Meitu Q1 Productivity Tool Revenue Up 45%, AI-Driven Paid User Growth Strong, Maintain Buy

Overview

Goldman Sachs released a research report maintaining the 'Buy' rating for Meitu Inc. (1357.HK) with a target price of HK$14.3. The core logic lies in Meitu significantly enhancing the monetization capabilities of both productivity and leisure tools by deepening AI capabilities (particularly agentic AI and AI customer service integration). Q1 2026 data shows 45% high-speed growth in productivity tool revenue, while paid user scale continues to expand, validating the business value of AI in lowering user usage thresholds and improving content generation efficiency.

Core views

Strong performance, productivity tools become core engine. In Q1 2026, Meitu's total revenue from photos, videos, and design products increased 34% YoY to RMB 852 million, achieving 43% of Goldman Sachs' H1 forecast. Among them, productivity tool revenue grew 45% YoY, leisure tool revenue grew 36% YoY. This structural growth benefits from the expansion of the paid user base: as of end-March 2026, total paid subscription users reached 17.9 million, up from 16.9 million previously. Specifically, productivity tool subscribers reached 2.3 million, growing 53% YoY; leisure tool subscribers were 15.6 million, growing 27% YoY. AI deepened application drives monetization model upgrade. Meitu pointed out that AI-driven productivity tool ARR grew 56% YoY to RMB 580 million. This growth stems not only from increased solution adoption and client base expansion but also from new billing models—charging by AI consumption. Data shows AI points consumed by users on products like Kaipai, RoboNeo, Designkit, and Vmake in March 2026 increased 59% compared to December 2025. Goldman Sachs believes that with deep integration of AI capabilities, learning costs for users generating and revising images/videos decrease, demand and usage frequency increase, supporting volume-based monetization models and expected to further improve ARPU.

Analysis framework

Goldman Sachs adopts a method combining bottom-up fundamental analysis with DCF valuation. First, by breaking down quarterly revenue data, distinguishing the two business segments of 'Productivity Tools' and 'Leisure Tools', focusing on tracking paid subscription users (especially productivity tool subscribers) and ARPU changes to verify the actual contribution of AI functions to monetization. Second, paying attention to high-frequency operational indicators such as AI point consumption as leading indicators for judging user stickiness and future revenue sustainability. Finally, at the valuation level, using a two-stage DCF model to capture long-term cash flow generation capability, setting clear WACC and terminal growth rate assumptions to derive the target price.

Methodology notes

• Valuation MethodDCF Cash Flow Discounting

  DCF Cash Flow Discounting Model

  Evaluating intrinsic value by discounting the company's future expected free cash flows to the current point. In this research report, Goldman Sachs set the second stage (2032-2036) annual free cash flow growth rate at 12%, terminal value growth rate at 2%, and Weighted Average Cost of Capital (WACC) at 11.5%, calculating the target price of 14.3 Hong Kong dollars based on this.

• Industry/Industrial Analysis FrameworkVolume-Price Breakdown

  Paid User Count and ARPU Driver Analysis

  Decomposing revenue growth into 'Volume' (paid user count) and 'Price' (ARPU) dimensions. The research report explains the reason for exceeding revenue expectations by analyzing the high growth of productivity tool subscription counts (volume) and additional revenue brought by AI point consumption (price/usage).

• Competition & Strategy FrameworkMoat / competitive advantage

  AI Lowering Learning Costs Builds User Stickiness

  The research report believes that the integration of AI functions reduces the technical threshold (learning cost) for users to generate and edit content, thereby expanding the potential user base and increasing the usage frequency of existing users, forming a competitive advantage based on experience and efficiency.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• Meitu Inc. (1357.HK)

  Direct beneficiary, AI feature deepening drives core business growth

  Strengths

  Productivity tool revenue high-speed growth, paid user base expands, AI point consumption model verified successful

  Weaknesses

  -

  Comparison

  -

  Risks

  AI adoption and monetization slower than expected, paid ratio lower than expected, competition intensifies

Key data

• Q1 Total Revenue Growth Rate+34% YoYPhoto, video, and design product revenue reached RMB 852 million
• Productivity Tool Revenue Growth Rate+45% YoYCore Growth Engine
• Total Paid Subscription Users17.9 MillionAs of end-March 2026
• Productivity Tool Subscription User Growth Rate+53% YoYReached 2.3 Million users
• AI-driven ARR Growth Rate+56% YoYReached RMB 580 Million
• AI Points Consumption MoM Growth Rate+59%March 2026 vs December 2025
• Target PriceHK$14.3Based on DCF model, maintained unchanged

Impact & implications

The research report believes that Meitu has successfully transformed from a simple image beautification tool into an AI-driven productivity platform, validating the sustainability of its business model. The introduction of the AI point consumption model ties revenue growth more closely to actual user usage intensity, possessing greater elasticity. For investors, the focus should shift from purely user scale to paid conversion rates and ARPU improvement. Goldman Sachs' Buy rating and target price reflect confidence in the company's long-term cash flow generation ability, especially under the background of continuous AI technology iteration, where Meitu's leading position in niche fields is expected to consolidate.

Risks

• Market adoption speed and monetization process of AI technology slower than expected
• User paid conversion ratio lower than expected
• Industry competition exceeds expectations, leading to increased customer acquisition costs or impaired pricing power

What to watch

• Changes in paid subscription user counts for productivity and leisure tools
• Monthly/Quarterly trends of AI points consumption volume
• Improvement of ARPU (Average Revenue Per User)