Here Group Ltd DRC reported a widened fourth-quarter loss as revenue surged on stronger IP performance, though a large goodwill impairment offset gains and the stock fell premarket.
Revenue for the quarter ended June 30, 2026, rose 94.1% year-over-year to CNY 127.7 million, bringing full-year revenue to CNY 596.8 million. However, gross margin contracted sharply to 25.8% from 34.7% a year earlier and 34.5% in the prior quarter, as cost of revenue climbed to CNY 94.7 million from CNY 43 million a year ago.
The company recorded a CNY 124.1 million goodwill impairment related to its Fastone acquisition, reducing remaining goodwill to CNY 63.5 million from an original CNY 187.6 million. Net loss from continuing operations widened to CNY 169.6 million from CNY 21.8 million a year earlier, or 1.07 per share versus 0.12. Adjusted net loss was CNY 37.7 million, compared with CNY 19.3 million a year ago, or 0.24 per share versus 0.10.
Total operating expenses reached CNY 216.1 million. Sales and marketing expense was CNY 56.2 million, representing 43.9% of revenue on a non-GAAP basis. Research and development came in at CNY 9.9 million, or 7.7% of revenue non-GAAP. General and administrative expense declined to CNY 25.8 million from CNY 33.6 million in the third quarter.
IP revenue showed mixed performance. WAKUKU, the company's flagship intellectual property, generated CNY 47.7 million in the quarter and CNY 369.3 million for the full year, accounting for 61.9% of annual revenue. SIINONO, launched in the second half of 2025, contributed CNY 27.3 million in Q4 — 21.4% of quarterly revenue — and CNY 92.7 million for the year, or 15.5% of annual revenue.
The authors IP category, including Xiao, Mimimo, Funi, Fila, and Inpoppo Pigs, surged to CNY 39.8 million from CNY 5.2 million a year earlier, a gain of 661%. ZIYULI contributed CNY 12.8 million in the quarter. As of June 30, 2026, Here's portfolio comprised 22 IPs — 13 proprietary and 9 exclusively licensed.
On retail operations, the company operates seven permanent direct-to-consumer stores across four core Chinese metropolitan areas, including a new location at Beijing Daxing International Airport, along with 25 automated Roboshops in six cities.
Peng Li, founder, chairman and CEO, said the company remains focused on building distinctive proprietary IP rather than relying on third-party distribution. "The meteoric rise of SIINONO from zero to a near CNY 100 million annualized scale in under 12 months confirms that we can systematically build and scale new proprietary IPs," Li said.
CFO Tim Xie emphasized discipline in store expansion. "We will not open stores for the sake of opening stores — each new location must pass a strict return-on-investment review," he said.
Here Group's stock fell 6.49%, or $0.120, to $1.73 in premarket trading from a September 21 close of $1.85. The shares have dropped 42% over the past six months, 81% over the past year, and 64% year-to-date, with a 52-week range of $1.50 to $10.40. The company reported a current ratio of 4.82.
Looking ahead, Here Group announced that ticket sales for a Hong Kong Central Pier cruise project based on its IP launched on Ctrip on September 21, ahead of the maiden voyage on October 1. The company also highlighted recent collaborations with partners including Genki Forest, Museum of Fine Arts Boston, IRO Paris, China Open, CASETiFY, and Ctrip, alongside pop-up activations throughout September.
