Q4 2025 Tuya Inc Earnings Call

March 3, 2026

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 the first speaker today, Ms. Regina Wong, Investor Relations Associate Director of Tuya. Please go ahead.

Speaker #2: Thank you, Operator. Hello, everyone. Welcome to our fourth quarter and fiscal year 2025 earnings call. Joining us today are our founder and CEO, Mr. Jerry Wong, and our co-founder and CFO, Mr. Alex Yang.

Jerry Wang: Thank you, operator. Hello, everyone. Welcome to our Q4 and fiscal year 2025 Earnings Call. Joining us today are our Founder and CEO, Mr. Jerry Wang, and our Co-founder and CFO, Mr. Alex Yang. The Q4 and fiscal year 2025 financial results and webcast of the conference call are available at ir.tuya.com. A replay of this call will also be available on our IR website in a few hours. Before we continue, I refer you to our safe harbor statement in our earnings press release, which applies to this call as we will make forward-looking statements. With that, I will now turn the call over to our Founder and CEO, Mr. Jerry Wang. Jerry will deliver his remarks in Chinese, which will be followed by a corresponding English translation. Jerry, please. Hello, everyone.

Regina Wang: Thank you, operator. Hello, everyone. Welcome to our Q4 and fiscal year 2025 Earnings Call. Joining us today are our Founder and CEO, Mr. Jerry Wang, and our Co-founder and CFO, Mr. Alex Yang. The Q4 and fiscal year 2025 financial results and webcast of the conference call are available at ir.tuya.com. A replay of this call will also be available on our IR website in a few hours. Before we continue, I refer you to our safe harbor statement in our earnings press release, which applies to this call as we will make forward-looking statements. With that, I will now turn the call over to our Founder and CEO, Mr. Jerry Wang. Jerry will deliver his remarks in Chinese, which will be followed by a corresponding English translation. Jerry, please.

Speaker #2: The fourth quarter and fiscal year 2025 financial results and webcast of the conference call are available at ir.tuya.com. A replay of this call will also be available on our IR website in a few hours.

Speaker #2: Before we continue, I refer you to our Safe Harbor statement in our earnings press release, which applies to this call, as we will make forward-looking statements with that.

Speaker #2: I will now turn the call over to our founder and CEO, Mr. Jerry Wong. Jerry will deliver his remarks in Chinese, which will be followed by a corresponding English translation.

Speaker #2: Jerry, please.

Speaker #3: 大家好，感谢大家参加 Tuya 智能 2025 年第四季度业绩电话会。

Jerry Wang: Hello, everyone. Thank you for joining Tuya's earnings call for the Q4 2025. In 2025, against the complex and evolving external environment, we maintained stability across our platform business, delivered steady full year revenue growth, and achieved a notable improvement in GAAP profitability. At the same time, we made solid progress in building a more systematic AI capability framework. For full year 2025, we generated total revenue of $320 million, representing a year-over-year increase of approximately 7.8%. Profitability and cash flow quality continued to improve. These results reflect the resilience and stability of our core platform business, as well as our ongoing progress in prioritizing resource allocation and execution discipline.

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

Jerry Wang: Thank you for joining Tuya's earnings call for the Q4 2025. In 2025, against the complex and evolving external environment, we maintained stability across our platform business, delivered steady full year revenue growth, and achieved a notable improvement in GAAP profitability. At the same time, we made solid progress in building a more systematic AI capability framework. For full year 2025, we generated total revenue of $320 million, representing a year-over-year increase of approximately 7.8%. Profitability and cash flow quality continued to improve. These results reflect the resilience and stability of our core platform business, as well as our ongoing progress in prioritizing resource allocation and execution discipline.

Speaker #3: 2025 年我们在复杂环境中保持平台业务的稳定，全年实现收入稳健增长，并实现 GAAP 盈利能力的显著提升。同时在 AI 能力体系化建设上，迈出坚实一步。

Speaker #2: In 2025, against a complex and evolving external environment, we maintained stability across our platform business, delivered steady full-year revenue growth, and achieved a notable improvement in GAAP profitability.

Speaker #2: At the same time, we made solid progress in building a more systematic AI capability framework.

Speaker #3: 2025 年公司全年收入 3.2 亿美金，同比增长约 7.8%。盈利能力和现金流质量持续优化，对于结果体现了核心平台业务的稳定性，也反映了我们在资源聚焦与执行纪律方面的持续推进。

Speaker #2: For the full year 2025, we generated total revenue of $320 million, representing a year-over-year increase of approximately 7.8%. Profitability and cash flow quality continued to improve.

Speaker #2: These results reflect the resilience and stability of our core platform business, as well as our ongoing progress in prioritizing resource allocation and execution discipline.

Speaker #3: 对，战略层面，我们持续优化了更多的 AI 加 IoT 的应用场景，加快 AI 能力在平台与设备生态中的系统化嵌入。AI 正从单一功能叠加，逐步演进为可落地、可运行的 AI 应用。

Jerry Wang: On the strategic front, we continue to incubate new AI+IoT application scenarios and accelerated the systematic integration of AI capabilities across our platform and device ecosystem. AI is evolving from a mere overlay of discrete features into fully deployable operational applications. As part of our AI strategy, we introduced the AI-powered smart life assistant, Hey Tuya, at CES. Through a more intuitive and tangible entry point, integrating AI agents with hardware devices, we aim to help users enjoy a more comfortable and effortless home experiences. Accelerating the real-world adoption of AI capabilities across a broader range of everyday scenarios. Our understanding of the integration pathway between AI and the smart products is becoming increasingly clear. AI is progressing beyond the stage of capability overlay and entering a phase of deep integration with device form factors and industry specific scenarios.

Speaker #2: On the strategic front, we continue to incubate new AI plus IoT application scenarios and accelerate the systematic integration of AI capabilities across our platform and device ecosystem.

Speaker #2: AI is evolving from a mere overlay of discrete features into fully deployable, operational applications.

Speaker #3: 对，AI 战略推进方面，我们在 CES 上推出了 AI 赋能的智慧生活助手黑涂鸦。我们希望通过一个更可感知的入口，通过 AI Agent 和实体硬件，帮助人们获得更舒适轻松的家庭生活，推动 AI 能力在更多真实场景中的体验落地。

Speaker #2: As part of our AI strategy, we introduced the AI-powered smart life assistant 黑涂鸦 at CES through a more intuitive and tangible entry point, integrating AI agents with hardware devices.

Speaker #2: We aim to help users enjoy more comfortable and effortless home experiences, accelerating the real-world adoption of AI capabilities across a broader range of everyday scenarios.

Speaker #3: 我们对 AI 与智能硬件结合路径的认知正在变得更加明确。AI 正在从能力叠加阶段进入与设备生态与行业场景深度融合的阶段，其价值更多体现在应用成熟度、收入结构改善以及效率结构提升上。我们认为随着 AI 从对话工具走向参与真实世界运行的智能体，行业对底层系统稳定性、实时性和可眼镜性需求正在显著的提升。AI 带来的变化不仅体现在产品体验上，更体现在应用形态的演进与生态协同方面的提升。随着 AI 应用逐步的成熟，其价值更多的体现在了可复制性和规模化落地能力上。

Speaker #2: Our understanding of the integration pathway between AI and smart products is becoming increasingly clear. AI is progressing beyond the stage of capability overlay and entering a phase of deep integration with device form factors and industry-specific scenarios.

