Thank you, operator. Hello, everyone.

Welcome to our fourth quarter and fiscal year 2025 year— earnings call. Joining us today are our founder and CEO, Mr.

Jerry Wang, and our co-founder and CFO, Mr. Alex Yang.

The fourth quarter and fiscal year 2025 financial results and webcast of the conference call are available at ir.tuya.com. A replay of this call will be also be available on our IR website in a few hours.

Before we continue, I refer you to our safe harbor statement in our earnings press release, which applies to this call as we will make forward-looking statements. With that, I will now turn the call over to our founder and CEO, Mr.

Jerry Wang. Jerry will deliver his remarks in Chinese, which will be followed by a corresponding English translation.

Jerry, please. 大家好。感谢大家参加涂鸦智能2025年第四季度业绩电话会。

Hello, everyone. Thank you for joining Tuya's earnings call for the fourth quarter 2025.

2025年我们在复杂环境中保持平台业务的稳定，全年实现收入稳健增长，并实现GAAP盈利能力的显著提升，同时在AI能力体系化建设上迈出坚实一步。 In 2025, against a complex and evolving external environment, we maintained stability across our platform business, delivered steady full-year revenue growth, and achieved a notable improvement in GAAP profitability.

At the same time, we made solid progress in building a more systematic AI capability framework. 2025年公司全年收入3.2亿美元，同比增长约7.8%，盈利能力和现金流质量持续优化。这些结果体现了核心平台业务的稳定性，也反映了我们在资源聚焦与执行纪律方面的持续推进。

For full year 2025, we generated total revenue of $320 million, representing a year-over-year increase of approximately 7.8%. Profitability and cash flow quality continued to improve.

This result reflects the resilience and stability of our core platform business, as well as our ongoing progress in prioritizing resource allocation and execution discipline. 在战略层面，我们持续孵化了更多的AI加IoT的应用场景，加快AI能力在平台与设备生态中的系统化的嵌入。AI正从单一功能叠加逐步演进为可落地、可运行的AI应用。

On the strategic front, we continued to incubate new AI plus IoT application scenarios and accelerated the systematic integration of AI capabilities across our platform and the device ecosystem. AI is evolving from a mere overlay of discrete features into fully deployable, operational applications.

在AI战略推进方面，我们在CES上推出了AI赋能的智慧生活助手Hey Tuya。我们希望通过一个更可感知的入口，通过AI Agent和实体硬件，帮助人们获得更舒适、轻松的家庭生活，推动AI能力在更多真实场景中的体验落地。 As part of our AI strategy, we introduced the AI-powered smart life assistant, Hey Tuya, at CES.

Through a more intuitive and tangible entry point, integrating AI agents with hardware devices, we aim to help users enjoy a more comfortable and effortless home experience, accelerating the real-world adoption of AI capabilities across a broader range of everyday scenarios. 我们对AI与智能硬件结合路径的认知正在变得更加的明确，AI正在从能力叠加阶段进入与设备生态与行业场景深度融合的阶段，其价值更多体现在应用成熟度、收入结构改善以及效率结构提升上。我们认为随着AI从对话工具走向参与真实世界运行的智能体，行业对底层系统稳定性、实时性和可演进性需求正在显著的提升。AI带来的变化不仅体现在产品体验上，更体现在应用形态的演进与生态协同方面的提升。随着AI应用逐步的成熟，其价值更多的体现在可复制性和规模化落地能力上。

Our understanding of the integration pathway between AI and smart products is becoming increasingly clear. AI is progressing beyond the stage of capability overlay and entering a phase of deep integration with device form factors and industry-specific scenarios.

Its value is increasingly reflected in application maturities, improved revenue structures, and enhanced operational efficiency. We believe that as AI evolves from a conversational tool into intelligent agents capable of engaging in real-world operations, industry expectations for underlying system stability, real-time responsiveness, and scalability are increasingly significantly.

The impact of AI extends beyond enhancing product experiences; it is also reshaping application architectures and transforming modes of ecosystem collaboration. As AI applications continue to mature, their value will increasingly be reflected in their replicability and capacity to scale effectively across real-world deployments.

