Earnings call transcript: Here Group’s Q1 2025 revenue surges amid stock volatility

Here Group Ltd (HERE) reported robust revenue growth for the first quarter of 2025, with revenue climbing 93.3% quarter-over-quarter to CNY 127.1 million. Despite narrowing its adjusted net loss to CNY 17.1 million, the company’s stock experienced a volatile session, closing down 5.56% at 4.76 USD but surging 14.29% in premarket trading to 5.44 USD.

Key Takeaways

• Revenue increased by 93.3% quarter-over-quarter, reaching CNY 127.1 million.
• Gross margin improved to 41.2%, up from 34.7% in the previous quarter.
• Stock showed significant volatility, closing down 5.56% but rebounding 14.29% in premarket trading.
• Direct-to-customer sales accounted for CNY 44.6 million of total revenue.
• The company is expanding its international distribution to 20 countries.

Company Performance

Here Group demonstrated strong performance in Q1 2025, driven by substantial revenue growth and improved gross margins. The company’s focus on direct-to-customer sales and international expansion has begun to yield results. The POPTOY market, which Here Group is targeting, is projected to grow at an 18% compound annual growth rate over the next five years, providing a favorable backdrop for the company’s strategic initiatives.

Financial Highlights

• Revenue: CNY 127.1 million, up 93.3% quarter-over-quarter.
• Gross Margin: 41.2%, an increase from 34.7% in the previous quarter.
• Adjusted Net Loss: CNY 17.1 million, narrowed from CNY 19.3 million.
• Cash and Equivalents: CNY 789.4 million.

Market Reaction

The stock of Here Group experienced a turbulent session, closing at 4.76 USD, down 5.56%. However, in premarket trading, the stock rebounded sharply, rising 14.29% to 5.44 USD. This volatility reflects mixed investor sentiment, likely influenced by the company’s robust revenue growth and improved margins, countered by ongoing net losses and market competition.

Outlook & Guidance

Looking ahead, Here Group has provided a revenue forecast for the second quarter of 2025 in the range of CNY 150-160 million and a full-year forecast of CNY 750-800 million. The company aims to balance profitability and growth, focusing on expanding its IP portfolio and targeting broader consumer segments.

Executive Commentary

CEO Peng Li highlighted the company’s strategic positioning: "We are now positioned to capture the massive global POPTOY competency." Li also emphasized the market’s evolution, stating, "The POPTOY market has moved beyond its niche origins." He reiterated the company’s dual focus: "We aim to strike a balance between profitability and growth."

Risks and Challenges

• Market Competition: Intense competition in the POPTOY market could pressure margins.
• Profitability Concerns: Despite narrowing losses, sustained profitability remains a challenge.
• Supply Chain Risks: Potential disruptions could impact production and distribution.
• Consumer Demand: Changes in consumer preferences might affect sales projections.
• Currency Fluctuations: Exchange rate volatility may impact international revenue.

Q&A

During the earnings call, analysts inquired about Here Group’s revenue growth strategy and its plans for offline market expansion. The company detailed its focus on key IPs and addressed expectations for future profitability, providing insights into its strategic roadmap.

Full transcript - Here Group Ltd DRC (HERE) Q1 2026:

Conference Operator: Good morning and good evening, ladies and gentlemen. Thank you for standing by and welcome to Heres Earnings conference call. At this time, all participants are in a listen-only mode. We will be hosting a question-and-answer session after management’s prepared remarks. Please note that today’s event is being recorded. I would now like to turn the conference over to Ms. Leah Guo, Investor Relations Associate Director of the company. Please go ahead, ma’am.

Leah Guo, Investor Relations Associate Director, Heres Group: Thank you. Hello, everyone, and welcome to Heres Earnings call for the first quarter of fiscal year 2026. With us today are Mr. Peng Li, our Founder, Chairman, and CEO, and Mr. Jin Xie, our CFO. Mr. Li will provide a business overview for the quarter. Tim will discuss the financials in more detail. Following their prepared remarks, Mr. Li and Tim will be available for the Q&A session. I will translate for Mr. Li. You can refer to our quarterly financial results on our IR website at ir.heresgroup.com. You can also access a replay of this call on our IR website when it becomes available a few hours after its conclusion. Before we continue, I would like to refer you to our safe harbor statement in our earnings press release, which also applies to this call, as we will be making forward-looking statements.

