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Good morning and good evening, ladies and gentlemen. Thank you for standing by, and welcome to Here's earnings conference call. [Operator Instructions] 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. Tim Xie, our CFO. Mr. Li will provide a business overview for the quarter, then Tim will discuss the financials in more detail. Following their prepared remarks, Mr. Li and Tim will be available for the Q&A session. I will translate for Mr. Li. You can refer to our quarterly financial results on our IR website at ir.heregroup.com. You can also access a replay of this call on our IR 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's prepared remarks are in RMB terms, and we will discuss non-GAAP measures today which are more solidly explained and reconciled to the most comparable measures reported in our earnings release and the filings 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 [ 3 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 with our first full quarter operating as a dedicated IP trained company. We have a clear and firm strategy and we are continuously optimizing in execution in a rapidly changing market environment. Building on our Q1 outperformance, Q2 delivered strong results. Total revenue reached RMB 177.3 million, representing 35.4% quarter-over-quarter growth. This performance exceeded the high end of our guidance and reflects a sustained and steady momentum following our strategy. We continue to focus our flagship IPs to create an ultimate product appeal. Our flagship IP, WAKUKU contributed on the RMB 129.4 million, accounting for 73% of Q2 revenue. SIINONO is another potential flagship IP. It has been gaining momentum since its initial launch in July 2025. It's generated over RMB 19.2 million in revenue this quarter. This is not just about product's success, it demonstrates that our IP-first strategy is successfully converting more 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 measure an IPs success. The ultimate goal of our operations is to build IPs that users love and that process lasting vitality. We expanded sales contribution from off-line distributor channels. This allows users to experience IP products more intuitively. We have opened 5 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, IP ecosystem, moving from a creative to a systematic pipeline. In Q1, we demonstrated our ability to turn IP launches into cultural phenomena. The WAKUKU split 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, 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 exclusive licensed and two nonexclusive licensed IPs. This diversified portfolio from our IP ecosystem condition. We have established a comprehensive end-to-end mechanism carrying everything from IP planning to production and promotion. The WAKUKU On A Roll series launched in late November 2025 it builds WAKUKU's growing success. It took our daily [ continuous ] concept to new highs. We introduced a many authorized from factor for full scenario integration. [ The only thing ] about WAKUKU is the entirely new category of [indiscernible] as everyday companies. The market response was immediate. We achieved total omnichannel sales, surpassing RMB 18 million within one week along with over 84,000 presale registrations. Our 56,000 peak concurrent online users and over RMB 100 million in total new product exposure. For SIINONO, the success of it's latest release is clear. The Whispers of "Ta" series value plus store hit over RMB 11 million in omnichannel sales within a week with more than 60 peak concurrent online users and total exposure reaching RMB 170 million. The IP journey begins at launch, but it extends far beyond this quarter. This quarter, WAKUKU was invited by the Tianjin culture and the tourism bureau to serve as a promotion ambassador. This demonstrates our success integrating IP with culture and tourism development. Recently, WAKUKU also launched a co-branding collaboration with Lukfook jewelry [indiscernible]. This continuously enhanced IP influence. We are planning to enrich our narrative grows through our live content strategy. That short-from storytelling that depends emotional connections. [indiscernible] IP influence from physical spaces into narrative spaces. It expands sustained emotional engagement between IPs and [ brands ]. Pillar two, omnichannel reach. Our approach ranges from online brand visibility to offline user experiences, we are continuously depending the connection between IP's products and the users. Our diverse channels are not just sales points. There are portals for IP user interaction and experience. They 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 exposures exceeded RMB 1.8 billion. This growing digital footprint forms one of the foundations of our brand and IP-driven model. For off-line channels, we position our D2C stalls as brand users interaction and experience hubs. Since December 2025, we have opened 5 D2C stores in Beijing, Shenzhen and Chongqing. To date, additional two stores are in the preparation stage. A notable example is the ground opening of our Shenzhen Upperhills flagship store on February 1 this year. We invited a celebrity to serve as store manager for a day. This grew a massive ground and it generated a strong same-day sales of approximately RMB 250,000. This validates the power of our off-line experiential 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 both traffic and sales. On 2026, New Year's Eve, we held here at [indiscernible] an exhibition and the light show in core commercial districts such as Wangfujing in Beijing, Gulou in Tianjin, and K11 in Shanghai. Through this landmark's public spaces, we achieved high traffic, which under dependent interaction between the brand and the consumers. At the same time, we are deeply leveraging the powerful and the creative tools of the AI era and innovating vigorously in the area of smart sales Terminals. We expect to deploy our intelligent sales robots to more offline locations for user interaction in the near future. The change in gross margin this quarter reflects our strategic participation of partnerships with small offline distributor channels. we are committed to providing more interactive and cocktail experience through will diversified offline channels to our consumers. This deepens IP connections and strengthen user loyalty through physical engagements. 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 improved, 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 collaborations. As we continue to refine our approach, the appeal of various international markets is steadily increasing. This quarter, we continue to optimize our organic base organizational structure and the 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 systems that will be a crucial competitive advantage. On the supply chain brands, we -- our production capability -- capacity is now approximately at 50x what it was at the beginning of 2025. This progress further step from last quarter was a solid foundation for creating [indiscernible] product 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 live 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 patients 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.

Thank you. Before I go into the details of our financial results, please note that all amounts are in RMB terms, that the reporting period in the second quarter of fiscal year 2026, ending on December 31, 2025. And then in addition to GAAP measures, we'll also be discussing non-GAAP measures to provide greater clarity on the trends in our actual operations. We are pleased to report another quarter of solid financial performance, marked by continued revenue growth and further improvement in our profitability metrics. This demonstrates the sustained successful execution of our strategy as an IP-based product-driven pop toy company. Total revenue reached RMB 177.3 million, representing a 39.4% increase from the previous quarter. Gross profit reached RMB 55 million with a gross margin of 31% compared with total revenue of RMB 127.1 million and a gross margin of 41% in the previous quarter. Adjusted net loss from continuing operations continued to narrow to RMB 161.1 million, down from RMB 17.1 million in the previous quarter. These results reflect the growing traction of our pop toy products and operating leverage, we are beginning to realize in our focused business model. Revenues for the quarter were RMB 177.3 million entirely generated from the sales of pop toys and other related activities compared to RMB 127.1 million in the previous quarter. This sequential growth is primarily driven by our off-line channel sales. Gross profit for the quarter was RMB 55 million compared to RMB 52.4 million in the previous quarter. Our gross margin decreased to 31% this quarter from 41% in the previous quarter. The margin decline reflects our strategic expansion of off-line channels which generated lower per unit margins than direct online sales. This channel diversification strategy is designed to enhance IP engagement and strengthen customer loyalty through physical retail experiences, aligning with the company's long-term vision as a leading IP chain company. On the operational front, total operating expenses were RMB 93.2 million for this quarter. To break this down, sales and marketing expenses were RMB 52.8 million. These expenses nearly included advertising and promotion expenses and staff compensation to support brand building and customer acquisition efforts across multiple platforms. As a percentage of total revenue, non-GAAP sales and marketing expenses, which include share-based compensation changed to 29.6% this quarter from 21.7% in the previous quarter. Research and development expenses were RMB 9.1 million. These expenses were mainly consisting of IP design and product development expenses. As a percentage of total revenue, non-GAAP research and development expenses, which exclude share-based compensation, changed to 5.1% this quarter compared to 12.5% in the previous quarter. General and administrative expenses was RMB 31.3 million. These expenses reflected our operational functions, including employee compensation, professional service fees and other operational expenditures. As a percentage of total revenue, non-GAAP general and administrative expenses which excludes share-based composition changed to 12.7% this quarter from 23.2% in the previous quarter. Our net loss from continued operations was RMB 25.4 million compared to RMB 25.8 million in the previous quarter. Our adjusted net loss from continuing operations was RMB 16.1 million compared with RMB 17.1 million in the previous quarter. Basic and diluted net loss from continuing operations per share were RMB 0.16 during this quarter. Basic and diluted adjusted net loss from continuing operations per share was RMB 0.1 during this quarter. Regarding our balance sheet position, our accounts receivable amounted to RMB 32.6 million as of December 31, 2025, primarily attributable to revenue from our off-line channel sales. It's worth noting that despite significant revenue growth from off-line channels during this quarter, our accounts receivable balance actually decreased markedly compared to September 30, 2025. This improvement reflects our intensified efforts to enhance customer engagement management capabilities and strengthen collections discipline. Our inventories were RMB 111.8 million as of December 31, 2025, representing a significant increase from the prior quarter. This was primarily driven by enhanced supply chain capacity and efficiency as well as inventory build proactively in anticipation of the Chinese New Year factory closures and new product launches in the upcoming quarter. We view this as a strategic move to ensure we are well positioned to meet upcoming demand. Looking ahead, we remain excited about the growth prospects for our pop toy business. Based on currently available information, including our pipeline for the upcoming IP releases and seasonal demand, we expect revenue from our pop toy business to be in the range of RMB 140 million to RMB 150 million for the third quarter of fiscal year 2026 and in the range of RMB 750 million to RMB million for the full fiscal year of 2026. This forecast reflect our confidence in the total market opportunity and our ability to scale our IP portfolio and expand internationally. That concludes my prepared remarks. Operator, let's open up the call for questions. Thank you.

[Operator Instructions] The first question today comes from Alice Cai with Citibank.

