With stock prices surging over 255% this year and market capitalization returning to over 40 billion yuan, MEITU (1357.HK), the veteran imaging tool company, is making a fierce comeback to the market after years of being overlooked by capital markets.

In the chaotic landscape where AIGC (Generative Artificial Intelligence) companies compete fiercely and large model battles continue burning cash for future prospects, MEITU has successfully transformed the hot AI concept into substantial profit. Its performance of nearly 400 million yuan in net profit for half a year and over 15 million paid users undoubtedly proves that it has captured the "first taste" of this AI application explosion.

The ability to seize the first-mover advantage was not based on technological gambling. The "tuition receipt" of 4.2 billion yuan burned has already taught MEITU that rather than betting heavily on foundational models it doesn't excel at, it's better to leverage its 280 million monthly active users accumulated over 17 years and deep understanding of beauty to be first to market.

MEITU founder Wu Xinhong revealed that over the past three years, with the development of generative AI, AI penetration across all MEITU products has reached 90%. However, the freshness of being "first to taste" often fades quickly, and the real challenges are just beginning. As international giants like Adobe and Canva enter strongly with AI features, and domestic tech giants launch their own AIGC imaging applications, this track is rapidly transforming from blue ocean to red ocean. The flash-in-the-pan phenomenon of "Miaoya Camera" last summer serves as a warning bell for all AI applications: relying solely on novelty "AI toys" cannot build lasting competitive moats.

For the "reborn" MEITU, the biggest test ahead is how to transform first-mover advantage into unshakeable user habits under the siege of giants, evolving from a successful "hit application" to an indispensable "productivity platform" in users' workflows. This will determine not only whether MEITU can climb back to over 100 billion yuan market cap, but also whether its "rebirth" story is the prelude to an era or merely a brief wave.

**Focus on Imaging**

"In the first half of 2025, by actively promoting productivity and globalization strategies, we achieved dual growth in user scale and profit scale." Meanwhile, MEITU founder, Chairman and CEO Wu Xinhong pointed out that as a key driver for MEITU to achieve strategic goals, AI has helped MEITU simultaneously improve product capabilities and monetization ability.

On August 18, MEITU released its 2025 interim results announcement. The financial report shows that in the first half of this year, MEITU achieved revenue of 1.8 billion yuan, up 12.3% year-over-year; net profit attributable to shareholders increased 30.8% year-over-year to approximately 397 million yuan, while adjusted net profit attributable to shareholders grew 71.3% year-over-year to approximately 467 million yuan.

Looking at specific revenue streams, MEITU's revenue grew 12.3% year-over-year to 1.8 billion yuan in the first half of this year. The highest proportion came from imaging and design products, reaching 1.35 billion yuan, up 45.2% year-over-year; advertising business revenue was 430 million yuan, up 5%; beauty solutions business revenue was 30.1 million yuan, down significantly by 88.9%; other business revenue was 6.2 million yuan.

MEITU CFO and Company Secretary Yan Jinliang stated that the seemingly slow overall revenue growth is mainly due to MEITU's proactive and significant contraction of cosmetics supply chain solutions business, leading to decreased revenue from this non-core beauty solutions business. MEITU's purpose is clear: to free up more energy and resources to develop core imaging business.

It's evident that MEITU's imaging and design products business maintained strong growth, primarily driven by increased paid users. As of June 30, 2025, MEITU's paid subscription users reached approximately 15.4 million, a historical high, up over 42% year-over-year. Subscription penetration rate reached 5.5%.

The growth in paid subscription users is inseparable from AI's driving force. Yan Jinliang pointed out that generative AI enables MEITU to more comprehensively and efficiently solve pain points that users previously couldn't address with traditional imaging tools, thereby significantly improving users' subscription willingness.

It's worth noting that increasing investment in productivity tools has become MEITU's key strategy in recent years. According to records, in the 2023 financial report, MEITU first categorized its products by application scenarios into lifestyle and productivity categories. The former includes well-known products like Meitu Xiuxiu and Meitu Camera, while the latter includes Meitu Design Studio and Kaipai.

Compared to lifestyle scenario products, productivity scenario products contribute limited revenue to MEITU. From paid subscription users perspective, lifestyle imaging products have approximately 13.6 million subscription users, while productivity products have 1.8 million subscription users.

Nevertheless, productivity products still show strong growth potential. The financial report shows that as of June 30, 2025, MEITU's monthly active users in productivity scenarios reached 23 million, up 21.1% year-over-year. Among these, productivity tools' monthly active users in markets outside mainland China grew over 90% year-over-year.

Amid the wave of Chinese companies going global, MEITU has also intensified its overseas expansion efforts. In the first half of this year, MEITU's global monthly active users reached 280 million, up about 8.5% year-over-year. Among these, monthly active users in markets outside mainland China were 98 million, up 15.3% year-over-year.

