tax rate of 15% from 2020 to 202 2 .Beijing Momo IT applied for Key Software Enterprise (“KSE”) status for fiscal year 2019 and was approved in 2020, which entitled Beijing Momo IT at the preferential tax rate of 10% for 2019. Accordingly, in 2020 Beijing Momo IT recorded the preferential tax rate adjustment from 12.5% to 10% for income tax expense of the fiscal year of 2019. According to No. 23 announcement of the State Administration of Taxation of PRC in April 2018, Chengdu Momo Technology Co., Ltd (“Chengdu Momo”) is no longer required to submit the preferential tax rate application to the tax authority , but is only required to keep the relevant materials for future tax inspection instead. Based on the historical experience, the Group believes Chengdu Momo will most likely to qualify as western China development enterprise and accordingly be entitled to a preferential income tax rate of 15% for the year ended December 31, 1 because Chengdu Momo’s business nature has no significant changes. As a result, the Group applied 15% to determine the tax liabilities for Chengdu Momo. In July 2019, Tantan Technology qualified as HNTE. As such, Tantan Technology enjoyed a preferential tax rate of 15% from 2019 to 2021. Tantan Technology applied for Software Enterprise (“SE”) status for fiscal year 2020 and was approved in 2021, which entitled Tantan Technology to enjoy an income tax exemption in 2020. Accordingly, in 2021 Tantan Technology recorded the preferential tax rate adjustment from 15% to 0 % for income tax expense of the fiscal year of 2020. The other entities incorporated in the PRC are subject to an enterprise income tax at a rate of 25%. Under the Enterprise Income Tax Law (the “EIT Law”) and its implementation rules which became effective on January 1, 2008, dividends generated after January 1, 2008 and payable by foreign-invested enterprise in the PRC to its foreign investors who are non-resident enterprises are subject to a 10% withholding tax, unless any such foreign investor’s jurisdiction of incorporation has a tax treaty withthe PRC that provides for a different withholding arrangement. Under the taxation arrangement between the PRC and Hong Kong, a qualified Hong Kong tax resident which satisfies the criteria of “beneficial owner” and directly holds 25% or more of the equity interest in a PRC resident enterprise is entitled to a reduced withholding tax rate of 5% for dividends generated in the PRC. Cayman, where the Company is incorporated, does not have a tax treaty with PRC.Uncertainties exist with respect to how the current income tax law in the PRC applies to the Group’s overall operations, and more specifically, with regard to tax residency status. The EIT Law includes a provision specifying that legal entities organized outside of the PRC will be considered residents for Chinese income tax purposes if the place of effective management or control is within the PRC. The implementation rules to the EIT Law provide that non-resident legal entities will be considered China residents if substantial and overall management and control over the manufacturing and business operations, personnel, accounting, properties, etc., occurs within the PRC. Despite the present uncertainties resulting from the limited PRC tax guidance on the issue, the Group does not believe that the legal entities organized outside of the PRC within the Group should be treated as residents for EIT law purposes. If the PRC tax authorities subsequently determine that the Company and its subsidiaries registered outside the PRC should be deemed resident enterprises, the Company and its subsidiaries registered outside the PRC will be subject to the PRC income taxes, at a rate of 25%.F-39 Hello Group Inc. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - FOR THE YEARS ENDED DECEMBER 31, 2019, 2020 AND 2021 (in thousands, except share data)
PRC - continuedIf any entity within the Group that is outside the PRC were to be a non-resident for PRC tax purposes,Group has accrued additional withholding tax of RMB207 million on retained earnings generated in 2021 by Beijing Momo IT, because Beijing Momo IT’s earnings is planning to be remit 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. Aggregate undistributed earnings of the Company’s PRC subsidiaries and the VIEs 0 deferred tax liability was recorded for taxable temporary differences attributable to the undistributed earnings because the Company believes the undistributed earnings can be distributed in a manner that would not be subject to income tax. Deferred income taxes reflect the net tax effects of temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes.Significant components of the Group’s deferred tax assets and liabilities are as follows:
