A copyright lawsuit has emerged involving 3D printing and the LABUBU character. Earlier this year,
Public information reveals that
These copyright issues involving a leading industry player cast a shadow over xTool, a company in the same sector that is currently pursuing a listing on the Hong Kong Stock Exchange.
According to its prospectus, xTool is an intelligent digital tools brand under STEAM education robotics company Makeblock. Its main products include laser engravers, laser cutters, laser welders, CNC cutting machines, and material printers. Supporting infrastructure includes the software platform xTool Studio, printing accessories and consumables, and the user community Atomm. As of September 30, 2025, the free Atomm community had shared over 40,000 design works, generating 177,000 content case references. Downloadable templates on the platform include well-known IPs such as LABUBU and Minions.
More notably, xTool's financial performance is showing signs of strain. For the first nine months of 2023, 2024, and 2025, the company reported total revenues of 1.457 billion yuan, 2.476 billion yuan, and 1.777 billion yuan, respectively. The year-on-year growth rate plummeted from nearly 70% to 18.6%. Adjusted net profits were 183 million yuan, 259 million yuan, and 172 million yuan, with the corresponding net profit margin declining from 12.6% to 9.7%. In the first nine months of 2025, the company experienced a net cash outflow of 209 million yuan from operating activities, approximately 5.8 times the outflow from the same period in 2024. xTool attributed this to a proactive increase in inventory to 856 million yuan in preparation for the peak season in the fourth quarter of 2025, which turned operating cash flow negative.
Over 85% of xTool's revenue comes from Europe and the United States, raising questions about the sustainability of its "hardware + consumables" business model. China is the world's largest producer of consumer-grade 3D printers, but the core consumer market for these products is in Europe and the US.
A recent research report from CICC indicated that China's consumer-grade 3D printer production grew from 740,000 units in 2017 to 4.01 million units in 2023, representing a compound annual growth rate of 32.5%. In 2024, approximately 96% of global entry-level products priced below $2,500 were manufactured in China. However, statistics show that North America and Europe accounted for over 51% of global consumer-grade 3D printing sales in 2024, with the US market alone valued at $8.61 billion, representing more than 35% of global revenue.
The reasons for this disparity include less developed small industrial goods supply chains, higher labor costs, a prevalent DIY culture, and less efficient logistics systems in Europe and the US. Consumers in these regions often face high costs, long lead times, and poor experiences when replacing small parts or purchasing small industrial goods, creating stronger demand for consumer-grade 3D printers among individuals and families.
xTool's revenue base is similarly concentrated in Europe and the US. According to the prospectus, revenue from the US accounted for 61.6%, 57.4%, and 54.8% of total revenue for the first nine months of 2023, 2024, and 2025, respectively. Revenue from Europe accounted for 22.8%, 28.2%, and 30.3% during the same periods. In other words, Europe and the US consistently contributed around 85% of xTool's total revenue, while the combined share from other regions, including mainland China, Canada, and Australia, decreased from 15.6% in 2023 to 14.9% in the first nine months of 2025.
This heavy reliance on a single market presents significant risks. On one hand, the European and US markets are relatively mature and saturated, with internal economies facing inflationary pressures and rising energy costs. As a discretionary purchase, 3D printers might be among the first items consumers forgo. On the other hand, recurring Sino-US trade frictions, including potential tariffs, data privacy concerns, and device security issues, could increase cost burdens and put pressure on profit margins.
Indeed, in the first nine months of 2025, xTool's revenue growth in the US and Europe slowed significantly to 10.2% and 37.5%, respectively, compared to growth rates of 58.3% and 111.0% in 2023-2024. During the reporting period, the company's comprehensive gross profit margin fluctuated downward to 56.0%, a cumulative decline of 3.2 percentage points.
Furthermore, consumer-grade 3D printers are characterized by high customer acquisition costs and low repurchase rates. Extending the user lifecycle is a critical challenge for all brands in this space. While xTool has developed supporting software and a community, these free services currently generate no revenue. After acquiring customers through hardware sales, the company aims to enhance user loyalty through ongoing sales of printing raw materials like wood, acrylic, and metal, as well as semi-finished products like jewelry and cups.
However, xTool's consumables and accessories are not particularly unique, and consumers can easily find cheaper alternatives through other channels. For example, six circular plywood sheets are listed for a minimum of $7.99 on xTool's overseas website, while similarly specified products are available on Amazon for just $3.42.
From 2023 to the first nine months of 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 for the respective periods, showing a year-on-year declining trend. In the first nine months of 2025, consumables revenue increased by only 2.6% year-on-year, far below the previous growth rate of over 40%. If the "hardware + consumables" model struggles to form a closed loop in overseas markets, it faces even greater challenges in China, where e-commerce infrastructure is highly developed and supply is abundant.
Rising customer acquisition costs amid slowing sales volume growth pose the question: how can this niche hobby break into the mainstream? Fueled by the "trendy toys" boom, 3D printers were once expected to experience explosive growth similar to action cameras and drones.
Research from Guosheng Securities categorizes the target users for consumer-grade 3D printers into four groups: makers and DIY enthusiasts, educational and research institutions, DIY entrepreneurs, and general trendy consumers. The first two groups form the foundation of the 3D printing sector, driving its initial development. The latter two groups are crucial for scaling the market: small business-to-business users have high demand for consumables and strongly support sales of flagship models, while the large base of general trendy consumers can facilitate organic spread; increasing penetration rates among them is key to breaking into the mainstream.
However, the copyright disputes involving
According to the prospectus, xTool's sales expenses for the first nine months of 2023, 2024, and 2025 were 395 million yuan, 564 million yuan, and 402 million yuan, accounting for approximately 27.1%, 22.7%, and 22.6% of total revenue, respectively. Over half of these expenses were allocated to marketing and advertising, which consistently ranged between 200-300 million yuan annually. Given that 3D printers are durable goods, sales volume can be equated with new customer acquisition. A simple calculation based on marketing and advertising expenses shows that xTool's customer acquisition cost was 2,023.02 yuan in 2023, 2,258.83 yuan in 2024 (an 11.7% increase), and surged to 3,093.83 yuan in the first nine months of 2025—a 44.5% increase compared to the same period in 2024 and a cumulative 52.9% increase since 2023.
With customer acquisition costs continuously rising, xTool has relied on price increases to maintain profit margins. However, higher equipment prices deter potential customers, leading to a decline in sales volume. From 2023 to 2024, the average selling price of xTool's core product, the laser personal creative tool and its accessories, increased by 34.0% from 11,900 yuan to 15,900 yuan, while sales volume grew by 30.0% from 107 million units to 138 million units. But in the first nine months of 2025, the average product price exceeded 21,000 yuan, a further 34.9% increase compared to the same period in 2024, while sales volume fell by 16.2% to 71.929 million units.
In a niche market, core users, though loyal, are limited in number, while peripheral users are highly price-sensitive. xTool finds itself in a dilemma: raising prices stifles demand, while not raising prices erodes profits. As the industry's growth potential appears increasingly limited, the narrative of "rapid growth" becomes harder to sustain, and the "hardware + consumables" business model fails to form a closed loop, how should Hong Kong stock market investors value the company?