Please note that all members’ statements in the following management prepared remarks are in IND terms, and we will discuss non-GAAP measures today, which are more thoroughly explained and reconciled to the most comparable measures reported in our earnings release and the following with the SEC. I will now turn the call over to the CEO and the founder of Heres, Mr. Li.

Peng Li, Founder, Chairman, and CEO, Heres Group: Okay. Good morning, everyone. Thank you for joining us today for our first quarter of fiscal year 2026 earnings. This is a historic moment. Our first earnings call is here following our business strategy, which positions us as a pure-play player in the global employee market. Today, I’m proud to report that our first quarter as a fully focused organization has been well-executed and accelerating momentum. We have completed the proposal of our non-employee businesses by September 30, 2025, allowing us to concentrate all our talent and resources on the immense global employee opportunity ahead. In Q1, we delivered a total revenue of CNY 100 and yeah, CNY 127.1 million, with our employee business growing. Wait a moment. 你要我解决不了这个背景音的问题，好吧。 With our employee businesses growing 93.3% quarter over quarter from CNY 65.8 million, exceeding the higher end of our previous guidance, CNY 110 million.

Let me highlight our most impressive operational metric, which demonstrates the power of our focused strategy. Our total DTC across direct-to-customer online stores reached CNY 44.6 million this quarter. Fiscal year 2026 Q1, I will validate our capability to develop B2C operations, and our future B2C development strategy will align with our sales planning, new product launch schedules, and other operational activities. This operational momentum, along with contributions from our diversified sales channels, translates directly to strong financial performance. Our shipment focus is also driving growth for profitability, with gross margins expanding to 41.2%, up from 34.7% in the previous quarter. We ended the quarter with a solid balance sheet and a strong asset space, reflecting our financial stability and operational strength. Now, let me walk you through how we are executing our two-pillar growth strategy and tangible results we are seeing across our business.

Our first pillar focuses on strengthening our IP ecosystem with a balanced volume. This strategy is delivering results across original software IP creation, strategic partnerships of licensed IP, and across industry co-funding. A key element of this approach is concentrating resources on our flagship IP properties to maximize their market impact and cultural resonance. Our KUKU. We launched our KUKU on the GO series on November 29. This new series brings collectibles into real-life scenarios, building emotional connections with young consumers who will see pieces as daily companions and personal symbols rather than just toys. By integrating lucky numbers into lifestyle sentences and offering essential savings, we transform used interactions with collectibles into social sharing moments. Every design element, from trending colors to female social risk, like interchangeable silky cut hats, makes luck tangible daily experience.

The launch was further enhanced by original song and music video, creating a multimedia experience that extends the IP’s culture, reaching beyond physical products. Our operational excellence demonstrates this strategy in action. Our KUKU’s streets become one of Shanghai’s most popular photography destinations in November, attracting young people and social media creators who generate diverse content through street photography and collection showcases. This capability turns IP launches into cultural phenomena that drive organic community engagement. Proves our ability to create compelling characters that naturally embed into young people’s lives, becoming authentic expressions of personality and sentiments, or cultural moments that extend beyond traditional product boundaries. Our flagship IPs continue to be powerful growth engines, which recently launched, achieving record-breaking performance, particularly in international markets. These launches show our systematic IP development capability and our ability to create emotionally resonant characters with compelling narratives.

Looking ahead, we remain committed to adding value to our flagship IPs and the newly launched IPs. Let me share our strategic partnerships that are expanding our cultural influence. We will formally establish a strategic partnership with Beijing Radio and Television Station. The partnership covers content and cultural project cooperation mechanisms, including program co-creation, IP integration, and co-brand content production. This deep integration with mainstream media enhances our brand credibility and lays the foundation for our national and media partnerships. Our POPTOY IP participated in the official Golden Rooster Awards activities, including the Starry Sea Gift Set, red carpet visual elements, and the Outside Integrity Creativity, becoming one of the examples of new culture at this year’s film festival. This collaboration achieved deep connections with China’s mainstream entertainment industry.

