Three Squirrels Inc. (300783.SZ), which is pursuing a Hong Kong stock exchange listing, released its interim financial report for 2025 on the evening of August 27.
The interim results present a tale of two metrics: revenue climbed 7.94% year-over-year to 5.478 billion yuan, reaching a record high for the period, while net profit attributable to shareholders plummeted 52.22% to 138 million yuan. The decline was even steeper for adjusted net profit, which fell 77.57% to just 50.83 million yuan.
From a revenue perspective, the 5.478 billion yuan represents Three Squirrels' strongest half-year performance since its inception. However, the single-digit growth rate stands in stark contrast to the previous year's exceptional growth of over 75%, indicating a clear deceleration in growth momentum.
As the "nation's first snack stock," nuts constitute Three Squirrels' foundational business and revenue pillar. In 2024, this category contributed 5.366 billion yuan in revenue, growing 40.76% year-over-year and accounting for over half of total revenue, helping drive the company's annual revenue back above the 10 billion yuan threshold.
However, this core business segment became a drag during the first half of this year, with revenue declining 1.03% to 2.731 billion yuan. Additionally, rising raw material costs for nuts due to international conditions caused the category's gross margin to drop 2.64 percentage points to 23.91%, becoming a significant factor in profit erosion.
The leisure food industry has entered an intensely competitive phase, with bulk snack stores rapidly expanding through low-price strategies and diverse product offerings, continuously squeezing traditional brands' market share. Within the nuts segment specifically, competitors are increasing investments in product quality, pricing strategies, and marketing initiatives, further intensifying competitive pressure and creating challenges for Three Squirrels' nuts business growth.
Nevertheless, non-nuts categories provided some growth support for the company. In the first half, comprehensive snacks revenue reached 1.398 billion yuan, up 49.7% year-over-year, while baked goods revenue grew 11.96% to 682 million yuan.
Channel performance showed a pattern of "stable online, divergent offline" trends.
Online channels remain Three Squirrels' primary sales avenue, accounting for approximately 78.42% of total revenue. First-half online sales revenue reached 4.295 billion yuan, up 5.01% year-over-year. Among these, platforms within the TikTok ecosystem leveraged strong content marketing and traffic advantages to achieve 20.75% revenue growth to 1.478 billion yuan. However, revenue from Tmall-related platforms declined 18.56% to 882 million yuan due to multiple factors, while JD-related platforms maintained around 800 million yuan.
In offline channels, distribution business performed strongly with first-half revenue of 938 million yuan, up 40.21% year-over-year, as the number of distributors increased to 2,140, adding 269 new partners. However, offline retail stores faced pressure, with revenue declining 18.69% to 187 million yuan despite a net increase of over 100 stores.
This channel performance aligns closely with Three Squirrels' long-term strategy. Founder Zhang Liaoyuan previously outlined goals to achieve 20 billion yuan in revenue by 2026, with online and offline channels each contributing 10 billion yuan. The offline strategy primarily relies on distribution business and includes a "double hundred" strategy: achieving one million terminal points by expanding from 100,000 to one million retail terminals, and reaching 10 billion yuan in distribution business, scaling from 2 billion to 10 billion yuan. Based on the first half's combined offline revenue of over 1.1 billion yuan (including distribution and retail stores), these targets remain distant.
In investor relations activities following the earnings disclosure, the company provided further interpretation of channel performance: comprehensive e-commerce serves as the business foundation; short-video e-commerce acts as a "category engine" with not only channel attributes but also content and brand characteristics; offline distribution remains in a growth phase, reconstructing the distribution system with e-commerce thinking. After one year of testing, the proportion of daily-selling products has significantly improved, with over ten promising single products emerging, with future plans for quality and differentiation upgrades based on basic offerings. The future opportunity format is branded lifestyle stores, with the first store already opened as an exploration, with further expansion planned.
To drive channel product sales, Three Squirrels spent considerably more on marketing expenses in the first half than in previous periods.
Due to changes in traffic structures on some online platforms leading to higher rates, combined with increased market spending for offline distribution, the company's selling expenses grew 25.11% year-over-year to 1.119 billion yuan in the first half, with the selling expense ratio reaching 20.43%, up 2.81 percentage points year-over-year.
Promotion fees and platform service charges comprised the largest portion, growing over 25% from 607 million yuan in the prior-year period to 761 million yuan. While these investments partially drove revenue growth, they also took a significant bite out of the net profit "pie." Combined with declining gross margins due to rising nuts raw material costs, these factors jointly caused Three Squirrels' first-half net profit to be cut in half, with the current net profit margin at 2.47% compared to 5.71% in the same period last year.
Notably, Three Squirrels just achieved a "return to 10 billion" breakthrough in 2024, with annual revenue of 10.6 billion yuan and net profit attributable to shareholders of 400 million yuan. After this impressive turnaround, the company announced the launch of its Hong Kong IPO in March this year, formally submitting its prospectus to the Hong Kong Stock Exchange in April, planning to use listing proceeds to optimize its integrated "manufacturing, branding, and retail" layout.
This interim report showing slowing revenue growth and halved net profit may now serve as the first major test in its Hong Kong listing journey.
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