Are consumables not selling well and customer acquisition costs soaring? Under the cloud of industry copyright disputes, what are the prospects for xTool's IPO in Hong Kong?

Produced by: Sina Finance Listed Company Research Institute

Author: Mu Yu

3D printing LABUBU has found itself in a lawsuit.

At the beginning of the year, Pop Mart filed a lawsuit against consumer-grade 3D printing company Tazhu Technology, after discovering that Tazhu’s free model platform MakerWorld contained numerous unauthorized models of popular Pop Mart IPs like LABUBU and Star People. Users could easily print them by downloading the files, achieving “LABUBU freedom.” Currently, both parties have reached a settlement, and the related content has been taken down. However, Pop Mart has not withdrawn the lawsuit, and the case is set to be heard on April 2.

Public information from Tianyancha shows that Pop Mart is not the only company in a copyright dispute with Tazhu Technology. The operating studio for the original anime IP Luo Xiaohai, Hanmu Chunhua Animation, has recently also filed a lawsuit against Tazhu Technology and its subsidiaries for “infringement of the right to disseminate works online,” with the first trial scheduled for March 20.

The involvement of industry leaders in infringement events casts a shadow over xTool, a company in the same sector that is pushing for a listing on the Hong Kong Stock Exchange.

According to the prospectus, xTool is a smart digital tool brand under Makeblock’s Maker Studio, a STEAM education robotics company. Its main products include laser engraving machines, laser cutting machines, laser welding machines, CNC cutting machines, and material printers, along with supporting facilities such as the software platform xTool Studio, printing accessories, consumables, and the user community Atomm. As of September 30, 2025, the Atomm free community has shared over 40,000 design works, leading to 177,000 content citations, with downloadable templates including well-known IPs like LABUBU and Minions.

(Source: Atomm official website)

More importantly, xTool’s performance has shown signs of fatigue. In the first three quarters of 2023-2025, the company achieved total revenues of 1.457 billion yuan, 2.476 billion yuan, and 1.777 billion yuan, with year-on-year growth dropping sharply from nearly 70% to 18.6%; the adjusted net profit was 183 million yuan, 259 million yuan, and 172 million yuan, corresponding to net profit margins dropping from 12.6% to 9.7%. From January to September 2025, the company’s operating activities generated a net cash outflow of 209 million yuan, approximately 5.80 times that of the same period in 2024. In response, xTool explained that it proactively increased inventory to 856 million yuan to prepare for the peak season in the fourth quarter of 2025, resulting in a shift from positive to negative operating cash flow.

Over 85% of Revenue from Europe and America; “Device + Consumables” Model in Doubt

While flowers bloom indoors, they are fragrant outside; China is the world’s largest producer of consumer-grade 3D printers, but the core consumer market for this category lies in Europe and America.

A recent research report from CICC shows that from 2017 to 2023, China’s production of consumer-grade 3D printers grew from 740,000 units to 4.01 million units, with a compound annual growth rate of 32.5%. In 2024, about 96% of entry-level products priced below $2,500 globally will be produced in China. According to statistics, in 2024, the sales revenue of consumer-grade 3D printing in North America and Europe accounted for over 51% of the global market, with the U.S. market alone reaching $8.61 billion, accounting for over 35% of global revenue.

The reasons for this include the underdeveloped supply chain for small industrial products in Europe and America, high labor costs, the prevalence of DIY culture, and low efficiency in logistics systems. Consumers in these regions often face high costs, long cycles, and poor experiences when it comes to replacing small parts or purchasing small industrial goods, leading to a stronger demand for consumer-grade 3D printers among individuals and families.

xTool’s customer base is also primarily in Europe and America. The prospectus reveals that in the first three quarters of 2023-2025, the company’s revenue share in the U.S. was 61.6%, 57.4%, and 54.8%, while the revenue share in Europe was 22.8%, 28.2%, and 30.3%. In other words, the contribution of the European and American markets to xTool’s total revenue remains stable at around 85%, while sales revenue from other regions, including mainland China, Canada, and Australia, dropped from 15.6% in 2023 to 14.9% in the first three quarters of 2025.

Heavy reliance on a single market poses potential risks. On one hand, the European and American markets are relatively mature and saturated, facing internal economic pressures like inflation and rising energy costs, leading to 3D printers being prioritized for exclusion as optional consumer goods. On the other hand, repeated U.S.-China trade frictions, tariffs on Chinese imports, data privacy, and equipment safety could further increase cost burdens, putting pressure on gross profit margins.

