Q3 2025 QuantaSing Group Ltd Earnings Call
Operator: Good morning and good evening, ladies and gentlemen. Thank you for standing by, and welcome to Quantasing's earnings conference call. At this time, all participants are in a listen-only mode.
Good morning, and good evening, ladies and gentlemen.
Speaker Change: You for standing by and welcome to Quanta thing earnings Conference call.
Speaker Change: At this time all participants are in a listen only mode.
Operator: We will be hosting a question and answer session after management's prepared remarks. Please note that today's event is being recorded.
We will be hosting a question and answer session. After management's prepared remarks.
Speaker Change: Please note that today's event is being recorded.
Leah Guo: I will now turn the conference over to Ms. Leah Guo, Investor Relations Director of the company. Please go ahead, ma'am. Thank you.
I will now turn the conference over to Mr. Lee Roth.
Speaker Change: Investor Relations director of the company. Please go ahead ma'am.
Speaker Change: Thank you Hello, everyone and welcome to Quanta earnings call for the third quarter typically your 2025.
Leah Guo: Hello, everyone, and welcome to Quantasing's earnings call for the third quarter of fiscal year 2025.
Leah Guo: With us today are Mr. Peng Li, our founder, chairman, and CEO, and Mr. Ting Jie, our CFO. Mr. Li will provide a business overview for the quarter, then Ting will discuss the financials in more detail. Following their prepared remarks, Mr. Li and Ting will be available for the Q&A session.
Speaker Change: With us today are Mr. Colby, our voluntary China and C O N E.
Our Seattle.
Lee will provide a business overview for the quarter Duncan will discuss the financials in more detail.
Speaker Change: During their prepared remarks, Mr. Henry and team will be available for the Q&A session I will translate for Mr. Li.
Leah Guo: I will translate for Mr. Li. You can refer to our quarterly financial results on our IR website at ir.quantasing.com. You can also access a replay of this call on our IR website when it becomes available a few hours after its conclusion.
Speaker Change: You can refer to our quarterly financial results, although I am upset and I don't understand Dot Com you can also access a replay of.
Today's call Oh, well I all upset when it becomes available a few hours after its conclusion.
Leah Guo: 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 numbers stated in the following management's prepared remarks are in R&D 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 filings with the SEC.
Speaker Change: Before we continue I would like to say each of our safe Harbor statement in our earnings press release.
Speaker Change: Which also applies to this call as we will be making forward looking statements.
Speaker Change: Note that all numbers stated in the following management's prepared remarks.
RMB 10, and we will discuss non-GAAP measures today, which are multiple explained and reconciled to their most comparable measures reported in our earnings release and filings with the FTC.
Peng Li: I will now turn the call over to the CEO and founder of Quantasing, Mr. Li. Okay, good morning everyone. Thank you for joining us Q3 2025 earnings call. I'm pleased to share an update on our performance and strategic direction as we continue our transformation journey. This quarter marked a significant milestone in our evolution. We achieved revenue of RMB 570.7 million. This reflects our ongoing strategic shift from traffic-driven to product-driven business models. More importantly, we completed the consolidation of LIGHTS1 on March 31st. This positions us at the forefront of the high-growth pop toy market. I should note that our Q3 results include only balance sheet consolidation from this acquisition.
Speaker Change: I will now turn the call back to the CEO and founder of Qantas thing Mr. Li.
Speaker Change: Okay. Good morning, everyone. Thank you for joining US Q3, 'twenty to 'twenty five earnings call him a place detour sharing updates.
Speaker Change: The performance on the stretch the direction as we continue our transformation journey.
Speaker Change: This quarter marked a significant milestone in our evolution, we achieved revenue of RMB 570 pardon seven meeting.
This reflects our ongoing strategy shift from a traffic driven to protect driven business models more importantly, we completed the consolidation of lifestyle Hum on March 31st.
Speaker Change: This petition to us at the forefront of the high gross pulp toy market.
I should note that our Q3 results include only balance sheet.
Okay.
Patient from this acquisition.
Peng Li: Profit consolidation began on April 1st and will be reflected in our Q4 results.
Speaker Change: <unk> consolidation began on April 1st on the will be reflected in our Q4 results.
Peng Li: Before I discuss our existing new venture, let me update you about our existing businesses. They continue to demonstrate the strength of our disciplined approach to growth. We maintain strict ROI assessment across all results allocation decisions. This ensures we invest promptly in promising opportunities while maintaining financial discipline.
Before I discuss our existing new winter, let me update you about our existing businesses.
Speaker Change: They continue to demonstrate the strength of our disciplined approach to growth, we maintain our streak to IRI assessments.
Across all resource allocation decisions.
Speaker Change: This insurance be he loves to confidently in promising opportunities to buy all meant to me financial discipline.
Peng Li: For more information, visit www.fema.gov In our financial literacy program, our offerings remain well received by users. We expanded our community outreach with three major financial anti-fraud education initiatives this quarter. These programs not only fulfill our social responsibility commitments, but also strengthen our broad presence among the general public and the broader society. Our senior focused recreation and leisure courses continue to excel with strong retention rates. Particularly noteworthy is our calligraphy program. which has achieved repeat purchase rate exceeding 55%. We also developed an innovative combination of online learning and offline graduation trips. successfully delivering our first trip to over 60 participants with a 100% satisfaction rate.
Speaker Change: Yeah, well financial literacy program, our offerings I remain well received by users.
Speaker Change: We expanded our community ultra search our outreach.
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Speaker Change: With three major financial anti fraud education initiatives.
Speaker Change: Initiatives. This culture this programs not only fulfill our social responsibility commitments, but also strengthen our Brahms process, Mount a general public and our broader society.
Speaker Change: Our senior focused recreation and Legere Cortez continued to lease I always.
Speaker Change: Our strong retention rates.
Particularly note worthy is our colleague coffee program.
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Speaker Change: Extending our 55%.
Speaker Change: We also developed in no innovates U a combination of all of our learning on the offline graduation trips.
Speaker Change: Lastly, delivering our first trip to or 60 participants with a 100% satisfaction rate.
Peng Li: Our second cohort of over 50 participants demonstrates the growing demand for this integrated approach. Building on this success, the sixth annual Qianchi Cup Calligraphy competition attracts over 800 participants. Selected works were featured at national education events in Beijing's Chaoyang District. Expanding beyond calligraphy, our study tour business now spans 16 cities across four course categories. We delivered over 60 sessions. Early pre-sales for our 2025 tour packages generated a strong initial response. This validates strong market demand for our integrated approach. Meanwhile, our health and wellness product business through Zhixiu Tang continues to deliver stable performance. While serving senior customers with an expanding portfolio of tailored products and services, enhancing our revenue diversification and depending engagement with the key cohorts.
Speaker Change: Our second cohort of our over 50 participants Ah demonstrates the growing demands of fault. This integrated approach.
Speaker Change: Building on this success.
Speaker Change: Six and you changed your cup kind of grew up a competition.
Speaker Change: Or it's hundreds of participants.
Speaker Change: So that's state Oh works well features are added Nate National education events in Beijing Toyon District.
Speaker Change: Expanding.
Speaker Change: Beyond kind of quirky.
Speaker Change: Ah study tour business now stands a 16 cities across the full cost category categories.
We were deliberate or 60 sessions already pre sell its fall our 'twenty to 'twenty five tour.
