摯文集團 (MOMO) 2026 年第二季法說會：海外成長，國內展望疲弱

重點速覽

• 摯文集團 (Hello Group) (NASDAQ: MOMO) 公布 2026 年第二季營收為人民幣 24.9 億元，年減 5%，但季增 4%。
• 國內營收年減 17% 至人民幣 18.1 億元，反映出涉稅監管對陌陌公會產生的壓力、消費情緒低迷以及高價值用戶支出減少。
• 海外營收年增 52%、季增 13% 至人民幣 6.73 億元，占集團總營收比例從去年同期的 17% 提升至 27%。
• 歸屬於股東的 Non-GAAP 淨利為人民幣 2.739 億元，相較於 2025 年第二季的淨虧損人民幣 9,600 萬元有所改善。Non-GAAP 營業利潤率從 17.1% 降至 11.1%。
• 管理層預測 2026 年第三季營收介於人民幣 24 億至 25 億元之間，相當於年減 9.4% 至 5.7%。
• 管理層目前預計全年集團營收將呈中個位數百分比下滑。在落實成本控制與營運效率提升的前提下，調整後營業利潤率達到 10% 出頭的目標仍可實現。

關鍵財務數據

業務與營運表現

陌陌 (Momo)

陌陌增值服務營收為人民幣 15.4 億元，年減 16%，但季增 2%。影響公會與主播的稅務審查持續帶來拖累，而疲軟的消費支出則限制了變現能力。

在季節性流量復甦以及主題音視訊活動的推動下，付費用戶數季增 20 萬至 390 萬。管理層表示，隨著產品迭代，平台參與度與整體用戶規模均有小幅改善。

公司持續測試 AI 輔助配對、個性化破冰及聊天工具，並推出了小額變現功能，包括付費提升用戶動態的曝光量。

管理層提高了部分語音公會的分成比例與補貼，以在稅務合規過程中支持供給。下半年計畫專注於高消費用戶的社交參與和專屬服務，同時為中階與長尾用戶擴展低門檻的語音功能及社交遊戲。

探探 (Tantan)

探探產生的營收為人民幣 1.56 億元，年減 18%、季減 3%。付費用戶數季減 4 萬至 50 萬，主因支付寶自動續費規則的調整對會員續費造成壓力。

國內平均用戶規模大體保持穩定並略有增加，這是自 2022 年初開始削減行銷支出以來首次實現止跌回穩。AI 破冰工具、聊天助手及精選配對工具在提升配對效率與用戶留存率方面展現出初步成效。

探探推出了終身會員資格，鼓勵更長的訂閱週期，並引進抖音支付和微信支付，以減少對單一支付管道的依賴。管理層表示，儘管單位成本上升，用戶獲取投資報酬率 (ROI) 的回收率仍維持在 100% 以上。

海外業務

在中東與北非新產品以及 2025 年收購的交友產品併表驅動下，海外營收達到人民幣 6.73 億元。齋戒月後的季節性復甦、遊戲化功能與活動營運也推動了營收季成長。

SoulChill 繼續從第一季的低點復甦，但由於從土耳其 App Store 下架以及中東地緣政治動盪，其表現仍低於管理層最初的預期。

Yaahlan 和 Amar 實現強勁成長。兩者第二季的合計營收已接近 SoulChill 的規模，管理層更表示這兩項產品在第三季已超越 SoulChill。Yaahlan 在第二季達到淨利收支平衡，而 Amar 的虧損持續收窄。管理層預期這兩項產品將在 2027 年為集團利潤做出貢獻，其中 Amar 可能距離收支平衡還有約六個月。

Happn 透過提高付費轉化率和每付費用戶平均收入 (ARPPU) 維持營收成長。公司正將該交友平台擴展至韓國、台灣和英國等市場，同時在行銷投資與獲利能力之間取得平衡。

管理層業績展望

• 2026 年第三季營收預計為人民幣 24 億至 25 億元，年減 9.4% 至 5.7%。
• 若以展望中點計算，管理層預計中國大陸地區營收將年減 10% 高段，而海外營收則將年增 30% 高段。
• 管理層目前預計 2026 全年集團營收將呈中個位數百分比下滑，而先前預期為下滑幾個百分點。
• 原定人民幣 30 億元的海外營收目標目前看來極具挑戰。管理層指出，寧可將目標下修人民幣 1 億至 2 億元，也不願以犧牲獲利能力為代價來加速投資。
• 只要進一步實施人員、銷售及行銷成本優化，公司仍認為 2026 年實現 10% 出頭的調整後營業利潤率是可行的。