Our cross-industry co-branding strategy is elevating our branding to new customer segments through diverse partnerships across the entertainment media spots and company development. In the sports sector, we achieved a large amount of milestones as the first official POPTOY brand partner in China Open history, creating value across three key areas. From a media perspective, we generated over 200 million exposures and became a core tourism topic. In terms of athletic engagements, we secured athletic integration and organic endorsements from global top players, including the most number-one ranked athlete, who helped strong celebrity sales now develop. On the commercial side, our semi-performable store generation unit is self-driving, with multiple limited-edition items selling out immediately upon release. This success demonstrates the effectiveness of our POPTOY Plus premium sports events model, creating a seamless connection from the brand awareness to mature sales conversions.

In the entertainment sector, we’ve secured high-profile celebrity exhibitions that expand our reach into mainstream pop culture. We’ve also collaborated with various show PDs and Google’s Tommy by Quest, integrating our brand into the Chinese popular entertainment landscape. This partnership demonstrates our ability to seamlessly blend pop-up culture with mainstream television programs, reaching diverse demographic segments. We also partnered with the local tourism government office to create IPs and street featuring installations. Integrative scenarios and immersive photo opportunities in the core Beijing landmark commercial district. This project increased both traffic and helped really heavily challenge the barrier for younger audiences, providing a successful pilot for our urban renewal plus POPTOY scenario operation strategy. These collaborations showcase our strategic in cross-industry partnerships, from premium sports tournaments to domestic reality shows and urban commercial districts, each designed to introduce our IP to new audiences while strengthening brand recognition across different consumer platforms.

This IP set creates the foundation for our second pillar, our multi-channel approach, which can be lifesized by this compelling branding approach. Logical pipelines to drive efficient growth, both statically and internationally. In China, our social media matrix is delivering exceptional results. Our campaign followers are based across key platforms averaged 26,500. We have generated 675 million views on Douyin and 121 million views on Xiaohongshu, demonstrating actual traffic reach. This is converting directly to sales. With our Douyin flagship store, we’re increasing 97.2% total visits offline. We are continuing to develop our POPTOY stock, which serves flavor units and brand blend experiences to showcase our products and strengthen brand presence in key markets. Our software stores have generated over CNY 3 million in cumulative sales, and we have secured three locations. We have offsite traffic locations in top-tier shopping districts, including Shanghai, Beijing, and Shenzhen.

For more direct-to-customer channels, our first Beijing D2C store and our first Chongqing D2C store will open in December 2025. Two additional D2C stores in Beijing are set to open in early 2026. In addition, we have also launched the sequence and New Year’s pop-up stores to capture the holiday shopping momentum in Shanghai and Shenzhen. We participated in high-profile events, including the 2025 China International Fair of Street in Zhengyue, significantly boosting brand visibility and generating quarter-qualified leads for our wholesale channel. Internationally, our momentum is accelerating across key markets. Our performance on TikTok Shop in North America has positioned us as popular in the collectibles category. A standout success was our KUKU vendor series. Our overseas distribution network now covers around 20 countries, including North America, Europe, Southeast Asia, and the Middle East.

With the established infrastructure in place, we are now beginning to focus on enhancing sales performance in this market as our supply chain capabilities continue to improve and our partnerships with overseas distributors. This foundation allows us to rapidly scale our geographic footprint while minimizing fixed infrastructure investments and leverage our established retail relationships and local markets’ expertise to achieve efficient market performance under control. Underpinning our creative and commercial success is our in-time operational system, which represents a true competitive advantage. We are no longer in transition. We are in acceleration mode with a pure play of our strategy, followed by the two pillars: acquisition and supply, agile supply chain capability, and a strengthened balance sheet. We are now positioned to capture the massive global POPTOY competency and deliver sustainable long-term value to our shareholders.

This result is quarter-validated our strategic targets, our brand resonating with consumers, our channels scaling efficiently, and our operations executing flawlessly. We have the momentum, the capabilities, and the resources to become a defining global player in the POPTOY industry. I will now turn it over to Tim for a detailed review of our financial results. Thank you, everyone. That’s all. Hello. Thank you. Before I go into the details of our financial results, please know that all amounts are in CNY terms, that the reporting period is the first quarter of our fiscal year 2026, ending on September 30, 2025, and that in addition to GAAP measures, we will also be discussing non-GAAP measures to provide greater clarity on the trends in our actual operations.

