FREE

Developer Summit Shows How AI Has the Potential to Drive 20%+ Growth in 2024

Tuya, Inc. (TUYA: NYSE, 2391: HK), the global cloud platform service provider, hosted the TUYA Global Developer Summit in Futian, Shenzhen, China in May. As the largest third-party Internet of Things (IoT) cloud platform with a large TAM and network effects, consensus expects revenue growth of 20%+ in 2024, as the company implements a number of Artificial Intelligence (AI) initiatives. With the highest attendance in Tuya’s history, the Shenzhen edition of the summit attracted more than 3,000 developers As Tuya moves into more and more markets with its smart AI-enhanced platform, developers are now able to easily exploit the latest generative AI (GenAI) features that Tuya provides. Developers are eyeing Tuya’s platform to enable them to tap its future market. Today, 95% of consumer electronics are non-IoT, and of the 5% that are, 70% use in-house tools for IoT. This 70% share is down from 90% five years ago, a long-term trend for platform usage that is likely to continue to be a tailwind for Tuya. Tuya’s GenAI efforts should grow its network effects and margins as more end users enjoy the daily benefits of AI-Generated Content (AIGC). This leads developers to want to tap into the larger market, which leads to more users wanting to use the plethora of devices that are integrated together. As GenAI-driven products use more and more software, Tuya’s margins should be enhanced and, as it grows in market share, it should be able to command higher prices and larger profits. Tuya enhanced its ESG effort by joining the United Nations Global Compact (UNGC), pledging to uphold the UNGC’s “10 Principles” on human rights, labor, environment, and anti-corruption. This marks a milestone for Tuya, as the company’s longstanding efforts to actively fulfill corporate social responsibility gain global recognition. It also provides a broader platform for Tuya to promote sustainable development worldwide with the help of innovative technologies such as GenAI. Tuya is the world’s first IoT cloud development platform, according to CIC, with substantial first-mover advantages in the global IoT PaaS space. Through its IoT cloud development platform, it delivers a variety of offerings. The company’s IoT PaaS enables brands, OEMs, and developers to develop, launch, manage, and monetize smart devices and services. Tuya has a number of key characteristics that should interest investors, including: (1) 30% Y/Y revenue growth, with 20%+ expected for 2024; (2) a 20% net profit margin (non-GAAP); (3) operating net cash flow in the millions each quarter; (4) an asset-light business model; (5) a debt free balance sheet; and (6) $1 billion in net cash versus a ~$1.16 billion market cap. On an EV/S basis, which takes into account its large cash position, Tuya trades at a 95% discount to comps, 0.5x versus 10.3x. Tuya’s comparables include core infrastructure software companies, high-growth infrastructure leaders, and Chinese software companies. Its comps have a median forward P/S of 11.5x, while Tuya trades at 4.0x, a 65% discount.