Youlife H1 2026 gross margin falls to 8.6%
Employee management services accounted for 96.0% of first-half revenue, while consolidated gross margin was 8.6%.
Sentiment and the balance of points
Rhea-AI Sentiment reads the wording of the document, how positive or negative its language is on a 1 to 5 scale. The balance of points shown with the takes weighs what the document actually discloses, so the two can disagree, for example when a trial that missed its main goal is described in upbeat language.
Youlife Group Inc. reported first-half 2026 revenue of RMB1,961.9 million, up 114.8% year over year, led by employee management services revenue of RMB1,884.2 million, up 122.3%. Gross profit rose 31.7% to RMB169.2 million, but gross margin declined to 8.6% from 14.1%, reflecting the larger share of lower-margin employee management services following the YouheHR acquisition.
Net profit was RMB30.3 million versus RMB37.7 million, and operating income was RMB30.4 million versus RMB45.8 million. Operating cash flow was RMB9.1 million, compared with RMB13.7 million, while cash and cash equivalents stood at RMB130.0 million on June 30, 2026. Youlife acquired 100% of YouheHR on January 31, 2026, for share consideration of RMB68.1 million. First-half financing cash flow was an outflow of RMB47.0 million, primarily reflecting repayments of borrowings and third-party advances.
Youlife also reported a three-year nationwide outsourcing agreement with a leading domestic new-retail group and long-term strategic cooperation with Thingo Technology focused on AI-enabled recruitment and intelligent-agent solutions. Its five largest customers represented 52.7% of first-half 2026 revenue, compared with 28.1% of full-year 2025 revenue.
How this balance works
Rhea-AI gives every point it takes from this document a weight. Minor counts 1, Moderate 3 and Major 9, so one Major point outweighs several Minor ones. The bar adds up the weights on each side, and when neither side holds more than 65% of the total the balance reads Mixed.
It reads the document as published, with the same rules for every company, and it does not look at what the market expected or at how the stock traded, so a point can be objectively good on a day the stock falls.
Rhea-AI Sentiment measures something else, the tone of the wording.
Positive
- Moderate pointRevenue increased 114.8% to RMB1,961.9 million in first-half 2026.
- Moderate pointGross profit rose 31.7% to RMB169.2 million.
Negative
- Moderate pointNet profit declined from RMB37.7 million to RMB30.3 million.
- Moderate pointGross margin fell from 14.1% to 8.6%.
- Moderate pointOperating income decreased from RMB45.8 million to RMB30.4 million.
- Moderate pointOperating cash flow declined from RMB13.7 million to RMB9.1 million.
Filing Explained
Youlife issued 4,967,810 shares for its completed YouheHR acquisition, reducing existing holders’ percentage ownership absent offsetting changes.
The Form 6-K furnishes Youlife’s unaudited results for the six months ended
At
Key Figures
Key Terms
adjusted EBITDA financial
gross margin financial
goodwill financial
contract liabilities financial
FAQ
AI-generated questions and answers. How Rhea-AI works. Not financial advice.
How much revenue did YOUL report in first-half 2026?
Was YOUL profitable in first-half 2026?
AI-generated analysis. How Rhea-AI works. Not financial advice.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16
OR 15d-16 UNDER THE SECURITIES EXCHANGE ACT OF 1934
For the month of October
Commission File Number:
(Exact name of registrant as specified in its charter)
Room C431, Changjiang Software Park
No. 180 South Changjiang Road
Baoshan District, Shanghai 201900
People’s Republic of China
(Address of principal executive office)
Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.
Form 20-F ☒ Form 40-F ☐
EXPLANATORY NOTE
This Form 6-K shall be deemed to be incorporated by reference into the registration statement on Form F-3 of Youlife Group Inc. (File No. 333-299194) and shall become a part thereof from the date on which this current report is furnished, to the extent not superseded by documents or reports subsequently filed or furnished.
1
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| Youlife Group Inc. | ||
| By: | /s/ Yunlei Wang | |
| Name: | Yunlei Wang | |
| Title: | Chairman and Chief Executive Officer | |
Date: October 15, 2026
2
EXHIBIT INDEX
| Exhibit No. | Description | |
| Exhibit 99.1 | Press Release | |
| Exhibit 99.2 | Unaudited Consolidated Financial Statements as of December 31, 2025 and June 30, 2026 and for the six months ended June 30, 2025 and 2026 | |
| Exhibit 99.3 | Management’s Discussion and Analysis of Financial Condition and Results of Operations | |
| 101.INS | Inline XBRL Instance Document | |
| 101.SCH | Inline XBRL Taxonomy Extension Schema Document | |
| 101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document | |
| 101.DEF | Inline XBRL Taxonomy Extension Label Linkbase Document | |
| 101.LAB | Inline XBRL Taxonomy Extension Presentation Linkbase Document | |
| 101.PRE | Inline XBRL Taxonomy Extension Definition Linkbase Document | |
| 104 | Cover Page Interactive Data File formatted as Inline XBRL and contained in Exhibit 101 |
3
Exhibit 99.1
Youlife Group Inc. Reports Strong First Half
2026 Revenue Growth
and Expands AI-Enabled Blue-Collar Workforce Platform
| ● | Revenues up 114.8% YoY to RMB1,961.9 million |
| ● | Gross profit increased 31.7% YoY to RMB169.2 million |
| ● | Net profit of RMB30.3 million, with profitability maintained during platform expansion and investment |
SHANGHAI, China, October 15, 2026 /PRNewswire/ -- Youlife Group Inc. (“Youlife” or the “Company”) (NASDAQ: YOUL), a leading blue-collar lifetime service provider in China, today announced its unaudited financial results for the six months ended June 30, 2026.
Operational and Financial Highlights for the First Half of 2026
| ● | Total revenues were RMB1,961.9 million (US$288.1 million), up 114.8% YoY. |
| ● | Gross profit was RMB169.2 million (US$24.8 million), up 31.7% YoY. |
| ● | Net profit was RMB30.3 million (US$4.5 million), with profitability maintained while the Company continued to invest in its expanded platform and growth initiatives. |
Recent Developments
| ● | In January 2026, the Company’s subsidiary Shanghai Youerlan Information Technology Co., Ltd., entered into a three-year nationwide outsourcing service cooperation with a major domestic new-retail group. The agreement covers production operations and business support for stores and large-scale warehouses nationwide and is expected to expand the Company’s employee management services platform and enterprise customer base. |
| ● | In January 2026, the Company’s subsidiary, Wuhan Tiankun Diyun Education Technology Co., Ltd., established a joint venture with Bole Chepinwang Information Technology (Suzhou) Co., Ltd., to expand automotive school-enterprise cooperation, curriculum development and talent cultivation. |
| ● | In January 2026, the Company completed the previously announced share exchange transaction and YouheHR Group Inc. became a wholly owned subsidiary of Youlife, strengthening the Company’s nationwide blue-collar service network and employee management delivery capabilities. |
| ● | In April 2026, the Company reached a cooperation with Xinhui Technician College: the Company’s subsidiary signed a cooperation agreement with Xinhui Technician College, further expanding the Company’s vocational education cooperation network in the Guangdong-Hong Kong-Macao Greater Bay Area and building a talent reservoir for the extension of its business into Hong Kong and Macao. |
| ● | On June 18, 2026, the Company entered into a long-term strategic cooperation with Anhui Thingo Intelligent Technology Co., Ltd. to jointly develop intelligent agent services and AI recruitment products, and build an AI industry academy and related AI capabilities. The cooperation has an initial term of no less than ten years. |
| ● | In July 2026, the Company’s vocational education brand Tiankun Education entered into a ten-year school-running cooperation agreement with Dazhou Technician College covering enrollment, curriculum co-development, industry-oriented training, faculty development, internships, employment placement and operational management. |
| ● | In August 2026, the Company’s subsidiary Jiangxi Youlan Sci-Tech Industry Development Co., Ltd., entered into a strategic cooperation framework agreement with Ji’an Industry-Education Integration Technology Co., Ltd. to develop an industry-education integration platform anchored on the High-Speed Rail New District Digital Economy Industrial Park, including opportunities involving vocational education, embodied robotics and related technology industries. |
| ● | In August and September 2026, the Company held ecosystem partner summits in Chengdu and Wuhan as part of its “Thousand Cities, Ten Thousand Enterprises” initiative. The program is designed to expand Youlife’s county-level partner network and advance collaboration across AI talent cultivation, industry-education integration, technology-enabled talent services and international employment, supporting the Company’s broader platform strategy. |
Management Remarks
Yunlei Wang, founder, chief executive officer and chairman of Youlife, said, “The first half of 2026 marked an important phase in Youlife’s evolution from a primarily organic-growth business into a broader, technology-enabled blue-collar workforce platform. Revenue increased 114.8% year over year to RMB1.96 billion, supported by continued growth from enterprise customers and the rapid expansion of our employee management services business.The completion of Youhe HR acquisition strengthened our nationwide service network and delivery capabilities, while our three-year nationwide outsourcing agreement with a leading domestic new-retail group provides an additional platform for recurring employee management services growth. At the same time, our partnerships in automotive services, vocational education and international talent development are expanding the industries, geographies and customer relationships we can serve.”
“We are also accelerating the technology and ecosystem investments that we believe can support the next phase of growth. Our long-term strategic cooperation with Thingo Technology is focused on developing AI-enabled recruitment and intelligent agent solutions, with the objective of improving job matching, workforce delivery and workforce management. Our vocational education partnerships, including the Dazhou Technician College cooperation and the Ji’an industry-education integration initiative, are designed to strengthen our talent pipeline while creating new application scenarios for AI, robotics and intelligent manufacturing. Together with our Sealand joint venture and our cooperation with VCI Global to explore a robotics-enabled workforce-as-a-service platform, these initiatives broaden our addressable market and reinforce our strategy of building an integrated blue-collar talent ecosystem. We remain focused on disciplined execution, selective partnerships and acquisitions, and the use of technology to improve operating efficiency and create sustainable long-term value for shareholders,” Yunlei Wang concluded.
