QuantaSing's Pop-Toy Revenue Doubs as Loss Widens to CNY169.6 Million

QuantaSing Group's fourth-quarter revenue rose 94.1% year over year to CNY127.7 million, capping a fiscal 2026 in which the company generated CNY596.8 million from its pop-toy intellectual property business. The growth came at a cost: the net loss from continuing operations widened to CNY169.6 million from CNY21.8 million a year earlier.

Founder, Chairman and Chief Executive Officer Peng Li said the quarter closed out the company's first full fiscal year focused on pop toys. Management is now steering the business away from third-party distribution and toward proprietary IP and direct-to-consumer channels.

"We have made a deliberate strategic choice to prioritize long-term IP assets value over short-term wholesale sales volume," Li said on the earnings call. He described a closed-loop model combining proprietary IP, product design and direct customer channels, designed to give the company more control over product launches, presentation and customer experience.

IP portfolio concentrates on WAKUKU and SIINONO

As of June 30, the company held a portfolio of 22 IPs: 13 proprietary and nine exclusively licensed. The flagship WAKUKU IP generated CNY47.7 million in fourth-quarter revenue and CNY369.3 million for the full year, or 61.9% of annual revenue.

SIINONO, launched in the second half of 2025, added CNY27.3 million in the quarter, or 21.4% of quarterly revenue, and CNY92.7 million for the fiscal year, representing 15.5% of full-year sales.

Li said revenue from the other IP category — including Xiao, Mimimo, Funi, Fila and Inpoppo Pigs — rose 661% year over year to CNY39.8 million in the fourth quarter from CNY5.2 million. ZIYULI contributed CNY12.8 million during the quarter. Together, those IPs accounted for more than 41% of quarterly revenue, according to management.

The company is extending its characters into consumer and lifestyle partnerships. SIINONO launched a limited-edition sparkling-water collaboration with Genki Forest, worked with French fashion house IRO Paris on plush pendants, and took part in an exclusive partnership with the Museum of Fine Arts, Boston. SIINONO will serve as the headline IP for the 2026 China Open. Management also introduced Yuna as a new IP; Fluffy Lily collaborated with CASETiFY during the Qixi Festival and served as an official partner for the 38th Hundred Flowers Awards.

Retail footprint favors returns over store count

Here Group operated seven D2C stores across four metropolitan areas at the time of the call, including a new location at Beijing Daxing International Airport aimed at business and travel consumers. Chief Financial Officer Tim Xie said the company prioritizes operating quality and return on investment rather than store count.

The company also runs 25 Roboshops across six cities and said it has shifted from an expansion-focused rollout phase to improving per-machine efficiency and extracting consumer data. Its Hong Kong Central Pier cruise experience was in final decoration, with ticket sales starting Sept. 21 on Ctrip ahead of an Oct. 1 maiden voyage targeting National Day Golden Week tourist traffic.

Margins compress and goodwill takes a hit

Fourth-quarter cost of revenue rose to CNY94.7 million from CNY43 million a year earlier, reflecting higher IP product costs, logistics, labor and IP licensing expenses. Gross margin fell to 25.8% from 34.7% a year ago and 34.5% in the preceding quarter.

Total operating expenses reached CNY216.1 million. Sales and marketing expense climbed to CNY56.2 million from CNY19.1 million, driven by advertising, promotion and employee compensation. Research and development expense totaled CNY9.9 million; general and administrative expense was CNY25.8 million. Adjusted net loss from continuing operations came in at CNY37.7 million, versus CNY19.3 million in the prior-year quarter.

The company booked a CNY124.1 million non-cash goodwill impairment tied to its Fastone acquisition, citing lower-than-expected financial performance amid macroeconomic headwinds. Remaining goodwill from the acquisition stood at CNY63.5 million as of June 30.

Inventory overhang and capital returns

Management said channel inventory ran above its normal operating range during the quarter, blaming a mismatch between a cooling consumer environment and the company's historical operating pace. Xie said the company had relied heavily on distributors to gauge end-market demand and lacked precise real-time visibility into sell-through.

To work down the inventory, the company is increasing exposure through D2C online channels, stores, Roboshops, pop-up events and experiential initiatives. It has moderated shipments to wholesale distributors and introduced selected bundle offers and purchase incentives. It said it will not pursue aggressive clearance measures that could damage brand pricing or premium positioning.

The board approved a $20 million American depositary share repurchase program in June. As of Sept. 16, the company had bought back about 0.4 million ADSs for approximately $0.7 million. Xie said the company will continue to assess repurchases and other capital-return opportunities alongside investment needs.

The quarter's results frame the central question for the year ahead: whether SIINONO and newer characters can scale fast enough to offset thinning margins, inventory drag and wholesale restraint while the D2C model matures.