In fact, in the first three quarters of 2025, xTool’s revenue growth in the U.S. and Europe has significantly slowed to 10.2% and 37.5%, while the corresponding figures for 2023-2024 were 58.3% and 111.0%. During the reporting period, the company’s overall gross profit margin dropped to 56.0%, a cumulative decline of 3.2 percentage points.

Additionally, consumer-grade 3D printers are characterized by high unit prices and low repurchase rates, which raises the unavoidable question of how to extend user lifecycles for various brands. Compared to other industry players, while xTool also offers software and community services, these two free services have yet to generate any revenue. After acquiring customers through hardware sales, the company hopes to enhance user stickiness through continuous sales of printing materials like wood, acrylic, and metal, as well as semi-finished products like jewelry and cups.

However, the consumables and accessories provided by xTool do not have any particular advantages; consumers can easily find cheaper alternatives from other sources. According to its overseas website, the lowest price for six round plywood sheets is $7.99, while the same specification products on Amazon only cost $3.42.

(Source: xTool official website)

In the first three quarters of 2023-2025, xTool’s consumables revenue was 190 million yuan, 269 million yuan, and 159 million yuan, accounting for approximately 13.1%, 10.9%, and 8.9% of total revenue during that period, showing a declining trend year by year. From January to September 2025, consumables revenue only saw a slight year-on-year increase of 2.6%, far below the previous growth rate of over 40%. The “Device + Consumables” model still struggles to close the loop in overseas markets, and in a domestic market with well-developed e-commerce infrastructure and abundant supply, it is likely to find it even harder to establish a foothold.

Price Increases, Reduced Volume, Rising Customer Acquisition Costs; How Can Niche Hobbies Break Through?

Riding the wave of trendy play, 3D printers were once thought to experience explosive growth similar to that of sports cameras and drones.

A research report from Guosheng Securities indicates that the main target users of consumer-grade 3D printers can be divided into four categories: makers and DIY enthusiasts, educational and research institutions, DIY entrepreneurs, and general trend players. The first two categories are the cornerstone of the 3D printing sector, driving the category’s transformation from “0” to “1,” while the latter two categories are crucial in the process from “1” to “100”: small B-end users have high consumable demand and provide strong support for flagship model sales; general trend consumers have a large base and spontaneous dissemination, making the increase in penetration of 3D printers within this group key to breaking through.

However, the copyright disputes between Pop Mart, Luo Xiaohai Studio, and Tazhu Technology serve as a warning. This type of breakthrough, based on specific popular IPs and trendy play formats, not only must be prepared to face a significant decline in popularity but also may bear considerable compliance risks. If the general trend consumer group is lost, the “ceiling” for the 3D printing sector is destined to be low, leading to rising customer acquisition costs for all brands.

According to the prospectus, in the first three quarters of 2023-2025, xTool’s sales expenses were 395 million yuan, 564 million yuan, and 402 million yuan, accounting for approximately 27.1%, 22.7%, and 22.6% of total revenue. More than half of this was spent on marketing and advertising, with these expenses maintained between 200 million to 300 million yuan annually. Since 3D printers are durable consumer goods, sales can be seen as equivalent to the number of new customers. Based on straightforward estimates combining marketing and advertising spending, xTool’s customer acquisition costs were 2023.02 yuan and 2258.83 yuan for 2023 and 2024, respectively, showing a slight year-on-year increase of 11.7%. In the first three quarters of 2025, customer acquisition costs skyrocketed to 3093.83 yuan, an increase of over 44.5% compared to the same period in 2024, and a cumulative increase of 52.9% compared to 2023.

With customer acquisition costs continually rising, xTool can only rely on price increases to maintain profit margins, but raising prices discourages potential consumers, leading to decreased sales. In 2023-2024, the average price of xTool’s core product, the laser personal creative tool and supporting accessories, rose by 34.0% from 11,900 yuan to 15,900 yuan, with sales increasing from 10.7 million units to 13.8 million units, a year-on-year growth of 30.0%. However, in the first nine months of 2025, the average price of its products surpassed 21,000 yuan, increasing by another 34.9% compared to the same period in 2024, while sales only reached 7.1929 million units, a year-on-year decrease of 16.2%.

In a niche market, while core users are loyal, their numbers are ultimately limited, and marginal users are sensitive to price. Price increases stifle demand, while not increasing prices erodes profits, putting xTool in a dilemma. As the industry’s “ceiling” comes within reach, as the story of “high-speed growth” becomes unsustainable, and as the “Device + Consumables” business loop has yet to take shape, how should Hong Kong investors reassess its valuation?

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Editor: Company Observation