2
Haijun Zhang, acting chief financial officer of Youlife, commented, “We delivered substantial top-line growth in the first half of 2026, with revenue increasing 114.8% year over year to RMB1,961.9 million (US$288.1 million), primarily driven by a 122.3% increase in employee management services revenue. Gross profit increased 31.7% to RMB169.2 million (US$24.8 million), while gross margin was 8.6%, compared with 14.1% in the prior-year period. The change in gross margin primarily reflects the greater contribution of employee management services following the acquisition of YouheHR, which operates at a lower gross margin than certain of our other businesses. We also increased investment in sales and marketing, integration and research and development as we scaled the platform and expanded our technology capabilities. Net profit remained positive at RMB30.3 million (US$4.5 million), and cash and cash equivalents were RMB130.0 million (US$19.1 million) as of June 30, 2026. Going forward, we will maintain capital discipline while focusing on integration, operating efficiency, gross-margin improvement and selective investment in businesses and technologies that can support sustainable growth.”
Unaudited Financial Results for the First Half of 2026
Total revenues were RMB1,961.9 million (US$288.1 million), representing an increase of 114.8% from RMB913.3 million in the first half of 2025. Growth was primarily driven by employee management services, while HR recruitment and vocational education services also recorded strong year-over-year growth.
| ● | Vocational education services. Revenues generated from vocational education services increased by 33.1% from RMB17.2 million for the six months ended June 30, 2025 to RMB22.9 million (US$3.4 million) for the six months ended June 30, 2026, primarily due to growth in our smart campus services. |
| ● | Employee management services. Revenues generated from employee management services increased by 122.3% from RMB847.8 million for the six months ended June 30, 2025 to RMB1,884.2 million (US$276.7 million) for the six months ended June 30, 2026, primarily due to (i) an increase in the number of corporate customers and growing demand for blue-collar labor, attributable to comprehensive adjustments and enhancements to our business controls and development strategy and the full utilization of our blended business model across the blue-collar worker lifecycle value chain; (ii) a greater focus on target customers in new-economy industries that offer high customer value and require large-scale outsourcing services; and (iii) revenue generated from YouheHR following its acquisition on January 31, 2026. |
| ● | HR recruitment services. Revenues generated from HR recruitment services increased by 93.7% from RMB9.1 million in the six months ended June 30, 2025 to RMB17.7 million (US$2.6 million) for the six months ended June 30, 2026, primarily due to increased recruitment demand from clients. |
| ● | Marketing services and solutions. Revenues generated from marketing services and solutions decreased by 5.4% from RMB39.2 million for the six months ended June 30, 2025 to RMB37.1 million (US$5.4 million) for the six months ended June 30, 2026, primarily due to a reduction in the scale of retail goods sold through online retail platforms. |
Costs of revenues were RMB1,792.7 million (US$263.2 million), representing an increase of 128.4% from RMB784.8 million in the first half of 2025, primarily reflecting higher labor costs and service fees associated with the expansion of employee management services.
3
Gross profit and gross margin
Gross profit was RMB169.2 million (US$24.8 million), compared with RMB128.5 million in the first half of 2025, representing an increase of 31.7%, primarily due to higher revenues from employee management services.
Gross margin was 8.6%, compared with 14.1% in the first half of 2025. The decrease primarily reflected the larger contribution from employee management services following the acquisition of YouheHR, which has a lower gross margin than certain of the Company’s other businesses.
Total operating expenses were RMB138.8 million (US$20.4 million), compared with RMB82.7 million in the first half of 2025, representing an increase of 67.9%, primarily reflecting higher sales and marketing, and administrative expenses following the acquisition of YouheHR, as well as increased research and development investment.
| ● | Sales and marketing expenses were RMB69.1 million (US$10.1 million), compared with RMB24.7 million in the first half of 2025. The year-over-year increase was mainly attributable to expenses incurred by YouheHR following its acquisition. |
| ● | General and administrative expenses were RMB61.5 million (US$9.0 million), compared with RMB56.4 million in the first half of 2025. The year-over-year increase was mainly attributable to expenses incurred by YouheHR following its acquisition. |
| ● | Research and development expenses were RMB8.3 million (US$1.2 million), compared with RMB1.6 million in the first half of 2025. The year-over-year increase was mainly attributable to increased expenditures on research and development projects. |
Operating income was RMB30.4 million (US$4.5 million), compared with RMB45.8 million in the first half of 2025, primarily reflecting the lower gross margin and higher operating expenses associated with the Company’s expanded business scale and investment in growth initiatives.
Other non-operating income, net was RMB4.6 million (US$0.7 million), compared with RMB3.8 million in the first half of 2025, primarily due to lower exchange losses for the six months ended June 30, 2026.
Net profit was RMB30.3 million (US$4.5 million), compared with RMB37.7 million in the first half of 2025. The Company remained profitable while continuing to invest in its expanded operating platform, strategic initiatives and technology capabilities.
Basic and diluted earnings per share were RMB0.38 (US$0.06), compared with RMB0.54 in the first half of 2025, reflecting the increase in the weighted average number of shares outstanding to 80.2 million from 70.0 million, primarily following the issuance of shares in connection with the YouheHR acquisition.
Financial Position and Liquidity
Total assets as of June 30, 2026, were RMB1,471.4 million (US$216.0 million), compared with RMB1,242.9 million as of December 31, 2025, an increase of 18.4%. The increase primarily reflected higher accounts receivable and prepayments and other receivables associated with the expansion of the Company’s business, as well as the recognition of intangible assets and goodwill related to the YouheHR acquisition.
Total liabilities as of June 30, 2026, increased 28.8% to RMB630.5 million from RMB489.6 million, primarily reflecting higher other payables and accruals and an increase in short-term borrowings.
Total shareholders’ equity increased 11.6% to RMB840.9 million, compared with RMB753.2 million at year-end 2025, supported by the increase in additional paid-in capital associated with the YouheHR acquisition and the Company’s continued profitability.
Net cash generated from operating activities was RMB9.1 million (US$1.3 million) in the first half of 2026, compared with RMB13.7 million in the prior-year period. Operating cash flow remained positive despite the significant expansion in the Company’s business, with the primary use of operating cash related to the increase in trade receivables as revenue scaled.
Net cash generated from investing activities was RMB23.7 million (US$3.5 million), primarily reflecting RMB24.0 million of cash acquired in connection with the YouheHR business combination, partially offset by purchases of property and equipment. Net cash used in financing activities was RMB47.0 million (US$6.9 million), primarily reflecting repayments of borrowings, advances from third parties and listing expenses, partially offset by new bank and other borrowings.
Cash and cash equivalents decreased by RMB14.2 million during the first half of 2026, from RMB144.2 million at December 31, 2025 to RMB130.0 million (US$19.1 million) at June 30, 2026. The Company continues to focus on working-capital management and disciplined capital allocation while investing in the integration of YouheHR, technology capabilities and initiatives designed to support longer-term growth.
4
About Youlife Group Inc.
Youlife is a leading blue-collar lifetime service provider in China, dedicated to modernizing blue-collar employment through data, training, and technology-driven workforce solutions. In the talent services sector, Youlife operates 180 domestic branches and more than 10 overseas offices. By partnering with more than 10,000 renowned enterprises worldwide, Youlife provides stable and future-ready workforce infrastructure at scale. Under its “School-Enterprise Cooperation” model, Youlife maintains a nationwide network of vocational schools, including 37 schools and 146 curriculum development programs, covering 37 cities and counties across 16 provinces in China. For more information, please visit https://ir.youlife.cn/.
Forward-Looking Statements
This press release includes “forward-looking statements” within the meaning of the “safe harbor” provisions of the United States Private Securities Litigation Reform Act of 1995. Forward-looking statements may be identified by the use of words such as “estimate,” “plan,” “project,” “forecast,” “intend,” “will,” “expect,” “anticipate,” “believe,” “seek,” “target” or other similar expressions that predict or indicate future events or trends or that are not statements of historical matters. These forward-looking statements also include, but are not limited to, statements regarding future events and the future results of Youlife, and Youlife’s current expectations, estimates, forecasts, and projections about the industry in which Youlife operates, as well as the beliefs and assumptions of Youlife’s management. These statements are based on various assumptions, whether or not identified in this press release, and on the current expectations of Youlife’s management and are not predictions of actual performance. These statements involve risks, uncertainties and other factors that may cause Youlife’s actual results, levels of activity, performance, or achievements to be materially different from those expressed or implied by these forward-looking statements.
5
Exhibit 99.2
YOULIFE GROUP INC.
UNAUDITED INTERIM CONSOLIDATED BALANCE SHEET
(Amount in thousands of Renminbi (“RMB”) and U.S. dollars (“USD”), except for share and per share data, or otherwise noted)
| As of December 31, |
As of June 30, |
|||||||||||
| 2025 | 2026 | |||||||||||
| RMB | RMB | USD | ||||||||||
| ASSETS | ||||||||||||
| Current assets | ||||||||||||
| Cash and cash equivalents | ||||||||||||
| Accounts receivables, net | ||||||||||||
| Prepayments and other receivables, net | ||||||||||||
| Inventories, net | ||||||||||||
| Total current assets | ||||||||||||
| Property and equipment | ||||||||||||
| Right-of-use assets | ||||||||||||
| Intangible assets | ||||||||||||
| Goodwill | - | |||||||||||
| Long-term investment | ||||||||||||
| Deferred tax assets | ||||||||||||
| Other non-current assets | ||||||||||||
| Total non-current assets | ||||||||||||
| Total assets | ||||||||||||
| LIABILITIES AND SHAREHOLDERS’ DEFICIT | ||||||||||||
| Current liabilities | ||||||||||||
| Contract liabilities | ||||||||||||
| Trade and bills payables | ||||||||||||
| Other payables and accruals | ||||||||||||
| Short-term borrowings | ||||||||||||
| Lease liabilities | ||||||||||||
| Tax payable | ||||||||||||
| Total current liabilities | ||||||||||||
| Lease liabilities-non current | ||||||||||||
| Long-term borrowings | - | |||||||||||
| Total non-current liabilities | ||||||||||||
| Total liabilities | ||||||||||||
F-1
YOULIFE GROUP INC.
UNAUDITED INTERIM CONSOLIDATED BALANCE SHEET (CONTINUED)
(Amount in thousands of Renminbi (“RMB”) and U.S. dollars (“USD”), except for share and per share data, or otherwise noted)
| Commitments and Contingencies | ||||||||||||
| SHAREHOLDERS’ EQUITY | ||||||||||||
| Ordinary shares (US$ | ||||||||||||
| Treasury shares | ( | ) | ( | ) | ( | ) | ||||||
| Additional paid-in capital | ||||||||||||
| Statutory surplus reserve | ||||||||||||
| Accumulated losses | ( | ) | ( | ) | ( | ) | ||||||
| Total Youlife Group Inc. shareholders’ equity | ||||||||||||
| Non-controlling interests | ||||||||||||
| Total shareholders’ equity | ||||||||||||
| Total liabilities, and shareholders’ equity | ||||||||||||
| * |
F-2
YOULIFE GROUP INC.