Speaker Change: Packaging has generated a strong initial response.
Speaker Change: This validates strong market demand for our integrated team approach.
Speaker Change: Our house on the wellness product our business through a spiritual Tal continues to deliver stable performance.
Speaker Change: Well, serving a senior customers with spending purvey to offer a tailored product and services enhancing our revenue.
Speaker Change: They were diversely vacation and deep hunting.
Speaker Change: Our engagement with our key cohort.
Peng Li: Our existing business continues to generate positive cash flow, providing a solid foundation for our strategic expansion. The solid performance in our existing business stems from a fundamental philosophy. This philosophy has guided us throughout our history. We identify promising market opportunities through careful analysis and disciplined execution. Our proven formula combines through market evaluation, test and scale methodology, and data-driven decision making. What sets us apart is our commitment to sustainable growth. We build on brand strength and product excellence rather than a traffic-driven model. We have true long-term value creation comes from developing core computations. competition. They are in product development and brown building.
Speaker Change: How are you Gonna 15 Pizza news continue to generate positive cash flow providing.
Speaker Change: Providing a solid foundation for our strategy for expansion.
Speaker Change: The solid performance in our existing business stems.
Speaker Change: From a fundamental philosophy.
Speaker Change: Display Las Vegas has a cat it us throughout our history, we identify poorer missing luggage opportunities through careful analysis.
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Speaker Change: <unk> execution.
Speaker Change: <unk> proven our formula combines.
Speaker Change: Through market evaluation passed on a scale Macedonia, a methodology and a data driven decision making.
Speaker Change: What sets us apart is our commitment to sustainable growth.
Speaker Change: We built brown the stress on the protector excellence, rather than a traffic driven models.
Speaker Change: We have two long term value creation comes from developing car.
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Peng Li: This approach ensures more stable, sustainable growth compared to businesses reliant primarily on marketing expenditures. This disciplined approach has preserved our robust cash position. It enables us to capture Capital lies on strategic opportunities like the next one, acquisition, while maintaining financial resilience. We continually evaluate all our business plans based on ROI performance and strategic fit. This ensures optimal result allocation.
Speaker Change: This approach ensures more stable.
Speaker Change: Sustainable growth.
Speaker Change: Impairs two businesses really lines are primarily the marketing.
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Speaker Change: The acquisition, while maintaining financial resilience we continually.
Speaker Change: Evaluate all of our business plans based on how our performance under stress you can fix fits 60 insurers are optimal.
Speaker Change: The resource allocation.
Peng Li: This brings us to our most significant strategic move this year. Our entry into the pop toy market represents the natural evolution of our strategic philosophy. Let me share why this market captured our attention. According to Frost and Sullivan, the global toy market is massive and is expected to experience steady growth in the future. In terms of GMV, the global toy market grew at a CGR of 5.2%, from RMB 631.2 billion in 2019 to RMB 773.1 billion in 2023, and is expected to further grow at a CGR of 5.1% to reach RMB 993.7 billion in 2028.
Speaker Change: This bring us to our most just thinking if he could just drastic moves this year.
Speaker Change: Our entry into the hospitality market represents the nature evolution of our that she tried to take a philosophy.
Speaker Change: Let me share why are these markets captured our tissue.
Speaker Change: According to Frost <unk> Sullivan.
Speaker Change: The global top toy market is massive and is expected to experience steady growth in the future in terms of Jim G. M week, So the global toy market grow at a C. G. R O a.
Speaker Change: Final, 0.2% from RMB 631 point to BT in 'twenty, a nitrogen to RMB 770.
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Speaker Change: D. G. R O a final point to 1% to reach RMB, a Nike hundreds I'm Lucky 3.7, beating in 'twenty 'twenty H.
Peng Li: The PopToy business exemplifies our product-driven growth strategy. with success factors such as premium IP quality, innovative product design, and sustained investment in IP cultivation and operations. were amplified through precision marketing and operational strategies. The Fundamentals collectively forge enduring brand loyalty and long-term IP vitality. After careful market evaluation, we identified Lifeline as the ideal platform to enter this high-growth market. What made this partnership so compelling was how LeSwan's product development expertise perfectly complements our strengths in market operations. This creates powerful synergies. Last one has demonstrated excellence in IP development and event guard design intelligence. This perfectly complements our established competences in marketing and operations ecosystem.
Speaker Change: The pop toy business exemplifies our per product driven growth strategy.
Speaker Change: With successfactors, such as premium IP quality.
Speaker Change: Our innovative product design and a sustained our investment in I P. A car T lesion and our operations.
Speaker Change: Amplified.
Speaker Change: Through our precision marketing and operational strategies, the fundamentalists collectively such enduring brand loyalty in the long term IP a reality.
Speaker Change: After careful market evaluation, we identified the last one is the idea of a platform to enter this high growth market.
Speaker Change: What made this a partnership so compelling was how this one's product development.
Speaker Change: Expertise a perfect Chile complements our.
Speaker Change: The strength is in market all three operations. So this creates powerful synergies.
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Speaker Change: That's why I had a demonstrated our excellence in IP.
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Peng Li: private traffic momentization and omni-channel commercialization together, we create a complete value chain from IP creation to monetization. I'm pleased to report that we are already seeing promising results since our management team began executing last month's growth strategy in December 2024.
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Speaker Change: Together, we are create a complete value chain from IP creation tool.
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Speaker Change: I'm pleased to report that we are already seeing per month Ms. Promoting our results since our management team began a switching that's one gross stretchy in December 2024.
Peng Li: Let me walk you through our two-pillar approach to building this business. starting with product excellence and brand development. That's why I have built a strong IP metric. This features popular characters such as Wakuku, Youli, Funini, Fela, and Pidou. Among other distinctive IPs, since our investment in December 2024, we focused on operating IP Wakuku. This was incubated in 2024 and achieved excellent market performance in Q1 2025. The market validation has been remarkable. Our Wakuku Pandata release on March 29 achieved the second-highest single-day sales record in our key distributor partners' Beijing flagship store history. This inspectional performance demonstrated both our market strategy and innovation capabilities.
Speaker Change: Let me walk you through our two pillar approach to building this business.
Speaker Change: Starting with product excellence and Brown development. That's why it has built a strong IP Matt metrics.
Speaker Change: This features popular characters such as Roku cool you already a phony a feeler on the pedal.
Speaker Change: Among other distinctive our peers since our investment in December 110 default, we are focused on operating our key buckled cool.
Speaker Change: This was the <unk> to pay teach in 'twenty 'twenty, four and achieved excellent market performance in Q1 2017 filed.
Speaker Change: So my kids are validation has been remarkable our mccook cool Panda race. It is March plenty.
Speaker Change: Plenty nice achieved the second highest single day south to record in our key is to appeal to our panelists Beijing flagship store history.
Speaker Change:
Speaker Change: Our inspection no promise demonstrated both our market strategy and our innovation.
Speaker Change: But it is built.
Peng Li: built on this momentum. The launch of second generation Wakuku fuzzy series, the Fox and Bunny Trick-or-Treat collection on May. 11 teams. at key distribution partner locations in Shanghai and Nanjing, achieved record-breaking single-day sales at our flagship partner store in Shanghai. This performance highlights our product's strong customer appeal in China's premium urban markets, including major economic hubs and their rapidly developing counterparts.
