QuantaSing's Q4 2025 Earnings Call: Contradictions Emerge on Pop Toy Growth, IP Strategy with Juehua, E-Commerce Shifts, and Strategic Priorities

The above is the analysis of the conflicting points in this earnings call

Date of Call: None provided

Financials Results

• Revenue: RMB 617.8 million; property business RMB 65.8 million (10.6% of total); no total prior-year comparison disclosed.
• EPS: RMB 0.65 per diluted share (RMB 0.67 basic); no prior-year comparison disclosed.
• Gross Margin: 75.7%, compared to 85.9% in the prior-year quarter.

Guidance:

• Property business revenue expected at RMB 100–110 million in Q1 FY2026.
• Property business revenue expected at RMB 750–800 million for full FY2026.
• Plan to open 3–5 flagship stores by year-end in first-tier Chinese cities.
• Continued international expansion (Southeast Asia and North America) via TikTok/Shopee online stores and wholesale in 20+ countries.
• Considering divestiture of non-property businesses; timing/terms to be announced upon finalization.

Business Commentary:

* ** Property Business Growth and Restructuring:** - QuantaSing Group's property business contributed RMB 65.8 million in revenue for Q4, marking a significant core growth engine for the company. - The strategic restructuring to focus solely on the property business was driven by the need to concentrate resources for maximum impact and capitalize on the growing market demand for collectible and lifestyle products.

• Financial Performance and Cash Position:
• The company reported total revenue of RMB 617.8 million for Q4, with net income of RMB 108 million, achieving a strong net profit margin of 17.5%.

• QuantaSing held over RMB 1 billion in cash and cash equivalents, indicating a strong financial position and enabling strategic investments in the property business.

• Last One Acquisition and IP Strategy:

• The full acquisition of Last One for a 100% merger was completed, with RMB 1 billion as the upper limit of the transaction value.

• The acquisition was motivated by the synergy between QuantaSing's and Last One's property businesses and the potential for enhanced IP development and market penetration.

• Channel Expansion and Market Reach:

• QuantaSing's online GMV exceeded RMB 18 million in August, with significant offline presence through over 10,000 retail stores.

• The expansion into global markets such as Southeast Asia and North America, along with strategic partnerships and flagship store openings, is driving international growth and enhanced brand visibility.

• Cost Management and Resource Focus:

• Sales and marketing expenses decreased by 49.3% to $294.1 million, primarily due to reduced marketing and promotion costs and lower labor outsourcing.
• The company focused resources on the property business, enabling improved cost management and strategic allocation of resources.

Sentiment Analysis:

• Management reported net income of RMB 108 million with a 17.5% net margin and a sharp drop in sales and marketing expense ratio to 47.6%. Cash and investments exceeded RMB 1.0 billion. Property business momentum was strong (RMB 65.8 million revenue; rapid product sell-through), and guidance implies further growth (RMB 100–110 million in Q1 FY2026; RMB 750–800 million in FY2026). They also plan to divest non-property assets to focus on higher-growth property.

Q&A:

• Question from Alice Kai (City): What is the recent revenue run-rate for July–September, and can you quantify the confirmed order backlog in RMB terms?
  Response: Demand is outpacing supply with explosive growth; capacity is ~20x January levels, Cinnodle sold 300k units, and less than 50% of ordered products have been delivered—indicating a large pipeline and strong near-term visibility.

• Question from Alice Kai (City): Please detail the Last One consideration structure—tranches, vesting, and any performance ties; will later tranches be adjusted if targets aren’t met?
  Response: Founder chose shares; ~60% paid in newly issued shares, ~40% as long-term incentives vesting over ~8 years; other shareholders were bought out for cash at ≤RMB 1 billion; more details to come post-settlement.

• Question from Alice Kai (City): Given Q4 property revenue and guidance (RMB 100–110m Q1; ~RMB 750m FY26), are targets conservative, and when could property surpass education?
  Response: Guidance is prudent; performance is exceeding earlier expectations, driven by strong IPs (Makuku, Julie, Cinnodle), channel expansion (3–5 flagship stores by year-end), and overseas growth; forecasts may be raised as data updates.

• Question from Alice Kai (City): On restructuring, are you selling the education segment, and what does the pipeline look like?
  Response: Yes, they’re pursuing divestiture; the pipeline is very strong, reflecting confidence in property and a focus on maximizing shareholder value.

• Question from Brenda Zhao (CICC): What is the pop-toy product strategy and pipeline for new categories; and how will the Juehua Entertainment collaboration work?
  Response: IP pipeline is scheduled through next year; expanding into smaller figures and plush (including mini) at accessible prices; JV with Juehua pairs QS’s IP/design/supply-chain/sales with Juehua’s celebrity/media promotion, with exclusive IPs planned.