Just one quick question. The revenue guidance for third quarter suggests a quarter-over-quarter decline of about 15% to 20%. Is it primarily due to seasonality? Or are there any specific adjustment due to your IP launch schedule for the upcoming quarter?

Thank you, Alice, for the question. Indeed, those factors have contributed. But the core message is that we are actively building momentum for subsequent growth. Firstly, regarding seasonality, given that our current business primarily operate through a distributor model. Distributors naturally slow down their operations and inventory stocking during the spring festival holiday. This is within our expectations and represents a common seasonal fluctuation in this industry. And secondly, regarding the recent and pace of our product launches. This is not an adjustment, but rather a proactive arrangement based on our annual planning. Our products are typically planned 3 to 6 months in advance with dynamic optimization made based on market feedback. Currently, we are fully prepared for our product pipeline in the coming quarter and beyond, with major new products expected to launch successively starting from this end of March. Therefore, what we are seeing in the short term is the normal seasonal dip from a medium- to long-term perspective, this is proactive management on our part to welcome a new product cycle and optimize inventory and channel pace.

The next question comes from Liping Zhao with CICC.

[Foreign Language] I'll transfer it myself. So my question is about the cooperation of other companies in the future. We noticed that the Shenzhen Yiqi has recently established a joint venture with Enlight Media that this partnership means we will be working closely with Enlight Media in areas such as content creation and IP development?

I think Mr. Li will answer this question. [Foreign Language]

I will answer the question in Chinese and Tina will translate for me. Okay. [Foreign Language]

Thank you for your interest. Regarding our cooperation with Enlight Media, it is a key part of our efforts to deepen our IP strategy.

[Foreign Language]

First, over the past year, we have successfully taxed and confirmed the commercial path from IP images to pop toys by focusing on our core IP to create key products. We have built a solid foundation centered on the product gens.

[Foreign Language]

Second, we have always trusted the talent of IP comes from continuous contact support. And both the [ third column ] is very important to this. We focus not only to sell in the physical products like the blend boxes and the plush toys, but also on the long term, develop our IP. So we are now enhancing our IPs through the suitable content forms. We're doing this by bringing in excellent contact tailwinds like the Enlight Media and cooperating with the top industry partners. Our goal is to add a cultural meaning to our IPs and strengthening emotional connection between users and IP.

[Foreign Language]

Finally, the joint venture within Enlight Media, you mentioned it's exactly one of the specific projects to carry out our product and content stewardship strategy. We hope to explore more possibilities for our IPs in areas like the film and the television contact and derivative development through such cooperation. As for specific future plans, we will disclose them to the market when there is a substantial progress.

The next question comes from Yichen Zhang with CITIC Securities.

My question is about our operations strategy. The company was very successful in IP operations last year. So are there any new strategies for IP operation and marketing in this year?

Okay. Thank you for questions. I'll take this. This year, the core keyword for our IP operations and marketing strategy is a comprehensive upgrade from -- maybe we can call that opportunistic creativity to a systematic IP factory. This is reflected in 3 key areas. The first one is on the product front. We have built a replicable assembly line for IPs. Extreme product excellence is the foundation of everything. Through our product committee mechanism, we rigorously select IPs based on 3 dimensions: the visual distinctiveness, story potential, storytelling potential and audience resonance, ensuring that every category launch has a generic makeup to become more classic. Concurrently, we have established a complete process from discovery and incubation to development and launch and then to fulfill the full-size life cycle management, making it possible to replicate and sustain at products. A great product in itself is the best nourishment for IP. We continuously strengthen our in-house teams and integrate outstanding external resources, injecting vitality into our IPs with product excellence. And secondly, on the operations front, we have developed an iterable omnichannel marketing methodology. Over the past year, we have continuously summarized and optimized our operational experience, forming a replicable playbook that we constantly refine and iterate. This year, we will flexibly deploy differentiated marketing strategies based on the unique characteristics of different IPs and products, whether it's celebrating collaborations, branding, crossovers with major sports events or integrated online to off-line user engagement activities. Our goal is to leverage precise operational support to ensure great products are sent and loved by more people. And third, on the content front, as just discussed by Mr. Li and the CICC analyst. We are opening a new chapter of light content empowerment for IPs. And this is a crucial step in our journey from purely physical space to narrative space, and from product moments to sustain store retiring. Through appropriate content, we infused our IP with culture substance and emotional depth, transforming them from mere trendy toys into cultural symbols, with stories and vitality. This multidimensional empowerment across products, content, operations and branding has one ultimate goal, to build truly enduring evergreen IPs. So that's our training strategy so far.

The next question comes from [indiscernible] with [indiscernible] Securities.

My question is about our channel expansion. I wonder how is the performance of the -- our recent offline stores have reached our expectation and what's the channel expansion plan in year 2026?

Okay. I've answered your question. I thank you for your interest in our store operations. Regarding our offline stores, I will address this from three dimensions: the short-term performance, strategic positioning and future plans. Firstly, regarding short-term performance, our newly opened stores have generally met or even slightly exceeded our internal expectations. Since late last December, in last year 2025, we have opened 5 D2C stores in Beijing, Shenzhen and Chongqing. Although they have been operating for just over one month, the overall performance has been solid, and we have broadly achieved nearly breakeven or commendable result for newly opened stores in their initial phase. Of course, due to differences in customer profiles across various shopping districts, we are continuously fine-tuning the operational strategies for individual stores. And second, regarding strategic positioning, we value these stores not only for their sales contribution, but also and more importantly, for their role as brand landmarks and user touch points. Our offline direct to sale stores are core scenarios for fostering deep interaction between our IPs and users. To this end, we recently established a user operation center the organization in our company aimed at integrating online and offline data and user and planning more cohesive interactive activities with our IP platform and the product launch pace as a crucial component of this strategy, the value of our stores for brand showcasing and user connection far exceeds near sales figures.

As there are no further questions, I'd like to hand the conference back to management for 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 nice day.

Thank you for attending today's presentation. You may now disconnect.

Good morning, and good evening, ladies and gentlemen. Thank you for standing by, and welcome to Here's Earnings Conference Call. [Operator Instructions] Please note that today's event is being recorded. I would now like to turn the conference over to Ms. Leah Guo, Investor Relations Associate Director of the company. Please go ahead, ma'am.

Thank you. Hello, everyone, and welcome to Here's earnings call for the first quarter of fiscal year 2026. With us today are Mr. Peng Li, our Founder, Chairman and CEO; and Mr. Tim Xie, our CFO. Mr. Li will provide a business overview for the quarter, then Tim will discuss the financials in more detail. Following their prepared remarks, Mr. Li and team will be available for the Q&A session. I will translate for Mr. Li. You can refer to our quarterly financial results on our IR website at ir.heregroup.com. You can also access a replay of this call on our IR 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's 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 filings with the SEC. I will now turn the call over to the CEO and Founder of Here, Mr. Li.