We are pleased to report on solid financial performance this quarter, which demonstrates the successful execution of our strategic transformation into a product-driven POPTOY company. Total revenue reached CNY 127.1 million, with a gross margin of 41.2%, compared with total revenue of CNY 65.8 million, with a gross margin of 34.7% in the previous quarter. Adjusting net loss from continued operations narrowed to CNY 17.1 million, down from CNY 19.3 million in the previous quarter. These results reflect the success of our strategic business restructuring and the disposal of our non-POPTOY businesses, allowing us to focus entirely on our high-growth POPTOY segment. Revenues for the quarter were CNY 127.1 million, entirely generated from the sales of POPTOYs and related activities, compared to CNY 65.8 million in the previous quarter. Gross profit for the quarter was CNY 52.4 million, compared to CNY 22.8 million in the previous quarter.

Our gross margin increased to 41.2% this quarter from 34.7% in the previous quarter, reflecting the strength of our POPTOY business model. On the operational front, total operating expenses were CNY 81.6 million for this quarter. To break this down, sales and marketing expenses were CNY 27.6 million. These expenses mainly included advertising and promotion costs aimed at enhancing product and brand visibility to accelerate growth and expand market share. As a percentage of total revenue, non-GAAP sales and marketing expenses, which exclude share-based compensation, decreased to 21.7% this quarter, from 29% in the previous quarter. Research and development expenses were CNY 15.8 million. These expenses were mainly focused on advancing our POPTOY portfolio through new product design innovation and establishing our integrated sales platform and data center infrastructure. These investments create a solid operational foundation to support future business expansion.

As a percentage of total revenue, non-GAAP research and development expenses, which exclude share-based compensation, decreased to 12.5% this quarter, from 13.5% in the previous quarter. General and administrative expenses were CNY 38.1 million. These costs reflected our operational functions, including employee compensation, professional service fees, and other operational expenditures. As a percentage of total revenue, non-GAAP general and administrative expenses, which exclude share-based compensation, decreased to 23.2% this quarter, from 26.3% in the previous quarter. Our net loss from continuing operations was CNY 25.8 million, compared with CNY 21.8 million in the previous quarter. Our adjusted net loss from continuing operations was CNY 17.1 million, compared with CNY 19.3 million in the previous quarter. Basic and diluted net loss from continuing operations per share were CNY 0.16 during this quarter. Basic and diluted adjusted net loss from continuing operations per share were CNY 0.11 during this quarter.

Regarding our balance sheet position as of September 30, 2025, we held CNY 789.4 million in cash and cash equivalents, risk-free cash, and short-term investments. Looking ahead, we’re excited about the growth prospects for our POPTOY business. Based on currently available information, we expect revenues from our POPTOY business to be in the range of CNY 150 million-CNY 160 million for the second quarter of fiscal year 2026, and in the range of CNY 750 million-CNY 800 million for the full fiscal year 2026. These forecasts reflect our confidence in the POPTOY market opportunity and our ability to scale our IP portfolio and expand internationally. That concludes my prepared remarks. Operator, let’s open up the call for questions. Thank you. Thank you. We will now begin the question-and-answer session. To ask a question, you may press star then one on your touch-tone phone.

If you’re using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star, then two. When asking your question, when asking a question in Chinese, please translate your question in English for the convenience of everyone on the call. Please ask one question at a time. Our first question today will come from Alice Kai with Citi. Please go ahead. Good evening, Management Team. Thanks for taking my question. I have two questions. The first one, based on the second quarter guidance, implies that the first half revenue is around CNY 280 million, right? To hit the full year target of CNY 800 million, second half revenue needs to reach at least CNY 500 million, which is nearly double first half.

What is the specific breakdown of this confidence? Is this cost driven by capacity, secure orders from retailers, or is it based on projected sales through new launches, new IP launches, I mean? Do we expect to turn profitable in the second half given the strong revenue guidance? My second question is about the implication on the Labubu momentum. Do we expect is there any impact on our Labubu revenue momentum? Thanks. Okay. Thank you for the question, Alice. For the first one, regarding the guidance, the revenue forecast is primarily based on the following points: the timeline and pace of the product launches for different IPs and corresponding production capacity arrangements, as well as the current production capacity and inventory situation. It also takes into account the order from our customers’ allocation and arrangements for the channel partners and self-operated online platform and DTC channels.

Currently, our production capacity is expected to reach approximately 400,000 sets per month, equivalent to 2.4 million units in the near future, I think maybe by end of this year, which will help avoid severe supply chain shortages such as the first half year from recurring. At the same time, based on the order situation for new products in the latest months, the subsequent product launch plans, and the order placements from various channel partners, our projections can generally support the overall revenue guidance range for the fiscal year ending June 2026. I think the core of our business lies in balancing IP operations and sales scale with a focus and priority on continuously extending and enriching the emotional value that the IP products bring to our users while achieving sales growth. We are striving to continuously realize and optimize this objective.