展望未来，我们将继续围绕三件事推进：第一，持续强化AI原生平台的能力，使其更高效地支撑百万开发者设计出百花齐放的万千种AI设备形态和应用；第二，加快AI应用服务在重点场景中的落地和规模化推进；第三，加大开发者生态的建设，并对开发者进行扶持，建设繁荣和商业成功的开发者社群。 Looking ahead, we will continue to advance our strategy across three key priorities.

First, we will further strengthen our AI-native platform capabilities, enabling them to more effectively support millions of developers in creating a diverse range of next-generation AI devices and applications. Second, we will accelerate the deployment and scalable expansion of AI application services across key scenarios.

Third, we will deepen our investment in developer ecosystem growth and enhance our support for developers, fostering a vibrant community grounded in innovation and commercial success. 接下来我们请我们CFO，为大家带来更多的财务表现和经营进展。

Now let me turn the call over to our co-founder and CFO, Alex Yang, who will share more details about our financial performance and business progress.

Hello, everyone. This is Alex.

I will now provide more details on our fourth quarter's and full year's results. Please note that all the figures are in US dollars and all the comparisons are year-over-year unless stated otherwise.

In the fourth quarter of 2025, we generated total revenue of approximately $48.5 million, representing a year-over-year increase of 3%. Against the backdrop of the continuous cautious industry demand and more conservative customer procurement cycles, we achieved our 10th consecutive quarter of year-over-year growth.

In the fourth quarter, our blended gross margin was 47.6%, while non-GAAP operating margin improved to 11.1% compared with 10.3% in the same period last year. Non-GAAP net margin reached 24.4%.

Net operating cash flow totaled $23.5 million, making the 11th consecutive quarters of positive operating cash flow. Gross margin remained stable, underscoring the company's pricing power driven by the product value and technology capabilities, as well as the strong competitive positioning of our platform-based business model in the dynamic market environment.

From a full-year perspective, our stable growth in 2025 became even more pronounced. Our full-year revenue reached over $322 million, representing a year-over-year increase of 7.8%.

Blended gross margin of the full year improved to 48.2%, up 0.8 percentage points from 2024. Non-GAAP operating margin reached 10.5%, an increase of 2.9 percentage points year-over-year, while non-GAAP net margin rose to 24.9%.

Full-year non-GAAP net income reached to a record high of $80.1 million, up approximately $4.7 million compared with 2024. Among our segments, the PaaS business delivered stable performance, generating revenue of over $230 million, representing a year-over-year increase of 6.5%.

Against the backdrop of extended customer bargaining cycles, we maintained stable growth in our core business by optimizing our customer mix and enhancing our product capabilities by empowering our customers to provide a more competitive applications. As the end of 2025, the number of PaaS premium customers reached to 291, continuing to contribute a structurally stable revenue to the PaaS business.

Such a diversified structure, without reliance on any single customer group, has further strengthened our resilience in a volatile operating environment. The SaaS and others business generated a full-year revenue of $44.8 million, representing a year-over-year increase of 13.4%.

Of this total, recurring services revenues grew by 37% year-over-year, emerging as a key growth driver of the SaaS. We looking forward to enlarge this segment faster by this recurring model.

On a full-year basis, revenue growth from the SaaS and other business outpaced the company's overall revenue growth. This strong performance highlights the continued expansion of cloud software revenues, especially those AI-enabled softwares, and reflects the gradual realization of the life cycle value from the platform software capabilities as the installation base of the devices expands.

Our smart solution business generated full-year revenue of $45.7 million, making an 8.9% year-over-year increase. In this segment, we observed that AI capabilities are stimulating demands in certain new product categories while also enhancing the overall pricing power of our product offerings.

At the end of the 2025, our total cash and cash equivalents amounted to over $1 billion, precisely will be $1,017 million, together with the time deposit and the treasury securities recorded as a short-term and long-term investment. This net cash providing an ample flexibility to support AI capability development, ecosystem expansion, and potential capital allocations initiatives.

