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TUYA
Earnings call · Jun 2026 (Q2 FY26)

Tuya Q2 FY26 earnings call TUYA

Aug 25, 2026 Source

Executive summary

Tuya Inc. Q2 FY26 — Revenue Growth Accelerates with Strong PaaS and Smart Home Performance

Tuya Inc. delivered accelerated revenue growth in Q2 FY26, driven by robust performance in its PaaS and Smart Home segments, despite a complex global operating environment. The company is strategically advancing its AI-driven development, focusing on platformization and productization, while navigating gross margin pressures from semiconductor costs and a deliberate shift in its AI application segment towards higher-margin recurring services.

Highlights

5

  • Total revenue increased 16% year-over-year to $92.9 million, accelerating from 8.3% growth in Q1.

  • PaaS business revenue grew 16.9% year-over-year to $67.9 million, serving as a primary growth driver.

  • Smart Home and robot product revenue increased 23.2% year-over-year to $13.5 million, driven by demand for smart security and energy products.

  • Non-GAAP operating profit increased 11.7% year-over-year to $9.6 million, maintaining a double-digit operating margin of 10.3%.

  • Net cash generated from operating activities remained positive at $6.2 million, with a strong cash and investments balance of $976 million.

Concerns

5

  • Gross margin fluctuations were mainly driven by volatilities in upstream semiconductor costs and changes in business mix, impacting overall profitability.

  • AI application and other segments revenue growth decelerated to 3.9% year-over-year, primarily due to a strategic shift away from lower-margin B2B project-based services.

  • Non-GAAP net profit declined year-over-year due to lower financial income and foreign exchange losses, despite core operating profit growth.

  • Demand in the MEA region is currently paused due to military conflict, impacting business activity.

  • North America demand for price-sensitive, low-price devices showed fluctuations due to pricing pressure from the supply side.

Guidance & targets

CategoryTargetConfidence
AI application segment gross margin
75% to 80%
medium materiality
Medium

Segment performance

SegmentRevenueYoYQoQMargin
PaaS Business
Served as an important growth driver for the company. Core customer base remained stable. Growth driven by smart product penetration, adoption of differentiated solutions like smart door locks, and demand for AI-enabled products.
Premium customers (TTM): 318Premium customer contribution to PaaS revenue: 89.5%
$67.9 million16.9%—46.8% gross margin
AI Application and Other Segments
Growth primarily driven by cloud-based service revenue. Strategic shift towards higher-margin B2C recurring services, with recurring revenue growing 22% in Q2. Long-term gross margin target of 75-80%.
Cloud-based service revenue growth: primarily driven by video call storageRecurring service capability: gradually strengthening
$11.5 million3.9%—72% gross margin
Smart Home and Robot Products
Primarily driven by growing customer demand for smart security, energy, and other differentiated smart products. Focus on increasing contribution of high value-added products and integration with software and basic services.
$13.5 million23.2%—21.9% gross margin

Product announcements

ProductTypeDetails
Tuya Cobuilderlaunch

Risks & headwinds

Volatility in upstream semiconductor costs over 2 quarters

impacted gross margin fluctuations

Mitigation:passed through costs to customers in Q2; buffering inventory and cost balance; expect more stable costs in next 2-3 quarters; aim to stabilize and improve gross margins by offering new capabilities.

Military conflict in MEA region Q2 FY26

demand in MEA is still kind of in a pause

Mitigation:customers are still doing a lot of preparations; looking forward to better scenario maybe end of Q3 or Q4 with agreements for contacting countries.

Price sensitivity in North America for low-price devices Q2 FY26

not show kind of fluctuations by the pricing rate coming from the suppression side

Mitigation:restructured product mix along with customers to deliver better sell-through in H2 FY26.