The Group considers the following factors, among other matters, when determining whether some portion or all of the deferred tax assets will more likely than not be realized: the nature, frequency and severity of losses, forecasts of future profitability, the duration of statutory carry-forward periods, the Group’s experience with tax attributes expiring unused and tax planning alternatives. The Group’s ability to realize deferred tax assets depends on its ability to generate sufficient taxable income within the carry-forward periods provided for in the tax law. As of December 31, net operating loss carry-forward for the Company’s subsidiaries domiciled in the PRC, VIEs, and VIEs’ subsidiaries amounted to net operating loss in the PRC can be carried forward for five years to offset future taxable profit, and the period was extended to 10 years for entities qualified as HNTE in 2018 and thereafter.As of December 31, net operating loss carryforward for the Company’s subsidiaries domiciled in Hong Kong amounted to F-40 Hello Group Inc. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - FOR THE YEARS ENDED DECEMBER 31, (in thousands, except share data)
PRC - continuedAs of December 31, net operating loss carryforward for the Company’s subsidiaries domiciled in Singapore amounted to can be carried forward indefinitely and set off against its future taxable profits.The Group does not file combined or consolidated tax returns, therefore, losses from individual subsidiaries or the VIEs may not be used to offset other subsidiaries’ or VIEs’ earnings within the Group. Valuation allowance is considered on each individual subsidiary and legal entity basis. Valuation allowances have been established in respect of certain deferred tax assets as it is considered more likely than not that the relevant deferred tax assets will not be realized in the foreseeable future. Reconciliation between income tax expense computed by applying the PRC EIT rate of 25% to income before income taxes and the actual provision for income tax is as follows:
If Beijing Momo IT, Chengdu Momo and Tantan Technology did not enjoy income tax exemptions and preferential tax rates for the years ended December 31,
NaN significant unrecognized tax benefit were identified for the years ended December 31, material interest and penalties related to potential underpaid income tax expenses and also believed that uncertainty in income taxes did 0t have a significant impact on the unrecognized tax benefits within next twelve months.Hello Group Inc. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, (in thousands, except share data)
In For the years ended December31,
On March 12, 2019, the Company declared a special cash dividend in the amount of US$0.62 per ADS, or US$0.31 per ordinary share. US$128,607 to shareholders of record at the close of business on April 5, 2019. The(RMB877,346) cash dividend was paid inex-dividend date was April 4, 2019. The cash dividend was recorded as a reduction of retained earnings.On March 19, 2020, the Company declared a special cash dividend in the amount of US$0.76 per ADS, or US$0.38 per ordinary share. US$158,649 (RMB1,123,983) cash dividend was paid in April 2020 to shareholders of record at the close of business on April 8, 2020. Theex-dividend date was April 7, 2020. The cash dividend was recorded as a reduction of retained earnings.On March 25, 2021, the Company declared a special cash dividend in the amount of US$0.64 per ADS, or US$0.32 per ordinary share. US$132,032 (RMB852,743) cash dividend was paid in April 2021 to shareholders of record at the close of business on April 13, 2021. Theex-dividend date was April 12, 2021. The cash dividend was recorded as a reduction of retained earnings.
Share options granted by the Company In November 2012, the Company adopted a share incentive plan (“2012 Plan”), which was amended 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 ordinary shares. In November, 2014, the Company adopted the 2014 share incentive plan (“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. Starting from 2017, the number of shares reserved for future issuances under the 2014 Plan will 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 the Company’s 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, the Company will 0 longer grant any incentive shares under the 2012 Plan. The time and condition to exercise options will be determined by the Board or a committee of the Board. The term of the options may not exceed ten years from the date of the grant, except for the situation of amendment, modification and termination. Under the 2014 Plan, share options are subject to vesting schedules ranging from two to four years. Hello Group Inc. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - FOR THE YEARS ENDED DECEMBER 31, (in thousands, except share data)
Share options granted by the Company continued The following table summarizes the option activity for the year ended December 31,
There were The weighted-average grant-date fair value of the share options granted during the years The The fair value of options granted was estimated on the date of grant using the Black-Sholes pricing model
Risk-free interest rate was estimated based on the daily treasury long term rate of U.S. Department of the Treasury with a maturity period close to the expected term of the options, plus the country default spread of China.
