Core Viewpoint - Keep has turned a profit in H1 2025 after adjustments, with successful progress in AI coaching and a focus on expanding its apparel category [1] Financial Performance - Keep's adjusted net profit margin is expected to improve to over 5% as the company resumes reasonable expense investments in H2 2025 [1] - The company anticipates a return to revenue growth in H2 2025, driven by enhancements in AI features and the apparel product line [1] AI Coaching Development - Keep's AI coaching has shown initial success, with July DAU reaching over 150,000 and generating over 1 million in revenue [1] - By the end of the year, DAU for the AI coach is projected to exceed 1 million as more features are rolled out [1] - Management estimates that the AI coach could contribute an additional revenue of 230 million yuan for every 1 million monthly active users next year [1] Future Outlook - The report suggests that with the support of AI and apparel categories, Keep's revenue is expected to stabilize and rebound in H2 2025, with greater performance elasticity anticipated next year [1] - Adjusted net profit projections for Keep are 70 million yuan in 2025 and 170 million yuan in 2026, maintaining a recommended rating [1]

Core Insights - Keep has achieved profitability for the first time in the first half of 2025, driven by a strategic shift to an AI-focused business model [1] - The company has successfully restructured its AI infrastructure and optimized its product offerings, leading to an adjusted net profit of RMB 0.10 billion and a gross margin increase of 6.2 percentage points to 52.2% [1] - The fitness industry in China is experiencing rapid growth, with online and AI-driven solutions expected to unlock new commercial opportunities [1] Group 1 - Keep's "All in AI" strategy integrates hardware and software, creating a synergistic ecosystem that enhances user experience and drives sales [2] - The company aims to improve user satisfaction and average revenue per user (ARPU) through a diverse product matrix centered around AI coaching [2] - Keep's current market valuation is considered low compared to mainstream SaaS products, with significant upside potential as new AI coaching subscriptions are expected to generate over RMB 200 million in annual recurring revenue (ARR) by 2026 [2]

Core Insights - Keep reported a revenue of 822 million RMB for the first half of 2025, with a non-IFRS adjusted net profit of 10.35 million RMB, and a gross profit of 429 million RMB, resulting in a gross margin increase from 46.0% to 52.2% compared to the same period last year [1][2] Financial Performance - The revenue of 822 million RMB represents a year-on-year contraction, primarily due to the company's strategic transformation focusing on AI and the optimization of product structure [2] - The self-owned brand sports products generated approximately 400 million RMB in revenue, while online membership and paid content revenue amounted to 337 million RMB, and advertising and other income was 88 million RMB [2] - The gross margin for the self-owned brand sports products improved by 3.3 percentage points to 34.8%, confirming the effectiveness of the category focus and channel efficiency strategies [2] - The adjusted net profit of 10.35 million RMB marks a turnaround from a net loss of 167 million RMB in the same period last year, with an adjusted net profit margin of 1.3% compared to a net loss margin of 15.5% last year [2] User Metrics - The average monthly active users and average monthly subscription members were 22.49 million and 2.8 million, respectively, maintaining stability [3] - Membership penetration rate increased to 12.4% from 11.1% in the same period last year [3] - The average revenue per active user per month rose to 6.1 RMB, a 4.5% increase from 5.8 RMB in the previous year [3] Strategic Initiatives - In the first half of 2025, Keep initiated a strategic transformation from a content-driven platform to an AI-enabled, data-driven fitness intelligence service [3] - Key progress included the successful deployment of an AI infrastructure reconstruction system, reorganizing core tools and functions into AI coaching services [3] - As of July 2025, the daily active users of Keep's AI core exceeded 150,000, indicating a successful implementation of the AI strategy [3] - The company aims to establish a clear growth path through the systematic enhancement of operational efficiency, driving sustainable and scalable development while improving competitive differentiation [3]