Good morning, everyone. Thank you for joining us today for our first quarter of FY '26 earnings call. This is a historic moment, our first earnings call, as Here Group following our business restructuring, which positions us a pure-play player in the global pop toy market. Today, I am proud to report that our first quarter as a fully focused organization has been one of the strong execution and accelerating momentum. We have completed the disposal of our non-pop toy businesses by September 30, 2025, allowing us to concentrate all our talent and resources on the immense global pop toy opportunity ahead. In Q1, we delivered total revenue of RMB 127.1 million, with our pop toy business growing 93.3% quarter-over-quarter from RMB 65.8 million, exceeding the higher end of our previous guidance RMB 110 million. Let me highlight our most impressive operational metric, which demonstrates the power of our focused strategy: Our total GMV across direct-to-customer online stores reached RMB 44.6 million this quarter. Fiscal year '26, Q1, has validated our capability to develop DTC operations, and our future DTC development strategy will align with our sales planning, new product launch schedules, and other operational activities. This operational momentum, along with contributions from our diversified sales channels, translates directly to strong financial performance. Our sharpened focus is also driving improved profitability, with gross margins expanding to 41.2%, up from 34.7% in the previous quarter. We ended the quarter with a solid balance sheet and strong asset base, reflecting our financial stability and operational strength. Now, let me walk you through how we're executing our two-pillar growth strategy and the tangible results we're seeing across our business. Our first pillar focuses on strengthening our IP ecosystem with a balanced portfolio. This strategy is delivering results across original proprietary IP creation, strategic partnerships of licensed IP, and cross-industry co-branding. A key element of this approach is concentrating resources on our flagship IP properties to maximize their market impact and cultural resonance. For WAKUKU, we launched WAKUKU On a Roll Series on November 29th. This new series brings collectibles into real-life scenarios, building emotional connections with young consumers who view these pieces as daily companions and personal symbols rather than just toys. By integrating lucky numbers into lifestyle contexts and offering versatile sizing, we transform youth interaction with collectibles into spontaneous social sharing moments. Every design element—s from trending colors to premium accessories like interchangeable silky cat head hats, —makes luck, a tangible daily experience. The launch was further enhanced by an original song and music video, creating a multimedia experience that extends the IP's culture reach beyond physical products. Our operational excellence demonstrates this strategy in action. WAKUKU-themed Street became one of Shanghai's most popular photography destinations in November, attracting young people and social media creators who generate diverse content through street photography and collection showcases. This capability —turning IP launches into cultural phenomena that drive organic community engagement —proves our ability to create compelling characters that naturally embed into young people's lives, becoming authentic expressions of personality and catalysts for cultural moments that extend beyond traditional product boundaries. Our flagship IPs continue to be powerful growth engines, with recent launches achieving record breaking performance, particularly in international markets. These launches show our systematic IP development capability and our ability to create emotionally resonant characters with compelling narratives. Looking ahead, we remain committed to adding value to our flagship IPs and newly launched IPs. Let me share our strategic partnerships that are expanding our cultural influence. We've formally established a strategic partnership with Beijing Radio and Television Station. The partnership covers content and cultural project cooperation mechanisms, including program co-creation, IP integration, and co-branded content production. This deep integration with mainstream media enhances our brand credibility and lays the foundation for nationwide media partnerships. Our pop toy IP participated in the official Golden Rooster Awards activities, including the Starry Sea gift sets, red carpet visual elements, and on-site interactive creativity, becoming one of the symbols of youth culture at this year's film festival. This collaboration achieved deep connections with China's mainstream entertainment industry. Our cross-industry co-branding strategy is elevating our brand into new consumer segments through diverse partnerships across entertainment, media, sports, and urban development. In the sports sector, we achieved a landmark milestone as the first official pop toy brand partner in China Open history, creating value across three key areas. From a media perspective, we generated over 200 million exposures and became a core tournament topic. In terms of athlete engagement, we secured authentic interactions and organic endorsements from global top players, including the world's number one ranked athlete, which drove strong celebrity same style demand. On the commercial side, our themed pop-up store generated millions in sales revenue, with multiple limited-edition items selling out immediately upon release. This success demonstrates the effectiveness of our pop toy plus premium sports events model, creating a seamless connection from brand awareness to actual sales conversion. In the entertainment sector, we've secured high-profile collaborations that expand our reach into mainstream pop culture. WAKUKU collaborated with the variety show, "Pijingzhanjí dí gege", Call Me By Fire, integrating our brand into China's popular entertainment landscape. This partnership demonstrates our ability to seamlessly blend pop toy culture with mainstream television programming, reaching diverse demographic segments. We also partnered with the local tourism government office to create an IP-themed Street featuring installations, interactive scenarios, and immersive photo opportunities in a core Beijing landmark commercial district. This project increased foot traffic and helped revitalize the area for younger audiences, providing a successful pilot for our urban renewal plus pop toy scenario operation strategy. These collaborations showcase our versatility in cross-industry partnerships, from premium sports tournaments to domestic variety shows and urban commercial districts, each designed to introduce our IP to new audiences while strengthening brand recognition across different consumer touchpoints These IP successes create the foundation for our second pillar—, our omnichannel approach, which amplifies these compelling brands across multiple touchpoints to drive efficient growth both domestically and internationally. In China, our social media matrix is delivering exceptional results. Our combined follower base across key platforms has reached 26,500. We have generated 679 million views on Douyin and 171 million views on RedNote—, demonstrating massive organic reach. This is converting directly to sales, with our Douyin flagship store GMV increasing 97.2% quarter-over-quarter. Offline, we are continuing to develop our offline DTC stores, which serve primarily as brand flagship experiences to showcase our products and strengthen brand presence in key markets. Our pop-up stores have generated over RMB 3 million in cumulative sales, and we have secured prime locations, which are all high-traffic locations in top-tier shopping districts including Shanghai, Beijing, and Shenzhen, for more direct-to-customer channels. Our first Beijing DTC store and our first Chongqing DTC store will open in December 2025. Two additional DTC stores in Beijing are set to open in early 2026. In addition, we have also launched Christmas and New Year themed pop-up stores to capture the holiday shopping momentum in Shanghai and Shenzhen. We participated in high-profile events including the 2025 China International Fair for Trade in Services, significantly boosting brand visibility, and generating qualified leads for our wholesale channel. Internationally, our momentum is accelerating across key markets. Our performance on TikTok Shop in North America has positioned us as a top player in the collectibles category. A standout success was our WAKUKU Panda series. Our overseas distribution network now covers around 20 countries including North America, Europe, Southeast Asia, and the Middle East. With this established infrastructure in place, we are now beginning to focus on enhancing sales performance in these markets as our supply chain capabilities continue to improve and our partnerships with overseas distributors deepen. This foundation allows us to rapidly scale our geographic footprint, while minimizing fixed infrastructure investments and leverage our partners' established retail relationships and local market expertise to achieve efficient market penetration. Underpinning our creative and commercial success is our integrated operational system, which represents a true competitive advantage. We are no longer in transition. We are in acceleration mode. With a pure-play pop toy strategy, a formalized two-pillar execution plan, agile supply chain capability, and a strengthened balance sheet, we are well positioned to capture the massive global pop toy opportunity and deliver sustainable, long-term value to our shareholders. The results this quarter validate our strategic choices. Our brands are resonating with consumers, our channels are scaling efficiently, and our operations are executing flawlessly. We have the momentum, the capabilities, and the resources to become a defining global player in the pop toy industry. I'll now turn it over to Tim for a detailed review of our financial results. Thank you, everyone.

Thank you. Before I go into the details of our financial results, please note that all amounts are in RMB terms, that the reporting period is the first quarter of our fiscal year 2026 ending on September 30, 2025. And that in addition to GAAP measures, we will also be discussing non-GAAP measures to provide greater clarity on the trends in our actual operations. We are pleased to report on solid financial performance this quarter, which demonstrates the successful execution of our strategic transformation into a product-driven pop toy company. Total revenue reached RMB 127.1 million with a gross margin of 41.2%, compared with total revenue of RMB 65.8 million with a gross margin of 34.7% in the previous quarter. Adjusted net loss from continuing operations narrowed to RMB 17.1 million, down from RMB 19.3 million in the previous quarter. These results reflect the success of our strategic business restructuring and the disposal of our non-pop toy businesses, allowing us to focus entirely on our high-growth Pop Toy segment. Revenues for the quarter were RMB 127.1 million, entirely generated from the sales of pop toys and the related activities, compared to RMB 65.8 million in the previous quarter. Gross profit for the quarter was RMB 52.4 million, compared to RMB 22.8 million in the previous quarter. Our gross margin increased to 41.2% this quarter from 34.7% in the previous quarter, reflecting the strength of our pop toy business model. On the operational front, total operating expenses were RMB 81.6 million for this quarter. To break this down, sales and marketing expenses were RMB 27.6 million. These expenses mainly included advertising and promotion costs aimed at enhancing product and brand visibility to accelerate growth and expand market share. As a percentage of total revenue, non-GAAP sales and marketing expenses, which exclude share-based compensation, decreased to 21.7% this quarter from 29% in the previous quarter. Research and development expenses were RMB 15.8 million. These expenses were mainly focused on advancing our pop toy portfolio through new product design innovation and establishing our integrated sales platform and data center infrastructure. These investments create a solid operational foundation to support future business expansion. As a percentage of total revenue, non-GAAP research and development expenses, which exclude share-based compensation, decreased to 12.5% this quarter from 13.5% in the previous quarter. General and administrative expenses were RMB 38.1 million. These costs reflected our operational functions including employee compensation, professional service fees, and other operational expenditures. As a percentage of total revenue, non-GAAP general and administrative expenses, which exclude share-based compensation, decreased to 23.2% this quarter from 26.3% in the previous quarter. Our net loss from continuing operations was RMB 25.8 million, compared with RMB 21.8 million in the previous quarter. Our adjusted net loss from continuing operations was RMB 17.1 million, compared with RMB 19.3 million in the previous quarter. Basic and diluted net loss from continuing operations per share were RMB 0.16 during the quarter. Basic and diluted adjusted net loss from continuing operations per share were RMB 0.11 during this quarter. Regarding our balance sheet position, as of September 30, 2025, we held RMB 789.4 million in cash and cash equivalents, restricted cash, and short-term investments. Looking ahead, we are excited about the growth prospects for our pop toy business. Based on currently available information, we expect revenues from our pop toy business to be in the range of RMB 150 million to RMB 160 million for the second quarter of fiscal year 2026, and in the range of RMB 750 million to RMB 800 million for the full fiscal year 2026. These forecasts reflect our confidence in the pop toy market opportunity and our ability to scale our IP portfolio and expand internationally. That concludes my prepared remarks. Operator, let's open up the call for questions.

[Operator Instructions] And our first question today will come from Alice Cai with Citi. Please go ahead.

I have two questions. And the first one, based on the second quarter guidance imply that the first half revenue is around RMB 280 million, right? So, to hit the full year target of RMB 800 million, second half revenue is to reach at least RMB 500 million, which is nearly double first half. What is the specific breakdown of this confidence? And is this cost driven by capacity, secure orders from retailers? Or is it based on projected sell-through of new launches -- new IP launches, I mean? And do we expect to turn profitable in the second half given the strong revenue guidance? And my second question is about the implication on the Labubu momentum. Do we expect -- is there any impact on our Labubu revenue momentum?