Speaker Change: Built on this momentum the launch of our second generation local cool fuzzy I'm serious.
Speaker Change: The Fox and Bonnie a teacup took outreach collection may.
Speaker Change: 11 teens Ah.
Speaker Change: A key distribution.
Speaker Change: Our partners partner locations in Shanghai and Nanjing.
Speaker Change: <unk> achieved a record breaking singles day sell side, how our flagship power store in Shanghai. This performance highlights our production strong customer appeal in China's premium premium urban markets, including major.
Speaker Change: Economy cops and they're rapidly developing a contra counterparts.
Peng Li: the subsequent online release on. May 20th, on Leading Chinese Customer Platform Generated Immediate Purchase Momentum, with impressive sales figures and sustained growth in user engagement and organic content creation. Wakuku has built breakout cultural momentum through its distinctive design and aesthetic appeal. The brand has earned unsolicited endorsements from A-list celebrities. Today, prominent artists, actors and athletes are showcasing Wakuku products. This approach is driving deep engagement and user-generated content, UGC, across social media platforms. What makes this even more impressive is the Wakuku Semi-Thon, which has now surpassed the 1 billion organic impressions across digital platforms. You Li, another significant IP in our portfolio.
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Speaker Change: May a.
Speaker Change: Panties.
Speaker Change: Leading Chinese customer platform generated.
Speaker Change: Immediate purchase momentum with our impressive south speakers and the sustained growth in our user engagement and the organic content creation.
Speaker Change: I'll Cook, who has a huge breakout caucho well, Montana throws is this thing to a design and Ah Ah Ah Ah Ah Celtic appeal.
Speaker Change: Brown has earned Oh, Saudi.
Speaker Change: As already stated and or so minutes from eight leased celebrate teeth.
Speaker Change: Problem in artists are actors and athletes are showing showcasing our cocoa products.
Speaker Change: This approach is driving a deep engagement and user generated content UGC across social media platforms. What makes this even more impressive is our buckle cool semi thoughts which has now.
Speaker Change: <unk> surpassed the 1 billion organic impressions across digital platform.
Speaker Change: You have to eat and not a significant IP and our preferred portfolio.
Peng Li: has made significant strides in establishing itself as a culturally relevant IP through a variety of initiatives. such as partnering with a contemporary luxury women's wear brand to create a limited edition within our stores. This was launched through an exclusive pop-up event at PrestiShares.com. prestigious locations, Taigu Li Sanatorium in Beijing and SQP in Xi'an. This collaboration significantly evaluated the IP's artistic value. credentials.
Speaker Change: Had the made the significant strengths stress in establishing itself as a culturally relevant relevant IP throw a huarache off a initiative.
Speaker Change: Such as Oh, I know, what I mean with.
Speaker Change: Can temporary luxury women's wear Bronx to create H a limited edition we see.
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Speaker Change: This collaboration significantly.
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Speaker Change: Create potential credentials.
Peng Li: Additionally, our groundbreaking Blue and White theory has successfully bridged the gap between heritage and modernity. We will first integrate cultural heritage with contemporary design, creating collectibles and lifestyle products that bring traditional craftsmanship to modern customers.
Speaker Change: Additionally, our granta baking, a breaking a blue and white.
Speaker Change: You already theorists has successfully bridged the gap.
Speaker Change: Between our heritage and our modern modernity.
Speaker Change: We were first hmm intact, good intangible cultural.
Speaker Change: Heritage with a contemporary did that.
Speaker Change: Great.
Speaker Change: King a glut clap to tow boats and the lifestyle products that bring a traditional a crowd.
Speaker Change: Craftsmen shaped to modern customers.
Peng Li: Moving to our second pillar, Distribution and Market Expansion. We are implementing a comprehensive omni-channel strategy. We are exploring innovative direct-to-customer retail formats through expansion pop-ups and I'm excited to share some progress. Our first pop-up store debuted on May 24 at Beijing Chaoyang Joy City, consistently ranked among the capital's most visited shopping centers. This isn't just a retail place, it's an immersive space that brings together four key elements. Cultured IP exhibitions, integrative art installations, exclusive product drops, and social sharing At the same time, we attracted a semi-IP showcase at Beijing Solana Lifestyle Shopping Park. As of our earnings disclosure date, Leshan has established the summit.
Speaker Change: Moving to our second pillar a distribution out in the market expansion, we are implements a comprehensive omnichannel strategy.
Speaker Change: Explore ring Ah.
Speaker Change: In a way to direct to customer retail formats.
Speaker Change: Through his personal pop ups and I'm really excited to share.
Speaker Change: Some progress.
Speaker Change: Our first the pop up store debuted on may 24th at Beijing tall Young toy city.
Speaker Change: <unk> consistently ranked among the capitalist most visited shopping.
Speaker Change: Destinations are this isn't just a retail place isn't immersive AR space that brings together four key elements.
Speaker Change: The couch or the IP actually HAE patients are integral to arch our installations.
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Speaker Change: Exclusive product drops and a social sharing environments at the same time, we are attractive.
Speaker Change: <unk> summit, our IP showcase that Beijing, so a lot of lifestyle shopping park.
Speaker Change: As all of our earnings are a disclosure date, that's why it has established the semi the sex.
Peng Li: sections in key distribution partner stores across multiple core commercial districts nationwide. We've completed product coverage and standardized display pilots in key cities and major commercial areas. We've initially formed a national wide network of offline consumer touchpoints and broad display presence. Simultaneously, we are enhancing our online capabilities to empower less one. Our multi-platform approach now includes self-operated channels on social media platforms, which are driving a strong initial response and encouraging user-generated content engagement.
Speaker Change: Sections in key distribution partner staff across multiple Carl commercial districts are natural light.
Speaker Change: We will complete it product until color rich and stand a lot faster.
Speaker Change: Display palace in key cities and the major commercial errors well initiative. The initial Chile are formed a national lab network called for offline consumer touch.
Speaker Change: Touch points and Brown display places.
Speaker Change: Simultaneously enhancing.
Speaker Change: Hunting, our online capabilities to empower last one hour.
Speaker Change: Volatile multi platform approach now includes self operated channels.
Speaker Change: On social media platforms, which are driving a strong initial response and are encouraging our user generated content engagement.
Peng Li: Looking beyond China, we are expanding internationally with new sustenance. the Airways. Indonesia, Thailand, and Malaysia. Our collaboration on June 2nd with key distribution partners at their Bangkok flagship store marks a significant step in our global partnership strategy and our first international offline pop-up. In Southeast China, we are partnering with top-tier local influencers, generating buzz and sales through social platforms. which is boosting ground awareness in the region. Moving forward, we will focus on advancing our IP-driven products international expansion plan to strengthen our presence in global markets and enhance our content and product reach. Our first international collaboration demonstrates both the global appeal of our IP portfolio and our systematic approach to international expansion.
Speaker Change: Looking beyond China, we are expanding our international internationally with new.
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Speaker Change: Indonesia, Thailand and Malaysia.
Speaker Change: Uh Huh calibration Green second with key distribution partners at their Bangkok flagship.
Speaker Change: Stole my MX.
Speaker Change: So again, if we can establish in our global partnerships that strategy and our foster our international offline pop up in sauces to China, we are partnering with top tier its norco local influences January a bus and the south.
Speaker Change: Through our social platforms.
Speaker Change: She is boosting ground awareness in the region.
