BLOKS has finally returned to profitability, yet its share price continues to hover near its IPO level. According to the annual report, the company achieved total revenue of RMB 2.913 billion in 2025, a year-on-year increase of 30.0%. Net profit was recorded at RMB 634 million, a significant improvement from a net loss of RMB 398 million in 2024. Notably, this marks BLOKS's first profitable year since 2021, following four consecutive years of cumulative losses totaling RMB 1.53 billion.
On the first trading day after the earnings release, the company's stock price surged by nearly 22% intraday, eventually closing at HKD 66.55 per share, up 8.7% for the day. However, the gains were short-lived, as the stock fell for two consecutive trading days on March 18 and 19, declining by a total of 8.2%. Compared to its peak in June 2025, BLOKS's share price has retreated sharply from HKD 198 per share to around HKD 60, even dipping below its IPO price to a low of HKD 51 per share. As of the latest update, the company's market capitalization stands at approximately HKD 15.628 billion, having evaporated by 67.6% over just nine months.
Concurrently, BLOKS's rating was downgraded from "Buy" to "Hold" by CMB International, while other institutions including CICC, Citibank, and BOC International lowered their target prices to a range of HKD 80–90.
The primary reason for the market's skepticism lies in BLOKS's actual profitability, which remains under pressure. The annual report indicates that the key to its return to profitability was the exclusion of non-operational factors such as changes in the fair value of convertible redeemable preferred shares, listing expenses, and share-based compensation. In 2025, BLOKS's adjusted net profit was approximately RMB 675 million, up about 15.5% year-on-year, significantly lower than the growth in revenue. The adjusted net profit margin was about 23.2%, down 2.9 percentage points from 2024.
Two main factors are eroding profit margins. First, the low-price, high-volume strategy has reduced the average transaction value. During the reporting period, products priced at RMB 9.9 generated total revenue of RMB 541 million, accounting for 18.6% of total revenue, with sales volume reaching 122 million units, or 47.8% of total units sold. Calculations based on previously disclosed segmented revenue and sales data show that before the introduction of budget products, the average selling price for building block character toys was RMB 21.13 and RMB 18.27 in 2023 and the first half of 2024, respectively. By the second half of 2024, this figure dropped sharply by 18.4% to RMB 14.91. In the first half of 2025, the average price fell further to RMB 11.94, and by the second half, it declined another 8.5% to below RMB 11, nearly halving compared to 2023.
Second, a rapid product refresh strategy has increased mold depreciation costs. According to the annual report, BLOKS launched 913 new SKUs in 2025, with 273 and 640 released in the first and second halves, respectively. By the end of 2024, the company had only 682 SKUs in its portfolio. This means that the number of new SKUs launched in the second half of 2025 alone was equivalent to 93.8% of the total SKUs retained over the past decade. To meet the demand for high-precision, multi-cavity molds required for these new SKUs, the company's mold depreciation costs surged by 120.6% year-on-year.
Additionally, BLOKS remains heavily reliant on licensed IPs. Although the company reduced its dependence on the Ultraman IP in 2025, the combined revenue from four major IPs—Transformers, Ultraman, Kamen Rider, and Hero Infinity—totaled RMB 2.361 billion, contributing over 80% of total revenue. Among these, the proprietary IP Hero Infinity accounted for less than 10%, while the licensed IP Transformers alone contributed nearly one-third.
As of December 31, 2025, BLOKS had secured 73 licensed IPs, a 46.0% increase year-on-year, covering popular domestic and international franchises such as Toy Story, Zootopia, Frozen, Havoc in Heaven, Nezha Conquers the Dragon King, and JoJo's Bizarre Adventure. The company has commercialized 29 of these IPs and renewed or extended key licenses for properties including Kamen Rider, Marvel, Disney Princess, Naruto, and Pokémon, keeping licensing fees at elevated levels.
With revenue growth pressured by low-priced products, BLOKS can no longer replicate the triple-digit growth rates seen in previous years. Rising mold depreciation costs and licensing fees pushed the company's cost of sales up by 45.9% year-on-year to RMB 1.549 billion in 2025, causing the gross margin to fall below 50%, a decrease of 5.8 percentage points from 2024.
Overseas markets were a highlight for BLOKS in 2025. Overseas sales revenue reached RMB 319 million, nearly five times the RMB 64.2 million recorded in 2024. Sales in Asia (excluding China) and the Americas grew by 238.1% and 804.1%, respectively, each surpassing the RMB 100 million mark, with Indonesia and the United States emerging as the top overseas markets.
However, unlike Pop Mart, which has expanded globally with its proprietary IP LABUBU, BLOKS remains essentially a toy supplier, relying on channel and price advantages for its overseas expansion. In 2025, the company opened flagship stores on international e-commerce platforms such as Amazon, Shopee, and Lazada, while also securing shelf space in brick-and-mortar retailers like Walmart, Target, Toys "R" Us, and 7-Eleven. Online product pricing ranged from USD 3 to 15.99, less than one-tenth of the average price of Lego products and below the USD 4.22–20.0 range of mass-market competitor Hasbro.
Despite actively participating in international toy fairs in New York, Nuremberg, and Indonesia to build brand awareness, overseas consumers largely recognize IPs rather than the BLOKS brand. The company's low-price, channel-driven DNA makes it difficult to accumulate brand premium, leaving it in a relatively passive position. This requires continuous investment in advertising and marketing, maintaining distributor relationships, and staying vigilant against competitors offering lower prices or higher play value.
In 2025, BLOKS's selling and distribution expenses increased by 36.6% year-on-year, with marketing and promotion costs rising by approximately 33.7%. The selling expense ratio climbed from 12.6% in 2024 to 13.3%. Despite this, products spent more time in the company's warehouses. Inventory levels grew by 19.9% year-on-year to RMB 345 million, with finished goods accounting for 76.4% of the total. Inventory turnover days reached 75, about 1.17 times the figure for 2024.
In addition to expanding overseas, BLOKS is targeting the more financially capable adult consumer segment. The annual report shows that out of 1,447 SKUs available in 2025, 287 were primarily aimed at consumers aged 16 and above, accounting for 19.8% of the total, up from just 4.6% in 2024. Revenue from this segment represented approximately 16.7% of total revenue, an increase of over 5 percentage points year-on-year. Previously, BLOKS's core market had been children aged 6–16. In 2024, products for this age group accounted for 76.1% of SKUs. In the first half of 2025, revenue from the 6–16 age group still made up about 82.6% of total revenue.
Notably, the consumption characteristics of these two groups differ significantly. Children aged 6–16 have limited spending power, are easily influenced by peers, and prefer school-adjacent retail channels. In contrast, consumers aged 16 and above are more willing to pay a premium for emotional value, seeking identity through interest communities and collectible appeal. As such, BLOKS faces a challenging path in its transformation efforts.
In terms of product differentiation, BLOKS currently offers only minor IP variations between its offerings for the two demographic groups. It has not developed distinct play experiences for adult consumers like Lego, nor has it introduced limited or hidden edition products with appreciation potential akin to Pop Mart. Channel-wise, BLOKS relies heavily on a distributor network near schools in lower-tier markets, while competitors such as Lego, Pop Mart, TOP TOY (Miniso), and X11 (KKV) have already established direct-operated stores and pop-ups in prime locations in first- and second-tier cities, directly engaging their target audiences. Operationally, both Lego and Pop Mart have invested heavily in films and theme parks to extend the lifecycle of adult consumers—an area where BLOKS may need to make significant capital investments in the future.