xTool's Sprint to Hong Kong IPO: After a Sharp Decline in Performance Growth, How Far Is Laser Engraving from "Breaking the Circle"?

On TikTok or YouTube, you may have come across videos like these: a dazzling beam of light rapidly moving across a wooden board, and within seconds, a complex hollowed-out pattern miraculously appears; or a plain white T-shirt instantly printed with colorful personalized designs amid the roar of machinery.

These types of videos are garnering countless views on short video platforms worldwide. Meanwhile, on the other side of the screen, this huge flow of traffic not only stimulates the “sharing desire” and “creation desire” of countless ordinary people but also has propelled a hardware technology company from China—xTool Innovate Limited (hereinafter referred to as “xTool”).

Recently, xTool submitted its IPO prospectus to the Hong Kong Stock Exchange, with revenue surpassing 2 billion yuan in 2024.

xTool’s rise is highly characteristic of the era; it is not only a hardware manufacturer but also a “salesperson” of the creator economy in the short video age.

By “dimensionality reduction” of industrial-grade laser engraving technology to desktop level, xTool successfully leverages the shift from B-end to C-end adoption.

This “content-driven hardware sales” logic has led many investors to regard it as “the影石 of the laser industry.” However, as the flow of traffic begins to stabilize, whether xTool can truly replicate the cross-cycle growth of the latter remains highly uncertain.

In 2024, xTool once achieved a rapid growth with nearly 70% year-over-year revenue increase, but this suddenly slowed to 18.57% in the first three quarters of 2025.

This abrupt slowdown reveals concerns that laser engraving machines have yet to break into the mainstream consumer market.

When the core customer base remains confined to professional groups like tech enthusiasts, and cannot truly reach the general public like panoramic cameras, xTool may still be separated from the narrative of “the next 影石,” possibly due to an unbridged consumer gap.

The “salesperson” in the short video era

xTool focuses on laser engraving and cutting, and has established a significant position in the industry.

In 2024, xTool achieved a GMV of $365 million, capturing 35.1% of the market share, ranking first among personal creative laser tools brands, even surpassing the combined total of brands ranked 2nd to 5th.

xTool’s rise is closely linked to the short video era.

Traditional laser engraving processes are often limited by their dull industrial nature, but xTool has transformed the process into visually appealing content through technological improvements.

More importantly, xTool significantly lowers operational barriers through software optimization, allowing users to import designs and complete creations easily.

This product feature endows the device with a dual role: both as a production tool and as a content creation platform.

Users can gain social media attention by uploading their creation process, while monetizing the finished products, creating a closed loop that greatly enhances their purchase motivation.

In addition to lowering the entry barrier, xTool’s scarcity mainly lies in brand influence.

For a long time, “Made in China” meant a silent supply chain; even pioneers with brand awareness often chose a seemingly easier path—being an “invisible channel brand” on e-commerce giants like Amazon.

Even the flagship overseas company Anker Innovation has over 50% of its revenue from Amazon in the past three years.

Anker founder Yang Meng publicly admitted: “Honestly, if it weren’t for starting to sell on Amazon over a decade ago and growing together with Amazon’s team, I don’t think we’d be here today talking about building a global brand.”

But unlike predecessors, xTool’s overseas expansion does not rely on OEM or Amazon channels, but on its self-built official online store.

In the first three quarters of 2025, the official store contributed over 1.086 billion yuan, accounting for more than 60% of total revenue.

This also provides xTool with a relatively high profit margin.

In the first three quarters of 2025, xTool’s gross profit margin was 56%, comparable to top global tech hardware companies like Apple.

A major future growth point for xTool lies in the increasing installed base, as consumables used as accessories are expected to generate more sustained revenue.

As of the end of September 2025, xTool’s connected devices exceeded 405,000 units.

With the continuous expansion of the installed base, sales of dedicated consumables and accessories will form a strong complementary effect with the devices. This high-frequency, high-stickiness consumables revenue is expected to bring more predictable and sustained growth for xTool.

This is also the optimistic outlook that xTool presented to the capital market in its IPO prospectus.

“Beyond the initial purchase, we also offer a wide range of materials and accessories—from laser-compatible materials to expansion components for specific machines. These products feature high frequency and high profit margins, seamlessly integrating with our ecosystem to maintain user enthusiasm for creation and extend each machine’s lifecycle,” xTool stated.

Although the “device + consumables” business model is theoretically feasible, there are still many challenges in practical implementation.

On one hand, unlike high-frequency essential devices like smartphones or office printers, laser engraving machines are low-frequency creative tools for most individual users.

If users cannot continuously generate inspiration, the device is prone to idleness. Once the usage rate drops, the so-called “re-purchase of consumables” becomes impossible.

On the other hand, consumables like wood boards, acrylic, and water cups are essentially standardized, general-purpose products that are easily copied.

“In the price-sensitive consumer market, users are very likely to bypass the official store and choose cheaper third-party universal consumables available in the market,” pointed out a 3D printing industry insider in Beijing.

This means that xTool not only faces competition from similar device manufacturers but also must contend with price wars brought about by an open supply chain.

The missing “mass-market” gene?

When analyzing xTool’s business model, it’s hard not to think of another Shenzhen-based consumer electronics company that also rose through a “content ecosystem”:影石.

Both originated in the supply chain fertile ground of the Guangdong-Hong Kong-Macao Greater Bay Area and enjoyed the era’s short video boom.

While the capital market is eager to see xTool as “the影石 of the laser industry,” expecting it to replicate the latter’s growth curve, a sober look reveals fundamental differences in industry ceiling.

Although影石 started with panoramic action cameras, through continuous product iteration, its business has successfully extended into thumb cameras and other forms. More importantly, its audience has expanded from professional creators to the general consumer.

In contrast, xTool’s core customer base remains within DIY enthusiasts and artisans—relatively niche groups—without effective penetration into the mainstream public.

This “from niche to mass” breaking of barriers is visually reflected in the performance gap between影石 and xTool.

From 2021 to 2024,影石’s revenue grew over 50% year-over-year for four consecutive years, but xTool’s high growth trend has not continued.

In 2024, although xTool’s revenue once reached 2.476 billion yuan with explosive growth of nearly 70%, the growth rate in the first three quarters of 2025 slowed to 18.57%.

Moreover, xTool’s net profit growth in the first three quarters of 2025 far exceeded revenue growth, not due to improved gross margins, but driven by other net income items such as interest income and exchange gains.

During the same period, xTool’s other net income reached 42 million yuan, up 36.4%, accounting for over half of its net profit.

In the consumer electronics arena, moving from “niche hardcore” to “mass demand” is key to defining a company’s valuation ceiling.

影石 gained access to the mass market by lowering barriers and expanding scenarios, while xTool’s reliance solely on the red ocean of vertical market redemptions may struggle to support the grand narrative of “the next 影石” in the capital market.

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