Q3 2025 Tuya Inc Earnings Call

Speaker #1: At this time, all participants are in listen-only mode. After the speaker's presentation, there will be a question and answer session. Please be informed that today's conference is being recorded.

Speaker #1: I'll now turn the call over to your first speaker today, Ms. Regina Wang, Investor Relations Senior Manager of Tuya. Please go ahead.

Regina Wang: Thank you, Reg. Hello, everyone, and welcome to Tuya's Q3, Q4 2025 earnings conference call. Joining us today are Founder and CEO of Tuya, Mr. Jerry Wang, and our Co-founder and CFO, Mr. Alex Yang.

Speaker #1: ahead. Thank

Speaker #2: You, Operator. Hello, everyone, and welcome to Tuya's third quarter 2025 earnings conference call. Joining us today are founder and CEO of Tuya, Mr. Jerry Wang, and our co-founder and CFO, Mr. Alex Yang.

Speaker 1: The Q3, Q4, 2025 financial results and website of today's conference call will be available on our IR website at ir.tuya.com, and the replay will be posted shortly after our conclude. Before we continue, please notice that our safe harbor statement in the earnings press release applies to today's call. As we may make forward-looking statements, with that, let me now turn the call over to our Founder and CEO, Mr. Jerry Wang. Jerry will deliver his remark in Chinese, which will be followed by a corresponding English translation. Jerry, please. ?????????? Tuya 2025 ??????????? Hello, everyone. Thank you for joining Tuya's earnings call for Q3, Q4, 2025. ??????????????????????????????????????????????????????????????????????????????????????????????????????? 8,250 ?????????????????????????????????????????? 48% ??????????????????????????????????????????? In the Q3, the external environment remains volatile, continuing the trends seen since the beginning of the year.

The Q3, Q4, 2025 financial results and website of today's conference call will be available on our IR website at ir.tuya.com, and the replay will be posted shortly after our conclude. Before we continue, please notice that our safe harbor statement in the earnings press release applies to today's call. As we may make forward-looking statements, with that, let me now turn the call over to our Founder and CEO, Mr. Jerry Wang. Jerry will deliver his remark in Chinese, which will be followed by a corresponding English translation.

Speaker #2: The third quarter 2025 financial results and website of today's conference call are available on our IR website at ir.tuya.com. The replay will be posted shortly after we conclude.

Speaker #2: Before we continue, please notice that our safe harbor statements in the earnings press release apply to today's call. As we may make forward-looking statements, with that, let me now turn the call over to our founder and CEO, Mr. Jerry Wang.

Speaker #2: Jerry will deliver his remark in Chinese, which will be followed by a corresponding English translation. Jerry, please.

Jerry Wang: Jerry, please. ?????????? Tuya 2025 ???????????

Speaker #3: 大家好，感谢大家参加Tuya 2025年第三季度业绩电话会。

Regina Wang: Hello, everyone. Thank you for joining Tuya's earnings call for Q3, Q4, 2025.

Speaker #2: Hello, everyone. Thank you for joining Tuya's earnings call for the third quarter of 2025.

Jerry Wang: ??????????????????????????????????????????????????????????????????????????????????????????????????????? 8,250 ?????????????????????????????????????????? 48% ???????????????????????????????????????????

Speaker #3: 今年三季度外部环境仍然延续了年初以来的波动特征，全球消费电子行业整体处于恢复的节奏不均，客户需求更加谨慎的阶段。同时，去年同期的技术较高对同比的增速形成一定的压力。在这样的背景下，本季度总收入达到约8,250万美元。连续第九个季度保持同比增长，彰显了公司业务模式的看风险能力。毛利率继续保持在18%以上，体现了公司业务结构的韧性以及产品组合和经营效率在过去几个季度的持续的改善的成果。

Regina Wang: In the Q3, the external environment remains volatile, continuing the trends seen since the beginning of the year.

Speaker #2: In the third quarter, the external environment remains radical, continuing the trend seen since the beginning of the year. The global consumer electronics industry experienced an uneven recovery, with customer demand becoming more cautious amid ongoing macro uncertainties.

Speaker 1: The global consumer electronics industry experienced an uneven recovery, with customer demand becoming more conscious in the ongoing macro uncertainties. In addition, the high base from the same period last year created added pressure on year-over-year growth. Against the backdrop, our total revenue for Q4 reached approximately $82.5 million, marking our ninth consecutive quarter of year-over-year growth and underscoring the strength of Tuya's business model. Gross margin remained above 48%. This result further reflects the resilience of our business structure and the steady improvements we have made in product mix and operating efficiency over recent quarters. ???????????????????????????????????? GAAP ?????? 24.4%?GAAP ?????? 18.2%??? GAAP ??????????? 23.6 ????????????????????????????????????????????????????????????????? In terms of profitability, supported by an improved gross margin profile, greater expense efficiency, and sustained scale leverage, our non-GAAP net margin reached 24.4%, while GAAP net margin was 18.2%. Notably, GAAP net margin expanded by more than 23.6 percentage points year-over-year.

The global consumer electronics industry experienced an uneven recovery, with customer demand becoming more conscious in the ongoing macro uncertainties. In addition, the high base from the same period last year created added pressure on year-over-year growth. Against the backdrop, our total revenue for Q4 reached approximately $82.5 million, marking our ninth consecutive quarter of year-over-year growth and underscoring the strength of Tuya's business model. Gross margin remained above 48%. This result further reflects the resilience of our business structure and the steady improvements we have made in product mix and operating efficiency over recent quarters.

Speaker #2: In addition, the high base from the same period last year created added pressure on year-over-year growth. Against this backdrop, our total revenue for the quarter reached approximately $82.5 million, marking our ninth consecutive quarter of year-over-year growth and underscoring the strength of Tuya's business model.

Speaker #2: Gross margin remained above 48%. This result further reflects the resilience of our business structure and the steady improvements we have made in product mix and operating efficiency over recent quarters.

Jerry Wang: ???????????????????????????????????? GAAP ?????? 24.4%?GAAP ?????? 18.2%??? GAAP ??????????? 23.6 ?????????????????????????????????????????????????????????????????

Speaker #3: 净利润方面，受益于毛利率的结构改善，费用效率提升及规模杠杆的持续释放，让GAAP的净利润率为24.4%。GAAP的净利润率为18.2%，其中GAAP的净利润率同比提升超过23.6个百分点。整体来看，我们在保证业务发展的战略投入的前提下，实现了费用结构的持续优化，收入和毛利的增量正在更加高效的转化为经营利润。

Regina Wang: In terms of profitability, supported by an improved gross margin profile, greater expense efficiency, and sustained scale leverage, our non-GAAP net margin reached 24.4%, while GAAP net margin was 18.2%. Notably, GAAP net margin expanded by more than 23.6 percentage points year-over-year.

Speaker #2: In terms

Speaker #2: Of profitability, expected by an improved gross margin profile, greater expense efficiency, and sustained scale leverage, our non-GAAP net margin reached 24.4%. We are GAAP net margin well at 18.2%.

Speaker #2: Notably, GAAP net margin expanded by more than 23.6 percentage points year-over-year. Overall, we are maintaining key investments in business development. We have continued to optimize our expense structure, enabling incremental revenue and growth profits to translate more effectively into operating profits.

Speaker 1: Overall, while maintaining key investments in business development, we have continued to optimize our expense structure, enabling incremental revenue and gross profits to translate more effectively in operating profits. ??????????????????? AI?????????????????????????????? AI ??????????????? 93.9%?????????????? AI ??????????????????????AI ?????????????????? AI ??? AI Voice ?????????????????????? AI Agent ????????????? 1.55 ????? AI Note?AI Translate?AI ???AI ???AI ?????????????????????? AI Agent ????AI ??????????????????????????????????????????????????????????????? Tuya ???????????? AI Assistant App???????? Smart Life?Smart Living??????????????????? AI Life Assistant????????????? CES ???????? At the same time, on the strategic exclusion front, we continue to fully embrace AI and deepen its integrations across our ecosystem. As of the end of Q3, smart devices equipped with AI capabilities account for 93.9% of total shipments, an increase from the previous quarter, demonstrating that AI is swiftly becoming the default configuration for smart devices. On the user side, AI adoption is also scaling quickly.

Overall, while maintaining key investments in business development, we have continued to optimize our expense structure, enabling incremental revenue and gross profits to translate more effectively in operating profits.