Speaker Change: Moving part would be able to focus on Oh, the balancing our I T tubing products international.
Speaker Change: Expansion plans to strengthen our presence in global markets and enhance our content and product reach our first two international collaboration demonstrates.
Speaker Change: Demonstrating our.
Speaker Change: Both the global appeal of our IP portfolio and our systematic approach to international expansion.
Peng Li: I know many of you have questions about potential risks to this long-term viability of the pop toy industry. Let me address the key points. Concerns we are hearing from investors. The reason we are confident in the long-term availability of this country's industry comes down to fundamental customer behavior shift. Pop toys have become powerful vehicles for self-expression, particularly among millionaires, nails and Gen Z. The sector has proven resilient, with key players sustaining strong growth, even in economic downturn. This stems from the industry's collector-driven model and accessible pricing. which foster lasting engagement. Today's consumers increasingly prioritize emotional value over pure functionality.
Speaker Change: I know and I know many of you have a question about the potential risks Tuesday is a long term.
Speaker Change: Well ability of the pop tight industry, let me address the key.
Speaker Change: Concerts, or we are hearing from investors.
Speaker Change: The reason we are confident in the Uinta.
Speaker Change: Long term viability of this country, our industry comes down to a fundamental customer up here, where our ships popped.
Speaker Change: Pop tarts have become powerful real coast fall south expression.
Speaker Change: Particularly among meaning Theres now and didn't see the sector has proven resilient.
Speaker Change: With key players to pending a strong growth even in economic downturns.
Speaker Change: <unk> systems are from the industry as collector driven model and are accessible pricing.
Speaker Change: Which fault falter rich Walter a lasting engagement today's consumer consumers, increasing prey are really ties emotional value or.
Speaker Change: PURA functional let's say they are seeking comfort.
Peng Li: They are seeking comfort, identity, affirmation and connection through their purchases and Pop Toys delivers exactly that.
Speaker Change: I tend to tea.
Speaker Change: Our firm affirmation and.
Speaker Change: Connection through their purchases and the pop tarts deliver exactly that.
Peng Li: As we look to the future, Q4 will reflect full consolidation of last month's operations, giving clearer visibility into our combined performance potential. While maintaining steady operations in existing businesses, we are accelerating pop toy business growth through dedicated teams and strategic resource allocation. All of this is guided by consistent ROI tracking to ensure that we maximize returns on every investment. Our proven test-and-scale approach remains key. We expect positive cash flow. Through we anticipate some near-term profit volatility. volatility as we continue to optimize and scale our options.
Speaker Change: As we look to the future Q fall they all reflect to a consolidated they sent off of last month's operations, giving clear a clear our visibility into our camp and a promise potential while maintaining steady operations existing biz.
Speaker Change: It is we are a sally.
Speaker Change: Ah celebrating pop Holly.
Speaker Change: Business growth through our dedicated teams and our strategies resource allocation.
Speaker Change: All of this is guided by our because it's $10 right tracking to ensure that we maximize our returns all I really I worry our investments our proven passtime to scale. Our approach remains key we is back to positive cash flow.
Speaker Change: Through we anticipate.
Speaker Change: Some near term profits a vale well today.
Terry: Well well Terry T D. T has to be continue to optimize and scale our options.
Peng Li: Beyond all operational strategies and market tactics, what truly matters for long-term success are two key elements. excellence and brown power.
Terry: <unk> P M.
Terry: All operational strategies and the market.
Terry: The tactics are what's truly matters for long term success are two key elements product.
Terry: Excellence and the Brown power.
Peng Li: These are essential for Thank you for turning it over to Tim for a detailed review of our financial results. Thank you.
Terry: Uh huh.
Terry: Essential fall.
Terry: Fueling sustainable growth and delivering long term value to shareholders.
Terry: People for supporting our transformation journey, we are exerting.
Terry: About the road ahead, and we will keep you updated all of our progress I will now turn it over to Jim for a detailed a reveal of our financial results central or what.
Ting Jie: Before I go into the details of our financial results, please note that all amounts are in RMB terms. The other reporting period is the third quarter of fiscal year 2025, ending on June 30, 2025. And then in addition to gap measures, we'll also be discussing non-gap measures to provide greater clarity on the trends in our actual operation.
Jim: Thank you before.
Jim: Before I go into the details of our financial results. Please note that all amounts are you RMB terms the other reporting period as a circle or a fiscal year 'twenty to 'twenty five ending on June 32025.
Jim: And that in addition to kept matters will also be discussing non-GAAP measures to provide greater clarity on the Trinity our actual operations.
Ting Jie: In March, we completed the acquisition of a 61% equity stake in Shenzhen Yiqi Culture, also known as Let's Fun, for total cash consideration of 235 million RMB through a multi-step transaction. We began consolidating last month's results into our financial starting April 1, and then assets and liabilities. have been included at fair value in our consolidated balance sheet as of March 31.
Jim: In March we completed the acquisition of a 61% equity stake in syndrome Itchy culture also known as the last one.
Jim: For total cash consideration of 235 million RMB amount.
Terry: Multistep transaction.
Terry: We've begun consolidating last one's results seem to our financials. Starting April was the first assets and liabilities.
Terry: Have been included at fair value in our consolidated balance sheet as of March 31st.
Ting Jie: Please note that the income statement discussion that follows does not include last month's operating results for the quarter. For the third quarter of fiscal year 2025, our total revenues were 570.7 million, representing a 39.6% decrease year-over-year. This reflects our deliberate approach to business development as we transition from traffic-driven growth to high-quality growth. Among our revenues, individual online learning services generated revenues of 467.2 million, accounting for 81.9% of total revenues. This business line continues to operate effectively, generating steady cash flow that supports our strategic initiatives. Our gross billings from individual online learning services were 515.6 million, representing a decline of 47.5% year-over-year.
Terry: Please note that the income statement discussion that follows does not include the last ones operating EBITDA results for the quarter.
Terry: For the third quarter of fiscal year 'twenty to 'twenty five our total revenues were 577 million.
Terry: Representing a 39, 6% decrease year over year.
Terry: This reflects our deliberate approach to business development as we transition from traffic driven growth to high quality growth.
Terry: But most of our revenues in the redo all our learning services generated revenues of $467 2 million.
Terry: For 81, 9% of total revenues.
Terry: This business line continues to operate effectively generating steady cash flow that supports our strategic initiatives.
Terry: Our gross billings from individual learning services with $515 6 million, representing a decline of 47, 5% year over year. We view this as a natural progression during this strategic transformation transformation of our product mix.
Ting Jie: We view this as a natural progression due to the strategic transformation of our products mix. Revenues from enterprise services were 48.1 million, a decline of 26.1% from a year ago, and representing 8.4% of total revenue. The decline was mainly due to fewer marketing services for enterprise customers. Revenues from our customer consumer business were $48.7 million, down slightly from $49.4 million a year ago. The slight change was primarily attributable to the decline in Baidu revenue, partially offset by a modest increase in Valentine's products revenue. And finally, revenues from others were $6.7 million, up significantly from $3 million in the same period last year, primarily due to revenue from the company's newly initiated business.
Terry: Revenues from Enterprise services were $48 1 million a decline of 206, 1% from a year ago.
Terry: And representing eight 4% of total revenues the decline was mainly due to fewer marketing services for enterprise customers.
