Stone (Roborock) Revenue Surges But Profit Plummets: Institutions Cut Earnings Forecasts, Stock Price Falls 40% in Less Than a Year

Port Business Observer Shi Zifu Wang Lu

As a leading company in the household cleaning robot industry, Stone Technology (688169.SH) sells products worldwide in 170 countries and regions. However, the 2025 performance quick report shows a “big rise and big fall,” reflecting mixed feelings.

1

Revenue Surges, Net Profit Drops Significantly

Recently, Stone Technology disclosed key financial data and indicators for 2025: revenue of 18.616 billion yuan, up 55.85% year-over-year; net profit attributable to parent company owners of 1.36 billion yuan, down 31.19%; net profit excluding non-recurring gains and losses of 1.087 billion yuan, down 32.90%; basic earnings per share of 5.28 yuan, down 31.34%; weighted average return on net assets of 10.11%, a decrease of 6.07 percentage points from the previous year.

The sharp contrast between high revenue growth and steep profit decline is evident. Stone Technology states that the main reason for the significant revenue increase is that, during the reporting period, domestic demand for smart vacuum robots and floor washers was strong, driven by national “old-for-new” subsidy policies. Meanwhile, the company continued to innovate with technology and products to meet consumer needs, further improved its product and price matrices, seized market opportunities, and maintained rapid business growth.

In overseas markets, the company continued to build its brand, optimized product coverage across all price segments, expanded into new markets through refined channel layouts and active marketing strategies, reached new users, and effectively enhanced brand and product influence, resulting in stable overseas revenue growth. While maintaining rapid growth, the company’s global market leadership was further strengthened. According to IDC’s latest report, the company’s smart vacuum robot sales and market share remain the world’s top.

The profit decline mainly stems from the company’s market-focused layout and rapid business development. Specifically, the smart vacuum robot product matrix was further expanded across all price segments to increase consumer market coverage; floor washer business focused on new technologies and products to achieve quick market breakthroughs. The full-price range layout and rapid growth of new categories like floor washers initially impacted overall gross margin, but the strategic implementation proved effective, leading to fast business growth and increased global influence. Additionally, the company adopted more aggressive marketing strategies, which increased sales expenses, but the results in brand building and channel expansion were significant, further enhancing sales capacity and supporting long-term sustainable development.

On investor interaction platforms, Stone Technology stated that short-term profit fluctuations are typical during the phase of global strategic investment and product restructuring, representing normal adjustments in active strategic deployment. The company plans to proactively improve through key measures: first, upgrading product structure to increase revenue share of high-margin products; second, optimizing global supply chain and channel structure to reduce costs and middlemen; third, deepening refined operations through technology-driven cost reduction and expense control to strengthen profitability and ensure long-term, sustainable growth, creating long-term value for investors.

Shen Meng, Executive Director of Sangson Capital, pointed out that financial data should focus on gross margin changes. High gross margin indicates cost advantages and stronger product competitiveness. An increase in gross margin suggests ongoing optimization of competitive advantages. Additionally, examining the structure of fixed costs is important: if R&D expenses are high and gross margin improves, it indicates ongoing competitive strength; if management expenses are high and gross margin deteriorates, it suggests weaker market competitiveness and limited growth potential.

How did Stone Technology’s gross margin perform in 2025? We need to wait for the company’s further annual report disclosures. From 2022 to 2024, the gross margins were 49.26%, 53.93%, and 50.14%, respectively. In the first three quarters of 2025, gross margin dropped to 43.73%, a year-over-year decrease of 10 percentage points.

Wenxi Bo, Vice Chairman of the China Enterprise Capital Alliance, believes that from a financial perspective, rising revenue growth coupled with accelerating profit decline indicates that marginal costs are increasing faster than marginal revenue. This typically occurs during market expansion phases: channel development, brand marketing, and localization require upfront investments; product iteration phases involve increased R&D and price adjustments during product upgrades; supply chain restructuring involves fixed asset investments and rising operating costs due to global capacity deployment.

“Stone Technology, as a leader in vacuum robots, saw its net profit margin sharply decline from about 20% in 2023 to a lower level in 2025, consistent with the expansion pattern of tech companies prioritizing scale over profit initially.”

Wenxi Bo notes that Stone Technology is currently facing three overlapping pressures: 1. The costs of its globalization strategy are front-loaded, with overseas market share continuing to rise (expected to exceed 50%), but investments in overseas channels (especially offline channels in Europe and America), local warehousing, logistics, and branding have delayed returns. In 2025, accelerated overseas expansion led to significant increases in sales and management expenses, directly eroding profits. 2. Price wars and product restructuring: competition in the vacuum robot industry is fierce. To gain market share, Stone adopted aggressive pricing on mid- and low-end products; meanwhile, high-end new products (like G and S series) are still ramping up, with scale effects not yet fully realized, putting pressure on overall gross margins. The decline in gross margin in 2025 is a core reason for profit reduction. 3. Strategic increase in R&D investment: as a technology-driven company, Stone continues to increase R&D in AI algorithms, multi-in-one stations, robotic arms, and other frontier fields. R&D expenses are expected to remain high at 8-10% of revenue in 2024-2025. These investments are difficult to convert into short-term profits but serve as long-term competitive barriers.

