Currently, there are some new apps that are being tested and have not yet generated meaningful revenues. We expect them to further support revenue growth once this product format are stabilized. And for the specific revenue and profit guidance, I will leave it to Cathy.
Hui Peng: Sure. That was already a pretty thorough description of our strategy to the new apps and the achievements we’ve made under those strategies. For financial outlook, as you understand, a little bit too early to talk about the numbers now in December. But there are a couple of things we see happening next year, which I can share to help you understand how the new apps are going to contribute to the P&L in 2024. First of all, social, which is the social app that we won in the Middle East and North Africa area is going to — that app is going to continue to grow pretty rapidly next year. The driver will come from three directions. One is the continuous penetration into the existing markets by beefing up local operations and providing better customer service and so on.
Compared with our peers, we believe we still have potential in driving further user and ARPU growth in those markets. The second direction of growth is that as Sichuan and Tang Yan mentioned just now, we are now mainly providing the peer-to-peer social entertainment on social, and we expect to launch new features and services such as live streaming. That obviously can help us increase the share and ARPU as well. And thirdly, we are also looking at some other markets that we might be able to penetrate in. But as competition is already pretty intensive elsewhere in the GCC region, in the Gulf countries, this third strategy will be more of an uphill battle, but we’ll see how it plays out. Overall, for social and also the other two smaller apps in China should continue to grow quite rapidly next year.
This year, these three apps grew 15%-something year-over-year and are on track to bring in somewhere between CNY 1.1billion to CNY1.2 billion in top line and more than CNY 100 million at bottom line. Next year, the top line could slow down a little bit. The growth could slow down a little bit, but profit growth should be quite impressive as the operating leverage manifests itself. That’s my answer to the financial outlook for the new business. Back to Ashley for the questions.
Ashley Jing: In the interest of time, let’s just take one last question. Operator, we’re ready.
Operator: The next question comes from Thomas Chong with Jefferies. Please go ahead.
Thomas Chong: [Foreign Language] [Interpreted] Thanks management for taking my questions. My first question is about core Momo. Can management comment about the 2024 product strategies as well as the revenue outlook? And my second question is about shareholders’ return. Can management comment about the thoughts on share repurchase and dividends?
Yan Tang: [Foreign Language] [Interpreted] So let me translate first. Our goal for the mature Momo app for now and for the next few years is to keep the users and revenue scale stable and continue to optimize the cost structure and maintain the productivity of this cash cow business. Therefore, our execution plans for our products, user products, commercial products and channel efforts are all focused on this strategic goal. And for example, this year, our user product team added a navigation bar for flash chat on the homepage to direct users to matching-based real-time voice or text chatting experiences such as [indiscernible]. And our commercial product teams embedded paying features such as live streaming or chatroom into these experiences.
This design not only highlights the timely social value of the Momo app, but also increases the penetration rate of paying features and the monetization potential of the platform. Our user acquisition team has fine-tuned its focus on paying users and has strengthened cooperation with the commercial product team to better accommodate users from the channels. And the resulting ARPU growth has supported the continued improvement in channel ROI, enabling us to maintain a stable user scale and solid social fundamentals with a continuously decreasing marketing budget, which plays a positive role in improving Momo’s overall profit. In 2024, we will continue to execute the strategy for the Momo product and channels. In terms of financials, I’ll leave it to Cathy.
Hui Peng: Okay. After this earnings call, our job will move forward to putting together the financial plan for next year. Before that plan comes together, it’s hard for me to talk about the outlook in a very quantitative way. However, same as in the past, as we approach the end of the year, there are several trends that we can talk about to help you think about how the different line items may move heading into next year. And many of the investors know, Momo is a brand that has been around for more than 12 years. In terms of monetization, being 12 years old has both advantages and disadvantages. The biggest disadvantage here, obviously, is that it’s already pretty mature in terms of user penetration and also deeply monetized in terms of ARPU, that will make the business more cyclical to the macro and the regulatory environment.
So next year, we continue to see macro and regulation has 2 biggest factors that are going to move the Momo business either up or down. Macro-wise, I guess, everybody has his or her own estimation. So I don’t think I know better than investors do in this space. Regulatory front, as you can see, we’ve been very prudent and conservative in making sure we stay compliant. That’s why in the past few quarters, if you look at our performance, we have clearly been more stable than most of our peers in the social entertainment space. I guess that will continue to be the case next year. That said, in view of the overall environment that we face today, what we need to do is to focus more on profitable user and revenue growth instead of pursuing top line growth at all costs.
During the past few quarters, we’ve been scaling back from some of the user and revenue endeavors that generate limited or sometimes even negative margins. For example, you can see in this year’s year-end competition event, we further cut the incentive for agency-driven promotional events. These competitions are not particularly helpful in building a healthy social ecosystem and thus, post regulatory risks in today’s environment. In addition, although the agency-driven events would create a spike in revenue, but they usually hurt margins and sometimes even bring negative profits. So in this Q4, what you’re going to see is that the incremental revenue coming from year-end competition is going to significantly shrink down. However, as the actual promotional costs and spending also substantially went down, the profit impact is actually quite limited.
That’s why, although we are guiding, as you can see in our guidance, we are guiding Q4 to show a mid- to high-single digit percentage year-over-year revenue decline for core Momo. Bottom line for the core could see a high single-digit year-over-year improvement. Such an overall trend of focusing on bottom line will continue to be the case next year. Now I’m going to — I wanted to spend a few minutes talking about the good thing about being a 12 years old application. Over those 12 years, Momo has built up a strong brand loyalty as the go-to place, if you want to be around people discover some new friends and have fun and meaningful interactions with people you do not already know. And that brand loyalty allowed Momo to be able to navigate safely through the three years of pandemic and emerge on the other side with solid fundamentals and remarkable resilience.
