400 million MEITU has been reborn through AI

Author | Huang Yu

Editor | Zhou Zhiyu

Since the beginning of this year, the stock price has skyrocketed over 255%, and the market value has returned to over 40 billion. Meitu (1357.HK), an old imaging tool company, is making a fierce comeback at the table after being forgotten by the capital market for many years.

In the chaotic landscape where AIGC (Generative Artificial Intelligence) is competing fiercely and various models are burning money for the future, Meitu has truly turned the hot AI concept into a bowl of profit-rich soup. With a net profit of nearly 400 million in half a year and paid users exceeding 15 million, it undoubtedly proves that it has taken the "first sip" of this wave of AI application explosion.

Being able to take the lead is not due to a gamble on technology. The "tuition receipt" of 4.2 billion has long taught Meitu that instead of gambling on the underlying models it is not good at, it is better to leverage its 280 million monthly active users accumulated over 17 years and its deep understanding of beauty to serve the first dish.

Meitu's founder, Wu Xinhong, revealed that in the past three years, with the development of generative AI, the penetration rate of AI in all Meitu products has reached 90%.

However, the freshness of the "first sip" is often fleeting, and the real challenge is just beginning. With international giants like Adobe and Canva entering the market with strong AI features, and domestic major companies launching their own AIGC imaging applications, this track is rapidly turning from a blue ocean into a bloodbath.

The fleeting moment of the "Miao Ya Camera" in the summer of the year before last has sounded the alarm for all AI applications: relying solely on novel "AI toys" cannot build a lasting moat.

For the "reborn" Meitu, the biggest test ahead is how to transform its first-mover advantage into an unshakable user habit under the watchful eyes of giants, evolving from a successful "hit application" into an indispensable "productivity platform" in users' workflows.

This not only determines whether Meitu can climb back to a market value peak of over 100 billion but also decides whether its "rebirth" story is merely a prologue to an era or just a brief wave.

Focusing on Imaging

"In the first half of 2025, through actively promoting productivity and globalization strategies, we achieved dual growth in user scale and profit scale." At the same time, Meitu's founder, chairman, and CEO Wu Xinhong pointed out that AI, as a key driving force for Meitu to achieve its strategic goals, has helped Meitu enhance both product capability and monetization ability.

On August 18, Meitu released its mid-year performance announcement for 2025. The financial report shows that in the first half of this year, Meitu achieved revenue of 1.8 billion, a year-on-year increase of 12.3%; the net profit attributable to the parent company increased by 30.8% year-on-year to approximately 397 million, and the adjusted net profit attributable to the parent company increased by 71.3% year-on-year to approximately 467 million.

In terms of specific revenue, Meitu's revenue in the first half of this year increased by 12.3% year-on-year to 1.8 billion, with the highest proportion coming from imaging and design products, reaching 1.35 billion, a year-on-year increase of 45.2%; advertising business revenue was 430 million, a year-on-year increase of 5% The revenue from the beauty industry solutions business was 30.1 million yuan, a significant decrease of 88.9%; other business revenue was 6.2 million yuan.

Yen Jinliang, Chief Financial Officer and Company Secretary of MEITU, stated that the main reason for the seemingly slow overall revenue growth is that MEITU has proactively and significantly reduced its cosmetics supply chain solutions business, leading to a decline in revenue from the beauty industry solutions, which is a non-core business.

The purpose of MEITU's move is also very clear, which is to free up more energy and resources to develop its core imaging business.

It is not difficult to find that MEITU's imaging and design product business has maintained strong growth, mainly driven by the increase in the number of paying users. As of June 30, 2025, the number of paying subscription users of MEITU reached approximately 15.4 million, a record high, with a year-on-year growth of over 42%. The subscription penetration rate reached 5.5%.

The growth in the number of paying subscription users is inseparable from the drive of AI. Yen Jinliang pointed out that generative AI allows MEITU to comprehensively and efficiently address some pain points that users could not solve with traditional imaging tools in the past, thus significantly enhancing users' willingness to subscribe.

It is worth mentioning that increasing investment in productivity tools has become a key strategy for MEITU in the past two years. According to Wall Street Insights, in its 2023 financial report, MEITU first categorized its products by application scenarios into lifestyle and productivity categories, with the former including well-known products like MEITU XiuXiu and Beauty Camera, and the latter including MEITU Design Studio and KaiPai.

Compared to lifestyle scenario products, the revenue contribution from productivity scenario products to MEITU is still limited. In terms of paying subscription users, the subscription users for lifestyle scenario imaging products are approximately 13.6 million, while the subscription users for productivity products are 1.8 million.

Even so, productivity products still show strong growth potential. The financial report shows that as of June 30, 2025, MEITU's monthly active users in the productivity scenario reached 23 million, a year-on-year increase of 21.1%, with monthly active users of productivity tools outside mainland China growing by over 90% year-on-year.

Amid the wave of Chinese companies going global, MEITU has also intensified its efforts to expand overseas. In the first half of this year, MEITU's global monthly active users reached 280 million, a year-on-year growth of approximately 8.5%. Among them, the monthly active users outside mainland China reached 98 million, a year-on-year increase of 15.3%.