風險與關注焦點

• 陌陌最高價值直播用戶的支出自第二季末起弱於預期，並在第三季進一步惡化。管理層將此歸因於高淨值用戶的財富預期減弱。
• 持續的稅務審查給陌陌公會和主播帶來壓力，需要提供更高的分成比例與針對性補貼。
• 支付寶自動續費政策的調整降低了探探的付費轉化率和 ARPPU。
• 海外業務面臨 App Store 限制、地緣政治干擾以及較高的支付管道成本。
• 海外營收貢獻增加致使支付費用占營收比重上升，進而對毛利率構成壓力。
• 電影製作在第二季帶來約人民幣 6,000 萬元的額外虧損，對全年獲利展望造成壓力。

法說會問答精華

分析師重點關注較弱的國內展望、海外多元化布局以及集團獲利能力。

管理層表示，國內營收下修主要是由於陌陌頭部用戶支出下降，而非活躍度下滑。日活躍用戶數 (DAU)、參與度及付費用戶群體保持韌性，而中階用戶、長尾用戶及主播供給相對穩定。公司未發現顯著新增的監管壓力，但預計與總體經濟相關的支出逆風可能會持續至第四季。

在海外業務方面，管理層表示，SoulChill、Yaahlan 和 Amar 在用戶群體、區域布局及產品型態上的差異應能提升抗風險能力。Yaahlan 和 Amar 優於預期的成長部分彌補了 SoulChill 的不足，儘管公司並不打算超出先前計畫加速投資。

在獲利能力方面，管理層承認國內營收疲軟及電影業務虧損使原定的利潤率目標難度增加。儘管如此，在嚴格控管人員與行銷成本並持續提升效率的前提下，公司仍維持 10% 出頭的調整後營業利潤率目標。

法說會完整逐字稿

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完整財報電話會議逐字稿

管理層陳述

Operator

Ladies and gentlemen, thank you for standing by, and welcome to Hello Group's Second Quarter 2026 Earnings Conference Call. [Operator Instructions]

Please note, this conference is being recorded today. I would now like to hand the conference over to your first speaker today, Ms. Ashley Jing. Thank you. Please go ahead, ma'am.

Ashley Jing

Thank you, operator. Good morning, and good evening, everyone. Thank you for joining us today for Hello Group's Second Quarter 2026 Earnings Conference Call. The company's results were released earlier today and are available on the company's IR website.

On the call today are Mr. Tang Yan, CEO of the company; Mr. Wen Jianhua, CEO of the company; and Ms. Peng Hui, CFO of the company. They will discuss the company's business operations and highlights as well as the financials and guidance. They will all be available to answer your questions during the Q&A session that follows.

Before we begin, I would like to remind you that this call may contain forward-looking statements made under the safe harbor provision of the Private Securities Litigation Reform Act of 1995. Such statements are based on management's current expectations and current market and operating conditions and relate to events that involve known or unknown risks, uncertainties and other factors, all of which are difficult to predict and many of which are beyond the company's control, which may cause the company's actual results, performance or achievements to differ materially from those in the forward-looking statements. For the information regarding this and other risks, uncertainties and factors is included in the company's filings with the U.S. Securities and Exchange Commission. The company does not take any further obligation to update any forward-looking statement as a result of new information due to events or otherwise, except as required under law.

I will now pass the call over to our COO, Mr. Wen Jianhua. Jianhua, please.

Jianhua Wen

Okay. [Foreign Language]

Ashley Jing

[Interpreted] Hello, everyone. Thank you for joining today's call. The group maintained steady business momentum in Q2. On the domestic side, Momo continued to preserve the healthy functioning of our cash cow business through product innovation and refined operations. While Tantan focused on AI capability building to improve user experience and monetization efficiency. On the overseas side, the synergy across our diversified product portfolio became increasingly evident.

Next, I'll walk you through the key updates.

Jianhua Wen

[Foreign Language]

Ashley Jing

[Interpreted] Starting with the financials for Q2 '26, total group revenue was RMB 2.49 billion, down 5% year-over-year, but up 4% quarter-over-quarter. Domestic revenue reached RMB 1.81 billion, down 17% year-over-year, but up 1% quarter-over-quarter. Overseas revenue was RMB 673 million, up 52% year-over-year and 13% quarter-over-quarter. Overseas revenue accounted for 27% of total revenue compared to 17% in the same period last year. Adjusted operating income was RMB 276 million with a margin of 11%.

