Meitu has proven to the world that there is a demand for beauty-enhancing software products, but it has yet to show investors that its selfie-loving users are willing to pay for its feel-good apps. On August 24, Meitu Inc. reported an RMB 33 million ($4.95 million) adjusted net loss for the first half of 2017, down 87 percent year-on-year. The company, which went public in 2016 and became the largest internet IPO on the Hong Kong Stock Exchange since Tencent, continues to draw skepticism about its ability to turn a profit.

Founded nine years ago in China’s southeastern coastal city of Xiamen, Meitu has transformed from a PC photo touch up software to a suite of beauty-enhancing hardware and apps. The latter include its three pivotal products on the path to monetization: Meitu, its legacy photo-enhancing app; Meipai, a short video sharing app; and BeautyCam, a selfie app. The company now claims 461 million monthly active users (MAU) and has pocketed RMB 2.18 billion ($327 million) in total revenues in the first six months of 2017. In comparison, the Chinese dating app-turned-live streaming social app Momo (NASDAQ: MOMO) has made $577.5 million in net revenues in the same period with 91.3 million MAU.

Meitu has a mission to empower users to become more beautiful, and it trusts that it can cash in on its predominately young, beauty-conscious female users from ads, e-commerce, and games—the three major revenue channels on the Chinese internet, currently dominated by the BAT trio of Baidu, Alibaba, and Tencent.

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Rita Liao

Telling the uncommon China stories through tech. I can be reached at ritacyliao [at] gmail [dot] com.