UNAUDITED INTERIM CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
(Amount in thousands of Renminbi (“RMB”) and U.S. dollars (“USD”), except for share and per share data, or otherwise noted)
| Six Months Ended June 30, | ||||||||||||
| 2025 | 2026 | |||||||||||
| RMB | RMB | USD | ||||||||||
| Revenue | ||||||||||||
| Cost of revenue | ( | ) | ( | ) | ( | ) | ||||||
| Gross profit | ||||||||||||
| Operating expenses | ||||||||||||
| Selling and distribution expenses | ( | ) | ( | ) | ( | ) | ||||||
| Administrative expenses | ( | ) | ( | ) | ( | ) | ||||||
| Research and development expenses | ( | ) | ( | ) | ( | ) | ||||||
| Total operating expenses | ( | ) | ( | ) | ( | ) | ||||||
| Income from operations | ||||||||||||
| Other income/(expense) | ||||||||||||
| Other incomes | ||||||||||||
| Other expenses | ( | ) | ( | ) | ( | ) | ||||||
| Gain on dissolution of subsidiaries and branches | - | - | ||||||||||
| Financial cost, net | ( | ) | ( | ) | ( | ) | ||||||
| Total other income, net | ||||||||||||
| PROFIT BEFORE TAX | ||||||||||||
| Income tax expenses | ( | ) | ( | ) | ( | ) | ||||||
| Net profit for the year | ||||||||||||
| Net loss attribute to non-controlling interests | ( | ) | ( | ) | ( | ) | ||||||
| Net profit attribute to Youlife Group Inc. | ||||||||||||
| Net earnings per share: | ||||||||||||
| Basic and diluted | ||||||||||||
| Basic net earnings per share | ||||||||||||
| Diluted net earnings per share | ||||||||||||
| Shares used in net earnings per share computation | ||||||||||||
| Basic | ||||||||||||
| Diluted | ||||||||||||
| TOTAL COMPREHENSIVE INCOME FOR THE YEAR | ||||||||||||
| Comprehensive income/(loss) attribute to non-controlling interest | ( | ) | ( | ) | ( | ) | ||||||
| Comprehensive income attribute to Youlife Group Inc. | ||||||||||||
F-3
YOULIFE GROUP INC.
UNAUDITED INTERIM CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(Amount in thousands of Renminbi (“RMB”) and U.S. dollars (“USD”), except for share and per share data, or otherwise noted)
| Attributable to owners of the parent | ||||||||||||||||||||||||||||||||||||||||
| Ordinary shares* | Treasury | Additional paid-in |
Statutory surplus |
Accumulated | Non- controlling |
Total | ||||||||||||||||||||||||||||||||||
| Class A | Class B | Amount | shares | capital | reserve | losses | Total | interests | equity | |||||||||||||||||||||||||||||||
| RMB | RMB | RMB | RMB | RMB | RMB | RMB | RMB | |||||||||||||||||||||||||||||||||
| Balance as of January 1, 2026 | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||
| Profit for the year | - | - | - | - | - | - | ( | ) | ||||||||||||||||||||||||||||||||
| Total comprehensive profit for the year | - | - | - | - | - | - | ( | ) | ||||||||||||||||||||||||||||||||
| Costs incurred in connection with reverse recapitalization | - | - | - | - | ( | ) | - | - | ( | ) | - | ( | ) | |||||||||||||||||||||||||||
| Shares issued as part of an acquisition | - | - | - | - | - | |||||||||||||||||||||||||||||||||||
| Transfer from retained profits | - | - | - | - | - | ( | ) | - | - | - | ||||||||||||||||||||||||||||||
| Balance as of June 30, 2026 | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||
| Balance as of June 30, 2026 in USD | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||
| Attributable to owners of the parent | ||||||||||||||||||||||||||||||||||||||||
| Ordinary shares* | Treasury | Additional paid-in |
Statutory surplus |
Accumulated | Non- controlling |
Total | ||||||||||||||||||||||||||||||||||
| Class A | Class B | Amount | shares | capital | reserve | losses | Total | interests | equity | |||||||||||||||||||||||||||||||
| RMB | RMB | RMB | RMB | RMB | RMB | RMB | RMB | |||||||||||||||||||||||||||||||||
| Balance as of January 1, 2025 | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||
| Profit for the year | - | - | - | - | - | - | ( | ) | ||||||||||||||||||||||||||||||||
| Total comprehensive loss for the year | - | - | - | - | - | - | ( | ) | ||||||||||||||||||||||||||||||||
| Transfer from retained profits | - | - | - | - | - | ( | ) | - | - | - | ||||||||||||||||||||||||||||||
| Balance as of June 30, 2025 | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||
| * | On July 9, 2025, the Company consummated a business combination with Distoken Acquisition Corporation. In connection therewith, the Company amended its memorandum and articles of association to increase the authorized share capital to |
F-4
YOULIFE GROUP INC.
UNAUDITED INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amount in thousands of Renminbi (“RMB”) and U.S. dollars (“USD”), except for share and per share data, or otherwise noted)
| Six Months Ended June 30, | ||||||||||||
| 2025 | 2026 | |||||||||||
| RMB | RMB | USD | ||||||||||
| CASH FLOWS FROM OPERATING ACTIVITIES | ||||||||||||
| Net profit | ||||||||||||
| Adjustments for: | ||||||||||||
| Depreciation of items of property and equipment | ||||||||||||
| Amortization of right-of-use assets | ||||||||||||
| Amortization of other intangible assets | ||||||||||||
| Gain on dissolution of subsidiaries and branches | ( | ) | - | - | ||||||||
| Impairment of trade receivables | ||||||||||||
| Impairment of prepayments and other receivables | - | |||||||||||
| Listing expense | - | - | ||||||||||
| Changes in operating assets and liabilities: | ||||||||||||
| Increase in trade receivables | ( | ) | ( | ) | ( | ) | ||||||
| Increase in prepayments, other receivables and other assets | ( | ) | ( | ) | ( | ) | ||||||
| Decrease in inventories | ||||||||||||
| Decrease in deferred tax assets, net | ||||||||||||
| Decrease in trade and bills payables | ( | ) | ( | ) | ( | ) | ||||||
| (Decrease)/increase in contract liability | ( | ) | ||||||||||
| Increase in other payables and accruals | ||||||||||||
| Increase/(decrease) in tax payable | ( | ) | ( | ) | ||||||||
| Increase in right-of-use assets | ( | ) | ( | ) | ( | ) | ||||||
| (Decrease)/increase in lease liabilities | ( | ) | ||||||||||
| Total Net cash flows generated from operating activities | ||||||||||||
F-5
YOULIFE GROUP INC.
UNAUDITED INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
(Amount in thousands of Renminbi (“RMB”) and U.S. dollars (“USD”), except for share and per share data, or otherwise noted)
| Six Months Ended June 30, | ||||||||||||
| 2025 | 2026 | |||||||||||
| RMB | RMB | USD | ||||||||||
| CASH FLOWS FROM INVESTING ACTIVITIES | ||||||||||||
| Purchases of items of property and equipment | - | ( | ) | ( | ) | |||||||
| Cash received from a business combination | - | |||||||||||
| Long-term investments | ( | ) | - | - | ||||||||
| Total Net cash flows (used in)/generated from investing activities | ( | ) | ||||||||||
| CASH FLOWS FROM FINANCING ACTIVITIES | ||||||||||||
| Payment for listing expenses | ( | ) | ( | ) | ( | ) | ||||||
| New bank and other borrowings | ||||||||||||
| Repayment of bank and other borrowings | ( | ) | ( | ) | ( | ) | ||||||
| Repayment of advances from third parties | ( | ) | ( | ) | ( | ) | ||||||
| Proceed from PIPE investors | - | - | ||||||||||
| Total Net cash flows generated from/(used in) financing activities | ( | ) | ( | ) | ||||||||
| Net increase/(decrease) in cash and cash equivalents | ( | ) | ( | ) | ||||||||
| Cash and cash equivalents at beginning of the year | ||||||||||||
| Cash and cash equivalents at end of the year | ||||||||||||
| Supplemental disclosures of cash flow information: | ||||||||||||
| Income taxes paid | ||||||||||||
F-6
YOULIFE GROUP INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1. DESCRIPTION OF BUSINESS AND ORGANIZATION
| (a) | Description of Business |
Youlife Group Inc. (the “Company”) was incorporated as a Cayman Islands exempted company on
| (b) | Merger and recapitalization |
On July 9, 2025 (the “Closing Date”), the Company consummated the previously announced business combination with Distoken Acquisition Corporation (“Distoken”), pursuant to the business combination agreement, dated as of May 17, 2024, as amended on November 13, 2024 and January 17, 2025 (as it may be further amended, supplemented and/or restated from time to time, the “Business Combination Agreement”) by and among Distoken, the Company, Xiaosen Sponsor LLC, a Cayman Islands limited liability company (the “Sponsor”), Youlife I Limited, a Cayman Islands exempted company and a wholly-owned subsidiary of the Company (“First Merger Sub”), Youlife II Limited, a Cayman Islands exempted company and a wholly-owned subsidiary of the Company (“Second Merger Sub”), and Youlife International Holdings Inc., a Cayman Islands exempted company (“Youlife”).
Pursuant to the Business Combination Agreement, subject to the terms and conditions set forth therein, at the closing of the transactions contemplated by the Business Combination Agreement(the “Closing”), (a) First Merger Sub will merge with and into Youllife(the “First Merger”), with Youlife surviving the First Merger as a wholly-owned subsidiary of the Company and the outstanding shares of Youlife being converted into the right to receive shares of the Company; and (b) Second Merger Sub will merge with and into Distoken (the “Second Merger”, and together with First Merger, the “Mergers”), with Distoken surviving the Second Merger as a wholly-owned subsidiary of the Company and the outstanding securities of Distoken being converted into the right to receive substantially equivalent securities of the Company (the Mergers together with the other transactions contemplated by the Business Combination Agreement and other ancillary documents, the “Business Combination”).