Terry: Revenues from our customer consumer business were $48 7 million down slightly from $49 4 million a year ago.
Terry: Slight change was primarily attributable to the decline in Baidu revenue, partially offset by a modest increase in bonus products revenue.
Terry: And finally revenues from others was $6 7 million up Cigna.
Terry: Significantly from 3 million same period last year.
Terry: Due to revenue from the company's newly Nishi initiated goodness.
Ting Jie: Gross profit for the quarter was $474.2 million, with a gross margin of 83.1% compared to 84.6% in the same period last year. This margin change reflects our strategic shift towards more product-focused offerings. which naturally carry a different cost structure. On the operational front, we continue to prioritize effective cost management. while investing in our strategic initiatives.
Terry: Gross profit for the quarter was 400.
Terry: $74 2 million with a gross margin of 83, 1% compared to 84, 6% in the same period last year.
Terry: This is Martin change reflect our strategic shift towards more products folks offerings.
Terry: Which naturally Carol.
Terry: Kind of a different cost structure.
Terry: On the operational front, we continue to prioritize effective cost management.
Terry: That's been our strategy key initiatives.
Ting Jie: Total operating expenses were $441.1 million, a decrease of 45.2% from $804.9 million in the same period of last year. To break this down, sales and marketing expenses decreased by 45.8% to $395.2 million, primarily due to reductions in marketing and promotion expenses, labor outsourcing costs, and subs costs. As a percentage of total revenue, non-gap sales and marketing expenses, which exclude share-based compensation, decreased to $6.5 billion. 69.1% from 76.9% a year ago. Research and development expenses declined by 46.2% to 20.9 million, reflecting our focused approach to product development and decreased staff costs. As a percentage of total revenue, non-GAAP R&D expenses, which exclude share-based compensation, decreased to 3.6% from 3.7% a year ago.
Terry: Total operating expenses were $441 1 billion.
Terry: The decrease of 45, 2% from 800 of $4 9 million in the same period last year.
Terry: To break this down sales and marketing expenses decreased by 45, 8% to $395 2 million, primarily due to reductions in marketing and promotion expenses labor or sourcing costs and soft costs.
Terry: As a percentage of total revenue non-GAAP sales and marketing expenses, which excludes share based compensation decreased to 60 69, 1% from 76, 9% a year ago.
Terry: Research and development expenses declined by 46, 2% to $20 9 million.
Terry: Our focused approach to product development and decrease with staff cost.
Terry: As a percentage of total revenue non-GAAP R&D expenses, which excludes share based compensation decreased to three 6% from three 7% a year ago.
Ting Jie: General and administrative expenses decreased by 31.2% to $25 million. Mainly due to lower staff costs and subsequent decline in share-based compensation expenses as a percentage of total revenue, non-GAFG&E expenses, which exclude share-based compensation, is 3.9%. compared to 3% a year ago. We achieved a net income of $41.1 million, representing a net margin of 7.2%. Despite the decline in revenues, our adjusted net income, which excludes share-based compensation, was $37.8 million, representing an adjusted net margin of 6.6%. Basic and Diluted Net Income Per Share were both 0.25 during the quarter. Majestic Basic and Diluted Net Income Per Share were both 0.23 during the quarter.
Terry: General and administrative expenses decreased by 31, 2% to 25 million.
Terry: Mainly due to lower staff costs on a subsequent decline in share based compensation expenses as a percentage of total revenue non-GAAP G&A expenses, which excludes share based compensation is three 9%.
Terry: Compared to a year ago, 3% a year ago.
Terry: We achieved a net income of $41 1 million.
Terry: A net margin of seven.
Terry: 2%.
Terry: Despite the decline in revenues.
Terry: Adjusted net income, which excludes share based compensation was $37 8 million.
Terry: Representing.
Terry: That's in that market of six 6%.
Terry: Basic and diluted net income per share with both their point to 25 during the quarter adjusted basic and diluted net income per share were both there are points 20th street during the quarter.
Ting Jie: Regarding our balance sheet position. As of March 31st, 2025, they held 1,134.9 million in cash and cash equivalents, restricted cash, and short-term investments. representing an increase of $508.6 million from $1,000 3 million as of June 30, 2024. This enhanced liquidity position demonstrates our ability to generate cash in this period of transition, and our financial foundation remains robust as we forge ahead with our strategic evolution. Looking ahead, our disciplined capital allocation, strong cash generation capabilities, and ROI-focused assessment methodology provide us with a solid foundation during this transformative phase in our business.
Terry: Regarding our balance sheet position.
Terry: As of March 31st 2025.
Terry: $1134 9 million in cash and cash equivalents restricted cash and short term investments.
Terry: Representing an increase of $108 6 million from 1000.
Terry: 22 point.
Terry: 3 million as of June 32024.
Terry: This enhanced liquidity position demonstrates our ability to generate cash in this period of transition and our financial Foundation remains robust as we forge ahead with our strategy evolution.
Terry: Looking ahead.
Terry: Our disciplined capital allocation strong cash generation capabilities and O I focused assessment methodology provide us with a solid foundation during this trip.
Terry: Faith in our business.
Ting Jie: As we move into the next quarter, our financials will provide greater visibility into the results of our strategic transformation, as we will be consolidating last month's operating results for a full quarter period. Our strategic resource allocation away from traffic-driven businesses and improved operational focus give us confidence in our ability to execute.
Terry: As they move into the next quarter or financials, we provide greater visibility into the results of our strategic transformation.
Terry: We will be consolidating last ones operating results for a full quarter period.
Terry: Our strategy we saw.
Terry: Soldiers allocation away from traffic driven businesses and the improved operational focus give us confidence.
Terry: Our ability to execute.
Ting Jie: We remain committed to maintaining our robust financial position and transparent communication with our shareholders as we progress in our strategic evolution.
Terry: Then committed to maintaining a robust financial position and transparent communication with our shareholders as we progressed our strategic evolution.
Ting Jie: That concludes my prepared remarks.
Terry: That concludes my prepared remarks.
Operator: Operator, let's open up the call for questions. Thank you. We will now begin the question and answer session. To ask a question, please press star and 1. To withdraw your question, please press stars and 2.
Speaker Change: Reader, let's open up the call for questions. Thank you.
Terry: Okay.
Terry: Thank you.
Terry: We'll now begin the question and answer session.
Terry: If you ask a question. Please press Star then one.
Terry: So let's draw your question. Please press Star then two.
Operator: 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.
Terry: When asking a question in Chinese please translate your question in English for the convenience of everyone on the call.
Terry: Please ask one question at a time.
Operator: Our first question today comes from Michael Kim, with Zach.
Michael Kim: Our first question today comes from Michael Kim with that.
Michael Kim: Please go ahead. Great. Good morning and good evening, everyone. Thanks for taking my questions. First, just curious if you could speak a bit more to the strategic vision for Let's Van and just how you plan to leverage the company's marketing expertise to enhance growth going forward. Thanks. Yeah, sure. Thank you for your question.
Speaker Change: Please go ahead.
Michael Kim: Great Good morning, and good evening, everyone. Thanks for taking my questions first.
Speaker Change: First just curious if you could speak a bit more to the the strategic vision for for let's ban.
Speaker Change: And just how you plan to.
Speaker Change: Leverage the company's marketing expertise to to enhance growth going forward.
