Recommended Free Tools
Tuya’s software businesses give it a credible route to higher gross margins, but recent results do not show that margin expansion is sustained. For FY2025, the company reported a 72.5% gross margin for SaaS and others, versus 23.7% for Smart Solution. Yet consolidated gross margin fell year over year in Q2 2026. For investors, the key question is whether higher-margin services can grow without being outweighed by hardware mix, pricing pressure or rising input costs.
What Tuya sells—and why its mix matters
Tuya describes itself as an AI cloud platform provider serving smart-device developers, businesses, brands and original equipment manufacturers. Its offerings span Platform-as-a-Service (PaaS), Software-as-a-Service (SaaS), cloud-based value-added services, and smart solutions that combine hardware and software. That makes Tuya a blend of platform, software and hardware-integrated businesses—not a pure software company. Tuya’s investor-relations materials describe this range of offerings.
The margin thesis rests on the fact that these business lines have very different gross margins. If higher-margin services become a larger part of revenue, they could support consolidated margin. But that outcome is not automatic: the growth rates and revenue shares of each business, along with prices and costs, also determine the result.
What FY2025 results say about the thesis
Tuya Inc.’s 2026 reporting for the year ended December 31, 2025, put revenue at US$321.8 million, up 7.8% year over year. Overall gross margin rose to 48.2% from 47.4% in FY2024. The business-line comparison gives the mix argument its clearest support:
Crashes, No Sound, or Screen Glitches?
Random freezes, missing sound and display glitches usually trace back to one bad driver. Find and replace yours safely.Free scan · under a minutePC Slower Than It Used to Be?
A free scan shows the junk files, broken settings and background clutter dragging Windows down - then fixes them in one click.Free scan · Windows 10 & 11#1 Best Overall
- [Multi-Protocol Hub with Matter Bridge] The M is a versatile hub supporting Tuya/Smart life Zigbee,Bluetooth,Thread devices. Supports advanced Matter bridge functionality, enabling Tuya-exclusive scenes and signals to sync with Matter ecosystems such as Home Assistant for seamless integration.
- [Upgrade your Tuya Hub] Improve connective stability,Control of Matter,BLE or ZigBee devices:the user can control the Matter,BLE or ZigBee sub-devices through the gateway to support remote control.Supports up to 128 Tuya Zigbee devices （Not third-party Zigbee devices) and 128 Thread devices (Repeaters are needed)，200 Bluetooth devices.（Not third-party Zigbee devices)
- Matter:Standard Matter gateway,which supports OTBR,support access to standard matter over thread devices,Have both bridge,controller and border router roles.CSA Certifited. And you can add these devices into Apple Home,Home Assistant or smartthings through the gateway.
- Support wired and wireless WiFi networking and WiFi supports both 2.4G and 5G,It supports the communication protocols of Cable+WiFi+Zigbee+Bluetooth+Thread, that is, the uplink Ethernet and wireless WiFi connect to the cloud, and the downlink supports Zigbee (compatible with Tuya’s original Zigbee device ecosystem), Bluetooth (compatible with Tuya’s original Bluetooth device ecosystem) and Thread (Matter over thread) sub-devices.
- Local scenario/automation:when the scenario /automation execution is preferentially local.Through this function,the intelligent scenario/automation set by the user can beexecuted efficiently when the network is broken.
| Business line | FY2025 gross margin | FY2024 gross margin | Year-over-year change |
|---|---|---|---|
| PaaS | 48.3% | 47.1% | Up 1.2 percentage points |
| SaaS and others | 72.5% | 71.9% | Up 0.6 percentage points |
| Smart Solution | 23.7% | 25.5% | Down 1.8 percentage points |
| Overall | 48.2% | 47.4% | Up 0.8 percentage points |
The SaaS and others margin was substantially higher than Smart Solution’s, while the latter declined. That is consistent with a strategy that seeks more value from software and services. It does not, by itself, establish that a shift toward software caused the overall improvement: the figures above are gross margins, not the revenue mix or growth rate of each line. The company also reported a FY2025 non-GAAP operating margin of 10.5%; this is a separate, non-GAAP operating measure and should not be confused with gross margin. Tuya’s FY2025 results and annual-report materials provide the company-reported figures.
Why Q2 2026 complicates the picture
In unaudited Q2 2026 results released August 24, 2026, Tuya reported US$92.9 million in revenue, up 16.0% year over year. Revenue growth, however, came alongside a lower consolidated gross margin: 46.3%, down 2.1 percentage points from 48.4% in Q2 2025.
