HERE — Here Group Limited

HERE Q1 2026 Earnings Call Summary

1. Key Financial Results and Metrics:

• Total revenue for Q1 FY 2026 reached RMB 127.1 million, a significant increase of 93.3% from RMB 65.8 million in the previous quarter.
• Gross margin improved to 41.2%, up from 34.7% in the prior quarter.
• Adjusted net loss from continuing operations narrowed to RMB 17.1 million, compared to RMB 19.3 million in the previous quarter.
• Operating expenses totaled RMB 81.6 million, with sales and marketing expenses at RMB 27.6 million.
• Cash and cash equivalents stood at RMB 789.4 million as of September 30, 2025.

2. Strategic Updates and Business Highlights:

• HERE has successfully restructured to focus solely on the pop toy market, disposing of non-core businesses.
• The company launched the WAKUKU On a Roll Series, which has been well-received, contributing to strong sales and cultural engagement.
• Strategic partnerships have been formed with Beijing Radio and Television Station and participation in high-profile events like the China International Fair for Trade in Services.
• HERE is expanding its direct-to-consumer (DTC) presence with new store openings planned in major cities and pop-up stores generating over RMB 3 million in sales.

3. Forward Guidance and Outlook:

• Revenue guidance for Q2 FY 2026 is projected to be between RMB 150 million and RMB 160 million, with a full-year forecast of RMB 750 million to RMB 800 million.
• The company is optimistic about scaling its IP portfolio and expanding internationally, particularly in North America and Europe.

4. Bad News, Challenges, or Points of Concern:

• The net loss from continuing operations increased to RMB 25.8 million from RMB 21.8 million in the previous quarter, indicating ongoing financial challenges.
• High fixed costs related to the legacy business model remain a concern, although management is working to optimize these expenses.
• The company is still in the early stages of its international expansion, with current overseas revenue being relatively low compared to domestic sales.

5. Notable Q&A Insights:

• Management expressed confidence in achieving the ambitious revenue targets for the second half of FY 2026, citing increased production capacity and strong order demand.
• The focus on balancing IP operations with sales growth was emphasized, with a commitment to maintaining profitability while investing in marketing.
• Concerns were raised about the competitive landscape, particularly regarding the performance of peer companies like Labubu, but management believes there is ample room for growth in the pop toy market.
• The company plans to validate the profitability of new DTC stores before expanding further, ensuring each store becomes a valuable asset.

Overall, HERE's Q1 2026 results reflect strong growth in its pop toy segment, supported by strategic initiatives and a focused business model, although challenges remain in achieving profitability and expanding its international footprint.