Episode Details

Tuya Inc. (TUYA) Q2 2026 — Q2 2026 (three months ended June 30, 2026): revenue $92.9m, up 16.0%; net profit $18.6m, up 48.0%; non-GAAP net profit $18.9m, DOWN 5.8%; EPS $0.03 per ADS on both a GAAP and a non-GAAP basis, in line with a $0.03 bar; gross margin 46.3% vs 48.4%; operating cash flow $6.2m vs $18.2m. Shares closed August 25 at $1.79, up 1.70% from $1.76 on 1,721,865 shares. Tuya Inc. reported net profit of $18.6m for the June quarter, up 48.0% from $12.6m, on revenue of $92.9m, up 16.0%. The stock closed up just 1.70%. The reason is in the company's own non-GAAP reconciliation. Tuya defines non-GAAP profit by adding back share-based compensation - and that expense collapsed 92.0%, from $7.479m to $0.602m, as equity awards granted at 2021 IPO valuations finished amortising. On the company's OWN non-GAAP measure, net profit FELL 5.8%, from $20.1m to $18.9m. The $6.877m fall in stock compensation is 84% of the entire $8.220m rise in operating profit. And of the pre-tax profit that remains, financial income of $10.556m - interest on a $976.1m cash pile - exceeded the $9.308m the whole operating business earned. THE CALL: HOLD (3/5, A HEADLINE PROFIT JUMP THAT WAS AN AMORTISATION SCHEDULE EXPIRING) — base-case value ~$1.94 vs ~$1.79 today. KEY METRICS: - THE SPINE: GAAP net profit rose 48.0% to $18.6m, but the company's OWN non-GAAP net profit FELL 5.8%, $20.1m to $18.9m. Same quarter, same filing. - THE CAUSE: share-based compensation fell 92.0%, $7.479m to $0.602m. That $6.877m fall is 84% of the $8.220m rise in operating profit. - THE PROOF: G&A fell $4.670m in total, but the stock compensation inside it fell $5.265m - so every other administrative cost actually rose. - THE BANK: financial income $10.556m vs operating profit $9.308m - 1.13x. Interest is 56.0% of pre-tax profit, and it fell 13.4% across the half. - THE CASH: operating cash flow $18.2m to $6.2m, down 66.1%. Inventory $30.9m to $63.8m (70 to 124 days); fixed assets $15.7m to $35.0m. - THE COUNTER: revenue +16.0% and accelerating four quarters running. Strip the cash out and the enterprise is $127m - just 4.2x non-GAAP operating profit. - THE BOOK: $976.1m of cash and ZERO borrowings against a $1,103m market value. Net cash is $1.58 of the $1.79 share price - 88% of it. - THE CALL: HOLD 3/5, fair value $1.94 vs $1.79 (+8.4%): cash at a 20% haircut plus 16x after-tax operating profit. Bull $2.62, bear $1.39. The only live Street target is $3.69 (Jefferies, 3 March 2026, set 175 days before this print). What to watch: UP: revenue growth accelerating for a fourth straight quarter, +1.2%, +3.4%, +8.3%, +16.0%; PaaS revenue $67.9m, up 16.9%; non-GAAP operating profit up 11.7% to $9.6m; ZERO interest-bearing borrowings; $976.1m of cash, deposits and treasuries against a ~$1,103m market value, so an enterprise value of only ~$127m, or 4.2x trailing non-GAAP operating profit and 0.37x trailing revenue; premium PaaS customers 285 to 318; a $37.0m dividend paid in April. DOWN: non-GAAP net profit fell 5.8% and non-GAAP net margin went 25.1% to 20.4%; gross margin fell 2.0 points to 46.3% so gross profit grew only 11.1%; operating cash flow fell 66.1% to $6.2m as inventory doubled from $30.9m to $63.8m (70 to 124 days) and fixed assets doubled to $35.0m; interest income fell 13.4% across the half as the pile went $1,017.3m to $976.1m; no buyback and the diluted share count rose 0.97%. Also on YouTube: @ChargedAlpha DISCLAIMER: For informational and educational purposes only. Not financial advice. Do your own research before any investment decision.