Why does the world's leading vacuum robot company have much lower profits than Ecovacs?

Revenue hits a record high, but profits drop by over 30%—Stone Technology faces the reality of “increased revenue but not increased profit” for everyone to see.

Recently, Stone Technology announced its 2025 interim financial report. The company achieved a total operating revenue of 18.616 billion yuan for the year, a significant increase of 55.85% year-on-year, setting a new record high. However, net profit attributable to the parent company was only 1.36 billion yuan, down 31.19% year-on-year; non-recurring net profit decreased even more sharply by 32.90%. The weighted average return on net assets also declined by 6.07 percentage points to 10.11%.

The surge in revenue primarily stems from global market expansion. In the first three quarters of 2025, Stone Technology’s smart vacuum cleaner shipments reached 3.788 million units, capturing a 21.7% global market share, maintaining the top position. This was driven by a proactive strategic choice.

Domestically, the company seized the “trade-in” policy window and implemented a product penetration strategy, launching more entry-level and mid-range models. The results were immediate: the sales proportion of mid- and low-end vacuum cleaners jumped from about 35% in 2024 to 55% in 2025. This “price-to-volume” approach directly boosted sales, offsetting the decline in average price, and became the core engine of revenue growth. Meanwhile, the new category of floor washers has gained a leading domestic market share, contributing significant new growth.

Overseas markets played an even more critical role. In the first three quarters of 2025, overseas revenue reached 6.546 billion yuan, a 73.2% increase year-on-year, accounting for over half of total revenue for the first time at 54.3%. The company built a full product matrix across all price segments in key markets like Europe and America, promoted channels both online and offline, and employed localized marketing, rapidly increasing brand awareness. Export sales are expected to grow by about 30% in the fourth quarter, with sales in markets such as Germany, the U.S., Japan, and South Korea already ranking among the industry’s top. Global expansion is the fundamental support for record-breaking revenue.

However, the cost of market share and revenue growth is a significant contraction in profit.

Net profit fell by over 30%, mainly due to the direct impact of “price-to-volume” on profitability. Product structure shifts and price adjustments put enormous pressure on gross margin: from around 50% in 2024 to 43.73% in the first three quarters of 2025, a decline of over 10 percentage points from the 2023 peak. While sales of mid- and low-end products accounted for over half, their gross margins generally fell below 40%, and high-end models showed weak growth, making it difficult to offset profit compression. Intensified industry competition also forced main models to lower prices, with the global average unit price dropping about 8.7% year-on-year, further squeezing profits.

If “price-to-volume” is an active strategic sacrifice, then the surge in period expenses constitutes a second “profit drain.”

Sales expenses surged notably: in the first three quarters of 2025, reaching 3.18 billion yuan, a 103.42% increase year-on-year, far exceeding revenue growth. The sales expense ratio rose to 26.36%, meaning over 26 yuan is spent on marketing for every 100 yuan of revenue. To support market penetration and overseas expansion, the company invested heavily in celebrity endorsements, traffic buying, and channel incentives. This intense marketing drive temporarily boosted market share but also trapped the company in a cycle of “spending on advertising to gain market share, losing profit in the process.” Continuous increases in R&D investment further intensified short-term profit pressures.

Meanwhile, losses from new business segments continued to drain profits, with the laundry business being a typical example. After launching its first molecular sieve washer-dryer in 2023, market response was lukewarm. In 2024, sales of smart appliances including washing machines totaled only 1.07 billion yuan, less than 10% of total revenue. In June 2025, reports of significant layoffs at Nanjing’s washing machine division surfaced; although the company claimed it was normal organizational optimization, it also indicated a contraction of that business. Brokerage forecasts suggest that in 2025, losses in the washing machine segment will be about 500-600 million yuan, floor cleaner losses around 200 million yuan, and lawn mower losses about 100 million yuan, totaling approximately 800-900 million yuan in net profit drag, further intensifying profitability pressures.

Intense industry competition in the red ocean further amplifies this “increased revenue but not increased profit” pattern. In 2025, the global smart vacuum cleaner market grew by 18.7%, but Chinese manufacturers dominated the top five global shipments, including Ecovacs, Roborock, Xiaomi, and Yunji. DJI entered the field, and traditional giants like Midea and Haier leveraged their channel advantages to cut into the market. Product homogenization and fierce price wars have pushed the industry into a stock competition.

Compared to key competitors like Ecovacs, Stone Technology’s profitability performance is markedly different. In the first three quarters of 2025, Ecovacs achieved a 25.93% revenue growth alongside a 130.55% net profit increase, with stable gross margins. This reflects how different strategic choices lead to different financial outcomes in the same market environment. Stone Technology’s strategy of sacrificing profit for market share is now being questioned for its sustainability.

Market focus has shifted to 2026. For Stone Technology, the key challenge in the new year is how to convert scale advantages into profit quality, transitioning from “burning money for market” to “healthy growth.” This requires optimizing product structure, increasing the proportion of mid- and high-end products, and enhancing brand premiums to reverse the declining gross margin trend; also, refining sales expense management to improve marketing efficiency and break the cycle of “increased revenue but not increased profit.” Additionally, new categories like floor washers need to quickly become profitable, and overseas markets must shift from expansion to deepening and stabilizing returns.

However, achieving these goals will not be easy. First, industry competition remains fierce, and price pressures persist; second, the growth inertia driven by excessive marketing needs to be reversed; third, restoring confidence in the capital markets requires solid financial data. The company previously described profit decline as a “short-term strategic sacrifice,” but the market is now scrutinizing the cycle and boundaries of this “sacrifice.”

The capital market’s response is immediate and sharp. After the earnings report was released, Stone Technology’s stock price came under pressure. As of the close on March 9, 2026, its stock price was 131.20 yuan, down 2.55%, with a total market value of about 33.995 billion yuan, hitting a recent low. Compared to its historical peak, the company’s market value has significantly evaporated—this reflects the market’s recalibration of its valuation logic from “high growth” to “profit realization.”