Full-year profitability was primarily driven by three factors. First, the continued stability of our core platform business.

Second, the initial revenue contributions from AI-related products and applications. Third, disciplined expense management and the realization of operating leverage.

On the AI ecosystem side for the developers, within our developer ecosystem, we continued to advance the open source capabilities of Tuya Open and further develop our AI agent platform. By end of the 2025, the number of registered AI plus IoT developers exceeded to 1.8 million, representing a 37% year-over-year increase.

The cumulative number of AI agents on the Tuya platform reached about 16,000, spanning a wide range of smart product categories. At the application deployment level, AI capabilities are being integrated across a variety of end-user products, gradually establishing standardized pathway for AI applications.

Recently, we hosted a overseas developer event centered on hands-on AI hardware applications. Including the first hackathons held in Silicon Valley, this event attracted over 300 developers, and which about 90% of them are from overseas.

All participating projects were built and demonstrated on the real hardware using Tuya T5 AI development boards, completing the journeys from concept to a functional prototype within only 48 hours. This enabled the AI capability to be able to operate directly on physical devices.

Those projects spanned multiple scenarios, including AI companion, wearables, and desktop AI terminals, as well as applications in education and security. Some of those products have already entered subsequent incubation stage and attracted commercial interest.

Beyond customer-facing products and ecosystem development, we have rapidly applied AI internally to enhance the development efficiency. For instance, in certain front-end development process, nearly 40% of the codes is generated with AI assistance.

This has significantly shortened our R&D iteration cycles and reduced the cost of the repetitive development. Those efficiency gains enable us to maintain the pace of the products and the solution iterations while controlling the headcount growth.

Building on this foundation, we plan to launch the AI development tools for the developers within this year, and through the AI coding services, vibe coding, we aim to further lower the barriers for AI hardware development and boost Tuya developer efficiencies by enabling more low-code and no-code developers to participate in the AI hardware industry and application ecosystem. This initiative will help expand the developer base while accelerating the commercialization of AI applications.

Finally, with the maturation of the physical AI technology, the opportunity for deep integration between AI and physical world has arrived. Our launch of Hey Tuya is to build on this site.

Without waiting for the large-scale deployment of the embodied robots, Hey Tuya leveraged hundreds of millions of the existing powered by Tuya smart devices worldwide to enable AI to fully perceive and proactively interact with the real world today. It draws on understanding and reasoning on large models while seamlessly interacting with the smart devices that helps manage the daily tasks.

This represents a new form of integrated situational AI that making the benefits of AI tangible and immediately accessible, rather than distant future promise. In summary, the 2025 showcases the company's continuous progress across its business structures, profitability models, and competitiveness frameworks on the tech side.

Throughout 2025, Tuya's physical AI technology was validated for feasibility in smart devices, giving rise to a wide range of AI hardware forms, leveraging our accumulated strength across our developer communities, hardware ecosystem, and global delivery capabilities. We're well positioned to continuous advancing AI deployment and transforming it into a sustainable, long-term competitive advantage.

Looking ahead, we'll continue to focus our efforts in these directions. First, we will further categorize the platform-level AI capabilities to enable more efficient application of AI across diverse device and industry scenarios.

By lowering the technology barriers, we aim to help new players bridge the technology gap and accelerate this adoption of AI innovations in the hardware industry. Meanwhile, throughout Hey Tuya, our next-generation AI assistant, we will establish a new standard for interactive experience in smart devices through AI, accelerating a mass-market penetration of smart products.

Finally, we'll maintain cost discipline, consistently improving our profitability quality and long-term competitiveness. Thank you, operator.

Right now, we can begin the Q&A section.

Thanks for the opportunity to ask question, and congratulations on the solid results. I have two questions.

The first one is regarding the recent tax rate change at the US side, whether that will have any impact to our business outlook going forward. My second question is regarding the recent upstream memory and other chipset supply constraint, and whether it will impact Tuya's business.

Let me translate my question to Chinese.

