WAKUKU cools down, Qimeng Island lowers its 2026 fiscal year revenue guidance.

More trendy toy IPs are beginning to face the test of market cooling. On June 5, HERE Dream Island released its financial report for the third quarter of fiscal year 2026. During the three months ending March 31, 2026, the company achieved an operating income of 165 million yuan, down 7.1% from the previous quarter; the adjusted net loss was 22.933 million yuan, with the loss margin also expanding compared to the previous quarter. As an emerging trendy toy brand, Dream Island's core revenue still comes from its three flagship IPs: WAKUKU, SIINONO, and ZIYULI, but the revenue boost from a single hit IP is starting to weaken. WAKUKU remains the company's largest revenue source, with income this quarter at 102 million yuan, a decrease of about 20.9% from the previous quarter's 129 million yuan. SIINONO's income was 33.293 million yuan, an increase of about 73.1% from the previous quarter's 19.229 million yuan; ZIYULI's income was 14.3 million yuan, up about 50.5% from the previous quarter's 9.504 million yuan. The combined revenue of the second and third largest IPs now approaches 30% of the total. For trendy toy companies, the revenue explosion from hit IPs is often staged. Early high growth is driven by new products, scarcity, and user emotion; once the sales base rises and the product cycle normalizes, income growth becomes more reliant on continuous new releases, content operations, and repeat purchases. The quarter-over-quarter drop in income is also related to the Spring Festival holiday and the pace of new product launches. The company mentioned in the financial report that changes in revenue were mainly affected by the release schedule of new products and the Spring Festival holiday, the latter reducing effective working days and temporarily impacting supply chain and delivery capacity. Dream Island expects fourth-quarter income for fiscal year 2026, ending June 30, 2026, to be between 130 million and 140 million yuan; meanwhile, it has lowered its full-year fiscal forecast from 750-800 million yuan to 600–610 million yuan. According to this new guidance, the company's income for the next quarter will still be lower than the third quarter level. This means Dream Island is taking a more cautious approach to short-term growth. Management stated in the financial report that the company is adjusting product release schedules and sales methods based on market demand, launching new IP products in a more disciplined manner, and continuing to open self-operated stores to lay the foundation for future expansion. This also points to another main line being pursued by Dream Island this quarter: moving from online hit sales toward offline experiences and multi-scenario engagement. In the past, trendy toy companies often relied on online sales, blind box mechanisms, and social sharing for quick launch. However, as competition intensifies in the industry, relying solely on online traffic and hit product buzz is unstable. Offline stores, robot terminals, and other channels can not only expand user touchpoints and enhance consumer experience, but also help increase IP visibility and repurchase frequency. As of June 4, Dream Island has established two immersive self-operated experience stores in Xi’an and Shenzhen, and has deployed about 15 robot smart retail terminals in three cities. Among them, the brand image store at Shenzhen Yifang City, which opened on April 25, introduced the country’s first batch of two types of smart robot retail terminals, including the plush cute ROBO Shop and a mobile retail robot. On the brand crossover front, Dream Island continued to promote diverse collaborations in the past quarter. WAKUKU appeared as the official trendy toy partner at Beijing Fashion Week for the second consecutive year, further expanding the integration of “trendy toys + fashion”; the company also launched a crossover zone for intangible cultural heritage with the idea of “Heritage protection · Trendy innovation,” exploring the new business model of “trendy toys + intangible cultural heritage.” Additionally, Dream Island signed a strategic cooperation agreement with Pearl River Shipping, planning to create the first immersive trendy toy IP themed cruise line and themed cruise ship on Victoria Harbour in Hong Kong, and simultaneously launch Hong Kong city exclusive products, deepening the integration of IP with cultural tourism. Looking ahead, the key question for Dream Island is whether it can reduce its dependence on the single IP WAKUKU, while truly converting offline stores, robot terminals, and crossover collaborations into sustainable sales growth. 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