Tuya Inc. reported third‑quarter 2025 revenue of $82.5 million, a 1.1% year‑over‑year increase that fell short of the $83.25 million consensus estimate. The modest growth was driven by a 2.4% rise in PaaS revenue to $59.2 million and a 15.4% jump in SaaS and other services to $11.5 million, while Smart Solutions revenue declined 14.6% to $11.8 million, reflecting a shift in the company’s product mix toward higher‑margin cloud‑based offerings.
Tuya’s gross margin improved to 48.3% from 46.0% a year earlier, and operating profit rose to $3.8 million, reversing a $17.1 million loss in Q3 2024. The margin expansion is largely attributable to the higher mix of PaaS and SaaS contracts, which carry stronger pricing power, and to disciplined cost control that offset the decline in lower‑margin Smart Solutions sales. Net profit turned positive at $15.0 million, up from a $4.4 million loss, driven by the same mix shift and by a 10% reduction in operating expenses relative to revenue.
Earnings per share fell short of expectations: non‑GAAP EPS was $0.03, slightly below the consensus estimate of $0.0306, while basic and diluted EPS from continuing operations were reported at $0.02. The miss reflects the revenue shortfall and the impact of a one‑time restructuring charge that reduced earnings. The company’s guidance for the next quarter remains unchanged, with management projecting revenue growth of 1–2% and a non‑GAAP operating margin of 10–11%.
Segment analysis shows that PaaS revenue grew modestly, benefiting from continued demand for cloud‑based IoT platform services, while SaaS and other services saw a sharp uptick driven by new enterprise contracts. Smart Solutions revenue declined, indicating a slowdown in legacy hardware sales. Notably, 93.99% of the quarter’s device shipments included AI capabilities, underscoring Tuya’s strategic focus on AI integration and positioning for future growth.
Management highlighted the company’s cost discipline and the expansion of its AI‑enabled product line. CEO Xueji Wang emphasized the ninth consecutive quarter of year‑over‑year revenue growth and the resilience of the high‑margin PaaS and SaaS segments, while CFO Yi Yang noted the robust cash position and cautioned that macroeconomic uncertainty could temper demand in the near term. The company’s net cash balance exceeded $1 billion, providing a strong buffer for continued investment in AI and platform development.
After the earnings release, market sentiment was muted, with the stock trading slightly lower in after‑hours sessions. Analysts cited the revenue and EPS misses as the primary drivers of the subdued reaction, noting that while profitability and margin expansion were solid, the slight shortfall against consensus estimates tempered enthusiasm for the company’s near‑term outlook.
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