Okay. Thank you for your question, Alice. For the first one, regarding the guidance, the revenue forecast is primarily based on the following points: the timeline and pace of the product launches for different IPs and corresponding production capacity arrangements as well as the current production capacity and the inventory situation. It also takes into account the order from our customers' allocation and arrangements for the channel partners and self-operated online platform and DTC channels. Currently, our production capacity is expected to reach approximately 400,000 sets per month, equivalent to 2.4 million units in the near future, I think maybe by end of this year, which will help avoid severe supply chain shortages such as first half year from recurring. At the same time, based on the order situation for new products in the latest months, the subsequent product launch plans and the order placements from various channel partners, our projections can generally support the overall revenue guidance range for the fiscal year ending June 2026. I think, the core of our business lies in balancing IP operations and sales scale with a focus and priority on continuously extending and enriching the emotional value that the IP products bring to our users while achieving sales growth. We are striving to continuously realize and optimize this objective. Regarding the bottom line, I think the losses, especially the adjusted losses, excluding the share-based payment expenses, is narrowing. And also the losses incurred in the fourth quarter were primarily due to the short-term business adjustment for the business restructuring. Because the existing fixed cost structure and cost and expenses structure, including the fixed cost remained relatively high compared to our current revenue scale, of which many items are inappropriate with the legacy business, such as fixed expenses related to maintaining the listed company status, the audit fees and the leased office spaces based on the previous business model, all of which are currently being optimized. We are actively refining our cost and expense structure in accordance with the needs of the new business development. In the upcoming quarters, the proportion of similar fixed costs and expenses are expected to continue decreasing. Regarding sales expenses, I think one of the major expenses, we anticipate that the adjusted ratio will fluctuate around 20% of the revenue. The specific amount and proportion will depend on market conditions and the schedule of new product launches. During this rapid growth phase, we plan to allocate slightly more resources to branding and marketing to enhance the IP operation activities. However, consistent with our long-standing business strategy, we will not pursue growth through excessive spending. In the early stages, we aim to strike a balance between profitability and growth, and we are confident that -- this profitable growth will be achieved in the coming quarters. I think, the other question related to the product, especially for the IP. I think our peers, for example, the Labubu IP operations have achieved outstanding business performance and rapid growth. And we believe the market is closely following the latest developments of the Pioneer companies and other IPs. But as a pop toy company, we believe there is plenty of room for the growth in our industry. And according to a recent research report, the data from a research firm, the market of this IP pop toys is still growing very fast at a CAGR of over 18% in the next 5 years. So moving forward, we will continue to prioritize our IP operations, new product launches and brand building. The market has validated WAKUKU's unique appeal to the users. Let me share some sales numbers. The first generation of WAKUKU was launched at the end of last year and second generation was launched in the first half of this year in this May. All of the previous version of WAKUKU products, the cumulative sales up to now have now exceeded 6 million individual units. And we launched our new generation mini version on -- just now on November 29. The offline debut received very positive feedback and the online launch is scheduled for December 4. So the pop toy market has moved beyond its niche origins and now reaches a much broader audience. Going forward, we will continue to build our IP portfolio, creating distinctive and resonant IPs for different consumer segments. In product development, we will continue exploring the unique characteristics of each IP to develop new products that align with market demand. For marketing and promotions, we will integrate our operations with strategic marketing campaigns to continuously strengthen our IPs and maintain their long-term vitality. Yes.

The next question will come from Liping Zhao with CICC.

Congrats on your strong quarter. As Xie Dong just said that you guys are going to launch the DTC stores offline. Could you please share the latest updates on these stores and your future opening pipeline in 2026? And how should we expect the sales value of these DTC stores?

Thank you. I will answer it. Our key progress with offline DTC stores centers on building strategic of brand experience centers. The first batch of the stores are expected to open between late December this year and early 2026 in very early of January. Current preparations focus on decoration and operational systems, and I think we are getting ready. Our goal is to transform our DTC stores into immersive and interactive offline narrative spaces. This will serve as physical hubs for our brand culture and core basis for offline community engagement. In terms of channel synergy, our DTC stores represent a strategic investment in brand building and deepening user relationships. The goal is not only direct sales competition. Instead, we enhance overall brand momentum by providing unique immersive experiences. The approach reinforces and empowers the online DTC and KA channels. We are creating a positive cycle of offline experience, online engagement and omnichannel conversion. This ultimately strengthens our brand's omnichannel competitiveness. I think, future expansion will strictly follow a prudent sales strategy. We begin by validating the profitability of a single store and brand impact model using operational data from our initial stores. Once we successfully validate the business model, we will consider to speed the process of replication. This way ensures very -- every new store becomes a valuable brand asset that keeps generating value over time. That's my answer.

The next question will come from Yichen Zhang with CITIC.

And my question is regarding our overseas market. Because we know that Pop Mart's overseas business almost contributed half of its revenue. But for now, our current overseas revenue proportion is relatively low. So, will the overseas market be our focus for the next year? And what is our strategy on the overseas market?

Thank you for your question. Regarding the overseas market, I think that definitely is our -- one of our focuses, especially starting from recently in this quarter. I think because of the supply chain shortage in the first half year, we are -- our major resources are put into the domestic market, because we are still at early stage and also we are -- we should supply all of the demand -- order demand from the existing clients in the domestic market, especially the KAs first. But as -- at the same time, we are increasing our capacity, the production capacity, especially recently, as I just mentioned, we have increased the monthly capacity almost 40x recently of the -- compared to that early this year. So, we started to make our efforts in terms of the overseas channel and sales. So starting from this quarter, we will adopt such a strategy that, first, we will cooperate closely with our KAs, with our distribution partners, especially with that who has very solid overseas chain stores and distribution network. And then at the same time, we are building our overseas online platforms such as TikTok in North America and Southeast Asia at the same time. So, I think combining both of these efforts, we will make progress in terms of the overseas sales in this -- in the coming quarters. But I think as we -- even though we definitely think that the overseas market is growing very fast compared in terms of the speed, the growth rate with the domestic market. But as this -- overall, we are still at the early stage and our absolute sales volume is still growing very fast. I think to -- the majority of our sales will still come from the domestic market in the short term. Definitely, we will replicate the strength and experiences built in the domestic market to the overseas market. So, everything is at the beginning and on a trajectory trend so that we can make big progress in the coming quarters. Yes.

The next question will come from [ Dai Xu ] with Huatai Securities.

I'm Dai Xi from Huatai Securities. My question is about our IP structure. So, I wonder what is the revenue structure breakdown by IP this year? And how do we foresee the drivers from new IPs in the next year?

Based on this quarter data, our total business shows a healthy and well-structured IP portfolio. We ranked our IPs according to the popularity and also the IP strength. First, in this quarter, the total revenue for the quarter was RMB 127 million. Our super hit product and IP, WAKUKU alone accounted for 71% of our total revenue. And this makes it the key driver for our growth. Our classic IP, ZIYULI, as a stable pillar contributed 16% of the total revenue approximately. And the new IP, which we launched in July, and it is the third-party licensed exclusively licensed IP called SIINONO, made a solid debut, accounting for approximately 10% of our revenue this quarter, demonstrating a remarkable performance. And the remaining coming from -- came from other IPs because we currently have 70 IPs. So, for this result, I will give you some basic principles. First is that we will focus our efforts, all of our efforts, the majority of our efforts and resources on our class IPs, that is WAKUKU, ZIYULI and SIINONO, currently. I think in the short term, maybe in the coming quarters and maybe 3 -- around 3 years, we will focus on the top IPs, because we think the IP should -- we should put efforts to make the top IP to last their popularity. Looking ahead to the next year, our new IP strategy will be driven by a dual approach, deep in the core and systematic incubation. So our core engine, WAKUKU will transition from that explosive launch momentum to deeper operations and extending its product life cycle. We will consolidate our market-leading position through strategic product line expansion and enhanced user experience. And also, we will systematically replicate SIINONO's proven incubation model to cultivate one to two additional flagship IPs, creating a more balanced and diversified growth portfolio. So overall, our company will drive future growth through an IP matrix operating model. This breaks down into two main areas. And we -- first, we will refresh our established IPs to keep them fresh and engaging for our audiences. Second, we will set up a flexible incubation mechanism that allows us to continually test new concepts and strategically allocate resources to the most promising emerging IPs. Over time, this approach will help us create a healthy IP ecosystem, one that appeals to diverse audiences, protect us from single product risk and also deliver long-term growth potential. But quarter-by-quarter, I think the IP revenue fluctuation will be based on the product launches and the pace of the product -- each IP. So, I think in a sum, we will focus on three to five key IPs such as WAKUKU, SIINONO, ZIYULI, and other IPs maybe in the future. And also, we will incubate some new IPs so that we can not only diversify the revenue concentration risks, but also to grow the whole IP portfolio. Thank you.

As there are no further questions, I'd like to hand the conference back over to management for closing remarks. Please go ahead.

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 has now concluded. Thank you for your participation. You may now have a good day.

Good morning and good evening, ladies and gentlemen. Thank you for standing by, and welcome to the QuantaSing's Earnings Conference Call. [Operator Instructions] Please note that today's event is being recorded. I will now turn the conference over to Ms. Leah Guo, Investor Relations Associate Director of the company.

Thank you. Hello, everyone, and welcome to QuantaSing's Earnings Call for the Fourth Quarter and Fiscal Year 2025. With us today are Mr. Peng Li, our Founder, Chairman and CEO; and Mr. Dong Xie, our CFO. Mr. Li will provide a business overview for the quarter, then Xie will discuss the financials in more detail. Following their prepared remarks, Mr. Li and Xie will be available for the today's session. 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. 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 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 filings with the SEC. I will now turn the call over to CEO and Founder of QuantaSing, Mr. Li.

