Tuya Inc (TUYA) Q4 2024 Earnings Call Highlights: Strong Revenue Growth and Strategic AI Integration

GuruFocus News

Thu, Feb 27, 2025, 12:07 AM 4 min read

Revenue: $82 million in Q4 2024, a 27.4% year-over-year growth.
PaaS Revenue: $59.3 million in Q4 2024, up 25.7% year-over-year.
SaaS and Others Revenue: $11.5 million in Q4 2024, up 21.1% year-over-year.
Smart Solutions Revenue: $11.3 million in Q4 2024, a 45.5% year-over-year growth.
Total Annual Revenue: $298.6 million for 2024, nearly 30% year-over-year growth.
Gross Margin: Stable at around 47% for 2024.
Non-GAAP Operating Margin: 7.4% for 2024.
Non-GAAP Net Profit Margin: 25.2% for 2024.
Operating Cash Flow: $80.4 million positive for 2024.
Net Cash Balance: Over $1 billion at the end of Q4 2024.
IoT PaaS Premium Customers: Grew by 11% to 298 in 2024.
Revenue Dollar Expansion Rate (DBNER): Exceeded 122% at the end of Q4 2024.
Top 10% Customer Retention Rate: About 97%.
Average Revenue per Customer: Increased by about 37% year-over-year.
Average Gross Profit per Customer: Increased by about 40% year-over-year.
Sales and Marketing Efficiency: Improved by about 40% year-over-year.
Registered Developers: Reached around 1.32 million by the end of 2024.
Smart Devices SKUs: Over 1.07 million developed on the platform.
Dividend: Second dividend for 2024 totaling about $37 million approved.

Warning! GuruFocus has detected 1 Warning Sign with TUYA.

Release Date: February 26, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

Tuya Inc (NYSE:TUYA) achieved nearly 30% year-over-year revenue growth in 2024.
The company reported its first annual GAAP net profit and non-GAAP operating profitability.
Smart Solution revenue grew approximately 58% year-over-year, driven by strong demand across various categories.
Tuya Inc (NYSE:TUYA) maintained a strong liquidity position with a net cash balance of over $1 billion.
The company is committed to building a global AIoT developer ecosystem, enhancing its competitive edge.

Negative Points

The scalability of AI integration into Tuya Inc (NYSE:TUYA)'s products is still in its early stages, with no clear visibility on short-term margin impacts.
Operating expenses have been high due to investments in AI and operating efficiency.
The company's gross margin may slightly decrease in the long term as the solutions segment, which has lower margins, becomes a larger part of the revenue mix.
There is uncertainty in the commercialization strategy for AI, which could impact future profitability.
The competitive landscape in AI for IoT is evolving, with potential challenges from hyper-scalers and other solution providers.

Q & A Highlights

Q: Could management elaborate on the AI impact and usage scenarios in the smart solutions business? A: Yi Yang, Co-Founder and COO, explained that 2025 is expected to be a pivotal year for AI devices. The focus will be on audio and video interaction devices, such as pet feeders and control panels, and complex decision-making devices like energy solutions. Additionally, AI integration into toys is gaining traction, with many customers showing interest post-CES. The goal is to lower barriers for developers, fostering a robust market with diverse applications.

Q: How will AI impact unit pricing and margins, and what is the outlook for operating expenses? A: Yi Yang noted that AI is still in its early stages, and commercialization strategies are being explored across PaaS, SaaS, and solutions. While short-term margin impacts are unclear, AI is expected to add value long-term. Operating expenses are manageable, with existing teams already AI-ready, minimizing the need for new hires. The focus remains on scalability and efficient marketing.

Q: What are the growth prospects for SaaS, and could it change the landscape? A: Yi Yang highlighted that SaaS growth is tied to the expansion of the PaaS base. The focus is on increasing recurring revenue models and customer stickiness. While short-term surprises are not expected, SaaS is seen as a long-term growth driver, particularly as it expands into global markets with proven applications.

Q: What is Tuya's view on acquisitions given its strong cash position? A: Yi Yang stated that mergers and acquisitions (M&A) are an open option, with a focus on extending coverage or providing vertical solutions. The priority is to strengthen the global developer ecosystem, and potential targets within this ecosystem are of interest.

Q: What is the outlook for IoT PaaS demand and high-quality customer expansion? A: Yi Yang emphasized a balanced business structure across regions and categories, with Europe being the largest market. The focus is on expanding into non-consumer fields and spatial solutions, leveraging AI to open new opportunities. The goal is to attract high-quality customers by enhancing competitiveness through AI.

Q: How will the revenue structure and competition in AI for IoT affect Tuya? A: Yi Yang explained that PaaS will continue to provide a stable growth base, with SaaS as a long-term growth curve. Solutions may grow faster, potentially impacting overall gross margins. In terms of competition, Tuya aims to lower barriers for developers, fostering innovation and maintaining a competitive edge in the AI-driven IoT market.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

This article first appeared on GuruFocus.

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