Insta360's revenue in the first three quarters of 2026 increased by 42.73%, but net profit fell by 93.96%, with pressure from multi-line expansion

Insta360 is not short of success stories.

Eleven years ago, the young Insta360 entered the uncharted territory of panoramic cameras as a disruptor and fought a brilliant battle.

Its report card is dazzling enough: 11 years after its founding, cumulative global shipments of Insta360 cameras have surpassed 10 million units, of which 4.7 million came in the past year. In the panoramic camera market where it is strongest, its global shipment share in the second quarter of 2026 was about 73%.

Xu Heng, a practitioner in the mobile phone imaging industry, commented: "What Insta360 has been able to achieve in today's market comes down to being good at identifying needs that the giants have overlooked, and using them to open up new markets."

Since then, Insta360 has also been proving that it is not only capable of making good panoramic cameras.

In June 2026, its first gimbal camera, the Luna Ultra, went on sale and within less than a month approached a 6% share of global gimbal camera shipments. In the business stories of many rising stars, this is a good result.

But another set of numbers reflects a different reality.

In the first three quarters of 2026, Insta360's revenue grew 42.73% year on year to 9.436 billion yuan, yet net profit attributable to shareholders fell 93.96% to 47.8356 million yuan, net profit excluding non-recurring items was only 5.1344 million yuan, and consolidated net profit was a loss of 167 million yuan. Over the same period, net operating cash flow was an outflow of 4.264 billion yuan, and inventory at period end reached 7.154 billion yuan.

Compared with its investment, Insta360's profit is clearly a little thin. Is such heavy investment buying technology, channels and future markets, or is it making up for unresolved problems in products, supply chain and organizational efficiency? Can it convert product innovation capability into sustained profitability before its core business slows?

01 High growth, low cash generation?

Gross margin hits bottom, cost of growth climbs

In the first three quarters of 2026, Insta360's revenue was 9.436 billion yuan, close to the full-year 2025 level of 9.74 billion yuan; third-quarter revenue alone was 3.919 billion yuan, up 33.30% year on year, a marked slowdown from the roughly 83% growth in the first quarter. Revenue is still expanding, but operating costs in the first three quarters reached 5.830 billion yuan, up 75.07% year on year, far faster than revenue.

The comprehensive gross margin for the first three quarters was 38.21%, down 11.4 percentage points year on year; the third-quarter gross margin alone was about 33.70%, down nearly 14 percentage points from the same period last year. Quarterly revenue grew 33.30%, yet gross profit fell from about 1.401 billion yuan to 1.321 billion yuan, down about 5.72% year on year.

Insta360's incremental revenue not only failed to bring incremental gross profit; rising costs are also eroding the profit space of its existing business.

The company attributes the profit decline to increased R&D and marketing investment, as well as rising prices of storage components and intensifying industry competition. This means the problem is not just excessive expenses, but a decline in the ability of each unit of revenue to generate gross profit.

Thin profit buffer

In the first half of the year, Insta360's selling, administrative and R&D expenses grew 61.96%, 86.74% and 79.26% year on year respectively, all higher than the 50.29% revenue growth in the same period.

But a marginal change appeared in the third quarter. The three expenses were approximately 600 million yuan, 132 million yuan and 594 million yuan, with year-on-year growth slowing to about 19.46%, 31.88% and 13.51%, all below the quarterly revenue growth rate, indicating that the three expense ratios had begun to be diluted by revenue growth.

At the same time, Insta360 has not stopped its strategic investment. On October 28, the company announced a plan to use 298 million yuan of over-raised funds to build the "device-cloud integrated imaging software system R&D project," with a two-year construction period, of which labor costs account for 88.73%. The project uses existing over-raised funds and cannot be directly regarded as newly added expenses for the current period, but it shows that the company is still continuously investing in future products.

The improvement in expense ratios is not yet enough to offset the sharp decline in gross margin. In the third quarter, Insta360's net profit attributable to shareholders fell 93.59% year on year to 17.4282 million yuan. Net profit excluding non-recurring items was 20.4735 million yuan, down 91.82% year on year. Cumulative net profit attributable to shareholders in the first three quarters was 47.8356 million yuan, and net profit excluding non-recurring items was only 5.1344 million yuan, leaving the profit buffer still very thin.

In the first three quarters, Insta360's consolidated net profit was a loss of 167 million yuan, loss attributable to minority shareholders was 215 million yuan, and income tax expense for the same period was negative 42.5762 million yuan, which also offset part of the consolidated loss. The slight profit on the listed company shareholder basis does not mean the group as a whole has restored sustained profitability.

Risk of 7.1 billion in high inventory

Cash flow presents the cost of expansion more intuitively than profit.

