Meitu ((HK:1357)) has held its Q4 earnings call. Read on for the main highlights of the call.
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Meitu’s latest earnings call struck an upbeat tone, as management highlighted strong revenue and profit growth alongside rapid adoption of its AI‑driven productivity tools. While rising costs, slight margin pressure, flat ad revenue and accounting one‑offs weighed on IFRS profit, executives emphasized that core operations are scaling efficiently and global traction is building.
Strong Revenue Growth
Total revenue climbed 28.8% year over year to RMB 3.86 billion in FY 2025, underscoring robust demand across Meitu’s ecosystem. The core photo, video and design businesses were the standout, jumping 41.6% to RMB 2.95 billion and cementing their role as the company’s primary growth engine.
Material Increase in Adjusted Profitability
Adjusted net profit attributable to owners surged 64.7% to about RMB 970 million, as revenue growth outpaced the rise in operating expenses. Management said this reflects improving operating leverage, with core businesses scaling without a proportional increase in fixed costs.
Healthy Gross Profit and Margin
Gross profit increased 24.6% year over year to RMB 2.84 billion, showcasing the cash‑generating strength of Meitu’s model. Gross margin remained high at 73.6%, only modestly below the restated 76% in 2024 despite heavier compute usage and shifts in the revenue mix.
User and Subscriber Expansion
Monthly active users reached 276 million, up 3.8% year on year, signaling a still‑expanding user base even as products mature. Paying subscribers rose much faster, up 34.1% to 16.91 million, fueled by a 67.4% jump in productivity‑tool subscribers.
Productivity Adoption and ARPU Momentum
Subscription penetration for productivity tools climbed to 9%, an increase of 3.1 percentage points in a single year, showing users’ willingness to pay for higher‑value features. Management noted that average revenue per user is trending higher, driven by productivity subscriptions and token or agent‑based consumption, with more upside expected from premium production services.
International Expansion and Global Recognition
International revenue grew 37.4% and now contributes 38% of total sales, up two percentage points year on year, underlining the success of Meitu’s globalization strategy. The company’s apps topped overall charts in 52 countries and category charts in more than 110, and four Meitu apps ranked on a16z’s GenAI mobile list, reinforcing its global brand.
AI Agent Product Traction
Meitu’s AI agents are emerging as a key monetization lever, with DesignKit’s e‑commerce agent showing a roughly 50% save rate per two outputs. The Kaipai agent has reached about 11% penetration, and management said these agents have been a primary driver of recent revenue growth across web and app portals since late 2025.
Capital Allocation and Governance Signal
The board approved a share buyback program of up to HKD 300 million over one year, a move typically read as a sign of confidence in future performance and valuation. It also signals a willingness to return capital to shareholders, adding a shareholder‑friendly angle to Meitu’s growth story.
IFRS Net Profit Decline and One-Offs
IFRS net profit attributable to owners declined to roughly RMB 700 million from about RMB 800 million a year earlier, but the fall was driven by accounting items rather than weakening fundamentals. The prior year included a RMB 640 million one‑time cryptocurrency disposal gain, while 2025 was hit by a noncash RMB 510 million expense tied to convertible bonds.
Rising Costs and Expense Growth
Total costs rose 42% year on year to RMB 1.02 billion, reflecting the heavier infrastructure and revenue‑sharing load that comes with AI and platform expansion. Revenue‑sharing fees climbed to about RMB 620 million, cloud and computing costs reached RMB 230 million, and selling, marketing and administrative spending also grew double digits.
Slight Gross Margin Compression
Gross margin slipped by roughly one to two percentage points on a like‑for‑like basis, moving from a restated 76% in 2024 to 73.6% in 2025, but remains firmly in high‑margin territory. Management attributed the dip to lower advertising mix and rising compute and API costs as AI‑powered features scale.
Advertising Revenue Stagnation
Advertising revenue was roughly flat at RMB 840 million compared with 2024, suggesting limited near‑term recovery in ad monetization. Even with new AI‑driven ad formats, Meitu appears focused on shifting away from volatile ad income toward more predictable subscription and productivity revenues.
MAU Growth Moderation and Seasonality
User growth has moderated, with MAUs up only 3.8% year over year and some sequential softness versus mid‑year levels, which management linked to product maturity and seasonal patterns. They noted that the absence of blockbuster product launches in certain months weighed on momentum, highlighting the importance of continuous innovation.
Operational and Disclosure Incident
Management acknowledged an operational mistake in which parts of the results were posted early on social media, prompting removal and a temporary trading suspension application. While no financial impact was reported, the episode underscores the need for tighter controls around investor communications and disclosure.
Competitive and Technical AI Risks
Executives flagged rising competitive and technical risks as AI ecosystems fragment across models and devices, including pressure from large foundational model providers and smartphone features. Meitu plans to keep investing in specialized models and differentiated user experiences to navigate these fragmented environments and diverse global habits.
Dependence on Non-Operating Adjustments
Management emphasized that headline IFRS profitability is heavily shaped by non‑operating items, from crypto gains to convertible bond expenses, which can distort year‑to‑year comparisons. They encouraged investors to focus on adjusted profit and cash‑driven metrics to better gauge the company’s underlying operating trajectory.
Forward-Looking Guidance and Strategic Focus
Looking ahead, Meitu expects 2026 revenue to be broadly similar in size to 2025, but with a richer mix tilted toward higher‑ARPU productivity and AI agent offerings and faster growth expected in later years. The company aims to keep gross margin above about 70%, control personnel costs using AI, grow subscriptions and ARPU via agent‑driven usage, and will start providing quarterly operating metric updates to increase transparency.
Meitu’s earnings call painted a picture of a company successfully pivoting from a consumer photo app pioneer to a high‑margin, AI‑powered productivity platform with growing global reach. For investors, the key message was that underlying growth and monetization trends remain strong, even as accounting noise, rising costs and a soft ad market create short‑term optical headwinds.