With the rapid increase in demand for AI product images, short videos, and commercial content generation, MEITU is gradually transforming into a usage-based AI content platform.
<h4>Key Points:</h4>
<ul>
<li>Revenue from imaging and design products in the first quarter increased by 34.3% year-on-year, and the ARR of AI productivity applications rose by 56.2%.</li>
<li>The total consumption of AI computing power points increased by 59% compared to the end of last year, with usage of &#34;KaiPai&#34; and RoboNeo increasing by 360% and 316%, respectively.</li>
</ul>
Li Shida
MEITU (1357.HK) recently announced its business status for the first quarter of this year. Although the announcement is not a complete financial report, it is sufficient for the market to reassess the valuation logic of this former photo editing app company.
On the first trading day after the announcement, MEITU surged by 11.2%. Market attention has shifted from traditional photo editing business to the commercialization capabilities of AI productivity tools.
The most striking aspect is that the number of paid subscription users continues to expand. As of the end of March this year, MEITU's paid subscription users exceeded 17.9 million, a year-on-year increase of 30.2%. Among them, paid users from &#34;lifestyle applications&#34; reached 15.56 million, a year-on-year increase of 27.4%; paid users from &#34;productivity applications&#34; increased to 2.34 million, a significant year-on-year increase of 52.9%.
<h4>Productivity Applications Accelerate Monetization</h4>
Lifestyle applications remain the foundation of MEITU, mainly including MEITU XiuXiu, Beauty Camera, and Wink, covering functions such as selfie beautification, photo editing, and short video enhancement, and are also the source of the company's accumulated traffic and membership revenue over the years.
However, what truly drives the market to reassess its valuation is the shift towards AI productivity application scenarios. The products that MEITU has focused on in recent years include the &#34;MEITU Design Studio&#34; for e-commerce and commercial design, the AI short video tool &#34;KaiPai,&#34; the AI creative assistant &#34;RoboNeo,&#34; and the cross-border e-commerce material tool Vmake.
Among them, the MEITU Design Studio mainly provides AI product image, background removal, and material generation functions; &#34;KaiPai&#34; enters the commercial short video market, assisting industries such as insurance, real estate agencies, and medical beauty in quickly generating content. The common feature of these products is the gradual integration of AI into the commercial content production process.
In the first quarter, the core business revenue from imaging and design products reached 852 million yuan, a year-on-year increase of 34.3%. Among them, revenue from &#34;productivity applications&#34; grew by 45.4% year-on-year, a growth rate higher than the 35.5% of &#34;lifestyle applications.&#34; Although lifestyle applications currently account for about 82% of imaging and design product revenue, the market is clearly more focused on the rapid expansion of productivity business.
The company also showcased its AI commercialization progress more comprehensively for the first time. As of March this year, MEITU's AI productivity application ARR (Annual Recurring Revenue) was approximately 580 million yuan, a year-on-year increase of 56.2%. Compared to membership growth, this figure better reflects whether the AI business has formed a sustainable source of income
<h4>Pay-per-use Model</h4>
What surprised the market the most is that the consumption of &#34;AI computing points&#34; has begun to grow rapidly. By the end of March this year, user consumption of AI computing points increased by 59% compared to the end of December last year. Among them, the growth of Kaipai was 360%, RoboNeo grew by 316%, Meitu Design Studio increased by 107%, and Vmake grew by 78%. Every time AI generates product images, short videos, AI voiceovers, or material designs, it consumes AI computing power, and this usage is gradually becoming a new source of income, indicating that Meitu is beginning to move towards a pay-per-use model.
In fact, Meitu started laying out AI imaging functions several years ago, but the generative AI model capabilities were limited in the past, and the effects of AI photo editing and content generation were still difficult to commercialize on a large scale. With the rapid maturation of generative AI in the past two years, the quality of functions such as AI product images, AI models, and AI short videos has significantly improved. Coupled with the rapid growth of TikTok Shop, live e-commerce, and cross-border e-commerce, the demand from small and medium-sized businesses for low-cost, high-efficiency content production has surged, allowing Meitu's AI tools to truly enter the monetization stage.
What Meitu is trying to tap into is actually the global AI content tools market. Adobe (ADBE.US) and Canva have both been vigorously promoting AI-generated images, videos, and commercial design tools in recent years, hoping to further expand the small and medium-sized business market. Compared to Adobe, which leans towards professional designers, Meitu's positioning is closer to mass commercial content tools and benefits from the vast consumer imaging and e-commerce scenarios in China and Asia. As TikTok Shop, live e-commerce, and cross-border e-commerce rapidly expand, the demand from small and medium-sized businesses for product images, promotional short films, and marketing materials continues to increase, making it easier for Meitu to directly convert AI functions into commercial revenue.
However, Meitu still faces many challenges. The production of AI-generated images and videos requires a large amount of GPU and computing resources, and the company has not yet disclosed the gross profit margin and cost changes of its AI business. If the usage of AI increases significantly in the future, but costs rise even faster, profitability may still be under pressure. In addition, competition in the AI content tools market is also heating up rapidly. Besides Adobe and Canva, ByteDance's Jianying, Kuaishou (1204.HK), and numerous AI creation platforms are all vying for the same batch of commercial clients and content creators.
Moreover, the revenue share from productivity applications is still only about 18%, and lifestyle application revenue remains the main source of income, meaning that Meitu's transformation still needs time to be validated. But at least for the capital market, Meitu has begun to prove that AI is not just a tool for enhancing user stickiness, but a business that can truly charge based on usage

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MEITU's first-quarter report shows that with the increase in demand for AI product images, short videos, and commercial content generation, revenue grew by 34.3% year-on-year. The annual recurring revenue (ARR) from AI productivity applications increased by 56.2%, with the number of paid subscription users reaching 17.9 million, a year-on-year increase of 30.2%. MEITU is gradually transforming into a usage-based AI content platform, and the market is re-evaluating its valuation logic, with the stock price rising by 11.2% after the announcement

AI productivity demand explodes, MEITU accelerates commercialization