In the first three quarters, Insta360's net operating cash flow was an outflow of 4.264 billion yuan, compared with a net inflow of 930 million yuan in the same period last year. Cash received from sales of goods and provision of services was 10.010 billion yuan, while cash paid for goods and services was 11.093 billion yuan, compared with only 3.985 billion yuan in the same period last year. The surge in procurement spending is the direct cause of cash flow turning from positive to negative.

On the surface, a net cash outflow of 4.2 billion counts as acute blood loss, but for a smart hardware company, large-scale inventory is the more dangerous sword of Damocles.

Insta360's inventory increased from 2.919 billion yuan at the end of 2025 to 7.154 billion yuan, up 145.10%, accounting for about 44.05% of total assets; inventory turnover days rose to 233 days, an increase of 105 days year on year. Asset impairment losses also expanded from 43 million yuan in the same period last year to 123 million yuan.

The company attributes the inventory growth to strategic reserves of core components and stockpiling for new products.

Strategic stockpiling is reasonable from a supply security standpoint, but in the consumer electronics industry, where hardware iterates extremely fast and follows Moore's Law, inventory tends to depreciate over time.

An inventory scale of 7.154 billion yuan means Insta360 is using enormous capital to place a heavy bet on sales of new products that have not yet been fully validated.

While internal cash generation is insufficient, external financing has clearly increased. In the first three quarters, Insta360 received 3.704 billion yuan in cash from borrowings, and its subsidiaries received 1.405 billion yuan in cash from minority shareholders' investments; at period-end, short-term and long-term borrowings totaled 3.527 billion yuan, and the debt-to-asset ratio rose from about 47.47% at the end of 2025 to 64.93%.

At period-end, monetary funds and trading financial assets totaled about 4.601 billion yuan, so Insta360 does not face an imminent cash flow crisis. But liquidity is increasingly dependent on borrowings and external capital increases rather than operating cash generation. The so-called "thinning health bar" precisely means that while the company borrows money to carry huge inventory, it must also withstand the drain from declining gross margins and investment in new products, and its room for strategic maneuvering is being severely squeezed.

02 The second curve under exploration

The growth of the panoramic camera base is slowing

Insta360's base remains solid. IDC data shows that in the second quarter of 2026, Insta360's shipment share in the global panoramic camera market was about 73%, and even rebounded quarter on quarter. Insta360's long-accumulated panoramic stitching, imaging algorithms, software experience and user mindshare have not been easily lost.

Imaging industry investor Lin Zhou explained: "The core of panoramic is editing. When shooting, you don't need to consider composition, but when editing, you do. Without good AI editing, five minutes of footage may take 20 minutes to edit, let alone share."

The new-generation flagship X6 continues to iterate along chips, algorithms, image quality and AI editing. Software experience is an important moat for Insta360. Imaging industry entrepreneur Chen Xu pointed out: "Insta360's software capability does not refer to a technical barrier, but to gameplay. Insta360 will dig through various UGC effects and turn editing functions into templates from the content side, letting users generate with one click."

DJI's entry into the panoramic hardware market still requires time to replicate these software and gameplay accumulations. Compared with competitors "eyeing it covetously," Insta360's more realistic problem is that it needs to face the reality of a relatively single revenue structure and slowing category growth.

Panoramic cameras once contributed more than 55% of Insta360's total revenue for a long time, with advantages highly concentrated. At the same time, in Q2 2026, global panoramic camera shipments grew only 4% year on year; during the same period, global handheld smart imaging device sales grew more than 57%, and gimbal camera sales grew nearly 87%.

Competition is also squeezing prices. Imaging industry channel practitioner Han Shuo summarized hardware companies' strategies: "The competition logic in most categories is that you only need to be a little cheaper than your competitor and hold market share."

This means Insta360 can defend share, but may not be able to defend price and profit margin at the same time.

Therefore, finding a second curve is a mandatory question. But thinning profits in the base business are putting this expansion into a dilemma: without expansion, the existing business cannot support its grand dream of a huge hardware ecosystem; with continued expansion, these new categories that have not yet been proven can easily become bleeding points and backfire on already modest cash flow.

The drone business model is still being validated

Antigravity A1 is a P0-level project in which Insta360 has invested heavily. It combines panoramic shooting, free post-production framing, flight goggles and motion-sensing remote control, attempting to lower the composition threshold and provide an immersive flight experience.

Imaging industry investor Zheng Yuan compared the two companies' product definitions this way: "DJI's definition of this product is an all-around drone. It can be used as an aerial photography drone, and by controlling the gimbal, it can also become a panoramic FPV drone. Insta360's product definition is a panoramic FPV drone."

