BEIJING, Aug. 23, 2024 /PRNewswire/ — Keep Inc. (“Keep” or the “Company”), the largest online fitness platform in China, today announced its unaudited interim results for the six months ended June 30, 2024.

2024 Interim Results Highlights

Total revenues were RMB1,037.3 million for the six months ended June 30, 2024, a 5.4% increase from RMB984.7 million for the six months ended June 30, 2023.Gross profit was RMB477.3 million for the six months ended June 30, 2024, a 12.7% increase from RMB423.7 million for the six months ended June 30, 2023.Gross profit margin was 46.0% for the six months ended June 30, 2024, compared to 43.0% for the six months ended June 30, 2023.Adjusted net loss (non-IFRS measure) was RMB160.7 million, compared to RMB223.1 million for the six months ended June 30, 2023.Adjusted net loss margin narrowed to 15.5% for the six months ended June 30, 2024, compared with 22.7% for the six months ended June 30, 2023.

2024 Interim Operational Highlights

Mr. Wang Ning, Chief Executive Officer of Keep Inc., commented, “We are pleased of our solid performance for the first half of 2024, which is a result of our proactive efforts in propelling our corporate strategies and tactics to meet the various needs of our consumers and communities through the new release of App 8.0 version, expanding portfolio of services and benefits, integrating marketing campaign across online fitness services, smart fitness devices and complementary products, as well as enhancing user trust and consumer sentiment in the Keep brand. We are on track to healthy recovery and are committed to sustaining high-quality development.

Total revenues reached RMB1,037 million, up 5.4% year-over-year, driven by the increased resilience and scale of our monetization initiatives across self-branded fitness products, online membership subscriptions, and advertising sales. By prudently reducing costs and increasing efficiency, our gross profit margin expanded to 46.0% while adjusted net loss considerably narrowed by 28.0% year-over-year.  More importantly, we continue to see elevated user experience and activity level as our membership penetration rate increased to 11.1% in the first half of 2024, up from 10.2% in the first half of 2023. Looking ahead, we will continue to implement our strategic priorities of enhancing overall offerings of online content, outdoor categories, AI-centric solution, as well as evaluating potential synergistic cooperation throughout our value chain, driving sustained momentum across our ecosystem for our long-term growth.”

2024 Interim Financial Results

Revenues

Total revenues were RMB1,037.3 million for the six months ended June 30, 2024, representing a 5.4% increase from RMB984.7 million for the six months ended June 30, 2023, due primarily to increased revenues from self-branded fitness products and advertising and others.

Revenues from self-branded fitness products were RMB501.5 million for the six months ended June 30, 2024, representing a 7.5% increase from RMB466.4 million for the six months ended June 30, 2023, mainly attributable to the increase in wholesale channels sales, as well as the increased sales of fitness gear and apparel products.

Revenues from online membership and paid content were RMB437.0 million for the six months ended June 30, 2024, representing a 2.6% decrease from RMB448.9 million for the six months ended June 30, 2023, primarily due to a decrease in revenues from virtual sports events, which was partially offset by the increased revenues from online membership. 

Revenues from advertising and others were RMB98.9 million for the six months ended June 30, 2024, representing a substantial increase of 42.4% from RMB69.4 million for the six months ended June 30, 2023, primarily attributable to online to offline integrated advertising services.

Cost of revenues

Cost of revenues was RMB560.0 million for the six months ended June 30, 2024, representing a decrease of 0.2% from RMB561.0 million for the six months ended June 30, 2023, primary due to a decrease in cost of online membership and paid content, which was partially offset by an increase in cost of advertising and others.

Cost of self-branded fitness products was RMB343.3 million for the six months ended June 30, 2024, representing a 2.1% increase from RMB336.3 million for the six months ended June 30, 2023, mainly attributable to an increase in sales of self-branded fitness products. Due to economies of scale, the growth rate of costs is lower than the growth rate of revenues.

Cost of online membership and paid content was RMB140.4 million for the six months ended June 30, 2024, representing a 21.8% decrease from RMB179.4 million for the six months ended June 30, 2023. The decrease was mainly attributable to decreases of (i) RMB14.4 million in costs associated with virtual sports events; (ii) RMB9.8 million in content related costs as the Company optimized IP costs associated with third party influencer partnerships; and (iii) RMB5.4 million in employee benefit costs (including related share-based compensation expenses) mainly due to the fluctuation of share-based compensation expenses.