Okay. Good morning, everyone. Thank you for joining us today for our Q4 and full fiscal year 2025 earnings call. I'm excited to share some really encouraging results with you today, along with significant strategic announcement that marks a new chapter for our company. As many of you know, we've been transforming from a traffic-driven to a product-driven business. And furthermore, we have consolidated a controlling stake in Letsvan since March 31 and have reached an agreement to acquire the remaining equity for a full 100% merger. Before diving into our quarterly results, I want to share important news about our strategic direction. We are announcing our potential business restructuring to divest all our non-Pop Toy business to focus exclusively on our high-growth Pop Toy business. This represents a decisive step forward in our transformation. We have been in negotiations with buyers, who are interested in acquiring this established business. The restructuring will allow us to concentrate all our resources, talent and capital on the tremendous opportunities we see in the Pop Toy market, while ensuring that our all established non-Pop Toy business found the right home with a buyer who can continue maintaining the operation of this business and achieve potential further development. We will share further details on timing and transaction terms once they are finalized, subject to final negotiations and customary closing conditions. This quarter marks our first full period with Letsvan's consolidation. From April through June, the quarter was defined by both challenge and accomplishment, yet I'm incredibly proud of what we have achieved with our strategic transition. Let's look at the numbers. Our revenue reached RMB 617.8 million. Most importantly, our Pop Toy business contributed RMB 65.8 million, representing our core growth engine moving forward. Beyond that, as of June 30, 2025, we held over RMB 1 billion in cash and cash equivalents, restricted cash and short-term investments for the company. This cash reserve established a strong foundation for our transition into Pop Toy business. Let me highlight what is driving this growth opportunity with our Pop Toy business. We are seeing rapid cultural transformation, driven by young digitally savvy consumers, who want emotional connection and unique collectible experiences. This is one of the most dynamic segments globally. The brands that win are those that brand creative IP, emotional storytelling and real-time engagement. These trends have transformed pop toys from niche items into lifestyle essentials for adults and millennials. As a pop toy company, we will be uniquely positioned to capitalize on this massive market opportunity. Each of our Pop Toy series features unique designs and distinctive personalities that resonate on the psychological level. For example, WAKUKU, our flagship IP, is now one of the most recognized trend toys in China, a skilled hunter, full of courage and wisdom. ZIYULI, the Chinese princess that grows by yourself. And SIINONO, a new IP launched in July 2025, an alien creature from the warm and carefree planet, Hassey. Following the strategy we outlined in Q3, we have been operating the Pop Toy business systematically and have achieved significant results to date. We are seeing strong market validation across our IP portfolio. Next, I will provide further details on our core strategy using the Q3 framework. First, IP brand development and product. We have built a diverse portfolio of unique IP designs that resonate deeply with consumers. Let me give you some new recent examples. Our WAKUKU, Fox and Bunny series achieved over 1 million unit sales since its launch on May 17th. During the initial launch of our new IP SIINONO wants to tell you a secret blind box sold out 10,000 units in 10 minutes at our Douyin flagship store and achieved approximately 300,000 units sales to date. Today, we are operating over 40 blind box product lines. And over 30-plus pendent card products across our IP portfolio. This includes 11 self-owned IPs, including WAKUKU and ZIYULI, 2 exclusive licensed IPs and 2 nonexclusive licensed IPs. We are strengthening our IP metrics through 3 key approaches. First, we are investing in our own, original IP development. We will continue to gather artistic and designer resources in various locations, establishing design centers in different cities, such as Beijing, Hangzhou and Shenzhen. We have a diverse and collaborative team that enables us to continuously innovate blending artistic vision with cultural insights to create IPs that truly resonate with our fans. Second, we are strategically pursuing IP licensing partnerships with proactively exploring and securing exclusive collaborations across design styles, product categories, audiences and international markets. We began to collaborating with artists and illustrators through in-depth product co-creation and development to help launch their first-generation blind box collectibles and limited-edition products, fostering mutually rewarding opportunities. Third, we are building strategic partnerships beyond traditional toy collaborations, linking our product with healthy, optimistic lifestyle brands. For example, we are partnered with China Open Tennis Tournament, Beijing Fashion Week, Universal Studios, Genki Forest, a leading health beverage brand and for Shanghai, hot TV series. These partnerships expand our reach across entertainment wellness and lifestyle markets. What truly sets us apart is how we leverage everything from our strategic partnerships to our product design around emotional connection, we are not just making toys. We are creating meaningful products that foster companionship and speak to a real emotional needs. By weaving rich, growth stories into our classic IPs, we transform them into emotional companies that resonate on the personal level. The second pillar of our strategic focus is on marketing and channel expansion, which is driving growth, both thematically and internationally. In our home market, our momentum is impressive. On the online front, we've built a community of over 250,000 followers on the two largest local social platforms. While our content has achieved remarkable viral reach with over 550 million views on Douyin and 140 million views on Xiaohongshu. Regarding GMV, since officially launching online operations in April, our GMV had already exceeded RMB 18 million in August, which is over 9x that of April. Offline. Our multichannel presence is equally robust. We've established a widespread wholesale network of over 10,000 retail stores through our distributor partners and actively participate in Pop Toy exhibitions in top-tier cities such as Beijing, Shanghai and Shenzhen, significantly enhancing brand visibility. At our partnership retail stores, the launch of SIINONO achieved more than 10,000 units sold in just 10 seconds. This underscores our strong capability to generate marketing impact and rapid sale through physical locations. Our self-operated retail strategy is a key driver of our offline expansion, with a focus on innovative pop-up stores and high-impact launch events. As we mentioned before, we are actively developing our flagship retail stores. In the meanwhile, we have already demonstrated strong offline capabilities through large scale pop-up installations and exclusive product launches. For example, on August 30th, we launched a pop-up store at Beijing Chaoyang Hopson One. In addition to a selection of our best-selling products, this limited time activations allow us to create immersive IP-driven environment that generate significant social buzz and translate excitement into direct sales. We are currently in negotiations with top-tier shopping malls in several first-tier cities to open flagship stores, with at least 3 to 5 locations expected to open by the end of December. These events boost brand visibility. They act as community touch points, featuring an interactive content and limited edition releases. This deepens emotional connections with fans and builds lasting brand loyalty. While still in the early stages of our international expansion, we are encouraged by the strong growth momentum we are seeing overseas. On the online front, we have established a North American independent e-commerce sites, launched flagship stores on TikTok for both North America and Southeast Asia as well as an official online store on Shopee in Southeast Asia. We have achieved significant breakthroughs in these markets. For offline channels, we have established wholesale networking over 20 countries through our distribution partners, such as Japan, major Southeast Asian countries, the United States, Canada, Australia, the United Kingdom, France, Germany, Italy and Saudi Arabia. Self-operated stores are a key part of our long-term global strategy. So we are still in the planning phase for our physical store rollout. We intend to take a data-informed test-and-learn approach once we enter new markets using real-world insights, including sales performance, customer engagement and market feedback to strategically guide our expansion and deepen brand engagement. In July, we opened approximately a 30 square meter pop-up store at Central Park Mall in Jakarta, Indonesia, to test the local market, which successfully validated both market demand and our team's operational capabilities. Regarding our non-Pop Toy business restructuring, we are making strong progress. This move will ensure the established business continues to operate smoothly and provides better development opportunities for the team. While the process from the sale will strengthen the company's own equity, more importantly, the transaction allows us to concentrate all resources on operating our Pop Toy business with maximum focus, transforming the company into a global trendsetter and creating substantial long-term value for the shareholders. We are confident this move delivers clear value to our shareholders and sharpen our strategic focus. As we transition into Pop Toy business, our strategy will be built around 3 core priorities. First, we are strengthening IP creation and incubation, by refreshing content, expanding product lines and collaborating across sectors. We are building emotion-driven ecosystem that boosts users' loyalty and brand value. Second, we are driving agile execution by refining supply chain operations, optimizing inventory and logistics and building the flexible production partnership. Speed and efficiency are key to our market responsiveness and cost control. We have made significant progress in the product capability. In August, the output of our mainstream plush products had already increased more than 20-fold since the beginning of the year in January, exceeding 1 million units. Third, we are dedicated to delivering sustainable returns to our shareholders. Our focus remaining on calculating high-valued IP, expanding global channels and maintaining disciplined profitability and cash flow management. In summary, Q4 fiscal year 2025 represents a defining moment in our transformation journey. Our potential business restructuring reflects our confidence in the exceptional growth potential of this market. This sharper focus means we can really build on our early wins in Pop Toy, speed up our growth in sustainable way and deliver even more value to our shareholders. We have shown, we know how to execute in this business. And now with total focus dedicated to resources and a stronger financial position, we are ready to become a true leader in this dynamic, high-growth industry. Thank you for your continued trust and support. Our performance to date gives us strong confidence in our future position. I will now turn it over to Tim for a detailed review of our financial results. Thank you, everyone.