Wenxi Bo emphasizes that profit recovery for Stone Technology will not happen overnight, expecting a 12-18 month adjustment period. Key indicators investors should watch include: gross margin inflection point—when it stops falling and begins to recover, signaling profit recovery; quality of overseas revenue—whether growth in Europe and America is accompanied by expense ratio declines; operating cash flow—profit declines but cash flow remains healthy, indicating sustainable investments; if cash flow worsens simultaneously, caution is needed. Risks include: if industry price wars intensify or geopolitical risks (such as tariffs) increase overseas, the company could fall into a “bigger scale, more losses” trap. Therefore, 2026 will be a critical period for Stone Technology’s strategic focus and operational efficiency, requiring rapid proof of profitability while maintaining growth momentum. Overall, the “revenue growth but profit decline” is a strategic pain point, not a passive dilemma. Whether profits turn positive in 2026 depends on the speed of high-end transformation and global operational efficiency improvements.

2

Institutional Downgrades Earnings Forecast, Stock Price Falls 40% in Less Than a Year

Looking at annual reports from previous years, from 2017 to 2024, net profit attributable to parent company owners was negative only in 2022 and 2024.

Compared to 2024, 2025’s revenue growth increased by nearly 18 percentage points, but net profit decline widened by over 27 percentage points. In other words, for two consecutive years, although revenue kept rising, net profit continued to decline sharply.

Huachuang Securities believes that in Q4 2025, the company’s net profit attributable to parent was 320 million yuan, down 36.1% year-over-year, indicating weak performance. On one hand, after the reduction of national subsidies, the company’s self-subsidy policies weighed on profitability, though platform subsidies during promotional periods also shared some costs, possibly improving domestic net profit margins sequentially. On the other hand, investments in lawnmower business and disruptions from U.S. tariffs affected profitability, along with costs related to shrinking washing machine business, further weakening overall profitability.

However, Huachuang Securities notes that short-term disruptions are gradually dissipating, and the company’s operational resilience should be watched. Despite short-term pressures, some negative factors are easing, and in a low-base environment, the company is expected to see higher growth. First, the washing machine business has shrunk and continued to reduce losses, likely not to significantly drag on performance in 2026. Second, with the continuation of national subsidy policies, the removal of self-subsidy is expected to improve domestic profitability. Third, the lawnmower business is gradually contributing incremental revenue, and the launch of the G-Rover, the world’s first wheel-legged robotic vacuum at CES, could break traditional cleaning scene boundaries, offering high operational flexibility.

Huachuang Securities’ investment advice is that, as an industry leader, the company is expected to demonstrate operational resilience. However, considering short-term factors like exchange rate fluctuations and weakening national subsidies, EPS forecasts for 2025/2026/2027 are adjusted to 5.25/8.44/10.48 yuan (previously 6.70/9.11/11.72 yuan), corresponding to P/E ratios of 26/16/13. Using DCF valuation, the target price is adjusted to 200 yuan, corresponding to a 26-year PE of 24, maintaining a “strong buy” rating.

Meanwhile, CICC also states that the net profit margin in Q4 2025 was below market expectations, with a quick report estimating a 4.9% net margin, a quarterly low. The main reasons are: 1. domestic sales subsidies decreased, but promotional investments remained high; 2. initial R&D and channel investments for lawnmower robots caused losses concentrated in Q4; 3. washing machine business shrank significantly but still involved inventory clearance and after-sales costs. Looking ahead to 2026, these negative factors are expected to improve: 1. domestic cleaning appliance sales will return to pre-subsidy levels, with self-subsidy phased out, likely reducing losses by 2-3 billion yuan; 2. shrinking washing machine R&D and marketing investments should cut losses by 2-3 billion yuan; 3. new lawnmower robot models launched at CES 2026 are expected to contribute about 1 billion yuan in revenue and reduce losses accordingly.

CICC’s forecast for 2025/2026 earnings is lowered by 14%/8% to 13.60/21.35 billion yuan, with a 2027 forecast of 28.22 billion yuan. The current stock price corresponds to 17.4x/13.1x P/E for 2026/2027. Maintaining an “outperform” rating, the target price is cut by 15% to 189.49 yuan, corresponding to 23.0/17.4x P/E for 2026/2027, with 32% upside potential.

Beyond the disappointing performance, Stone Technology’s capital market performance has also been poor.

From May 27, 2025, to now (March 11, 2026), the stock price has fallen over 40%. (Port Finance Production)