Jianhua Wen

[Foreign Language]

Ashley Jing

[Interpreted] Our 2026 priorities continue along 3 main tracks. For Momo, the goal is to ensure stable sustained productivity of our cash cow business. For Tantan, to continue exploring a dating experience and an efficient business model tailored for Asian users. And for our new businesses to deepen overseas presence, enrich our brand portfolio and build a long-term growth engine.

Next, I'll walk you through each.

Jianhua Wen

[Foreign Language]

Ashley Jing

[Interpreted] Let me start with Momo. On the user side, a year of user-oriented product iteration has effectively lifted platform engagement, combined with the sequential recovery from the seasonal low inorganic traffic, this drove a modest increase in Momo's overall user base. Building on this uptick in the overall scale, our audio and video small-ticket scenarios run themed operational events around the World Cup and key seasonal occasions, driving paying users up 200,000 quarter-over-quarter to 3.9 million.

Jianhua Wen

[Foreign Language]

Ashley Jing

[Interpreted] On the product side, not focused on refining our deep tech matching strategy, precisely paring users with a high intent to chat, which had a positive effect on engagement, retention and overall user scale. AI chat assistants trains its models on real user behavior data to deepen its understanding of user preferences, driving steady growth in future adoption as well as the reply rate in AI greetings. This has both supported long-term retention and user base scale and open up new revenue scenarios. This quarter, we also began [ grade ] testing [indiscernible], which has AI browse user portals to identify common interest, complete on initial screening of potential matches and automatically generate a personalized ice breaker message, further improving matching efficiency and connection success rate.

Jianhua Wen

[Foreign Language]

Ashley Jing

[Interpreted] On user acquisition, we run a holdout experiment on channel spend for dormant user reactivation, aiming to test whether attribution [indiscernible] in our channel data were leading to inefficiencies in these re-engagement efforts. The results show that there is indeed room for continued optimization in our channel investments, and we are confident we can maintain our current platform scale and revenue with less spend. In Q3, we will continue to improve acquisition efficiency based on these findings.

Jianhua Wen

[Foreign Language]

Ashley Jing

[Interpreted] turning to Momo's commercial performance. In Q2, Momo's VAS revenue was RMB 1.54 billion, down 16% year-over-year but up 2% quarter-over-quarter. The year-over-year decline was mainly driven by 2 factors. Number one, continued tightening on the tax front, which has had a sustained [indiscernible] negative impact on our agencies and broadcasters. Number two, softness in consumer spending due to macro.

Sequential growth came in weaker than in previous years, mainly because since April, some agencies in the audio scenario scaled by operations due to tax-related pressures, which weighted on revenue. In late May, we rolled out targeted subsidies to ease the operating pressure on these agencies, which drove a quick recovery in revenue. In Q2, our overall VAS revenue share and ratio rose by a low single-digit percentage points, both year-over-year and quarter-over-quarter, mainly because we moderately raised the revenue sharing ratio and subsidy support for certain core agencies in the audio scenarios to ease the supply side financial pressure through the tax compliance process, keeping the supply side stable at a manageable cost.

On the product and operations side, we stayed with our approach of tier monetization and use case innovation. For high-value users, we selected top grossing broadcasters and created AI-generated [indiscernible] to custom gifts for them, which effectively refreshed paying interest among our top spenders.

For mid-tier users, we capitalized on World Cup-related traffic by rolling out interactive game play such as match predictions, which lifted engagement and user stickiness. At the long tail end, we [indiscernible] a moment's boost feature, letting users pay to increase the exposure of their post. This not only produced positive operating data, but also successfully validated a new small ticket payment scenario. This multipronged refined operating approach provided solid support for the stability of our overall revenue base amid the macro downturn.

Jianhua Wen

[Foreign Language]

Ashley Jing

[Interpreted] Now let's turn to Tantan. As of the end of Q2, Tantan had 0.5 million paying users, a modest decrease of 40,000 quarter-over-quarter, mainly due to pressure on paying conversion from Alipay's adjustments to its auto renewal deduction rules.

On the user base, average domestic user scale was stable with a slight uptick in Q2, marking the first stabilization in our user base since we began scaling back marketing spend in early 2022. New user growth stayed under year-over-year pressure amid the lingering effects of lower marketing spend. But on the product side, refined targeting strategies for different user segments improved matching efficiency, lifting retention among both male and female users to varying degrees and contributing positively to overall user base stability.