Thank you. Before I go into the details of our financial results, please note that all amounts are in RMB terms, that the reporting period is the fourth quarter of fiscal year 2025 ended on June 30, 2025, and that in addition to GAAP measures, we will also be discussing non-GAAP measures to provide greater clarity on the trends in our actual operations. We are pleased to report solid financial performance this quarter, making our first full reporting period since completing the Letsvan acquisition in March 2025. Total revenue reached RMB 617.8 million with net income of RMB 108 million, achieving a strong net profit margin of 17.5%. These results reflect our intentional strategic transformation from traffic-driven growth to a more sustainable product focused business model. This transition is already showing clear results with sales and marketing expenses, improving significantly to 47.6% of revenue from 69.2% in the previous quarter. Our Pop Toy business now accounts for 10.6% of total revenue as it's becoming a significant part of our revenue base. Breaking down our revenue composition. Revenues from the Pop Toy business totaled RMB 65.8 million. With a continued momentum in this business, we expect it to drive meaningful growth in future quarters. Individual online learning services generated revenues of RMB 456.9 million compared to RMB 906.7 million in the fourth quarter of 2024. This change was primarily due to decreases in skills upgrading courses, financial literacy courses and recreation and leisure courses. Revenues from enterprise services was RMB 35.7 million compared to RMB 56.6 million a year ago. The change was primarily due to a deliberate reduction in the marketing services provided to a customer. Revenues from our consumer business was RMB 50.5 million compared to RMB 33.3 million a year ago. The change was primarily driven by the increase in revenue from wellness product sales. And finally, revenues from others were RMB 8.9 million compared to RMB 3.5 million a year ago. Gross profit for the quarter was RMB 467.6 million, with a gross margin of 75.7%, compared to 85.9% 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 continued to prioritize effective cost management while focusing on our resources on the Pop Toy business. Total operating expenses were RMB 344.2 million, a decrease of 44.7% from RMB 622.9 million in the same period last year. To break this down, sales and marketing expenses decreased by 49.3% to RMB 294.1 million, mainly due to lower marketing and promotion costs, reduced labor outsourcing and lower staff expenses. This decrease was partially offset by new sales and marketing costs for the Pop Toy business following the Letsvan acquisition. As a percentage of total revenue, non-GAAP sales and marketing expenses, which excludes share-based compensation, decreased to 47.6% from 57.4% a year ago. Research and development expenses slightly declined by 0.1% to RMB 21.2 million, mainly due to lower staff costs, excluding share-based compensation, expenses of the established business. This decline was partially offset by the new research and development expenses for the Pop Toy business following Letsvan acquisition and by an increase in share-based compensation expenses of the established business. As a percentage of total revenue, non-GAAP R&D expenses, which excludes share-based compensation, was 3.4% compared to 3% a year ago. General and administrative expenses were RMB 29 million compared to RMB 11.6 million a year ago. The change was mainly due to the newly added general and administrative expenses for the Pop Toy business resulting from the acquisition of Letsvan and an increase in share-based compensation expenses for the established business. As a percentage of total revenue, non-GAAP G&A expenses, which exclude share-based compensation, is 4.3% compared to 2.5% a year ago. We achieved a net income of RMB 108 million, representing a net margin of 17.5%. Our adjusted net income, which excludes share-based compensation, was RMB 111.2 million, representing an adjusted net margin of 18%. Basic and diluted net income per share was RMB 0.67 and RMB 0.65 during the quarter. Adjusted basic and diluted net income per share were RMB 0.69 and RMB 0.67 during the quarter. Regarding our balance sheet position, as of June 30, 2025, we held RMB 1040.9 million in cash and cash equivalents, restricted cash and short-term investments, representing an increase of RMB 14.6 million from RMB 1026.3 million as of June 30, 2024. Both our established business and the Pop Toy business are cash self-sustaining and don't require significant additional capital. This allows us to focus our available cash reserves on strategically expanding the Pop Toy business, to accelerate its growth and market presence. Looking ahead, we're excited about the growth prospects for our Pop Toy business. Based on currently available information, we expect revenues from our Pop Toy business to be in the range of RMB 100 million to RMB 110 million for the first quarter of fiscal year 2026 and in the range of RMB 750 million to RMB 800 million for the full fiscal year 2026. This forecast reflects our confidence in the pop toy market opportunity and our ability to scale our IP portfolio and expand internationally. That concludes my prepared remarks. Operator, let's open up the call for questions. Thank you.

[Operator Instructions] First question today comes from Alice Cai of Citi.

I have several topics to cover. And let me begin with what I think most investors care most about, which is the toy revenue trajectory recently. Given that WAKUKU contribute RMB 43 million in Q4 and SIINONO, that's launched in July. And you now have 15 IPs in total. Could you please share the recent revenue run rate for July to September? And management mentioned that the demand so far is outpacing supply with order book through Q1 next year. So could you please quantify the confirmed order backlog in dollar terms?

Thank you, Alice. I'll answer this question. Regarding the growth curve, WAKUKU began operations last December, and we saw sustained volume expansion starting in March, right after the spring festival of China. Its growth rate can be described as explosive, out of the gate, gaining momentum very rapidly. By August, its monthly production capacity had reached approximately 20x the level at the beginning of the year. Strong demand from channels, our distributor partners and also the online and high user repurchase behavior provide strong visibility for our performance over the next several quarters. Also regarding the new IP, SIINONO, launched in July, SIINONO demonstrated our accelerating growth momentum as a completely new IP that has been on the market for only a few months. Its initial sales were exclusive. And recently, the sales of SIINONO have exceeded 300,000 boxes. This reflects our continuous evolution in product design, marketing and channel execution. When viewed together, the combined effect of these two engines, explosive new releases and sustained classic performance, is accelerating our overall revenue growth rapidly. This powerful momentum is the core reason for our confidence in future performance, and we look forward to sharing more detailed figures in the next earnings report. Regarding confirmed order value, our front-end sales team schedules production based on market feedback. For products already ordered by sales, the current delivery rate is less than 50%. That means a huge pipeline in process. Production and planning for future quarters is proceeding in an orderly manner. Yes, I think that will help to answer your question.

It's helpful. And my last question is on the valuation of Letsvan because some investors are calculating its valuation at RMB 1.7 billion based on the 8x 18 million common shares divided by 20%. But these 18 million shares are granted in 3 tranches with a vesting period over several years, right? So could you please walk us through the specific arrangements for these three tranches? And are they tied to performance markdown? And if performance targets cannot be met, will later tranches be adjusted or canceled?

Okay. The acquisition of the remaining equity is currently still in the settlement process and further details will be disclosed in due course. I think I can give you some key points to help everyone to understand the transaction. First, Mr. Huiyu Zhan, the Founder and CEO of Letsvan, he represents the product strength of our Pop Toy business. And he himself is a seasoned entrepreneur with years of experience in this sector. He is highly optimistic about the future of the pop toy market and believe in the long-term value of fully committing to this field together with us. For this transaction, Mr. Zhan opted to receive shares as consideration for his remaining equity with no cash involved. The second point is that approximately 60% of the consideration was paid in newly issued shares in exchange for Mr. Zhan's remaining equity, while the remaining 40% was granted as long-term incentives, which will vest gradually over a period of about 8 years. So it's a very long time, and it means the commitment with us, and we can do that in a long time. I think the third one is this structure reflects our shared commitment to long-term collaboration and value creation. And also for the remaining one, except Mr. Zhan's shares, the remaining equity held by other shareholders was acquired for cash, for pure cash, at a valuation not exceeding RMB 1 billion. This portion of the transaction has been completed as of today. I think that's the information I can give to the market. Maybe we can give details when we fully complete the transaction.

I have another question. Looking at the time line going forward, because you are guiding for RMB 100 million to RMB 110 million in Q1 and around RMB 750 million for the full year guidance, right? So given that Q4 already hit some RMB 66 million with just 3 months of contribution, are these targets conservative? When does the management expect the top revenue to -- toy revenue to surpass the education business?

Okay. I think first, our guidance for FY '25 and FY '26 were made based on the prudent assessment of the market environment and the piece of product and channel development when we formulated our strategy earlier this year. As you can see from the performance figures just released, growth across several key metrics has already outpaced our earlier expectations. Based on the recent business process and our updated market outlook, we are issuing our first formal earnings guidance for the Pop Toy business. And this guidance is supported by the following factors: The first is better-than-expected performance of hit products and mature IP matrix. Our established IPs, such as WAKUKU and ZIYULI have demonstrated strong longevity, and new generations of these IPs are already in the pipeline. In addition, the successful launch of our new IP SIINONO in July has been very well received with robust ongoing sales momentum. The next generation of products is already scheduled. This success validates our exclusive artist IP partnership model and sets a solid foundation for continuously introducing new artist IPs. In addition to the 15 IPs we had as of June 30, we recently signed two additional new exclusive licensed IPs. We have initially established a healthy product vision and pace, combining new explosive releases and sustained classic performance, driven jointly and by product strength and brand power. This indicates our IP operation capabilities and user loyalty are reaching a new level. The second is continuous expansion of online and offline sales channels. Our online GMV reached over RMB 18 million in August. We continue to deepen partnerships with offline distributors and self-operated pop-up stores as well as permanent flagship stores either under negotiation, all in the process of opening. We expect to open 3 to 5 flagship stores by end of year, laying a solid foundation for the expansion of self-operated stores next year. And also accelerated global expansion, we have established initial channel and marketing presence in Southeast Asia and North America. Although still in the early stages of expansion, the growth rate in these regions has exceeded our initial expectations and the market potential appears more promising than originally anticipated. This confirms our strategic direction is correct, and has positioned the company to capture future growth opportunities. I think based on these 3 areas of our outperformance and current business momentum, strongly supports a more optimistic outlook for future growth. As disclosed in our earnings release, given the rapid growth and market potential of the Pop Toy business, that concentrating all of our resources on this segment, we are currently in discussions with potential buyers regarding a group restructuring plan, which may include divesting non-Pop Toy businesses. The details will be announced promptly upon the completion of any relevant transaction. So all of the actions and plans will be conducted in accordance with the principles of business focus, enhancement of shareholder value and sustainable development of each business unit. We believe that upon completion of the restructuring we will achieve greater strategic focus, utilize resources more efficiently, see exceptional growth opportunities in the IP and Pop Toy sectors and create greater long-term value for shareholders. So in summary, I think the forecast all reflect our focus on this business sector and also our methodology to do the business and also our principle to do everything very seriously. So that figure reflects our very -- our confidence to deliver that, so that I think we will adjust the annual forecast based on new information, maybe in the next quarter, we will adjust and based on the ongoing development of the business so that we can give the market very serious and confident figures.

