Core Insights - The 23rd CTE China Toy Expo &潮玩展, 18th CLE China Licensing Expo, CKE China Baby Products Expo, and CPE China Early Education Expo opened in Shanghai, showcasing a significant international presence and innovation in the toy and baby products industry [1][4]. Group 1: Event Overview - The event spans three days and covers an exhibition area of 230,000 square meters, featuring 2,629 exhibitors from 41 countries and regions, with 5,426 brands represented [1]. - The theme of the expo is "Sharing Cross-Border Resources, Leading Innovation Trends" [1]. Group 2: International Participation - There has been a substantial increase in the number of international exhibitors, with a 65% year-on-year growth in the CLE China Licensing Expo [4]. - The number of overseas exhibition groups reached a record high, increasing by 22.2% [4]. Group 3: Product Innovations - AI smart toys, which incorporate emotional computing and large language models, emerged as a highlight of the China Toy Expo &潮玩展 [4]. - Innovations in baby products include smart child safety seats with intelligent stop and adjustment features, automatic folding strollers, and smart cribs that monitor sleep and provide soothing systems [4]. Group 4: Professional Activities - A total of 276 professional activities will be held during the expo, covering brand licensing, toys, baby products, and early education, with multiple international conferences gathering industry elites to discuss development strategies [4]. Group 5: Economic Impact - The expo is part of the "Shanghai Summer" international consumption season, enhancing the spillover effects of the exhibition economy in the Pudong area through various IP-themed events and activities [5].

Financial Data and Key Metrics Changes - The company reported a positive adjusted EBITDA of $2.4 million for Q1 2025, marking its first positive EBITDA quarter since 2023 [21][22] - There were $1 million in personnel-related costs in Q1 that have been eliminated, which would have resulted in a positive adjusted EBITDA of $3.4 million [22] Business Line Data and Key Metrics Changes - Licensing revenue increased significantly by 175% year-over-year, and even without the ByBorg deal, it was still up over 50% [33] - The ByBorg deal, effective January 1, contributes $5 million per quarter, with the first two payments already made [33][34] Market Data and Key Metrics Changes - The company is seeing improvements in its China licensing business despite a challenging environment due to tariffs, indicating potential for continued growth [34] Company Strategy and Development Direction - The company is focusing on an asset-light model and aims to reduce overhead while increasing EBITDA [21][28] - There are plans to develop new licensing deals in gaming and hospitality, with potential projects like a Playboy Club expected to take one to two years for physical build-out [23][28] - The company is also exploring opportunities in mainstream content, including TV shows and paid voting campaigns, which could generate additional revenue streams [25][27] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the growth opportunities in the next few years, particularly in gaming and content licensing [28] - The company is preparing for potential revenue recognition from multi-year deals in the second half of the year [24][28] Other Important Information - The company plans to release an additional magazine issue this year, with hopes to ramp up to four issues next year, which could create ancillary revenue streams [25][28] - A second equity investment vote has been moved to the annual meeting scheduled for June 16 [17] Q&A Session Summary Question: Expectations for Honeybird debt and gross margin changes - Management indicated that they are ahead of plan for the second quarter and expect an easy comparable from last year [8] - The near-term gross margin is expected to remain stable, with a $1 million impact from tariffs, which has been mitigated by a 10% price increase [9][11] Question: Plans for new product development with ByBorg - Management confirmed ongoing collaboration with ByBorg and a minimum guarantee of $20 million per year, with a $5 million payment scheduled for July 1 [14][15] Question: Potential in other licensing categories - Management highlighted enthusiasm for new licensing opportunities in clubs and hospitality, with a focus on an asset-light model and positive EBITDA [21][28]