Here Group Ltd. Q1 FY2025 earnings call

• The company is reshaping to serve China's silver economy, shifting focus from broad market reach to building relationships with silver economy customers.
• This quarter's revenue reflects strategic transition, with an anticipated decline as moving towards silver economy opportunities while maintaining healthy profitability.
• Evolving revenue model by expanding services beyond online learning to include health, wellness, and personal enrichment products, e.g., food and medicine product lab integrated with online learning platform.
• Strategically transforming business mix to focus on silver economy, reducing non-silver economy related businesses and exploring offline service centers.
• Maintaining focus on sustainable profitability, with disciplined cost management, including decreased sales and marketing, R&D, and general and administrative expenses.

In the first quarter of fiscal year 2025, total revenues were RMB810.4 million, a 6.8% year-over-year decrease. Individual online learning services generated revenues of RMB709 million, accounting for 87.5% of total revenues. Revenues from enterprise services were RMB47.8 million, representing 5.9% of total revenues. Gross profit for the quarter was RMB676 million with a gross margin of 83.4%. Total operating expenses were RMB573.7 million, a decrease of 18.8% from the same period last year. Net income was RMB80.7 million, with a net margin of 10%. Cash and cash equivalents, restricted cash, and short-term investments totaled RMB1,193.7 million as of September 30, 2024, up from RMB1026.3 million at the end of the previous year.

• Discontinued providing specific guidance during the transition period but remains committed to transparent communication.
• Strengthened cash position and healthy adjusted net margin provide a solid foundation during the transition.
• Disciplined cost management and improved operational metrics give confidence in execution capability.

Q: How is the company thinking about customer acquisition cost to lifetime value as it transitions the business?

A: Tim Xie mentioned they are actively optimizing CAC and LTV metrics. Leveraging existing user base reduces reliance on expensive acquisition methods. Deepening engagement through targeted marketing and personalized experiences, combined with online-offline operations, is expected to improve acquisition efficiency and lower CAC, while private label offerings create opportunities for rising LTVs.

Q: How is the company envisioning growth in e-commerce and private label strategy?

A: Peng Li stated the live streaming e-commerce is the start of the private label Chinese products business. While growth may not be rapid initially, they have a solid foundation with 134 million registered users, over 30 courses, and 98.5% customer satisfaction rate. Focus is on enhancing product quality and operational capabilities across online and offline to ensure long-term sustainable growth, having already achieved RMB15 million GMV milestone in private label strategy this quarter.