Jerry Wang: ??????????????????? AI?????????????????????????????? AI ??????????????? 93.9%?????????????? AI ??????????????????????AI ?????????????????? AI ??? AI Voice ?????????????????????? AI Agent ????????????? 1.55 ????? AI Note?AI Translate?AI ???AI ???AI ?????????????????????? AI Agent ????AI ??????????????????????????????????????????????????????????????? Tuya ???????????? AI Assistant App???????? Smart Life?Smart Living??????????????????? AI Life Assistant????????????? CES ????????

Speaker #3: 与此同时，再战略执行方面，我们全面拥抱AI，并在生态体系中取得了更进一步的落地效果。截至三季度末，支持AI能力的智能设备已占全部出货量的93%.9%，较第二季度进一步提升，说明AI正在快速的成为智能硬件的默认配置。在用户侧，AI的使用规模也在快速的扩大。我们可以看到AI已经从AI voice等单一的品类的产品逐步扩大到更多的品类，主要AI agent的服务的全球交互量已达每天1.5亿次，覆盖AI note、AI translate、AI健康、AI能源、AI养宠、潮玩、潮观、安全守护以及机器人等通用的AI agent产品。AI正在持续的渗透到更多的日常设备和生活场景，为未来更大规模的产品创新和价值的提升奠定基础。同时在这个季度，我们也以开始面向全球的Tuya生态用户灰度测试全新的AI assistant APP，围绕公司的使命Smart Life、Smart Living，我们正在构建一款面向全球用户的通用型AI life assistant，并计划在一个多月后的美国CES展会上正式发布。

Regina Wang: At the same time, on the strategic exclusion front, we continue to fully embrace AI and deepen its integrations across our ecosystem. As of the end of Q3, smart devices equipped with AI capabilities account for 93.9% of total shipments, an increase from the previous quarter, demonstrating that AI is swiftly becoming the default configuration for smart devices. On the user side, AI adoption is also scaling quickly.

Speaker #2: At the same time, under strategic execution plans, we continue to fully embrace AI and deepen its integrations across our ecosystems. As of the end of Q3, smart devices equipped with AI capabilities account for 93.99% of total shipments.

Speaker #2: An increment from the previous quarter demonstrates that AI is swiftly becoming the default configuration for smart devices. On the user side, AI adoption is also scaling quickly.

Speaker 1: AI has clear moves beyond single category features like AI Voice to a broader spectrum of product categories. Tuya's AI Agent service now handles 155 million daily interactions for global users, supporting diverse scenarios such as AI Note, AI Translate, AI Health, AI Energy, AI Pet Care, AI Trendy Play, AI Gaming, AI Secure Guard, and AI Robotics. AI continues to penetrate the broader range of daily devices and life scenarios, laying the foundation for large-scale product innovation and long-term valuation creation. During Q4, we also began global beta testing of our new AI Agent App with Tuya ecosystem users. Aligned with our Smart Live, Smart Living mission, we are currently developing a universal AI Life Assistant for global users, which is scheduled for official release at the CES show in the United States in just over a month.

AI has clear moves beyond single category features like AI Voice to a broader spectrum of product categories. Tuya's AI Agent service now handles 155 million daily interactions for global users, supporting diverse scenarios such as AI Note, AI Translate, AI Health, AI Energy, AI Pet Care, AI Trendy Play, AI Gaming, AI Secure Guard, and AI Robotics. AI continues to penetrate the broader range of daily devices and life scenarios, laying the foundation for large-scale product innovation and long-term valuation creation. During Q4, we also began global beta testing of our new AI Agent App with Tuya ecosystem users. Aligned with our Smart Live, Smart Living mission, we are currently developing a universal AI Life Assistant for global users, which is scheduled for official release at the CES show in the United States in just over a month.

Speaker #2: AI has clear moves beyond single-category features like AI voice to a broader speculation of product categories. Tuya's AI agent service now handles 155 million daily interactions for global users.

Speaker #2: Spotting diverse scenarios such as AI notes, AI translation, AI health, AI energy, AI pet care, AI trendy play, AI gaming, AI secure guard, and AI robotics.

Speaker #2: AI continues to penetrate the broader range of daily devices and life scenarios, laying the foundation for large-scale product innovation and long-term valuation creation. During the quarter, we also began global beta testing of our new AI agent app with Tuya ecosystem users.

Speaker #2: Aligned with our smart life, smart living mission, we are currently developing a universal AI life assistant for global users, which is scheduled for official release at the CES show in the United States in just over a month.

Jerry Wang: [Foreign language]

Speaker 1: Now, let me turn the call over to our Co-founder and CFO, Alex Yang, who will share more details about our financial performance and business progress. Hello, everyone. This is Alex. I will now provide more details on my third-quarter results. Please note that all the figures are in US dollar based, and all the comparisons are year-over-year based. We delivered a total revenue of approximately $82.5 million in the third quarter, representing a 1.1% year-over-year increase. Despite a strong comparison base last year and continued caution in external demand, we achieved our ninth consecutive quarter of year-over-year growth, underscoring our resilience and scalability in our business. With the total revenue, our PaaS business delivered strong results, generating $59.2 million, a 2.4% year-over-year increase, driven prevalently by our strategic focus on the customer demand and product optimization.

Speaker #3: 接下来请我们的CFOS为大家带来更多的财务表现和经营进展。

Regina Wang: Now, let me turn the call over to our Co-founder and CFO, Alex Yang, who will share more details about our financial performance and business progress.

Speaker #2: Now, let me turn the call over to our co-founder and CFO, Alex Yang, who will share more details about our financial performance and business.

Alex Yang: Hello, everyone. This is Alex. I will now provide more details on my third-quarter results. Please note that all the figures are in US dollar based, and all the comparisons are year-over-year based. We delivered a total revenue of approximately $82.5 million in the third quarter, representing a 1.1% year-over-year increase. Despite a strong comparison base last year and continued caution in external demand, we achieved our ninth consecutive quarter of year-over-year growth, underscoring our resilience and scalability in our business. With the total revenue, our PaaS business delivered strong results, generating $59.2 million, a 2.4% year-over-year increase, driven prevalently by our strategic focus on the customer demand and product optimization.

Speaker #2: progress. Hello, everyone.

Speaker #3: This is Alex. I will now provide more details on my third party's results. Please note that all the figures are in US dollar-based, and all the comparisons are year-over-year based.

Speaker #3: And we delivered total revenue of approximately $82.5 million in the third quarter, representing a 1.1% year-over-year increase. Despite a strong comparison base last year and continued caution in external demand, we achieved our ninth consecutive quarter of year-over-year growth.

Speaker #3: Under underscoring our resilience and stability in our business, with the total revenue our past business delivered strong results, generating 59.2 million US dollars, a 2.4% year-over-year increase, driven prevalently by my strategic focus on the customer demand, and the product optimization.

Speaker 1: In Q3, the number of PaaS premium customers reached 280, further strengthening our core customer base. In addition, fueled by growth in the cloud software products revenue, the SaaS and others business showed consistent expansion, generating $11.5 million this quarter, a 15.4% increase year-over-year. This momentum was driven by continued rise in in-store devices, and a high proportion of recurring revenues. Revenue from smart solutions reached $11.8 million during this quarter. We strategically scaled by lower efficiency products and prioritized scalable, high-value solutions such as AI energy management solution and spatial AI solution to further improve overall gross margin and cash recovery efficiency. From a regional perspective, in the China market, AI Toy continued to show healthy growth in the third quarter. More than 50 customers, including brands, channel partners, and solution providers, launched the products powered by Tuya.

In Q3, the number of PaaS premium customers reached 280, further strengthening our core customer base. In addition, fueled by growth in the cloud software products revenue, the SaaS and others business showed consistent expansion, generating $11.5 million this quarter, a 15.4% increase year-over-year. This momentum was driven by continued rise in in-store devices, and a high proportion of recurring revenues. Revenue from smart solutions reached $11.8 million during this quarter. We strategically scaled by lower efficiency products and prioritized scalable, high-value solutions such as AI energy management solution and spatial AI solution to further improve overall gross margin and cash recovery efficiency. From a regional perspective, in the China market, AI Toy continued to show healthy growth in the third quarter. More than 50 customers, including brands, channel partners, and solution providers, launched the products powered by Tuya.