Speaker Change: Yeah sure. So people feel all question I will answer in Chinese.
Peng Li: I will answer in Chinese. Since its establishment in 2020, LIGHTS1 has always been around the exploration of global artists, IP incubation, IP operation, copyright commercialization, culture promotion, related industrial investment, and other core areas. We are committed to becoming a global leader in IP and cultural innovation and a trending toy company.
Speaker Change: Just hold them downturn are already aren't in yeah, Tony Eli that's one she don't have in order to retrench or used for each other you could watch here, who do I P for P. B U a bunch in the Shanghai Tal on the wall to wall quality anti in Tulsa Dunham take Uh huh.
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Peng Li: Okay. Since its launch in 2020, Let's Fun has built its presence across global artist discovery, IP incubation and management, copyright commercialization, promoting pop toy culture and related industry investments. Our goal is to become a global leader in IP and cultural innovation, as well as a top player in the pop toy industry. Based on the solid IP and product foundation of Let's One's business in Chaoyuan, and the method of operation that has been verified, we will fully implement the full-channel strategy of Let's One. We will share the experience and business operations of our founders and core executives through the sharing of the underlying capabilities.
Speaker Change: Okay.
Speaker Change: Since its launch in 2020 that Sun has built is passing across global artist discovery, AGP integration and management copyright commercialization.
Speaker Change: Pop Tarts culture interrelated industries investment.
Speaker Change: Our goal is to become a global leader in IP and cultural innovation as well as a top player in the pub toy industry.
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Peng Li: We will combine the experience of business management and business operations, especially the experience of business system building and user operations, to better integrate the online and offline sales system, to create a complete solution from IP creation to immersive consumer experience. Leveraging Lifeline's established IT portfolio and proven operational expertise in pop toys, Quantasing will drive Lifeline's omnichannel expansion. We will share our fundamental capabilities, particularly in our front-end team's expertise in corporate leadership, business operations, digital infrastructure development, and user growth to bridge online and offline retail channels. Our collaboration will establish a complete ecosystem, spanning IP development through immersive consumer experience.
Speaker Change: Yeah.
Speaker Change: Establish to Abbvie portfolio and proven operational expertise in peptide corns.
Speaker Change: I wanted to kind of drive lifetime Omnichannel extension, we were shy of our fundamental capabilities.
Speaker Change: Yeah, well faulting team's expertise in corporate leadership business operation digital infrastructure development and user growth to bridge online and offline retail channels.
Speaker Change: Our collaboration with tablets, a complete ecosystem spanning IP development two in massive consumer experiences.
Peng Li: This kind of coordination is not just about adding resources, but it is also based on the two core capabilities that Quantasing has accumulated in the field of adult online education, in order to achieve a high level of harmony with the Chaowan industry. The first is the precise marketing driven by data. We have the ability to market and operate the brand, and we can accurately target our target group to create brand volume. The second is community operation and user experience. Our core team has accumulated a very rich community management and activity improvement experience in the past business.
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Peng Li: Through the deep integration of product operation, market, and so on, we believe that Let's One can achieve a more efficient brand upgrade and business growth in the Chaowan industry. This collaboration represents modern resource consolidation. It's powered by the Quantasing's two core competencies, honed in adult online learning that translates perfectly into pop toys. First, our data-driven marketing approach lets us precisely target consumers using our proven brand management system, creating comprehensive brand impact. Second, with our extensive community management expertise, we will enhance user experience to drive community engagement and loyalty. Through fully integration project development, operations, and marketing capabilities, we're confident that Swell will successfully upgrade its brand while expanding its business in the pop toy market.
Speaker Change: This collaboration.
Speaker Change: Northern resource consolidation.
Speaker Change: Highlights by the Qantas to core competencies horn and I don't online learning that translates perfectly into pop twice.
Speaker Change: Our data driven marketing approach that that's precisely target consumers using a proven brand management system, creating comprehensive brand impact.
Speaker Change: With our extensive community management expertise, we were in home music screen to drive community engagement and loyalty through fully integration project development operation and marketing capability. We're confident that's why we're successfully upgrade has been well spent.
Speaker Change: The new business in the pub toy market.
Peng Li: Specifically, in the following aspects, we will build the ultimate operational capability to achieve the results of implementation. The first is the original copy of the IP, create an exclusive IP copy method, effectively copy the IP of the trend culture, accurately locate, focus on creation, and perform high-efficiency tests. By the end of March 2025, we have copied and owned 10 main IPs independently. To be specific, we will cultivate world-class operational competencies across the following dimensions to ensure flawless execution and tangible business outcomes. The first is our original IP incubation. We've developed a systematic IP cultivation framework and methodology that identifies emerging cultural trends, executes targeted creation development, and implements rapid market validation.
Speaker Change: She could I, suppose 70, Columbia, well mohit alcohol due to the leap the at home tissue annuity that you could tango Dino should actually the year I'm talking for a while.
Speaker Change: The transfer of the IP foolhardy.
Speaker Change: Oh yourself at Hollywood Honda IP children, 13 week Juge, All council alcohol, so should ginger.
Speaker Change: Saturday well meet you suitable for HOKA humeral shook up a broad IP.
Speaker Change: Okay.
Speaker Change: To be specific we will partner with world class operational competency across the polling dimension.
Speaker Change: Flawless execution and tangible business outcomes.
Speaker Change: That's the original.
Peng Li: Original IP incubation.
Speaker Change: It's just the method at peak population framework.
Speaker Change: And methodology that identified imagine cultural changes as the keys talking to creation development and implement rapid market validation.
Peng Li: This data-informed approach has already yielded 10 distinctive IP assets as of March 2025. The second point is to develop products in an all-round way, based on the trend, and use the user's artistic perspective as a standard. Based on the needs of the consumers in the industry, we need to build the product power of the IP industry, and build the eco-system of IP products.
Speaker Change: This data informed approach has already yielded 10 distinctive ips it adds up much 2025.
Speaker Change: They are they are not sure timed in the Chinese youth.
Speaker Change: Hollywood is tied to wait you to you and yours.
Speaker Change: So this is all a builder he shelf edge, where the trends are as usual, although I hear the timely, but I view Tommy in Shanghai at all so how to draw that you have what.
Peng Li: This is the most important part. The third point is to build the influence of IP. Based on the social media, we need to build and operate it in a coherent way, and get more effective use of traffic. This is an execution of the creative strategy. We need to integrate the transfer resources, and make the use of them coherent for international circulation. Second is holistic product innovation strategy. We merge cutting-edge trend sensibilities with artistic integrity. Translating nuanced consumer insights into market-defining Appy products, fortifying the cornerstone of our enduring Appy ecosystem. Third is our IP Influence Expansion Initiative.
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Speaker Change: Second is holistic product innovation strategy, well much cutting edge parents sensibility with autistic integrating.
Speaker Change: Translating wants to consume the insights into market defining IP products fortifying the cornerstone of our enduring app ecosystem.
Peng Li: It's our IP influence expansion initiative will run its not social network connect online and offline China's monthly and launch related campaign trading a complete promotional that keeps our IP pulp and trending.
Peng Li: We run a smart social network, connect online and offline channels smoothly, and launch creative campaigns, creating a complete promotion loop that keeps our IPs hot and trending. The fourth point is to build an all-in-one supply chain. Prioritize the top factories in the industry. Based on strategic cooperation with factory partners, we produce high-quality products. We constantly optimize the efficiency and quality of our supply chain to meet our cutting-edge needs. The fifth point is to deepen strategic cooperation with retailers. We jointly set up our offline self-sales network and online self-sales channels. The last point is to integrate IP and tide business operations.