Jianhua Wen

[Foreign Language]

Ashley Jing

[Interpreted] In Q2, Tantan's domestic business focused its core efforts on exploring AI-driven improvements to the user experience. Among this, AI icebreaker and AI chat assistant delivered encouraging early results. The team strengthened AI's semantic understanding of users' photos, which feed Tantan's users preference for expressing themselves through images rather than text and use the photo content to generate personalized opening lines, which had a particularly strong pull on female user retention.

To address the pain point of female users receiving too many matches, the new AI [indiscernible] matching feature scans through a large volume of matches to surface the best people to chat with, effectively reducing decision fatigue. In addition, AI one registration and profile optimization, process the user information in bulk with precision, which not only lowers the barrier to onboarding, but also laid a high-quality data foundation for building an AI [ engine ] social manager down the road and enabling deeper, more curated matching and recommendations.

Jianhua Wen

[Foreign Language]

Ashley Jing

[Interpreted] On user acquisition, external factors pushed up unit acquisition costs year-over-year. And combined with narrowed channel budget, this reduced the number of users acquired from a year ago. However, because organic traffic retains better and drops more slowly than channel traffic, this partially offset the pressure on the overall user base from the reduction in paid acquisition.

Channel ROI declined quarter-over-quarter due to rising unit costs and the impact of Alipay's policy change on ARPPU, but Tantan's overall ROI remained at a healthy level, above 100% payback.

Jianhua Wen

[Foreign Language]

Ashley Jing

[Interpreted] On the financial side, in Q2, Tantan generated total revenue of RMB 156 million, down 18% year-over-year and 3% quarter-over-quarter. The revenue decline was mainly due to the temporary pressure on membership renewals from Alipay's domestic channel policy adjustments.

In response, we took several measures. First, we launched a lifetime membership product and encouraged the short-cycle subscribers to convert to longer cycle plans, reducing the volatility risk tied to the renewal frequency. Second, we completed an upgrade to our payment infrastructure, integrating Douyin Pay and WeChat Pay to meaningfully reduce the reliance on a single channel. At the same time, we optimized the matching strategy behind Flash Chat, driving revenue growth in that scenario against the broader trend.

Jianhua Wen

[Foreign Language]

Ashley Jing

[Interpreted] Lastly, our new businesses. In Q2, total overseas revenue was RMB 673 million, up 52% year-over-year and 13% quarter-over-quarter. Overseas revenue as a share of group revenue rose 10 percentage points year-over-year to 27%. The acceleration in year-over-year growth was mainly driven by strong momentum from our new MENA products as well as the consolidation of overseas dating products acquired last year.

Sequentially, overseas revenue grew at a double-digit rate, mainly reflecting the natural recovery in the MENA region following the seasonal Ramadan low, along with new gamified features on the product side and same-day events tied to seasonal occasions and the World Cup on the operational side, both of which lifted user engagement and paying propensity and drove revenue growth across the board.

Within the portfolio, SoulChill's progress moderated relative to our initial time line due to external factors, including its removal from the Turkish App Store and the ongoing geopolitical tension in the Middle East since the beginning of the year. However, the product is gradually emerging from its Q1 trough and is showing a clear recovery trend. Notably, the 2 newer products in MENA demonstrated strong growth momentum with their combined revenue in the second quarter already approaching the scale of SoulChill. And alongside this high growth, profitability has also continued to improve.

Yaahlan achieved a net income breakeven for the first time in Q2. Amar, having turned marginal contribution positive earlier this year, has seen its net loss continue to narrow quickly on the back of a rapid revenue growth and operating leverage. This marks a new stage of our MENA strategy moving from a social-driven single product model to a multiproduct matrix working in concert.

Jianhua Wen

[Foreign Language]

Ashley Jing

[Interpreted] On the other hand, our developed market dating business has maintained high-quality expansion. In the first half of the year, Happn improved paid conversion and ARPPU through iterating on its membership benefit and precision targeting, driving continued revenue growth both year-over-year and quarter-over-quarter. Building on strong position in its core European markets, Happn begun exploring neighboring markets starting early this year and has seen encouraging early results. The current user and revenue performance in these new markets fully validates their long-term growth potential and lays a solid foundation for the next phase of scaled expansion.

