Momo shares fall on Q3 beat

Momo Inc. (NASDAQ: MOMO) reported its third quarter financial results for fiscal year 2017. China’s leading mobile social network platform beat estimates in both revenue and earnings, but shares fell by 16 percent on Tuesday.

For the third quarter, Momo reported revenue of $354.5 million, increasing 126 percent year over year, and beating analysts’ estimates by $15.16 million. The company reported an EPS of $0.45, up from last year’s same quarter of $0.24, and beating analysts’ estimates by $0.07.

At the end of the third quarter in September, Momo hit 94.4 million monthly active users, compared to 77.4 million in the previous year’s same quarter. Momo’s revenue increase is due to the growing users base and average revenue per user.

Momo’s live video service is the main revenue driver. The segment drew in $302.6 million in revenue for the third quarter.

"We’ve had a good quarter with strong financial performance and progresses in other operational areas", commented Yan Tang, Chairman and CEO of Momo.

"Momo 8.0 allows us to further diversify the social and entertainment offerings on the platform. We are confident that Momo will continue to drive user growth through product innovations, use case expansions as well as a more result driven marketing plan. "

For the fourth quarter, Momo expects net revenue to be between $370 million and $385 million, representing a 50 percent to 56 percent increase.

Momo shares also plummeted when the company had released its second quarter financial results in August. Shares plummeted by 18 percent despite the company reporting strong results and beating analysts’ estimates.

Momo’s shares fell after the second quarter results due to the company’s high valuation given by investors. The company also beat its own third quarter revenue estimates, which was $342 million, provided in the second quarter. The company grew significantly from fiscal year 2016, but compared to its other Chinese tech peers, its growth is not exceeding expectations.

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