And I have a follow-up question on the restructuring. It seems that you are considering a sale on the education segment, right? And if so, what's the pipeline looking like?

Yes, the pipeline is very strong. So as I just mentioned in several situations to the market, we will consider the different development direction of our existing business based on the performance of the Pop Toy business and other performances of the existing business. As we announced, since we have started the process of this restructuring, that means we are very confident that of the existing Pop Toy business' performance and also the development of this performance so that we can deliver a long-term value based on the solid foundation we have set up during the past months and since the acquisition and controlling of the Pop Toy business.

Next question comes from Brenda Zhao with CICC.

I got 2 questions here. So first, relates to the Pop Toy business because we've recently seen that Pop Mart launched its Mini Labubu. So could management introduce your product strategy and whether we will introduce more product categories in the future and what's our pipeline for new categories? And my second question is related to the collaboration with Yuehua. I'm wondering whether there will be new business model and innovations. If so, could you elaborate more on that side?

Okay. Thank you for your question. I will answer in Chinese. [Foreign Language] [Interpreted] We have a clear and structured road map for IP launches. Our IP pipeline is already scheduled through the end of next year. Both our fundamental art library and product design reserves ensure a consistent and well placed rollout of our new products. In terms of the category innovation, we're also actively exploring and developing new directions. In addition to our core blind box series, some other categories will increase smaller sized line of figures and plush products, which will also include mini versions featuring more durable designs and accessible price. This will cater to wider user reverences for collecting and consumption, further expanding our market presence. Products in these new categories are set to debut in next fourth quarter. We can't wait to share them with you soon. Okay. That's the answer for the question one. And about the question two, first, in terms of the cooperation with Yuehua Entertainment, as you can see that our partnership with them is strategic initiatives build on the complementary strengths. We have established a joint venture with Yuehua Entertainment. In terms of the business model, we primarily provide joint venture with IP design, supply chain support and sales operation capabilities, while Yuehua Entertainment will leverage its extensive cross-industry resources in the film, television and celebrities field to drive promotion and strengthen IP breakout and enlarge the user engagement. In the future, we are planning to develop more IPs exclusively for the joint venture. These IPs will also incorporate Yuehua Entertainment's strength and also their capabilities. We will also continue to utilize these IPs and to promote them and operate using both companies' resources, we'll focus on IP design and product development while jointly building a close-loop ecosystem, causing the IP incubation, promotion and formalization.

That is all the time we have for Q&A. I'd like to hand the conference back over to management for any closing remarks.

Thank you, everyone, for joining our call today. If you have any further questions, please feel free to contact us. Also make a request through our IR website. We look forward to speaking with everyone in our next call. Have a good day.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

Good morning and good evening, ladies and gentlemen. Thank you for standing by, and welcome to QuantaSing's Earnings Conference Call. [Operator Instructions]. Please note that today's event is being recorded. I will now turn the conference over to Ms. Leah Guo, Investor Relations Director of the company. Please go ahead, ma'am.

Thank you. Hello, everyone, and welcome to QuantaSing's Earnings Call for the Third Quarter of Fiscal Year 2025. With us today are Mr. Peng Li, our Founder, Chairman and CEO; and Mr. Tim Xie, our CFO. Mr. Li will provide a business overview for the quarter, then Peng will discuss the financials in more detail. Following their prepared remarks, Mr. Li and Tim will be available for the Q&A session. 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. 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 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 filings with the SEC. I will now turn the call over to the CEO and Founder of QuantaSing, Mr. Li.

Okay. Good morning, everyone. Thank you for joining our 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 Letsvan on March 31. This positions us at the forefront of the high-growth Pop Toy market. I should note that our Q3 results includes only balance sheet consolidation from this acquisition. Profit consolidation began on April 1 and will be reflected in our Q4 results. Before I discuss our existing new winter, 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. In our financial literacy program, our offerings remain well received by users. We expanded our community out search -- outreach with 3 major financial anti-fraud education initiatives this quarter. These programs not only fulfill our social responsibility commitments, but also strengthen our brand presence among the general public and the broader society. Our senior focused recreation and leisure classes 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. Our second cohort of over 50 participants demonstrates the growing demand for this integrated approach. Building on this success, the sixth annual [indiscernible] 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 4 cost categories. We delivered over 60 sessions. Early presales for our 2025 tour packages generated a strong initial response. This validates strong market demand for our integrated approach. Meanwhile, our health and wellness products business through [indiscernible] continues to deliver stable performance, while serving senior customers with an expanding portfolio of tailored products and services, enhancing our revenue diversification and deepening engagement with the key cohort. 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 this preplanned 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 broad strength and product excellence rather than traffic-driven models. We have true long-term value creation comes from developing core competitions. There are in product development and brand building. This approach ensures more stable, sustainable growth. Compares to businesses, we line primarily our marketing expenditures. This disciplined approach has preserved our robust cash position. It enables us to capitalize on strategic opportunities like the Letsvan acquisition, while maintaining financial resilience. We continually evaluate all our business lines based on ROI performance and the strategic fit. This ensures optimal results allocation. This brings us to our most significant strategic move this year. Our entry into the Pop Toys market represents nature evolution of our strategic philosophy. Let me share why this market captured our attention. According to Frost & Sullivan, the global Pop Toy market is massive and is expected to experience steady growth in the future. In terms of GMV, the global toy markets grew at CAGR of 5.2% from RMB 631.2 billion in 2019 to RMB 773.1 billion in 2023, and it is expected to further grow at CAGR of 5.1% to reach [ RMB 1,993.7 ] billion in 2028. The Pop Toy 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 well 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 Letsvan as an ideal platform to enter this high-growth market. What made this partnership so compelling was how Letsvan's product development expertise perfectively complements our strengths in market operations. This creates powerful synergies. Letsvan has demonstrated excellence in IP development and design intelligence. This perfectly complements our established competencies in marketing and operations ecosystems. Private traffic moment station and the 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 Letsvan growth strategy in December 2024. Let me walk you through our 2-pillar approach to building this business. Starting with product excellence and brand development. Letsvan has built strong IP metrics. This features popular characters such as WAKUKU, ZIYULI, FUNII, FIILA and PIDOL. Among other distinctive, since our investment in December 2024, we've 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 released on March 29, achieved the second high single day sales records in our key distributor partners Beijing flagship store history. This tractional performance demonstrated both our market strategy and innovation capabilities. Built on this momentum, the launch of second-generation WAKUKU Series, the Fox and Bunny Trick or Treat collection on May 11 at a key distribution partner locations in Shanghai and Nanjing achieved record-breaking single day sell side, our flagship partner store in Shanghai. This performance highlights our products' strong customer appeal in China's premium urban markets, including major economic hubs and their rapidly developing counterparts. The subsequent online release on May 20 on leading Chinese customer platforms generated immediate purchase momentum with impressive sales figures and sustained growth in user engagement and organic content creation. WAKUKU has a huge breakout cultural momentum through its distinctive design and aesthetic appeal. The brand has earned consolidated endorsements from A-list celebrities. Today, prominent artist, actors and athletes are showing -- 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 WAKUKU, which has now surpassed the 1 billion organic impressions across digital platforms. Ziyuli another significant IP in our portfolio has made significant strides in establishing itself as a culturally relevant IP through a variety of initiatives, such as partnering with temporary luxury women's wear brand to create a limited addition within our stores. This were launched through exclusive top events at prestigious locations in Beijing and [ SKP ] in Xian. This collaboration significantly evaluated the IP's artistic credentials. Additionally, our groundbreaking blue and white Youli Ziyuli has successfully bridged the gap between heritage and modernity. We were first intangible cultural heritage with contemporary design collectables and lifestyle products that bring a traditional craftmanship to modern customers. Moving to our second pillar, distribution and market expansion. We are employment comprehensive omnichannel strategy. We are exploring innovative direct-to-customer retail formats through expansional pop-ups and I'm excited to share some progress. Our first pop-up store debuted on May 24 at Beijing Chaoyang Toy City, consistently ranked among the capital's most visited shopping destinations. This isn't just a retail place, it's an immersive space that brings together 4 key elements: Cultured IP acts, integrated art installations, exclusive product shops and social sharing environment. At the same time, we attracted semi IP showcase at Beijing Solana Lifestyle Shopping Park. As of our earnings disclosure date Letsvan has established the sections in key distribution partner stores across multiple core commercial districts nationwide. We have completed product coverage and standard like a display pallets in key cities and major commercial areas, will initially formed a national network of offline consumer touch points and brand display patterns. Simultaneously, we enhancing our online capabilities to empower Letsvan. 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. Looking beyond China, we are expanding internationally with new subsea areas Indonesia, Thailand and Malaysia. Our collaboration on June 2 with key distribution partners at their Bangkok flagship store marks 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 brand 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. I know many of you have questions about the potential risks to this long-term viability of the Pop Toy industry. Let me address the key concerns we are hearing from investors. The reason we are confident in the long-term availability of this country, industry comes down to fundamental customer behavior shifts. Pop Toys have become powerful vehicles for self-expression, particularly among millennials and Gen Z. The sector has proven resilient with key players sustaining strong growth even in economic downturns. This stems from the industry's collector-driven model and accessible pricing, which foster lasting engagement. Today's consumer is increasing emotional value over pure functionality. They are seeking comfort, identity affirmation and connection through their purchases. And the pop toys deliver exactly that. As we look to the future, Q4 will reflect full consolidation of Letsvan's operations, giving a clearer visibility into our combined performance potential. While maintaining steady operations in existing businesses, we are fairly accelerating Pop Toy business growth through dedicated teams and strategic results allocation. All of this is guided by a 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. Though we anticipate some near-term profit volatility as we continue to optimize and scale our options. Beyond all operational strategies and the market tactics what truly matters for long-term success are 2 key elements: product excellence and brand power. These are essential for fueling sustainable growth and delivering long-term value to shareholders. Thank you for supporting our transformation journey. We are excited about the road ahead, and we'll keep you updated on our progress. I will now turn it over to Tim for a detailed review of our financial results. Thank you, everyone.