The expected term of the options represents the period of time between the grant date and the time the options are either exercised or forfeited, including an estimate of future forfeitures for outstanding options. F-43 Hello Group Inc. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - FOR THE YEARS ENDED DECEMBER 31, 2019, 2020 AND 2021 (in thousands, except share data)
Share options granted by the Company
The volatility of the underlying ordinary shares during the life of the options was estimated based on the historical stock price volatility of comparable listed companies over a period comparable to the expected term of the options.
The dividend yield was estimated by the Group based on its expected dividend policy over the expected term of the options.
The exercise price of the options was determined by the Group’s board of directors.
The fair value of the ordinary shares is determined as the closing sales price of the ordinary shares as quoted on the principal exchange or system. For employee, non-employee share options, the Group recorded share-based compensation of As of December 31, Restricted share units (“RSUs”) granted by the Company On April 15, 2019, April 15, 2020 and April 15, Company grantedThe Company will forfeit the unvested portion of the RSUs if the grantees terminate their service during the vesting period. The Group recorded share-based compensation of As of December 31, Restricted shares granted by QOOL Inc. On December 12, 2018, QOOL Inc.’s minority interest shareholder entered into an arrangement with QOOL Inc. whereby 9,000,000 ordinary shares of QOOL Inc. owned by the minority interest shareholder became subject to service and transfer restrictions. Such restricted shares are subject to repurchase by QOOL Inc. upon early termination of two years of the employment or consulting service provided by the founder of the minority interest shareholder at a nominal price. F-44 Hello Group Inc. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - FOR THE YEARS ENDED DECEMBER 31, 2019, 2020 AND 2021 (in thousands, except share data)
Restricted shares granted by QOOL Inc. The Group recorded share-based compensation of and RMB10,227 forthe restricted shares for the years ended December 31, Share options granted by Tantan In March 2015, Tantan adopted the 2015 share incentive plan (“2015 Plan”), pursuant to which a maximum aggregate of 1,000,000 shares may be issued pursuant to awards may be authorized, but unissued ordinary shares. The Board of Directors of Tantan may in its discretion make adjustments to the numbers of shares. In April 2016 and March 2017, the Board of Directors of Tantan approved to adjust the numbers of shares to a maximum aggregate of 2,000,000 and 2,793,812, respectively.In July 2018, Tantan adopted the 2018 share incentive plan (“2018 Plan”), pursuant to which the maximum aggregate number of shares which may be issued shall initially be 5,963,674 ordinary shares, plus that number of ordinary shares authorized for issuance under the 2015 Plan, in an amount equal to (i) the number of ordinary shares that were not granted pursuant to the 2015 Plan, plus (ii) the number of ordinary shares that were granted pursuant to the 2015 Plan that have expired without having been exercised in full or have otherwise become unexercisable. The time and condition to exercise options will be determined by Tantan’s Board. The term of the options may not exceed ten years from the date of the grant, except for the situation of amendment, modification and termination. Tantan split its shares 1-for-5 Options classified as equity awards The following table summarizes the option activity for the year ended December 31,
F-45 Hello Group Inc. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2019, 2020 AND 2021 (in thousands, except share data)
Share options granted by Tantan Options classified as equity awards - continuedDuring the years ended December 31, 2020 and 2021, the Company voluntarily repurchased for employees’ vested options upon the termination of their employment with total consideration of RMB54,367 and RMB119,141, respectively. Those options were subsequently cancelled. Cash payments amounting to RMB26,276 and RMB62,276 were made during the year ended December 31, 2020 and 2021, respectively. The Group recorded the consideration directly to equity, to the extent that the amount does not exceed the fair value of the vested option repurchased at the repurchase date. The Group recorded any excess of the repurchase price over the fair value of the vested options repurchased as additional compensation cost. There were NaN as of December 31, The weighted-average grant-date fair value of the share options granted during the years ended December 31, 2021 was US$ and US$ The fair value of each option granted was estimated on the date of grant using the binomial tree pricing model with the following assumptions used for grants during the applicable periods:
Risk-free interest rate was estimated based on the daily treasury long term rate of U.S. Department of the Treasury with a maturity period close to the expected term of the options, plus the country default spread of China.