我这边两个问题，一个是关于最近美国对贸易伙伴的這個税率变化是否会影响到公司2026年的业务展望。另一个就是我们也观察到最近公司上游一些芯片行业，尤其是存储芯片板块有比较大幅的涨价和供给紧张，不知道是否会影响公司未来的业务发展。谢谢。 Thank you, Mr.

Liu. The first question, yes, that considers as a positive indicator that about the tariff reduction and recently.

The demand didn't react immediately yet. We really see that the customers' confidence levels about a better environment to do the business, especially in global manufacturing, trading, show improved.

People have a more positive and more confidence that the macroeconomy will become more stable and better this year. The demand and order didn't show up immediately.

Two reasons. First one is that still people consider the global situation will be more dynamic.

Those type of recent reductions maybe will not be a sustainable level. In the near future, maybe in March, that maybe new executive order will come out.

Reset the tune of the tariffs level maybe into the fixed 15% or a little bit higher. That's the first one, dynamic.

People rather not overreact. The second one is that this kind of news is happening during the Chinese New Year.

Till now, most of the manufacturers, they starting to back to work today, literally today. Many of the manufacturers, they didn't starting to offering new price and try to making new orders.

We'll see. Anyhow, it will be a very positive direction looking forward to, and while overall costs eventually will bring down somehow, and so the customers will be able to have more confidence to enlarge the demand.

That's the first one. The second one is, yes, since last Q4, we're really starting to notice that the shortage of the production capacity of the semiconductor side.

First one is that the shortage will not impact us because consider as a significant buyers in this sector, all our suppliers will ensure that we will get a fulfillment of our orders no matter what. That's the first one.

In the same time, that since last Q4, we're really starting to prepare a quite good inventory levels to going against those kind of dynamics in the supply cycles. That's the first one.

Shortage is not a problem for us. About the cost raise, we continue to keep closing on that.

Right now, we didn't meet that immediately increase, like I mentioned, that's because of the buying forces. If this kind of intensity is starting to increase without a limit, we're not sure.

We'll keep closing in on that. Anyhow, because of the special value position that the company's been doing so far, so that kind of increase on the supply side will not impact on our demand or significant on our gross margin side.

We'll keep closing in on that. Seems that it will last maybe for another one or two quarters.

Thank you.

Thank you, Alex.

Great. Good morning, management.

Thank you for taking my question, and congrats on the very solid results. I also have two questions here.

One is I think a more broad question about the company's value proposition in the agentic AI world. Given we have seen continuous progress in the agentic AI capabilities, how should we think about Tuya's value proposition to the customers in your PaaS and SaaS business?

Will the AI technology advance actually enhance the self-development capabilities of your customers? Which how should we think about the long-term relationship between Tuya and your customers?

Especially I think you you mentioned that in the SaaS business, the recurring revenue actually increased quite dramatically last year. Just wondering if you can further elaborate on that.

Second question is that also in your remarks, you talked about going forward, you want to accelerate the AI deployment of the key application scenarios. Just wondering if you can also further elaborate on this as well.

For example, what scenarios that you see are more promising? Just wondering if you can share more details.

那我很快翻译一下。那感谢管理层接受我的提问。那我这边有两条问题。那第一个可能是一个稍微偏宏观的问题。那在我们看到agentic AI的能力在全球范围内有比较大的这个进步和突破，那我们应该怎么去考虑涂鸦在PaaS和SaaS的客户之间的这个value proposition？那会不会因为AI的技术能力的进步导致了我们的客户的自研能力或者是自研能力的提高或者是成本的降低？那我们长期和客户的关系现在有哪些额外的变化？那更加细节的是一个是您刚刚提到了我们的SaaS业务里面的这个recurring的收入其实是有比较显著的增长，那可否在更详细地阐述一下这个背后的驱动因素是哪些？第二个是您刚刚提到我们在今年也会进一步加速在特定应用场景中间的这个AI的应用，那可否请教一下有哪些特定的应用场景是我们觉得会更加乐观或者是会有更快增长的？谢谢。 Thank you, Timothy.

