--- title: "Hikvision: Price Hikes as Lifeline, Layoffs for Efficiency — Has the Growth Thesis Changed?" type: "Topics" locale: "en" url: "https://longbridge.com/en/topics/40013637.md" description: "Hikvision released its 2025 annual report and 1Q26 results (through Mar 2026) after the A-share close on Apr 17, 2026, Beijing time. Key takeaways are as follows.1) Overall performance: product price hikes drove double-digit growth. In 1Q26, revenue reached RMB 20.7bn, up 11.8% YoY.The return to double-digit growth mainly reflected an across-the-board price increase this quarter. Net profit attributable to shareholders was RMB 2.8bn in 1Q26, with net margin rebounding to 15.7%. Earnings are recovering..." datetime: "2026-04-17T17:04:03.000Z" locales: - [en](https://longbridge.com/en/topics/40013637.md) - [zh-CN](https://longbridge.com/zh-CN/topics/40013637.md) - [zh-HK](https://longbridge.com/zh-HK/topics/40013637.md) author: "[Dolphin Research](https://longbridge.com/en/news/dolphin.md)" --- # Hikvision: Price Hikes as Lifeline, Layoffs for Efficiency — Has the Growth Thesis Changed? Hikvision released its 2025 annual report and Q1 2026 results (through Mar 2026) after the A-share close on Apr 17, Beijing time. Key takeaways are as follows: **I. Headline results: price hikes drove double-digit growth**. **Hikvision posted Q1 2026 revenue of RMB 20.7bn, up 11.8% YoY.** The return to double-digit growth was largely due to broad-based product price increases in the quarter **; Q1 attributable net profit reached RMB 2.8bn, with NPM recovering to 15.7%.** Profit recovery was supported by higher revenue and a stronger margin post price hikes, with GPM improving to 49.1%. **II. Biz. updates: innovation kept growing; domestic core remains soft.**$HIKVISION(002415.SZ) saw declines across its three domestic divisions in 2H25. **Public services (PBG) and large/mid-size enterprise (EBG) fell by around 5%, while the SME division (SMBG) dropped 23% YoY**. Innovation lines still delivered double-digit growth, but decelerated to ~12%, remaining the key growth driver. **III. Integrated soft + hard: software rebounded; hardware slipped modestly.** Transitioning from a hardware-centric CCTV vendor to a software-empowered security leader, the company has maintained an integrated model. **Based on our estimates, software revenue share rebounded to ~22% in 2H25, which lifted the overall margin mix.** **Dolphin Research view: price hikes prop up growth; core biz. still under pressure** **Hikvision delivered double-digit YoY top-line growth this quarter, primarily driven by product price increases, which also supported a GPM rebound.** Specifically, **the company implemented three rounds of price hikes in Q1**: (1) on Feb 27, an 8%–15% increase across the portfolio (cameras, NVRs, servers, AI devices, etc.); (2) on Mar 12, a separate hike on HDDs; (3) on Mar 24, another ~5% increase across the board. **On the biz. front, using 2H25 as context, operating pressure remains notable. Domestic demand is still subdued, especially with tighter spending by gov. procurement, corporates and SMEs**, weighing on security product demand. Innovation and overseas remain in growth, but are slowing. **Against this backdrop, the company cut headcount and trimmed costs. In 2025, total headcount fell by 2,479, the first reduction in a decade, with R&D staff down to 26.8k by year-end, a reduction of 1,466 within the year**. For Hikvision, the market focuses on the 'core base' and 'growth drivers': **a) Domestic operations are the core base:** **In 2025, all three domestic divisions declined:** PBG (public services) was soft amid cautious spending in public safety and smart-city. EBG and SMBG were pressured by macro headwinds, prompting cuts to capex and opex. **b) Overseas + innovation provide growth optionality.** **i) Overseas:** incremental demand is mainly from EMs, yet growth is showing signs of slowdown; 2H25 revenue growth was only 6%. **ii) Innovation:** a key focus area, including smart home and robotics, also faced deceleration. Smart home grew 35% in 2H25, but robotics declined by double digits. Innovation accounts for only 27% of revenue, limiting its contribution to the group. At the current market cap of RMB 303.6bn, this roughly implies ~18x 2026E P/E (assuming revenue +10% YoY, GPM 48%, tax rate 10%). **Versus the historical 16–27x range, valuation sits in the lower half.** **Overall, while operating pressure persists, headcount and cost cuts plus product price hikes lifted GPM and lowered opex ratios, keeping overall EPS growth in the double digits.** **The industry headwinds are well understood and expectations are subdued, but the continued GPM improvement underscores strong execution.** **After COVID disruptions and property-cycle volatility, the stock has consolidated at low levels, reflecting support. With valuation already on the low side, a recovery in revenue growth and GPM could rekindle confidence.