Momo (MOMO) Says Buyer Group Moves to Withdrawal 'Going Private' Offer

August 18, 2016 8:05 AM EDT
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Momo Inc. (Nasdaq: MOMO) announced that the special committee of the Company’s board of directors received a letter from Mr. Yan Tang (“Mr. Tang”), co-founder, chairman and chief executive officer of the Company, Matrix Partners China II Hong Kong Limited (“Matrix”), Sequoia Capital China Investment Management L.P. (“Sequoia”) , Alibaba Investment Limited (“Alibaba”), Rich Moon Limited (“Yunfeng”) and Huatai Ruilian Fund Management Co., Ltd. (“Huatai Ruilian,” and together with Mr. Tang, Matrix, Sequoia, Alibaba and Yunfeng, the “Buyer Group”), stating that the Buyer Group would like to withdraw the non-binding going private proposal dated June 23, 2015, with immediate effect.

Mr. Tang, the Company’s chairman and chief executive officer, stated that “During the privatization process, we have consistently maintained our focus on business operations and delivering growth to our investors. Driven by solid fundamental improvements, our non-GAAP diluted net income per ADS increased from US$0.03 in the second quarter of 2015 to US$0.12 in the second quarter of 2016. Our GAAP diluted net income per ADS increased from US$0.01 in the second quarter of 2015 to US$0.08 in the second quarter of 2016. With the privatization proposal from the Buyer Group behind us, we are more committed than ever to driving business growth in the interest of the Company and our shareholders.

Our management team have a great deal of confidence in the growth prospects of the Company as well as the long term value of the Momo platform. Such confidence is firmly supported by the strong momentum in revenues and profitability that we foresee into the rest of 2016.

In the second quarter of 2016, we hit another homerun with our live video service revenues reaching US$57.9 million, more than tripling the amount in the first quarter of 2016 and just six months after we fully rolled out the service. At a strategic level, live video is much more than just a monetization opportunity for us. It is essentially an important extension of our social ecosystem. As a brand new form of interaction enabled by technological transitions, live video service is reshaping the way young people socialize and have fun via internet. New forms of content and social activities are emerging on our platform. We recently started to beta test Momo 7.0 and unveiled our short video service called Moments, enabling our users to create and interact with short video stories in a fun and immersive way. This pioneering experiment is part of our effort to expose more Momo users to the live video experience and drive more social activities around it.

Live video is diversifying the social scenarios available on Momo. Leveraging these new social scenarios, we are seeing opportunities to target a new cohort of users and expand into new territories in social and the broader entertainment industry.

We have a clear roadmap ahead and are more focused than ever on executing our strategic priorities. It is our firm conviction that these strategic focuses will allow us to further drive expansion in user scale, revenues as well as profit growth in the future.

Lastly and as always, we are committed to maximizing shareholders values. I look forward to reporting and discussing more of our achievements in the quarters ahead.”

Business Outlook

For the third quarter of 2016, the Company expects net revenues to be between US$125 million and US$130 million, representing a year-over-year increase of 234% to 247%. These estimates reflect the Company's current and preliminary view, which is subject to change.

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