20-F: Tuya Inc. Reports 7.8% Revenue Growth in 2025

Tuya Inc. announced its annual report for the fiscal year ended December 31, 2025, detailing a 7.8% year-over-year revenue increase to $321.8 million and a significant rise in net profit to $57.9 million.

Summary

• Tuya Inc. reported a 7.8% increase in revenue for the fiscal year ended December 31, 2025, reaching $321.8 million, up from $298.6 million in 2024.
• Net profit saw a substantial increase, growing from $5.0 million in 2024 to $57.9 million in 2025.
• The company's PaaS revenue grew by 6.5% to $231.2 million, while Smart Solution revenue increased by 8.9% to $45.7 million, and SaaS and others revenue rose by 13.4% to $44.9 million.
• Gross margin improved to 48.2% in 2025 from 47.4% in 2024, driven by a favorable shift in product mix towards higher-margin SaaS offerings.
• Research and development expenses decreased by 5.6% to $89.7 million, and sales and marketing expenses decreased by 10.7% to $33.1 million, contributing to improved profitability.
• General and administrative expenses saw a significant decrease of 54.7% to $30.9 million, largely due to lower share-based compensation expenses.
• The company generated $81.0 million in net cash from operating activities in 2025.
• As of December 31, 2025, Tuya Inc. had $952.5 million in cash, cash equivalents, and short-term investments.
• The company declared and paid dividends totaling approximately $69.8 million in 2025.

Sentiment

Score: 7

Explanation: StockSavvy.ai views this filing positively due to strong revenue growth, significant improvement in profitability, and a healthy cash position, although the slight decline in PaaS net expansion rate warrants monitoring.

Positives

• Revenue increased by 7.8% to $321.8 million in 2025.
• Net profit increased significantly from $5.0 million in 2024 to $57.9 million in 2025.
• Gross margin improved to 48.2% in 2025.
• PaaS revenue grew by 6.5% to $231.2 million.
• Smart Solution revenue grew by 8.9% to $45.7 million.
• SaaS and others revenue grew by 13.4% to $44.9 million.
• Research and development expenses decreased by 5.6% to $89.7 million.
• Sales and marketing expenses decreased by 10.7% to $33.1 million.
• General and administrative expenses decreased by 54.7% to $30.9 million.
• Net cash from operating activities was $81.0 million in 2025.
• Cash and cash equivalents and short-term investments totaled $952.5 million as of December 31, 2025.
• The company's dollar-based net expansion rate for PaaS was 102% as of December 31, 2025, indicating continued customer engagement and growth.
• The number of premium PaaS customers remained strong at 291 as of December 31, 2025.
• The company's AI Agent Development Platform supports integration with multiple leading large language models, lowering barriers for AI device development.

Negatives

• The dollar-based net expansion rate for PaaS declined to 102% as of December 31, 2025, from 122% as of December 31, 2024, reflecting normalization of growth patterns among some large customers and a strategic focus on new customer acquisition.
• The gross margin for the Smart Solution business decreased to 23.7% in 2025 from 25.5% in 2024.
• Other operating incomes, net, decreased by 10.4% due to a decrease in government grants.
• Other income decreased due to a decline in financial income, net.

Risks

• The company operates in an emerging and evolving market with significant competition, and future growth is dependent on market adoption of AI cloud platforms and smart devices.
• Failure to estimate customer demand properly could harm financial results.
• Reliance on third-party suppliers for modules and finished smart devices carries risks of increased costs, supply disruption, and quality issues.
• The company faces risks related to cybersecurity, data privacy, and compliance with evolving global data protection laws.
• Geopolitical tensions, particularly between the United States and China, and related trade policies could adversely affect business operations.
• The company's dual-class voting structure may limit shareholders' ability to influence corporate matters and could affect the trading price and liquidity of its securities.
• The company may be classified as a Passive Foreign Investment Company (PFIC) for U.S. federal income tax purposes, which could result in adverse tax consequences for U.S. investors.
• Regulatory and legislative developments related to AI could adversely affect the company's use and provision of AI in its products and services.
• The company's business depends on its strong reputation and the 'Tuya' brand; negative publicity or security incidents could harm its brand and business.
• The company may require additional capital in the future, and such capital may not be available on favorable terms, if at all.

Future Outlook

The company expects to continue investing in research and development, particularly in AI capabilities, and to expand its customer base and global presence. The company's financial performance will be influenced by market adoption of AI cloud platforms, customer retention, and effective cost management.

Management Comments

• "In 2025, we continued to improve our operating performance and advance the execution of our AI-related initiatives, while also returning capital to shareholders through cash dividends."
• "During the year, we achieved revenue growth and further improved profitability and operating efficiency."
• "Our non-GAAP operating income reached a record level, and we remained profitable on a GAAP basis, primarily due to increased operating leverage, continued expense discipline and a decrease in share-based compensation."
• "We believe these efforts enhanced the functionality of our offerings and supported broader engagement across our ecosystem, including our registered AI developer community."
• "We also continued to declare and pay cash dividends during the year, reflecting our capital allocation approach and confidence in our business and financial position."

Industry Context

StockSavvy.ai notes that Tuya's performance reflects the broader trend of increasing adoption of AI and IoT technologies across consumer and industrial sectors. The company's focus on an open, AI-agnostic platform and its expanding developer ecosystem are key competitive advantages in a rapidly evolving market.

Comparison to Industry Standards

• Tuya is identified by CIC as the world's largest third-party AI cloud platform offering PaaS in terms of the volume of smart devices powered in 2025.
• The company's gross margin of 48.2% in 2025 is competitive within the cloud platform and IoT service industry, though specific industry benchmarks for PaaS and Smart Solutions can vary widely.
• The company's R&D investment as a percentage of revenue (27.9% in 2025) is substantial, aligning with industry practices for technology-focused companies investing heavily in innovation.

Legal Proceedings

• A securities class action lawsuit filed in August 2022 was dismissed with prejudice on March 31, 2025, after the court granted the company's motion for judgment on the pleadings, finding no false or misleading statements in the registration statement.

Related Party Transactions

• The company had minimal transactions with Tencent Group in early 2025, primarily for cloud services, before Tencent ceased to be a related party.
• There were no other material related party transactions during the year ended December 31, 2025.

Stakeholder Impact

• Shareholders benefit from increased profitability and a strong cash position, with dividends declared and paid in 2025.
• Customers benefit from improved AI and IoT capabilities, a robust developer ecosystem, and potentially more competitive pricing due to cost efficiencies.
• Employees benefit from the company's continued investment in R&D and a focus on operational efficiency, which supports long-term growth and stability.

Next Steps

• Continue to integrate Spatial LLM and On-Device AI capabilities into the platform.
• Expand into additional product categories, including AI-powered toys.
• Foster the developer ecosystem and enhance AI Agent development platform.
• Focus on acquiring new customers and supporting their initial ramp-up phase.
• Continue to optimize operating expenses and maintain cost discipline.

Key Dates

Recommendation

The company has demonstrated strong financial performance with significant revenue growth and improved profitability. However, the declining PaaS net expansion rate and ongoing risks related to the competitive landscape, regulatory environment in China, and potential PFIC status warrant a cautious 'hold' recommendation, pending further clarity on these factors and sustained growth in key metrics.

Keywords

Tuya Inc., Form 20-F, Annual Report, IoT, AIoT, PaaS, SaaS, Smart Solution, Cloud Platform, AI Agent, LLM, Financial Results, Revenue Growth, Net Profit, Shareholder Dividends, Cybersecurity, Data Privacy, China, SEC Filing