xTool rushes for Hong Kong stock IPO: After a sharp decline in performance growth, how far is laser engraving from "breaking the circle"?

On TikTok or YouTube, you may have come across videos like this: a dazzling beam of light swiftly dances across a wooden board, and within seconds, a complex hollow pattern miraculously appears; or an ordinary white T-shirt instantly gets printed with colorful personalized designs amidst the roar of machines.

These types of videos are racking up countless views on global short video platforms. On the other side of the screen, this massive traffic not only ignites the "sharing desire" and "creative desire" of countless ordinary people but also catapults a hard tech company from China—xTool Innovate Limited (hereinafter referred to as "xTool").

Recently, xTool submitted its prospectus to the Hong Kong Stock Exchange, with revenue exceeding 2 billion yuan in 2024.

The rise of xTool is highly characteristic of the times; it is not only a hardware manufacturer but also a "water seller" in the creator economy of the short video era.

By "downgrading" industrial-grade laser engraving technology to desktop level, xTool successfully leveraged the shift from B-end to C-end.

This logic of "content-driven hardware sales" has led many investors to view it as the "Ying Stone of the laser industry." However, as the tide of traffic begins to settle, whether xTool can truly replicate the latter's cross-cycle growth is evidently fraught with uncertainty.

In 2024, xTool achieved an "acceleration" with a year-on-year revenue growth rate of nearly 70%, but in the first three quarters of 2025, it suddenly slowed to 18.57%.

This abrupt deceleration reveals concerns that laser engraving machines have yet to break into the ordinary user market.

When the core customer base remains confined to professional groups like geek enthusiasts and cannot truly reach the general public like panoramic cameras, xTool may still be separated from the narrative of becoming the "next Ying Stone" by an unbridged consumption gap.

The "Water Seller" of the Short Video Era

xTool focuses on laser engraving and cutting and has established a significant position in the industry.

In 2024, xTool achieved a GMV of $365 million, capturing 35.1% market share, ranking first among laser personal creative tool brands, even surpassing the combined total of brands ranked second to fifth.

The rise of xTool is closely tied to the short video era.

Traditional laser engraving processes are often limited by their dull industrial nature, while xTool has transformed the processing into visually appealing content through technological improvements.

More importantly, xTool has significantly lowered the operational threshold through software optimization, allowing users to complete creations simply by importing designs.

This product characteristic endows the equipment with dual attributes as both a production tool and a content creation medium.

Users gain social media attention by uploading their production processes while monetizing the finished products generated by the equipment, creating a closed loop that greatly enhances users' willingness to purchase.

In addition to lowering the threshold, xTool's scarcity mainly lies in its brand influence.

For a long time, "Made in China" meant a silent supply chain; even pioneers with a brand awareness awakening often chose a seemingly shortcut path, residing on giant e-commerce platforms like Amazon, becoming invisible "channel brands." Even Anker Innovations, a benchmark company for going overseas, has derived over 50% of its revenue from Amazon in the past three years.

Anker Innovations founder Yang Meng has publicly admitted: "To be honest, if we hadn't started selling on Amazon over a decade ago and grown alongside the Amazon team, I don't think we would have the opportunity to sit here today and talk about building a global brand."

However, unlike its predecessors, xTool's overseas expansion does not rely on OEM partnerships or channels from giants like Amazon, but rather generates revenue through its self-built official mall.

In the first three quarters of 2025, the official mall contributed 1.086 billion yuan in revenue to xTool, accounting for over 60%.

This also provides xTool with a higher profit margin.

In the first three quarters of 2025, xTool's gross margin was 56%, comparable to top global tech hardware manufacturers like Apple.

A major highlight for xTool's future performance growth lies in the expectation that as installation volumes increase, consumables as accessories will bring more sustainable revenue.

As of the end of September 2025, xTool's connected devices exceeded 405,000 units.

With the continuous expansion of installations, the sales of dedicated consumables and accessories will create a strong complementary effect with the devices. This high-frequency, high-stickiness consumable revenue is expected to bring more certainty and sustainability to xTool's performance growth.

This is also the beautiful blueprint that xTool has drawn for the capital market in its prospectus.

"In addition to initial purchases, we also provide a rich array of materials and accessories—from laser-compatible materials to exclusive machine expansion components. These products are characterized by high frequency and high profit, and they seamlessly collaborate with our ecosystem to maintain users' creative enthusiasm and extend the lifecycle of each machine," xTool pointed out.

Although the "device + consumables" business logic can theoretically work, there are still many challenges in practical implementation.

On one hand, unlike high-frequency essential devices like smartphones or office printers, laser engraving machines are considered low-frequency creative tools for the vast majority of individual users.

If users cannot continuously generate creative inspiration, the devices are likely to fall into idle status. Once the operating rate declines, the so-called "consumable repurchase" becomes irrelevant.

On the other hand, materials like wood, acrylic, and cups are essentially standardized generic products that are easy to replicate.

"In the price-sensitive consumer market, users are very likely to bypass the official mall for cost considerations and choose cheaper third-party generic consumables available in the market," pointed out a 3D printing industry insider in Beijing.

This means that xTool not only faces competition from similar device manufacturers but also has to deal with price competition brought about by an open supply chain.

Missing the "Mass" Gene?

When analyzing xTool's business model, it is hard not to think of another consumer electronics company from Shenzhen, YingShi, which also rose through a "content ecosystem."

Both were born in the fertile supply chain of the Guangdong-Hong Kong-Macao Greater Bay Area and enjoyed the era's dividends from the explosion of short videos.

Although the capital market is eager to view xTool as the "next YingShi," expecting it to replicate the latter's growth curve, a calm examination reveals that there are essential differences in the industry ceilings of the two Although Insta360 started with panoramic action cameras, through continuous product iteration, its business reach has successfully extended to diverse forms such as thumb cameras. More importantly, its audience has expanded from professional creators to mass consumers.

In contrast, xTool's core customer base remains confined to relatively professional circles such as DIY enthusiasts and craftsmen, and has not yet achieved effective penetration into the general public.

This shift from "niche" to "mass" influence is directly reflected in the differences in performance growth between Insta360 and xTool.

From 2021 to 2024, Insta360's revenue maintained a year-on-year growth rate of over 50% for four consecutive years, while xTool's high growth momentum has not been sustained.

In 2024, although xTool's revenue once reached 2.476 billion yuan, achieving an explosive year-on-year growth of 69.97%, the year-on-year growth rate for the first three quarters of 2025 has fallen back to 18.57%.

Moreover, in the first three quarters of 2025, xTool's net profit year-on-year growth rate far exceeded that of its revenue, which is not a result of improved gross margins from the products themselves, but rather driven by other net income items including interest income and foreign exchange gains.

During the same period, xTool's other net income reached 42 million yuan, a year-on-year increase of 36.4%, accounting for more than 50% of the net profit for that period.

In the realm of consumer electronics, transitioning from "niche hardcore" to "mass essential" is key to determining a company's valuation ceiling.

Insta360 has secured its ticket to the mass market by lowering barriers and broadening scenarios. If xTool relies solely on tapping into the existing dividends of the vertical market, it may find it difficult to support the capital market's grand narrative of being the "next Insta360."