Speaker #2: Its value is increasingly reflected in application maturities, improved revenue structures, and enhanced operational efficiency. We believe that as AI evolves from a conversational tour into an intelligent agent capable of engaging in real-world operations, industry expectations for underlying system stability, real-time responsiveness, and scalability are increasing significantly.

Jerry Wang: Its value is increasingly reflected in application maturity, improved revenue structures, and the enhanced operational efficiency. We believe that as AI evolved from a conversational tool into an intelligent agent capable of engaging in real-world operations, industry expectations for underlying system stability, real-time responsiveness, and scalability are increasing significantly. The impact of AI extends beyond enhancing product experiences. It is also reshaping application architectures and transforming modes of ecosystem collaboration. As AI applications continue to mature, their value will increasingly be reflected in their replicability and the capacity to scale effectively across real-world deployments. Looking ahead, we will continue to advance our strategy across three key priorities. First, we will further strengthen our AI native platform capabilities, enable them to more effectively support millions of developers in creating a diverse range of next-generation AI devices and applications.

Speaker #2: The impact of AI extends beyond enhancing product experiences. It is also reshaping application architectures and transforming modes of ecosystem collaboration. As AI applications continue to mature, their value will increasingly be reflected in their replicability and capacity to scale effectively across real-world deployments.

Speaker #3: 谈完未来，我们将继续围绕三件事推进。第一，持续强化 AI 原生平台的能力，使其更高效地支撑百万开发者设计出百花齐放的万千种 AI 设备形态和应用。第二，加快 AI 应用服务在重点场景中的落地和规模化推进。第三，加大开发者生态的建设，并对开发者进行扶持，建设繁荣和商业成功的开发者社群。

Speaker #2: Looking ahead, we will continue to advance our strategy across three key priorities. First, we will further strengthen our AI-native platform capabilities and enable them to more effectively support millions of developers in creating a diverse range of next-generation AI devices and applications.

Speaker #2: Second, we will accelerate the deployment and scalable expansion of AI application services across key scenarios. Third, we will deepen our investment in developer ecosystem growth and enhance our support for developers.

Jerry Wang: Second, we will accelerate the deployment and the scalable expansion of AI application service across key scenarios. Third, we will deepen our investments in developer ecosystem growth and enhance our support for developers, fostering a vibrant community grounded in innovation and commercial success. 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 the business progress.

Speaker #2: Fostering a vibrant community grounded in innovation and commercial success.

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

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 progress.

Speaker #4: Hello everyone, this is Alex. I will now provide more details on our fourth quarter and full-year results. Please note that all the figures are in US dollars, and all comparisons are year over year unless stated otherwise.

Alex Yang: Hello, everyone. This is Alex. I will now provide more details on our Q4 and full year's results. Please note that all the figures are in US dollars and all the comparisons are year-over-year, unless stated otherwise. In the Q4 of 2025, we generated total revenue of approximately $48.5 million, representing a year-over-year increase of 3%. Against the backdrop of the continuous cautious industry demand and more conservative customer procurement cycles, we achieved our 10th consecutive quarter of year-over-year growth. In the Q4 quarters, our blended gross margin was 47.6%, while non-GAAP operating margin improved to 11.1% compared with 10.3% in the same period last year. Non-GAAP net margin reached 24.4%.

Speaker #4: In the fourth quarter of 2025, we generated total revenue of approximately $48.5 million US dollars, representing a year-over-year increase of 3%. This is against the backdrop of continuous, conscious industry demand and more concerns about customer procurement cycles.

Speaker #4: We achieved our 10th consecutive quarter of year-over-year growth. In the fourth quarter, our blended gross margin was 47.6%, while non-GAAP operating margin improved to 11.1%, compared with 10.3% in the same period last year.

Speaker #4: Non-GAAP net margin reached 24.4%. Net operating cash flow totaled $23.5 million, making this the 11th consecutive quarter of positive operating cash flow. Gross margin remained stable.

Alex Yang: Net operating cash flow totaled $23.5 million, making the 11th consecutive quarters of positive operating cash flow. Gross margin remained stable, underscoring the company's pricing power, driven by the product value and technology capabilities, as well as the strong competitive positioning of our platform-based business model in the dynamic market environment. From a full-year perspective, our stable growth in 2025 became even more pronounced. Our full-year revenue reached over $322 million, representing a year-over-year increase of 7.8%. Blended gross margin of the full year improved to 48.2%, up 0.8 percentage points from 2024. Non-GAAP operating margin reached to 10.5%, an increase of 2.9 percentage points year over year, while Non-GAAP net margin roses to 24.9%.

Speaker #4: Underscoring the company's pricing power, driven by the product value and technology capabilities, as well as the strong competitive positioning of our platform-based business model in the dynamic market environment.

Speaker #4: From a full-year perspective, our stable growth in 2025 became even more pronounced; our full-year revenue reached over $322 million, representing a year-over-year increase of 7.8%.

Speaker #4: Blended gross margin for the full year improved to 48.2%, up 0.8 percentage points from 2024. Non-GAAP operating margin reached 10.5% and increased by 12.9 percentage points year over year.

Speaker #4: While non-GAAP net margin rose to 24.9%. Full-year non-GAAP net income reached a record high of $80.1 million U.S. dollars, up approximately $4.7 million compared with 2024.

Alex Yang: Full year non-GAAP net income reached to a record high of $80.1 million, up approximately $4.7 million compared with 2024. Among our segments, the PaaS business delivered stable performance, generating revenue of over $230 million, representing a year-over-year increase of 6.5%. Against the backdrop of extended customer budgeting cycles, we maintain stable growth in our core business by optimizing our customer mix and enhancing our product capabilities by empowering my customers to provide a more competitive applications. At the end of 2025, the number of PaaS premium customers reached to 291, continuing to contribute a structurally stable revenue to the PaaS business. Such a diversified structures without reliance on any single customer group has further strengthened our resilience in a vital operating environment.

Speaker #4: Among our segments, the past business delivered stable performance, generating revenue of over $230 million US dollars, representing a year-over-year increase of 6.5%. Against the backdrop of extended customer margin cycles, we maintained stable growth in our core business by optimizing our customer mix and enhancing our product capabilities by empowering our customers to provide more competitive applications.

Speaker #4: At the end of 2025, the number of past premium customers reached 291, continuing to contribute structurally stable revenue to the past business. Such diversified structures, without reliance on any single customer group, have further strengthened our resilience in a vital operating environment.

Speaker #4: The second other business generated full-year revenue of $44.8 million, representing a year-over-year increase of 13.4%. Of this total, recurring services revenues grew by 37% year over year, emerging as a key growth driver of the SaaS.

Alex Yang: The SaaS and others business generate a full-year revenue of $44.8 million, representing a year-over-year increase of 13.4%. Of this total, recurring services revenues grows by 37% year-over-year, emerging as a key growth driver of the SaaS. We're looking forward to enlarge this segment faster. By this recurring model. On a full year basis, so revenue growth from the SaaS and other business outpaced the company's overall revenue growth. This strong performance highlights the continued expansion of cloud software revenues, especially those AI-enabled softwares, and reflects the gradual realization of the life cycle value from the platform software capabilities as the installation base of the device expands. Our smart solution business generates a full year revenue of $45.7 million, making an 8.9% year-over-year increase.

Speaker #4: So we're looking forward to enlarging this segment faster by this recurring model. On a full-year basis, the revenue growth from the SaaS and other businesses outpaced the company's overall revenue.

