Hello Group Inc. Annual Report - How They Did This Year

I’ve put together this guide to help you understand how Hello Group Inc.—the company behind apps like Momo and Tantan—performed in 2025. My goal is to cut through the corporate jargon so you can decide if this company fits your investment goals.

1. What does this company do?

Hello Group is a social networking and entertainment business. They combine social discovery with live-streaming. They make money in four main ways:

• Live Video: Users buy virtual gifts for streamers, and the company keeps a cut.
• Value-Added Services: This includes premium memberships for Momo and Tantan, plus virtual items that spice up social interactions.
• Mobile Marketing: They sell advertising space to companies wanting to reach their users.
• Mobile Games: They distribute games to monetize their platform traffic.

2. The "Hidden" Structure: How you actually own the company

When you buy Hello Group stock, you aren't buying a direct piece of the Chinese apps. Because China restricts foreign ownership in tech, Hello Group uses a "Variable Interest Entity" (VIE) structure. You are buying shares in a Cayman Islands holding company that has a contract to control the Chinese operations.

Why this matters: You don't own the actual assets, like servers or licenses, in China. If the Chinese government decides these contracts are invalid, your shares could theoretically become worthless. While common for Chinese tech stocks, this is a significant risk. In 2025, about 80.7% of the company's revenue came through these VIEs. The company’s financial health relies entirely on these contracts holding up.

3. Financial performance and health

Hello Group is a mature business focused on cash flow. They generated enough cash to pay roughly RMB 768 million (about $110 million) in taxes in 2025. Instead of taking out traditional bank loans, the company is investing its spare cash. They are using "convertible notes"—loans that earn interest but can be swapped for ownership in smaller tech firms later. This lets them bet on other companies’ growth.

4. Major wins and challenges

The company’s investment portfolio has been a mixed bag. Long-term partnerships with Tianfu and Jingwei have hurt their performance for three years. On the bright side, the "AEZ Capital Feeder Fund" performed well, adding over RMB 15 million in value in 2025. These outside bets remain unpredictable and don't guarantee future profits.

5. Key risks for investors

• The "VIE" Risk: Your ownership is based on contracts, not direct equity. This structure has never been fully tested in a Chinese court. If the government changes its rules, the company might have to remove these revenues from its books, which would likely crash the stock price.
• Regulatory Environment: China has strict data privacy laws. If the government decides Hello Group isn't handling user data correctly, they could face massive fines or be kicked off app stores.
• Investment Volatility: Investing in private companies is risky. If Hello Group needs cash quickly, they may be unable to sell these investments.
• Currency Fluctuations: China tightly controls how money leaves the country. There is no guarantee that the company can convert its Chinese profits into U.S. dollars or move that money out of the country easily.

6. Future outlook

Hello Group is moving from being a simple lender to an active, strategic investor. For you, the story isn't about explosive user growth. It is about how well they manage their cash and navigate China’s complex regulations. They are focused on keeping Momo and Tantan profitable while hunting for growth through outside investments.

Investor Takeaway: If you are considering this stock, ask yourself if you are comfortable with the "VIE" structure and the regulatory risks inherent in Chinese tech. This is a company for those who prioritize cash flow and are willing to accept the uncertainty of the Chinese market in exchange for the potential of the company's strategic investment portfolio.