📰 What This Document Is 📄

This is an Annual Report (Form 20-F) filed with the U.S. Securities and Exchange Commission (SEC) for Tuya Inc. It provides a detailed look at the company's business, financials, and risks for the fiscal year ended December 31, 2025. Because this is a mandatory annual filing, it acts as a comprehensive warning label, detailing everything from historical share structure to every potential risk the company faces.

👉 Why it matters: The report is incredibly dense with warnings and legal disclaimers. Investors should treat this document as a caution sign, spending as much time reading the risk sections as they spend reviewing the financial numbers.

🏢 Tuya's Business Profile 💡

In simple terms, Tuya is a technology company involved in the Internet of Things (IoT) market. They develop platforms and services that connect smart devices, making products—like smart lights, locks, and appliances—work together through a single network. They make money through various models, including selling hardware (smart devices) and providing software services (PaaS and SaaS).

• Scale & Geography: Tuya is a global player, with significant operations across multiple international markets, including major subsidiaries located in the Cayman Islands, China, India, Australia, Japan, the UK, Colombia, and Germany.
• Corporate Structure: The company is incorporated in the Cayman Islands, but its operations are heavily centered in mainland China.
• Key Personnel: The filing lists Yi (Alex) Yang as the Chief Financial Officer (CFO).

💸 Dividend Payment History 💰

The filing provided a clear history of when Tuya has paid dividends to its shareholders. Dividends are a key indicator of a company's financial health and cash flow. These payments are paid in U.S. dollars and sourced from the company's surplus cash and share premium account, rather than needing to be funded by the core operating business.

• 2024 Dividends: The Board approved two dividend payments in 2024:
  • First Payment (Aug 26, 2024): $0.0589 per ordinary share (approx. $33 million aggregate).
  • Second Payment (Feb 26, 2025): $0.0608 per ordinary share (approx. $37 million aggregate).
• 2025 Dividends: The Board approved two payments in 2025:
  • Third Payment (Aug 26, 2025): $0.054 per ordinary share (approx. $33 million aggregate).
  • Fourth Payment (Mar 2, 2026): $0.0605 per ordinary share (approx. $37 million aggregate).

👉 Why it matters: The company has consistently used cash flow generated from surplus accounts to maintain a regular dividend schedule into 2026, signaling management’s confidence in its ability to distribute capital.

🇨🇳 Controlling the VIE Structure 🔗

This section details the complex corporate mechanism by which Tuya operates and controls its business in the People's Republic of China (PRC). Because of regulations, Tuya Inc. cannot directly own the PRC subsidiary; instead, it uses a structure called a "Variable Interest Entity" (VIE) and historical contractual arrangements.

• VIE Control: These arrangements include power of attorney, exclusive business cooperation agreements, and exclusive options. These contracts give Tuya a "controlling financial interest" and allow it to consolidate the VIE’s financial results under U.S. GAAP.
• Cash Flow Mechanics: In 2023, 2024, and 2025, the former VIE did not pay any service fees to Tuya Information. This suggests the VIE was primarily self-funding, although Tuya and its subsidiaries provided temporary working capital support (e.g., RMB 1.1 million in 2025).
• Outstanding Balances: The accumulated balances owed by the former VIE to Tuya Information for working capital support were RMB 11.5 million (2023), RMB 13.6 million (2024), and nil (2025). The zero balance in 2025 was due to the former VIE repaying all outstanding amounts before its deregistration.

👉 Why it matters: This VIE structure is the linchpin of Tuya's Chinese operations. Any change in PRC law regarding contractual arrangements or cross-border capital flows could jeopardize the ability of Tuya to report these financials.

🚧 Regulatory and Geopolitical Risks 🌐

The annual report dedicates significant space to the risks associated with doing business in China and maintaining international listings. These risks are not merely cautionary footnotes; they are structural threats to the company's future.

• PRC Government Oversight: The company warns that the PRC government retains the authority to regulate, influence, or even intervene with Tuya's operations for political or societal goals, which could severely impact its value.
• New Overseas Listing Rules: The PRC Securities Regulatory Commission (CSRC) introduced the New Overseas Listing Rules. These rules are complex, requiring issuers to file updates to the CSRC within three business days of any material event (like a change of control or a regulatory sanction).
• Local Compliance: Tuya’s PRC legal counsel confirmed compliance with applicable PRC laws for licenses and approvals. However, the report notes that future ability to maintain or renew these licenses is dependent on continued compliance with evolving PRC laws.