With the increasing proportion of high-margin imaging and design products and the rapid contraction of low-margin beauty industry solutions revenue, MEITU has also welcomed an improvement in gross margin. In the first half of this year, MEITU achieved a total gross profit of 1.34 billion yuan, a year-on-year increase of 27.3%; the gross margin was approximately 73.6%, an increase of 8.7 percentage points year-on-year.

Everything seems to be developing in a better direction.

Emerging from the Quagmire

From years of losses and monthly active user attrition to stable profit growth in recent years, MEITU has not reached this point easily.

Regarding the achievements made today, Wu Xinhong attributes them to two core measures: first, focusing on imaging and design products; second, embracing the subscription business model. At the same time, accelerating globalization in the past two years has also been an important strategy for MEITU Once, Meitu was a diversified investment company that blindly expanded from tools to hardware, social networking, e-commerce, and other fields between 2013 and 2018. However, Meitu ultimately failed to achieve success in its diversified business ventures and instead fell into a quagmire of huge losses.

After a series of setbacks, Meitu began to reflect and, starting in 2019, firmly promoted a focus on its core business, cutting non-core operations, and returning to its imaging business, shifting to a paid subscription model.

A more significant turning point began in 2022, when Meitu shifted its strategic focus to generative AI, gradually building a comprehensive product matrix covering AI images, AI videos, and AI design.

Eddie Wu mentioned in an internal review that Meitu burned 4.2 billion yuan to gain three insights: strategy must match capabilities; resources should not be consumed carelessly; and there must be core competitiveness.

Clearly, these three insights have become important principles for Meitu's current development and explain why Meitu is shifting its business model from a primarily traffic-driven model to a paid subscription model.

At the performance meeting, Eddie Wu stated that there are significant differences between these two models; the subscription model allows Meitu's team to focus more on enhancing product capabilities without having to consider many non-core traffic-driven businesses, such as e-commerce, games, and more, aside from advertising.

At the same time, Eddie Wu also pointed out that Meitu maintains a cautiously optimistic attitude towards its advertising business, which saw a 5% growth in the first half of this year, but is not expected to have particularly high growth rates moving forward. Following this trend, the vast majority of Meitu's future revenue will come from imaging and design products.

In Meitu's view, there is still significant growth potential in the imaging and design product segment. Firstly, in terms of lifestyle scenario products, the subscription penetration rate has substantial room for growth, as some lifestyle-related subscription products in China can achieve a penetration rate of 20%, and the penetration rate overseas is even higher than in China.

As for productivity scenario products, Eddie Wu believes that since they are directly related to users' cost reduction and efficiency improvement, the subscription penetration rate in this scenario will also be higher than in lifestyle scenarios. Globally, both Adobe and Cava are in this space, with the revenue scale of productivity scenarios being ten times that of lifestyle scenarios.

According to Adobe's calculations, the projected market space for the image productivity market is $91 billion by 2027.

Productivity scenario products have become the focus of Meitu's next bets. Eddie Wu stated that he hopes one day, revenue and profits from productivity scenarios will also account for more than half of Meitu's income, and that day should not be far off.

Faced with this enormous market space, Meitu is trying to seize the opportunities brought by AIGC to achieve a leapfrog development. On July 14, Meitu launched the AI Agent product RoboNeo, positioned as an AI agent in the imaging and design field, equipped with multi-modal visual creation capabilities such as intelligent photo editing, video processing, and AI design generation, serving as a productivity tool.

Of course, as AI applications enter an explosive growth phase, competition in the global market for AI applications in the imaging and design fields is also very fierce. How will Meitu stand out?

Eddie Wu seems quite confident about this. Firstly, Meitu has channel advantages that many innovative companies do not possess, having built a user base of 280 million monthly active users over 17 years. In addition, Meitu also has the capability for large-scale engineering investment and aesthetic insights On very important AI large models, MEITU has chosen a more flexible and low-investment strategy. It is understood that the underlying model training of MEITU's visual large model was basically completed last year; additionally, MEITU has opted for a strategy that embraces model containers, utilizing a combination of fine-tuning open-source models, third-party APIs, and self-developed vertical models for application in the app, rather than spending a lot of resources on training the underlying model.

Wu Xinhong pointed out that the model container strategy allows MEITU to focus more on what it is good at, without having to spend a lot of resources on areas where it may not be as proficient, such as underlying model training.

In response to investors' concerns about the competitive pressure brought by the future capabilities of general large models, Wu Xinhong believes that the relationship between MEITU and large model manufacturers is one of cooperative complementarity. Some model manufacturers also want to enter the application field, but it is not going very smoothly.

Since the emergence of ChatGPT at the end of 2022, a new wave of AI has been unleashed, and AI applications have entered an explosive period. The multi-modal AI application, Miao Ya Camera, has become the first phenomenal AIGC application in China. Although it ultimately turned out to be a "flash in the pan," it also proved that people are willing to pay for image AI applications.

In the field of multi-modal AI applications, which is the easiest to generate hit products, MEITU has undoubtedly successfully positioned itself. However, whether it can create new hit products and change the interactive experience in the imaging field still faces significant challenges