Speaker #4: Growth. This strong performance highlights the continued expansion of cloud software revenues, especially those AI-enabled softwares, and reflects the gradual realization of the lifecycle value from the platform software capabilities as the installation base of the device expands.

Speaker #4: Our smart solution business generates full-year revenue of $45.7 million US dollars, marking an 8.9% year-over-year increase. In this segment, we observe that AI capabilities are stimulating demand in certain new product categories, while also enhancing the overall pricing power of our product offerings.

Alex Yang: In this segment, we observe that AI capabilities are stimulating demand in certain new product categories, while also enhancing the overall pricing powers of our product offerings. At the end of 2025, our total cash and cash equivalent amounted to over $1 billion. Precise will be $1,017 million, together with the term deposit and the Treasury securities recorded as short-term and long-term investments. This net cash providing ample flexibility to support AI capability development, ecosystem expansion, and potential capital allocations initiatives. Full year profitabilities was primarily driven by 3 factors. First, the continuous stability of our core platform business. Second, the initial revenue contribution from AI-related products and applications. Third, disciplined expense management and the realization of operating leverage. On the AI ecosystem side for the developers.

Speaker #4: At the end of 2025, our total cash and cash equivalents amounted to $1 billion, or more precisely, $1,017 million US dollars.

Speaker #4: Together with the time deposit and the treasury securities recorded as short-term and long-term investments, this net cash provides ample flexibility to support AI capability development, ecosystem expansion, and potential capital allocation initiatives.

Speaker #4: So, full-year profitability was primarily driven by three factors. First, the continuous scalability of our core platform business. Second, the initial revenue contribution from AI-related products and applications.

Speaker #4: Third, disciplined expense management and the realization of operating leverage. So, on the AI ecosystem side for the developers, within our developer ecosystem, we continue to advance the open-source capabilities of Tuya Open and further develop our AI agent platform.

Alex Yang: Within our developer ecosystem, we continue to advance the open source capabilities of TuyaOpen and further development our AI agent platform. By end of the 2025, the number of registered AI+IoT developers exceeded 1.8 million, representing a 37% year-over-year increase. The cumulative number of AI agents on the Tuya platform reach about 16,000, spanning a wide range of smart product categories. At the application deployment level, AI capabilities are being integrated across a variety of end user products, gradually establishing standardized pathway for AI applications. Recently, we host a overseas development event centered on hands-on AI hardware applications. Including the first hackathons held in Silicon Valley, this event attract over 300 developers, and which about 90% of them are from overseas.

Speaker #4: So by the end of 2025, the number of registered AI plus IoT developers exceeded 1.8 million, representing a 37% year-over-year increase. The cumulative number of AI agents on the Tuya platform reached about 16,000, spanning a wide range of smart product categories.

Speaker #4: So, at the application deployment level, AI capabilities are being integrated across a variety of end-user products, gradually establishing a standardized pathway for AI applications. Recently, we hosted overseas development events centered on hands-on AI hardware applications.

Speaker #4: So, including the first Hexons held in Silicon Valley, this event attracted over 300 developers, with about 90% of them from overseas. All participating projects were built and demonstrated on real hardware using Tuya T5 AI development boards.

Alex Yang: All participating projects were built and demonstrated on the real hardwares using Tuya T5 AI development boards, completing the journeys from concept to a functional prototype within only 48 hours. This enabled AI capability to be able to operate directly on physical devices. Those products span multiple scenarios, including AI companion wearables, desktop AI terminals, as well as applications in education and security. Some of those products have already entered the subsequent incubation stage and attracted commercial interest. Beyond customer-facing products and ecosystem development, we have rapidly applied AI internally to enhance the development efficiency. For instance, like the in short-term front-end development process, nearly 40% of the codes is generated with AI assistance. This has significantly shortened our R&D iteration cycles and reduced the cost of the repetitive development.

Speaker #4: Completing the journeys from concept to a functional prototype within only 48 hours. This enabled AI capability to operate directly on physical devices.

Speaker #4: So, those products span multiple scenarios, including AI companion, wearables, and desktop AI terminals, as well as applications in education and security. Some of those products have already entered the subsequent incubation stage and attracted commercial interest.

Speaker #4: Beyond customer-facing products and ecosystem development, we have roughly applied AI internally to enhance development efficiency. So, for instance, in certain front-end development processes, nearly 40% of the code is generated with AI assistance.

Speaker #4: This has significantly shortened our R&D integration cycles and reduced the cost of the repetitive development. So, those efficiency gains enable us to maintain the pace of the production and the solution integrations while controlling the headcount.

Alex Yang: Those efficiency gains enable us to maintain the pace of the products and the solution iterations while controlling the headcounts growth. Building on this foundation, we plan to launch the AI development tools for the developers within this years. Through the AI coding services, web coding, we aim to further lower the barriers for AI hardware development and boost Tuya developer efficiencies by enabling more low-code and no-code developers to participate in the AI hardware industry and application ecosystem. This initiative will help expand the developer base while accelerating the commercialization of AI applications. Finally, with the maturation of the physical AI technology, the opportunity for deep integration between AI and physical world has arrived. Our launch of Hey Tuya is to build on this site.

Speaker #4: Growth. So, building on this foundation, we plan to launch the AI development tools for developers within these years. And through the AI coding services and web coding, we aim to further lower the barriers for AI hardware development and boost Tuya developer efficiencies.

Speaker #4: By enabling more low-code and no-code developers to participate in the AI hardware industry and application ecosystem, this initiative will help expand the developer base while accelerating the commercialization of AI applications.

Speaker #4: Finally, with the maturation of physical AI technology, the opportunity for deep integration between AI and the physical world has arrived. Our launch of Hey Tuya is to build on this site.

Speaker #4: Without waiting for the large-scale deployment of enabled embodied robots, Hey Tuya leveraged hundreds of millions of the existing powered by Tuya smart devices worldwide to enable AI to fully perceive and proactively interact with the real world today.

Alex Yang: Without waiting for the large scale of deployment of like enable embodied robots, Hey Tuya leveraged hundreds of millions of the existing Powered by Tuya smart devices worldwide to enable AI to fully perceive and proactively interact with the real world today. It draws on understanding and reasoning on large models while seamlessly interacting within with the smart devices that helps manage daily tasks. This represents a new form of integrated situational AI that making the benefits of AI tangible and immediately accessible rather than distant closure promised. In summary, the 2025 showcases the company's continuous progress across its business structures, profitability models, and competitive frameworks on the technical side.

Speaker #4: So it draws on understanding and reasoning on large models, while seamlessly interacting within the smart devices that help manage daily tasks. So this represents a new form of integrated situational AI that makes the benefits of AI tangible and immediately accessible, rather than a distant, further promise.

Speaker #4: So, in summary, 2025 showcases the company's continuous progress across its business structures, profitability models, and competitive frameworks on the technical side. So, throughout 2025, Tuya's physical AI technology was validated for feasibility in smart devices, giving rise to a wide range of AI hardware forms.

Alex Yang: Throughout 2025, Tuya's physical AI technology was validated for feasibility in smart devices, giving rise to a wide range of AI hardware forms, leveraging our accumulated strength across our developer communities, hardware ecosystem, and global delivery capabilities. We're well-positioned to a continuous advance in AI deployment and transforming it into a sustainable long-term competitive advantage. Looking ahead, we'll continue to focus our efforts in these directions. First, we will further categorize the platform-level AI capabilities to enable more efficient applications of AI across diverse device and industry standards. By lowering the technology barriers, we aim to help new players bridge the technology gap and accelerate this adaption of AI and innovations in the hardware industry. Meanwhile, throughout Hey Tuya, our next generation AI assistant, we will establish a new standard for interactive experience in smart devices through AI, accelerating a mass market penetration of smart products.

