This article first appeared on GuruFocus .
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Total Revenue:RMB2.39 billion, down 5% year-over-year.
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Domestic Revenue:RMB1.79 billion, down 15% year-over-year.
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Overseas Revenue:RMB597 million, up 44% year-over-year.
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Adjusted Operating Income:RMB349 million, up 1% year-over-year with a margin of 14.6%.
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Non-GAAP Net Income:RMB328 million, compared to RMB403.8 million in the same period of 2025.
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Value-Added Services Revenue:RMB2.35 billion, down 6% year-over-year.
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Non-GAAP Gross Margin:38.8%, compared to 37.9% from the year-ago period.
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Non-GAAP R&D Expenses:RMB165.2 million, representing a 11% decrease year-over-year.
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Non-GAAP Sales and Marketing Expenses:RMB335.4 million, representing 14% of total revenue.
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Cash and Cash Equivalents:RMB8.56 billion as of March 31, 2026.
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Net Cash Provided by Operating Activities:RMB158.9 million.
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Q2 Revenue Guidance:Estimated to be in the range of RMB2.45 billion to RMB2.55 billion.
Release Date: June 02, 2026
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
Positive Points
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Overseas revenue increased by 44% year-over-year, accounting for 25% of total revenue compared to 16% last year.
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Adjusted operating income rose by 1% year-over-year with a margin of 14.6%.
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AI-driven innovations have improved user engagement and retention, particularly among female users.
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New overseas products are showing rapid growth, with some nearing profitability.
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The company is actively working on AI product innovations, which are expected to enhance user experience and drive long-term growth.
Negative Points
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Total group revenue decreased by 5% year-over-year, with domestic revenue down 15%.
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The company faced regulatory challenges in Turkey and geopolitical tensions in the Middle East, impacting overseas revenue.
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New tax regulations and stricter enforcement have negatively affected domestic revenue, particularly for Momo's entertainment business.
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Alipay's policy changes have led to a temporary decline in Tantan's membership renewals.
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The company expects a mid-teens percentage decline in domestic revenue for the full year due to regulatory and macroeconomic pressures.
Q & A Highlights
Q: Could the management provide more details on the challenges faced by the MENA business in Q1, and will this impact the full-year revenue outlook for the overseas business? A: The sequential revenue decline was due to three main factors: tightened regulations in Turkey affecting user acquisition, softer consumer sentiment during Ramadan, and ongoing conflicts in the Middle East. Despite these challenges, the business has begun to recover, and we remain confident in our full-year overseas revenue outlook. We expect our new MENA products to turn profitable soon, with Yahanlan reaching net profitability within a quarter and Mine about half a year behind.
Q: When should we expect the external factors affecting domestic revenue, such as new tax rules and Alipay changes, to be fully digested? A: The impact of new tax regulations and stricter enforcement affected agency-related revenue, but we expect performance to normalize by Q3. The Alipay auto-renewal policy changes primarily impacted Tantan's membership business, with improvements expected in the second half of the year as we diversify payment channels and membership structures.
Q: Could you share more about the group's AI product roadmap and its impact on long-term growth and profitability? A: AI is transforming user experience by enhancing connections and enabling new product formats. We are focusing on AI-assisted chat features and AI voice tools to lower social barriers. AI investment is high-return, directly improving user experience and driving higher propensity to pay. We will continue to expand AI's penetration across our products to maximize returns.
Q: How should we think about the full-year domestic revenue outlook given the external challenges? A: The domestic revenue decline is expected to improve in the second half of the year as regulatory impacts normalize and the comparison base becomes easier. We now expect a mid-teens year-over-year decline for the full year, slightly adjusting from our previous low 10s decline guidance.
Q: What is the profitability outlook for 2026, considering the challenges faced in the first half of the year? A: We expect a slight year-over-year decline in group revenue for 2026. Despite additional pressure from tax-related disruptions, we remain on track to achieve our adjusted operating margin target in the low 10s. We are optimizing spending to improve productivity without affecting long-term growth initiatives.
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