Regarding the bottom line, I think the losses, especially the adjusted losses excluding the share-based payment expenses, are narrowing. Also, the losses incurred in the fourth quarter were primarily due to the short-term business adjustment for the business restructuring. Because the existing fixed cost structure and expenses structure, including the fixed cost, remained relatively high compared to our current revenue scale, of which many items are inappropriate with the legacy business, such as fixed expenses related to maintaining the listing company status, the ODCs, and the list office spaces based on the previous business model, all of which are currently being optimized. We are actively refining our cost and expense structure in accordance with the needs of the new business development. In the upcoming quarters, the proportion of similar fixed costs and expenses is expected to continue decreasing.

Regarding sales expenses, I think one of the major expenses, we anticipate that the adjusted ratio will fluctuate around 20% of the revenue. The specific amount and proportion will depend on market conditions and the schedule of new product launches. During this rapid growth phase, we plan to allocate slightly more resources to branding and marketing to enhance the IP operation activities. However, consistent with our long-standing business strategy, we will not pursue growth through excessive spending. In the early stages, we aim to strike a balance between profitability and growth, and we are confident that this profitable growth will be achieved in the coming quarters. I think the other question related to the product, especially for the IP, I think our peers, for example, the Labubu IP operations, have achieved outstanding business performance and rapid growth.

We believe the market is closely following the latest developments of the pioneer companies and other IPs. As a POPTOY company, we believe there is plenty of room for the growth in our industry. According to a recent research report, the data from a research firm, the market of these IP POPTOYs is still growing very fast at a CAGR of over 18% in the next five years. Moving forward, we will continue to prioritize our IP operations, new product launches, and brand building. The market has validated KUKU’s unique appeal to the users. Let me share some sales numbers. The first generation of KUKU was launched at the end of last year, and the second generation was launched in the first half of this year in May.

All of the previous version WAKUKU products, the cumulative sales up to now have now exceeded 6 million individual units. We launched our new generation mini version just now on November 29. The offline debut received very positive feedback, and the online launch is scheduled for December 4. The POPTOY market has moved beyond its niche origins and now reaches a much broader audience. Going forward, we will continue to build our IP portfolio, creating distinctive and resonant IPs for different consumer segments. In product development, we will continue exploring the unique characteristics of each IP to develop new products that align with market demand. For marketing and promotions, we will integrate our operations with strategic marketing campaigns to continuously strengthen our IPs and maintain their long-term vitality. Yeah. Thank you. That’s all. Very helpful. Yeah. The next question will come from Lai Ping Zhao with CICC.

Please go ahead. Good evening, Li Zhong, team. Congrats on your strong quarter, and thanks for taking my questions. As Li Zhong just said, you guys are going to launch the DTC stores offline. Could you please share the latest updates on these stores and your future opening pipeline in 2026? How should we expect the sales value of these DTC stores? Thank you. Thank you. I will answer it. Our key progress with offline DTC stores centers on building strategic brand experience centers. The first batch of the stores is expected to open between late December this year and early 2026, in very early January. Current preparations focus on decoration and operational systems, and I think we are getting ready. Our goal is to transform our DTC stores into immersive and interactive offline narrative spaces.

They will serve as physical hubs for our brand culture and core basis for offline community engagement. In terms of channel synergy, our DTC stores represent a strategic investment in brand building and deepening user relationships. The goal is not only direct sales competition. Instead, we enhance overall brand momentum by providing unique immersive experiences. The approach reinforces and empowers the online DTC and KA channels. We are creating a positive cycle of offline experience, online engagement, and omnichannel conversion. This ultimately strengthens our brand’s omnichannel competitiveness. I think future expansion will strictly follow a prudent phased strategy. We begin by validating the profitability of a single store and brand impact model using operational data from our initial stores. Once we successfully validate the business model, we will consider speeding the process of replication.

