<div id="readability-page-1">Soaring demand for AI-generated product images, short videos and commercial content is transforming the company into a pay-per-use AI content platform <h4>Key Takeaways:</h4> <ul> <li>Meituan’s first-quarter revenue from imaging and design products grew by 34.3%, while annual recurring revenue from its AI Productivity Applications rose by 56.2%</li> <li>Total consumption of the company’s AI credits rose 59% through March compared with the end of last year, with Kaipai and RoboNeo usage soaring by 360% and 316%, respectively</li> </ul> By Lee Shih Ta As the saying goes, beauty lies in the eye of the beholder. And if that beholder is beauty app operator Meitu Inc. (1357.HK), then the apple of the company’s eye without question these days is AI. Meitu’s release last week of limitedperformance data for the first quarter was undoubtedly cherry-picked, aimed at showing off the company’s strongest suits as it integrates AI into its various products. But the data was impressive nonetheless, prompting investors to reconsider the valuation logic of this former photo-editing app company. Meitu’s stock surged by 11.2% the day after the announcement, as investor focus shifted from the company’s traditional photo-editing business and turned toward the potential for its AI productivity tools for content creators to take it to the next level. Most impressively, the numbers show the company’s base of paying subscribers is still expanding briskly. That base exceeded 17.9 million paid subscribers at the end of March, up 30.2% year-on-year. Within that pool, paying users for the company’s Applications for Leisure reached 15.56 million, up 27.4% year-over-year; meanwhile, paying users for its Applications for Productivity surged by nearly twice that rate, rising 52.9% to 2.34 million. <h4>Monetizing Productivity Applications</h4> Leisure Applications are still Meitu’s foundation, including imaging products such as the Meitu app, BeautyCam, and Wink. Those products include features such as selfie beautification, photo editing and short video enhancement, and are the main drivers of the traffic and membership revenue accumulated by the company over the years. But what’s truly making investors take a second look at the company is its shift toward using AI in its many applications for professionals. Meitu’s focus in recent years has been on products like Designkit, which caters to e-commerce and commercial design; Kaipia, an AI short video tool; RoboNeo, an AI creative assistant; and Vmake, a cross-border e-commerce generation tool. Among those, Designkit is used to generate AI product images, while also doing things like removing backgrounds. Kaipai, meanwhile, allows professionals from industries such as insurance, real estate and medical aesthetics to quickly generate video content. Both products share a common characteristic of gradually introducing AI into the workflow of commercial content producers. Revenue for Meitu’s core photo, video and design products in the first quarter totaled 852 million yuan ($125 million), up 34.3% year-on-year. Within that segment, revenue from Applications for Productivity grew by 45.4% year-over-year, outpacing the 35.5% growth for Applications for Leisure. While Leisure Applications currently still account for about 82% of the revenue from photo, video and design products, the market appears to be paying closer attention to rapid growth for the Productivity Applications business aimed at commercial customers. The quarterly highlights were also noteworthy for presenting a relatively comprehensive view of Meitu’s AI commercialization progress for the first time. As of March, annual recurring revenue for Meitu’s AI Productivity Applications was approximately 580 million yuan, up 56.2% from the same period a year earlier. Compared to membership growth, the figure more accurately reflects whether the AI business is gaining traction as a source of recurring revenue. <h4>Pay-per-use model</h4> What may have impressed investors the most was rapid growth in consumption of Meitu’s AI credits. Overall AI credit consumption through March rose 59% compared to the figure at the end of last year. Consumption on Kaipai surged the most, up by 360%, while RoboNeo rose by 316%, Designkit by 107%, and Vmake by 78%. Every time a user generates something using AI, be it a product image, short video or talking head, he uses AI credits that must be paid for. And those payments are gradually evolving into a new revenue source, showing Meitu is increasingly relying on a pay-per-use model. Meitu began investing in AI imaging functions several years ago. But limited capabilities of earlier generative models made AI photo editing and content generation difficult to commercialize on a large scale. As generative AI has rapidly matured over the past two years, the quality of features such as AI product images and short videos has improved significantly. Concurrent rapid growth of TikTok Shop, livestreaming e-commerce, and cross-border e-commerce have caused demand for low-cost, high-quality content to skyrocket from small- and medium-sized merchants. That combination has enabled Meitu’s AI tools to rapidly monetize, fueled by demand from those smaller businesses. Meitu is not only well-known in its home China market, but is also attempting to penetrate the global market for AI content tools. Both Adobe (ADBE.US) and Canva have been strongly promoting their own AI-generating image, video, and commercial design tools in recent years, hoping to further expand into the small- and medium-sized merchant market. While Adobe leans toward professional designers, Meitu’s positioning tends toward providing content tools for a more mass-market audience. That’s helping it benefit from the massive demand for related consumer imaging and e-commerce services in China and Asia, making it relatively easier for Meitu to directly convert its AI features into revenue. However, Meitu still faces numerous challenges. Generating AI images and videos inherently requires massive amounts of computing resources, and the company has yet to disclose any gross profit margin or costs associated with its AI business. If AI usage increases significantly in the future, but costs grow even faster, the company’s profitability may still come under pressure. In addition, competition in the AI content tools market is also rapidly heating up. Aside from Adobe and Canva, ByteDance’s CapCut, Kuaishou’s (1204.HK) Kling AI, and a multitude of other AI creative platforms are all vying for the same group of content creators. What’s more, Meitu only currently gets about 18% of its revenue from professional-use Productivity Applications, while Leisure Applications for more casual users remain its primary revenue source. That means that Meitu’s transition to a tool for commercial users still needs time to prove itself. But at the very least, the company has already begun to demonstrate that AI is not merely a tool for attracting and holding on to users, but rather a genuine business that can charge on a pay-per-use basis. To subscribe to Bamboo Works weekly free newsletter, click here</div>

美圖公司

美圖公司因對付費 AI 內容創作的需求激增而蓬勃發展。該公司第一季度來自成像和設計產品的收入增長 34.3%，而 AI 生產力應用的年度經常性收入增長 56.2%。截至 3 月底，公司 AI 信用的總消費較去年底增長 59%，Kaipai 和 RoboNeo 的使用量分別激增 360% 和 316%。

Meitu thrives on exploding demand for paid AI content creation