Theoretically, the latter has greater category innovation, but panoramic reduces the difficulty of composition, not the difficulty of flying. For users, it requires more attention to flight safety itself.

Zhou Xiao, an investor focused on the drone sector, further explained its scenario limitations: "When is a panoramic camera most useful? It is definitely not flying two or three hundred meters up to shoot snow mountains... Under the definition of the aircraft's own technical characteristics, Insta360's aircraft is best at a flight altitude of 3-10 meters, because panoramic needs richness in the frame."

Panoramic indeed allows Insta360 to bypass some traditional aerial photography barriers. Drone industry practitioner Liang Che told Leiphone: "One advantage of Insta360's drone is that panoramic does not need a gimbal, so it can avoid DJI's professional gimbal barrier." But Cheng Ye, a former R&D staffer at an imaging company, pointed out: "The only overlap with the original business is stitching, editing and rendering. Insta360 has no capabilities in image transmission, perception, VIO, flight control, navigation, path planning and so on, and must build them all from scratch."

In other words, Insta360's past accumulation can solve "what to shoot and how to frame in post," but cannot automatically solve "how to fly stably and safely."

Image transmission is especially critical. Liang Che said: "A drone with poor image transmission means a crash. Even if DJI's drones suffer signal interference or disconnection, there is not much impact; they will fly back on their own. But I find it hard to imagine A1: if it disconnects, the crash risk is extremely high, especially when performing exaggerated maneuvers."

Ordinary aerial photography drones can usually return automatically after disconnection; once low-altitude, close-range, high-speed flight is delayed or loses contact, the fault-tolerance window is shorter. This does not mean A1 will necessarily have safety problems, but its product definition places higher demands on image transmission, flight control and overall system coordination.

Public reviews have also pointed out that the A1 has issues such as a conservative obstacle-avoidance algorithm, delayed response under strong light, insufficient recognition of transparent objects, mediocre image quality at night, and insufficient high-speed tracking capability. The perception system listed on the Yingling official website mainly consists of forward-facing and downward-facing binocular vision and a bottom infrared sensor, which differs from traditional omnidirectional obstacle-avoidance solutions.

There are also contradictions in expanding the user base. Chen Xu noted: "Most people who fly FPV drones are male, but the people in Insta360's teaser short videos are female—this is a very obvious attempt to expand the circle." Imaging industry investor Su Ning believes that the A1 "is more not aimed at beginners," but rather first wins over experienced pilots, "capturing them first and then breaking out of the circle."

Both observations point to the same problem: moving from pilots to the general public requires crossing not only the composition threshold, but also the thresholds of flight, safety and sharing.

Cost also constitutes a constraint. Zheng Yuan once estimated: "Insta360's panoramic drone has a BOM cost alone of 4,000–4,500 yuan; even selling it for 8,000 yuan would barely avoid a loss." This figure is an interviewee's estimate and cannot replace company disclosures, but it highlights the pressure that hardware complexity, supply chain rebuilding and overall system coordination place on gross margin.

Yingling once announced that global shipments of the A1 exceeded 30,000 units in its first month on the market; however, under AVC's China online drone retail monitoring methodology, Yingling's share in the first quarter of 2026 was about 2.1%. First-launch shipments cannot be directly extrapolated into sustained market share. The interim report shows that Shenzhen Yingling had a net loss of 290 million yuan in the first half of the year; the third-quarter report still describes the panoramic drone as a business in the market education stage that has not yet formed economies of scale.

Spinning off financing can share investment, but it cannot replace validation of the business model. The A1 is a highly recognizable new product, but drones are currently still a heavy-investment business that has not yet been proven, rather than a second growth curve.

Luna: bearing the heavy burden of "growth hope"

Luna is another P0-level project for Insta360. Compared with drones, it enters a market where demand already exists and is still expanding rapidly. In the second quarter of 2026, global gimbal camera shipments approached 2.8 million units, up 87% year on year.

Luna Ultra's share performance after launch proves that Insta360 can replicate its product definition capability into a second category.

The market is also expanding and prices are falling. In the second quarter of 2026, the average unit price of global gimbal cameras fell 6% year on year to 2,968 yuan. Potential competitors are not only existing imaging brands. Xu Heng told Leiphone: "Can phone manufacturers do this? The answer is yes, and they might do it even better. Whether to do it or not is not about whether they can, but from a business decision perspective, whether they want to."