Cost of advertising and others was RMB76.4 million for the six months ended June 30, 2024, representing a 68.5% increase from RMB45.3 million for the six months ended June 30, 2023, mainly attributable to an increase of RMB23.9 million in advertising production costs associated with the expanded advertising services the Company offers and relatively higher cost of certain offline advertising activities.

Gross profit and gross profit margin

Gross profit was RMB477.3 million for the six months ended June 30, 2024, representing a 12.7% increase from RMB423.7 million for the six months ended June 30, 2023.

Gross profit margin was 46.0% for the six months ended June 30, 2024, representing a 3.0 percentage points increase from 43.0% for the six months ended June 30, 2023, mainly attributable to an increase in gross profit margin from online membership and paid content and self-branded fitness products.

Gross profit of self-branded fitness products increased by 21.6% from RMB130.1 million for the six months ended June 30, 2023 to RMB158.2 million for the six months ended June 30, 2024, mainly attributable to the increase in the sales of self-branded fitness products and improvement in gross profit margin.

Gross profit of online membership and paid content increased by 10.1% from RMB269.4 million for the six months ended June 30, 2023 to RMB296.6 million for the six months ended June 30, 2024, as the Company generated higher sales from membership subscription with optimized content related cost.

Gross profit of advertising and others decreased by 6.7% from RMB24.1 million for the six months ended June 30, 2023 to RMB22.5 million for the six months ended June 30, 2024, primarily due to the relatively higher cost of certain offline advertising activities.

Fulfillment expenses

Fulfillment expenses were RMB61.9 million for the six months ended June 30, 2024, representing a 25.8% decrease from RMB83.4 million for the six months ended June 30, 2023, primarily due to optimized warehousing, packaging and delivery expenses.

Selling and marketing expenses

Selling and marketing expenses were RMB323.4 million for the six months ended June 30, 2024, representing a 25.8% increase from RMB257.1 million for the six months ended June 30, 2023, primarily due to increase in promotional and advertising expenses associated with more marketing activities for brand promotion and user acquisition.

Administrative expenses

Administrative expenses were RMB90.5 million for the six months ended June 30, 2024, representing a 19.3% decrease from RMB112.0 million for the six months ended June 30, 2023, primarily attributable to decreases of (i) RMB14.6 million in expected credit loss in accounts receivables because the Company optimized the receivables management measures; and (ii) RMB7.2 million in administrative personnel costs (including related share-based compensation expenses), mainly due to the fluctuation of share-based compensation expenses.

Research and development expenses

Research and development expenses were RMB195.7 million for the six months ended June 30, 2024, representing a 19.6% decrease from RMB243.4 million for the six months ended June 30, 2023, primarily attributable to decreases of (i) RMB39.6 million in research and development personnel costs (including related share-based compensation expenses); (ii) RMB4.6 million in cloud computing service fees; and (iii) RMB2.1 million in outsourcing and other labor costs.

Fair value changes of convertible redeemable preferred shares

Fair value changes of convertible redeemable preferred shares was RMB1.4 billion for the six months ended June 30, 2023. The change in the fair value of convertible redeemable preferred shares was primarily attributable to the changes in the valuation of the Company. The Company did not record any further fair value changes of the convertible redeemable preferred shares following the listing of the shares of the Company on the Main Board of the Stock Exchange (the “Listing”) as preferred shares liabilities were redesignated and reclassified from liabilities to equity after automatically converting into ordinary shares upon the Listing.

(Loss)/profit

Net loss was RMB163.4 million for the six months ended 2024, compared with a net profit of RMB1.2 billion for the six months ended June 30, 2023. Net profit for the six months ended June 30, 2023 was primarily due to fair value changes of convertible redeemable preferred shares.

Adjusted net loss (non-IFRS measure)

Adjusted net loss (non-IFRS measure) was RMB160.7 million for the six months ended 2024, compared to RMB223.1 million for the six months ended June 30, 2023.

Liquidity and capital resource

We had cash and cash equivalents of RMB1.4 billion as of June 30, 2024, as compared to RMB1.6 billion as of December 31, 2023. The decrease was primarily due to the use of cash for operating and financing activities. Most of the Company’s cash and cash equivalents were denominated in Renminbi while most of the time deposits were denominated in U.S. dollars.