Jianhua Wen

[Foreign Language]

Ashley Jing

[Interpreted] Overall, in the first half of the year, while our domestic business continued to weather external headwinds, our overseas product portfolio has shifted from being supported by a single product to achieving balanced diversified growth. This validates the effectiveness of our sustained investment in globalization over the past several years and has given the group a healthier revenue structure and stronger resilience.

In the second half of the year, we'll continue to strengthen the foundation of our domestic cash cow business through product innovation and refined operations while advancing the scaling of our overseas business so as to create long-term value for both users and shareholders.

Jianhua Wen

[Foreign Language]

Ashley Jing

[Interpreted] This concludes my remarks today. Now let me pass the call over to Cathy for the financial review. Cathy, please.

Cathy Peng

Thanks, Jianhua and Ashley. Hello, everyone. Thank you for joining our conference call today. Now let me take you through the financial review.

Total revenue for the second quarter of 2026 was RMB 2.49 billion, down 5% year-on-year but up 4% quarter-on-quarter. Non-GAAP net income attributable to the shareholders of the company was RMB 273.9 million compared to a net loss of RMB 96 million in the same period of 2025, and RMB 328.8 million in the previous quarter.

Looking into the key revenue items for Q2. Total revenue from value-added services for the second quarter of 2026 was RMB 2.44 billion, down 5% year-on-year, but up 4% quarter-on-quarter. On a geographic basis, PRC Mainland value-added services revenue was RMB 1.77 billion, down 17% year-over-year. The decrease was primarily due to continuous tax scrutiny on some of Momo's agencies, combined with weak consumer sentiment due to broader macro pressures and, to a lesser degree, a decline in paying users on Tantan.

PRC Mainland VAS revenue for Q2 '26 was up 1% quarter-over-quarter due to recovery from low seasonality. VAS overseas revenue for the second quarter of 2026 reached [ RMB 664.9 million, ] up 51% year-over-year, driven by strong growth momentum from our new MENA product as well as the consolidation of overseas dating products acquired last year. Sequentially, overseas VAS revenue rose 12%, driven by a recovery in the MENA region after its seasonal low alongside product and operational initiatives.

Turning to cost and expenses. Non-GAAP cost of revenue for the second quarter of 2026 was RMB 1.6 billion, same as the year ago period. Non-GAAP gross margin for the quarter was 35.8% compared to 38.8% from year ago period. Q2 cost of revenue included RMB 56.8 million in film production expenses. Excluding this item, gross profit margin would have been 38.1%, a decline of less than 1 percentage point versus Q2 last year. The decrease was primarily due to payment channel costs rising as a percentage of revenue. This resulted from a geographic mix shift towards international operations, which carry higher payment channel fee structures compared with our domestic businesses.

Although Momo raised agency payout ratio to mitigate impact from tax scrutiny, improved gross margins in the MENA region, coupled with larger revenue contribution from higher-margin overseas dating products offset the margin pressure stemming from Momo's operations. As a result, total revenue share costs as a percentage of revenue remained stable from the year ago period.

Non-GAAP R&D expenses for the second quarter was RMB 171.3 million compared to RMB 172.0 million for the same period last year. Non-GAAP R&D expenses as a percentage of revenue was 7%, same as Q2 last year. We ended the quarter with 1,399 total employees compared to 1,268 from a year ago. The R&D personnel as a percentage of total employees for the group was 56% compared with 58% from Q2 last year. Non-GAAP sales and marketing expenses for the second quarter was RMB 380.4 million compared to RMB 339.7 million for the same period last year, representing a 15% and 13% of total revenue, respectively. The year-over-year increase in sales and marketing expenses was mainly attributable to a greater marketing spend on our new overseas app. This increase was partly offset by ongoing cost controls in Mainland China operations, both Momo and Tantan cut marketing spend, while SoulChill temporary pulled back on channel investments amid external challenges.

Non-GAAP G&A expenses was RMB 75.1 million for the second quarter compared to RMB 67.5 million for the same period last year. The increase was primarily driven by RMB 11 million in exchange gains on euro-dominated deposits stemming from currency fluctuations in Q2 last year compared with a RMB 1.8 million exchange loss in the current quarter. Non-GAAP G&A expenses as a percentage of revenue was 3%, largely unchanged from Q2 last year.