Speaker #4: Leveraging our accumulated strength across our developer communities, hardware ecosystem, and global delivery capabilities, we are well-positioned to continuously advance AI deployment and transform it into a sustainable, long-term competitive advantage.

Speaker #4: Looking ahead, we continue to focus our efforts in this direction. First, we will further categorize the platform-level AI capabilities to enable more efficient applications of AI across diverse device and industry scenarios.

Speaker #4: By lowering the technology barriers, we aim to help new players bridge the technology gap and accelerate the adoption of AI and innovations in the hardware industry.

Speaker #4: Meanwhile, throughout Hey Tuya, our next-generation AI assistant, we will establish a new standard for interactive experience in smart devices through AI, accelerating mass-market penetration of smart products.

Speaker #4: Finally, we'll maintain cost discipline, consistently improving our profitability, quantity, and long-term competitiveness. Thank you, all. Operator, right now we can begin the Q&A section.

Alex Yang: Finally, we'll maintain cost discipline, consistently improving our profitability quantity and long-term competitiveness. Thank you all. Operator, right now we can begin the Q&A section.

Speaker #1: Thank you. We will now begin the question-and-answer session. To ask a question now, please press star one one on your telephone and wait for your name to be announced.

Operator: Thank you. We will now begin the question and answer session. To ask a question now, please press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again. One moment for our first question. We will now take our first question from the line of Yang Liu from Morgan Stanley. Please ask your question. Yang, your line is open.

Speaker #1: To withdraw your question, please press star 11 again. One moment for our first question. We will now take our first question from the line of Yang Liu from Morgan Stanley.

Speaker #1: Please ask your question. Yang, your line is open.

Speaker #2: Thanks for the opportunity to ask a question, and congratulations on the solid result. I have two questions. The first one is regarding the recent tax rate change on the US side, whether that will have any impact on our business outlook going forward.

Yang Liu: Thanks for the opportunity to ask question, and congratulations on the solid result. I have two questions. The first one is regarding the recent tax rate change at the US side, whether that will have any impact on our business outlook going forward. My second question is regarding the recent upstream memory and other chipset supply constraint, and whether it will impact Tuya's business. Let me translate my question to Chinese.

Speaker #2: And my second question is regarding the recent upstream memory and other chipset supply constraint, and whether it will impact Tuya's business. Let me translate my question to Chinese.

Speaker #2: 我这边两个问题。一个是关于最近美国对贸易伙伴的这个税率变化是否会影响到公司明年抱歉，2026年的业务展望。另一个就是我们也观察到最近公司上游一些芯片行业，尤其是存储芯片吧，有比较大幅的涨价和供给紧张。不知道是否会影响公司未来的业务发展。谢谢。

Speaker #3: Yeah, thank you, Mr. Liu. So the first question is—yes, let's consider as a positive indicator the tariff reductions recently. But the demand didn't react immediately yet.

Alex Yang: Thank you, Mr. Liu. The first question, yes, let's consider as a positive indicators that about the tariff reductions recently. The demand didn't react immediately yet, but we're very see that the customers' confidence levels about a better environment to do the business into especially global manufacturing, trading, should improved. People have a more positive and more confidence that the macro economy will become more stable and better this year. The demand and order didn't showed up immediately. Two reasons. The first one is that still people consider the global situation will be more dynamic. Those type of reason to reductions maybe will not be a sustainable level.

Speaker #3: But we really see that the customers' confidence levels about the better environment to do business, especially in global manufacturing and trading, have so improved. So people have a more positive outlook and more confidence that the macroeconomy will become more stable and better.

Speaker #3: They're sure. But the demand and order didn't show up immediately. Two reasons. The first one is that still, people consider the global situation will be more dynamic.

Speaker #3: So those types of reasons for reductions may not be at a sustainable level. So in the near future, maybe in March, there may be a new executive order that will come up.

Alex Yang: In the near futures, maybe in March, that maybe new executive order will come up. we'll just like the reset the term of the tariffs level, maybe into the fixing 15% or a little bit higher. That's the first one, dynamic. People rather not overact. The second one is that this kind of news is happening during the Chinese New Year. Till now, most of the manufacturers, they start back to work today. I mean, today, literally today. So many of the manufacturers, they didn't starting to offer a new price and try to making new orders. We'll see. Anyhow, we'll be a very positive and directions we're looking forward to.

Speaker #3: So we’ll just, like, reset the tune of the tariffs level. Maybe into the 15%, or a little bit higher. So that’s the first one, dynamic.

Speaker #3: So people would rather not overreact. And the second point is that this kind of news is happening during the Chinese New Year. So up till now, most of the manufacturers have just started back to work today.

Speaker #3: I mean, today—literally today—so many of the manufacturers, they didn't start to offer new prices and try to make new orders. So, we'll see.

Speaker #3: But anyhow, it will be a very positive and direction. We're looking forward to it. And while overall costs eventually will bring down a little somehow, and so the customers will be able to have more confidence to enlarge the demand.

Alex Yang: While overall costs eventually will bring down a bit somehow, so the customers will be able to have more confidence to enlarge the demand. That's the first one. The second one is, yes, since last Q4, we're very starting to notice that the shortage of the production capacity of the semiconductor side. First one is that the shortage will not impact us because consider as a significant buyers in these sectors. Many of our... I mean, all our suppliers will ensure that we will get a fulfillment of our orders no matter what. That's the first one. In the same time, that's since last Q4, we're really trying to prepare, how can I say? Quite good inventories levels to going against those kind of dynamics in a supplying cycles.

Speaker #3: That's the first one. And the second one is, yes, since last Q4, we're really starting to notice the shortage of the production capacity on the semiconductor side.

Speaker #3: And the first one is that the shortage will not impact us because we are considered as significant buyers in this sector. So many of our—I mean, all our suppliers will ensure that we will get fulfillment of our orders.

Speaker #3: No matter what. That’s the first one. At the same time, since last Q4, we’re really starting to prepare—how can I say? Quite good inventory levels to go in against those kinds of dynamics in the supplying cycles.

Speaker #3: So that's the first one. So, shortage is not a problem for us. And about the cost raise, we continue to keep closing on that.

Alex Yang: That's the first one. Shortage is not a problem for us. About the cost raise, we're continuous to keep closing on that. Right now, we didn't meet that immediately increase. Like I mentioned, that's because of the buying forces. If this kind of intensity is trying to increase, you know, without a limit, we're not sure. We'll keep closing on that. Anyhow, because of the special value position that the company been doing so far, that kind of increase on the supply side will not impact on our demand or in significantly on our gross margin side. We'll keep closing on that. Seems that it will be last maybe for another 1 or 2 quarters. Thank you.

Speaker #3: Right now, we didn't meet that immediate increase. Like I mentioned, that's because of the buying forces. But if this kind of intensity is starting to increase without a limit, we're not sure.

Speaker #3: So, we'll keep closing on that. But anyhow, because of the special value position that the company has been building so far, that kind of increase on the supply side will not impact our demand, or significantly impact our gross margin side.

Speaker #3: But we'll keep closing on that. It seems that it will last maybe for another one or two quarters. Thank you.

Speaker #2: Thank you, Alex.

Operator: Thank you, Alex. Thank you. We will now take our next question from the line of Timothy Zhao from Goldman Sachs. Please ask your question. Your line is open.