It's a lot of questions. First one is that about the macro side.

We're happy to see that more customers starting to thinking on how they can create their own differentiations, how they can build their own capabilities in their own R&D side, because we're happy to see that. Otherwise, we have to offer that.

I think that AI makes no difference for past 10 years, experience is that why we starting to enable the manufacturing players to embrace the smart technology. As we're starting with IoT, it's the same stuff.

If they cannot do that, but they want it, we have to offer it. For the all the time of the company's histories, we continuously to offer two things.

The first thing is that if they don't have the capability right now, we offer them the off-the-shelf solution, turnkey. If they really have some capability, we continue to educate them to do that, and then we offer them infrastructures to allow them to do that some extra values they want to create more freely.

I think that's what we call ecosystem want to create. It's not like just keep selling stuff.

They don't have to do that, no. We're happy to see that we really have a significant amount of the customers who really have their own kind of in-house capability to create their own differentiation and make their own innovations.

We're happy to see that. The same as that we continue to enable our customers to build their own device-level innovations and application-level.

I think AI makes no difference. We all continue to do the same thing, including 2025, the showcase is that for some new players, they don't know nothing about that, but they only have some ideas how they want to bring AI into their business.

We create some turnkey solutions for them, they can grab and go. In the same time, we'll continue to have the very deep and active conversations with their engineering team, okay, what they can take for now and what they can build in the future, and how Tuya can enable them to do that more efficiently and faster without the overwhelmed burden.

We'll continue to do that the same way. What we think that make us very exciting about is that several years ago, you still need to convince or tell people how the smart devices are promising business.

You still need to tell them that this will be the future. Right now, you don't have to tell people that AI is the future.

Every people are buying that. The key part is that they really have the concept in their mind, and how you will be able to help them to make that faster and more efficiency and more competitively, on the user experience side.

I think that's the first one. The second one is on the SaaS recurring stuff.

I think the key driver for that is that remember our past, we continue to deploy a significant amount and scale of the devices overall with or without any type of recurring services out there. Which means that we already have a large base.

In the same time, coming on with the AI, some what we call existing categories only come with IoT before, and we already see that, okay, combine with AI capability, we will be able to offer some extra experience and values on the same type of the devices and which already deployed on the households. In 2025, we continue to offer some new services on the same type of the hardware, and then we see that it should rock out.

Even on the existing recurring services, like some storage services, by offering extra AI capability, we make the services more valuable or more feasible for the end-user side. We either continue to enlarge our recurring consumer base, in the same time, we're starting to offering more recurring services out there.

We will believe that will be a long-term, especially for some AI initial products, that's the new type of applications. Since they want those kind of new recurring models, we're starting to taking places from the beginning.

I think that's for the SaaS and recurring. We continue to grow that.

I think that will be the one of the fastest-growing and segment in our middle term. That's for the recurring.

The third one is for the AI applications. I think that's we really shared some of our overviews in late last year.

For those segments that AI will be able to provide more significant values, we believe right now will be two. The first one is that all the multi-modeling applications, including the video and audio interactions and analysis.

Including like the companions, toy, securities, those type of products, we really have a significant base, and we have new players coming in. Come along with AI, either you make those device interactions more smoothly, and also combined with the perceptions of the video and audios, the devices will be able to provide more things.

Like the security side, that you will be able to protect the people's home more precisely without bringing any false alarms. Like for the companion side, or toy side, you really could be able to provide some educational level of the interactions by providing the right language, providing the right emotion, providing the right feedbacks, and provide the right type of knowledge to the target customers.

That will be the first one, multi-modeling applications, especially on audio and video interactions. The second one is data analytic and decision-making.

A typical use cases is for energy management. Come along with a full-cycle device deployments for the energy life cycle, including the generation of energy, storage, consumptions, and metering.