Non-GAAP operating income was RMB 276.1 million, representing a margin of 11.1% compared with RMB 447.7 million and a margin of 17.1% from Q2 '25. As noted earlier, non-GAAP cost of revenue included film production-related expenses. Excluding these items, non-GAAP operating income from our recurring business would have been RMB 332.9 million with a margin of 13.4%. Non-GAAP OpEx as a percentage of total revenue was 25%, an increase from 22% from the year ago period.

Now briefly on income tax expenses. Non-GAAP income tax expenses was RMB 71.2 million for the quarter with an effective tax rate of 23%. In Q2, the company accrued withholding income tax of RMB 18.4 million, which is 10% of undistributed profit generated by our [indiscernible]. Without the withholding tax, our estimated non-GAAP effective tax rate was around 17% in the second quarter.

Now turning to balance sheet and cash flow items. As of June 30, 2026, Hello Group's cash, cash equivalents, short-term deposits, long-term deposits, short-term investments and restricted cash totaled RMB 8.54 billion compared to RMB 8.68 billion as of December 31, 2025. Net cash provided by operating activities in the second quarter of 2026 was RMB 642.3 million. The difference between operating net cash and non-GAAP net income was mainly due to the fact that a substantial amount of Q1 receivables were collected in Q2. Accrued interest and some noncash items, including film production costs and withholding tax.

Lastly, on business outlook. We estimated our third quarter revenue to come in the range from RMB 2.4 billion to RMB 2.5 billion, representing a decrease of 9.4% to 5.7% year-over-year. This is based on the assumption that at midpoint on a year-over-year basis, revenue from our Mainland China business will decline by high teens percentage-wise, while overseas revenue is expected to grow by high 30s percentage wise.

Please be mindful that this forecast represents the company's current and preliminary view on the market and operational conditions, which are subject to change.

That concluded our prepared portion of today's discussion. With that, let me turn the call back to Ashley to start Q&A. Ashley, please. Thanks.

Ashley Jing

[Operator Instructions]. Operator, we're ready for questions.

Operator

[Operator Instructions] Your first question comes from Thomas Chong with Jefferies.

分析師問答

Thomas Chong

[Foreign Language] Let me translate myself. In our last earnings call, management talked about the decline in domestic revenue in the second half would be notably leveling versus the first half. However, when we look at the guidance, it seems the decline in Q3 is slightly widening versus the first half of the year. May we know the key reason for the difference? Is it more due to the changes in external macro environment or adjustment about our operational strategy?

And in response to the situation, what specific measures does the company have at the moment? Can management provide more color about the financial -- about the domestic revenue and expenses in the second half?

Unknown Executive

[Foreign Language]

Ashley Jing

[Interpreted] Our revised outlook for the domestic business is mainly based on some new trends that we've seen in the Momo live streaming revenue since entering the second half of the year. The data shows that the revenue pressure is concentrated mainly in consumption downgrading among high-spending paying users. Although the vast majority of these users in this cohort remain active on our platform, but they've become more cautious about spending and average ARPPU has declined significantly.

Based on our targeted interviews to those cohort of users by our VIP team, we found out that the core driver behind this is weaker wealth expectations among high net worth individuals amid macro volatility, which has dampened spending on social entertainment. But by contrast, mid-tier and long-tail users as well as the broadcasters from the supply side has remained relatively stable.

Unknown Executive

[Foreign Language]

Ashley Jing

[Interpreted] Based on this view, we will take a tiered operating approach, starting with top-tier users. We will make full use of Momo's strength as a social platform, focusing on deepening social connections rather than simply pushing more spending. And specifically, on the one hand, we will roll out light-weighted social interaction focused features and organize official offline events for hyping users, further strengthening this group's stickiness to the platform and upgrading our VIP exclusive services.

And on the other hand, we will continue to provide high-quality broadcasters with exclusive resources, such as overseas [indiscernible] and short drama production to constantly refresh content supply and sustain high-value users' ongoing interest and engagement around top broadcasters.

Yan Tang

[Foreign Language]

Ashley Jing

[Interpreted] For mid-tier and long-tail users, will focus on low barrier high-retention scenarios such as audio-based interactive features and social mini games, using richer use case offering to stabilize the revenue base generated by this user group.

And for the financial figures, I will hand it over to Cathy.

Cathy Peng

Sure. Let me give you a quick update on how we currently think about the domestic business in the second half of 2026. As you may see, our Q3 guidance implies roughly a high-teens year-over-year decline for the domestic business, widening from Q2's 17% year-over-year decline rate. And that underperforms our earlier expectation that in the second half, domestic business could see Y-o-Y decline rate narrowing down from first half.

