Tuya NYSE: TUYA reported higher first-quarter 2026 revenue and improved profitability as management said demand continued to recover and the company’s artificial intelligence-related businesses gained traction across software, hardware and developer tools.
Founder and CEO Jerry Wang said the company delivered “solid growth momentum and a strong execution capability” despite external uncertainties and regional disruptions. Total revenue rose 8.3% year over year to approximately $80.9 million, with management citing a continued recovery in downstream demand and positive growth for multiple consecutive quarters.
Co-founder and CFO Alex Yang said GAAP operating margin reached 9.2%, while non-GAAP operating margin was 10%. Net margin improved to 19.5%, and net profit reached $15.8 million. Tuya recorded profit from operations of about $7.5 million and non-GAAP profit from operations of approximately $8.1 million.
Yang attributed the profitability improvement to gross profit growth, disciplined expense management and lower share-based compensation expenses. Total operating expenses were approximately $30.4 million in the quarter, while the company continued investing in AI development and platform capabilities.
AI Strategy Becomes Central to Growth Plans
Management emphasized Tuya’s transition toward AI-native applications and what Jerry Wang described as “physical AI,” referring to AI capabilities that interact with and coordinate hardware devices in real-world environments rather than only handling digital tasks.
During the quarter, Tuya introduced applications including the AI-powered smart life assistant Hey Tuya and AI Security Guardian. Jerry Wang said these initiatives were intended to validate AI agents’ ability to move beyond digital task handling into physical-world execution and device coordination.
Looking ahead, Jerry Wang said Tuya will focus on three areas: advancing AI-native application innovation in consumer categories such as smart toys, expanding proven AI solutions globally in energy and green technology, and strengthening its developer ecosystem through open platforms and enhanced tools.
Yang said AI-related business continued to show a strong growth trend and that the company’s revenue mix is shifting toward higher-value segments. He said AI applications are increasingly extending from the platform layer into end devices such as door locks, energy management products, sensors, companion toys and robots.
Segment Changes Reflect AI Push
Tuya changed the names of two business segments during the quarter. The former SaaS and others segment is now called AI application and others, while the former Smart solution segment is now called Smart home and robot products. Yang said the changes are presentational and do not affect revenue composition, recognition methods or historical comparability.
The PaaS business generated revenue of $59 million, up approximately 9.8% year over year. Tuya ended the quarter with 306 PaaS premium customers, which Yang said reflected stability in the company’s core customer base.
The AI application and others segment generated revenue of $11.6 million, up approximately 16.9%. Management said growth was driven by cloud software services and AI application services, including AI cloud storage, energy management and savings, SMS and voice services, app OEM offerings and SDK products.
The Smart home and robot products segment generated revenue of $10.2 million, down approximately 6.9%. Yang said the decline reflected Tuya’s decision to phase out lower-value hardware products and shift resources toward higher-value, AI-native hardware terminals. In response to a question from Jefferies analyst Matt Ma, management said it expects recovery in the segment in the coming quarter or two as new offerings begin contributing.
Margins and Cash Position
Tuya’s blended gross margin was 46.9% in the quarter. By segment, PaaS gross margin was 46.1%, AI application and others gross margin was 71.7%, and Smart home and robot products gross margin was 23%.
Yang said the slight year-over-year fluctuation in blended gross margin was mainly due to product mix changes and certain upstream cost variations. In the AI application segment, management said a year-over-year gross margin decline was partly tied to seasonal usage patterns, particularly lower first-quarter usage in the U.S. for service-based revenue.
Tuya ended the quarter with more than $1 billion in cash equivalents, time deposits and treasury securities. Yang said the company’s cash position supports continued investment in long-term AI capabilities, the ability to navigate uncertainty and opportunities, and shareholder returns. He also said Tuya will prudently evaluate strategic investment opportunities.
Security, Energy and Developer Ecosystem Highlighted
Management pointed to several verticals as examples of AI and smart hardware integration. In security, Tuya’s smart door lock business grew 73% year over year. PaaS revenue from Wi-Fi-enabled smart door locks rose 75%, while AI application revenue from video-enabled locks increased 500% year over year.
Yang said those results showed that AI and multimodal capabilities are helping the smart lock market evolve from standalone hardware toward a model that combines hardware, software services and AI capabilities.
In energy, Yang said PaaS products including EV chargers, metering products and professional metering solutions are emerging as growth drivers. He said demand in Europe for home energy management, energy storage and AI-driven energy-saving solutions continued to grow, and that customers received positive feedback and secured channel partnerships and orders at exhibitions including Light+Building in Frankfurt and Solar Solutions in the Netherlands.
Tuya also reported continued progress in its developer ecosystem. At the end of the first quarter, registered AI developers on the platform exceeded 1.96 million. The TuyaOpen documentation platform had accumulated more than 340,000 views and more than 16,000 community members.
Management Addresses Supply Chain and Demand Outlook
During the question-and-answer session, Morgan Stanley analyst Yang Liu asked about chipset sourcing and pricing strategy amid global shortages. Management said Tuya noticed cost fluctuations about 1.5 quarters earlier and had taken steps including strategic purchasing before cost increases. Management said this contributed to a slight increase in inventory and that unavoidable cost increases are being passed through downstream without adding margin.
Goldman Sachs analyst Timothy Zhao asked about demand and revenue growth outlook amid geopolitical and macro uncertainty. Management said downstream demand began recovering after November of the prior year and continued gradually. Tuya cited stronger momentum in appliances, energy, innovative devices, security and locks, while lighting remained in an evaluation stage. Management also said some categories, such as cameras and control panels with screens, may be more affected by memory chip cost increases.
Management said Tuya is balancing fluctuations through its broad hardware category mix and multi-region exposure. Europe, Southeast Asia and Australia were described as areas of strong demand for energy management solutions, while some markets such as Latin America were described as more price-sensitive.
In closing, Yang said the first-quarter performance further validated the commercial viability of Tuya’s AI strategy, with the core PaaS business providing a growth foundation and AI application services integrated with physical hardware emerging as a new driver of value creation.
About Tuya NYSE: TUYA
Tuya Inc is a global Internet of Things (IoT) platform provider that enables brands, OEMs and developers to create smart products and solutions. The company offers a suite of cloud services, connectivity modules and software development kits designed to support the full lifecycle of IoT devices. Tuya’s platform is built to facilitate rapid prototyping, secure device management and scalable data analytics, with an emphasis on interoperable solutions for smart homes, commercial buildings and industrial applications.
At the core of Tuya’s offering is its IoT operating system, which integrates device hardware, network protocols and application-level services into a unified framework.
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