Share repurchase programs

Under the HK$16 million and HK$100 million Share Repurchase Programs announced on February 14, 2024 and May 20, 2024, respectively, as of June 30, 2024, the Company repurchased a total of 5,256,200 shares of the Company on the Stock Exchange at the aggregate consideration of HK$35.49 million before expenses.

Outlook

2024 will mark a year of comprehensive upgrades for Keep platform with continued execution of the strategies. The Company will continue to promote synchronized improvements in scale and efficiency. While overall consumer confidence is gradually recovering, the Company recognizes that both opportunities and challenges exist. Keep will continue to invest in several key areas: (i) enhance overall online offerings; (ii) further explore the outdoor category by enriching member privileges, leveraging the value of fitness data, and actively expanding its offline presence; (iii) expand AI-driven overseas fitness app portfolio to deliver innovative fitness experiences; and (iv) promote the growth of self-branded fitness products. In addition, Keep will continue to actively seek collaboration opportunities along the industry chain to increase commercial value across our ecosystem, ensuring sustainable long-term development.

Conference Call

The Company’s management will host an earnings conference call at 8:00 p.m. Beijing Time on August 23, 2024.

Participants who wish to join the call should follow the following method:

1)  Please click on the call link and complete the online registration form. Kindly register at least one working day before the event.
https://register.vevent.com/register/BI0e1af0f1c86f4526ac796550f5b10a03

2)  Upon registering you will receive the dial-in info and a unique PIN to join the call as well as an email confirmation with the details.

3)  Select a method for joining the call:

Dial-In: A dial in number and unique PIN are displayed to connect directly from your phone.Call Me: Enter your phone number and click “Call Me” for an immediate callback from the system. The call will come from a US number, and this function is only applicable for participants outside China.

4)  Please dial in 15 minutes before the call is scheduled to begin and provide the personal PIN to join the call.

Additionally, a live and archived webcast of the conference call will be available at https://ir.keep.com/en/news_events.php.

About Keep Inc.

Keep Inc. (HKEX Stock Code: 3650) is the largest online fitness platform in China in terms of MAUs and number of workout sessions completed by users in 2022, according to CIC. Keep offers a comprehensive fitness solution to help users achieve their fitness goals. On the Keep platform, extensive, professional, and premium fitness content with diverse activities and services are offered to encourage users to engage in daily exercise. Keep platform leverages AI technology to provide personalized workout programs incorporating recorded courses and interactive live streaming classes, dynamically customized to each user’s athletic levels, fitness goals, daily workout patterns and diet. Keep’s services seamlessly connect the physical and digital realms, spanning smart devices, workout equipment, athletic apparel and food to provide an immersive fitness experience.

For more information on Keep Inc., visit https://keep.com/.

Forward-looking Statements

This press release contains forward-looking statements relating to the business outlook, estimates of financial performance, forecast business plans and growth strategies of the Company. These forward-looking statements are based on information currently available to the Company and are stated herein on the basis of the outlook at the time of this press release. They are based on certain expectations, assumptions and premises, some of which are subjective or beyond our control. These forward-looking statements may prove to be incorrect and may not be realised in the future. Underlying these forward-looking statements are a lot of risks and uncertainties. In light of the risks and uncertainties, the inclusion of forward-looking statements in this press release should not be regarded as representations by the board of directors of the Company or the Company that the plans and objectives will be achieved, and investors should not place undue reliance on such statements.

Non-IFRS Measures

To supplement our consolidated financial statements, which are presented in accordance with IFRS Accounting Standards as issued by the IASB, we also use adjusted net loss as an additional financial measure, which is not required by, or presented in accordance with, IFRS Accounting Standards.

The Company’s management believe adjusted net loss provides useful information to investors and others in understanding and evaluating our consolidated results of operations in the same manner as they help our management. However, our presentation of adjusted net loss may not be comparable to similarly titled measures presented by other companies. The use of adjusted net loss has limitations as an analytical tool, and you should not consider it in isolation from, or as a substitute for an analysis of, our results of operations or financial condition as reported under IFRS Accounting Standards.

The following table reconciles the adjusted net loss for the periods presented to the most directly comparable financial measure calculated and presented in accordance with IFRS Accounting Standards, which is (loss)/profit for the six months ended June 30, 2024 and 2023:

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SOURCE Keep Inc.