Here Group's Revenue Nearly Doubled to CNY 127.7 Million in Q4

Here Group closed its fourth quarter with revenue of CNY 127.7 million, up 94.1% year-over-year, bringing full fiscal year 2026 revenue to CNY 596.8 million, founder, chairman and CEO Peng Li said on the company's earnings call Tuesday, Sept. 22, 2026. The quarter also produced a net loss from continuing operations of CNY 169.6 million, driven largely by a one-time CNY 124.1 million goodwill impairment tied to the company's acquisition of Fastone.

Fiscal 2026 marked Here's first full fiscal year dedicated to the pop toy business, and Li used the call to lay out a strategic repositioning away from wholesale distribution toward what he called a "strategic closed loop" of proprietary IPs, adaptive product design, and direct-to-customer channels.

"Distribution expands market reach, but it cannot answer the fundamental question of user loyalty," Li said. "Why will customers remember you and consistently choose your brand?"

The company's answer is scarcity and discipline. Li argued that the long-term asset value of an IP is intrinsically linked to perceived scarcity: once supply outpaces consumer interest, the IP structurally devalues. "We have made a deliberate strategic choice to prioritize long-term IP asset value over short-term wholesale sales volume," he said.

IP portfolio diversification

As of June 30, 2026, Here's portfolio spanned 22 IPs — 13 proprietary and nine exclusively licensed. Flagship IP WAKUKU generated CNY 47.7 million in the fourth quarter and CNY 369.3 million for the full year, accounting for 61.9% of annual revenue.

The standout was SIINONO. Launched only in the second half of 2025, it generated CNY 27.3 million in Q4 alone — 21.4% of quarterly revenue — and CNY 92.7 million, or 15.5% of the annual top line, in its first full fiscal year. Li called the trajectory confirmation that the company "can systematically build and scale new proprietary IPs."

The long tail grew faster still. Revenue from the company's "others" IP category, including Xiao Many More, Funini, Fila and Inpoppo Pigs, surged 661% year-over-year to CNY 39.8 million in the quarter, up from CNY 5.2 million a year earlier. Combined with ZIYULI's CNY 12.8 million contribution, that portfolio now represents over 41% of quarterly revenue.

The company pushed its characters into premium consumer scenarios during the quarter: SIINONO launched a limited-edition co-branded sparkling water with Genki Forest, partnered with French fashion house IRO Paris on a plush pendant collection, and was named headline IP of the 2026 China Open. Here also formalized an exclusive partnership with the Museum of Fine Arts, Boston, co-developing five premium artistic works across three core IPs. In Hong Kong, its landmark cruise project at Central Pier opens ticket sales via Ctrip on September 21, ahead of an October 1 maiden voyage timed to National Day Golden Week.

Financials under pressure

CFO Tim Xie detailed a quarter of sharp margin compression. Cost of revenue rose to CNY 94.7 million from CNY 43 million a year ago, cutting gross margin to 25.8% from 34.7%. Total operating expenses reached CNY 216.1 million, including sales and marketing costs of CNY 56.2 million — nearly triple the CNY 19.1 million a year earlier, reflecting heavier advertising and employee compensation.

The adjusted net loss from continuing operations was CNY 37.7 million, versus CNY 19.3 million a year ago. Basic and diluted loss per share was CNY 1.07; on an adjusted basis, CNY 0.24.

On capital allocation, Xie said the board approved a $20 million ADS repurchase program in June. As of September 16, 2026, the company had bought back approximately $0.4 million of ADSs for approximately $0.7 million.

Inventory and the wholesale retreat

Responding to Huatai Securities' Di Shi, Xie acknowledged channel inventory ran above the company's normal operating range, attributing it to a structural mismatch between a cooling macro environment and the company's historical reliance on distributors to gauge demand. His remedies: accelerating sell-through via D2C stores and the 25-machine Roboshop network across six cities, deliberately moderating wholesale shipments to preserve scarcity, and targeted bundle offers in partner channels.

"We prefer to absorb a short-term compression in wholesale revenue to give the channel sufficient room to clear existing stock in a healthy way," Xie said. He stressed the company carries no interest-bearing debt and said it would not resort to aggressive clearing that undermines brand premium.

The company now operates seven D2C stores across four core metropolitan areas, including a new location at Beijing Daxing International Airport opened during the quarter. "We will not open stores for the sake of opening stores," Xie said, noting every plan passes a strict ROI review.

Management gave no timeline for profitability, saying only that it expects the gap between revenue and cost trends to close as revenue stabilizes and cost structures are optimized, with a near-term mandate to reach sustainable profitability "at an early date."