xTool, Is the Next "Insta360" Heading for an IPO?

Author | Fan Liang

Editor | Zhang Fan

On January 1st, xTool officially submitted its prospectus to the Hong Kong Stock Exchange.

It is a well - known Chinese brand among overseas DIY enthusiasts. The three core labels are: The leader in consumer - grade laser engravers, with annual revenue exceeding 2 billion yuan, and 80% of revenue coming from Europe and the United States.

In terms of its growth process, xTool is quite similar to Insta360. Both have achieved counter - attacks from the role of "chasers" overseas to become industry leaders. After completing its Series D financing in November 2025, xTool's valuation exceeded $1.1 billion.

So, if it successfully lists on the Hong Kong Stock Exchange, can xTool replicate the glory of Insta360?

Productivity or an "expensive toy"?

xTool was formerly known as Makeblock, whose original main business was STEAM education robots and operated the Makeblock brand. Makeblock launched the Laserbox and the desktop 3D printer "mCreate" in 2018 and 2019 respectively.

Affected by the pandemic and the "double reduction" policy, Makeblock's education business faced difficulties. In 2020, the company adjusted its business direction, officially established the xTool brand, and launched its first semiconductor laser engraver and cutter in 2021.

Currently, xTool's products include three major categories: laser engravers and cutters, laser welding machines and CNC cutters, and material printers. The laser engraver remains the core product.

Like Insta360, xTool is also a core beneficiary of the short - video wave. Its laser engraver products are naturally in line with the attributes of short - video content and easy to spread due to the strong visual appeal and stress - relieving feeling during the processing (such as laser ablation of wood, cutting of acrylic, and metal marking). At the same time, under the recommendation mechanism of short - video platforms, xTool can also accurately target DIY enthusiasts, providing key support for the company's early market breakthrough and sales explosion.

In the first three quarters of 2023, 2024, and 2025, xTool's operating revenues were 1.457 billion, 2.476 billion, and 1.777 billion yuan respectively, with year - on - year growth rates of approximately 70% and 19% in the first three quarters of 2024 and 2025 respectively. In terms of sales volume, the cumulative sales volume of xTool's products during the corresponding periods were 106,700, 138,300, and 71,900 units respectively, with corresponding average selling prices of 11,900, 15,900, and 21,100 yuan.

Figure: Introduction diagram of xTool products on the official website. Source: xTool official website, compiled by 36Kr

In terms of market positioning, although xTool's products have an industrial style and its high - power engravers/cutters equipped with carbon dioxide lasers can be used for industrial and commercial purposes, the usage frequency, gross profit margin and other attributes of xTool's products still point to consumer goods attributes. At the same time, in the prospectus, xTool also positions itself as a high - end technology consumer brand, and the disclosed customer types are individual consumers, small and medium - sized business owners, and brand retail stores.

xTool's user survey data (200 respondents) shows that each active device has an average of 48 processing times per month and an average processing duration of 6 hours per month. 40% of users use the device once a day, and 80% of users use it at least once a month. This "low capacity utilization" usage frequency and duration also indicate that its products are not mainly used for industrial and commercial purposes.

The gross profit margin also does not conform to the characteristics of the TO B industry. According to the prospectus, xTool's gross profit margin reached 56% in the first three quarters of 2025 and has remained in this range for many years, which is closer to the average level of consumer goods rather than industrial equipment.

Therefore, currently xTool's products are more inclined to a To C high - end technology hardware positioning.

This is also confirmed by xTool's sales regions and channels. The prospectus shows that in recent years, the company's products have been mainly sold to the United States (accounting for 55%), followed by Europe (accounting for 30%), and finally to the Chinese mainland, Canada, and Australia. Among them, the proportion of revenue from sales to Europe and the United States has been in the range of 83% - 85% for many years.

The reason is not difficult to understand. The average selling price of the company's products is relatively high (20,000 yuan per unit). As an optional consumer good, it necessarily requires the support of high - income groups. In addition, people in Europe and the United States generally have a DIY culture, so they are also willing to pay a premium for the products. From the perspective of sales channels, more than 60% of xTool's revenue comes from the official online mall, and more than 80% of the revenue comes from online channels, which also conforms to the characteristics of C - end sales.

Figure: Distribution of xTool's sales channels. Source: Company announcement, compiled by 36Kr

Judging from the company's proposed use of raised funds, according to the order in the prospectus, they are to enhance R & D capabilities; expand the influence of the overseas community and improve brand awareness; improve domestic production capacity and optimize the supply chain; build local teams overseas to improve operation and after - sales capabilities. Two of them are related to the overseas market, which means that in the future, xTool's development focus will still be on the overseas market.

Pioneer or chaser?

xTool is not the first player in the consumer - grade laser engraver industry. At that time, there was already Glowforge, a pioneer in consumer - grade laser engravers founded in 2014, in the US market.

However, according to CIC, in 2024, xTool occupied an absolute leading share of 42.8% in the field of laser engravers and cutters. The top five participants in the industry are all Chinese companies, and Glowforge is no longer in sight.

So how did Chinese companies like xTool achieve a counter - attack?

The core is the price advantage brought by supply chain capabilities.

Comparing the average selling prices of xTool and Glowforge, the price range of Glowforge's flagship CO2 laser engraver is $4,499 - $7,999 per unit, while that of xTool is $3,319 - $6,499 per unit. xTool's selling price is about 20% lower than that of Glowforge. In addition, some advanced software of Glowforge requires a subscription, while xTool offers it for free.