Upon the consummation of the Merger Transaction,
| (a) | (i) Each security of Youlife that was not subject to any lock-up restrictions, other than the ordinary shares of Youlife held by Youtch Investment Co., Ltd., a holding company wholly owned by Mr. Yunlei Wang, Chief Executive Officer and Chairman of the Board of Directors of Youlife and the Company (the “Youlife Founder Shares”), that was issued and outstanding immediately prior to the time the First Merger was effective (the “First Merger Effective Time”) was cancelled and converted into the right to receive such number of Class A ordinary shares of the Company (“Company Class A Ordinary Shares”) equal to the Exchange Ratio (as defined below) in the form of the Company ADSs, |
F-7
(ii) Each security of Youlife that was subject to lock-up restrictions, other than the Youlife Founder Shares, that was issued and outstanding immediately prior to the time the First Merger Effective Time was cancelled and converted into the right to receive such number of the Company Class A Ordinary Shares equal to the Exchange Ratio, in each case in accordance with the Business Combination Agreement,
(iii) Each Youlife Founder Share that was issued and outstanding immediately prior to the First Merger Effective Time was cancelled and converted into the right to receive such number of Class B ordinary shares of the Company (“Company Class B Ordinary Shares”) equal to the Exchange Ratio and in accordance with the Business Combination Agreement, with each such Company Class B Ordinary Share entitling each holder thereof to
| (b) | Each outstanding ordinary share of Distoken that was issued and outstanding immediately prior to the time the Second Merger was effective was cancelled and converted into the right to receive an equivalent number of the Company Class A Ordinary Shares in the form of the Company ADSs (excluding certain restricted securities held by the Sponsor which was exchanged for the Company Class A Ordinary Shares). |
Each outstanding public warrant and Private Warrant (as defined below) of Distoken was convert into
| (c) |
“Exchange Ratio” means (i) the Merger Consideration as of the First Merger Effective Time divided by (ii) the total number of ordinary shares and preferred shares of Youlife. The Company Class A Ordinary Shares and the Company Class B Ordinary Shares are collectively referred to as “Company Ordinary Shares.”
Pursuant to the Mergers above stated, Distoken was considered as the “acquired” company for financial reporting purposes. Accordingly, for accounting purposes, the financial statements of the Company represented a continuation of its operations with the Mergers treated as the equivalent of the Company issuing shares for the net assets of Distoken, accompanied by a recapitalization. The net assets of the Company are stated at historical cost, with no goodwill or other intangible assets recorded.
On July 10, 2025, the ADSs of the Company commenced trading on The Nasdaq Stock Market LLC (“Nasdaq”) under the symbol “YOUL.” The Warrants of the Company are quoted on the Over-the-Counter market (“OTC market”).
| (c) | Acquisition |
On January 31, 2026, the Company acquired
F-8
2 SIGNIFICANT ACCOUNTING POLICIES
Basis of presentation
The consolidated financial statements of the Group have been prepared in accordance with the accounting principles generally accepted in the United States of America (“U.S. GAAP”). Significant accounting policies followed by the Group in the preparation of the accompanying consolidated financial statements are summarized below.
Going concern consideration
In accordance with Accounting Standards Update (“ASU”) 2014-15, “Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern(Subtopic 205-40)”, the Group has evaluated whether there are conditions and events, considered in the aggregate, the Group has the ability to continue as a going concern within one year after the date that the consolidated financial statements are issued. The Group recorded net profit of RMB 30,307 for six months ended June 30, 2026. As of June 30, 2026, the Group had a shareholders’ equity of RMB822,068, net current assets of RMB 476,191. Based on these factors, management has concluded that no conditions or events exist that raise substantial doubt about the Group’s ability to continue as a going concern for a period of at least one year after the issuance date of these consolidated financial statements.
Accordingly, the accompanying consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business.
Principle of consolidation
The consolidated financial statements include the financial statements of the Company and its subsidiaries. All significant inter-company transactions and balances have been eliminated upon consolidation.
Business combination
The Group accounts for its business combinations using the purchase method of accounting in accordance with ASC 805, Business Combinations (“ASC 805”). The purchase method of accounting requires that the Company allocate the fair value of purchase consideration to the separately identifiable tangible and intangible assets acquired as well as liabilities assumed based on their estimated fair values. The consideration transferred in an acquisition includes the aggregate of the fair values at the date of exchange of the assets given, liabilities incurred, and equity instruments issued as well as the contingent consideration and all contractual contingencies as of the acquisition date. The excess of the total of cost of acquisition, over the fair value of the identifiable net assets of the acquiree, is recorded as goodwill. If the cost of acquisition is less than the fair value of the net assets of the businesses acquired, the difference is recognized directly in earnings. Transaction costs directly attributable to the acquisitions are expensed as incurred. The determination and allocation of fair values to the identifiable assets acquired, liabilities assumed, and non-controlling interests is based on various assumptions and valuation methodologies requiring considerable judgment from management. Significant estimates include but are not limited to future expected cash flows from acquired assets, assumptions on useful lives, discount rates and terminal values. The Company’s estimates of fair value are based upon assumptions believed to be reasonable, but which are inherently uncertain and unpredictable and, as a result, actual results may differ from estimates. The Company determines discount rates to be used based on the risk inherent in the related activity’s current business model and industry comparisons. Terminal values are based on the expected life of assets, forecasted life cycle and forecasted cash flows over that period.
Fair value measurement
The Group measures its financial assets at fair value through profit or loss at the end of each of the Relevant Years. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either in the principal market for the asset or liability, or in the absence of a principal market, in the most advantageous market for the asset or liability. The principal or the most advantageous market must be accessible by the Group. The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their economic best interest.
A fair value measurement of a non-financial asset takes into account a market participant’s ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use.
The Group uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximizing the use of relevant observable inputs and minimizing the use of unobservable inputs.
F-9
All assets and liabilities for which fair value is measured or disclosed in the consolidated financial statements are categorized within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole:
| Level 1 – | based on quoted prices (unadjusted) in active markets for identical assets or liabilities |
| Level 2 – | based on valuation techniques for which the lowest level input that is significant to the fair value measurement is observable, either directly or indirectly |
| Level 3 – | based on valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable |
The carrying value of financial instruments included in current assets and liabilities approximate their fair values because of the short-term nature of these instruments.
Impairment of non-financial assets other than goodwill
Where an indication of impairment exists, or when annual impairment testing for an asset is required (other than financial assets), the asset’s recoverable amount is estimated. An asset’s recoverable amount is the higher of the asset’s or cash-generating unit’s value in use and its fair value less costs of disposal, and is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets, in which case the recoverable amount is determined for the cash-generating unit to which the asset belongs. In testing a cash-generating unit for impairment, a portion of the carrying amount of a corporate asset is allocated to an individual cash-generating unit if it can be allocated on a reasonable and consistent basis or, otherwise, to the smallest group of cash-generating units.
An impairment loss is recognized only if the carrying amount of an asset exceeds its recoverable amount. In assessing recoverable amount, the estimated future cash flows are undiscounted expected to result from the use of the assets and their eventual disposition. If the sum of the expected undiscounted cash flows is less than the carrying amount of the assets, the Group recognizes an impairment loss based on the excess of the carrying amount of the assets over their fair value. Fair value is generally determined by discounting the cash flows expected to be generated by the assets when the market prices are not readily available. An impairment loss is charged to the profit or loss in the period in which it arises in those expense categories consistent with the function of the impaired asset.
Derecognition of financial assets
A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is primarily derecognized (i.e., removed from the Group’s consolidated balance sheet) when:
| ● | the rights to receive cash flows from the asset have expired; or |
| ● | the Group has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the received cash flows in full without material delay to a third party under a “pass-through” arrangement; and either (a) the Group has transferred substantially all the risks and rewards of the asset, or (b) the Group has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset. |
When the Group has transferred its rights to receive cash flows from an asset or has entered into a pass-through arrangement, it evaluates if, and to what extent, it has retained the risk and rewards of ownership of the asset. When it has neither transferred nor retained substantially all the risks and rewards of the asset nor transferred control of the asset, the Group continues to recognize the transferred asset to the extent of the Group’s continuing involvement. In that case, the Group also recognizes an associated liability. The transferred asset and the associated liability are measured on a basis that reflects the rights and obligations that the Group has retained.
Continuing involvement that takes the form of a guarantee over the transferred asset is measured at the lower of the original carrying amount of the asset and the maximum amount of consideration that the Group could be required to repay.
F-10
Related parties
A party is considered to be related to the Group if:
| (a) | the party is a person or a close member of that person’s family and that person |
| (i) | has control or joint control over the Group; | |
| (ii) | has significant influence over the Group; or | |
| (iii) | is a member of the key management personnel of the Group or of a parent of the Group; |
or
| (b) | the party is an entity where any of the following conditions applies: |
| (i) | the entity and the Group are members of the same group; | |
| (ii) | one entity is an associate or joint venture of the other entity (or of a parent, subsidiary or fellow subsidiary of the other entity); | |
| (iii) | the entity and the Group are joint ventures of the same third party; | |
| (iv) | one entity is a joint venture of a third entity and the other entity is an associate of the third entity; | |
| (v) | the entity is a post-employment benefit plan for the benefit of employees of either the Group or an entity related to the Group; | |
| (vi) | the entity is controlled or jointly controlled by a person identified in (a); | |
| (vii) | a person identified in (a)(i) has significant influence over the entity or is a member of the key management personnel of the entity (or of a parent of the entity); and | |
| (viii) | the entity, or any member of a group of which it is a part, provides key management personnel services to the Group or the parent of the Group. |
Use of estimates
The preparation of the consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and the reported revenues, costs and expenses during the reported year in the consolidated financial statements and accompanying notes. These accounting estimates reflected in the Group’s consolidated financial statements mainly include, but are not limited to, current expected credit losses, useful lives of intangible assets and property and equipment, provision of income tax, valuation allowance for deferred tax assets and incremental borrowing rate applied in lease liabilities. Actual results could differ from those estimates.
F-11
Foreign currency translation
The functional currency and booking currency are both RMB for substantial all entities of the Group, transactions, assets and liabilities dominated in foreign currency were few within 2026.
For the purpose of such translation in cost-efficiency way, the financial statements are translated into USD in the convenience rate (USD
Current expected credit losses
The Group adopted ASC Topic 326, “Financial Instruments — Credit Losses”, for credit loss assessment using the modified retrospective approach for all in-scope assets. The Group’s in-scope assets are primarily account receivables, prepayments and other receivables. To estimate expected credit losses, the Group has identified the relevant risk factors which include clients’ credits and accounts aging. Accounts with similar risk factors have been grouped into pools. For each pool, the Group considers the collection experience, current economic conditions and future economic conditions.
Cash and cash equivalents
Cash and cash equivalents represent cash at bank and on hand, on-demand deposits.