Speaker Change: Okay.
Speaker Change: Dan This is.
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Peng Li: We will stick to the principle of product priority. Prioritize and optimize the execution of each business link to rapidly improve the overall operating performance of S1. Fourth is end-to-end supply chain optimization. We team up with the best factories in the business, building strong partnerships to build top quality products. We're always finding ways to speed up production and improve quality so we can keep up with what consumers want. Fifth and finally is our Omni-channel growth strategy. We are developing ties with trusted distributors while rolling out our own direct sales channels, both online stores and physical retail spots to build a complete flexible sales network.
Speaker Change: T shirt and I just wanted to talk with certainty the GMT shop Okay.
Speaker Change: Both it and supply chain optimization, we team up with the fast act or anything for that.
Speaker Change: Building strong partnerships to bring top quality projects.
Speaker Change: You're always finding ways to speed up production and improve quality. So we can keep up with what consumers want.
Speaker Change: Fifth and finally in our Omnichannel growth strategy, we are dividend tightly kept it into a bigger well really our own direct sales channel.
Speaker Change: Thanks, George and digital radio spots to build a complete flexible does not work.
Peng Li: Our IP Pop Toys business runs as one complete system. We always put products first, constantly improving how we work to quickly boost the last one's performance and bringing fresh energy into the industry.
Speaker Change: Pulp twice business rents at one complete system, we always put products.
Speaker Change: But constantly improving how we work so quickly boosting that plant performance and bring fresh energy into the industry.
Peng Li: Okay, that's all for the questions.
Speaker Change: Okay. That's all for the questions. Thank you.
Operator: Thank you.
Operator: Great, that's very helpful.
Speaker Change: Great. That's very helpful. And then just maybe to follow up any any sense of what the current sales mix for let's run look like just in terms of products IP.
Michael Kim: And then just maybe to follow up, any sense of what the current sales mix for Let's Von looks like just in terms of products, IP? and Channels or maybe Geography.
Speaker Change: Channels or maybe geographies.
Speaker Change: [laughter].
Ting Jie: Hi Michael, I'll take your question. Yeah, that's a good question. As mentioned by Matt, our chairman and CEO just now, As of end of this quarter, Lights1 has already created 10 original IPs. Since our investment in Lights1 in December last year, we are focusing this year on building 2 to 3 standout IP-based PopToy products to establish our brand in the market. We are growing our IP portfolios through continuous in-house development and licensing third-party IPs, constantly upgrading both our product quality and business scale. Lights1 has strong IP development capabilities and well-established partnerships with major pop toy retailers.
Speaker Change: Michael I'll take your question.
Speaker Change: Yeah. That's a good question I think just as mentioned by Matt our hours, our chairman and CEO just now.
Speaker Change: Uh huh.
Speaker Change: As of the end of this quarter. So that's one of them has already created two new original Ips since our investment in life why in December last year, we are focusing this year on building two to three stand all IP based pulp toy products to establish our brand in the market.
Speaker Change: We're growing our IP portfolio through continues in house development and licensing third party IP is constantly upgrading both our product quality and business scale.
Speaker Change: Lifestyle has a strong IP development capabilities and by always tablets are partnerships with major pulp toy retailers.
Ting Jie: This year, we are doubling down on these relationships, working closely with key partners to launch HIT IP products through co-marketing and joint operations. This approach will boost both brand recognition and sales performance this year. And also, we are rapidly expanding our PopToy IP lineup while building our own retail network, both online and offline. Our successful pop-up store at Beijing Chaoyang Joy City that launched in May last month proved the model. And based on its strong performance metrics, we are now accelerating the rollout of more branded stores. We expect our direct retail sales to grow significantly through late 2025 and into 2026.
Speaker Change: This year, we are top a doubling down on this our relationships working closely with key partners to launch a heat IP products through co marketing on the joint operations.
Speaker Change: [noise] approach, we boosted both brand recognition and a soup performance this year.
Ting Jie: And also we are rapidly expanding our pulp toy IP lineup, we're building our own retail network, both online and offline.
Speaker Change: Our successful pop up store at Beijing, Toyland higher Chung.
Ting Jie: Can call young toy city.
Speaker Change: That's launched in May.
Ting Jie: Last month's proved as a model and based on that.
Speaker Change: Strong performance metrics then.
Speaker Change: How excited are accelerating the roll out of more branded stores.
Speaker Change: We expect our direct retail sales to grow significantly through late.
Speaker Change: The $10 95 and into 2026.
Ting Jie: Concurrently, we are optimizing our omni-channel online operations by integrating social media traffic, e-commerce platform resources, and proprietary online channels to create a seamless integrated online-to-offline marketing ecosystem. From a regional perspective, currently mainland China remains our primary revenue source. We have begun expanding internationally this year, especially since the acquisition and consolidation of the business, launching in Southeast Asia and laying the groundwork for North America. We are committed to growing globally, and while 2025 marks our first step overseas. We expect our geographic sales mix to become more diverse in the coming years. Thank you.
Speaker Change: Concurrently we are off to minding, our omnichannel online operations by integrating social media traffic E Commerce platform resources.
Speaker Change: Proprietary online channels to create a seamless integrated online to offline marketing ecosystem.
Speaker Change: From a regional perspective currently mainland China remains our primary revenue.
Speaker Change: Ross.
Ross: Oh, we have begun expanding internationally this year, especially since the acquisition and.
Ross: Consolidation of the business.
Ross: Launching games, so as to Asia and laying the ground work for North America.
Ross: Yeah.
Ross: <unk>, two growing globally and while a.
Ross: 2025 marks our first step well worth it.
Ross: We expect our geography.
Ross: Mix sales mix to become more diverse it got worse in the coming years.
Ross: Do you.
Speaker Change: Okay.
Operator: Great, thanks for taking my question.
Speaker Change: Great. Thanks for taking my questions.
Speaker Change: Okay.
Alice Cai: The next question comes from Alice Cai with Citibank. Please go ahead. Hello, thank you for taking my question. I have two questions. Specifically, first, what revenue contribution do you expect from that grant in Q4? And second, given the decline in education revenues, how will you balance the jobless allocation between the largest business and new initiatives? And will you continue reducing education marketing spending to support land-based expansion? And finally, one thing, is that overall revenue to return to place in the fiscal year 2026? Thank you for your question. Thank you, Alex.
Speaker Change: Our next question comes from Alex hacking with Citibank. Please go ahead.
Speaker Change: Oh, great. Thank you.
Speaker Change: And I have two correction.
Speaker Change: Cause he put what math any contribution the background that's been truthful and.
Speaker Change: Given the decline in.
Speaker Change: Education revenues, how will you balance sheet allocation between benign.
Speaker Change: New initiatives and where you can.
Speaker Change: Hum education market, they've been spending a good bit.
Dan: I'll, let Dan.
Speaker Change: And finally, one thing that we can keep getting better.
Speaker Change: Cool.
Speaker Change: Thank you so much.
Speaker Change: Thank you.
