Tuya, Inc. Q4 FY2024 earnings call

• In 2024, Tuya Inc. achieved nearly 30% year-over-year revenue growth, inaugural quarterly and annual non-GAAP operating profitability, and first-ever annual GAAP net profit. • 2024 was a year of heavy AI R&D, launching proprietary AI large model and advancing on-device AI. • Upgraded software-hardware integrated business model, extending beyond PaaS to hardware solutions, with smart solution revenue growing ~58% year-over-year. • In 2024, IoT PaaS premium customers grew 11% to 298, DBNER was 122% at end of Q4, top 10% revenue-contributing customers had 97% retention rate. • Sales and marketing efficiency improved ~40% year-over-year, average revenue per customer and average gross profit per customer increased 37% and 40% year-over-year respectively. • Smart solution business model aligned with top-tier customers, growing ~58% in 2024, and registered developers on platform reached ~1.32 million with over 1.07 million SKUs of smart devices.

In Q4 2024, Tuya Inc. achieved revenue of about $82 million, a 27.4% year-over-year growth. PaaS revenue was approximately $59.3 million, up 25.7% year-over-year. Other revenue was around $11.5 million, a 21.1% year-over-year increase. Smart solution revenue reached about $11.3 million, growing 45.5% year-over-year. For the full year 2024, revenue was nearly $298.6 million, a nearly 30% year-over-year growth. Overall gross margin remained stable at around 47%. The number of IoT PaaS premium customers grew by 11% to 298 in 2024, and the revenue dollar expansion rate (DBNER) was 122% at the end of Q4, marking five consecutive quarters above 100% and three consecutive above 120%.

• 2025 will be a breakthrough year for device and AI, plan to integrate AI capability across all categories in developer platform, making every Tuya Inc. device AI-enabled by default. • Continue to expand global market penetration, leveraging PaaS, SaaS, and smart solutions, especially in Europe, Latin America, and Asia Pacific. • Advance AI devices and applications, leveraging Gen AI and LAMs to enhance smart product experience. • Help top-tier customers speed up product launches with integrated hardware-software solutions. • Continue customer-centric approach to serve high-quality core customers and build global developer ecosystem, accelerating AI agent platform and leveraging Gen AI tools for developer efficiency.

Q: On AI in PaaS and smart solution business management, elaborate on usage scenarios.

A: Priority AI opportunities on device side include audio-video interaction devices, energy solutions with complex decision-making, and integrating AI into toys. Audio-video interaction for new ways to interact with devices, energy solutions to handle multiple variables and make decisions, and toys as incubating categories with kids as adapters.

Q: Regarding margins, unit price trend and operating leverage into 2025.

A: AI in early stage, not decided on commercialization yet, margin impact short term not visible. OpEx investment in AI started early 2023, resources already reallocated, slight increase in specific application investments manageable.

Q: On SaaS growth prospects, is it a game-changer or add-on?

A: SaaS is later business model based on PaaS deployment, focusing on increasing recurring models in SaaS, positive progress in global markets, long-term growing business with focus on customer stickiness.

Q: On IoT downstream demand, potential countries/categories and gross margin unlock.

A: PaaS has balanced structure across regions and categories, not relying on single category or region. High-quality customers: extension to non-consumer fields and spatial solutions providers, new business lines and telecom carrier partners.

Q: Outlook of revenue structure and competitive landscape in AIU for IoT.

A: Revenue structure: PaaS margin ~45%, SaaS over 70%, solution margin slightly lower but manageable. Competitive landscape: early stage for AI devices, Tuya Inc. provides toolkit for easy idea realization, continuing to lower barrier for developers with successful ecosystem.