With the increased proportion of high-margin imaging and design products and rapid contraction of low-margin beauty solutions revenue, MEITU also achieved improved gross margins. In the first half of this year, MEITU achieved total gross profit of 1.34 billion yuan, up 27.3% year-over-year; gross margin was approximately 73.6%, up 8.7 percentage points year-over-year.

Everything seems to be developing in a better direction.

**Emerging from the Quagmire**

From previous years of losses and declining monthly active users to steady profit growth in recent years, MEITU's journey to this point hasn't been easy. Wu Xinhong attributes current achievements to two core measures: first, focusing on imaging and design products; second, embracing the subscription business model. Additionally, accelerating globalization has been an important strategy for MEITU in recent years.

MEITU was once a diversified investment company that blindly expanded from tools to hardware, social media, e-commerce and other fields between 2013-2018. However, MEITU ultimately failed to succeed in multiple business tracks and instead fell into a massive loss quagmire. After consecutive setbacks, MEITU began reflection and from 2019 firmly promoted focus on main business, cutting non-core businesses, returning to imaging main business, and shifting to paid subscription model.

A more important turning point began in 2022, when MEITU shifted strategic focus to generative AI, gradually building a full-scenario product matrix covering AI images, AI video, and AI design.

Wu Xinhong said in an internal review that MEITU burned 4.2 billion yuan in exchange for three insights: strategy must match capabilities; resources cannot be consumed carelessly; there must be core competitiveness. These three insights have clearly become important principles for MEITU's current development and explain why MEITU shifted its business model from primarily traffic-driven to paid subscription.

At this earnings conference, Wu Xinhong stated that these two models actually have significant differences. The subscription model allows MEITU's team to focus more on product capability improvement without worrying about many non-specialty traffic businesses, such as e-commerce and gaming beyond advertising.

Wu Xinhong also pointed out that MEITU maintains cautiously optimistic attitude toward advertising business, with 5% growth in the first half of this year, and doesn't expect particularly high growth rates going forward. Following this trend, the vast majority of MEITU's future revenue will come from imaging and design products.

In MEITU's view, the imaging and design products segment still has significant growth potential. First, regarding lifestyle scenario products, subscription penetration still has enormous growth space, as some lifestyle-related subscription products in China can achieve 20% penetration, and overseas subscription penetration rates are even higher than China's.

As for productivity scenario products, Wu Xinhong believes that because they directly relate to users' cost reduction and efficiency improvement, subscription penetration in this scenario will be higher than lifestyle scenarios. From a global perspective, whether Adobe or Canva, productivity scenario revenue scale is 10 times that of lifestyle scenarios. According to Adobe estimates, the imaging productivity market is expected to reach $91 billion by 2027.

Productivity scenario products have become MEITU's key focus going forward. Wu Xinhong stated hopes that one day, MEITU's revenue and profit from productivity scenarios can exceed half, and this day shouldn't be far away.

Facing this enormous market space, MEITU attempts to seize opportunities brought by AIGC to achieve overtaking on curves. On July 14, MEITU launched AI Agent product RoboNeo, positioned as an AI intelligent agent in imaging and design fields, with multimodal visual creation functions including intelligent photo editing, video processing, and AI design generation, belonging to productivity tools.

Of course, as AI applications enter explosive growth period, competition for AI applications in global imaging and design fields is also very intense. How will MEITU break through? Wu Xinhong seems very confident about this. First, MEITU has channel advantages that many innovative companies lack, having built a user base of 280 million monthly actives over 17 years; additionally, MEITU has large-scale engineering investment capabilities and aesthetic insights.

Regarding very important AI large models, MEITU has chosen more flexible and light investment strategies. It's understood that MEITU's visual large model's foundational model training was basically completed last year; additionally, MEITU chose to more actively embrace model container strategies, using combinations of open-source model fine-tuning, third-party APIs, and self-developed vertical models to apply to apps, rather than spending large amounts of resources training foundational models.

Wu Xinhong pointed out that model container strategies allow MEITU to focus more on what it excels at, rather than spending many resources on things it may not excel at, like foundational model training.

Facing investor concerns about competitive pressure from future capability improvements of general large models, Wu Xinhong believes that the relationship between MEITU and large model manufacturers is cooperative and complementary. Some model manufacturers also want to enter application fields, but it hasn't been very smooth.

Since ChatGPT's emergence at the end of 2022, a new round of AI waves has risen, and AI applications have entered explosive growth period. Miaoya Camera, belonging to multimodal AI applications, became China's first phenomenal-level AIGC application. Although it ultimately was just a "flash in the pan," it also proved people's high willingness to pay for imaging AI applications. In the multimodal AI application field most likely to produce hit products, MEITU has undoubtedly successfully positioned itself, but whether it can create new hit products and change interaction experiences in imaging fields going forward still faces numerous tests.