Yang Liu: Thank you, Alex.

Speaker #1: Thank you. We will now take our next question from the line of Timothy Chow from Goldman Sachs. Please ask your question. Your line is open.

Operator: Thank you. We will now take our next question from the line of Timothy Zhao from Goldman Sachs. Please ask your question. Your line is open.

Speaker #4: Great. Good morning, managers. Thank you for taking my question. And congrats on the very solid results. I also have two questions here. One is, I think, a more broad question about the company's value position in the agentic AI world.

Timothy Zhao: Great. Good morning, management. Thank you for taking my question. Congrats on the very solid results. I also have two questions here. One is, I think a more broader question about the company's value proposition in the agentic AI world. Given we have seen continued progress in the agentic AI capabilities, how should we think about Tuya's value proposition to the customers in your PaaS and SaaS business? Will the AI technology advance actually enhance the self-development capabilities of your customers? How should we think about the long-term relationship between Tuya and your customers? Especially I think you mentioned that in the SaaS business, the recurring revenue actually increased quite dramatically last year. Just wondering if you can further elaborate on that.

Speaker #4: Given we have seen continual progress in the agentic AI capabilities, how should we think about Tuya's value proposition? To the customers in your past and SaaS business?

Speaker #4: And will the AI technology advance actually enhance the self-development capabilities of your customers? And how should we think about the long-term relationship between Tuya and your customers?

Speaker #4: And essentially, I think you mentioned that in the SaaS business, the recurring revenue actually increased quite dramatically last year. Just wondering if you can further elaborate on that.

Speaker #4: And second question is that, also in your remarks, you talk about going forward, you want to accelerate the AI deployment of the key application scenarios.

Timothy Zhao: Uh, and second question is that also in your remarks, uh, you talk about, uh, going forward, you want to, uh, uh, accelerate the AI deployment of the key application scenarios. Uh, just wondering if you can also further elaborate on this as well. Uh, for example, what scenarios that you see are more promising? And just, uh, wondering if you can share more details. Uh,

Speaker #4: Just wondering if you can also further elaborate on this as well. For example, what scenarios that you see are more promising? And just wondering if you can share more details.

Speaker #4: Another question. 我这边有两条问题。第一个可能是一个稍微偏宏观的问题。在我们看到 agentic AI 的能力在全球范围内有比较大的进步和突破，我们应该怎么去考虑 Tuya 在 PaaS 和 SaaS 的客户之间的 value proposition？会不会因为 AI 的技术能力的进步导致我们的客户自研能力的提升或者成本的降低？我们长期和客户的关系现在有哪些额外的变化？更细节一点，您刚刚提到我们的 SaaS 业务里面 recurring 的收入其实有比较显著的增长，能否更详细阐述一下背后的驱动因素有哪些？第二个是，您刚才提到我们今年也会进一步加速在特定应用场景中的 AI 应用，能否请教一下有哪些特定的应用场景是我们觉得会更加乐观或者会有更快增长的？谢谢。

Speaker #3: Yeah, thank you, Timothy. So yeah, it's a long question. So, the first one is about the macro side. We are happy to see that more customers are starting to think about how they can create their own differentiations, how they can build their own capabilities in their own R&D side.

Alex Yang: Yeah, thank you, Timothy. Yeah, it's a long question. First one is that about the macro side. We are happy to see that, more customers starting to thinking on how they can create their own differentiations, how they can build their own capabilities in their own R&D side. Because we're happy to see that, otherwise we have to offer that. I think that AI makes no difference for past 10 years, you know, experience is that while we're in starting to enable the manufacturing players to embrace the smart technology wise, since the starting with the IoT, it's the same stuff. If they cannot do that, but they want it, we have to offer it. For all the time of the company's histories, we continue to offer 2 things.

Speaker #3: Because we're happy to see that. Otherwise, we have to offer that. So I think that AI makes no difference for the past 10 years. Experience is that while we're starting to enable the manufacturing players to embrace the smart technology, right?

Speaker #3: Since the starting with IoT, it's the same stuff. If they cannot do that, but they want it, we have to offer it. So for all the time of the companies' histories, we continue to offer two things.

Speaker #3: The first thing is that if they don't have the capability right now, we offer them the off-the-shelf turnkey solution. And if they really have some capability, we continue to educate them to do that.

Alex Yang: The first thing is that, if they don't have the capability right now, we offer them the off-the-shelf solution turnkey. If they already have some capability, we continue to educate them to do that, and then we offer them infrastructures to allow them to do that some extra values they want to create more freely. I think that's the, what we call ecosystem we want to create. It's not like they just keep selling stuff. They don't have to do that. No. We're happy to see that we already have a significant amount of the customers who already have their own kind of in-house capability to create their own differentiation and make their own innovations. We're happy to see that. The same as that, we continue to enable our customers to build their own, like the device level innovations and application level.

Speaker #3: And then we offer them infrastructures to allow them to do that, some extra values they want to create, more freely. So I think that's what we call ecosystem, where to create.

Speaker #3: So it’s not like just keep selling stuff. They don’t have to do that. No. So we’re happy to see that we really have a significant amount of the customers who really have their own kind of in-house capability to create their own differentiation and make their own innovations.

Speaker #3: We're happy to see that. So, the same as that, we continue to enable our customers to build their own device-level innovations and application-level.

Speaker #3: So I think AI makes no difference. We all continue to do the same thing. Including 2025, the showcase is that for some new players, they don't know nothing about that, but they only have some ideas how they want to bring AI into their business.

Alex Yang: I think AI makes no difference. We all continue to do the same thing. Including 2025, the showcase is that for some new players, they don't know nothing about that, they only have some ideas how they want to bring AI into their business. We create some turnkey solution for them. They can grab and go. In the same time, we'll continue to have the very deep and active conversations with their engineering team. Okay, what they can take for now and what they can build in the futures and how Tuya can enable them to do that more efficiently and faster without the overwhelming burden. We continue to do that the same way.

Speaker #3: We create some turnkey solution for them. They can grab and go. In the same time, we continue to have the very deep and active conversations with their engineering team: 'Okay, what they can take from now?' And what they can build in the futures.

Speaker #3: And how Tuya can enable them to do that more efficiently and faster, without the overwhelming burden. So we continue to do that the same way.

Speaker #3: So, but what we think that makes us very excited about is that, several years ago, you still need to convince or tell people how the smart devices are promising business.

Alex Yang: But what we're, we think that make us very excited about is that, you know, several years ago, you still need to convince or tell people how the smart devices are promising business. You still need to tell them that this will be the future. Right now, you don't have to tell people that AI is future. Every people are buying that. The key part is that they already have the concept in their mind and how you'll be able to help them to make that faster and more efficiency and more competitively, I mean, on the user experience side. I think that's the first one. The second one is on the SaaS recurring stuff.

Speaker #3: You still need to tell them that this will be the future. But right now, you don't have to tell people that AI is the future.

Speaker #3: Everyone is buying that. So the key part is that they really have the concept in their mind, and how you will be able to help them to make that faster and more efficiently.

Speaker #3: And more competitively—I mean, on the user experience side. I think that's the first one. And so the second one is on the SaaS recurring stuff.

Speaker #3: I think the key driver for that is that remember our past. We continue to deploy a significant amount, a scale of the devices overall, with or without any type of recurring services out there.