** Below is Dolphin Research's detailed take on Hikvision's results: **I. Key metrics: price-led revenue lift; headcount and cost control** **1.1 Revenue** **Hikvision delivered Q1 2026 revenue of RMB 20.7bn, up 12% YoY**. The return to double-digit growth **was mainly driven by broad-based price hikes across the portfolio in the quarter**. **1.2 Gross margin** **Q1 2026 gross profit was RMB 10.2bn (+22% YoY), with GPM at 49.1%, up 420bps YoY**. GPM expansion was driven by: **(i) price increases across the portfolio; (ii) hardware cost rationalization, lifting hardware GPM; (iii) a higher software revenue mix, providing a structural boost.** **1.3 Core opex** Core opex includes selling, admin and R&D. **In Q1 2026, total core opex was RMB 6.2bn (+5% YoY)**, with the core opex ratio at 30%, down 200bps YoY. **1) Selling expenses:** **RMB 2.66bn in Q1 (+2% YoY)**. The selling expense ratio was 12.9%, down 110bps YoY, largely reflecting faster revenue growth. **2) Admin expenses:** **RMB 690mn in Q1 (+6% YoY)**, with the ratio at 3.3%, down 20bps YoY. **3) R&D expenses:** **RMB 2.86bn in Q1, down RMB 160mn QoQ**. The R&D ratio was 13.8%, down 60bps YoY. **By end-2025, R&D headcount was 26.8k, down 1,466 vs. 2024, with downsizing accelerating. Average annual R&D compensation rose to RMB 438k, which includes some severance payouts.** With downstream demand subdued, the company has stepped up headcount cuts and expense control to reduce opex. **II. Biz. updates: domestic still under pressure** Since 2021, Hikvision has stopped disclosing granular categories like 'front-end', 'back-end' and 'central control', folding them into 'core and other products'. **Instead, the company highlights innovation lines, and its strategic focus has been shifting toward innovation.** **1) Core and other products remain the largest revenue source, contributing 71% in 2H25.** Given the sluggish domestic core, its contribution is trending lower. **2) Innovation share kept rising, with a 27% contribution in 2H25, up 300bps YoY.** Smart home, auto-related and storage were the main growth drivers. **2.1 Core products and services** **Core products and services generated RMB 37.0bn in 2H25, down 5.4% YoY**, reflecting continued softness in the domestic core. Across domestic divisions in 2H25, all three declined: **(i) SMBG (SMEs) fell 23% YoY, the steepest drop and the most exposed to macro pressures**; (ii) **PBG and EBG both declined by around 5% YoY**, with PBG more affected by fiscal constraints. **Overseas core product revenue reached RMB 15.0bn in 2H25, up 3% YoY**. Growth decelerated but remained positive. **2.2 Innovation** **Innovation revenue was RMB 13.68bn in 2H25, up 12.5% YoY.** While sub-30% of total, it is the company's key growth engine. **Smart home, auto-related and storage each grew 25%+ in 2H25.** **By region, innovation performed as follows:** **(i) Domestic innovation revenue was RMB 9.8bn in 2H25, up 9% YoY, with growth slowing to single digits**. In scale terms, innovation remains primarily domestic. **(ii) Overseas innovation revenue was RMB 3.9bn in 2H25, up 22% YoY.** **III. Integrated soft + hard: software clearly rebounded; hardware relatively weaker** Hikvision ships hardware such as cameras as the entry point and follows with software services, constituting an integrated model. Based on the latest report, how did software and hardware perform? **3.1 Software** While the annual report breaks down products, it does not separately disclose software revenue. Software qualifies for VAT refunds, and the 'excess VAT refund over tax burden' line allows back-calculation of software revenue. 'Software revenue = VAT refund / refund rate' (Note: 'refund rate = statutory VAT rate − effective VAT paid rate') **Based on our estimates, Hikvision's software revenue was RMB 11.4bn in 2H25, up 10% YoY.** Software value-add rose back to ~22% of total revenue. **3.2 Hardware** After estimating software value-add, we derive hardware revenue from total. **Hardware revenue was RMB 39.3bn in 2H25, down 4% YoY.** **For 2025 in aggregate, hardware unit shipments rose 8.6%, but ASP fell 8.7%, leading to a decline in hardware revenue.** Comparing software vs. hardware growth, **software improved in 2H, while hardware lagged. The hardware ASP pressure seen in 2025 was at least partially alleviated by Q1 2026 price hikes, and hardware shipments have consistently grown.** Dolphin Research on Hikvision: Oct 17, 2025 earnings take: [海康威视：增长 “卡壳” 难动，何时才能破局？](https://longportapp.cn/zh-CN/topics/35350433) Aug 2, 2025 earnings take: [海康威视：裁员控费，深坑蹲麻？](https://longportapp.cn/zh-CN/topics/32542701) Apr 18, 2025 earnings take: [海康威视：业绩卡壳、研发缩编，靠 AI 救场？](https://longportapp.cn/zh-CN/topics/29022380) Risk disclosure and disclaimer: [海豚君免责声明及一般披露](https://support.longbridge.global/topics/misc/dolphin-disclaimer) ### Related Stocks - [300024.CN](https://longbridge.com/en/quote/300024.CN.md) - [002415.CN](https://longbridge.com/en/quote/002415.CN.md)