Speaker #3: In Q3, the number of past premium customers reached 280, further strengthening our core customer base. In addition, fueled by growth in the cloud software products revenue, the SaaS and other businesses showed consistent expansion, generating $11.5 million this quarter, a 15.4% increase year-over-year.

Speaker #3: This momentum was driven by a continued rise in in-store devices and a high proportion of recurring revenues. Revenue from smart solutions reached $11.8 million during this quarter, with strategically scaled bike lower-efficiency products and prioritized scalable high-value solutions such as AI energy management solutions and spatial AI solutions to further improve overall growth margin and cash recovery efficiency.

Speaker #3: For our regional perspective, in the China market, AI toys continued to show healthy growth in the third quarter, with more than 50 customers, including brand channel partners and solution providers.

Speaker #3: They launched the products part by Tuya, and key product capabilities also continued to advance, such as multimodal interactions, long-term memory, and emotional expressions, with several connectivity versions coming soon as well.

Speaker 1: Key product capabilities also continued to advance, such as multimodal interactions, long-term memory, and emotional expressions, with several connectivity versions coming soon as well. These improvements further strengthened the foundation of expanding into new product categories and regional markets. In the European market, demand for AI-powered solutions such as AI cloud storage and AI energy saving solutions continued to rise. At the same time, we added several new industrial clients in the energy and HVAC sectors during this quarter. In Asia Pacific, deployment of Qube, the privatized platforms for several Southeast Asian telecom operators, are scaling rapidly, with additional cities entering the delivery phase. The Singapore HQB housing deployment board of Singapore projects also progressed into implementation, with the first batch of the hardware and software solutions delivered and in-stores in this quarter. In North America, AI-enabled products such as smart bird feeders continue to record healthy growth.

Key product capabilities also continued to advance, such as multimodal interactions, long-term memory, and emotional expressions, with several connectivity versions coming soon as well. These improvements further strengthened the foundation of expanding into new product categories and regional markets. In the European market, demand for AI-powered solutions such as AI cloud storage and AI energy saving solutions continued to rise. At the same time, we added several new industrial clients in the energy and HVAC sectors during this quarter. In Asia Pacific, deployment of Qube, the privatized platforms for several Southeast Asian telecom operators, are scaling rapidly, with additional cities entering the delivery phase. The Singapore HQB housing deployment board of Singapore projects also progressed into implementation, with the first batch of the hardware and software solutions delivered and in-stores in this quarter. In North America, AI-enabled products such as smart bird feeders continue to record healthy growth.

Speaker #3: This improvement further strengthened the foundation for expanding into new product categories and regional markets. In the European market, demand for AI-powered solutions, such as AI cloud storage and AI energy-saving solutions, continued to rise.

Speaker #3: At the same time, we added several new industrial clients in the energy and HVAC sectors during this quarter. In Asia Pacific, deployment of a CUBE, the privatized platforms for several Southeast Asian telecom operators, is scaling rapidly with additional cities entering the delivery phase.

Speaker #3: The Singapore HDB housing deployment projects also progressed into implementation, with the first batch of the hardware and software solutions delivered and installed in this quarter.

Speaker #3: In North America, AI-enabled products such as smart bird feeders continue to record healthy growth. The strong adoption validates the commercial potential of niche scenarios that integrate emotional values, frequent content interactions, and long-term subscription models.

Speaker 1: The strong adoption validates the commercial potential of niche scenarios that integrate emotional values, frequent content interactions, and long-term subscription models, and underscores the structural growth opportunities for AI products in mature consumer markets. In summary, despite pressure in the global consumer environment, Tuya leveraged its diversified product portfolios and strong software capabilities to achieve structural growth. Those trends further strengthen our resilience against external macro volatilities and uncertainties. Moving to gross margin, our blended gross margin for Q3 2025 was 48.3%. Total gross profit reached approximately $39.8 million, representing a 6.1% year-over-year increase. This growth was primarily driven by concurrent improvements in both our revenue mix and cost restructure. By segments, the PaaS gross margin rose to 48.8%, continuing the upward trend from the second quarter of 2025. SaaS and others maintain a strong gross margin of 70.8%, remaining above the 70% level.

The strong adoption validates the commercial potential of niche scenarios that integrate emotional values, frequent content interactions, and long-term subscription models, and underscores the structural growth opportunities for AI products in mature consumer markets. In summary, despite pressure in the global consumer environment, Tuya leveraged its diversified product portfolios and strong software capabilities to achieve structural growth. Those trends further strengthen our resilience against external macro volatilities and uncertainties. Moving to gross margin, our blended gross margin for Q3 2025 was 48.3%. Total gross profit reached approximately $39.8 million, representing a 6.1% year-over-year increase. This growth was primarily driven by concurrent improvements in both our revenue mix and cost restructure. By segments, the PaaS gross margin rose to 48.8%, continuing the upward trend from the second quarter of 2025. SaaS and others maintain a strong gross margin of 70.8%, remaining above the 70% level.

Speaker #3: And underscores the structural growth opportunities for AI products in mature consumer markets. In summary, despite pressure in the global consumer environment, Tuya leveraged its diversified product portfolios and strong software capabilities to achieve structural growth.

Speaker #3: Those trends further strengthen our resilience against external macro volatilities and uncertainties. Moving to the growth margin, our branded growth margins for Q3 2025 were 48.3%.

Speaker #3: Total gross profit reached approximately $39.8 million, representing a 6.1% year-over-year increase. This growth was primarily driven by concurrent improvements in both our revenue mix and cost structure.

Speaker #3: By segments, the past growth margin rose to 48.8%, continuing an upward trend from the second quarter of 2025. SaaS and others maintain a strong growth margin of 7.8%, remaining above the 70% level.

Speaker 1: Smart solutions posted a gross margin of 23.8%, slightly higher than last year's 23.5%. Overall, our Q3 performance aligned with our expectations and continued to reinforce the profitability foundation at this stage. On the expense side, we continue to maintain prudent and disciplined financial management. Even as both our scale and profitability expanded, total operating expenses declined to $36 million, down 34.1% year-over-year. GAAP operating margins improved significantly to 4.6%, and GAAP net margins increased 23.6 percentage points year-over-year to 18.2%. While ensuring that R&D investment in key AI initiatives and platform development remained intact, we continue to exercise strict cost control to balance growth quantity and profitability. On the cash flow front, operating net cash flow continued to grow steadily this quarter, reaching $30 million, a 25.7% increase year-over-year. Our cash collection cycles remained stable, and cash flow quantity materially improved.

Smart solutions posted a gross margin of 23.8%, slightly higher than last year's 23.5%. Overall, our Q3 performance aligned with our expectations and continued to reinforce the profitability foundation at this stage. On the expense side, we continue to maintain prudent and disciplined financial management. Even as both our scale and profitability expanded, total operating expenses declined to $36 million, down 34.1% year-over-year. GAAP operating margins improved significantly to 4.6%, and GAAP net margins increased 23.6 percentage points year-over-year to 18.2%. While ensuring that R&D investment in key AI initiatives and platform development remained intact, we continue to exercise strict cost control to balance growth quantity and profitability. On the cash flow front, operating net cash flow continued to grow steadily this quarter, reaching $30 million, a 25.7% increase year-over-year. Our cash collection cycles remained stable, and cash flow quantity materially improved.

Speaker #3: Smart Solutions poses a growth margin of 23.8%, slightly higher than last year's 23.5%. Overall, our Q3 performance aligned with our expectations and continued to reinforce the profitability foundation at this stage.

Speaker #3: On the expense side, we continue to maintain prudent and disciplined financial management. Even as both our scale and profitability expanded, total operating expenses declined to $36 million.

Speaker #3: Down 34.1% year-over-year. GAAP operating margins improved significantly to 4.6%, and GAAP net margins increased to 23.6%, up from 18.2% year-over-year. While ensuring that R&D investment in key AI initiatives and platform development remained intact, we continue to exercise strategic cost control to balance growth quantity and profitability.

Speaker #3: On the cash flow front, operating net cash flow continued to grow steadily this quarter, reaching $30 million, a 25.7% increase year-over-year. Our cash collection cycles remained stable, and cash flow quantity materially improved.

