Momo (MOMO) to Report Q3 Earnings: What's in the Offing?

Momo Inc. MOMO is expected to report third-quarter 2018 results on Nov 27.

Notably, the company has a positive record of earnings surprises in three of the trailing four quarters, average beat being 14.8%.

In the last reported quarter, Momo reported earnings of 66 cents per share that was in line with the Zacks Consensus Estimate but jumped 88.6% year over year.

Revenues of $494.3 million also beat the consensus mark of $484 million and surged 58% year over year.

For third-quarter 2018, Momo estimates revenues between $525 million and $540 million, a year-over-year increase of 51-55% on a constant-currency basis.

The Zacks Consensus Estimate for third-quarter earnings has declined by a penny to 53 cents over the past seven days. The consensus mark for revenues currently stands at $536 million, reflecting year-over-year growth of 51.2%.

Let’s see how things are shaping up for this announcement.

Key Factors to Watch Out

Momo is benefiting from an expanding paying user base and improving engagement levels, driven by solid content and product innovation.

In the last reported quarter, monthly active users (MAUs) were 108 million, increasing 18% year over year and representing a 4.7 million net addition from the previous quarter. Per user time spent per day grew 11% on a year-over-year basis.

Momo Inc. Price and EPS Surprise

Momo Inc. Price and EPS Surprise | Momo Inc. Quote

 

Moreover, value-added service revenues for the Momo app more than doubled on a year-over-year basis. The addition of Tantan along with strong demand for virtual gifting businesses is expected to drive revenues.

Additionally, the momentum in live video business is expected to continue based on growing number of paid users and professional broadcasters.

However, weakness in the mobile games business is a headwind. Further, operating expenses, particularly marketing expenses, are expected to jump due to Tantan.

What Our Model Says

According to the Zacks model, a company with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) has a good chance of beating estimates if it also has a positive Earnings ESP. The Sell-rated stocks (Zacks Rank #4 or 5) are best avoided.

Momo has a Zacks Rank #3 and an Earnings ESP of 0.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Stocks with a Favorable Combination

Here are some companies, which, per our model, have the right combination of elements to post an earnings beat this quarter:

Burlington Stores BURL has an Earnings ESP of +2.95% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Splunk SPLK has an Earnings ESP of +10.94% and a Zacks Rank #3.

Semtech Corp. SMTC has an Earnings ESP of +1.64% and a Zacks Rank #3.

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