--- title: "VR \"bomb\", tariffs \"backstab\", where is the way out for Goertek?" type: "Topics" locale: "en" url: "https://longbridge.com/en/topics/29040782.md" description: "Goertek released its Q1 2025 earnings report (as of March 2025) after the A-share market close on April 21, 2025 Beijing time. Key points are as follows: 1. Overall performance: Demand declined, revenue dropped again. ①$Goertek(002241.SZ) reported total revenue of 16.3 billion yuan in Q1 2025, down 15.6% YoY, missing market expectations (20.9 billion). The Q1 decline was mainly affected by weakening demand for VR devices and other products. After achieving double-digit recovery growth in Q4, the company fell back into decline territory in Q1..." datetime: "2025-04-21T14:14:03.000Z" locales: - [en](https://longbridge.com/en/topics/29040782.md) - [zh-CN](https://longbridge.com/zh-CN/topics/29040782.md) - [zh-HK](https://longbridge.com/zh-HK/topics/29040782.md) author: "[Dolphin Research](https://longbridge.com/en/news/dolphin.md)" --- # VR "bomb", tariffs "backstab", where is the way out for Goertek? Goertek Inc. released its Q1 2025 financial report (as of March 2025) after the A-share market closed on April 21, 2025, Beijing time. Key highlights: **1\. Overall Performance: Demand Decline Leads to Revenue Drop Again. ①**$Goertek(002241.SZ) **Q1 2025 total revenue was RMB 16.3 billion, down 15.6% YoY,** missing market expectations (RMB 20.9 billion). The decline was mainly due to weakening demand for VR devices. **After double-digit recovery growth in Q4, Q1 slipped back into decline, indicating Meta VR restocking lacked sustainability. From VR and PS to earphones, the entire product line is stuck in a sluggish cycle with no new releases this quarter—or likely for the full year. ② Gross margin this quarter was 12.4%, up 3.2 ppts YoY,** beating expectations (11.2%). Previous margin compression was driven by Apple order cuts, but rebounded thanks to order recovery and improved smart hardware margins, lifting overall margins back to double digits. **2\. Expenses & Operations: Inventory Rational but Costs Rise. Goertek’s Q1 2025 inventory stood at RMB 10.746 billion, down 8.4% YoY.** The inventory/revenue ratio of 0.66 remains historically reasonable. Core operating expense ratio rose to 10.9% due to revenue decline. **Goertek Outlook: Weak Q1, Full-Year Recovery Unlikely** Double-digit revenue decline this quarter reflects demand weakness. Profit growth was mainly driven by non-operational factors like investment gains. Following Q4’s rebound—fueled by Quest 3S and AirPods 4—the market expected a strong Q1. However, renewed revenue decline confirms downstream demand softness. **With ~60% of revenue from smart hardware (Meta/PS VR/AR devices), growth in 2025 looks limited post-Quest 3S and PS5’s end-of-cycle.** Apple’s MEMS upgrades may benefit its <20% precision components segment, but impact will be marginal. **With clients in a product gap, no turnaround is in sight.** Tariff policy changes may also affect its Vietnam/China production. **If implemented, manufacturing costs could rise.** This "bleak" report signals persistent demand headwinds for 2025. Dolphin Research’s detailed analysis: **1\. Overall Performance: Demand Drop Drives Revenue Decline** **1.1 Revenue** **Goertek’s Q1 revenue fell 15.6% YoY to RMB 16.3B, below consensus (RMB 20.9B).** Q4’s 27% rebound (Quest 3S/AirPods 4) proved short-lived, highlighting demand fragility. **With clients entering a product drought, revenue recovery remains elusive.** **1.2 Gross Margin** **Gross profit rose 13.9% YoY to RMB 2.023B, lifted by margin expansion.** **Q1 gross margin of 12.4% (+3.2ppts YoY) beat estimates (11.2%).** Post-Apple order cuts, margin recovery reflects regained OEM share. **Precision components (20% margin) outperform smart audio/hardware (<10%).** **2\. Expenses & Operations: Inventory Steady, Costs Climb** **2.1 Operating Metrics** **① Receivables: RMB 8.713B (+18% YoY), with receivables/revenue at 0.53—within range.** **② Inventory: RMB 10.746B (-8.4% YoY), inventory/revenue at 0.66—historically normal. Inventory may rise as clients’ product gaps persist.** **2.2 Expenses** **Operating expenses grew 20.7% YoY to RMB 1.775B (10.9% of revenue).** **1) Sales: RMB 174M (+15.2% YoY, 1.1% of revenue)—boosted amid weak demand;** **2) Admin: RMB 512M (+11.8%, 3.1%)—stable absolute spend, ratio up on revenue drop;** **3) R&D: RMB 1.096B (+32.8%, 6.7%)—largest expense, focused on smart hardware/precision components;** **4) Finance: RMB -7M—FX gains.** **2.3 Net Profit** **Net profit rose 23.4% YoY to RMB 469M, below consensus (RMB 560M).** Gains were non-operational (e.g., investments). Operationally, flat profits reflect revenue drop offset by margin lift. Q4’s Quest 3S/AirPods 4 hype gave way to Q1’s "cold shower" of weak demand. Dolphin Research’s historical coverage on Goertek: **Earnings Season** 2024/10/24: [Meta & Apple’s New Launches: Is Goertek Back?](https://longportapp.cn/zh-CN/topics/24689201) 2024/8/14: [Goertek: Legacy Biz Recovers, VR Stagnates](https://longportapp.cn/zh-CN/topics/23159479) 2024/4/24: [Goertek: With Apple Onboard, Can VR/AR Survive?](https://longportapp.cn/topics/20719003) 2023/10/27: [Goertek: Profit Collapse—When’s the Rebound?](https://longportapp.cn/zh-CN/topics/10417802) 2023/4/18: [Goertek: Apple’s Order Cuts Crush Earnings—Can Suppliers Endure?](https://longportapp.cn/en/topics/5185592) 2022/8/30: [Goertek: Why Did 2x VR Growth Suddenly Halt?](https://longbridgeapp.com/topics/3387357) 2022/4/27: [VR Surge Powers Goertek’s Strong Guidance | Earnings Digest](https://longbridgeapp.com/topics/2433201) 2022/3/30: [Goertek: Weak Now, But VR Is the Future](https://longbridgeapp.com/topics/2212515?channel=t2212515&invite-code=FRQWBJ) 2021/8/27: [Goertek: VR’s Rise Masks TWS Earbuds’ Fall](https://longbridgeapp.com/topics/1084501?invite-code=032064) **Deep Dives** 2022/10/11: [Goertek’s Redemption: ByteDance-Backed Pico](https://longbridgeapp.com/topics/3521919) 2022/6/17: [Consumer Electronics "Overripe": Apple Holds, Xiaomi Suffers](https://longbridgeapp.com/topics/2917540) 2021/8/20: [Goertek (Part 2): Metaverse Is Far, But VR Gaming Is Here](https://longbridgeapp.com/topics/1065205?invite-code=032064) 2021/7/23: [Goertek (Part 1): What Hit Apple’s Top Supplier?](https://longbridgeapp.com/news/41114137) Disclosures: [Dolphin Research Disclaimer](https://support.longbridge.global/topics/misc/dolphin-disclaimer) ### Related Stocks - [002241.CN](https://longbridge.com/en/quote/002241.CN.md)