Hello Group Q2 2026 Earnings: Overseas Growth Partly Offsets Domestic Weakness

Hello Group (NASDAQ: MOMO) reported Q2 2026 net revenue of RMB2.486 billion, down 5.1% year over year, while diluted earnings per ADS turned positive at RMB1.52 from a loss of RMB0.84. Overseas expansion partly offset declining mainland revenue, but rising costs reduced operating profit; operating cash flow, meanwhile, increased to RMB642.3 million.

Core Earnings Data

Revenue declined as weakness in Momo and Tantan’s domestic businesses outweighed part of the growth generated by overseas apps. Attributable net income returned to positive territory largely because Q2 2025 included an additional RMB547.9 million withholding-tax accrual. Underlying profitability weakened, with operating income falling faster than revenue even as operating cash flow improved.

The year-over-year net income comparison is affected materially by the prior-year tax accrual. Non-GAAP measures exclude share-based compensation, acquisition-related intangible-asset amortization and associated tax effects, but non-GAAP operating income still fell to RMB276.1 million from RMB447.7 million.

Business and Geographic Performance

Mainland China remained the primary source of the overall revenue decline, while overseas operations continued to expand. Overseas revenue accounted for approximately 27.1% of total revenue, up from about 16.9% one year earlier.

The company attributed the value-added service decline to external factors affecting some Momo broadcasters and agencies, weak consumer sentiment and a smaller Tantan user base. Momo’s paying users increased both year over year and from 3.7 million in the previous quarter, but this did not prevent Momo revenue from contributing to the mainland decline.

Overseas growth came from new audio- and video-based products in the Middle East and North Africa, along with additional revenue from dating brands outside that region. Management said the international portfolio is becoming more balanced rather than relying on a single product.

Overseas Growth Partly Offsets Revenue Weakness but Adds Cost Pressure

Total costs and expenses increased 1.5% to RMB2.260 billion even though revenue fell 5.1%. This mismatch was the main reason operating income declined about 41% and the operating margin narrowed by approximately 5.8 percentage points.

The cost increase included RMB56.8 million of additional film-production expenses, increased marketing for new overseas apps and higher payment-channel costs. The company noted that overseas businesses incur higher payment-channel costs as a percentage of revenue. Lower marketing expenses for Chinese apps and reduced revenue sharing with Momo broadcasters provided only a partial offset.

Sales and marketing expense rose to RMB388.0 million from RMB347.3 million. The results therefore show that overseas growth is improving the geographic revenue mix, but its current cost structure has not yet offset the profitability pressure from declining domestic revenue.

Cash Flow and Capital Allocation

Operating cash flow increased to RMB642.3 million from RMB250.1 million. In addition to the recovery in reported net income, cash flow benefited from positive changes in accounts receivable, prepaid expenses and other operating assets during the quarter.

As of June 30, 2026, cash, cash equivalents, deposits, short-term investments and restricted cash totaled RMB8.542 billion, compared with RMB8.678 billion at the end of 2025. During Q2, Hello Group spent RMB184.8 million on share repurchases and RMB280.6 million on dividends.

Interest income fell to RMB53.6 million from RMB105.5 million. The company attributed the decline to a smaller pool of interest-bearing funds following loan repayments, dividends, tax payments, acquisitions, investments and repurchases, as well as lower yields and a reduced proportion of higher-yielding U.S. dollar funds. Other gains and losses included a RMB25.1 million net loss, mainly from unrealized fair-value changes in short-term investments such as paper gold.

As of September 3, 2026, the company had repurchased 68.0 million ADSs for US$424.1 million under its repurchase program, at an average price of US$6.22 per ADS. US$62.0 million remained authorized.

Earnings Guidance

Hello Group expects revenue to remain below the prior-year level in Q3 2026. The guidance range indicates that the domestic and monetization pressures affecting Q2 are expected to continue in the following quarter.

Management’s View

Chairman and CEO Yan Tang said Momo continued to manage external headwinds while preserving the performance of its established cash-generating business. He also highlighted Tantan’s work on AI capabilities intended to improve user experience and monetization efficiency, as well as increasing diversification and coordination across the overseas app portfolio.

Recent Insider Transactions

The supplied insider dataset reports six purchases totaling 33,901 shares and one sale totaling 4,218 shares over the latest six-month period, resulting in net purchases of 29,683 shares. Among the individually identified records, the dataset provides complete action and value details for the following sale.

The transaction data alone does not establish the insider’s view of the company’s outlook.

Risks Investors Need to Watch

• Continued mainland contraction: Mainland revenue fell approximately 16.7%, reflecting declines at both Momo and Tantan. A slow recovery among Momo broadcasters and agencies or continued weak consumer sentiment could prolong the pressure.
• Higher overseas operating costs: International growth requires additional marketing and carries higher payment-channel costs as a percentage of revenue, which may continue to weigh on operating margin.
• Tantan user decline: Tantan paying users fell to 0.5 million from 0.7 million, and the company directly linked part of its revenue decline to the app’s smaller user base.
• Lower non-operating income: Reduced interest-bearing funds and lower market yields cut interest income nearly in half, while fair-value changes in short-term investments produced a quarterly loss.
• Persistent revenue pressure: Q3 guidance calls for another year-over-year decline, suggesting that overseas growth may not yet be sufficient to fully offset weakness in the domestic businesses.

Summary

Hello Group’s Q2 2026 results showed a widening divide between domestic and overseas operations. Rapid international growth softened the mainland decline and operating cash flow improved, but higher costs and weaker domestic monetization reduced operating profitability. The next key points are whether overseas apps can scale more efficiently, whether Momo’s affected broadcaster ecosystem recovers and whether Tantan can stabilize its paying-user base.