Here Group Limited

Good morning and good evening, ladies and gentlemen. Thank you for standing by, and welcome to HERE's earnings conference call. At this time, all participants are in a listen-only mode. We will be hosting a question and answer session after management's prepared remarks. Please note that today's event is being recorded. I will now turn the conference over to Ms. Tina Tang, the company's manager of investor relations. Please go ahead, ma'am.

Thank you. Hello, everyone, and welcome to HERE's earnings call for the second quarter of fiscal year 2026. With us today are Mr. Peng Li, our founder, chairman, and CEO, and Mr. Ting Xie, 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. I will translate for Mr. Li. You can refer to our quarterly financial results on our IA website at ia.healgood.com. You can also access a replay of this call on our IA website when it becomes available a few hours after its conclusion. 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 prepared remarks are in RMB 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 the following with the SEC. I will now turn the call over to the CEO and the founder of HERE, Mr. Li.

Okay, good morning everyone, and thank you for joining us today. Just over three months ago, we held our first earnings call as a pure play portfolio company. We shared our vision of focused acceleration. Today, I'm pleased to report that we have not only maintained that momentum, but also began translating it into the durable, long-term value we promised. This quarter marks a significant milestone. It's our first full quarter operating as a dedicated FP-trained company. We have a clear and firm strategy, and we are continuously optimizing in execution in rapidly changing market environments. Building on our Q1 outperformance, Q2 delivered strong results. Total revenue reached 177.3 million, representing 39.4% quarter-over-quarter growth. This performance exceeded the high end of our guidance and reflects sustained and steady momentum following our strategy. We continue to focus our flagship IPs to create ultimate product appeal. Our flagship IP, Makuku, contributed RMB 129.4 million, accounting for 73% of Q2 revenue. Zenono is another potential black-shaped IP. It has been gaining momentum since its initial launch in July 2025. It's generated over 19.2 million in revenue this quarter. This is not just about productive success. It demonstrates that our IP-first strategy is successfully converting more payroll consumers into a growing base of our users. This quarter, based on our observation on changing market conditions and our evolving operational insights, we improved our strategy implementation in a timely manner. we have gained a deep understanding. Product sales for a period of time are not the only metric to mirror an IP's success. The ultimate goal of our operations is to build IPs that users love and that possess lasting vitality. We expanded the sales contribution from offline distributor channels. This allows users to experience IP products more intuitively. We have opened five offline D2C stores, positioning as a dedicated venue for brand user interaction. We are continuously optimizing the operational experience. Our online operations team has also improved our user membership system. This quarter, we refined our core operational systems. This covers IP portfolio health, product appeal, supply chain efficiency, channel effectiveness, and user engagement. These efforts aim at building enduring value, not just focusing on quarterly revenue. Building on the framework we discussed last quarter, let me walk you through the performance of our two-pillar growth strategy this quarter. Pillar one, IT ecosystem. Moving from a creative heist to a systematic pipeline. In Q1, we demonstrated our ability to turn IP launches into cultural phenomena. The Wakuku Dam, the street in Shanghai, was a great example. This quarter, we refined our operational approach we identified what works and applied those licenses systematically. Our IP and product development now rely on continuously improving mechanisms, a data-driven, systematic engine. Let me share a snapshot of our IP portfolio. As of December 31, 2025, we had a total of 18 IPs. That includes 11 proprietary file-exclusive licensed and two non-exclusive licensed IPs. This diversified portfolio forms our IP ecosystem foundation. We have established a comprehensive end-to-end mechanism covering everything from IP planning to production and promotion. The Wacoku on the Go series launched in late November 2025. It spewed Wacoku's proven success. It took our daily campaign concept to new heights. We introduced many authorized from factors for full scenario integration, placing Makuku in the entirely new category of collectibles as everyday components. The market response was immediate. We achieved total omni-channel sales surpassing 18 million within one week, along with over 84,000 pre-sale registered patients, over 56,000 peak concurrent