Keep Inc. Annual Report 2025: Key Financial and Strategic Developments for Investors

Executive Summary

Keep Inc.’s 2025 Annual Report marks a significant turning point for the company, reflecting both a strategic transformation and notable improvements in financial performance. For the first time, the Group reported a full-year adjusted net profit, signaling a material turnaround following years of losses. The company also continued to execute on its “lean-and-fit” operational approach amid a rapidly evolving fitness and sports industry in China.

Key Financial Highlights

• Revenues: RMB 1,637.3 million in 2025, a decrease from RMB 2,065.7 million in 2024, reflecting business rationalization and transition impacts.
• Gross Profit: RMB 854.1 million, with gross profit margin improving to 52.2% (up from 46.7% in 2024), indicating improved operational efficiency.
• Net Loss: RMB 71.8 million attributable to owners (down from RMB 534.7 million loss in 2024), but more importantly, the company achieved its first adjusted net profit (Non-IFRS) of RMB 25.2 million, up from a loss of RMB 469.6 million in 2024.
• Adjusted Net Profit Margin: 1.5%, compared to negative 22.7% in 2024.

Strategic Milestones and Business Transformation

• Strategic Shift: Keep Inc. is undergoing a deep transformation from a content-centric platform to an AI-driven fitness and health ecosystem. This includes the development of AI-powered personalized training programs, dynamic course adjustments, and integration of physical/digital offerings.
• Restructuring and Focus: The Group has deprioritized segments not aligned with its long-term vision, focusing resources on AI, data science, and software engineering capabilities.
• Risks: The transformation involves material execution risks. The company cautions that historical metrics may have limited predictive value going forward, and sustainable profitability depends on successful architecture re-engineering, business rationalization, and talent acquisition.

Balance Sheet and Liquidity

• No Outstanding Borrowings: As of December 31, 2025, Keep Inc. had no bank borrowings.
• Gearing Ratio: 0.24, down from 0.29 a year earlier, reflecting deleveraging and improved capital structure.
• Distributable Reserves: RMB 5,374.8 million, providing potential for future shareholder returns.
• Cash Management: The company invests in wealth management products and private funds, with total financial assets at FVPL (Fair Value through Profit or Loss) reaching RMB 892.97 million.
• No Material Contingent Liabilities or Asset Pledges: The Group reported no significant contingent liabilities or pledges as of year-end.

Shareholder Value and Corporate Actions

• Share Buybacks: In 2025, Keep Inc. repurchased 4,057,500 shares for HK\$19.14 million, with 12,085,400 shares held as treasury shares and 3,510,600 shares cancelled by March 2026. The buybacks are intended to enhance shareholder value and may impact future share supply.
• Dividend Policy: No final dividend was recommended for 2025. The Board will consider future dividends based on financial performance, liquidity, capex, and regulatory requirements. PRC laws require a 10% statutory reserve from after-tax profits by foreign-invested enterprises.

Corporate Governance and Compliance

• Strong Compliance Record: No material litigation, arbitration, or regulatory non-compliance was reported during the year.
• Governance Upgrades: The company adopted new Articles of Association in June 2025 to align with Hong Kong’s Core Shareholder Protection Standards, including provisions for virtual general meetings and electronic voting.
• ESG Commitment: Keep Inc. continues to integrate Environmental, Social, and Governance (ESG) principles, with disclosures on ESG matters available in its ESG Report.

Material Risks and Uncertainties

• Execution Risk: The strategic shift to an AI-driven model presents challenges, including the need for new talent and successful rollout of AI products. Any delays or missteps could impact profitability and user experience.
• Regulatory and Structural Risks: The company operates under a VIE (Variable Interest Entity) structure due to PRC foreign investment restrictions. These contractual arrangements carry risks, including potential changes in PRC law, effectiveness of operational control, and possible scrutiny by PRC tax authorities.
• Fair Value and Credit Risks: The Group’s investments in unlisted entities and wealth management products are subject to fair value estimates and credit risk. A 10% change in key assumptions can materially impact valuations.

Other Noteworthy Items

• Employee Overview: 645 full-time employees, with emphasis on training and retention, especially for AI and technology roles.
• Related Party Transactions: All related and connected transactions have been disclosed and are in compliance with Hong Kong Listing Rules.
• Future Accounting Changes: The Group is preparing for the adoption of IFRS 18, which will affect presentation and disclosure in future financial statements.

Potential Price-Sensitive Information

• Return to Adjusted Profitability: The achievement of adjusted net profit for the first time is a major inflection point and could affect investor sentiment and share price.
• Ongoing Strategic Repositioning: The company’s pivot to AI-driven fitness is untested across a full business cycle and introduces execution risk. Investors are cautioned that past trends may not be reliable indicators of future performance.
• Share Buybacks and Capital Reduction: The ongoing share repurchase program and cancellation of shares may impact the trading dynamics and valuation.
• VIE Structure Risks: Changes in PRC regulations or enforcement could materially affect the company’s control over its PRC operations, representing a significant risk factor.

Conclusion

2025 marked a year of stabilization and strategic redirection for Keep Inc., with the company achieving a long-awaited return to adjusted profitability and laying the groundwork for future growth as an AI-driven fitness platform. However, investors should monitor the execution of its strategic transformation, potential regulatory risks, and the impact of capital actions such as share repurchases. The company’s ability to sustain profitability and deliver on its new business model will be critical for future share price performance.

Disclaimer

This article is for informational purposes only and does not constitute investment advice. Investors should review the full annual report and consult with professional advisors before making any investment decisions. The information herein is based on the company’s published annual report and may be subject to change or updates.

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