Tantan used the original contractual term.
The volatility of the underlying ordinary shares during the life of the options was estimated based on the historical stock price volatility of comparable listed companies over a period comparable to the expected term of the options.
The dividend yield was estimated by Tantan based on its expected dividend policy over the expected term of the options.
The exercise price of the options was determined by the Board of Directors of Tantan. F-46 Hello Group Inc. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2019, 2020 AND 2021 (in thousands, except share data)
Share options granted by Tantan Options classified as equity awards - continued
The estimated fair value of the ordinary shares underlying the options as of the respective grant dates was determined based on a retrospective valuation before Tantan was acquired and on a contemporaneous valuation after Tantan was acquired, which used management’s best estimate for projected cash flows as of each valuation date. For share options classified as equity awards, Tantan recorded share-based compensation of RMB99,635, RMB77,807 and As of December 31, Options classified as liability awards In August 2018, Tantan granted 17,891,025 share options to its founders under the 2018 Plan. The founders have the right to request Tantan to redeem for cash the vested options upon the termination of the founders’ employment at a Accordingly, the awards are re-measured at each reporting date with a corresponding charge to share-based compensation expense and are amortized over the estimated vesting period. The share options also include a performance condition in which the founders have the right to receive fully vested options immediately upon achieving certain performance conditions.During the year ended December 31, 2019, all outstanding options granted to Tantan’s founders were vested as the necessary performance conditions were probable to be satisfied. Thereafter, the awards are re-measured at fair value at each reporting date with a corresponding charge to share-based compensation expense.In May 2021, the founders resigned from Tantan and exercised the right to have Tantan repurchased for cash the vested options at the pre-agreed fixed equity value of Those options were subsequently cancelled. The difference between the repurchase price and the fair value of the awards as of settlement date was recorded as an adjustment of share-based compensation during the year ended December 31, 2021. Cash payments amounting were made to the founders during the year ended December 31, 2021, and the remaining US$12,000 is in an escrow account payable upon certain conditions are met. The fair value of each option granted was estimated using the binomial tree pricing model with the following assumptions used during the applicable periods:
F-47 Hello Group Inc. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2019, 2020 AND 2021 (in thousands, except share data)
Share options granted by Tantan Options classified as liability awards - continued
Risk-free interest rate was estimated based on the daily treasury long term rate of U.S. Department of the Treasury with a maturity period close to the expected term of the options, plus the country default spread of China.
Tantan used the original contractual term.
The volatility of the underlying ordinary shares during the life of the options was estimated based on the historical stock price volatility of comparable listed companies over a period comparable to the expected term of the options.
The dividend yield was estimated by Tantan based on its expected dividend policy over the expected term of the options.
The exercise price of the options was determined by the Board of Directors of Tantan.
The estimated fair value of the ordinary shares underlying the options as of each period-end date was determined based on acontemporaneous valuation, which used management’s best estimate for projected cash flows as of each valuation date. For share options classified as liability awards, Tantan recorded share-based compensation of , RMB12,485and including the impact of the accelerate vesting and the subsequent adjustment of the fair value at each reporting
Hello Group Inc. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, (in thousands, except share data)
The calculation of net income (loss) per share is as follows:
The following table summarizes potential ordinary shares outstanding excluded from the computation of diluted net income (loss) per ordinary share for the years ended December 31,
For the year ended December 31, F-49 Hello Group Inc. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, (in thousands, except share data)
Contingencies The Group is subject to legal proceedings in the ordinary course of business. The Group does not believe that any currently pending legal or administrative proceeding to which the Group is a party will have a material effect on its business or financial condition.