Speaker 1: At the end of Q3, our net cash balance stayed above $1 billion, giving us ample flexibility to balance shareholders' returns, manage external uncertainties, and support long-term strategic investment. Next, I'd like to briefly highlight some recent progress in our AI capabilities and developer ecosystem, which serves as a crucial foundation for Tuya long-term growth. At the end of Q3, Tuya's platform had 1.62 million registered developers, representing a 23% year-over-year increase. AI adoptions across smart devices also continued to accelerate. Commercial AI developers have collectively created more than 12,000 AI agents on the Tuya platform, covering a broad range of smart product categories, including toys, pet products, electronics, home appliances, IP cameras, and wearables. Meanwhile, we continue to deepen and strengthen our AI developer ecosystem, anchored by Tuya OS, Tuya Open, and the T-Series AI Developer Board.

At the end of Q3, our net cash balance stayed above $1 billion, giving us ample flexibility to balance shareholders' returns, manage external uncertainties, and support long-term strategic investment. Next, I'd like to briefly highlight some recent progress in our AI capabilities and developer ecosystem, which serves as a crucial foundation for Tuya long-term growth. At the end of Q3, Tuya's platform had 1.62 million registered developers, representing a 23% year-over-year increase. AI adoptions across smart devices also continued to accelerate. Commercial AI developers have collectively created more than 12,000 AI agents on the Tuya platform, covering a broad range of smart product categories, including toys, pet products, electronics, home appliances, IP cameras, and wearables. Meanwhile, we continue to deepen and strengthen our AI developer ecosystem, anchored by Tuya OS, Tuya Open, and the T-Series AI Developer Board.

Speaker #3: At the end of Q3, our net cash balance stayed above $1 billion, giving us ample flexibility to balance shareholders' returns, manage external uncertainties, and support long-term strategic investment.

Speaker #3: Next, I would like to briefly highlight some recent progress in our AI capabilities and developers' ecosystem, which serves as a crucial foundation for Tuya's long-term growth.

Speaker #3: At the end of Q3, Tuya's platform had 1.62 million registered developers, representing a 23% year-over-year increase. AI adoptions across smart devices also continued to accelerate.

Speaker #3: Commercial AI developers have collectively created more than 12,000 AI agents. On the Tuya platform, we cover a broad range of smart product categories, including toys, pet products, electronics, home appliances, IP cameras, and wearables.

Speaker #3: Meanwhile, we continue to deepen and strengthen our AI developer ecosystem, anchored by Tuya OS, Tuya Open, and the T-Series AI Developer Board. On the open-source front, Tuya Open has seen steady growth in both documentation and code engagement.

Speaker 1: On the open-source front, Tuya Open has seen steady growth in both documentation and code engagement. Since the beginning of these years, the GitHub repository star counts have increased by about 80%. To date, over 2.3 million lines of code have been contributed to open-source projects. Beyond the rise of Tuya developer participation, the overall quantity of the ecosystem is also improving significantly. In summary, despite the prevailing external uncertainties, we still demonstrate strong resilience and operational agility, achieving solid financial growth and impressive profitability, which is steadily advancing the AI plus IoT developer ecosystem across our core business segments. Thank you all, operators. We can begin the Q&A session right now. Thank you. We will now begin the question and answer session. To ask a question now, please press star one and one on your telephone and wait for your name to be announced.

On the open-source front, Tuya Open has seen steady growth in both documentation and code engagement. Since the beginning of these years, the GitHub repository star counts have increased by about 80%. To date, over 2.3 million lines of code have been contributed to open-source projects. Beyond the rise of Tuya developer participation, the overall quantity of the ecosystem is also improving significantly. In summary, despite the prevailing external uncertainties, we still demonstrate strong resilience and operational agility, achieving solid financial growth and impressive profitability, which is steadily advancing the AI plus IoT developer ecosystem across our core business segments. Thank you all, operators. We can begin the Q&A session right now.

Speaker #3: Since the beginning of this year, the GitHub repository star counts have increased by about 80%. To date, over 2.3 million lines of code have been contributed to open-source projects.

Speaker #3: Beyond the rise of the Tuya developer participation, the overall quantity of the ecosystem is also improving significantly. In summary, despite the prevailing external uncertainties, we still demonstrate strong resilience and operational agility.

Speaker #3: Achieving solid financial growth and impressive profitability reached steadily while advancing the AI plus IoT developer ecosystem across our core business segments. Thank you all, operator.

Speaker #3: We can begin Q&A session

Speaker #3: We can begin the Q&A session right now. Thank you.

Operator: Thank you. We will now begin the question and answer session. To ask a question now, please press star one and one on your telephone and wait for your name to be announced.

Speaker #2: You. We will now begin the question-and-answer session. To ask a question now, please press star one and one on your telephone and wait for your name to be announced.

Speaker 1: To withdraw your question, please press star one and one again. One moment for our first question. Our first question comes from the line of Yang Liu from Morgan Stanley. Please ask your question, Yang. Thanks for the opportunity. I have one question regarding the business outlook. With more and more trade deals settling down in the international trade market, what is the business outlook going into the fourth quarter this year, which is a peak season, and also what is your early look for customer demand going into 2026? Thanks a lot. Thanks, Liu. I'd like to share three points. The first one is that this year, we still see that will be the kind of the soft demand on the growth side.

To withdraw your question, please press star one and one again. One moment for our first question. Our first question comes from the line of Yang Liu from Morgan Stanley. Please ask your question, Yang.

Speaker #2: To withdraw your question, please press star one and one again. One moment for our first question. Our first question comes from the line of Yang Liu from Morgan Stanley.

Speaker #2: Please ask your question,

Yang Liu: Thanks for the opportunity. I have one question regarding the business outlook. With more and more trade deals settling down in the international trade market, what is the business outlook going into the fourth quarter this year, which is a peak season, and also what is your early look for customer demand going into 2026? Thanks a lot.

Speaker #2: Yang. Thanks for the

Speaker #3: Opportunity. I have one question regarding the business outlook. With more and more trade deals settling down in the international trade market, what is the business outlook going into the fourth quarter this year, which is a peak season, and what is your early look for customers' demand going into 2026?

Alex Yang: Thanks, Liu. I'd like to share three points. The first one is that this year, we still see that will be the kind of the soft demand on the growth side.

Speaker #3: Thanks a lot.

Speaker #4: Thanks, Liu. I'd like to share three points. So the first one is that this year we still see that it will be the kind of the soft demand on the growth side.

Speaker 1: Because of the uncertainties on the global macroeconomic situations this year, Q4 will see that the regular promotion season will be kind of the soft term versus last year. We will keep closing on to review that while we already have the stable kind of the stable turns across multiple countries, whether the demand will be coming to return steadily in December. That will be the short term. For 2026, what we see here is that, like Jerry shared earlier before, all those kind of AI features and smart home portfolios become more and more inevitable trend for the entire sector, which means that more and more consumers are already starting to familiar with this type of products. They already become the beginning users of this type of things.

Because of the uncertainties on the global macroeconomic situations this year, Q4 will see that the regular promotion season will be kind of the soft term versus last year. We will keep closing on to review that while we already have the stable kind of the stable turns across multiple countries, whether the demand will be coming to return steadily in December. That will be the short term. For 2026, what we see here is that, like Jerry shared earlier before, all those kind of AI features and smart home portfolios become more and more inevitable trend for the entire sector, which means that more and more consumers are already starting to familiar with this type of products. They already become the beginning users of this type of things.

Speaker #4: And because of the uncertainties on the global macroeconomy situations at this year, and so this year the Q4, we'll see that the regular promotion season will be kind of the soft versus the last year.

Speaker #4: So we will keep closing in to review that while we already have the stable kind of the stable turns across multiple countries. That's whether the demand will be going to return steadily in December.

Speaker #4: So that will be the short term. And for 2026, what we see here is that because of the Jerry's share earlier before, all those kinds of AI features and smart home portfolios are becoming a more and more inevitable trend for the entire sector.

Speaker #4: So, this means that more and more consumers are starting to become familiar with this type of product; they have already become the beginning users of this type of thing.

Speaker 1: All the major brands and the players, manufacturers in industries are already starting to enter these sectors and bring that into their growth factors. Those type of trend will never stop. For 2026, we'll have a very positive outlook about the growth, keep growing the entire business sectors. The third one I'd like to share is that by reviewing all the technology improvements in the past decade, we'll review AI will be one of the boosters that bring the IoT experience into the next level. Because in the past, the smart home experience, it's majorly focused on the connectivities, some automation, and control. While coming on with the AI capabilities, the user experience will come into a next level to more friendly, more easy to use, and more smart.

