xTool rushes for a Hong Kong IPO: After a sharp decline in performance growth, how far is laser engraving from "breaking the circle"?
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On TikTok or YouTube, you may have come across videos like these: a dazzling beam of light zips across a wooden board, and within seconds, intricate hollowed-out patterns appear as if by magic; or an ordinary white T-shirt is instantly printed with a vibrant personalized design amidst the rumbling of machines.
These types of videos are racking up millions of views on short video platforms worldwide. On the other side of the screen, this massive traffic is not only stimulating the “sharing” and “creation” urges of countless ordinary people, but has also catapulted a Chinese hard tech company into fame—xTool Innovate Limited (“xTool”).
Recently, xTool submitted a prospectus to the Hong Kong Stock Exchange, with its 2024 revenue having surpassed 2 billion RMB.
xTool’s rise is deeply characteristic of this era; it’s not only a hardware manufacturer, but also a purveyor of the “creator economy” in the age of short video.
By “downgrading” industrial-grade laser engraving technology to the desktop level, xTool has successfully leveraged the shift from B2B to mainstream consumer adoption.
This “content-driven hardware sales” logic has led many investors to see it as the “DJI of the laser world.” However, as the tidal wave of traffic begins to calm, whether xTool can truly replicate DJI’s cross-cycle growth remains highly uncertain.
In 2024, xTool achieved revenue growth of nearly 70% year-on-year “acceleration,” but in the first three quarters of 2025, this slowed abruptly to 18.57%.
This sudden deceleration reveals an underlying concern that laser engravers have not yet truly broken out to reach ordinary users.
When the core customer base remains largely limited to geek enthusiasts and professional groups, unable to reach the general public like panoramic cameras, there may still be an unbridged consumer gap between xTool and the narrative of becoming the “next DJI.”
“Water Seller” in the Short Video Era
xTool focuses on laser engraving and cutting, and has established a notable position in the industry.
In 2024, xTool captured a 35.1% market share with $365 million in GMV, ranking first among personal creative laser tool brands—surpassing the combined total of the second to fifth brands.
xTool’s rise is inseparable from the short video era.
Traditional laser engraving processes are often bogged down by tedious industrial attributes, but through technical innovation, xTool has transformed the manufacturing process into visually engaging content.
More importantly, xTool’s software optimizations have greatly lowered the operational barrier: users simply import a pattern to begin creating.
This product feature grants the device both the role of production tool and content creation platform.
Users upload the making process to gain social media attention, while commercially monetizing the finished products from the device—a closed loop that significantly boosts purchase intent.
Beyond lowering the barrier, xTool’s key rarity lies in brand influence.
For a long time, “Made in China” meant a silent supply chain; even trailblazers with emerging brand awareness often took what seemed like a shortcut: relying on Amazon and other e-commerce giants, becoming hidden “channel brands.”
Even Anker, the flagship overseas brand, received over 50% of its revenue from Amazon in the past three years.
In public, Anker’s founder Yang Meng admits: “To be honest, if we hadn't started our store on Amazon years ago and grown together with their team, we wouldn’t be sitting here today talking about building a global brand.”
However, unlike its predecessors, xTool’s overseas strategy doesn’t depend on relabeling or on giant platforms like Amazon; it relies on revenue from its self-built official storefront.
In the first three quarters of 2025, the official store contributed 1.086 billion RMB of xTool’s income, accounting for over 60% of total revenue.
This also gives xTool a high profit margin.
In the first three quarters of 2025, xTool’s gross margin was 56%, matching global top hardware tech companies like Apple.
Looking forward, one key growth area for xTool is that as the installed base grows, sales of consumables and accessories could provide more sustained income.
As of the end of September 2025, xTool had over 405,000 connected devices.
With the installed base expanding, sales of proprietary consumables and accessories will strongly complement device sales. This high-frequency, high-retention consumable income may offer xTool more reliable and sustained growth.
This is also the rosy blueprint xTool sketches for the capital markets in its prospectus.
“Beyond the initial purchase, we offer a wide range of materials and accessories—from laser-compatible materials to machine-specific expansion modules. These products are high-frequency, high-margin, and integrate seamlessly with our ecosystem, sustaining user creativity and extending each machine’s lifecycle,” xTool states.
Though the “devices + consumables” business logic theoretically works, plenty of challenges remain in practice.
On one hand, unlike smartphones or office printers which are high-frequency, essential devices, laser engravers are low-frequency creative tools for most individual users.
If users can’t continually generate creative inspiration, the device is likely to sit idle. Once the activation rate drops, the so-called “repeat consumable purchase” is moot.
On the other hand, consumables like wood boards, acrylics, cups, etc., are highly standardized and easily copied.
“In the price-sensitive consumer market, users may, for cost reasons, bypass the official store and choose cheaper third-party generic consumables,” said a Beijing-based 3D printing industry expert.
This means xTool must compete not only with similar device makers, but also face the price wars from an open supply chain.
Missing “Mass Market” Gene?
When analyzing xTool’s business model, it’s hard not to think of another Shenzhen company—DJI—that also rose on the back of a “content ecosystem.”
Both were born in the supply chain hub of the Greater Bay Area, and have benefited from the short video boom.
Although capital markets are eager to see xTool as “the next DJI” and hope it will copy DJI’s growth curve, a calm look reveals that industry ceilings for each are fundamentally different.
While DJI built its brand on panoramic action cameras, through continual product iterations it successfully extended into thumb cameras and other formats. More crucially, it expanded its target audience from professional creators to mass consumers.
By contrast, xTool’s core customer base is still primarily DIY enthusiasts and artisans—a relatively niche sector—and hasn’t truly penetrated the general public.
This “niche-to-mass” breakout influence can be clearly seen in the difference in revenue growth rates between DJI and xTool.
From 2021 to 2024, DJI’s revenue grew more than 50% year-on-year for four consecutive years, but xTool hasn’t maintained such high growth.
In 2024, xTool revenue reached 2.476 billion RMB, up 69.97% year-on-year, but by the first three quarters of 2025, growth had reverted to 18.57%.
Moreover, in the first three quarters of 2025, xTool’s net profit growth far exceeded revenue growth, not due to product margin improvements, but because of other income such as interest and exchange gains.
During the same period, xTool’s other income reached 42 million RMB, up 36.4% year-on-year, accounting for more than half of net profit.
In consumer electronics, making the leap from “niche hardcore” to “mass market essential” is key to a company’s valuation ceiling.
DJI lowered user barriers and broadened use cases to win mass-market entry. If xTool only keeps mining vertical market dividends, it may struggle to support the capital market’s grand narrative of being “the next DJI.”
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