The key reason Q3 is coming in below our quarter ago expectation is that as [ Tang Zong ] mentioned just now, the domestic business has been facing greater pressure than we anticipated, particularly on user spending sentiment among the very top cohort users in live streaming [ showroom. ].

With regards to the trajectory from Q3 onwards, as in the previous quarters, I would still frame our view around 3 areas that we closely monitor. First is overall spending sentiment, what we've observed since late Q2 is a meaningful reduction in spending from the top cohort of users. These are the users who historically contribute a disproportionate amount of revenue in the [ showrooms. ] And many of them spend in the hundreds of thousands renminbi on a monthly basis.

In Q3, the reduction in spending from this top of pyramid users became more pronounced. Our current assessment is that this reflects continued pressure on the financial outlook of the so-called high net worth users, which is, in turn, affecting their discretionary and entertainment spending. So from a macro spending sentiment perspective, we may continue to see a headwind as we move into Q4.

And the second factor is the regulatory environment. At this point, we are not seeing any significant incremental regulatory pressure, and we expect the environment to remain relatively stable. So this is not a major driver of the change in our outlook.

The third area and one where we continue to see encouraging signs is the underlying health of the platforms. Our DAU and engagement metrics remain relatively resilient, and importantly, Momo paying users -- Momo paying user base in Q2 increased meaningfully from Q1. This is certainly -- there is certainly some seasonality in that sequential improvement. However, we believe it also reflects a relatively healthy and resilient user ecosystem.

So in other words, the weakness we're seeing in revenue is not primarily a function of users leaving the platforms or deterioration in engagement. It's much more concentrated in the spending behavior of the highest net worth users. These users are still active and still paying. They're simply spending less.

So if you put these factors together, I would say the biggest change in our view versus the beginning of the year -- versus at the beginning of the year is the macro spending environment, particularly among the top cohort of users. For that reason, our earlier expectation for a meaningful narrowing of the year-over-year decline in the second half should be adjusted downward.

At this point, given the uncertainty around the macro environment, I don't think it would be appropriate for us to put a specific Q4 number out there. What we can control is continuing to strengthen the fundamentals of both Momo and Tantan, improving user experience and engagement across the platform and make the business more efficient.

On the cost side, we do see opportunities to further optimize our operating expenses. This includes continued discipline around personnel costs. As Jianhua mentioned, in his prepared remarks, additional opportunities to optimize sales and marketing spending in the domestic business.

So while the revenue environment is more challenging than we anticipated at the beginning of the year, we are taking a more balanced approach, remaining focused on improving the underlying health of the platforms, while at the same time, actively managing the cost structure. This should allow us to mitigate some of the pressure on the bottom line, even in a more challenging revenue environment.

Now back to Ashley for more questions.

Ashley Jing

Operator, next question please.

Operator

Your next question comes from Xueqing Zhang with CICC.

Xueqing Zhang

[Foreign Language] My question is about the overseas business. Management mentioned that combined revenue by Yaahlan and Amar in the same quarter was already close to that of SoulChill, while their profitability continued to improve. As the revenue mix of the social entertainment business in the MENA region becomes more diversified, can we expect the company's performance in the region to become more stable and resilient going forward? And how will the structural shift affect the overall margin profile of the MENA business? And can management also share whether there has been any update to the company's full year outlook for overseas business.

Unknown Executive

[Foreign Language]

Ashley Jing

[Interpreted] Based on the current momentum, the combined revenue of our 2 new MENA products will surpass SoulChill in Q3. Both products are still maintaining healthy strong growth so we are confident that we can grow them into social products of the scale comparable to SoulChill.

Unknown Executive

[Foreign Language]

Ashley Jing

[Interpreted] In addition, these 3 products differ in gameplay, target of user base and regional focus, which will make the group's MENA business more diversified and strengthen both our resilience to external risks and our agility in capturing growth opportunities. Once the new products are established, even if one of them comes under short-term pressure from external regulatory or geopolitical factors, the others can still support the stability of overall regional revenue. We also believe the market for this type of audio, video social products is unlimited to MENA. Our diversified product portfolio gives us a stronger capability to expand into other regions than a single product would.

Unknown Executive

[Foreign Language]

Ashley Jing

[Interpreted] On profitability, both Yaahlan and Amar are improving quickly. Yaahlan already crossed breakeven, and Amar likely still around half a year away. But both products gross margin and contribution margin are improving rapidly and steadily. We believe both products will contribute to group's profit next year.