Accounts receivable, net
Accounts receivable, net are recognized and carried at the cost amount less an allowance for credit losses. An estimate for the allowance for credit losses is discussed above in “Current Expected Credit Losses”.
Leases
The Group follows ASC Topic 842, Leases. The Group leases office spaces, warehouse, and farmland which are classified as operating leases in accordance with Topic 842. Under Topic 842, lessees are required to recognize the following for all leases (with the exception of short-term leases, usually with initial term of 12 months or less) on the commencement date: (i) lease liability, which is a lessee’s obligation to make lease payments arising from a lease, measured on a discounted basis; and (ii) right-of-use (“ROU”) asset, which is an asset that represents the lessee’s right to use, or control the use of, a specified asset for the lease term.
F-12
Operating lease ROU assets and operating lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at commencement date. As most of the Group’s leases do not provide an implicit rate, the Group uses its incremental borrowing rate based on the information available at commencement date in determining the present value of future payments. The operating lease ROU asset also includes any lease payments made and excludes lease incentives and includes initial direct costs incurred. The Group’s lease terms may include options to extend or terminate the lease when it is reasonably certain that the Group will exercise that option. Lease expenses for minimum lease payments are recognized on a straight-line basis over the lease term. All operating lease ROU assets are reviewed for impairment annually.
Revenue recognition
Revenue from contracts with customers
Revenue from contracts with customers is recognized when control of goods or services is transferred to the customers at an amount that reflects the consideration to which the Group expects to be entitled in exchange for those goods or services.
When the consideration in a contract includes a variable amount, the amount of consideration is estimated to which the Group will be entitled in exchange for transferring the goods or services to the customer. The variable consideration is estimated at contract inception and constrained until it is highly probable that a significant revenue reversal in the amount of cumulative revenue recognized will not occur when the associated uncertainty with the variable consideration is subsequently resolved.
When the contract contains a financing component which provides the customer with a significant benefit of financing the transfer of goods or services to the customer for more than one year, revenue is measured at the present value of the amount receivable, discounted using the discount rate that would be reflected in a separate financing transaction between the Group and the customer at contract inception. When the contract contains a financing component which provides the Group with a significant financial benefit for more than one year, revenue recognized under the contract includes the interest expense accreted on the contract liability under the effective interest method. For a contract where the period between the payment by the customer and the transfer of the promised goods or services is one year or less, the transaction price is not adjusted for the effects of a significant financing component.
| (a) | Vocational education services |
The Group provides vocational education services mainly including vocational education entrusted management services, self-operated vocational school services, curriculum co-development projects services, vocational training services and connotation construction services.
F-13
For vocational education entrusted management services, the Group agrees the price with the sponsors of managed schools upfront and recognizes the management fee received or receivable as its revenue on a straight-line basis over the agreed management period based on pre-agreed fixed amounts or unit rate per students for management services provided or the estimated operating results of the managed schools in the whole management period.
For self-operated vocational school services, the tuition and boarding fees from students are paid in advance at the beginning of each semester of an academic year and are initially recorded as contract liabilities. Tuition and boarding fees are recognized on a straight-line basis over the relevant period of the applicable program. The portion of tuition payments received from students but not earned is recorded as contract liabilities and is reflected as a current liability as such amounts represent revenue that the Group expects to earn within one year. The academic year of the Group’s schools is generally from September to June of the following year and has two semesters.
For curriculum co-development projects services, the Group agrees the price with the curriculum or subordinate schools upfront and recognizes the service fee received or receivable as its revenue on a straight-line basis over the relevant period of the applicable program based on pre-agreed fixed unit rate per student for services provided in the whole period.
For vocational training services, the Group recognizes the training fee received or receivable as its revenue on a straight-line basis over the training period as the customers simultaneously receives and consumes the benefits provided by the Group.
For connotation construction services, revenue is recognized at the point in time when control of the asset is transferred to the customer, generally on acceptance by the customer.
| (b) | HR recruitment services |
The Group provides HR recruitment services regarding blue-collar talent to customers, and revenue is recognized at the point in time when the services are rendered and accepted by the customers.
| (c) | Employee management services |
The Group provides employee management services mainly including labor outsourcing services and labor dispatch services and others.
For labor outsourcing services, the Group charged service fees in respect of the labor outsourcing services on a lump sum basis. The Group acts as principal and is primarily responsible for providing the labor outsourcing services to customers. The Group recognizes the fee received or receivable from customers as its revenue and all related labor outsourcing services costs as its cost of services. The Group recognizes the labor outsourcing services fee received or receivable as its revenue over time in the period in which the customer simultaneously receives and consumes the benefits provided by the Group.
F-14
For labor dispatch services, the Group acts as a dispatching agent and is mainly responsible for administrative work, which is considered as one performance obligation, and the Group does not control employee’s labor services; therefore, the Group’s labor dispatch revenue is recorded on a net basis over time in the period in which the customer simultaneously receives and consumes the benefits provided by the administration work performed by the Group, while the labor costs paid to the employees are recorded to net off revenue.
The Group’s other revenue includes income from the provision of HR agency services, which is recognized when the services are rendered and accepted by the customers.
| (d) | Market services |
The Group provides market services mainly including sale of retail goods to end customers via online retail platform and provision of value-added services to students of vocational schools, such as shopping, catering and dormitory management services.
For market services, revenue is recognized at the point in time when the services are rendered and accepted by the customers.
Income tax
The Group follows the liability method of accounting for income taxes in accordance with ASC 740, Income Taxes (‘‘ASC 740’’). Under this method, deferred tax assets and liabilities are determined based on the difference between the financial reporting and tax bases of assets and liabilities using enacted tax rates that will be in effect in the period in which the differences are expected to reverse. The Group records a valuation allowance to offset deferred tax assets if based on the weight of available evidence, it is more-likely-than-not that some portion, or all, of the deferred tax assets will not be realized. The effect on deferred taxes of a change in tax rate is recognized in tax expense in the period that includes the enactment date of the change in tax rate.
The Group accounted for uncertainties in income taxes in accordance with ASC 740. Interest and penalties arising from underpayment of income taxes shall be computed in accordance with the related PRC tax law. The amount of interest expense is computed by applying the applicable statutory rate of interest to the difference between the tax position recognized and the amount previously taken or expected to be taken in a tax return. Interest and penalties recognized in accordance with ASC 740 are classified in the consolidated statements of comprehensive loss as income tax expense.
In accordance with the provisions of ASC 740, the Group recognizes in its consolidated financial statements the impact of a tax position if a tax return position or future tax position is “more likely than not” to prevail based on the facts and technical merits of the position. Tax positions that meet the “more likely than not” recognition threshold are measured at the largest amount of tax benefit that has a greater than fifty percent likelihood of being realized upon settlement. The Group’s estimated liability for unrecognized tax benefits, if any, will be recorded in the “other non-current liabilities” in the accompanying consolidated financial statements, and is periodically assessed for adequacy and may be affected by changing interpretations of laws, rulings by tax authorities, changes and/or developments with respect to tax audits, and expiration of the statute of limitations. The actual benefits ultimately realized may differ from the Group’s estimates. As each audit is concluded, adjustments, if any, are recorded in the Group’s consolidated financial statements. Additionally, in future periods, changes in facts, circumstances, and new information may require the Company to adjust the recognition and measurement estimates with regard to individual tax positions. Changes in recognition and measurement estimates are recognized in the period in which the changes occur.
F-15
Earnings per share
Basic earnings per share is computed by dividing net income attributable to ordinary shareholders by the weighted average number of ordinary shares outstanding during the year. Diluted earnings per share reflects the potential dilution that could occur if securities or other contracts to issue ordinary shares were exercised into ordinary shares. Common share equivalents are excluded from the computation of the diluted earnings per share in years when their effect would be anti-dilutive.
Segment reporting
The Group’s business activities, for which discrete financial information is available, are regularly reviewed and evaluated by the chief operating decision-maker. The chief operating decision-maker, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the executive directors of the Company that make strategic decisions. As a result of this evaluation, the Group determined that it has operating segments as follows:
| (a) | the vocational education segment engages in the provision of vocational education entrusted management services, self-operated vocational school services, curriculum co-development projects services and vocational training services; | |
| (b) | the HR recruitment segment engages in the provision of HR recruitment services regarding blue-collar talent to customers; | |
| (c) | the employee management segment engages in the provision of labor outsourcing services, labor dispatch services and others; | |
| (d) | the market service segment engages in the provision of value-added services. |
The chief operating decision-maker monitors the results of the Group’s
| Six months Ended June 30, 2025 | ||||||||||||||||||||
| Continuing operation | ||||||||||||||||||||
| Vocational education | HR recruitment | Employee management | Market service | Total | ||||||||||||||||
| RMB | RMB | RMB | RMB | RMB | ||||||||||||||||
| Segment revenue | ||||||||||||||||||||
| Sales to external customers | ||||||||||||||||||||
| Cost of revenue | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||
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| Gross profit % | ||||||||||||||||||||
| Six months Ended June 30, 2026 | ||||||||||||||||||||
| Continuing operation | ||||||||||||||||||||
| Vocational education | HR recruitment | Employee management | Market service | Total | ||||||||||||||||
| RMB | RMB | RMB | RMB | RMB | ||||||||||||||||
| Segment revenue | ||||||||||||||||||||
| Sales to external customers | ||||||||||||||||||||
| Cost of revenue | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||
| Gross profit | ||||||||||||||||||||
| Gross profit % | ||||||||||||||||||||
F-16
Recently Issued Accounting Pronouncements
In November 2023, the FASB issued ASU No. 2023-07, Improvements to Reportable Segment Disclosures (Topic 280). This ASU updates reportable segment disclosure requirements by requiring disclosures of significant reportable segment expenses that are regularly provided to the Chief Operating Decision Maker (“CODM”) and included within each reported measure of a segment's profit or loss. This ASU also requires disclosure of the title and position of the individual identified as the CODM and an explanation of how the CODM uses the reported measures of a segment’s profit or loss in assessing segment performance and deciding how to allocate resources. The ASU is effective for annual periods beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Adoption of the ASU should be applied retrospectively to all prior periods presented in the financial statements. Early adoption is also permitted. The Company adopted this update in fiscal year 2024 and the adoption did not have a material impact to the Company’s consolidated financial statements.
