Momo reports narrowing net loss for Q4

Momo Inc, a location-based social networking platform in China, on Thursday reported a narrowing fourth-quarter net loss, thanks to its strong membership subscription business.

For the three months ending December 31, 2014, the company's net loss stood at $2.5 million, down 17.4 percent year-on-year from the previous year's $3.1 million, according to a financial result filing posted by Momo on NASDAQ.

Its net revenues substantially surged by 702.3 percent year-on-year to $18.6 million during the quarter. The earnings for the whole of 2014 was $44.8 million, increasing over 13 times from the previous year.

"As we ramped up monetization, revenue grew massively," Tang Yan, chairman and CEO of Momo, was quoted by the filing as saying.

Membership subscription, the major contributor to the company's earnings, generated $11.9 million during the fourth quarter, accounting for 64.2 percent of total revenue. The company attributed the robust performance in membership subscription to the increased active user base.

"We are making great progress in growing our user base, with MAU [monthly active user] up 106 percent year-over-year to 69.3 million [in December 2014]," said Tang.

Momo, launched in August 2011, allows users to pinpoint and contact nearby strangers anonymously in contrast to WeChat's friend-based social networking.

The fast growth in Momo's user base will continue, as the company targets a niche market where no other companies have successfully made a dent in as it did, Lu Jingyu, an industry analyst with Beijing-based market consultancy iResearch, told the Global Time Thursday.

However, what concerns Momo the most should not be how to woo users but how to maintain their loyalty, said Lu.

"More efforts are needed to avoid users turning to other more mainstream platforms such as WeChat after knowing each other via Momo," said Lu, noting that some users treat the app as a useful tool for setting up blind dates or seeking one-night stands.

Analysts said that the introduction of mobile games can be a way out.

Momo, which started offering games on its platform from November 2013, launched 11 new games during 2014. In the fourth quarter of 2014, mobile games generated $4.3 million, contributing 23.4 percent to total revenue.

Cooperation with China's e-commerce giant Alibaba and online classified firm 58.com is also something that Momo expects to bank on for furthering its monetization strategy, according to the filing.

In a filing to the US Securities and Exchange Commission in November 2014, Momo announced a plan of selling shares worth $50 million and $10 million respectively to Alibaba and 58.com.

The latest version of Momo's mobile app, launched in late January, enables users to gift goods like flowers and cosmetics as well as virtual hongbao (red envelopes filled with cash) to friends.

Momo estimated that for the first quarter of the year its revenue would range from $24 million to $26 million, a growth of 341 percent to 377 percent year-on-year.