All the major brands and the players, manufacturers in industries are already starting to enter these sectors and bring that into their growth factors. Those type of trend will never stop. For 2026, we'll have a very positive outlook about the growth, keep growing the entire business sectors. The third one I'd like to share is that by reviewing all the technology improvements in the past decade, we'll review AI will be one of the boosters that bring the IoT experience into the next level. Because in the past, the smart home experience, it's majorly focused on the connectivities, some automation, and control. While coming on with the AI capabilities, the user experience will come into a next level to more friendly, more easy to use, and more smart.

Speaker #4: And all the major brands and the players, manufacturers in industries are already starting to enter this sector and bring that into their growth factors. So, those types of trends will never stop.

Speaker #4: So, for 2026, we'll have a very positive outlook about keeping the entire business sector growing. The third point I'd like to share is that by reviewing all the technological improvements in the past decade, we can see that AI will be one of the boosters that brings the IoT experience to the next level.

Speaker #4: Because in the past, the smart home experience is majorly focused on the connectivities, some automation, and control. But while coming on with the AI capabilities, the user experience will come into a next level to more friendly more easy to use and more smart.

Speaker 1: That's why we decided to provide a new AI assistant for life, which connects all the home scenarios to ordinary people and has more people be able to enjoy the smart devices experience. That will lower another bar for the end-to-user. Combine that three together, the short times, we'll see that 2025, there's still some uncertainty and pressure on that, but it's become more and more inevitable and become a default options for major brands and players there. We're trying to bring the bar lowers for more users who are not become the smart devices user as well. I think that will be the overall is very positive in the long term and consistent in short term. Thank you. Thank you. Thank you. Our next question comes from the line of Timothy Zhao from Goldman Sachs. Please go ahead, Timothy. Great.

Speaker #4: And so that's why we decided to provide a new AI assistant for life, which connects all the home scenarios to ordinary people.

That's why we decided to provide a new AI assistant for life, which connects all the home scenarios to ordinary people and has more people be able to enjoy the smart devices experience. That will lower another bar for the end-to-user. Combine that three together, the short times, we'll see that 2025, there's still some uncertainty and pressure on that, but it's become more and more inevitable and become a default options for major brands and players there. We're trying to bring the bar lowers for more users who are not become the smart devices user as well. I think that will be the overall is very positive in the long term and consistent in short term. Thank you.

Speaker #4: And have more people be able to enjoy the smart devices experience. So that will lower another bar for the entry user. So combine that three together, in the short term, we'll see that by 2025 there's still some uncertainty and pressure on that.

Speaker #4: But it's become more and more inevitable and has become a default option for major brands and players in the industry. We're trying to lower the bar for more users who have not yet become smart device users.

Speaker #4: So I think that the overall outlook is very positive in the long term, and we should concentrate on the short term. Thank you.

Operator: Thank you.

Speaker #4: you.

Yang Liu: Thank you.

Operator: Our next question comes from the line of Timothy Zhao from Goldman Sachs. Please go ahead, Timothy. Great.

Speaker #3: Hey, thank Thank you.

Speaker #3: you. Our next

Speaker #2: Question comes from the line of Timothy Zhao from Goldman Sachs. Please go ahead.

Speaker #2: Timothy. Great.

Speaker 1: Good morning, Management. Thank you for taking my question, and congrats on the solid results. I have two questions here. One is regarding the AI home agent that you just mentioned. Just wondering if you can share more color on the detailed specs and the use case of this AI agent that you are going to officially release at CES next month, and how do you think about the impact on the overall business of Tuya with this new product. Secondly, it's about the AI overall impact on your PaaS and PaaS smart solution business. Just wondering, for example, for the segment growth this quarter, will you please break down in terms of by volume and by pricing? Has AI brought any positive impact on the overall pricing of your product and services, and also on the impact on the gross book margin? Thank you. Okay. Thank you, Timothy.

Timothy Zhao: Good morning, Management. Thank you for taking my question, and congrats on the solid results. I have two questions here. One is regarding the AI home agent that you just mentioned. Just wondering if you can share more color on the detailed specs and the use case of this AI agent that you are going to officially release at CES next month, and how do you think about the impact on the overall business of Tuya with this new product. Secondly, it's about the AI overall impact on your PaaS and PaaS smart solution business. Just wondering, for example, for the segment growth this quarter, will you please break down in terms of by volume and by pricing? Has AI brought any positive impact on the overall pricing of your product and services, and also on the impact on the gross book margin? Thank you.

Speaker #3: Good morning, management. Thank you for taking my question, and congrats on the solid results. I have two questions here. One is regarding the AI home agent that you just mentioned.

Speaker #3: Just wondering if you can share more color on the detailed specs and the use case of this AI agent that you're going to officially release at CES next month, and how do you think about the impact on the overall business of Tuya with this new product?

Speaker #3: Secondly, I’d like to ask about the overall impact of AI on your path and size in the smart solutions business. For example, in terms of the seven growth this quarter, could you please break it down in terms of volume and pricing? Has AI brought any positive impact on the overall pricing of your products and services?

Speaker #3: And also on the impact on the growth profit margin. Thank you.

Alex Yang: Okay. Thank you, Timothy.

Speaker #3: you. Okay.

Speaker #4: Thank you, Timothy. So the first one is that we will define this as an AI assistant. It's bigger than an agent, and we think that if we review the life scenarios, even only for home, you will find that you have multiple things you want someone to help you with.

Speaker 1: The first one is that we'll define this as an AI assistant. It's bigger than an agent, because we think that if we review the life scenarios, even only for home, you find that you have multiple things you want someone to help you with. This is an AI assistant that comes with multiple agents that can help you to do almost everything you need in a home. That's the first one. That's how we designed this new assistant. The key value for that part, we believe in two things. The first one is that while coming on with the adoptions of the Gemini and app, including the GPT, including the Qianwen, etc., you find that the AI can help you to do a lot of things, a lot of tasks on the software side.

The first one is that we'll define this as an AI assistant. It's bigger than an agent, because we think that if we review the life scenarios, even only for home, you find that you have multiple things you want someone to help you with. This is an AI assistant that comes with multiple agents that can help you to do almost everything you need in a home. That's the first one. That's how we designed this new assistant. The key value for that part, we believe in two things. The first one is that while coming on with the adoptions of the Gemini and app, including the GPT, including the Qianwen, etc., you find that the AI can help you to do a lot of things, a lot of tasks on the software side.

Speaker #4: So this is an AI assistant that comes with multiple agents that can help you do almost everything you need at home. So that's the first one.

Speaker #4: That's how we design this new assistant. And the key value for that part we believe in two things. The first one is that while coming on with the adoptions of the Gemini and app including the GPT, including the chain one, etc., that you found that the AI can help you to do a lot of things, a lot of tasks on the software side.

Speaker 1: There's no assistant focused on home. That's what you need for your home and how you want to take care of the home. For us, we design the different type of agents and capabilities focused on those scenarios people want to interact and people want to have a better life quality or easier life experience in home. That's the first one. The second one is that the key differentiation of this assistant among any generic assistant is that this assistant will naturally be able to interact with the physical scenarios through the hundreds of millions of the powered by Tuya devices. Which means that we're trying to bring kind of the science fiction into come true. Like the Jarvis in Iron Man's house, every people appreciate that. Every people, I mean, admire that. There's no that type of Jarvis yet.

There's no assistant focused on home. That's what you need for your home and how you want to take care of the home. For us, we design the different type of agents and capabilities focused on those scenarios people want to interact and people want to have a better life quality or easier life experience in home. That's the first one. The second one is that the key differentiation of this assistant among any generic assistant is that this assistant will naturally be able to interact with the physical scenarios through the hundreds of millions of the powered by Tuya devices. Which means that we're trying to bring kind of the science fiction into come true. Like the Jarvis in Iron Man's house, every people appreciate that. Every people, I mean, admire that. There's no that type of Jarvis yet.

Speaker #4: But there's no assistant focused on home. That's what you need for your home. And how you want to take care of the home. So for us is that we design the different type of agents and capabilities focused on those scenarios people want to interact and people want to have a better life quality or easier life experience in home.

Speaker #4: That's the first one. And the second one is that the key differentiation of this assistance among any generic assistant is that this assistant will naturally be able to interact with the physical scenarios.