In December 2023, the FASB issued ASU No. 2023-09, Improvements to Income Tax Disclosures (Topic 740). The ASU requires disaggregated information about a reporting entity’s income tax disclosures on the effective tax rate reconciliation as well as additional information on income taxes paid. The ASU is effective for annual periods beginning after December 15, 2024. Early adoption is permitted, and the disclosures in this standard are required to be applied on a prospective basis with the option to apply the standard retrospectively. The Company adopted this ASU on a prospective basis for the period ended December 31, 2025.
In November 2024, the FASB issued ASU 2024-03, Income Statement (Topic 220): Reporting Comprehensive Income – Expense Disaggregation Disclosures. Additionally, in January 2025, the FASB issued ASU 2025-01 to clarify the effective date of ASU 2024-03. This new standard expanding disclosure requirements related to certain income statement expenses. This new standard requires more detailed information about specified categories of expenses (purchases of inventory, employee compensation, depreciation, amortization, and depletion) included in certain expense captions presented on the face of the income statement. The effective date is for annual reporting periods beginning after December 15, 2026, and interim periods within annual reporting periods beginning after December 15, 2027. Early adoption is permitted. The amendments may be applied either (1) prospectively to financial statements issued for reporting periods after the effective date of this ASU or (2) retrospectively to all prior periods presented in the financial statements. The Company is in the process of evaluating the impact of the new guidance on its consolidated financial statement and related disclosures and this ASU will likely result in the required additional disclosures being included in the Group’s consolidated financial statements, once adopted.
3. BUSINESS ACQUISITION
The Company accounted for its acquisition in accordance with ASC 805, “Business Combination” (“ASC 805”). The result of the acquiree’s operation has been included in the consolidated financial statements since the acquisition date. The excess of the fair value of the acquired entity over the fair value of net tangible and intangible assets acquired was recorded as goodwill, which is not deductible for corporate income taxation purposes.
On January 31, 2026, the Company acquired
The acquisition was recorded as a business combination.
| As of acquisition close date 2026 | ||||
| RMB | ||||
| Fair value of consideration transferred | ||||
| Ordinary shares | ||||
| Number of ordinary shares issued | ||||
| Intangible assets - customer relationships | ||||
| Other identifiable net assets acquired | ( | ) | ||
| Total identifiable net assets acquired | ||||
| Goodwill | ||||
| Total purchase consideration | ||||
The excess of purchase price over tangible assets and identifiable intangible assets acquired and liabilities assumed was recorded as goodwill. Goodwill associated with acquisition of YouheHR attributed to expected synergies arising from the acquisition. The acquired goodwill is not deductible for tax purposes.
F-17
4. ACCOUNTS RECEIVABLE, NET
| As of December 31, | As of June 30, | |||||||||||
| 2025 | 2026 | |||||||||||
| RMB | RMB | USD | ||||||||||
| Accounts receivable | ||||||||||||
| Less: allowance for credit loss | ( | ) | ( | ) | ( | ) | ||||||
| Accounts receivable, net | ||||||||||||
Movement of allowance of doubtful accounts is as follows:
| As of December 31, | As of June 30, | |||||||||||
| 2025 | 2026 | |||||||||||
| RMB | RMB | USD | ||||||||||
| Beginning balance | ||||||||||||
| Charge to expense | ||||||||||||
| Ending balance | ||||||||||||
5. PREPAYMENTS AND OTHER RECEIVABLES, NET
| As of December 31, | As of June 30, | |||||||||||
| 2025 | 2026 | |||||||||||
| RMB | RMB | USD | ||||||||||
| Other receivables | ||||||||||||
| Receivable from asset disposal | ||||||||||||
| Less: allowance for credit loss of other receivables | ( | ) | ( | ) | ( | ) | ||||||
| Prepayments | ||||||||||||
| Deductible input VAT | ||||||||||||
| Prepayment, other receivables other, net | ||||||||||||
6. LEASES
The Group’s operating leases mainly related to various buildings. The total lease cost for the six months ended June 30, 2025 and 2026 was RMB
Supplemental balance sheet information related to operating lease was as follows:
| As of December 31, | As of June 30, | |||||||||||
| 2025 | 2026 | |||||||||||
| RMB | RMB | USD | ||||||||||
| Operating lease right-of-use assets | ||||||||||||
| Lease liabilities – current | ||||||||||||
| Lease liabilities – non-current | ||||||||||||
| Total operating lease liabilities | ||||||||||||
The weighted average remaining lease terms and discount rates for the operating lease as of December 31, 2025 and June 30, 2026 were as follows:
| As of December 31, | As of June 30, | |||||||
| 2025 | 2026 | |||||||
| Weighted average remaining lease term (years) | ||||||||
| Weighted average discount rate | % | % | ||||||
F-18
The undiscounted future minimum payments under the Company’s operating lease liabilities and reconciliation to the operating lease liabilities recognized on the consolidated balance sheet was as below:
| As of June 30, 2026 | ||||||||
| RMB | USD | |||||||
| 2026 | ||||||||
| 2027 | ||||||||
| 2028 | ||||||||
| 2029 | ||||||||
| 2030 and after | ||||||||
| Total undiscounted cashflows | ||||||||
| Less: imputed interest | ( | ) | ( | ) | ||||
| Present value of lease liabilities | ||||||||
7. INTANGIBLE ASSETS
| As of December 31, | As of June 30, | |||||||||||
| 2025 | 2026 | |||||||||||
| RMB | RMB | USD | ||||||||||
| Customer relationships | - | |||||||||||
| Systems software | ||||||||||||
| Trademark | ||||||||||||
| Less: accumulated amortization | ( | ) | ( | ) | ( | ) | ||||||
| Intangible assets, net | ||||||||||||
Amortization of intangible assets was RMB
8. LONG-TERM INVESTMENT
Long-term investment represents an equity interest in a fund that subscribed Class B participating shares which holds a portfolio of various financial assets. The contractual terms of the shares do not give the group a right to receive contractual cash flows consisting solely of payments of principal and interest on the principal amount outstanding. The investment is subject to a mandatory 10-year lock-up period. This extended restriction demonstrates a lack of intent to sell the investment in the short term. Based on the lock-period and significant unobservable inputs of investment to the fund, the Group make the assessment of the fair value level for the fund is level 3. The fund would regularly value these investments and provide the valuation result of NAV to investors. This valuation process is highly dependent on models and management judgment. The Group made such investment in May 2025.
9. OTHER PAYABLES AND ACCRUED LIABILITIES
| As of December 31, | As of June 30, | |||||||||||
| 2025 | 2026 | |||||||||||
| RMB | RMB | USD | ||||||||||
| Payroll and welfare payables | ||||||||||||
| Other liabilities | ||||||||||||
| Total | ||||||||||||
F-19
10. BORROWINGS
| As of December 31, | As of June 30, | |||||||||||
| 2025 | 2026 | |||||||||||
| RMB | RMB | USD | ||||||||||
| CURRENT | ||||||||||||
| Bank borrowings – unsecured | ||||||||||||
| Long-term borrowing – secured, current portion | - | - | ||||||||||
| Subtotal | ||||||||||||
| NON-CURRENT | ||||||||||||
| Long-term borrowing – secured | - | |||||||||||
| Subtotal | - | |||||||||||
| Total | ||||||||||||
Effective interest rate range of bank borrowings was
11. REVENUES
| Six Months Ended June 30, | ||||||||||||
| 2025 | 2026 | |||||||||||
| RMB | RMB | USD | ||||||||||
| Vocational education services | ||||||||||||
| Employee management services | ||||||||||||
| HR recruitment services | ||||||||||||
| Market Services | ||||||||||||
| Total | ||||||||||||
12. TAXATION
Under the current laws of the Cayman Islands, the Group is not subject to tax on income or capital gains. Additionally, upon payment of dividends by the Group to its shareholders, no Cayman Islands withholding tax will be imposed. The Company’s subsidiaries in Hong Kong are subject to Hong Kong Profits Tax rate at
PRC corporate income tax has been provided at the rate of
F-20
The Group recorded a tax expense of RMB
13. ORDINARY SHARES
On 26 February 2019, the Company was incorporated as an exempted company with limited liability in the Cayman Islands with an authorized share capital of US$
Upon the completion of the Business Combination on July 9, 2025: (i) the Company issued
As of June 30, 2026, the Company had
14. EARNINGS PER SHARE
The rights of the holder of Class A and Class B ordinary shares were identical for all periods presented, except with respect to voting and conversion rights, and therefore, the undistributed earnings were allocated on a proportionate basis and the resulting earnings per share attributable to ordinary shareholders were the same for both Class A and Class B ordinary shares on an individual or combined basis.
| Six Months End June 30, | ||||||||||||
| 2025 | 2026 | |||||||||||
| RMB | RMB | USD | ||||||||||
| Basic and diluted earnings per share calculation | ||||||||||||
| Numerator: | ||||||||||||
| Net profit attribute to Youlife Group Inc. | ||||||||||||
| Denominator: | ||||||||||||
| Basic Weighted average number of shares outstanding | ||||||||||||
| Basic net earnings per share | ||||||||||||
| Diluted Weighted average number of shares outstanding | ||||||||||||
| Diluted net earnings per share | ||||||||||||
15. SUBSEQUENT EVENTS
No subsequent event which had a material impact on the Company was identified through the date of issuance of the financial statements.
16. COMMITMENT AND CONTINGENCIES
The Group does not have any material commitments and contingencies as of June 30, 2026.
F-21
Exhibit 99.3
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS OF YOULIFE
This management’s discussion and analysis is designed to provide you with a narrative explanation of our financial condition and results of operations for the six months ended June 30, 2025 and 2026. This section should be read in conjunction with our unaudited condensed consolidated financial statements for the six-month periods ended June 30, 2025 and 2026 and related notes thereto, or the Unaudited Condensed Consolidated Financial Statements, included as Exhibit 99.2 to the report on Form 6-K to which this discussion is included. We also recommend that you read our management’s discussion and analysis and our audited consolidated financial statements for the fiscal year 2025 and the notes thereto, which appear in our annual report on Form 20-F for the year ended December 31, 2025, or the Annual Report, filed with the U.S. Securities and Exchange Commission, or the SEC, on April 30, 2026.
Unless the context otherwise requires, all references in this section to “Youlife,” “we,” “us” or “our” refer to Youlife Group Inc. and its subsidiaries, and, in the context of describing its operations and consolidated and combined financial information, also include the former subsidiaries.
All such financial statements were prepared in accordance with accounting principles generally accepted in the United States, or U.S. GAAP. We have made rounding adjustments to some of the figures included in this management’s discussion and analysis. Accordingly, numerical figures shown as totals in some tables may not be an arithmetic aggregation of the figures that precede them. This discussion contains forward-looking statements that involve risks, uncertainties and assumptions. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of various factors.
