QuantaSing Group (NASDAQ:QSG), referred to throughout the earnings call as Here Group Limited, reported quarterly revenue of RMB 164.7 million, exceeding the high end of management’s guidance, as executives said the company continued to prioritize its pop toy and intellectual property business despite a softer market backdrop.
Founder, Chairman and CEO Peng Li said the quarter reflected progress in refining operations, cost structure and IP development. He noted that the first half of the year, particularly the first three months, is typically a slower period for the pop toy industry, but said consumer demand for emotional and experience-based spending remained intact.
Revenue Declines Sequentially, Margin Improves
CFO Tim Xie said total revenue for the quarter ended March 31, 2026 was RMB 164.7 million, down from RMB 177.3 million in the previous quarter. He attributed the decline to the cadence of new product launches and the impact of the Chinese New Year holidays, which reduced effective working days and constrained supply chain and delivery capabilities.
Xie said gross margin improved to 34.5% from 31% in the previous quarter, reflecting early benefits from cost structure refinements. Operating expenses totaled RMB 100.8 million, including RMB 57.7 million in sales and marketing expenses, RMB 9.5 million in research and development expenses and RMB 33.6 million in general and administrative expenses.
The company reported a net loss of RMB 34.1 million, compared with a net loss of RMB 25.4 million in the prior quarter. Adjusted net loss was RMB 22.9 million, compared with RMB 16.1 million previously. Basic and diluted net loss per share were RMB 0.21, while adjusted basic and diluted net loss per share were RMB 0.14.
Wakuku Remains Flagship IP as Sinono Gains Scale
Li said Wakuku remains the company’s flagship IP, contributing RMB 102 million in revenue during the quarter. He also said Sinono revenue grew 73.1% quarter over quarter and accounted for 20.2% of total revenue. Sinono launched in the second half of 2025, and Li described its growth as an early validation of the company’s ability to incubate new IPs.
As of March 31, 2026, the company’s IP portfolio included 20 IPs, consisting of 12 proprietary IPs and eight exclusive licensed IPs. Li said the company is working to move from “one-off hits” toward a repeatable IP development engine.
During the quarter, the company launched a new co-branded IP called Xiao, which management said generated strong pre-launch attention. For Wakuku, the company launched the “Handicraft World of Wakuku” vinyl plush doll series on March 28. Li said omni-channel sales for that series exceeded RMB 20 million during the initial launch period through March 31.
The company also introduced new products across other IPs, including ZIYULI, Sinono, Kido, KILIKILI and Awai. Sinono’s “Mood On” series vinyl plush doll launched offline on May 30 and online on June 2.
Offline Stores and Robo Shops Are Central to Strategy
Management said offline engagement is a key part of building IP value. As of the call, the company had opened seven direct-to-consumer brand stores in four cities, including recent openings at Shenzhen Uniwalk Qianhai and Xi’an SKP. Li described the stores as extensions of the company’s IP products and said the company has upgraded its membership system to support ongoing user engagement.
The company is also expanding its ROART robo shop network. Li said it had developed about 15 robo shops in three cities, positioning them as lower-cost offline brand touchpoints that also provide data on product performance and purchasing habits.
Online channels remain part of the company’s community-building strategy. Li said cumulative followers across major social platforms were approaching 800,000 as of June 4. The company also highlighted marketing partnerships, including a collaboration with Apollo Go, Baidu’s autonomous driving platform, and participation in a Beijing cultural and trendy toy event.
Guidance Revised for Fiscal 2026
Xie said management expects revenue from the pop toy business to be between RMB 130 million and RMB 140 million for the fourth quarter of fiscal 2026, based on current information, the product pipeline and seasonal demand.
The company revised its fiscal 2026 revenue guidance to a range of RMB 600 million to RMB 610 million. Xie said the revision reflects “near-term market realities” and current industry conditions.
Management Addresses Consumer Demand and Category Expansion
During the question-and-answer session, Xie said consumer motivation in the pop toy market is increasingly driven by emotional value and collectible value. He said demand has shifted away from scarcity-driven purchases and toward products that consumers like and can integrate into daily life.
Xie also said competition is moving from product capability alone toward full-chain IP operations, including design, supply chain, brand and sales. He noted that the company has emphasized owned IPs and long-term licensed partnerships rather than relying primarily on short-term licensing deals.
Asked about sustaining momentum for IPs such as Wakuku, Sinono and Xiao, Li said the company plans to focus resources on core IPs, maintain a steady product plan and build engagement through products, events, partnerships and offline touchpoints.
On category expansion, management said the company is exploring IP-related merchandise, especially lifestyle products, but will not expand simply to add more SKUs. The company is also monitoring opportunities in smart companionship and AI-enabled pop toys, though it said those efforts remain in the research stage and there are no specific launch plans yet.
About QuantaSing Group (NASDAQ:QSG)
QuantaSing Group Limited provides online learning services in the People's Republic of China. The company offers online courses, including financial literacy, short-video production, personal well-being, electronic keyboard, and meditation courses. It also offers marketing and enterprise talent management services to enterprise customers. In addition, the company provides online and literacy course to adult learners under various brands, including QiNiu, JiangZhen, and QianChi. QuantaSing Group Limited was founded in 2019 and is headquartered in Beijing, the People's Republic of China.
