Summary of Keep's Conference Call Company Overview - **Company**: Keep - **Industry**: Fitness and Health Technology Key Points and Arguments Financial Performance - In the first half of 2025, Keep achieved an adjusted net profit of over 10 million RMB, with a profit margin of approximately 1% [2][5][18] - The profit margin is expected to increase to 3-4% in the second half of 2025, with an optimistic annual profit target [2][5][18] - Despite a 20% decline in consumer product revenue in the first half, gross margins improved significantly, with a narrowing decline to single digits during the Double Eleven shopping festival [5][6] - The company aims for a revenue rebound in 2026, targeting a reasonable profit margin of 4-5% for sustainable profitability and market investment [2][5][6] User Engagement and Growth - Monthly Active Users (MAU) were approximately 23 million in the first half of 2025, expected to stabilize between 23 million and 25 million in the second half [2][6] - Membership penetration slightly increased to around 13%, with improvements in user activity frequency and duration compared to the previous year [2][6] AI Integration and Product Development - Keep is focusing on AI-driven enhancements, particularly in the online business and fitness coaching [3][4] - The AI coach module has shown better performance than average users, with a 30% increase in click-through rates after interface optimization [7][8] - Future plans include expanding AI functionalities to include voice and video interactions, enhancing user experience [10][11] Strategic Partnerships - Collaboration with Nike to offer professional running coaches, with potential commercialization pricing set at 299 RMB per quarter, currently offered at a promotional price of 200 RMB [8][9] - The integration of AI coaching with membership services allows unlimited access for members, while regular users face limitations [4] Market Trends and Challenges - The medal event business is projected to generate around 200 million RMB in 2025, a significant decline from previous years due to reduced IP event scheduling and market saturation [16][17] - The company is exploring new IPs and product forms to attract younger demographics, despite a cautious outlook on the medal event business [17] Marketing and Brand Strategy - Marketing expenses decreased significantly in the first half of 2025, attributed to reduced customer acquisition costs and promotional spending [14] - The appointment of brand ambassador Sun Yingsha has led to increased engagement, including a themed online medal event attracting over 100,000 participants [14][15] Future Outlook - Keep anticipates a net profit margin of 5% in 2026, driven by stable gross margins and revenue growth [18][19] - AI technology is expected to enhance profitability by increasing membership scale and revenue, despite some cost increases associated with new applications [19] Additional Important Insights - The company is actively refining its product offerings, focusing on high-margin consumer goods such as equipment and apparel [5][6][12][13] - Keep's apparel sales strategy emphasizes major e-commerce platforms, with a goal of achieving positive growth in 2026 after a projected decline in 2025 [13]