Key Factors Affecting Our Results of Operations
Our results of operations and financial condition are affected by the general factors affecting China’s blue-collar lifetime service market, including, among others, China’s overall economic growth, the competitive environment in China and greater challenges in hiring. In addition, our results of operations and financial condition are also affected by factors driving the blue-collar lifetime service market in China, such as growth of the blue-collar sector. Unfavorable changes in any of these general factors could materially and adversely affect our results of operations.
While our business is influenced by general factors affecting our industry, our results of operations are more directly affected by the following specific factors.
Our business mix
We have broad and diversified blue-collar lifetime service offerings, each of which complements and benefits each other and ensures our ability to withstand market while maintaining a strong financial growth trajectory. A shift in our revenue mix would affect our gross profit margin, as the gross profit margin of each business segment varies. Any change in the revenue mix or change in the profitability of any service offering may have a corresponding impact on our overall profitability. We may in the future further adjust our business structure and strategies to improve our profitability. Any further changes on our business mix may affect our profitability.
Our ability to maintain major customers and expand our customer base
Our success is largely dependent on our ability to attract and maintain major customers and expand our customer base, which in turn is affected by our ability to deliver quality services amid a changing landscape of the blue-collar lifetime service industry in China. In 2024 and 2025, and the six months ended June 30, 2026, approximately 28.5%, 28.1% and 52.7% of our total revenue were generated from our top five customers, respectively. There is no guarantee that we will continue to obtain new contracts with these major customers or maintain our relationships with them in the future. In addition, we have a proven record of serving leading domestic and international corporate customers with a deep understanding of their needs and delivery, which we believe would be important to enhance our branding. Our continuous growth will be driven by our ability to expand our customer base to cover more large and medium sized customers of different industries in more cities and regions. In addition, our success will also be affected by our ability to explore relationships with customers focused on emerging industries with great growth potential.
Our ability to keep up with rapid changes in the blue-collar lifetime service industry
Our ability to grow our business and increase profitability largely depends on our ability to keep up with the rapid changes in both market conditions and relevant laws and regulations of the blue-collar lifetime service industry. Government policies have strengthened supervision requirements in the blue-collar lifetime service industry. Although we have taken measures to comply with the laws and regulations that are applicable to our business operations and avoid conducting any non-compliant activities under the applicable laws and regulations, the PRC government authorities may promulgate new laws and regulations regulating the blue-collar lifetime service industry from time to time. Any of these changes in the blue-collar lifetime service industry may result in the prohibition or restriction of certain types of services we offer, or the imposition of new or additional licensing or other requirements could also reduce our revenue and earnings.
Non-GAAP Financial Measures
To supplement our consolidated financial statements which are presented in accordance with U.S. GAAP, we use adjusted net profit/loss and adjusted EBITDA, which are non-GAAP financial measures, in evaluating our operating results and for financial and operational decision-making purposes. Adjusted net profit/loss represents net profit before share-based compensation expenses and fair value gains from financial assets at fair value through profit or loss. Adjusted EBITDA represents adjusted net profit/loss before income tax expense, depreciation, amortization and interest expense. We believe that adjusted net profit/loss and adjusted EBITDA help identify underlying trends in our business that could otherwise be distorted by the effect of non-GAAP adjustments. We believe that such non-GAAP financial measures also provide useful information about our operating results, enhance the overall understanding of our past performance and prospects and allow for greater visibility with respect to key metrics used by our management in its financial and operational decision making.
The non-GAAP financial measures are not defined under U.S. GAAP and are not presented in accordance with U.S. GAAP. It should not be considered in isolation or construed as alternatives to net loss or any other measure of performance or as an indicator of our operating performance. Investors are encouraged to review the historical non-GAAP financial measures considering the most directly comparable GAAP measures, as shown below. The non-GAAP financial measures presented here may not be comparable to similarly titled measures presented by other companies. Other companies may calculate similarly titled measures differently, limiting their usefulness as comparative measures to our data. We encourage investors and others to review our financial information in its entirety and not rely on a single financial measure.
| For Six Months Ended June 30, | ||||||||||||
| 2025 | 2026 | |||||||||||
| RMB | RMB | USD | ||||||||||
| (in thousands) | ||||||||||||
| GAAP net profit | 37,572 | 30,307 | 4,451 | |||||||||
| Reconciliation item: | ||||||||||||
| Add: | ||||||||||||
| Fair value loss from financial assets at fair value through profit or loss, net of tax impact of nil | - | - | - | |||||||||
| Non-GAAP adjusted net profit | 37,572 | 30,307 | 4,451 | |||||||||
| Add: | ||||||||||||
| Income tax expense | 12,045 | 4,728 | 694 | |||||||||
| Depreciation | 5,095 | 3,976 | 584 | |||||||||
| Amortization | 7,006 | 10,042 | 1,474 | |||||||||
| Interest expense | 1,957 | 2,402 | 353 | |||||||||
| Non-GAAP adjusted EBITDA | 63,675 | 51,455 | 7,556 | |||||||||
2
Results of Operations
The following table sets forth a summary of our unaudited condensed consolidated statements of operations, both in absolute amount and as a percentage of our revenues, for the periods indicated. This information has been derived from and should be read together with our Unaudited Condensed Consolidated Financial Statements. The results of operations in any period are not necessarily indicative of the results that may be expected for any future period.
| For Six Months Ended June 30, | ||||||||||||
| 2025 | 2026 | |||||||||||
| RMB | RMB | USD | ||||||||||
| (in thousands) | ||||||||||||
| Revenues | 913,333 | 1,961,898 | 288,053 | |||||||||
| Cost of revenue | (784,828 | ) | (1,792,692 | ) | (263,209 | ) | ||||||
| Gross profit | 128,505 | 169,206 | 24,844 | |||||||||
| Operating expenses: | ||||||||||||
| Selling and distribution expenses | (24,680 | ) | (69,072 | ) | (10,141 | ) | ||||||
| Administrative expenses | (56,422 | ) | (61,479 | ) | (9,027 | ) | ||||||
| Research and development expenses | (1,589 | ) | (8,263 | ) | (1,213 | ) | ||||||
| Total operating expenses | (82,691 | ) | (138,814 | ) | (20,381 | ) | ||||||
| Operating income | 45,814 | 30,392 | 4,463 | |||||||||
| Other income/(expense): | ||||||||||||
| Other incomes | 5,657 | 8,498 | 1,248 | |||||||||
| Other expenses | (370 | ) | (459 | ) | (67 | ) | ||||||
| Gain on dissolution of subsidiaries and branches | 638 | - | - | |||||||||
| Financial expense, net | (2,122 | ) | (3,396 | ) | (499 | ) | ||||||
| Total other income, net | 3,803 | 4,643 | 682 | |||||||||
| Profit before tax | 49,617 | 35,035 | 5,145 | |||||||||
| Income tax expenses | (12,045 | ) | (4,728 | ) | (694 | ) | ||||||
| Net profit for the year | 37,572 | 30,307 | 4,451 | |||||||||
| Net loss attribute to non-controlling interests | (144 | ) | (187 | ) | (27 | ) | ||||||
| Net profit attribute to Youlife Group Inc. | 37,716 | 30,494 | 4,478 | |||||||||
| Non-GAAP Financial Data1 | ||||||||||||
| Adjusted net profit | 37,572 | 30,307 | 4,451 | |||||||||
| Adjusted EBITDA | 63,675 | 51,455 | 7,556 | |||||||||
| 1 | See “-Non-GAAP Financial Measures.” |
3
Six months ended June 30, 2026 compared to six months ended June 30, 2025
Revenues
Our revenues increased by 114.8% from RMB913.3 million for the six months ended June 30, 2025 to RMB1,961.9 million (US$288.1 million) for the six months ended June 30, 2026, with increases in revenues generated from employee management services. The increase of our revenues was mainly driven by the growth in employee management services. The following table sets forth a breakdown of our revenues, each expressed in the absolute amount and as a percentage of our total revenues, for the periods indicated:
| For the Six Months Ended June 30, | Variance | |||||||||||||||||||||||||||
| 2025 | 2026 | Amount | ||||||||||||||||||||||||||
| RMB | % | RMB | US$ | % | RMB | % | ||||||||||||||||||||||
| (in thousands, except for percentages) | ||||||||||||||||||||||||||||
| Vocational education services | 17,235 | 1.9 | 22,941 | 3,368 | 1.2 | 5,706 | 33.1 | |||||||||||||||||||||
| Employee management services | 847,790 | 92.8 | 1,884,238 | 276,650 | 96.0 | 1,036,448 | 122.3 | |||||||||||||||||||||
| HR recruitment services | 9,123 | 1.0 | 17,669 | 2,594 | 0.9 | 8,546 | 93.7 | |||||||||||||||||||||
| Market Services | 39,185 | 4.3 | 37,050 | 5,440 | 1.9 | (2,135 | ) | (5.4 | ) | |||||||||||||||||||
| Total | 913,333 | 100.0 | 1,961,898 | 288,053 | 100.0 | 1,048,565 | 114.8 | |||||||||||||||||||||
Vocational education services. Revenues generated from vocational education services increased by 33.1% from RMB17.2 million for the six months ended June 30, 2025 to RMB22.9 million (US$3.4 million) for the six months ended June 30, 2026, primarily due to the increase in our smart campus services.
Employee management services. Revenues generated from employee management services increased by 122.3% from RMB847.8 million for the six months ended June 30, 2025 to RMB1,884.2 million (US$276.7 million) for the six months ended June 30, 2026, primarily due to (i) the increase of our corporate customers and their growing demands of blue-collar labors, which was attributable to comprehensive adjustments and optimizations we have achieved on business control and development under fully utilizing our mix business model of blue-collar lifecycle value chain service; (ii) greater likelihood that our target customers are focusing on new economy industries with high customer value and large scale of outsourcing services demands; and (iii) the revenue generated from YouheHR as a result of acquisition dated on January 31, 2026.
HR recruitment services. Revenues generated from HR recruitment services increased by 93.7% from RMB9.1 million in the six months ended June 30, 2025 to RMB17.7 million (US$2.6 million) for the six months ended June 30, 2026, primarily due to clients’ increasing recruitment demands.
Marketing services and solutions. Revenues generated from marketing services and solutions decreased by 5.4% from RMB39.2 million for the six months ended June 30, 2025 to RMB37.1 million (US$5.4 million) for the six months ended June 30, 2026 primarily due to the decrease the scale of selling retail goods via online retail platform.