Lower financial income and foreign exchange losses Q2 FY26

year-over-year decline in non-GAAP net profit

Mitigation:core operating profit continued to grow

What to watch in Q3 FY26

MEA demand recovery

end of Q3 or Q4
Current paused due to military conflict
Target demand coming back

Why it matters

Recovery in this region could contribute to overall revenue growth and geographic diversification.

And immediately, is still kind of in a pause right now because of the military conflict going down in the second quarter. So right now, we're still kind of we and see the customer is still there and the customer is still doing a lot of preparations, including the development and the new concept definitions and type of stuff. But right now, that's the -- I think that all the businesses are coming back yet. And we're looking forward to have a better scenario, perhaps maybe end of Q3 or Q4.

Q&A highlights

What is the growth and demand outlook for the second half of 2026, with a breakdown by geography (US, Europe, ASEAN, etc.)?

Management expects continued gradual recovery, with strong demand in Europe (energy-related), growth in Southeast Asia/LatAm from telecom partnerships, a pause in MEA due to conflict (expected recovery late Q3/Q4), North America facing price sensitivity in low-end devices, and promising categories in China (home appliances, AI companion products).

“Europe still show very strong on the demand side, especially for all type of energy-related segments.”

asked by Yang Liu · answered by Xuechen Wang

2 min read 6 chapters

Detailed narrative

Accelerated Revenue Growth and Segment Performance

Tuya Inc. reported total revenue of $92.9 million in Q2 FY26, marking a 16% year-over-year increase, an acceleration from the 8.3% growth in Q1. The core PaaS business was a significant driver, growing 16.9% year-over-year to $67.9 million. The Smart Home and robot product segment also demonstrated strong growth, increasing 23.2% year-over-year to $13.5 million, fueled by demand for smart security and energy products.

AI-Driven Development and Product Innovation

The company continues to advance its AI-driven strategy, extending capabilities beyond foundation models to platformization and productization. Shipment volumes of AI companion product solutions expanded, with consumer acceptance validated during the June 18 shopping festival in China. Tuya Cobuilder, an AI developer gateway, was launched in Q2, enabling developers to cover the entire product development process from concept to physical device validation using natural language, significantly shortening the AI hardware development cycle.

Geographic Demand Dynamics

Europe showed strong demand, particularly for energy-related segments and home management solutions. Southeast Asia and Latin America's growth was driven by strategic partnerships with telecom channels. The MEA region experienced a pause due to military conflict, with recovery anticipated in late Q3 or Q4. North America saw fluctuations in demand for price-sensitive, low-price devices due to supply-side pricing pressures. China's market is transforming, with major brands adopting AIoT and AI-native devices, and new AI companion categories emerging.

Gross Margin and Profitability

Blended gross margin for the quarter was 46.3%. While gross profit increased 11.1% year-over-year to $43 million, gross margin fluctuations were primarily attributed to volatility in upstream semiconductor costs and changes in business mix. Despite these pressures, non-GAAP operating profit grew 11.7% year-over-year to $9.6 million, maintaining a 10.3% non-GAAP operating margin. Non-GAAP net profit declined year-over-year due to lower financial income and foreign exchange losses.

Strategic Shift in AI Application Segment

The AI application and other segments generated $11.5 million in revenue, growing 3.9% year-over-year. This slower growth was attributed to a strategic mix shift away from lower-margin, project-based B2B customization services towards higher-margin, recurring B2C cloud-based services. The recurring revenue within this segment grew 22% in Q2, and management aims for a long-term gross margin of 75% to 80% for this segment by scaling B2C services and improving architectural efficiency.

Developer Ecosystem Expansion

The number of registered developers on the platform exceeded 90,000 by the end of Q2 FY26. The Tuya Cobuilder, launched in Q2, has extended its AI-powered panel generation capabilities to cover 30 product categories, reducing average generation time to approximately 190 seconds per panel. This tool aims to lower the barrier for developers and product managers to innovate and validate AI hardware concepts.

AI-generated summary of the company's earnings call. Not investment advice.