Even so, xTool's gross profit margin can still reach about 55%. An important factor that cannot be ignored is the cost advantage brought by the domestic supply chain capabilities.

Consumer - grade laser engraver companies like xTool are system integrators in the industrial chain, and their core ability is software - hardware collaboration rather than simple hardware manufacturing.

In terms of production, xTool mainly adopts self - production and supplemented by outsourced processing. It has factories in China and Thailand respectively. The core hardware components of laser engravers, such as lasers and sensors, are all purchased externally. In the third quarter of 2025, the company's property, plant, and equipment totaled less than 100 million yuan, but it generated revenues exceeding 2 billion yuan, which does not conform to the characteristics of heavy - asset manufacturing.

Therefore, the cost of raw material components such as lasers and sensors becomes the core factor affecting product cost and pricing.

From the composition of xTool's cost of sales (operating cost), the material cost accounts for less than 70%, while other expenses mainly consisting of freight account for more than 30%. If we compare the material cost with the operating revenue, the material cost of xTool's products only accounts for about 30% of the operating revenue.

Figure: Composition of xTool's operating cost. Source: Company announcement, compiled by 36Kr

The low material cost gives xTool flexible pricing space. Even considering the high logistics costs brought by domestic production and overseas sales, xTool can still make a profit.

Taking the financial data of the first three quarters of 2025 as an example, xTool's gross profit margin is 56%, the R & D expense ratio is 17.1%, and the selling expense ratio is 22.6%. Despite the high R & D and selling expenses, xTool can still achieve an adjusted net profit margin of 9.7%, corresponding to an adjusted net profit of 172 million yuan.

Figure: xTool's profit margin situation. Source: Company announcement, compiled by 36Kr

Software experience is another major advantage.

On the R & D side, xTool's high - intensity R & D is mainly focused on high - precision motion control, optical design, artificial intelligence and other directions. Currently, it focuses on the development of various software algorithms, such as vision algorithms, intelligent nesting algorithms, and motor drives. In the composition of the company's R & D expenses, labor costs account for more than 80%. This cost structure of "investing in people" also reflects the company's R & D ability mainly in software algorithms.

From the perspective of specific capital investment, in the first three quarters of 2023, 2024, and 2025, xTool's R & D expenses were 157 million, 359 million, and 309 million yuan respectively, indicating that the company attaches great importance to R & D. Therefore, the high - quality product experience brought by high R & D is another major advantage of xTool besides price.

For example, the company has developed the creative intelligent agent AIMake. Users can generate product design documents through the intelligent agent, further adjust the design documents on the software platform xTool Studio, and control the machine production through the software platform, which greatly reduces the operation difficulty.

In addition, xTool has also built a user community ecosystem Atommm. Senior users can share design tutorials and exchange design experiences in the community. At the same time, there is an "Academy" module in Atommm where users can learn operation skills. According to the prospectus, as of September 30, 2025, Atommm already had 212,000 registered users, shared 40,000 works, and had 640,000 visits in that month.

Overall, the price advantage brought by supply chain capabilities and the experience advantage built by high R & D are the core reasons for the company to achieve an absolute leading share in the market.

In 2025, couldn't sell the products?

A key performance data in the prospectus is that the company's revenue growth rate in the first three quarters of 2025 was 18.57%, a significant decline compared with the year - on - year growth rate of 70% in 2024.

The revenue growth also shows the characteristic of "rising price and falling volume". The company's sales volume in the first three quarters of 2025 was 71,900 units, a decrease compared with 85,900 units in the first three quarters of 2024. At the same time, the average selling price increased from 15,600 yuan to 21,000 yuan. That is to say, the sales volume of the company's high - end laser engravers is increasing, while the sales volume of entry - level products may be declining.

Meanwhile, the company's inventory increased sharply from 433 million yuan at the end of 2024 to 857 million yuan, most of which are finished products. xTool pointed out in the prospectus that the significant increase in inventory is mainly due to strategic reserves for the peak season in the fourth quarter of 2025. As of November 30, 2025, 315 million yuan of the inventory has been cleared.

Based on the proportion of material cost to operating revenue being 30%, this 315 million yuan of inventory can generate approximately 1.05 billion yuan of operating revenue. It is estimated that the company's total operating revenue from January to November 2025 was 2.827 billion yuan.

Since November is also the peak season for overseas e - commerce, it is speculated that the sales volume in that month was the highest. Assuming that the upper limit of xTool's operating revenue in December is 500 million yuan, the average of October and November, and the lower limit is about 200 million yuan, the average of January to September, then the company's annual revenue can reach approximately 3 billion - 3.3 billion yuan. This revenue level represents a year - on - year increase of about 21% - 34% compared with 2024, still a gap compared with the year - on - year growth rate in 2024.

On the other hand, from the perspective of selling expenses, xTool allocates half of its funds to marketing and advertising. Roughly calculated, in the first three quarters of 2023, 2024, and 2025, the average marketing and advertising expenses per unit of the company's products were approximately 2,000 yuan, 2,200 yuan, and 3,000 yuan respectively. Laser engravers have a high unit price and low sales volume, and still belong to a niche market. Therefore, as a customer acquisition cost, the marketing and advertising expenses per unit are not high, but the upward trend of customer acquisition cost needs attention.

A possible reason is that the previous trade environment disrupted the company's sales rhythm.

xTool's employees and main production bases are all located in China. The trade environment may affect the company's shipping rhythm, especially the sales of low - priced products. Data shows that the company's sales in the US region only increased by about 10% in the first three quarters of 2025.

If the reason for the company's revenue decline in 2025