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NewsMaterial3 min readDisconfirmAI Editorial

Insta360: Revenue Up 40%, Profit Plunges 90% — How Multi-Pronged Expansion Drains Cash Flow

Analysis of Insta360's financial data for the first three quarters of 2026 reveals that high revenue growth has not translated into profit or cash flow. The core mechanism is that operating costs (up 75.07%) have grown much faster than revenue, causing gross margin to drop by 11.4 percentage points year-over-year, while inventory surged from RMB 2.919 billion to RMB 7.154 billion. The article argues that Insta360 faces a fundamental dilemma: the growth of its core panoramic camera business has slowed (global shipments grew only 4%), forcing multi-category expansion. However, projects such as drones, gimbal cameras, and smart glasses are simultaneously in their most resource-intensive phases, creating a catch-22 where "expansion is necessary to support ecosystem dreams, but continued expansion turns new categories into bleeding points."

2026-10-30 19:12 GMT+8

Insta360's financial report for the first three quarters of 2026 presents a paradox of hardware company expansion: revenue increased by 42.73% year-over-year to RMB 9.436 billion, approaching the full-year 2025 level of RMB 9.74 billion; however, net profit attributable to shareholders decreased by 93.96% to RMB 47.8356 million, with non-recurring net profit amounting to only RMB 5.1344 million, resulting in a consolidated net loss of RMB 167 million. Operating cash flow saw a net outflow of RMB 4.264 billion during the same period, compared to a net inflow of RMB 930 million in the previous year.

The mechanism behind this contradiction is not simply "excessive expenses." Operating costs reached RMB 5.83 billion in the first three quarters, a year-over-year increase of 75.07%, far outpacing revenue growth. The comprehensive gross margin dropped from approximately 49.6% in the same period last year to 38.21%, a decline of 11.4 percentage points; the third-quarter single-quarter gross margin was approximately 33.70%, down nearly 14 percentage points year-over-year. In that quarter, while revenue grew by 33.30%, the gross profit amount fell from approximately RMB 1.401 billion to RMB 1.321 billion, a year-over-year decrease of about 5.72%. New revenue did not bring incremental gross profit; instead, rising costs eroded the profitability of existing businesses.

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Cash flow more intuitively reflects the cost of expansion. Cash received from selling goods and providing services totaled RMB 10.01 billion, while cash paid for purchasing goods and accepting services reached RMB 11.093 billion, compared to only RMB 3.985 billion in the same period last year. Inventory increased from RMB 2.919 billion at the end of 2025 to RMB 7.154 billion, a growth of 145.10%, accounting for approximately 44.05% of total assets; inventory turnover days rose to 233 days, an increase of 105 days year-over-year. The company attributed the inventory growth to strategic reserves of core components and preparation for new products. In the consumer electronics industry, where hardware iterations are extremely rapid, RMB 7.154 billion in inventory means massive capital is tied up in new product sales that have not yet been fully validated.

Insta360's core dilemma lies in the resource competition between its base business and expansion. Panoramic cameras once contributed over 55% of total revenue, but global panoramic camera shipments grew by only 4% year-over-year in Q2 2026, while gimbal camera sales grew by nearly 87% in the same period. Thinning margins on the base business forced the search for a second curve, but drones (Yingling A1 shipped 30,000 units in its first month on the market, holding approximately 2.1% share in China's online market, with its subsidiary reporting a net loss of RMB 290 million in the first half of the year), Luna gimbal cameras (revenue and profit contribution not yet separately disclosed), and smart glasses/mirrorless cameras (still in experimental R&D) are all simultaneously in their most resource-consuming stages. When resources are abundant, multi-pronged expansion can be an exploration of the future; when profits and cash flow are under pressure, the same expansion may evolve into a scramble for resources, leading to conflicting goals, longer decision-making chains, and redundant construction.

External financing is replacing internal blood-making. Cash received from borrowing amounted to RMB 3.704 billion in the first three quarters, and cash received from subsidiaries absorbing minority shareholder investments was RMB 1.405 billion; short-term and long-term borrowings combined stood at RMB 3.527 billion at the end of the period, with the asset-liability ratio rising from approximately 47.47% at the end of 2025 to 64.93%. Monetary funds and trading financial assets combined were approximately RMB 4.601 billion at the end of the period, meaning Insta360 does not face an imminent capital chain crisis, but liquidity is increasingly dependent on loans and external capital increases. Citing several anonymous interviewees, the article suggests that Insta360's operational evolution speed has failed to match the pace of its ambitious expansion. Whether it can transform product innovation capabilities into sustainable profitability before the base business slows down is the core issue for the next stage.

Sources

  • leiphone.com↗
  • 163.com↗
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