You'll be able to understand how the electricity be moving on, transmit from the grid into each of the devices, how people want to manage the flow. Through the all the data, you'll be able to know, and then the AI will be able to, jump one step ahead, is not only providing you the data analytics and suggestions, but the AI will be able to make the decisions, that how you'll be able to control your dishwasher different way, how you'll be able to manage your battery bank different way, how you'll be able to manage the AC and heating system different way, combined with the variable pricing in different timing, combined with the generation of your solar panel, combined with what kind of battery you have in home right now, and either to reduce the total costs directly.

That will be a typical showcases, the AI is not providing the tool. AI will be able to provide the outcome.

People already see directly that what will be the TCO, what will be the total values they can get for the life cycle of the usage of this type of devices, and they pay for the services as well. The data analytic and decision-making will be another parts.

Beyond energy, we're looking for more scenarios in that segment as well. That's it, Timothy.

Thank you. Thank you for the detailed answers.

Thank you, management, for taking my question, and congrats on the strong results. My first question concerns the demand side.

Given the recent geopolitical risk, how does management assess the potential impact on Tuya's international operations? Looking at the current environment in this year, how do you perceive the recovery in demand across your overseas markets?

My second question, I would like to ask about the shareholder returns. Tuya holds a very healthy cash position, and your profitability continues to improve.

Could management share if there are any more specific plans or considerations for shareholder returns as we move through 2026? Thank you very much.

我很快翻译一下我的这个问题。感谢管理层的提问机会，也恭喜公司强劲的业绩。第一个问题是需求端，我们看到近期全球的地缘政治发生了一些变化，那公司的出海业务会受到什么样的影响？站在2026这个时间节点的话，这个管理层是如何观察海外市场的一个需求的一个复苏的节奏的？第二个问题是想请教关于股东回报的问题。公司现在的这个现金储备比较充裕，而且盈利能力也是在持续改善的，那么管理层在2026年对于股东的回报有没有一些更具体的规划？谢谢。

Thank you for the questions. The first one is that already covered part of that from MS, that's the tariff questions.

The first one is that, yes, the global situation become more and more dynamic, right? We're really starting to get used to that, coming on with our customers as well.

Right now, we see that we get to be able to see more positive indicators in that directions, either it's reductions of the tariff on the global side, by anyhow, through any type of pathways. We really see that the commerce require a better environment to do the business, and people cannot cut each other off.

We really see that the end demand continued to increase. Because the technology really provides value for the end users, and they want it, and they use that more and more often.

That's what we see. This is inevitable, you can never return that.

Coming on with the end demands increase, and so all the commerce level that people just figure out the way how they'll be able to fulfill the demands and navigate through all the dynamic factors, including the tariff, including the reallocation of the supply chain globally, etc. For us is that we just follow the flow is that we come along with our customers to focus on, first one is to provide our offering, technical offering to help them to build whatever application that makes sense for their end users and be able to scale it.

That's the first one, to make them be able to provide the right things. In the same time that we continue closely that to manage the costs, come along with the different allocation of our services on the global side.

Right now, we can deploy the services on whatever countries my customers are, we already did. Right now, my customers already have different type of production centers in across 11 countries all over the world.

We just follow the flow and help them to achieve that more urgently. I think that's a overall what we see for the global situation side.

This year, we really see that people looking forward to have the rebound versus 2025, because 2025 will be kind of the overcautious situations, and people don't know what will happen. Things happening like every week, and so people are not willing to do even a long-term across a quarter decisions, they keep that decision very frequently and precisely, the micro decisions.

This year, people already see that the sustainability on the situation will be starting to build up better, they try to rebound from the overcautious confidence level. That's for the macro side.

Second side for the return of the shareholders, as what we've been doing for the past two years, we continue as the shareholders' return as the one of the prioritized targets for the company as well. It continues to provide a very sustainable and strong foundations on the operation side, including the net cash flow, including the profitability, including the growth of the revenue, including the health of the revenue structures and margin.

The return of the shareholders will become our long-term strategy as well. We just announced we'll have a new round of the dividend for the shareholder as well.

Come along as a continue as a practice for us is that one or two times a dividend a year, so that will be what we're doing for the shareholders' returns. Also in the same time that the dividend will be more reflect on our level of net operating cash flow and profitability.