This way ensures every new store becomes a valuable brand asset that keeps generating value over time. That’s my answer. Thank you. The next question will come from Yuken Zhang with CITIC Securities. Please go ahead. Good evening, Management. Thank you for taking my question. My question is regarding our OFE market. We know that Pop Mart’s OFE business almost contributes half of its revenue, but for now, our current OFE revenue proportion is relatively low. Will the OFE market be our focus for the next year? What is our strategy on the OFE market? Thank you. Thank you for the question. Regarding the OFE market, I think that definitely is one of our focuses, especially starting from recently in this quarter.

I think because of the supply chain shortage in the first half year, our major resources are put into the domestic market because we are still at the early stage, and also we should supply all of the order demand from the existing clients in the domestic markets, especially the KAs first. At the same time, we are increasing our capacity, the production capacity, especially recently, as I just mentioned, we have increased the monthly capacity almost 40 times recently compared to that early this year. We started to make our efforts in terms of the OFE channel and sales. Starting from this quarter, we will adopt such a strategy that first we will cooperate closely with our KAs, with our distribution partners, especially with that who has very solid OFE chain stores and distribution network.

At the same time, we are building our OFE online platforms such as TikTok in North America and Southeast Asia at the same time. I think combining both of these efforts, we will make progress in terms of the OFE sales in the coming quarters. Even though we definitely think that the OFE market is growing very fast compared in terms of the speed, the growth rate with the domestic market, as overall, we are still at the early stage and our absolute sales volume is still growing very fast. I think the majority of our sales will still come from the domestic market in the short term. Definitely, we will replicate the strengths and experiences built in the domestic market to the OFE market.

Everything is at the beginning and on a trajectory trend so that we can make big progress in the coming quarters. Thank you. The next question will come from Dai Xi with Haitong Securities. Please go ahead. Thank you, Management, for this opportunity to raise my question. I’m Dai Xi from Haitong Securities. My question is about our IP structure. I wonder what is the revenue structure breakdown by IP this year and how do we foresee the drivers from new IPs in the next year? Thank you. Thank you. Based on this quarter data, our POPTOY business shows a healthy and well-structured IP portfolio. We ranked our IPs according to the popularity and also the IP strength. First, in this quarter, the total revenue for the quarter was CNY 127 million.

Our superhit product and IP WAKUKU alone accounted for 71% of our total revenue. This makes it the key driver for our growth. Our classic IP, the Youli Zuli, as a stable pillar, contributed 16% of the total revenue approximately. The new IP, which we launched in July, and it is a third-party licensed, exclusively licensed IP called Xenono, made a solid debut, accounting for approximately 10% of our revenue this quarter, demonstrating a remarkable performance. The remaining came from other IPs because we currently have 70 IPs. For this result, I will give you some basic principles. First is that we will focus all of our efforts, the majority of our efforts and resources on our S-class IPs, that is WAKUKU, Zuli, and Xenono.

Currently, I think in the short term, maybe in the coming quarter and maybe around three years, we will focus on the top IPs because we think we should put efforts to make the top IP last their popularity. Looking ahead to the next year, our new IP strategy will be driven by a dual approach, deep in the core and systematic incubation. Our core engine, KUKU, will transition from that explosive launch momentum to deeper operations and extending its product lifecycle. We will consolidate our market leading position through strategic product line expansion and enhance user experience. We will systematically replicate Xenono’s proven incubation model to cultivate one to two additional flagship IPs, creating a more balanced and diversified growth portfolio. Overall, our company will drive future growth through an IP matrix operating model. This breaks down into two main areas.

First, we will refresh our established IPs to keep them fresh and engaging for our audiences. Second, we will set up a flexible incubation mechanism that allows us to continually test new concepts and strategically allocate resources to the most promising emerging IPs. Over time, this approach will help us create a healthy IP ecosystem, one that appeals to diverse audiences, protects us from single product risks, and also delivers long-term growth potential. Quarter by quarter, I think the IP revenue fluctuation will be based on the product launches and the pace of each IP. I think in sum, we will focus on three to five key IPs, such as KUKU, Xenono, Youli Zuli, and other IPs maybe in the future. We will incubate some new IPs so that we can not only diversify the revenue concentration risks, but also grow the whole IP portfolio.

Thank you. As there are no further questions, I’d like to hand the conference back over to Management for closing remarks. Please go ahead. Thank you again for joining our call today. If you have any further questions, please feel free to contact us or submit a request through our IR website. We look forward to speaking with everyone in our next call. Have a good day. The conference is now concluded. Thank you for your participation. You may now have a good day.

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