Keep (3650) H2 2024 earnings summary

Executive summary

• FY2024 revenue fell 3.4% YoY to RMB2,065.7m; gross margin rose to 46.7%, while the IFRS net loss was RMB534.7m and adjusted net loss widened to RMB469.6m.

• Spending on AI-enabled products, wearables, brand-building and organizational changes weighed on adjusted results; the strategic shift toward a data-driven fitness platform is intended to support longer-term competitiveness.

Financial highlights

• Revenue was RMB2,065.7m, down 3.4% YoY; gross profit was RMB965.4m, up 0.4%, and cost of revenue declined 6.5% to RMB1,100.3m.

• Operating loss widened to RMB575.2m from RMB375.6m; FY2024 net loss was RMB534.7m versus 2023 profit of RMB1,105.9m, when preferred-share fair-value gains materially lifted results.

• Adjusted net loss was RMB469.6m versus RMB295.4m in 2023; adjusted figures exclude share-based compensation and preferred-share fair-value changes.

• Basic and diluted loss per share were both RMB1.15; 2023 basic and diluted EPS were RMB3.78 and RMB3.50, respectively.

• Selling and marketing costs rose 33.1% to RMB757.9m, while fulfillment costs fell 21.2% to RMB122.6m and R&D costs fell 2.4% to RMB439.0m.

Outlook and guidance

• Targeting breakeven in 2025 through business optimization, operating expense reductions using technology including AI, improved supply-chain management and higher workforce productivity.

• 2025 priorities include expanding AI-powered online offerings and membership monetization, broadening wearables, gear and apparel, and deepening user engagement across more activities and segments.

• Management expects strategic initiatives to begin contributing positively from 2025, while noting they may temporarily affect near-term performance.