Cost of revenues
Our cost of revenues increased by 128.4% from RMB784.8 million for the six months ended June 30, 2025 to RMB1,792.7 million (US$263.2 million) for the six months ended June 30, 2026, primarily attributable to the increases in our labor cost and service fees for employee management services, in line with the increase in revenue.
4
Operating expenses
Our operating expenses increased from RMB82.7 million for the six months ended June 30, 2025 to RMB138.8 million (US$20.4 million) for the six months ended June 30, 2026, representing an increase of 67.9%, primarily due to the expenses from YouheHR as a result of acquisition. The following table sets forth a breakdown of our cost of revenues, each expressed in the absolute amount and as a percentage of our total revenues, for the periods indicated:
| For the Six Months Ended June 30, | Variance | |||||||||||||||||||||||||||
| 2025 | 2026 | Amount | ||||||||||||||||||||||||||
| RMB | % | RMB | US$ | % | RMB | % | ||||||||||||||||||||||
| (in thousands, except for percentages) | ||||||||||||||||||||||||||||
| Operating expenses | ||||||||||||||||||||||||||||
| Selling and marketing expenses | 24,680 | 2.7 | 69,072 | 10,141 | 3.5 | 44,392 | 179.9 | |||||||||||||||||||||
| Administrative expenses | 56,422 | 6.2 | 61,479 | 9,027 | 3.1 | 5,057 | 9.0 | |||||||||||||||||||||
| Research and development expenses | 1,589 | 0.2 | 8,263 | 1,213 | 0.4 | 6,674 | 420.0 | |||||||||||||||||||||
| Total | 82,691 | 9.1 | 138,814 | 20,381 | 7.1 | 56,123 | 67.9 | |||||||||||||||||||||
Selling and marketing expenses. Our selling and marketing expenses increased by 179.9% from RMB24.7 million for the six months ended June 30, 2025 to RMB69.1 million (US$10.1 million) for the six months ended June 30, 2026, primarily due to the expenses from YouheHR as a result of acquisition.
Administrative expenses. Our administrative expenses increased by 9.0% from RMB56.4 million for the six months ended June 30, 2025 to RMB61.5 million (US$9.0 million) for the six months ended June 30, 2026, primarily due to the expenses from YouheHR as a result of acquisition.
Research and development expenses. Our research and development expenses increased by 420.0% from RMB1.6 million for the six months ended June 30, 2025 to RMB8.3 million (US$1.2 million) for the six months ended June 30, 2026, primarily due to the increase in the research and development project expenditure.
Other income, net
We incurred other income, net of RMB3.8 million and other income, net of RMB4.6 million (US$0.7 million) for the six months ended June 30, 2025 and 2026, respectively, primarily due to the decrease of exchange loss for the six months ended June 30, 2026.
Income taxes
We recorded a tax expense of RMB12.0 million and RMB4.7 million (US$ 0.7 million) for the six months ended June 30, 2025 and 2026, respectively. Changes in the income tax expense primarily due to recognition of deferred tax assets in 2024 which began to be realized in 2025 and 2026.
5
Net profit
As a result of the foregoing, we recorded net profit of RMB37.7 million and RMB30.3 million (US$4.5 million) for the six months ended June 30, 2025 and 2026, respectively.
Liquidity and Capital Resources
Our cash and cash equivalents consist of cash on hand, demand deposit.
The following table sets forth a summary of our cash flows for the year presented:
| For the Six Months Ended June 30, | ||||||||||||
| 2025 | 2026 | |||||||||||
| RMB | RMB | USD | ||||||||||
| Net cash provided by operating activities | 13,690 | 9,137 | 1,341 | |||||||||
| Net cash (used in)/provided by investing activities | (98,512 | ) | 23,658 | 3,474 | ||||||||
| Net cash provided by/(used in) financing activities | 117,319 | (46,981 | ) | (6,898 | ) | |||||||
| Net increase/(decrease) in cash and cash equivalents | 32,497 | (14,186 | ) | (2,083 | ) | |||||||
| Cash and cash equivalents, beginning of the year | 126,531 | 144,219 | 21,175 | |||||||||
| Cash and cash equivalents, ended of the year | 159,028 | 130,033 | 19,092 | |||||||||
We believe that our current cash and cash equivalents and our anticipated cash flows from operations will be sufficient to meet our anticipated working capital requirements and capital expenditures for at least the next 12 months. After this offering, we may decide to enhance our liquidity position or increase our cash reserve for future investments through additional capital and finance funding. The issuance and sale of additional equity would result in further dilution to our shareholders. The incurrence of indebtedness would result in increased fixed obligations and could result in operating covenants that would restrict our operations. We cannot assure you that financing will be available in amounts or on terms acceptable to us, if at all.
Operating activities
Our net cash provided by operating activities for the six months ended of June 30, 2026 was RMB9.1 million (US$1.3 million), primarily due to our net profit of RMB30.3 million (US$4.5 million), as adjusted to reflect certain non-cash or non-operating activities related items. Changes in the working capital mainly included (i) a decrease in trade and bills payables of RMB7.0 million (US1.0 million); (ii) a decrease in tax payable of RMB5.2 million (US$0.8 million); (iii) an increase in trade receivables of RMB31.2 million (US$4.6 million); and (iv) a decrease in deferred tax assets, net of RMB3.8 million (US$0.6 million).
Our net cash provided by operating activities for the six months ended of June 30, 2025 was RMB13.7 million (US$1.9 million), primarily due to our net profit of RMB37.6 million (US$5.2 million), as adjusted to reflect certain non-cash or non-operating activities related items, which primarily included listing expenses of RMB12.5 million. Changes in the working capital mainly included (i) a decrease in trade and bills payables of RMB1.6 million (US$0.2 million); (ii) an increase in other payables and accruals of RMB4.4 million (US$0.6 million); (iii) an increase in trade receivables of RMB50.6 million (US$7.1 million); and (iv) a decrease in deferred tax assets, net of RMB11.5 million (US$1.6 million).
Investing activities
Our net cash provided by investing activities for the six months ended June 30, 2026 was RMB23.7 million (US$3.5 million), primarily due to cash received from a business combination of RMB24.0 (US$3.5 million) million.
Our net cash used in investing activities for the six months ended June 30, 2025 was RMB98.5 million (US$13.8 million), primarily due to cash used in purchase of long-term investments.
6
Financing activities
Our net cash used in financing activities for the six months ended June 30, 2026 was RMB47.0 million, primarily due to repayment of advances from third parties of RMB45.7 million (US$6.7 million).
Our net cash provided by financing activities for the six months ended June 30, 2025 was RMB117.3 million (US$16.4 million), primarily due to proceed from PIPE investors of RMB141.2 million (US$19.7 million).
Capital Expenditures
Our capital expenditures were nil and RMB 0.3 million for the six months ended June 30, 2025 and 2026, respectively. Our capital expenditures were mainly used for purchases of furniture, computers and office equipment and leasehold improvements. We will continue to make capital expenditures to meet the expected growth of our business. We intend to fund our future capital expenditures with our existing cash balance.
Contractual Obligations
The following table set forth our contractual obligations as of June 30, 2026:
| Payment Due by Period | ||||||||||||
| Total | Within One Year | More Than One Year | ||||||||||
| (RMB in thousands) | ||||||||||||
| Operating lease obligation | 33,168 | 7,462 | 25,706 | |||||||||
Other than as shown above, we did not have any other significant capital and other commitments, long-term obligations, or guarantees as of June 30, 2026.
Internal Control over Financial Reporting
Prior to this Business Combination, we were a private company with limited accounting personnel and other resources with which to address our internal control over financial reporting. Our management and independent registered public accounting firm have completed the assessment and audit of our internal control over financial reporting, and they did not find any internal control issue.
As a company with less than US$1.235 billion in revenue for the last year, we qualify as an “emerging growth company” pursuant to the JOBS Act. An emerging growth company may take advantage of specified reduced reporting and other requirements that are otherwise applicable generally to public companies. These provisions include exemption from the auditor attestation requirement under Section 404 of the Sarbanes-Oxley Act of 2002 in the assessment of the emerging growth company’s internal control over financial reporting.
Off-Balance Sheet Commitments and Arrangements
We have not entered into any financial guarantees or other commitments to guarantee the payment obligations of any third parties. In addition, we have not entered into any derivative contracts that are indexed to our shares and classified as shareholders’ equity or that are not reflected in our consolidated and combined financial statements. Furthermore, we do not have any retained or contingent interest in assets transferred to an unconsolidated entity that serves as credit, liquidity, or market risk support to such entity. We do not have any variable interest in any unconsolidated entity that provides financing, liquidity, market risk, or credit support to us or engages in leasing, hedging, or product development services with us.
7
Cautionary Statement Regarding Forward Looking Statements
We have made statements in this report that constitute forward-looking statements. Forward-looking statements involve risks and uncertainties, such as statements about our plans, objectives, expectations, assumptions or future events. In some cases, you can identify forward-looking statements by terminology such as “anticipate,” “estimate,” “plan,” “project,” “continuing,” “ongoing,” “expect,” “we believe,” “we intend,” “may,” “should,” “could” and similar expressions. These statements involve estimates, assumptions, known and unknown risks, uncertainties and other factors that could cause actual results to differ materially from any future results, performances or achievements expressed or implied by the forward-looking statements.
These forward-looking statements include statements about:
| ● | our future business development, financial condition and results of operations; |
| ● | the expected growth of the relevant markets; |
| ● | our expectations regarding demand for and market acceptance of our services; |
| ● | expected changes in our revenues, costs or expenditures; |
| ● | general business, political, social and economic conditions in China and the relevant markets where we have operations. |
The ultimate correctness of these forward-looking statements depends upon a number of known and unknown risks and events. Many factors could cause our actual results to differ materially from those expressed or implied in our forward-looking statements. Consequently, you should not place undue reliance on these forward-looking statements.
The forward-looking statements speak only as of the date on which they are made, and, except as required by law; we undertake no obligation to update any forward-looking statement to reflect events or circumstances after the date on which the statement is made or to reflect the occurrence of unanticipated events.
In addition, we cannot assess the impact of each factor on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements.
Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. We undertake no obligation to update this forward-looking information. Nonetheless, we reserve the right to make such updates from time to time by press release, periodic report or other method of public disclosure without the need for specific reference to this interim report. No such update shall be deemed to indicate that other statements not addressed by such update remain correct or create an obligation to provide any other updates.
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