online users, and over 100 million in total new product exposure. For Zenono, the success of its latest release is clear. The Whisper of Ta series value slash store hit over 11 million in omni-channel sales within a week, with more than 60 peak concurrent online users and a total exposure reaching 170 million. IP's journey begins at launch, but extends far beyond. This quarter, LaCouCou was invited by the Tianjin Culture and Tourism Bureau to serve as a promotion ambassador. This demonstrates our success in integrating IP with culture and tourism development. Recently, Wacoku also launched a co-branding collaboration with Lux Folk Jewelry, 六福珠宝. This continuously enhances IP influence. We are planning to enrich our IP narrative walls through our light content strategy. That's short form Storytelling that depends on emotional connections. It extends IP influence from physical spaces into narrative spaces. It extends emotional engagement between IPs and fans. Pillar 2. Omni-channel reach. Our approach ranges from online brand visibility to offline user experiences. We are continuously depending on the connection between IP products and users. Our diverse channels are not just sales points. They are portals for IP user interaction and experience. continuously empowering the IP ecosystem. Building on last quarter's massive organic reach, our members are strong. As of February 26, 2026, our total cumulative followers across major social platforms in China reached approximately 700,000. And our cumulative social media exposure exceeded 1.8 billion. This growing digital footprint forms one of the of our brand and the IP-driven model. For offline channels, we position our D2C stores as brand users' interaction and experience hubs. Since December 2025, we have opened five D2C stores in Beijing, Shenzhen, and Chongqing. To date, additional two stores are in the preparation stage. A notable example is the grand opening of our Shenzhen Upper Hills flagship store on February 1 this year. We invited a celebrity to serve as store manager for a day. This drew a massive crowd and it generated a strong same-day sales of approximately RMB 250,000. This validates the power of our offline experience or approach. Our Shanghai K11 pop-up generated strong social media buzz and even become a trending topic and this event has more become one of the key drivers of food traffic and sales. On 2026, New Year's Eve, we held here at Qimengdao some exhibition and the light show in core commercial districts such as Wangfujing in Beijing, Gulou in Tianjin, and P11 in Shanghai. Through this landmark, public spaces, we achieved high traffic reach and dependent interaction between the brand and the consumer. At the same time, we are deeply leveraging the powerful and creative tools of the AI era and innovating vigorously in the area of smart sales terminals. We expect to deploy our intelligence sales robots to more offline locations for user integration and interaction in the near future. The change in growth margin this quarter reflects our strategic expansion of partnerships with more offline distributor channels. We are committed to providing more interactive and tactile experience through diversified offline channels to our consumers. This deepens IP connections and strengthens user loyalty through physical engagement. We firmly believe that the strategic investment will lay a solid foundation for the company's long-term healthy development. our international strategy continues to gain momentum. On one hand, as our supply chain capability improves, we are working with domestic distribution partners to promote overseas export sales. On the other hand, we are actively seeking local overseas partners for IP and product sales As we continue to refine our approach, the appeal of various international markets is steadily increasing. This quarter, we continued to optimize our organizational structure and core operating platform. We refined our cost structure. We now have a leaner and more focused team and cost structure compared to the first fiscal quarter. We are building an integrated operational system that will be a crucial competitive advantage. On the supply chain for France, Our production capacity is now approximately 50 times what it was at the beginning of 2025. This progress further steps from last quarter. This is a solid foundation for creating these products this year. Operational excellence provides a solid foundation for our capital allocation. We will continue to invest in high-potential IP development, strategic metric expansion, and our light content initiatives. We will continue to systematically build cultural assets based on IP. As a dedicated IP-trained company, we are committed to continuously improving our operational efficiency and financial health. The journey of building an enduring company requires patience and discipline, and we are fully committed to both. I will now turn it over to Tim for a detailed review of our financial results. Thank you, everyone.