That's what we're looking forward to do.

Very clear. Thank you.

your

Hello, good morning. Thank you for taking my question, and congrats on the solid results.

My question is regarding on the smart solution segment. We noticed that the company showcased multiple AIoT products at CES last year, and which product categories does the company have higher confidence in sales growth in this year?

When we are thinking about product category expansion, what's our thought process? Could we expect relatively strong growth in the smart solution segment in 2026?

所以我的问题主要是关于这个Smart Solution这一块的这个业务。我们去年在这个CES展上亮出了很多这个AIoT的这个产品。想请教一下管理层，就是在2026年我们对于哪一些这个品类的这个销售会比较有信心？然后当我们在思考这个拓展Smart Solution的这个产品品类的时候，我们一般会有什么样子的这个考量？以及我们对于这块业务在2026年是否会是否可以预期一个比较较快的一个增长？好，谢谢。

Thanks for the question, Matt. The first one is that I think combined with a previous questions and answers.

For the more promising categories that can achieve a higher growth enabled by AI. Those categories will be those devices that can use more AI capabilities naturally.

Including those kind of video and audio interactions and safety stuff, and toy, what we call entertainment stuff, and appliances. Those energy, and those will be those segments we found that AI can use more.

They can use more AI capabilities than ever, and some of the capabilities would directly deliver as a value that become visible for the end users. That's one.

We have a more confidence level in that segment. In the same time, we'll continue to reach other segments, and what will be the new innovative ideas that combine the AI deep integrated with the existing device capabilities.

We continue to search for that as well. What we think that we're going to see in 2026 is that gradually you'll find more and more new type of device that didn't exist before will starting to occur because of the AI.

That will be totally new stuff. Same as the toy, nobody think that a companion type of toy will become a realistic before 2025.

This type of new concept of applications, we're looking forward to have more because we have more talents coming into the industry, we have more players coming into the industry. The new ideas come across different world will create a very, very interesting chemistries out there.

New categories, which I don't name that, even we don't know how should we call that, but we'll find more this year. That's the first question.

The second one is on the smart solutions. Like I described, the value proposition of smart solution is that it's those type of hardware type that help my customers to differentiate themselves.

Those differentiators, the customers prefer Tuya to do that because that either that will be more efficiency or that will be a must-be. A typical use cases for that is like the bird feeders, I mentioned a couple of times out there, is that that's just a concept of ideas that might works.

The customers come from the pet products worlds, they know that some of their customers are looking for to interact with wildlife like that. That's a user insight and concept of ideas.

If they want to do that, they have to cover all the technology gap, and will be kind of overwhelming for them, and not only because of the lack of capabilities of the engineering team, but also that investment can be huge, for them if they do that individually. Also in the same time, that type of innovations need a deep integration on the software and hardware development directly.

Instead of waiting for Tuya to offering the PaaS, maybe that doesn't showed up in our PaaS roadmap ever, they see that how they can work closer with Tuya if we can make that happen. Through that, we think that we buy in this concept, and then we offer it as a solution because we can directly make that happen, and then they can try out the concept.

That will be the typical situation for the smart solution is that we're looking for those differentiated type of offering to the market that can help my customer outspend themselves in their own segment in different region, in different categories, in different vertical channels, etc. We only focus on this.

That you can see that for the smart solutions, even on the hardware business, we maintain as a 20% plus margin. Reason being is that we only choose those higher-valued products with the differentiations and with a special technical offering, and touched as a very precise targeted consumers that they're willing to pay higher.

That will be what we do. Consider smart solution will be kind of the high-value segment type of the devices among all my PaaS offerings.

This we'll continue to do. Usually, our solutions will become the flagship model for specific past customers in the new year.

We continue to work along with their product roadmap year-over-year, and the flagship types, they asking us to offer as a solution.

Thank you. That is very helpful.

Thank you.

Thank you, operator, and thank you all once again for joining us today. If you have any further questions, please feel free to contact Tuya's IR team.

Goodbye, and see you next quarter.