Rank #2
- 【Dual Mode Gateway Hub】NOTE: The ZigBee Hub isn't compatible with Blind, Sengled Bulb and Door Lock. It’s a ZigBee and Bluetooth dual mode gateway hub. With ZigBee 3.0 and Bluetooth 5.0, you can use it to connect most of the ZigBee and Bluetooth smart devices. NOTE: The ZigBee Hub is only compatible with Tuya Smart devices, It means your smart devices is compatible with Smart Life App or Tuya Smart Life App. Please confirm it before purchase.
- 【APP Remote Control】The wireless smart hub is compatible with Smart Life and Tuya Smart App. When it connects with your 2.4GHz WiFi, you can control your smart devices anywhere and anytime you want.
- 【Easy To Set Up】You can connect the ZigBee Hub with the video. No need to connect to network cable, just need insert the smart gateway hub cable into power and connect it with the Smart Life app. Within few second pairing, you can add your home bluetooth and zigbee devices and enjoy smart home automation.
- 【Stable and Reliable Connection】The Smart ZigBee gateway connection works stably, with wide coverage, strong reception signal, low power consumption, and the Type-C can keep working when it is powered on.
- 【Which kind of Products Can be Connected】The dual mode ZigBee and Bluetooth gateway is only compatible with those sub-devices who use Tuya protocols. The ZigBee gateway is not compatible with any other products who use other platform protocols! Please make sure your devices is compatible with Tuya protocols first.
| Business line | Q2 2026 gross margin | Q2 2025 gross margin | Year-over-year change |
|---|---|---|---|
| PaaS | 46.8% | 48.7% | Down 1.9 percentage points |
| AI Application & others | 72.0% | 72.0% | Unchanged |
| Smart home and robot products | 21.9% | 22.5% | Down 0.6 percentage points |
| Overall | 46.3% | 48.4% | Down 2.1 percentage points |
The quarterly figures reinforce the gap between software-related services and hardware-linked product activity, but they also show that a high service margin does not prevent consolidated margin from falling. PaaS and smart home and robot product margins both declined year over year, while the reported AI Application & others margin was unchanged. The quarterly segment label also differs from the FY2025 “SaaS and others” label: Tuya renamed the revenue stream “AI Application & others” in Q1 2026, so comparisons across periods should be read with that naming change in mind. Tuya’s Q2 2026 results report these unaudited figures.
What management is trying to do in 2026
Tuya says its “AI + Platform” strategy involves enhancing AI-powered PaaS and SaaS offerings, developing industry-focused applications such as space intelligence, and expanding its developer ecosystem. In its Q1 2026 reporting, it said it would focus the renamed AI Application & others revenue stream on subscription-based value-added services powered by large-scale AI models.
Rank #3
- 【2 Modes in 1 Gateway】Support MOES/Tuya Bluetooth mesh (SIG) + Zigbee3.0 multi-protocol communication. Only one gateway is needed to connect devices of different protocols to the 2.4Ghz network.
- 【Support 128 Devices】 Support up to 128 Tuya smart home devices, such as Bluetooth Door Lock, ZigBee Light Switch No Neutral, Bluetooth Finger, Zigbee Power Monitor Plug, Bluetooth Thermometer, ZigBee Window Gate Sensor, etc.
- 【Sound & Light Alarm】 Support sound and light alarm.Support Local Scenario / Support Local Automation / Support Security Function and be integrated into the Tuya Security Saas Platform.
- 【Voice & App Remote Control】 No matter where you are, you can control the connected smart devices through the MOES/Smart Life App on your mobile phone. Support voice control of Alexa, and Google Assistant.
- 【ESAY SET-UP】Designed for quick and easy set-up with absolutely no wiring or technical skills required.Quickly and easily add, reset, and group devices via the hub.
For Q2 2026, management highlighted AI-native application innovation, development of an AI developer platform, and global expansion of solutions it considers validated. These priorities could support service adoption, but the available results do not establish how much additional revenue or margin they will produce. The strategic case needs to be tested against subsequent revenue mix and margin data, rather than assumed from the stated focus.
What could help—or hinder—margin expansion
Business mix and operating execution
Tuya attributes gross-margin movements primarily to product and solution mix; it also cites semiconductor supply-chain price changes for the latest quarter. A shift toward higher-margin services could help, but the effect depends on which lines grow, at what rate, and whether their own margins hold. Operating efficiency is another stated priority, but execution alone cannot be inferred from gross-margin data.
