(Yicai) Aug. 19 -- Meitu’s net profit for the first six months has already surpassed the full year profit for 2023, thanks to strong growth in the artificial intelligence-powered subscription business of the Chinese photo-editing software developer.

Meitu’s net profit surged 30.8 percent in the six months ended June 30 from the year before to CNY400 million (USD55.69 million), according to the financial report released by the Xiamen-based company yesterday. This is already more than the CNY370 million in profit that it raked in in 2023.

Meitu's revenue surged 12.3 percent over the period to CNY1.8 billion (USD250 million). Revenue from its imaging and design products, which are its biggest earner, soared 45.2 percent to CNY1.3 billion (USD181 million), accounting for 74 percent of total revenue. The number of paid subscribers jumped 42 percent to 15.4 million, lifting the penetration rate to 5.5 percent.

Despite the good news, Meitu's share price [HKG:1357] closed down 1.6 percent at HKD10.22 (USD1.31) today. The stock has quintupled in value in the past year, driven by the strong earnings.

Generative AI addresses user pain points that traditional tools cannot solve, which has significantly boosted people’s willingness to subscribe, said Chief Financial Officer Yan Jinliang.

The AI revolution is reshaping the market, said founder Wu Xinhong. Meitu must maintain a startup mindset to stay competitive. Smaller, agile rivals may pose a bigger threat than big companies. So Meitu is aligning with startup practices in terms of strategic focus and organizational agility, while channeling resources into its core businesses.

On the strategic front, Meitu is pushing what it calls "AI-driven productivity and globalization." Monthly active users hit 280 million in the first half, with overseas users jumping 15.3 percent from the year before to 98 million.

The firm's productivity tools are also performing very well. The number of subscribers surged 69 percent year on year to 1.8 million and users of its ‘Kaipai’ app more than quadrupled. Revenue from productivity tools could soon account for more than half of the company’s income, Wu said.

Meitu’s recent CNY1.8 billion (USD250.7 million) tie-up with e-commerce giant Alibaba Group Holding is also attracting a lot of attention. Meitu does not have the resources to invest in foundational AI models, so teaming up with strategic partners is essential, Wu said.

Alibaba’s open-source Tongyi model fits well with Meitu's vertical models and business scenarios, he said.The two companies will link arms in areas such as AI-powered virtual try-ons, e-commerce image tools and cloud services, with Alibaba Cloud providing the computing power.

The window of opportunity for generative AI is short, and Meitu has about two years to make the most of this opportunity, Wu said. By leveraging its 280 million monthly active users, large-scale engineering investments and expertise in visual aesthetics, Wu said he believes the company can stay ahead of the competition.

Editor: Kim Taylor