Speaker #4: Through the hundreds of millions of the power by Tuya devices, we are trying to bring a kind of science fiction to come true.

Speaker #4: Like the Javas in Iron Man's house, everyone appreciates that. Everyone, I mean, admires that. But there's no type of Javas like that yet. So we want to create that type of experience for people globally.

Speaker 1: We want to create that type of experience for the global people. That's how we define the key features and value for the user side. I think what it means for the ordinary users, I think the key part is that right now we find the smart devices is still kind of complicated. It becomes way more easier than 10 years before, but still kind of complicated to, I mean, to learn, to use, to interact with by many non-users, I mean, for those beginners. Those bars are still there. Coming on with through the assistant, you don't have to learn to use the app anymore. You don't even need, you just need to know how to speak, right? Like how you can tell the housekeeper to do something, how to tell a servant to do something.

We want to create that type of experience for the global people. That's how we define the key features and value for the user side. I think what it means for the ordinary users, I think the key part is that right now we find the smart devices is still kind of complicated. It becomes way more easier than 10 years before, but still kind of complicated to, I mean, to learn, to use, to interact with by many non-users, I mean, for those beginners. Those bars are still there. Coming on with through the assistant, you don't have to learn to use the app anymore. You don't even need, you just need to know how to speak, right? Like how you can tell the housekeeper to do something, how to tell a servant to do something.

Speaker #4: So that's how we define the key features and value for the user side. And I think the what it means for the ordinary users I think the key part is that right now we found the smart devices is still kind of complicated.

Speaker #4: Is it becoming way more easier than 10 years before? But still kind of complicated to, I mean, to learn to use, to interact with by many non-users, I mean, for those beginners.

Speaker #4: So that bar is still there. But coming on through the assistant, you don't have to learn to use the app anymore. And you don't even need to; you just need to know how to speak, right?

Speaker #4: Like how you can tell your housekeeper to do something, you can instruct a servant to do something as well. It's similar in that the assistant will be able to take the orders and perform all those complicated operations for you.

Speaker 1: It's similar, like the assistant will be able to take the orders and to do all those complicated operations for you. We believe that will lower the bar significantly for new users for home. Right now we see that while the penetration of even smart home is still in the low, no digits, by lowering the entry bar, we'll be able to open more doors for those new users while they find that the smart devices will be accessible for them to use. That's for the AI assistant part. The second question is for the AI. First one is that this year we consider as the beginning year of the AI device. We are very happy to see that finally our education to the market, to the developers, to the customers are already starting to offer some feedback.

It's similar, like the assistant will be able to take the orders and to do all those complicated operations for you. We believe that will lower the bar significantly for new users for home. Right now we see that while the penetration of even smart home is still in the low, no digits, by lowering the entry bar, we'll be able to open more doors for those new users while they find that the smart devices will be accessible for them to use. That's for the AI assistant part. The second question is for the AI. First one is that this year we consider as the beginning year of the AI device. We are very happy to see that finally our education to the market, to the developers, to the customers are already starting to offer some feedback.

Speaker #4: So we believe that this will lower the bar significantly for new users at home. Right now, when we see that the penetration of smart home technology is still in the low single digits, we will be able to open more doors for those new users.

Speaker #4: While they found that the smart devices will be accessible for them to use. So that's for the AI assistant parts. And the second part, second question is for the AI and so first one is that this year we consider at the beginning year of the AI device.

Speaker #4: So we are very happy to see that, finally, our education to the market, to the developers, and to the customers is already starting to offer some feedback.

Speaker 1: Like the numbers we shared before, by the end of Q3, over 93% of the products we shipped this year already been turned on some AI capability. Which means that my customers, my developers are already very active to try whatever AI features or capabilities they can provide through their devices, even their existing devices. That's the first one. We already have a lot of innovative developers trying to try the ideas and try to educate end users and test end users' feedback. We believe that will be a very, very typical starting point for any new technology adoption. We already have that kind of scale test field taking places. The second one is that we still provide the AI seamlessly through our three business models.

Like the numbers we shared before, by the end of Q3, over 93% of the products we shipped this year already been turned on some AI capability. Which means that my customers, my developers are already very active to try whatever AI features or capabilities they can provide through their devices, even their existing devices. That's the first one. We already have a lot of innovative developers trying to try the ideas and try to educate end users and test end users' feedback. We believe that will be a very, very typical starting point for any new technology adoption. We already have that kind of scale test field taking places. The second one is that we still provide the AI seamlessly through our three business models.

Speaker #4: So, like the numbers we shared before, by the end of Q3, over 93% of the products we shipped this year have already been turned on with some AI capability.

Speaker #4: So, which means that my customers and my developers are already very active in trying whatever AI features or capabilities they can provide through their devices, even their existing devices.

Speaker #4: So, that's the first one. We already have a lot of innovative developers starting to try the ideas and educate end users, as well as test end users' feedback.

Speaker #4: And we believe that will be a very, very typical starting point for any new technology adoption. So we already have that kind of scale test field taking place.

Speaker #4: And the second one is that we still provided the AI seamlessly through our three business models. So including the past, including the solution, including the SaaS, right now we have different types of AI offerings in different business models as well.

Speaker 1: Including the past, including the solution, including the SaaS, right now we have different type of AI offering in different business models as well. Which means that for my customer side, on the procurement perspective, they don't have to learn how they will be able to purchase something from Tuya differently. It's a similar offering, but it comes with different features, and maybe it comes with a different pricing, maybe not. For that part, we try to open, have almost all my customers defaultly be able to try AI, try bring AI into their existing products and solutions. Through that seamless integrations into my existing business models, we believe that will help you in two things. The first one is that coming on with a new feature set, any new feature set will bring new demands.

Including the past, including the solution, including the SaaS, right now we have different type of AI offering in different business models as well. Which means that for my customer side, on the procurement perspective, they don't have to learn how they will be able to purchase something from Tuya differently. It's a similar offering, but it comes with different features, and maybe it comes with a different pricing, maybe not. For that part, we try to open, have almost all my customers defaultly be able to try AI, try bring AI into their existing products and solutions. Through that seamless integrations into my existing business models, we believe that will help you in two things. The first one is that coming on with a new feature set, any new feature set will bring new demands.

Speaker #4: So, which means that for my customer side, on the procurement perspective, they don't have to learn how they will be able to purchase something from Tuya differently.

Speaker #4: It's similar like the offering, but come with a different features and maybe come with a different pricing, maybe not. So for that part, is that we try to open all my customers have almost to try defaultly be able AI, try AI, try bring AI into their existing production and solutions.

Speaker #4: And through that seamless integration into my existing business models, we believe that this will help in two ways. The first one is that with the new feature set, any new feature set will bring new demand.

Speaker 1: That will be able to speed up the penetration and adoptions of the entire market. We're looking forward to have the AI coming as a booster. The second one is that with some really new feature set, we will price that, and that will improve our GPM as well. We're looking forward to have the GPM impact coming very soon because it's still in the beginning. We try to promote the market. We try to incubate in the market in the beginning, but not running very aggressively on the profitability side on that type of niche sector. That's the overall outlook, Timothy. Thank you. That's very clear. Thank you, Management. Thank you. Our next question comes from the line of Mingran Li from CICC. Please go ahead, Mingran. Thanks, Management, for taking my questions.

That will be able to speed up the penetration and adoptions of the entire market. We're looking forward to have the AI coming as a booster. The second one is that with some really new feature set, we will price that, and that will improve our GPM as well. We're looking forward to have the GPM impact coming very soon because it's still in the beginning. We try to promote the market. We try to incubate in the market in the beginning, but not running very aggressively on the profitability side on that type of niche sector. That's the overall outlook, Timothy.

Speaker #4: So that will be able to speed up the penetration and adoption of the entire market. And we're looking forward to having AI come as a booster.

Speaker #4: And the second one is that with some really new feature set that we repriced, and that improved our GPM as well. But we're looking forward to having the GPM impact coming very soon because it's still in the beginning.

Speaker #4: So we try to promote the market. We try to incubate in the market at the beginning, but we're not running very aggressively on the profitability side in that type of niche sector.

Speaker #4: So that's the overall outlook, Timothy.

Operator: Thank you.

Timothy Zhao: That's very clear. Thank you, Management.