Alex Yang: I think that the key driver for that is that, remember our past, we continue to deploy a significant amount and scale of the devices overall, with or without any type of recurring services out there. Which means that we will have a large base. In the same time coming on with AI, some, what we call existing categories will only come with IoT before, and we already see that, okay, combined with AI capability, we will be able to offer some extra experience and values on the same type of the devices, and which already deployed on the household. In 2025, we're continuing to offer some new services on the same type of the hardware. Then we see that it should work out.

Speaker #3: So, which means that we really have a large base. And at the same time, coming along with AI, so somewhat we call existing categories only come with IoT before, and we really see that combined with AI capability, we will be able to offer some extra experience and values on the same type of devices.

Speaker #3: And which are already deployed in the household. So in 2025, we will continue to offer some new services on the same type of hardware. And then we see that it should work out.

Speaker #3: And even on the existing recurring services, like some storage services, by offering extra AI capability, we make the services more valuable or more feasible for the end user side.

Alex Yang: Even on the existing recurring services, like some storage services, by offering extra AI capability, we make the services more valuable or more feasible for the end user side. We either continue to enlarge our recurring consumer base. In the same time, we're trying to offer more recurring services out there. We believe that will be a long term, especially for some AI initial products, which will mean that the new type of applications, since day one, those kind of new recurring models, we're starting to take places from the beginning. I think that's for the SaaS and recurring. We continue to grow that. I think that would be one of the fastest growings and segment in our middle term. That's for the recurring. The third one is for the AI applications.

Speaker #3: So we either continue to enlarge our recurring consumer base at the same time we're starting to offer more recurring services out there. And we believe that will be long term, especially for some AI initial products, which will mean that the new type of applications since day one, those kind of new recurring models are starting to take place.

Speaker #3: From the beginning. So I think that's for the SaaS and recurring. We continue to grow that. I think that will be one of the first, fastest growings.

Speaker #3: And segment in our middle term. That's for the recurring, and the third one is for the AI applications. I think that we really shared some of our overviews again, late last year.

Alex Yang: I think that's, we already share some of our overviews, and again, late last year. For those segments that AI will be able to provide more significant values, we believe right now will be two. The first one is that all the multi-modeling applications, including the video and audio interactions and the analysis. Including like the companions, toy, and securities. Those type of products will really have a significant base, and we have new players coming in. Coming on with AI, either you make those device interactions more smoothly and also combined with the perceptions of the video and audios, the devices will be able to provide more things. Like the security sides that you'll be able to protect the people's home more precisely without bringing any false alarms.

Speaker #3: So for those segments that AI will be able to provide more significant values, we believe right now there will be two. The first one is all the multi-modal applications, including video and audio interactions, and interactions, and analysis.

Speaker #3: So, including the companions, toys, securities—so those types of products, we really have a significant base, and we have new players coming in. But coming along with AI, so either you make those device interactions more smoothly, and also combined with the perceptions of the video and audios, the devices will be able to provide more things.

Speaker #3: Like the security side, that you will be able to protect the people's home more precisely, without bringing any false alarms. And for the companion side, so your toy side, you really could be able to provide some educational level of the interactions by providing the right language, providing the right understanding, the right emotion.

Alex Yang: like for the companion side, or toy side, you really could be able to provide some educational level of the interactions by providing the right language, providing the right understanding, the right emotion, providing the right feedbacks, and providing the right type of knowledge to the targets, to the target customers. That will be the first one, multi modeling applications, especially on audio and video interactions. The second one is data analytic and decision making. A typical use cases is for energy management. Come along with a full cycle and device deployment for the energy life cycle, including the generation of energy storage, consumptions, and metering.

Speaker #3: Providing the right feedback and providing the right type of knowledge to the targets, to the target customers. So that will be the first one.

Speaker #3: Multi-modeling applications, especially for audio and video interactions. The second one is data analytics and decision-making. So, a typical use case is for energy management.

Speaker #3: So coming along with a full cycle device deployment for the energy life cycle, including the generation of energy, storage, consumptions, and metering. You'll be able to understand how the electricity will be moving along, I mean, transit from the grid into the into each of the devices, how people want to manage the flow.

Alex Yang: You'll be able to understand how the electricity will be moving along, I mean, transit from the grid into each of the devices, how people want to manage the flow. Through the all the data you'll be able to know, and then the AI will be able to, you know, jump one step ahead. It's not only providing you the data analytics and suggestions, but the AI will be able to make the decisions. That's how you'll be able to control your dishwasher a different way, how you'll be able to manage your battery bank different way, how you'll be able to manage the AC and heating system in a different way. Combined with the variable pricing in different timing, combined with the generation of your solar panel, combined with what kind of battery you have in your home right now.

Speaker #3: And through all the data, you'll be able to know. And then the AI will be able to jump. One step ahead is not only providing you the data analytics and suggestions, but the AI will be able to make the decisions as to how you'll be able to control your dishwasher a different way, how you'll be able to manage your battery bank a different way, how you'll be able to manage the AC and heating system a different way.

Speaker #3: Combined with the variable pricing at different times, combined with the generation of your solar panel, combined with what kind of battery you have in your home right now.

Alex Yang: Either to reduce the total cost directly. That will be a typical showcase, is the AI is not providing the tool. AI will be able to provide the outcome. People will really see directly that what will be the TC or what will be the total values they can get for the life cycle of the usage of this type of devices. They pay for the services as well. The data analytics and decision making will be another part. Beyond energy, we're looking for more scenarios in that segment as well. That's it, Timothy.

Speaker #3: And either to reduce the total cost directly, so a typical showcase is the AI is not providing the tool. AI will be able to provide the outcome.

Speaker #3: So people will really see directly what the TCO is and what the total values they can get will be for the life cycle of the usage of this type of devices.

Speaker #3: And they pay for the services as well. So, the data analytics and decision-making will be another part. And beyond energy, we're looking for more scenarios in that segment as well.

Speaker #3: So that's the thematic.

Speaker #1: Thank you. Thank you for the detailed answers.

Timothy Zhao: Thank you. Thank you for the detailed answers.

Speaker #3: Thank you. We will now take our next question from Min Run Lee from CICC. Please ask your question, Min Run. Your line is open.

Operator: Thank you.

Operator: Thank you. We will now take our next question from Kai Xiao from CICC. Please ask your question. Minran, your line is open.

Operator: We will now take our next question from Kai Xiao from CICC. Please ask your question. Minran, your line is open.

Regina Wang: Thank you management for taking my question and congrats on the strong results. My first question concerns the demand side. Given the recent geopolitical risk, how does management assess the potential impact on Tuya's international operation? Looking at the current environment in this year, how do you perceive the recovery in demand across your overseas markets? My second question, I would like to ask about the shareholder return. Tuya holds a very healthy cash position and your profitability continues to improve. Could management share if there are any more specific plans or considerations for shareholder returns as we move through 2026? Thank you very much.

Speaker #4: Thank you, management, for taking my question, and congrats on your performance. My first question concerns the demand side. Given the recent geopolitical risk, how does management assess the potential impact on Tuya's international operation?

Mingran Li: Thank you management for taking my question and congrats on the strong results. My first question concerns the demand side. Given the recent geopolitical risk, how does management assess the potential impact on Tuya's international operation? Looking at the current environment in this year, how do you perceive the recovery in demand across your overseas markets? My second question, I would like to ask about the shareholder return. Tuya holds a very healthy cash position and your profitability continues to improve. Could management share if there are any more specific plans or considerations for shareholder returns as we move through 2026? Thank you very much.