Thank you. Before I go into the details of our financial results, please note that all amounts are in RMB terms, that the reporting period is the third quarter of fiscal year 2025, ending on June 30, 2025, and that in addition to GAAP measures, we'll also be discussing non-GAAP measures to provide greater clarity on the trends in our actual operations. In March, we completed the acquisition of our 61% equity stake in Shenzhen Yiqi Culture, also known as Letsvan. For total cash consideration of RMB 235 million through a multistep transaction. We began consolidating Letsvan results into our financial starting April 1, and then assets and the liabilities have been included at fair value in our consolidated balance sheet as of March 31. Please note that the income statement discussion that follows does not include Letsvan's operating results for the quarter. For the third quarter of fiscal year 2025, our total revenues were RMB 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 RMB 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 RMB 515.6 million, representing a decline of 47.5% year-over-year. We view this as a natural progression during strategic transformation of our product mix. Revenues from enterprise services were RMB 48.1 million, a decline of 26.1% from a year ago and representing 8.4% of total revenues. The decline was mainly due to fewer marketing services for enterprise customers. Revenues from our customer -- consumer business were RMB 48.7 million, down slightly from RMB 49.4 million a year ago. The slight change was primarily attributable to the decline in Beijing's revenue, partially offset by a modest increase in wellness products revenue. And finally, revenues from Others was RMB 6.7 million, up significantly from RMB 3 million in the same period last year, primarily due to revenue from the company's newly initiated business. Gross profit for the quarter was RMB 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. Total operating expenses were RMB 441.1 million, a decrease of 45.2% from RMB 804.9 million in the same period of last year. To break this down, sales and marketing expenses decreased by 45.8% to RMB 395.2 million, primarily due to reductions in marketing and promotion expenses, labor outsourcing costs and staff costs. As a percentage of total revenue, non-GAAP sales and marketing expenses, which exclude share-based compensation, decreased to 69.1% from 76.9% a year ago. Research and development expenses declined by 46.2% to RMB 20.9 million, reflecting our focused approach to product development and decreased the 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. General and administrative expenses decreased by 31.2% to RMB 25 million, mainly due to lower staff costs and subsequent decline in share-based compensation expenses, as a percentage of total revenue. Non-GAAP G&A expenses, which exclude share-based compensation, is 3.9% compared to 3% a year ago. We achieved a net income of RMB 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 RMB 37.8 million, representing an adjusted net margin of 6.6%. Basic and diluted net income per share were both RMB 0.25 during the quarter. Adjusted basic and diluted net income per share were both RMB 0.23 during the quarter. Regarding our balance sheet position. As of March 31, 2025, we held RMB 1,134.9 million in cash and cash equivalents, restricted cash and short-term investments, representing an increase of RMB 108.6 million from RMB 1,022.3 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. As we move into the next quarter, our financials will provide greater visibility into the results of our strategic transformation as we'll be consolidating Letsvan's operating results for a full quarter period. Our strategic resource will allocation away from traffic-driven businesses and the improved operational focus give us confidence in our ability to execute. We remain committed to maintain our robust financial position and transparent communication with our shareholders as we progress in our strategic evolution. That concludes my prepared remarks. Operator, let's open up the call for questions. Thank you.

[Operator Instructions]. Our first question today comes from Michael Kim with Zacks.

Great. First, just curious, if you could speak a bit more to the strategic vision for Letsvan and just how you plan to leverage the company's marketing expertise to enhance growth going forward?

Yes, sure. Thank you for your question. I will answer in Chinese. [Foreign Language].

[Interpreted] Since its launch in 2020, Letsvan has built its presence across global artist discovery, IP incubation and management, copyright commercialization, promising 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. [Foreign Language] [Interpreted] Leverage investments established IP portfolio and proven operational expertise in Pop Toys, QuantaSing will drive Letsvan's omnichannel expansion. We will share our fundamental capabilities, particularly in our 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 experiences. [Foreign Language] [Interpreted] This collaboration represents modern resource consolidation is powered by the QuantaSing's 2 core competencies honed in adult online learning that translate 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 integrating product development, operations and marketing capabilities, we're confident that we will successfully upgrade its brand, while expanding its business in the Pop Toy market. [Foreign Language] [Interpreted] 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 identified emerging cultural trends, execute targeted creation development and implement rapid market validation. This data-informed approach has already used 10 distinctive IP assets as of March 2025. [Foreign Language] [Interpreted] Second is holistic product innovation strategy. We merge cutting-edge trend sensibilities with artistic integrity, translating nuance to consumer insights into market-defining IP products, fortifying the cornerstone of our enduring IP ecosystem. Third is our IP influence expansion initiative. We'll run a smart social network, connect online-offline channel smoothly and launch creative campaigns creating a complete promotion route that keeps our IP pop and trending. [Foreign Language] [Interpreted] 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 omnichannel growth strategy. We are dividend tied with trusted distributors, while rolling out our own direct sales channel both online stores and physical retail stores to build a complete flexible sales network. Our IP Pop Toys business runs as 1 complete system, we always put products first, constantly improving how we work to quickly boost Letsvan's performance and bringing fresh energy into the industry.

Okay, that's all for the questions. Thank you.

Great. That's very helpful. And then just maybe to follow-up, any sense of what the current sales mix for Letsvan looks like just in terms of products, IP, channels or maybe geographies?

Michael, I'll take your question. Yes, that's a good question. I think just as mentioned by Matt, our Chairman and CEO, just now, as of end of this quarter, Letsvan has already created 10 original IPs. Since our investment in Letsvan in December last year, we are focusing this year on building 2 to 3 standout IP-based Pop Toy products to establish our brand in the market. We are growing our IP portfolio through continuous in-house development and licensing, third-party IPs constantly upgrading both our product quality and business scale. Letsvan has strong IP development capabilities and well established partnerships with major Pop Toy retailers. 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 should we boost both brand recognition and sales performance this year. And also, we are rapidly expanding our pop toy IP lineup, while building our own retail network, both online and offline. Our successful pop-up store at Beijing Chaoyang Toy City that's 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. Concurrently, we are optimizing our omnichannel online operations by integrating social media traffic, e-commerce platform resources and proprietary online channels to create a seamless integrated online to off-line marketing ecosystem. From a regional perspective, currently, Mainland China remains our primary revenue source. We are -- 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 mix -- sales mix to become more diverse in the coming years. Thank you.

The next question comes from Alex Cai with Citibank.

I have 2 questions. Specifically, first what revenue contribution do you expect from Letsvan in Q4? And second, given the decline in education revenues how will you balance the traffic allocation between the lines of business and new initiatives? And will you continue reducing education marketing spend lending to [indiscernible] expansion? And finally, 1 thing expect overall revenue to return to growth in the fiscal year 2026?

Thank you, Alex. I will take your question. Yes, it's very, very important. So as we have just disclosed the profit and loss statement of Letsvan business will be merged and consolidating to 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 1. And we will disclose the specific information in a timely manner. Since investing in Letsvan, based on its excellent product strength, we'll continue to focus on operating WAKUKU and 2 other core IPs, as I just mentioned in the last question. Currently, the overseas -- the overall sales process of Letsvan 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 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 the 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 operations with Letsvan. 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 in fiscal year 2025 Q4. We will continue to optimize the operating system of the Pop Toy business, and we 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 view 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 maintained stable profit performance and a solid balance sheet. Next, we will continue to evaluate the ROI [indiscernible] 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 Letsvan's Pop Toy business, it has a great growth potential and the business model. And it seems that the fund operating resources and foundation we have accumulated are sufficient to support the development of our -- of this business. Maybe we will disclose at a separate business segment in the next quarter. And this business, we see very independently, we see that as a very bright future in terms of both the revenue and the midterm and long-term bottom line. We will -- for the revenue recovery or maybe in the next 2 quarters or next year, we will still independently evaluate the optimization of business models and the revenue growth arrangements for different types of businesses. 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'll be seeing in the relevant figures in the subsequent quarterly disclosures. 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 [ EUE ] performance and good user feedback, such kind of product-driven based KPIs. Yes, so that's my answer, yes. I hope that helps. Thank you.

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 also made a request through our IR website. We look forward to speaking with everyone in our next call. Have a good day.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.