Speaker #3: That's very clear. Thank you. Thank you, Imagine.

Operator: Thank you. Our next question comes from the line of Mingran Li from CICC. Please go ahead, Mingran.

Speaker #2: Thank you. Next question comes from the line of Ming Run Li from CICC. Please go ahead, Ming.

Mingran Li: Thanks, Management, for taking my questions.

Speaker #2: Run. Thanks, Imagine, for taking my

Speaker #4: Congrats on your solid layout. I have two questions. First, regarding the adjustment of the breaking global tariff policy, could management share more color on the downstream order recovery progress in your overseas market, especially North America?

Speaker 1: Congrats on your solid result, and two questions from my side. First is that following adjustments of frequent global tariff policy, could management share more color on the downstream or the recovery progress in your overseas markets, especially North America? My second one is that could management share the latest progress on the AI technology, particularly in terms of commercialization? Thanks. Yeah. The first one is that a couple of weeks ago we get a temporary one-year terms between China and US, right? Which means that all the merchants, importers, right now they have stable cost levels at a specific timing. That will be a good thing. At least we get some certainty. The promotion for the issue will be pretty locked in. Those kind of new terms will be able to impact for next year's demand.

Congrats on your solid result, and two questions from my side. First is that following adjustments of frequent global tariff policy, could management share more color on the downstream or the recovery progress in your overseas markets, especially North America? My second one is that could management share the latest progress on the AI technology, particularly in terms of commercialization? Thanks.

Speaker #4: My second point is that could management share the latest progress on the AI technology, particularly in terms of commercialization? Thanks.

Alex Yang: Yeah. The first one is that a couple of weeks ago we get a temporary one-year terms between China and US, right? Which means that all the merchants, importers, right now they have stable cost levels at a specific timing. That will be a good thing. At least we get some certainty. The promotion for the issue will be pretty locked in. Those kind of new terms will be able to impact for next year's demand.

Speaker #5: Yeah. So the first one is that a couple of weeks ago that we get temporary one-year terms between China and US, right? And so which means that all the merchants importers right now they have stable cost levels at a specific timing.

Speaker #5: We get some certainty, and so that will be a good thing. At least the promotion for the issue will be pretty locked in.

Speaker #5: So those kinds of new terms will be able to impact next year's demand. So we're looking forward to having an impact. And right now, to be positive, the customers and importer sides are still kind of reviewing, okay, what will be the tune for next year?

Speaker 1: We're looking forward to have that to be a positive impact. Right now on the customers and importer side, they still kind of review, okay, what will be the tune for next year's? They like to review what will be the turns out sell-throughs for this promotion season starting from this week, right? We'll have the Black Friday this week. We're looking forward to have more feedbacks on December, I can describe. While people already know that what cost they can get for next year, over a year, and what will be the demand looks like, and then how they like to set the tunes for the new projects and the new sell-in reordering. That's the first one. Still under review. The second one is for the AI.

We're looking forward to have that to be a positive impact. Right now on the customers and importer side, they still kind of review, okay, what will be the tune for next year's? They like to review what will be the turns out sell-throughs for this promotion season starting from this week, right? We'll have the Black Friday this week. We're looking forward to have more feedbacks on December, I can describe. While people already know that what cost they can get for next year, over a year, and what will be the demand looks like, and then how they like to set the tunes for the new projects and the new sell-in reordering. That's the first one. Still under review. The second one is for the AI.

Speaker #5: And they like to review what the projected sell-throughs will be for this promotional season starting this week, right? We'll have Black Friday this week.

Speaker #5: So we're looking forward to having more feedback in December, like I described. While people already know what costs they're going to incur for next year, over a year, and what the demand will look like, we also want to understand how they would like to set the tunes for the new projects and the new sell-in reordering.

Speaker #5: So that's the first one, still under review. And the second one is for the AI. I think that I already answered part of that to Timothy earlier for the earlier questions.

Speaker 1: I think that I already answered part of that to Timothy earlier for the earlier questions. The first one is that right now we're offering AI across almost all my categories. We have some generic AI capabilities that can work on anything, and we also have some differentiated vertical AI capability for specific type of the products. All those kind of offerings are seamlessly integrated into my existing three services, the PaaS, the solution, and the SaaS. That's the first one. In this year, on the new device side, including the PaaS and solutions, we're really happy to see some breakthroughs into some new sectors like the toys. We shared that earlier last quarter as well. This will be a totally new vertical categories coming up with a large total addressable market size that we didn't touch before.

I think that I already answered part of that to Timothy earlier for the earlier questions. The first one is that right now we're offering AI across almost all my categories. We have some generic AI capabilities that can work on anything, and we also have some differentiated vertical AI capability for specific type of the products. All those kind of offerings are seamlessly integrated into my existing three services, the PaaS, the solution, and the SaaS. That's the first one. In this year, on the new device side, including the PaaS and solutions, we're really happy to see some breakthroughs into some new sectors like the toys. We shared that earlier last quarter as well. This will be a totally new vertical categories coming up with a large total addressable market size that we didn't touch before.

Speaker #5: So the first one is that right now we're offering AI across almost all my categories. We have some generic AI capabilities that can work on anything.

Speaker #5: And we also have some differentiated vertical AI capabilities for specific types of products. But all those offerings are seamlessly integrated into my existing three services: the past, the solution, and the SaaS.

Speaker #5: That's the first one. And in this year's on the new device side, including the past and solutions, we're really seeing a happy to see some breakthroughs into some new sectors, like the toys, and we share that earlier last quarter as well.

Speaker #5: So this will be a totally new vertical. Categories come up with a large total addressable market scale size that we haven't touched before.

Speaker 1: The IoT never will be able to enter that sectors. Coming on with AI, right now we'll open the door. In this year only, we're running three quarters only, that many of the key players in the industry, starting from China in the toy industry, already started to cooperate with us. In Q3, we're ready to help the customer to launch a lot of the use cases to test the demand. It turns out that the end users love it. I'll say that trial sales for many of the customers works out. We're looking forward to continuously improving the experience. Also, the customers start to reordering and to running a new type of promotion across its all sales channels to scale it. That's what we see, that the AI opened new doors. That's the second one.

The IoT never will be able to enter that sectors. Coming on with AI, right now we'll open the door. In this year only, we're running three quarters only, that many of the key players in the industry, starting from China in the toy industry, already started to cooperate with us. In Q3, we're ready to help the customer to launch a lot of the use cases to test the demand. It turns out that the end users love it. I'll say that trial sales for many of the customers works out. We're looking forward to continuously improving the experience. Also, the customers start to reordering and to running a new type of promotion across its all sales channels to scale it. That's what we see, that the AI opened new doors. That's the second one.

Speaker #5: And the IoT never got to be able to enter that sector. But coming on with AI, so right now we'll open the door. And in this year only, we are running three quarters only. That's many of the key players in the industry, starting from China in the toy industry, and they already started to cooperate with us.

Speaker #5: And in Q3, we're really helping the customer to launch a lot of the use cases to test the demand. It turns out that the end users love it.

Speaker #5: Try sales for many of the customers work, and so I'll say that out. We're looking forward to continuing to improve the experience, and also the customers start to reorder and to run a new type of promotion across all sales channels to scale it.

Speaker #5: So that's what we see: AI opens new doors. So that's the second point. And the third point is that it not only upgrades my existing categories but also opens new categories.

Speaker 1: The third one is that not only upgrades, kind of upgrades on my existing categories and open new categories. The third one we try to open is the 2C experience. We're looking forward to using the new AI assistant to open all the new home users' doors, especially for those ones who still don't have any smart devices. They still consider that type of devices will be kind of complicated for them. We're using assistant to help them out. That's it. Okay. Thank you. Very clear. Thank you. Our next question comes from the line of Matt Ma from Jefferies. Please go ahead, Matt. Hello. Good morning, Management. Thank you for taking my question. I just have one question regarding smart solutions. The smart solution revenue declined by around 14% in the third quarter. Just wondering what is the reason behind it?

The third one is that not only upgrades, kind of upgrades on my existing categories and open new categories. The third one we try to open is the 2C experience. We're looking forward to using the new AI assistant to open all the new home users' doors, especially for those ones who still don't have any smart devices. They still consider that type of devices will be kind of complicated for them. We're using assistant to help them out. That's it.

Speaker #5: So the third one we try to open is the 2C experience. We're looking forward to using the new AI assistant to open all the new home users' doors.