F-50 Hello Group Inc. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2019, 2020 AND 2021 (in thousands, except share data)
The Group’s chief operating decision maker has been identified as the Chief Executive Officer (“CEO”) who reviews financial information of operating segments based on US GAAP amounts when making decisions about allocating resources and assessing performance of the Group. During the 2021, it operated in 3operating segments namely Momo,and QOOL. mainly include value-added services and live video services provided onF-51 Hello Group Inc. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2019, 2020 AND 2021 (in thousands, except share data)
The Group primarily operates in the PRC and substantially all of the Group’s long-lived assets are located in the PRC. The Group’s chief operating decision maker evaluates performance based on each reporting segment’s net revenue, operating cost and expenses, operating income and net income. Net revenues, operating cost and expenses, operating income, and net income by segment for the years ended December 31,
Hello Group Inc. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, (in thousands, except share data)
The impairment loss was presented as an unallocated item in the segment information because the CE does not consider this as part of the segment operating performance measure.O
Full time employees of the Group in the PRC participate in a government-mandated defined contribution plan pursuant to which certain pension benefits, medical care, unemployment insurance, employee housing fund and other welfare benefits are provided to employees. The Group accrues for these benefits based on certain percentages of the employees’ salaries. The total provisions for such employee benefits were
In accordance with the Regulations on Enterprises with Foreign Investment of China and their articles of association, the Group’s subsidiaries and VIEs located in the PRC, being foreign invested enterprises established in the PRC, are required to provide for certain statutory reserves. These statutory reserve funds include one or more of the following: (i) a general reserve, (ii) an enterprise expansion fund or discretionary reserve fund, and (iii) a staff bonus and welfare fund. Subject to certain cumulative limits, the general reserve fund requires a minimum annual appropriation of 10% of after-tax profit (as determined under accounting principles generally accepted in China at eachyear-end); the other fund appropriations are at the subsidiaries’ or the affiliated PRC entities’ discretion. These statutory reserve funds can only be used for specific purposes of enterprise expansion, staff bonus and welfare, and are not distributable as cash dividends except in the event of liquidation of our subsidiaries, our affiliated PRC entities and their respective subsidiaries. The Group’s subsidiaries, VIEs and VIEs’ subsidiaries are required to allocate at least 10% of their after tax profits to the general reserve until such reserve has reached 50% of their respective registered capital.F-53 Hello Group Inc. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2019, 2020 AND 2021 (in thousands, except share data)
Appropriations to the enterprise expansion reserve and the staff welfare and bonus reserve are to be made at the discretion of the board of directors of each of the Group’s subsidiaries. The appropriations to these reserves by the Group’s PRC subsidiaries, VIEs and VIEs’ subsidiaries were Relevant PRC laws and regulations restrict the WFOEs, VIEs and VIEs’ subsidiaries from transferring a portion of their net assets, equivalent to the balance of their statutory reserves and their paid in capital, to the Company in the form of loans, advances or cash dividends. The WFOEs’ accumulated profits may be distributed as dividends to the Company without the consent of a third party. The VIEs and VIEs’ subsidiaries’ revenues and accumulated profits may be transferred to the Company through contractual arrangements without the consent of a third party. Under applicable PRC law, loans from PRC companies to their offshore affiliated entities require governmental approval, and advances by PRC companies to their offshore affiliated entities must be supported by bona fide business transactions. The capital and statutory reserves restricted which represented the amount of net assets of the Group’s PRC subsidiaries, VIEs and VIEs’ subsidiaries in the Group not available for distribution were
Special cash dividend On March ex-dividend date was April Restriction of cash balances in bank In million was restricted for withdrawal by a local government authority in the PRC. The restricted amount is suspected to |