Meitu Company Reports Strong Growth in 2023 Mid-Year Financials
On August 28, Meitu Inc. announced its mid-year performance for 2023, showcasing impressive results. The company reported total revenue of 1.261 billion yuan, reflecting a year-on-year growth of 29.8%. Adjusted net profit attributable to the parent company reached 151 million yuan, an extraordinary increase of 320.4%. These results highlight Meitu's solid performance in the first half of the year, driven by its focus on the rapidly expanding digital content creation market.
Consumer Segment: Benefiting from AIGC Trends
Meitu's revenue primarily stemmed from its image and design product business, heavily reliant on VIP subscriptions, which contributed 602 million yuan—a remarkable 62.2% increase year on year. The surge in VIP subscribers, spurred by AIGC technology advancements, was pivotal in enhancing profits. Key consumer apps like Meitu Xiu Xiu, BeautyCam, and BeautyPlus have witnessed significant membership growth. By June 2023, the number of VIP members surpassed 7.2 million, marking a 44% year-on-year increase, with a paid penetration rate of 2.9%, a historic high for the company.
AI technology has played a crucial role, with Meitu introducing AIGC-related features in its apps. Notable additions to BeautyCam include AI cutouts, one-click beautification, AI subtitles for videos, and AI blemish removal. Many innovative features are accessible only to VIP subscribers, reflecting the growing user interest.
Meitu's commitment to AI research began in 2010 with the establishment of the Meitu Imaging Research Institute (MT Lab), leading to 451 registered patents and 192 software copyrights. In the first half of 2023, the company's R&D expenditure reached 294 million yuan, up by 10.8% compared to the prior year, focusing on AI-based imaging and recognition technologies.
Despite this success, Meitu's overall monthly active users (MAU) have remained stable over the past few years, fluctuating between 241 and 261 million. Marketing costs rose by 21.3% in the mid-year report, indicating an effort to acquire new users. However, the increase in paying members did not significantly enhance MAU figures. Nevertheless, Meitu is well-positioned to leverage its large user base and expand its market share with AIGC-driven creative products.
Enterprise Segment: Investment in SaaS Solutions
Transitioning from a focus on consumer products, Meitu is effectively expanding its business-to-business (B2B) segment, particularly in SaaS offerings. This new revenue stream has become the company’s third-largest income category, with revenue from beauty industry solutions reaching 286 million yuan in the first half of 2023, reflecting an increase of 31.1%.
Meitu has introduced various SaaS solutions to global skincare brands and medical institutions, securing partnerships with over 140 notable brands, including Dior and Shiseido. Additionally, the company provides ERP and supply chain management solutions to more than 10,000 cosmetics stores across China.
To address the B2B market, Meitu has developed a diverse lineup of seven products tailored for creators and professionals in photography, beauty, and design. These include AI tools for video creation and editing, indicating a strategic emphasis on scaling its B2B operations. The B2B digital imaging market presents significant growth potential, estimated to be 4-5 times larger than the B2C market.
Advertising Business Slowing
Meitu's advertising revenue for the first half of 2023 reached 349 million yuan, a 28.2% increase from the previous year. However, this figure still falls short of the 392 million yuan recorded in 2021. The slowdown can be attributed to broader trends affecting online advertising, such as cautious spending by advertisers and a shift within Meitu’s business model toward VIP subscriptions and SaaS services.
The competitive landscape for online advertising has intensified, with several companies entering the AI-enhanced image editing space. While Meitu maintains a significant presence, it faces growing competition from emerging products like Remini, an AI-powered app for photo enhancement and restoration.
International Growth Opportunities
While Meitu has demonstrated robust performance in the Chinese market, it shows potential for improvement internationally. User engagement abroad has not seen notable growth; as of June 2023, overseas MAU dropped to 7.3 million from a previous peak of 9.7 million. The competition is fierce, with numerous companies vying for market share in the AI photo editing sector.
Nonetheless, Meitu’s products rank within the top ten in several countries’ app stores, including Brazil, Thailand, and the United States. The company is poised to capitalize on significant international growth opportunities, with a strategic focus on enhancing its global footprint and productivity through advanced imaging solutions.
In summary, Meitu's mid-year results indicate strong growth potential, driven by innovative technology and a commitment to expanding both its consumer and enterprise offerings, alongside a strategic pivot toward international markets.
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