Rank #4
- 2 MODES IN 1 GATEWAY: This Smart home hub support Bluetooth mesh (SIG) + Zigbee3.0 multi-protocol communication. Only one gateway is needed to connect devices of different protocols to the 2.4Ghz network.
- APP REMOTE CONTROL: Smart Bluetooth Zigbee hub works with smart life/Tuya App, Support Adding devices, device reset, third-party control and group control. You can manage and remotely control the device through the Smart Life App. You can manage and remotely control your lights, fingerbot and other smart devices via the app, even when you're not home.
- VOICE CONTROL: The smart hub Support voice control, Simply give a voice command to Alexa or Google home to control devices(such as turn on/off the smart plug, turn on/off the Finger Bot).
- SMART HOME AUTOMATION: Sub-devices of the gateway act as trigger conditions for Interacting with devices such as ZigBee, Bluetooth, Wi-Fi, for device linkage. Featured as one powerful network bridge for whole house linkage in a real sense for all smart home devices.
- SUPPORT 128 DEVICES: Support up to 128 Tuya smart home devices, such as ZigBee Motion Sensor, Leak Detector, BLE Finger Bot, Zigbee Door Sensor, BLE Thermometer, ZigBee Window Gate Sensor, etc. NOTE: Supports Tuya/SmartLife devices only.
Demand and trade conditions
In its FY2025 annual-report outlook, management described the connected-device environment as complex but more stable than earlier in the year. It also noted cautious planning among manufacturers, brands and channel partners, with project execution more normalized in some core categories. These are management’s assessments, not independent forecasts.
The same outlook identifies risks that may affect demand, costs or execution:
Quick wins for a faster PC:
Repair Windows errors before they cause bigger problemsFix Now →Scan for outdated or missing drivers - takes under a minuteDriver Scan →Best Value
- SMART HOME COMPATIBILITY: Works seamlessly with Alexa and Google Home for convenient voice control of your motorized shades.
- TUYA APP CONTROL: Manage and automate your motorized shades remotely from anywhere using the Tuya smart app on your smartphone.
- HOME AUTOMATION HUB: Acts as a central controller, connecting and coordinating multiple motorized shades for a unified smart home experience.
- EASY INTEGRATION: Designed to connect effortlessly with a wide range of compatible motorized shade devices for a streamlined setup.
- AUTOMATED SCHEDULING: Program custom schedules and routines for your motorized shades to enhance comfort and convenience in your home.
- Changes in consumer spending and differences among regional economies.
- Inventory pressures among customers or channel partners.
- Foreign-exchange and interest-rate volatility.
- Tariffs, trade barriers and geopolitical uncertainty.
Management says it plans selective investment while pursuing AI-powered platform offerings, industry applications, developer-ecosystem growth, customer expansion and operating efficiency. Those priorities describe intended actions; they do not remove the disclosed risks. Tuya’s FY2025 annual-report outlook sets out the company’s assessment.
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.How to assess the outlook as an investor
To judge whether the strategy is translating into durable margin progress, track revenue growth and margin change separately, then examine whether the reported business mix supports the explanation. The following checks keep the thesis tied to evidence rather than a single headline figure:
- Consolidated gross margin: Does it rise across multiple reporting periods, or does quarterly movement continue to reflect mix and input-cost pressures?
- Segment margins: Do PaaS and AI Application & others maintain their margins as they grow, and how do hardware-linked margins move?
- Revenue mix and growth: Are higher-margin services gaining share, and are they growing quickly enough to affect the consolidated result? Margin percentages alone do not answer this.
- Operating measures: Keep gross margin distinct from operating margin, and distinguish GAAP results from non-GAAP measures such as Tuya’s FY2025 non-GAAP operating margin.
- Management’s catalysts and risks: Compare progress on AI applications, platform development and customer expansion with disclosed exposure to inventory, regional demand, currencies, trade and semiconductor pricing.
Results through Q2 2026 provide a plausible basis for a software-led margin thesis, not a definitive forecast of 2026 expansion. The next evidence needed is a consistent pattern in consolidated margin alongside business-line growth, mix and cost drivers.
Quick Recap
Product prices and availability are accurate as of the date/time indicated and are subject to change. Any price and availability information displayed on Amazon at the time of purchase will apply.