Speaker #4: And looking at the current environment in this year, how do you perceive the recovery in demand across your overseas markets? And my second question, I would like to ask about the shareholder returns.

Speaker #4: Tuya holds a very healthy cash position and your profitability continues to improve. Could management share if there are any more specific plans or considerations for shareholder returns as we move through 2026?

Speaker #4: Thank you very much.

Alex Yang: Yeah. Thank you for the questions. The first one is that, I already covered part of that, like the, from MS, like the tariff questions. The first one is that, yes, the global situation will become more and more dynamic, right? We're really starting to get used to that, but coming on with our customers as well. Right now we will see that, we get to be able to see more positive indicators in that direction. Either it's reductions of the tariff on the global side, but anyhow, right? Through any type of pathways. We really see that people require... The commerce require a better environment to do the business, and people cannot cut each other off. We really see that.

Speaker #5: Yeah, so thank you for the questions. The first one is that a very core part of that, like from MS, like the tariff questions.

Speaker #5: So, the first one is that, yes, the global situation has become more and more dynamic, right? We're really starting to get used to that, coming along with our customers as well.

Speaker #5: So right now, we see that we get to be able to see more positive indicators in that direction, either through reductions of the tariff on the global side, right?

Speaker #5: Anyhow, right? Any type of pathways, but we really see that people require—the commerce requires—a better environment to do the business. And people cannot cut each other off.

Speaker #5: So we really see that. So the end demand continues to increase, because the technology really provides value for the end users, and they want it.

Alex Yang: The end demand continue to increase because the technology really provides value for the end users, and they want it, and they use that more and more often. That's what we see. This is inevitable. I mean, you can never return that. Coming on with the end demand increase and all the commerce level that people just figure out a way how to be able to fulfill their demands and navigates through all the dynamic factors, including the tariff, including the reallocation of the supply chain globally, et cetera. For us, is that we just follow the flow, is that we're coming on with the customers to focus on...

Speaker #5: And they use that more and more often. So that's what we see. And this is inevitable. I mean, you can have a return on that.

Speaker #5: So, coming up with the end demand increase, and so all the commerce level that people just figure out the way how they’ll be able to fulfill the demand and go through, navigate through all the dynamic factors, including the tariff, including the reallocation of the supply chain globally, etc.

Speaker #5: So for us, is that we just follow the flow. Is that we come along with our customers, focus on—first one is to provide our offering, technical offering to help them to build whatever application that makes sense for their end users and be able to scale it.

Alex Yang: First one is to provide our offering, technique offering, to help them to build whatever application that makes sense for their end users and be able to scale it. That's the first one. To make them be able to provide the right thing. In the same time that we continue closely to manage the cost, to come along with the different allocation of our services on the global side. Right now we can deploy the services on whatever countries my customers are. We already did. Right now my customers are really starting to build different type of production, and they already have different type of production centers in across 11 countries all over the world. We just follow the flow and help them to achieve that more agilely.

Speaker #5: So that's the first one, to make them be able to provide the right thing. At the same time, we continue to closely do that to manage the cost coming on with the different allocation of our services on the global side.

Speaker #5: Right now, we can deploy the services in whatever countries my customers are. We already did. And right now, my customers are really starting to build different types of production.

Speaker #5: I mean, they already have different types of production centers across 11 countries all over the world. So we just follow the flow, and help them to achieve that more urgently.

Speaker #5: So I think that that's overall what we see for the global situation side. And so this year, we really see that people are looking forward to having the rebound versus 2025.

Alex Yang: I think that's a overall what we see for the global situation side. This year we will see that people looking forward to have the rebound versus 2025, because 2025 will be kind of the overconscious situations, and people don't know what will happen, and things happening like every week. People don't, people are not willing to do even a long-term across the border, like the decisions. They keep the decision very, I mean, frequently and precisely on the more macro decisions. This year people will really see that the sustainability on the situation will be starting to become better. They try to rebound from the overconscious confidence level. Yeah. That's for the macro side.

Speaker #5: Because 2025 will be kind of the overconscious situations. And people don't know what will happen. And things happening like every week. And so people don't, people are not willing to do even a long-term across the border like the decisions.

Speaker #5: So they keep that decision very, I mean, frequently and precisely. I mean, with the micro decisions. But this year, people will see that the sustainability on the situation will be starting to become better.

Speaker #5: So, they try to rebound from the overconscious confidence level. Yeah. So that's for the micro side. And the second side, for the return of the shareholders, is as what we've been doing for the past two years.

Alex Yang: Second side, for the return of the shareholders, as what we've been doing for the past 2 years, we continue as the shareholders return as 1 of the prioritized targets for the company as well. We continues to provide a very sustainable and strong foundations on the operation side, including the net cash flow, including the profitability, including the growth of the revenue, including the health of the revenue structures, and the margin. The return of the shareholders will become our long-term strategy as well. We just announced we have a new round of the dividend for the shareholders as well. Coming out as a continue, as a practice for us is that 1 or 2 times a dividend a year.

Speaker #5: We continue as the shareholders return as one of the prioritized targets for the company as well. So we continue to provide very sustainable and strong foundations on the operation side, including the net cash flow, including the profitability, including the growth of the revenue, including the health of the revenue structures, and the margin.

Speaker #5: So the return to the shareholders will become a long-term strategy as well. So we just announced we'll have a new round of dividends for the shareholders as well.

Speaker #5: So coming out as a continual, as a practice for us, is that one or two times the dividend a year. So that will be what we're doing for the shareholders' returns.

Alex Yang: That will be what we're doing for the shareholders' returns. In the same time that the dividend will be more reflect on our level of net operating cash flow and profitability. That's what we're looking for. Very clear. Thank you.

Speaker #5: And also, at the same time, the dividend will be more reflective of our level of net operating cash flow and profitability. So that's what we're looking forward to do.

Mingran Li: Very clear. Thank you.

Speaker #4: Is there a clear thank you.

Speaker #6: Thank you. Our next question comes from Matt Ma from Jefferies. Please ask your question, Matt. The line is open.

Operator: Thank you. Our next question comes from Matt Ma from Jefferies. Please ask your question, Matt.

Matt Ma: Hey.

Operator: The line is open.

Speaker #7: Hello. Good morning. Thank you for taking my question, and congrats on the solid results. My question is regarding the Smart Solution segment. We noticed that the company showcased multiple AIoT products at CES last year.

Matt Ma: Hello, good morning. Thank you for taking my question, and congrats on the solid results. My question is regarding on the smart solutions segment. We noticed that the company showcased multiple AIoT products at CES last year. Which product categories does the company have higher confidence in sales growth in this year? When we are thinking about product category expansion, what's our thought process? Could we expect relatively strong growth in the smart solutions segment in 2026?

Speaker #7: And which product categories does the company have higher confidence in sales growth this year? And when we are thinking about product category expansion, what's our thought process?

Speaker #7: And could we expect relatively strong growth in the smart solution segment in 2026? So it was a 20 to actually 关于这个smart solution这一块的这个业务，我们去年在这个CES展上亮相了很多这个AIoT的这个产品。想请教一下管理层，就是在2026年我们对于哪一些这个品类的这个销售会比较有信心？然后当我们在思考这个拓展smart solution的这个产品品类的时候，我们一般会有什么样的这个考量？以及我们对于这块业务在2026年是否会可以预期一个比较快的一个增长？好，谢谢。

Alex Yang: Yeah. Thanks for the question, Matt. The first one is that, I think combined with the previous questions and answers. For the more promising, I call it as promising, maybe, I mean, we will have a more confidence levels categories so that can achieve a higher growth combined, enabled by AI. Those categories will be those one, those devices that can use more AI capabilities naturally. Including those kind of video and audio interactions and safety stuff, and toy, what we call entertainment stuff, and appliances. Those energy, and those will be those segments we'll find that AI can use more. They can use more AI capabilities than ever, and some of the capability will directly deliver as a value that becomes visible for the end users.