👉 Why it matters: These warnings stress that Tuya’s ability to operate and list its securities is highly sensitive to Chinese government regulations, which could change suddenly and without warning.

⚠️ Industry and Operational Headwinds 🚨

Tuya operates in the highly competitive and rapidly evolving Smart Home and IoT market. The report outlines several key operational risks tied to market dynamics, technology, and supply chains.

• PaaS/SaaS Volatility: The Platform-as-a-Service (PaaS) and Software-as-a-Service (SaaS) markets are "relatively early stage of development." The success of Tuya depends heavily on its ability to quickly adapt its products to new industry standards and rapid technological changes.
• Competition: The market is intensely competitive, with factors like platform scalability, global reach, and data security being key differentiators. Tuya is warned that competitors could quickly match or beat its features, potentially forcing Tuya to reduce prices and thereby shrinking its profit margins.
• Customer Base Fluctuation: While the company had a slight increase in customer numbers (from ~6,100 in 2023 to ~5,900 in 2025), the report notes that its revenue relies on customers increasing their usage of the platform. Any decline in usage or if major customers stop placing orders poses a material threat.
• Supply Chain Risk: The company relies on third-party suppliers for manufacturing modules and finished smart devices. Disruptions, quality issues, or delays from these suppliers could severely harm Tuya’s operations.

👉 Why it matters: The technology space moves at lightning speed. Tuya must constantly innovate, and its dependence on stable global supply chains and favorable market growth makes its operational future highly uncertain.

💼 Corporate & Financial Structural Risks 🧱

These risks cover the fundamental aspects of the company’s ownership structure, market listing, and financial forecasting ability. These are technical warnings aimed at sophisticated investors.

• Limited Operating History: Tuya commenced operations in 2014. The company repeatedly warns that its relatively limited operating history makes it difficult to reliably forecast future revenues or growth rates.
• Growth Trajectory: The report makes it clear that prior periods of rapid growth are not guarantees of future performance. Future growth depends on successful strategic execution, which is difficult to guarantee.
• Adverse Tax Risk (PFIC): U.S. investors face a specific risk regarding being classified as a Passive Foreign Investment Company (PFIC). If this classification holds for 2026, U.S. investors could be subject to adverse U.S. federal income tax consequences.
• Share Structure: The company’s dual-class voting structure, while common, introduces risks regarding liquidity and its potential ineligibility for certain stock market indices.

👉 Why it matters: Investors must account for the high uncertainty built into the financial structure, including potential tax liabilities and the unpredictability associated with a company still defining itself in a volatile market.

🤝 Key Contacts and Resources 📞

The filing provided several important contact points for interested parties who wish to learn more about Tuya Inc.

• Principal Executive Offices: 10/F, Building A, Huace Center Xihu District , Hangzhou City Zhejiang, 310012, People’s Republic of China.
• Company Contact Person: 10/F, Building A, Huace Center , Xihu District , Hangzhou City Zhejiang, 310012, People’s Republic of China.
• CFO: Yi (Alex) Yang.
• CFO Contact: Tel: + 86 0571 - 86915981, E-mail: [email protected].

🧠 The Analogy 🏛️

Investing in Tuya is like trying to predict the future of a global city that is built on complex, beautiful, and revolutionary plumbing (the IoT platform). The plumbing is excellent and very popular, but it runs through multiple jurisdictions (China, the Cayman Islands, various EU nations), each with its own, sometimes shifting, set of rules. Furthermore, the construction crew (the supply chain) might be delayed, and the city government (the PRC government) can change the zoning laws or impose new fees at any moment, making long-term financial forecasting extremely difficult.

🧩 Final Takeaway 🧩

Tuya Inc. is a leading player in the global IoT sector with a proven record of paying dividends and building a complex platform ecosystem. However, the company faces immense, interwoven risks related to geopolitical instability, regulatory reliance on its VIE structure in China, and the inherent volatility of the rapidly evolving PaaS/SaaS market.