iHuman Inc. (NYSE: IH) reported an adjusted loss per share of $(0.05) for the second quarter ended June 30, 2026, marking a 162.5% decline from earnings of $0.08 in the same period last year. The company recorded net losses of RMB17.5 million (US$2.6 million), reversing from a net income of RMB30.7 million in Q2FY25.

Total revenues stood at $25.553 million, representing an 8.55% decrease from $27.942 million in Q2FY25. In local currency, total revenues fell to RMB173.4 million from RMB210.9 million. The company attributed the swing to profitability to a decline in revenues and increased strategic investments in product development and international expansion.

Financial Performance Overview

The drop in top-line performance was driven by a contraction in the user base and conservative consumer spending in China. Average total monthly active users (MAUs) decreased to 20.72 million, compared with 23.97 million in the year-ago quarter.

Operating expenses rose despite the revenue decline, contributing to an operating loss of RMB20.8 million (US$3.1 million), against an operating income of RMB18.3 million in Q2FY25. Sales and marketing expenses increased 17.2% YoY to RMB52.3 million as the company invested in brand enhancement and promotional activities.

Strategic Initiatives and Product Updates

CEO Peng Dai highlighted efforts to strengthen the product ecosystem through original IP and global partnerships. Domestically, the Liamiao English-learning IP gained traction, surpassing 300,000 followers on Xiaohongshu. Internationally, the Aha World platform integrated the Gabby’s Dollhouse franchise through a collaboration with Universal Products & Experiences.

Co-CEO Teng Li noted progress from recent acquisitions, including the launch of AI Tianti by All Knowledge and enhanced AI capabilities at Perfect Lingo. CFO Vivien Weiwei Wang stated that investments in AI innovation and international expansion weighed on near-term financial performance but are intended to build long-term resilience.

Balance Sheet and Cash Position

Cash, cash equivalents, and short-term investments stood at RMB1,007.4 million (US$148.5 million) as of June 30, 2026, down from RMB1,154.2 million at December 31, 2025. The decrease was primarily due to payments for annual bonuses, cash dividends, and acquisition considerations for All Knowledge and Perfect Lingo.

Deferred revenue and customer advances were RMB231.5 million, reflecting a slight decline from RMB245.1 million at the end of 2025.

What the Numbers Show

A divergence between revenue contraction and expense growth highlights margin pressure. While revenue fell 17.8% YoY in RMB terms, total operating expenses increased 7.9% to RMB132.0 million. This inverse relationship resulted in a significant swing from operating income to loss. Additionally, gross margin contracted to 64.1% from 66.7% in the prior year, indicating that cost efficiencies did not fully offset the revenue decline.

iHuman reported a significant decline in its quarterly financial performance, with adjusted earnings per share falling to $0.01. This represents an 85.71% decrease compared to earnings of $0.07 per share in the same period last year. The company also recorded a drop in revenue, reflecting broader challenges in its operational results during the quarter.

Sales for the period totaled $26.456 million, a decrease of 8.77% from $28.999 million reported in the corresponding quarter of the previous year. The reduction in both earnings and revenue highlights the pressure on the company's profitability and top-line growth.

Financial Performance Summary

The following table outlines the key financial metrics reported by iHuman for the quarter compared to the prior year period:

The decline in sales directly impacted the bottom line, resulting in the sharp reduction in per-share earnings. The company's ability to reverse this trend will depend on its performance in the coming quarters.