(Chinese Version)

On May 25th, Momo released its 2017 Q1 earnings, which shows that the company’s net revenue had jumped by 421% year-on-year to $265.2 million, registering a net profit of $90.7 million, a 615% year-on-year growth. There is no doubt that the previous quarter had been a great moment for Momo as it had soared in both revenue and profit.

YY, the Internet company that has been the top leader of the livestream in industry in China, amassed $88.2 million in profit in the first quarter this year. Although YY’s Q1 statistics are still slightly higher than Momo, Momo has already surpassed YY in terms of the net profit. If Momo can maintain its strong growth, it’s only a matter of time for the company to outperform YY in revenue too. And this might happen in this year.

Despite the fact that the livestream business has brought about an income of $212 million (a 1263% year-on-year growth, accounting for 80% of the revenue), to Momo, the company still doesn’t see itself as a livestream company, but a social company dedicated to building a greater entertainment platform. From this perspective, Momo and YY have very different positioning, and therefore there is no need to compare the two on revenue and net profit.

In fact, I am more interested in Momo’s monthly active users instead of the company’s revenue and profit. The earnings report shows that Mom boasted 85.2 million monthly active users in the first quarter, which is an 18% increase compared with last year’s 72.3 million, a record high. In this second half of the mobile Internet game, the data flow dividend is providing less and less thrusting power. Every mobile product that relies on user growth has met the bottleneck. So how could Momo achieve such revenue while maintaining user growth as well?

Momo’s monthly active users growth

A unique world

After Aleng left Momo, Hong Xiaoqiao became the leading female liveshow broadcaster on the platform, with 1.19 million fans. Besides regularly broadcasting liveshow every day, she has also posted 17 short videos and joined seven communities and three circles, posting 209 personal posts.

The personal posts here resemble to Twitter’s tweets, in which she shares her persona thoughts with everyone on the platform. She has got 30,000 to 50,000 views, over one thousand likes and hundreds of comments for each one of her posts.

Momo’s communities are like WeChat’s chat groups. Hong Xiaoqiao set up four communities named Hong’s Army in an attempt to connect with her loyal fans.

"Circle" is a new feature on Momo’s latest version, which is quite similar to Baidu’s Tieba (a social forum). The only one-month-old Hong Xiaqiao Fans circle already has 5,007 members and 310 posts.

The short video feature has also been Momo’s recent focus as well, as the company has deployed advertisements on its short video feature in over 300 cities in the country. Hong Xiaoqiao’s latest nine-second video has been played 302,000 times, receiving 2,756 likes and eight gift rewards.

It’s apparent that Hong Xiaoqiao has been spending all of her time on Momo. She is either livestreaming, or using communities and circles to connect with her fans. After getting a huge amount of data flow through short videos, she is also posting videos more often.

She didn’t even have a Weibo account 15 days ago and the public knew little about her. But it only took her one year to become the leading broadcaster in Momo’s unique world, forging a relationship with over one million fans.

Hong Xiaoqiao is not the only case here. Most of Momo’s popular broadcasters only run their social business on Momo, paying little attention to other social platforms.

However, in contrast to other platforms, Momo does not rely on its popular livestream broadcasters who have an average monthly income of over ￥30,000. These popular broadcasters only generate 50% of the livestream business income. Besides the popular broadcasters, Momo also has a great number of ordinary broadcasters. These people don’t broadcast professionally. They treat livestream as a social-networking channel that allows them to get to know people around them and make some friends. During the earnings phone meeting, Momo’s founder Tang Yan stated: “Momo’s livestream feature is not merely a new entertainment service, but more of a community-based social-networking experience.”

Momo’s strong social-networking gene allows popular and ordinary broadcasters to build and maintain their own social network on one platform. They no longer have to connect with their fans on WeChat every time they finish broadcasting liveshows. Momo is continuing to refine its social gameplay and features, providing a one-stop platform for users.

The general public believes that the livestream business “saved” Momo’s revenue. In fact, what the livestream business did save was the monthly active user growth. In Momo’s 2015 Quarterly Reports, there are these sets of data:

March 2015: Monthly active users—— 78.1 million.

