After two years of benefiting from the wave of large AI models, Tuya Inc. has successfully turned its annual net profit from loss to gain. Building on this, the company continues to bet on an AI-driven development path.

On May 12, Tuya Inc. announced its unaudited financial results for the first quarter of 2026. Total revenue increased by 8.3% year-over-year to $80.9 million, while net profit grew by 43.6% to $15.8 million.

While maintaining profit growth, this earnings report further strengthened the company's "AI" branding. The previously listed "Software as a Service (SaaS) and Others" segment was renamed "AI Applications and Others." Meanwhile, the hardware-integrated "Smart Solutions" segment became "Smart Home and Robotics Products."

Tuya Inc. explained in the report that this change reflects the group's established strategy of fully integrating AI capabilities into all software products. Moving forward, the AI Applications and Others segment will focus on providing subscription-based value-added services powered by large-scale AI models. The Smart Home and Robotics Products segment will concentrate on AI-driven consumer electronics and home robotics.

However, the growth of Tuya Inc.'s current AI-related business segments remains unstable. The financial report shows that in Q1 2026, revenue from AI Applications and Others was approximately $11.6 million, a 16.9% year-over-year increase, primarily due to higher cloud service revenue. In contrast, revenue from Smart Home and Robotics Products decreased by 6.9% year-over-year to $10.2 million.

Despite this, in Tuya Inc.'s strategic plan, AI-related businesses are expected to gradually become a crucial pillar for its long-term growth. Founder and CEO Wang Xueji stated that the company is accelerating the transformation of AI capabilities from the platform layer to the application layer and scenario-based products. Seeking growth from AI is the new narrative Tuya Inc. must continue to tell.

From an objective data perspective, this new story has indeed brought significant commercial momentum to Tuya Inc. As of March 31, the number of registered AI developers on the Tuya platform had exceeded 1.97 million, a 9.4% increase from approximately 1.801 million as of December 31, 2025. This indicates that in 2026, as the global AI implementation wave fully engages the application layer, the underlying platform stickiness of Tuya Inc. remains on an upward trajectory.

Regarding the company's overall profitability, although Tuya Inc. continued to be profitable on a quarterly basis, Chief Financial Officer Yang Yi revealed that this was mainly due to optimized operational efficiency and continuous improvements in the cost structure. Looking at the overall business gross margin, in Q1 2026, Tuya Inc.'s overall gross margin fell to 46.9%, a decline of 1.6 percentage points from 48.5% in the same period of 2025.

As the core revenue pillar, the Platform as a Service (PaaS) business recorded revenue of $59 million for the quarter, a 9.8% year-over-year increase. However, its gross margin slipped from 48.4% to 46.1%. The gross margins for AI Applications and Others, as well as Smart Home and Robotics Products, also experienced slight declines.

Holding ample cash reserves provides Tuya Inc. with the greatest confidence to firmly bet on AI amidst an uncertain future. According to the financial report, as of March 31, the company's cash and various liquid investments totaled over $1 billion. For a company with quarterly total revenue of only around $80 million, asset reserves exceeding $1 billion signify very robust financial support.

Yang Yi also stated that this substantial capital provides ample resource security and strategic flexibility for the company's continued investment in the AI field and its global expansion. Tuya Inc.'s next three major strategic focus areas are very clear: AI application innovation, global solution expansion, and developer ecosystem building.

In this wave of pragmatic hardware and software reconstruction, Tuya Inc. has only just managed to turn losses into profits and start with a lighter load. The real deep waters still lie ahead.