As for our overseas revenue outlook, I will leave it to Cathy.

Cathy Peng

Before giving a quantitative outlook, let me briefly walk through the 3 key components of the overseas business. First, on SoulChill, our flagship product in the MENA region, the business has underperformed our original expectation somewhat. There were 2 main factors behind that. One was the removal of the app from the App Store in Turkey earlier this year. And the other was the regional conflict that started in April, which had an impact on the operating environment in parts of the Middle East.

The encouraging part is that, as you can see from Q2 results, both revenue and traffic for SoulChill have already recovered from the low point in Q1. We are continuing to see gradual sequential improvement as we move through Q3 and hopefully, Q4 as well. So SoulChill is somewhat below our initial expectation for the year, but the trajectory has been improving over the past couple of quarters.

The second piece is Yaahlan and Amar, as Tang Zong and Jianhua mentioned, the outperformance of these 2 businesses has partially compensated for the shortfall in SoulChill. In Q3, the combined revenue from Yaahlan and Amar has already exceeded that of SoulChill. Both businesses are still growing at a rapid pace while we are also seeing a meaningful improvement in their bottom line performance. So we believe these 2 businesses can continue to make progress and become increasingly meaningful contributors to both the top line and bottom line of the overseas business going forward.

The third piece is the dating and membership subscription businesses, which continue to perform well. Some of the acquired brands, including Happn have been making good progress in new markets, including Korea, Taiwan and U.K. At the same time, we are taking a fairly disciplined approach to investment in these new markets.

We do see opportunities to increase marketing investment to accelerate top line growth. But we also want to maintain a healthy bottom line for the newly acquired dating business. More importantly, we want to make sure that we are building the ecosystem in these markets in a sustainable way rather than simply pushing for short-term user or revenue growth. So there is naturally a balance between the pace of top line expansion and the level of investments that we are willing to pour in within a relatively short time frame. In other words, we'd rather take it right, then take it fast.

So if you wrap up these -- if you wrap these all up and try to look at the takeaway as a whole, I would say that SoulChill perhaps moved a little bit slower than we expected a quarter ago. We do have the potential to maybe compensated by moving faster on expanding the other 2 MENA apps and the dating app. But given that we wanted to balance top line growth and bottom line target, we probably won't push the gas pedal harder than we previously planned.

Therefore, my current view is that the original RMB 3 billion target for overseas revenue for 2026 at this point looks a little bit of a stretch. We'd rather take RMB 100 million or RMB 200 million down from that target.

Maybe back to Ashley to take the last question.

Ashley Jing

Yes. So in the interest of time, let's just take one last question before we close the line. Operator, we're ready.

Operator

Your next question comes from Jenny Yuan with UBS.

Yicheng Yuan

[Foreign Language] My question is on the profit outlook. As management [indiscernible] weaker revenue outlook for domestic business in the second half, how can we think about the impact on the group's overall profitability and the earnings performance going forward?

Cathy Peng

Okay. I'll take that question. Profitability, maybe let me start with the group top line first because that's the first area where our view has changed. As I mentioned back in June during our Q1 conference call, at that time, we expected the group revenue to decline slightly year-over-year, perhaps by a couple of percentage points.

Given the additional pressure we are seeing in the domestic business in the second half, we currently expect the full year group's revenue decline to be somewhat larger, maybe to mid-single-digit range. The second factor affecting profitability is the investment in the 2 movies. With both movies now released, we've recognized roughly somewhere around RMB 60 million of additional losses in Q2. That obviously creates some incremental pressure on the full year bottom line relative to our earlier expectations.

Having said that, we continue to see opportunities to offset some of this pressure through cost management and improving operating efficiency. In particular, we are looking at further optimization of personnel costs as well as sales and marketing spending, especially in the domestic businesses. So putting these factors together, the additional pressure on the top line does make it more challenging to achieve our original margin target, which was I think we pointed towards a low teens adjusted operating margin for 2026. But at this point, we still believe that, that margin target remains achievable, provided that we execute well on the cost side and continue to improve operating efficiency.

Back to Ashley to wrap up the call.

Ashley Jing

I think that's all the time we have. And thank you for joining us today, and we'll see you next quarter.

Operator

Thank you. That does conclude our conference for today. Thank you for participating. You may now disconnect.