Speaker #5: Especially for those who still don't have any smart devices, they consider that type of devices will be kind of complicated for them.

Speaker #5: So we're using Assistant to help them out. That's it.

Mingran Li: Okay. Thank you. Very clear.

Speaker #4: Okay. Thank you.

Speaker #4: Okay, thank you. Very clear.

Operator: Thank you. Our next question comes from the line of Matt Ma from Jefferies. Please go ahead, Matt.

Speaker #2: You. Next question comes from the line of Matt Ma from Jefferies. Please go ahead, Matt.

Matt Ma: Hello. Good morning, Management. Thank you for taking my question. I just have one question regarding smart solutions. The smart solution revenue declined by around 14% in the third quarter. Just wondering what is the reason behind it?

Speaker #6: Hello. Good morning, Imagine. Thank you for taking my question. I just have one question regarding smart solutions. The smart solution revenue declined by around 14% in the third quarter.

Speaker #6: Just wondering, what is the reason behind it? And then, could management provide any growth outlooks for the segment in 2026? Also, any thoughts on product category expansion going forward?

Speaker 1: Could Management provide any growth outlooks for the segment in 2026? Also, any thoughts on product category expansion going forward? Thank you. Yeah. I think that the first one is that in 2026, we're looking to have a better year versus 2025 because we should have less turbulence on the macroeconomy side on a global basis. Like I described, the customers right now in many vertical sectors already think that the AI features or AIoT features will become more and more default for them. Some categories, every single new project they've been doing, they have to come along with the AIoT. We begin to take a larger portion in their pie. That's the first one. We will see that the penetration will grow.

Could Management provide any growth outlooks for the segment in 2026? Also, any thoughts on product category expansion going forward? Thank you.

Alex Yang: Yeah. I think that the first one is that in 2026, we're looking to have a better year versus 2025 because we should have less turbulence on the macroeconomy side on a global basis. Like I described, the customers right now in many vertical sectors already think that the AI features or AIoT features will become more and more default for them. Some categories, every single new project they've been doing, they have to come along with the AIoT. We begin to take a larger portion in their pie. That's the first one. We will see that the penetration will grow.

Speaker #6: Thank

Speaker #6: you. Yeah.

Speaker #5: So I think that the first one is that in 2026, we're looking to have a better year versus 2025 because we should have less turbulence in the marketing economy on a global basis.

Speaker #5: And so like I described that the customers right now in many vertical sectors the customers already think that the AI features or AIoT features will become more and more default for them.

Speaker #5: So, in some categories, every single new project they’ve been doing has to come along with the AIoT. We are beginning to take a larger portion of their pie.

Speaker #5: So that's the first one. We'll see that the penetration will grow, I mean, for the overall industries. We continue to grow steadily, no matter what.

Speaker 1: I mean, for the overall industries, we continue to grow steadily no matter what. It's only a matter of speed, which year will be the tipping point. That's the first one. In 2026, we keep closing eye. We think that we can share more colors around the second half of December while the customers have more feedback on the end demand side, and while they're starting to set the tunes for 2026 because they don't like to run in a very conservative operation base for a long time. They're already running for 2025. I think that's for the first one. The second one, thanks for the AI. Yeah, the second one is also regarding, yeah, it's also regarding smart solutions. Just want to understand what are our thoughts on product category expansion for smart solutions going forward. Thank you. Right.

I mean, for the overall industries, we continue to grow steadily no matter what. It's only a matter of speed, which year will be the tipping point. That's the first one. In 2026, we keep closing eye. We think that we can share more colors around the second half of December while the customers have more feedback on the end demand side, and while they're starting to set the tunes for 2026 because they don't like to run in a very conservative operation base for a long time. They're already running for 2025. I think that's for the first one. The second one, thanks for the AI.

Speaker #5: It's only a matter of speed regarding which year will be the tipping point. And so, that's the first one for 2026, and we will keep a close eye.

Speaker #5: We think that we can share more colors around the second half of December, while the customers have more feedback on the end-demand side.

Speaker #5: And while they're starting to set the tunes for 2026 because they don't like to run in a very conservative operation base for a long time.

Speaker #5: They're really running for 2025. So I think that's for the first one. And the second one.

Matt Ma: Yeah, the second one is also regarding, yeah, it's also regarding smart solutions. Just want to understand what are our thoughts on product category expansion for smart solutions going forward.

Speaker #6: Yeah. So the second one is also regarding smart solutions. I just want to understand what our thoughts are on product category expansion for smart solutions going forward.

Alex Yang: Thank you. Right.

Speaker #6: Thank you.

Speaker 1: I missed one part. I think that for smart solutions, we're very carefully looking for the expansion to new categories because we're already learning that business model for over two years. I think that for smart solutions, we're still kind of focused on some strategically highly valued categories. For those ones that the AI can bring a total difference, like it brings some innovative idea to come true, without the AI, it never exists. Also, to some categories that we're really helping customers to do a differentiation, to help them out. Usually, the solutions are the ones we design for the customers for their flagship model. That's what we put out.

I missed one part. I think that for smart solutions, we're very carefully looking for the expansion to new categories because we're already learning that business model for over two years. I think that for smart solutions, we're still kind of focused on some strategically highly valued categories. For those ones that the AI can bring a total difference, like it brings some innovative idea to come true, without the AI, it never exists. Also, to some categories that we're really helping customers to do a differentiation, to help them out. Usually, the solutions are the ones we design for the customers for their flagship model. That's what we put out.

Speaker #5: Right. So I missed one part. I think that for smart solutions, we are very carefully looking for expansion into new categories.

Speaker #5: Because we're really learning about the business model for over two years. So I think that for smart solutions, we're still kind of focused on some strategically highly valued categories.

Speaker #5: And for those that the AI can bring a total difference, like it brings some innovative idea to come true, without the AI, it never exists.

Speaker #5: And also to some categories that we are really helping customers to differentiate. To help them out. So usually, the solution is the one we design for the customers for their flagship model.

Speaker #5: So that's why we put out. So right now, the solutions in the major categories will be the video and related multi-modeling capabilities. The control panels—that's a super comprehensive interaction on the touch panel side.

Speaker 1: Right now the solutions, the major categories will be the video and related multimodal capabilities, the control panels with super comprehensive interactions on the touch panel side, including the gateways, focus on specific scenarios, and energy. I think that for the middle terms we continue to put focus and scale those kinds of verticals unless we see some opportunities with scalability in some new vertical categories. Thank you, Alex. Thank you. There are no further questions at this time. I'll now hand the conference back to the management team for closing remarks. Thank you, Operator, and thank you all for participating on today's call and for your support. If you have any further questions, please feel free to reach out to our IR team. We look forward to speaking with you at our upcoming investor event. Thank you, everyone, and have a great day.

Right now the solutions, the major categories will be the video and related multimodal capabilities, the control panels with super comprehensive interactions on the touch panel side, including the gateways, focus on specific scenarios, and energy. I think that for the middle terms we continue to put focus and scale those kinds of verticals unless we see some opportunities with scalability in some new vertical categories.

Speaker #5: And including the gateways, focus on specific scenarios and energy. So I think that's, for the middle term, that we continue to put focus and scale those kinds of verticals.

Speaker #5: Unless we see some opportunities with scalabilities in some new vertical categories.

Matt Ma: Thank you, Alex.

Speaker #6: Okay. Thank you,

Operator: Thank you. There are no further questions at this time. I'll now hand the conference back to the management team for closing remarks.

Speaker #2: Thank you. There are no further questions at this time. I'll now hand the conference back to the management team for closing.

Regina Wang: Thank you, Operator, and thank you all for participating on today's call and for your support. If you have any further questions, please feel free to reach out to our IR team. We look forward to speaking with you at our upcoming investor event. Thank you, everyone, and have a great day.

Speaker #2: remarks. Thank you.

Speaker #7: Operator, thank you all for participating in today's call and for your support. If you have any further questions, please feel free to reach out to our IR teams.

Speaker #7: We look forward to speaking with you at our upcoming inventory event. Thank you, everyone, and have a great day.

Speaker #7: day. Thank you for your participation.

Speaker 1: Thank you for your participation in today's conference. This does conclude the program. You may now disconnect your lines.

Operator: Thank you for your participation in today's conference. This does conclude the program. You may now disconnect your lines.