Why Tuya’s Platform Pivot Paid Off in Q3 With Higher Margins and Profit

Tuya Inc. (NYSE:TUYA) is one of the best-performing small-cap tech stocks in the past three years. On November 24, the company reported its Q3 results for the period ended September 30. Total revenue reached $82.5 million, up 1.1% year-over-year, marking Tuya’s ninth consecutive quarter of YoY revenue growth.

Gross margin rose to 48.3%, while operating expenses declined 34.1% to $36 million. These improvements contributed to GAAP net profit of $15.0 million, compared with a net loss in the same quarter last year. Net margin reached 18.2%, up 23.6 percentage points year-over-year.

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Management attributed the turnaround to a combination of cost discipline and demand for its Platform-as-a-Service (PaaS) and Software-as-a-Service (SaaS) offerings. PaaS revenue grew 2.4% to $59.2 million, while SaaS and other software rose 15.4% to $11.5 million. In contrast, smart solutions revenue, Tuya’s hardware-centric segment, declined.

During the earnings call, executives highlighted that over 93% of the devices shipped in Q3 were AI-enabled, signaling increased integration of AI across Tuya’s ecosystem.

Tuya Inc. (NYSE:TUYA) provides a global IoT development platform, offering PaaS, SaaS, and other tools to help brands build, deploy, and manage smart devices across categories such as energy, home automation, and security.

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Disclosure: None.