Here Group Limited Q1 FY2026 earnings call

• Business restructuring: Completed disposal of non-pop toy businesses by September 30, 2025, focusing on global pop toy market.
• IP ecosystem: Strengthening IP ecosystem with balanced portfolio, e.g., WAKUKU launched WAKUKU On a Roll Series, integrating lucky numbers into lifestyle, multimedia experience with song and music video, and WAKUKU-themed Street became popular photography destination.
• Strategic partnerships: Partnered with Beijing Radio and Television Station, participated in Golden Rooster Awards, cross-industry co-branding in sports, entertainment, etc.
• Omnichannel approach: Strong social media matrix in China with high views and GMV growth, developing offline DTC stores, pop-up stores, and international expansion with presence in 20+ countries via distribution network.

Total revenue for the first quarter of FY '26 was RMB 127.1 million. The pop toy business contributed the entire revenue, with Q1 pop toy revenue at RMB 127.1 million, up from RMB 65.8 million in the previous quarter. The pop toy business grew 93.3% quarter-over-quarter and exceeded the previous guidance of RMB 110 million. Gross margin expanded to 41.2% from 34.7% in the previous quarter.

• Expect revenues from pop toy business to be RMB 150 million to RMB 160 million for Q2 FY '26.
• Full fiscal year '26 revenue guidance is RMB 750 million to RMB 800 million. Forecasts based on product launches, production capacity, and channel orders.

Q: Based on the second quarter guidance, what's the breakdown of confidence for full-year revenue? And impact on Labubu momentum?

A: Revenue forecast based on product launches, production capacity, customer orders. Losses narrowing, focusing on balancing IP operations and sales growth. Labubu momentum: Market growing fast, WAKUKU has strong sales, will continue building IP portfolio.

Q: Latest updates on offline DTC stores and future opening pipeline?

A: First batch of stores to open late Dec 2025 to early 2026, focus on decoration and operational systems, DTC stores as brand experience centers, reinforcing omnichannel competitiveness.

Q: Overseas market focus and strategy?

A: Overseas is focus, cooperating with KAs and distribution partners, building overseas online platforms, will replicate domestic strength to overseas, majority sales still from domestic in short term.

Q: Revenue structure breakdown by IP and future drivers from new IPs?

A: WAKUKU accounted for 71% of Q1 revenue, ZIYULI 16%, SIINONO 10%. Focus on top IPs, WAKUKU to deepen operations, replicate SIINONO model to cultivate new flagship IPs, IP matrix operating model for future growth.