Hello Group (MOMO) Margin Slide To 7.8% Tests Bullish Earnings Narrative

Hello Group (NasdaqGS:MOMO) has just wrapped up FY 2025 with fourth quarter revenue of C¥2,575.8 million and basic EPS of C¥1.46, set against a trailing twelve month tally of C¥10.4 billion in revenue and basic EPS of C¥4.84. Over the past six reported quarters, revenue has moved between C¥2,520.8 million and C¥2,674.7 million, while quarterly basic EPS has ranged from a loss of C¥0.84 to a high of C¥2.58. This gives investors a clear view of how earnings have tracked through the year. With trailing net profit margins easing to 7.8% from 9.8% a year earlier, the latest numbers put profitability and margin resilience firmly in focus for shareholders.

See our full analysis for Hello Group.

With the headline results on the table, the next step is to see how these figures line up with the prevailing stories around Hello Group, highlighting where the numbers back the narrative and where they start to question it.

See what the community is saying about Hello Group

Margins Slip as Net Profit Trails Revenue

• Trailing twelve month net income is C¥804.0 million on C¥10.4b of revenue, giving a 7.8% net margin compared with 9.8% a year earlier. Quarterly net income over FY 2025 ranged from a C¥140.2 million loss in Q2 to a C¥358.0 million profit in Q1.
• Bears highlight that this softer margin profile fits with concerns about rising costs and regulatory pressure, yet the numbers also show some resilience:
  • The move from C¥1.4b trailing net income in early FY 2025 to C¥804.0 million now lines up with the bearish worry that profitability might be harder to sustain as domestic apps mature and overseas ventures carry higher payout and marketing costs.
  • At the same time, positive net income in three of the last four quarters, including C¥237.3 million in Q4, pushes back on the idea of a straight-line deterioration and suggests cost actions and product tweaks are still supporting earnings in parts of the business.

Bears warn that slipping margins could be the start of a longer slide in profitability, but the recent earnings swings tell a more mixed story about how Hello Group is adapting to higher costs and changing user trends, which is unpacked further in the 🐻 Hello Group Bear Case.

Valuation Cheap on P/E, Rich to DCF

• Hello Group trades on a P/E of 8.4x, below the broader US market at 18.6x and the Interactive Media & Services industry at 14.9x. However, the share price of US$6.24 sits above the stated DCF fair value of US$5.64.
• Bulls lean on the low P/E and forecasted earnings growth of about 9.9% a year, but the mixed signals in the data keep that case debatable:
  • The discount to market and peers backs the bullish view that the stock could be priced cautiously relative to its earnings record, which includes 11.8% yearly earnings growth over five years despite a weaker most recent year.
  • The DCF fair value of US$5.64 and current price of US$6.24, along with a net margin that has moved down from 9.8% to 7.8%, leave room for the argument that some of the expected earnings recovery and margin strength may already be built into the quote.

Supporters point to the compressed P/E and earnings history as reasons the market might be underestimating Hello Group, while the gap to DCF fair value and softer margins give you clear numbers to stress test the bullish case in the 🐂 Hello Group Bull Case.

Flat Revenue, Volatile EPS Through FY 2025

• Quarterly revenue over the last six reported periods stayed in a narrow band between roughly C¥2.52b and C¥2.67b, while basic EPS ranged from a loss of C¥0.84 in FY 2025 Q2 to a high of C¥2.58 in FY 2024 Q3, and trailing twelve month EPS now sits at C¥4.84.
• The consensus narrative expects modest revenue growth of about 0.5% a year with faster earnings growth around 9.9%, and the recent pattern highlights why that mix of slow top line and choppy EPS matters:
  • Steady revenue around C¥10.4b over the trailing twelve months fits the idea that growth may be limited by pressure on core apps and a more measured approach to user acquisition, even as overseas businesses scale.
  • The swing from quarterly losses to profits of more than C¥300 million shows how sensitive EPS can be to changes in monetization and cost control, which is central to whether earnings can track the growth rates implied in forward estimates.

Next Steps

To see how these results tie into long-term growth, risks, and valuation, check out the full range of community narratives for Hello Group on Simply Wall St. Add the company to your watchlist or portfolio so you'll be alerted when the story evolves.

If this mix of risks and rewards feels finely balanced, treat it as a prompt to review the numbers yourself. Consider moving quickly while views are still forming, starting with the 4 key rewards and 1 important warning sign.

See What Else Is Out There

Flat revenue around C¥10.4b, slipping net margins from 9.8% to 7.8%, and volatile EPS all point to earnings quality that is not fully convincing.

If you want ideas where pricing looks more supportive than this mix of choppy profitability and modest growth, check out the 49 high quality undervalued stocks today while conditions still look favorable.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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