- Cloud firm rebrands business units around AI, as focus pays off
- Rising revenue, profits and cash reserves in excess of $1 billion undergird pivot to AI
Tuya Inc. (涂鸦智能), a Hangzhou-based AIoT service provider, reported stronger first-quarter earnings on May 12, as the Chinese cloud platform operator accelerated its pivot toward AI despite softer margins across several core businesses.
Listed both in the US and Hong Kong, the company posted unaudited first-quarter revenue of $80.9 million, up 8.3% from a year earlier, while net profit rose 43.6% to $15.8 million.
“Since the fourth quarter (of 2025), benefiting from sustained recovery in downstream demand, our business scale has continued to expand, with total revenue increasing by 8.3% year-over-year,” Tuya co-founder and chief executive Wang Xueji said on an earnings call. “This marks a further improvement in growth rate compared to the previous quarter and maintaining positive growth for multiple consecutive quarters.”
Alongside the results, Tuya reshaped the naming of several business units to emphasize its transition to AI.
Its long-standing “software-as-a-service (SaaS) and others” segment was renamed “AI applications and others,” while the former “smart solutions” division became “smart home and robotics products.”
Repositioning
The name change aligns with Tuya’s bet on AI as the main growth driver going forward. Originally founded in 2014 as an IoT cloud platform that helped manufacturers turn traditional appliances into connected smart devices, Tuya is now repositioning itself as an AI-driven technology provider.
This new position is underpinned by a broader strategy to embed AI across its hardware and software offerings, including integration of large language models and AI agents into smart homes, robotics, enterprise applications, among others.
The AI applications segment will focus on subscription-based services powered by AI models, while the smart home and robotics division will center on AI-enabled consumer electronics and household robots, Tuya said.
Growth across those AI-focused businesses, however, remained uneven.
Revenue from AI applications and related services rose 16.9% year-on-year to about $11.6 million, driven mainly by cloud services growth. Revenue from smart home and robotics products fell 6.9% to $10.2 million.
Wang said the company is accelerating efforts to move AI capabilities from infrastructure layers into consumer-facing applications and scenario-based products.
As of March 31, Tuya’s platform hosted more than 1.97 million registered AI developers, up 9.4% from the end of 2025.
Sizable cash reserves
Despite remaining profitable, Tuya’s margins continued to tighten. Overall gross margin declined to 46.9% in the first quarter from 48.5% a year earlier.
Gross margin in its core platform-as-a-service (PaaS) business slipped to 46.1% from 48.4%, even as revenue from the segment increased 9.8% year-over-year to $59 million. Gross margins in AI applications and smart home products also edged lower.
Chief Financial Officer Alex Yang said profitability mainly benefited from improved operational efficiency and tighter cost controls.
Tuya’s sizable cash reserves remain central to its long-term AI ambitions. The company disclosed that cash and liquid investments exceeded $1 billion as of March 31.
The balance sheet gives the company “strategic flexibility” to continue investing in AI and overseas expansion, Yang said.
