HERE — Here Group Limited

HERE Q2 2026 Earnings Call Summary

1. Key Financial Results and Metrics:

• Total Revenue: RMB 177.3 million, a 35.4% increase quarter-over-quarter, exceeding guidance expectations.
• Gross Profit: RMB 55 million, with a gross margin of 31%, down from 41% in the previous quarter due to lower margins from offline sales.
• Adjusted Net Loss: RMB 161.1 million, narrowing from RMB 17.1 million in the previous quarter.
• Operating Expenses: Totaled RMB 93.2 million, with sales and marketing expenses at RMB 52.8 million, reflecting increased investment in brand building.
• Accounts Receivable: RMB 32.6 million, decreased from the previous quarter, indicating improved collection efforts.
• Inventories: Increased to RMB 111.8 million, driven by proactive inventory build-up for upcoming demand.

2. Strategic Updates and Business Highlights:

• IP Strategy: Continued focus on flagship IPs, with WAKUKU generating RMB 129.4 million (73% of revenue) and SIINONO contributing RMB 19.2 million.
• Offline Expansion: Opened 5 D2C stores, enhancing brand interaction and consumer experience, with plans for more stores in 2026.
• Cultural Integration: WAKUKU appointed as a promotion ambassador by Tianjin's culture bureau, indicating successful cultural engagement.
• Omnichannel Approach: Strengthened connections between online and offline channels, leveraging user engagement and sales.

3. Forward Guidance and Outlook:

• Q3 Revenue Forecast: Expected between RMB 140 million to RMB 150 million, reflecting a seasonal decline of 15-20% due to distributor inventory adjustments during the Spring Festival.
• Full Year Revenue Guidance: Anticipated to be between RMB 750 million to RMB 800 million, supported by a robust pipeline of new IP releases.

4. Challenges and Points of Concern:

• Gross Margin Decline: The decrease in gross margin from 41% to 31% raises concerns about profitability as offline sales grow.
• Seasonal Revenue Dip: Anticipated revenue decline in Q3 may indicate vulnerability to seasonal fluctuations in consumer behavior.
• Increased Losses: Despite narrowing losses, the adjusted net loss remains significant, highlighting ongoing financial pressures.

5. Notable Q&A Insights:

• Revenue Guidance Clarification: Management confirmed that the expected decline in Q3 revenue is primarily due to seasonality and proactive inventory management, not a reaction to poor performance.
• Partnership with Enlight Media: Emphasized as a strategic move to enhance IP development and cultural engagement, aiming to deepen emotional connections with consumers.
• Operational Strategy: Focus on systematic IP operations and marketing, moving from opportunistic creativity to a structured approach to ensure sustainable growth.

Overall, HERE has demonstrated strong revenue growth and strategic execution in Q2 2026, though it faces challenges related to profitability and seasonal revenue fluctuations. The company remains optimistic about future growth driven by its IP portfolio and omnichannel strategy.