Speaker #8: Yeah. So, thanks for the question, Matt. So, the first one is that I think, combined with the previous questions and answers—so, for the more promising, quote as 'promising' maybe—I mean, we will have more confidence level categories that can achieve a higher growth.

Speaker #8: Combined, enabled by AI, so those categories will be those devices that can use more AI capabilities—naturally. So, including those kinds of video and audio interactions, and safety stuff.

Speaker #8: And to what we call entertainment stuff and the appliances, so those—energy and those—will be those segments we found that AI can use more.

Speaker #8: They can use more AI capabilities than ever. And some of the capability will directly deliver as a value that becomes visible for the end users.

Alex Yang: That's the one. We have a more confidence level in that segment. In the same time, we continue to reach other segments and what will be the new innovative ideas that combine the AI deep integrated with the existing device capabilities. We continue to search for that as well. What we're looking for, we think that we're gonna see in 2026 is that, gradually, you'll find more and more new type of device that didn't exist before, which trying to occur because of the AI. That will be 2, 3 new stuff. Same as a toy. Nobody think that a companion type of toy will become realistic before 2025.

Speaker #8: And so that's the one. And so we have more confidence in that segment. At the same time, we continue to reach other segments, and we will look at new innovative ideas that combine AI deeply integrated with existing device capabilities.

Speaker #8: We continue to search for that as well. And, but, which will—what we're looking for, we think that what we're going to see in 2026 is that, gradually, you'll find more and more new types of devices that didn't exist before.

Speaker #8: We're starting to occur because of the AI. So that will be two, three new stuff. Same as the toy—nobody thinks that a companion type of toy will become realistic.

Speaker #8: Before 2025. So, this type of new concept of applications we're looking for to have more, because we'll have more talents coming into the industry.

Alex Yang: This type of new concept of applications, we're looking for to have more because we have more talents coming into the industry. We have more players coming into the industry. The new ideas come across a different world, will create a very interesting chemistries out there. New categories, which I don't name that, even we don't know, how should we call that, but we'll find more this year. That's the first one, the first question. Second one is around smart solutions. Like I described, the value proposition of smart solution is that it's those type of hardware type that help my customers to differentiate themselves. Those differentiators, the customers prefer to have to do that because that's either there'll be more efficiency or that will be a must-be.

Speaker #8: We'll have more players coming into the industry. The new ideas come across different worlds. We'll create very, very interesting chemistries out there. So, new categories—which I won't name, because even we don't know what we should call them—but we'll find more this year.

Speaker #8: That's the first one. First question. And the second one is, I'm not so much smart solutions. So like I described, the value proposition of smart solution is that it's those type of hardware type that help my customers to differentiate themselves, and those differentiators—the customers prefer to do that because either that will be more efficient or that will be a must-be.

Speaker #8: So a significant—I mean, a typical use case for that is like the bird feeders I mentioned a couple of times out there. Is that, that's just a concept of ideas.

Alex Yang: A significant, I mean, a typical use cases for that is like the bird feeders. I mentioned a couple of times out there, is that's just a concept of ideas that might work. The customers come from the, how can I say, the pet products world. They know that some of those, their customers are looking for to interact with wildlife like that. That's just a customer, consumer, or user insight and concept ideas. If they want to do that, they have to cover all the technology gap. It will be kind of overwhelming for them, and not only because of the capability, lack of capabilities of the engineering team, but also that investment can be huge. I mean, for them, if they do that individually.

Speaker #8: That might work. So the customers come from the—how can I say—the pet products world. They know that some of their customers are looking to interact with wildlife like that.

Speaker #8: So, that's just a customer and consumer or user insight and concept ideas. So, if they want to do that, they have to cover all the technology gap.

Speaker #8: It will be kind of overwhelming for them, and not only because of the lack of capabilities of the engineering team, but also that investment can be huge.

Speaker #8: I mean, for them, if they do that individually. And also, at the same time, that type of innovation needs a deep intuition on the software and hardware development directly.

Alex Yang: Also, in the same time, that type of innovations need a deep intuition on the software and hardware development directly. Instead of waiting for Tuya to offering the path, maybe that hasn't showed up in our path roadmap ever. They say that, how they can work closer with Tuya if we can make that happen.

Speaker #8: So instead of waiting for Tuya to offer the paths—maybe that doesn't show up in our past roadmap ever—so they say that, how they can work closer with Tuya if we can make that happen.

Speaker #8: So through that, we think that we buy in this concept, and then we make it as a—we'll offer it as a solution because we can directly make that happen.

Alex Yang: Through that, we think that we buy in this concept and then we make it as a We'll offer it as a solution because we can directly make that happen, and then they can try out the concept. That would be the typical situation for the smart solution is that we're looking for those differentiator or differentiated type of offering to the market that can help my customer outstand themselves in their own segment, in different region, in different categories, in different vertical channels, et cetera. We only focus on this. That we can see that for the smart solutions, even on the hardware business, we maintain as a 20% plus margin.

Speaker #8: And then they can try out the concept. So that will be the typical situation for the smart solution, is that we're looking for those differentiator or differentiated type of offering to the market that can help my customer outstand themselves in their own segment, in different region, in different categories, in different vertical channels, etc.

Speaker #8: So we only focus on this, so that you can see that for the smart solutions, even on the hardware business, we maintain a 20%+ margin.

Speaker #8: The reason being is that we'll only choose those higher-valued products with the differentiations and with the special technical offering, and target them to very precise, targeted consumers who are willing to pay higher.

Alex Yang: Reason being is that we only choose those higher valued products with the differentiations and with the special technical offering, and touch as a very precise targeted consumers that they're willing to pay higher. That will be what we do. Consider smart solution will be kind of the higher value segment type of the devices among all my past offerings. This we'll continue to do. Usually our solutions will become the flagship model for my past customers, specific past customers in the New Year. We do, we continue to work along with their product roadmap year-over-year and the flagship types they're asking us to offer as a solution. Thank you. That's very helpful. Thank you.

Speaker #8: So that will be how we do. So, consider smart solution will be kind of the higher value segment type of the devices among all my past offers.

Speaker #8: So this will continue to do. So usually, our solutions will become the flagship model for my past customers—specific past customers—in the new year.

Speaker #8: So we continue to work along with their product roadmap year over year and the flagship types they're asking us to offer as a solution.

Matt Ma: Thank you. That's very helpful.

Speaker #1: Thank you. That's very helpful. Thank you.

Alex Yang: Thank you.

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

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

Speaker #3: Thank you, operator. And thank you all once again for joining us today. If you have any further questions, please feel free to contact Tuya's IR team.

Jerry Wang: Thank you, operator, and thank you all once again for joining us today. If you have any further questions, please feel free to contact Tuya's IR team. Goodbye and see you next Q.

Regina Wang: Thank you, operator, and thank you all once again for joining us today. If you have any further questions, please feel free to contact Tuya's IR team. Goodbye and see you next Q.

Speaker #3: Goodbye, and see you next quarter.

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

Q4 2025 Tuya Inc Earnings Call

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