Ting Jie: I'll take your question. Yeah, it's very, very important. So, as we have just disclosed, the profit and loss statement of the last one business will be merged and consolidated into QSG Group's consolidated financial statements starting from April 1. and also Wakuku and our key IP and also other IPs. All of the financial statements will be merged in the future, starting from April 1st. And we will disclose specific information in a timely manner. Since investing in LiteSwan, based on its excellent product strengths, we will continue to focus on operating Wakuku and one to two other core IPs, as I just mentioned in the last question.
Speaker Change: I'll take your question, yes, it's very very important.
Speaker Change: So as we have just disclosed to the profit and loss statement of last one business will be merged and consolidated into <unk> group's consolidated financial statements starting from April the first.
Speaker Change: And also.
Speaker Change: Baku, and our key IP and also all the IP is all of the financial statements of ABB merged in the future starting from April the first.
Speaker Change: We will disclose specific information in a timely manner.
Speaker Change: Since investing in lifestyle based on its excellent product strengths will continue to focus on operating a well.
Speaker Change: While cuckoo and one two.
Speaker Change: Two other call IP is as I just mentioned in the last question.
Ting Jie: Currently, the overall sales process of LiteSwan is very good, with a significant year-on-year improvement since our acquisition. Our ... and also currently we are cooperating with key channel partners and the shipping and the shipping price have a certain discount on the terminal price because of this sales model. At the same time this year we will increase the proportion of our own self-operated channels and overall income level and also the price level will gradually improve. And in terms of the Q4 estimate and forecast, I think with the deepening of our strategic adjustment of the business model, and also the improvement of our integrated operation with LastOne, it is expected that the pop-toy business will account for a very significant level of overall revenue at the consolidated level in the next quarter, starting from the next quarter.
Speaker Change: Currently the overseas the overall sales process. So that's why it is very good with a significant year on year improvement.
Speaker Change: Since our acquisition.
Speaker Change: Our.
Speaker Change: And Oh and also currency we are cooperating.
Speaker Change: Key channel partners.
Speaker Change: The shipping.
Speaker Change: The shipping price have a certain discount on the terminal price because of the sales model are there sometime this year, we will increase the proportion of our own.
Speaker Change: Self operated channels and an overall income level and also the price of oil will be gradually improve.
Speaker Change: And in terms of the Q4.
Speaker Change: Estimate and forecast I think these are deepening of ours tactics with the adjustment of the business model and also the improvement of our <unk>.
Speaker Change: <unk> retail operation with the last one.
Speaker Change: It is expected that the pop health business. They account for a very significant level of overall revenue the consolidated at the consolidated level in the next quarter.
Speaker Change: From the next quarter.
Ting Jie: in fiscal year 2025-24. We will continue to optimize the operating system of the pop-toy business and we will also disclose revenue guidance as soon as possible at the proper time. In terms of the traditional education related business We continue to search for and explore high-quality growth business models, and we are independently evaluating their performance based on specific business types from a fundamental perspective. I think the current decline in revenue from The education-related business is also our deliberate result of the strategic transformation from traffic-driven to product-driven business model. As you can see, although our revenue has declined, we still maintain stable profit performance and a solid balance sheet.
Speaker Change: In fiscal year.
Speaker Change: 10 to 10 10 to 25 Q4, but we will continue to optimize the operating system.
Speaker Change: Top toy business.
Speaker Change: We also disclose revenue guidance as soon as possible.
Speaker Change: The appropriate time.
Speaker Change: In terms of the traditional art accretion related business.
Speaker Change: We continue to search for and explore high quality growth business models, and we view that'd be all independently evaluating their performance based on specific business types from a fundamental.
Speaker Change: It's back to.
Speaker Change: I think the current decline in revenue from.
Speaker Change: The added Christian related businesses is also.
Speaker Change: We're deliberate result of the strategy.
Speaker Change: [noise] formation from traffic driven through product driven business model.
Speaker Change: As you can see although our revenue has declined.
Speaker Change: Minton stable profit performance and a solid balance sheet.
Ting Jie: Next, we will continue to evaluate the ROI, UE, or such kind of KPIs, and especially the long-term user value of this type of business in order to optimize the overall business foundation. For Lifeline's PopToy business, it has a great growth potential and business model. And it seems that the found operating resources and foundation we have accumulated are sufficient to support the development of this business.
Speaker Change: Our next.
Speaker Change: Maybe you can.
Speaker Change: <unk> to evaluate the ROI U E O such kinds of Kpis, and especially the long term user value.
Speaker Change: <unk> of this type of business in order to optimize the overall business Foundation.
Speaker Change: So that's why it's popped Hoyt our business.
Speaker Change: It has a great growth potential in the business model.
Speaker Change: It seems that the fone operating resources and the foundation, we have accumulated.
Speaker Change: There are sufficient to support the development of our of this business.
Ting Jie: Maybe we will disclose a separate business segment in the next quarter. And this business, we see very independently, we see that has a very bright future in terms of both the revenue and the mid-term and long-term bottom line. For the revenue recovery, or maybe in the next quarter or next year, we will still independently evaluate the optimization of business models and revenue growth arrangements for different types of business. For the overall revenue growth of the group, we expect the revenue of the pop-toy business to continue to show a strong growth trend, which we will be seeing in the relevant figures in the subsequent quarterly disclosures.
Speaker Change: Maybe maybe it as close as a separate business segment.
Speaker Change: Sure.
Speaker Change: This business, we see a very independently we see that as a very bright future in terms of both the revenue and a mid term and long term bottom line.
Speaker Change:
Speaker Change: For the for the revenue.
Speaker Change: Recovery or maybe.
Speaker Change: In our natural quota or so next year review SKU independently evaluate the optimization of business models and a revenue growth arrangements for different types of businesses.
Speaker Change: Well for the overall revenue growth of the group, we expect the revenue of the pop health business to continue to show a strong growth trend, which will be seen in the relevant figure is seeing the subsequent quarterly disclosures.
Ting Jie: We will evaluate the revenue growth of other business segments specifically and only attempt to start growth again. On the basis of meeting conditions such as product quality-driven, good UE performance, and good user feedback, such kind of product-driven-based KPIs. Yeah, so that's my answer. Hope that helps. Thank you. Thank you, team, for your update. Very helpful. Thank you.
Speaker Change: Did you evaluate the revenue growth of other business segments, specifically and only attempt to start grows again.
Speaker Change: On the basis of meeting conditions, such as product quality driven.
Speaker Change: Good performers and good user feedback such kind of.
Speaker Change: The product driven based keep your eyes, yes.
Speaker Change: Yes, so so that's my answer yes.
Speaker Change: Hope that helps thank you.
Speaker Change: Okay.
Speaker Change: I think it's very helpful.
Speaker Change: Thank you guys.
Speaker Change: Okay.
Operator: Since there are no further questions, I'd like to hand the conference back to management for any closing remarks. 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 attending today's presentation. You may now disconnect.
Speaker Change: If there are no further questions I'd like to hand, the conference back to management for any closing remarks.
Speaker Change: Thank you again for joining our call today. If you have any further questions. Please feel free to contact US also means a request to the hour.
Speaker Change: We look forward speaking with everyone next call have a good day.
Speaker Change: Hum.
Speaker Change: The conference has now concluded.
Speaker Change: You for attending today's presentation you may now disconnect.
Speaker Change: Okay.
Speaker Change: Yeah.
Speaker Change: Yes.
Speaker Change: [music].