June 2015: Monthly active users—— 78.4 million.

September 2015: Monthly active users—— 73 million.

April 2015: Monthly active users—— 69.8 million.

It’s evident that the year of 2015 had been a tough year for Momo as its monthly active user base continued to drop. The number of active users in Q4 had had a 12% drop compared with that of the first quarter. User acquisition has always been the first priority of the Internet industry. When Momo was losing its users, some even commented that Momo was over.

However, as Momo’s livestream business rises, the number of Momo’s monthly active users has also been surging since the first quarter of 2016. The figures of monthly active users of 2016’s quarters had been, 72.3 million, 74.8 million, 77.4 million and 81.1 million. In 2017’s first quarter, the number hit 85.2 million, an 18% year-on-year growth.

It’s apparent that Momo would be able to have more business moves, for example, short video business, with these monthly active users.

Deploying a social-networking playground

Even if the livestream business can become the “milk tank” for Momo to cash in, it seems to the public that Momo has been focusing on its short video business instead.

At the end of March Momo pushed a new update, which integrated the short video use cases, Moments and Timeline, together. It also added a new tag “follow” at the bottom of the navigation bar, which aggregates quality short video contents, including contents user have followed and recommended contents selected by the recommendation engine based on big data.

Momo also changed its logo. Its slogan has also changed from “always something amazing around you” to “social networking through videos, here on Momo”. The company has deployed massive advertising campaigns in over 300 cities in the country, covering subways, public buses, movie theaters, elevators, taxi cabs etc., aiming to swarm the users from all angles.

As an ordinary user, I also experienced Momo’s video social networking features, posting a short video #ThisIsMeToday. The short video received six comments, five likes and 156 views in two hours. If I started to interact with users that commented on me, a round of video social networking was completed.

Momo’s Q1 earnings showcases the social-networking integration of its video and greater entertainment businesses. Its short video has a penetration rate of 46% among daily active users. The year-on-year growth of daily active users hit 12%. The daily formation of networking had also surged by 50% in numbers. More users are getting used to express themselves in videos. This video contents in fact forge a content ecosystem.

However, Momo’s founder Tang Yan believes that whether it’s the livestream or the short video feature, they all serve the purpose of social networking. He had reiterated over and over again during the phone meeting that:

“Social networking has always been the center of business for Momo. Whether it’s short video, livestream, community or the nearby feature, they are all part of the social-networking scene. They are like different infrastructures in an amusement park.”

For social-networking platforms, the number of monthly active users and user retention rate are most essential. To keep the users, the entertainment infrastructures in the amusement must be appealing. Besides contents produced by users, Momo itself has also been enriching its content ecosystem:

Momo had invited a group of folk music musicians and the 12 Girls Band to its livestream platform as regular performers, showing a diversity of livestreaming contents.

Every week Momo would set up a short video theme, such as “My pet is super smart”, “Crazy dance” etc., encouraging more users to participate.

All these moves are initiated to keep users to stay on Momo and have fun.

That’s why instead of the profit surge, I am more intrigued by Momo’s user growth. Short video and livestream might not be popular after a while, but as long as the company has users in its disposal, it has opportunities.

For instance, many might only notice the strong growth provided by the livestream business. But it’s also worth noting that Momo had cashed in $17.9 million through mobile advertisements, a 45% year-on-year growth. The company also profits by $11.6 million, a 56% jump year-on-year. These two lines also hold immense potential. The development of short the video business will even lead to the reconstruction of the mobile marketing and advertising layout. Momo, as one of the major players, would definitely have its fair share of the cake. Who knows whether or not Momo would develop it Honor of Kings in the future, right?

What Momo is doing and will continue to do is enrich its social networking platform, acquiring and keeping more users. These users would be the company’s future possibilities.

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The article is published with authorization from the author @Ma Youkong, please note source and hyperlink when reproduce.]

Translated by Garrett Lee (Senior Translator at PAGE TO PAGE), working for TMTpost.