On August 24, KEEP (03650.HK) released its interim results for the first half of 2026. During the period, the company recorded total revenue of RMB 825 million, a year-on-year increase of 0.4%. The net loss for the period narrowed by 65.6% to RMB 12.19 million. Under non-IFRS measures, adjusted net profit came in at RMB 5.877 million, down 21.4% year-on-year. Overall gross profit reached RMB 422 million, with a gross margin of 51.1%.

Compared with the profit figures, a more pronounced shift has emerged in the revenue mix.

In the first half of the year, revenue from KEEP's self-branded sports products reached RMB 483 million, up 21.7% year-on-year, accounting for nearly 60% of total company revenue and cementing its position as the largest revenue source. The gross margin for this segment improved from 34.8% in the same period last year to 40.1%. Within this segment, sports equipment revenue surged 49% year-on-year, representing over 60% of consumer product sales.

This performance is closely tied to KEEP's restructuring of its consumer products business over the past year. The company previously scaled back certain low-margin, slower-turning categories, reallocating resources toward muscle building, body shaping, yoga, and outdoor sports gear. In the first half of 2026, gross merchandise value for muscle building, body shaping, and yoga categories grew 63%, 49%, and 33% year-on-year, respectively. In terms of sales channels, the distribution network expanded 35% year-on-year, while the Douyin channel saw growth exceeding 50%.

In parallel, KEEP has been exploring overseas expansion for its sports equipment. Overseas revenue surpassed RMB 22 million in the first half, primarily generated through platforms such as Amazon and TikTok, with sports equipment as the main product line. While this segment remains relatively small compared with domestic operations and is unlikely to become a primary growth driver in the near term, it broadens the channel opportunities for the consumer products division.

On the other front, KEEP's core online membership and paid content business continues to face headwinds.

Revenue from this segment reached approximately RMB 246 million in the first half, a decline of 26.9% year-on-year. KEEP's average monthly active users stood at 18.58 million, with average monthly paying subscribers at 2.17 million, translating to a membership penetration rate of 11.7%. The drop in both user and subscriber numbers directly weighed on subscription revenue. Advertising and other business revenue totaled approximately RMB 96 million, up 9.3% year-on-year.

However, certain usage metrics among existing users have shown improvement. In the first half, KEEP's average monthly revenue per monthly active user rose from RMB 6.1 in the same period last year to RMB 7.4, a 21.3% year-on-year increase. Average monthly exercise duration per active user also grew by 15.3% year-on-year. These trends suggest that despite a shrinking overall user base, the company is focusing on boosting engagement and monetization efficiency among its retained users.

KEEP's operational priorities in recent years have shifted from chasing user scale toward profitability and operational efficiency. In 2025, the company generated revenue of RMB 1.637 billion, down 20.7% year-on-year, yet achieved its first full-year adjusted profit. Entering the first half of 2026, revenue returned to modest growth, and the net loss narrowed further. However, the year-on-year decline in adjusted profit indicates that the profitability trajectory is not yet stable.

Artificial intelligence has been a major area of increased investment for KEEP this year. In April, the company launched its vertical large model for fitness and health, Keepace.ai, which is currently applied to course generation, fitness knowledge Q&A, and exercise data interpretation. During the first half, KEEP rolled out more than 8,000 AI-powered courses and integrated related capabilities into scenarios such as voice-guided running companions. The company is also exploring AI-powered membership offerings, as well as enterprise services for sports hardware, insurance, and healthcare clients. These business models remain in their early stages.

Based on the interim report, the challenges facing KEEP are clear. The renewed growth in the consumer products business has partially offset the decline in membership revenue, but the company's online user base continues to contract.

Going forward, the sustainability of sports equipment growth, the stabilization of membership numbers, and whether AI investments ultimately translate into new revenue streams remain key variables in assessing the durability of KEEP's profitability.