He believes that an important advantage of phone manufacturers lies on the one hand in "connectivity and sharing": "With a phone, you can post directly after shooting." Insta360's automatic editing and content templates can lower the sharing threshold, but whether they can form sustained differentiation still needs to be verified. On the other hand, phone manufacturers also have strong chips, imaging algorithms and R&D resources. Whether they enter, and in what product form, still depends on market space and return on investment, but this means Luna faces not only share competition among existing brands, but also the possibility of the phone ecosystem extending into handheld imaging.

Insta360 has not yet separately disclosed Luna's revenue, gross margin and profit contribution. The company's overall gross margin continued to decline in the third quarter and consolidated net profit remained at a loss, indicating that its revenue increment is not yet sufficient to reverse the group's pressure.

Luna is the new business most likely to carry revenue growth, but to go from "growth hope" to "second curve," it must also prove sustained sales, reasonable gross margin and profit contribution, and it cannot let a single project bear too many expectations.

Smart glasses and mirrorless cameras require greater investment and determination

It must be acknowledged that in exploring imaging, Insta360 has always maintained extremely high courage and imagination.

In addition to the two core projects of drones and gimbal cameras, Insta360 co-founder Max Richter has confirmed that the company is experimentally developing self-branded smart glasses and mirrorless cameras.

Whether attempting to stand on the next wave of smart wearable devices, or daring to charge into the professional mirrorless camera market firmly monopolized by Japanese optical giants, both maximally demonstrate this team's "Think bold" ambition.

However, synergy in technology and brand cannot directly eliminate the entry barriers of the categories themselves.

Smart glasses need to simultaneously solve weight, battery life, heat, wearing comfort and privacy acceptance. Many startups whose main business is smart glasses still face commercialization difficulties; entering through multi-front operations, Insta360 needs to assess resource investment and cultivation cycles.

Mirrorless cameras, meanwhile, must face the optical patents, lens ecosystems, camera body systems and user ecosystems accumulated by Japanese manufacturers, and the market size is also relatively limited and under overall pressure. Chen Xu once estimated: "Even if you only make M43, based on cost it would have to sell for 12,000 yuan, which is not competitive with mirrorless cameras." This estimate does not represent Insta360's actual plan, but it shows that new entrants face not only making the camera body, but also cost and price competition.

With drones not yet proven, Luna just starting to scale, and profit and cash flow under pressure, Insta360 needs to define phased goals, investment caps and exit conditions for each new project; otherwise, multi-category expansion will bring not growth, but a cost crisis.

Multi-front operations make resources hard to balance

Insta360's current problem is not simply "too many projects," but that multiple projects are simultaneously in the most resource-consuming stage.

Panoramic cameras and action cameras require continuous iteration, drones are still in market education, Luna needs to expand production capacity and channels, smart glasses and mirrorless cameras require early-stage R&D, and custom chips, AI algorithms and global stores are also competing for capital and management attention.

When resources are abundant, multi-front expansion can be a way to explore the future; when profit and cash flow come under pressure, the same expansion can turn into a scramble for resources, bringing goal conflicts, longer decision-making chains and duplicated construction.

The more hidden cost is that when every project is given the meaning of a "second curve," it also becomes harder for management to slow down or terminate inefficient investment in time. Insta360 needs to clearly tier its projects, and at the same time answer how edge businesses should contract and how early-stage investment should be exited or recovered. The second curve cannot be tested only by the space for imagination; it must also be tested by revenue, gross margin, cash flow and return on capital.

03 From 1 to 100, shedding inertia

After channel expansion, it is necessary to return to per-store returns

Imaging products require experience, education and after-sales service, so it is necessary for Insta360 to fill in offline channels.

Insta360 is also aware of this. Imaging channel distributor Han Shuo said, "In the past two years Insta360's offline channels have expanded substantially, with plans for 1,000 stores, move-in ready... The policy is very attractive: Insta360 provides product samples and renovation, and agents only need to provide staff."

Han Shuo also believes that "Insta360 is not just products; its marketing and channels all have distinctive features."

Multiple public reports show that in 2023 Insta360 had only 5 specialty stores in China, and by 2026 it had more than 250; its global experience retail stores exceed 10,000 and its brand flagship stores exceed 300, but a large number of experience retail stores are cooperative channels and cannot be conflated with directly operated stores.

Past expansion was not inherently inefficient either. Insta360's 2025 annual report disclosed that offline specialty stores increased from 36 at the beginning of the year to nearly 300, while sales per store rose by nearly 50% year on year over the same period.

But as stores enter high-cost overseas markets, the test has changed. Tang Jun, who works in overseas channels, once pointed out: "In some places where stores shouldn't be opened, he goes and opens one too, maybe doing 50,000 or 100,000 in sales a month... after opening, it is a complete loss."

This observation cannot be directly extrapolated to all stores, but it raises questions that require per-store data to answer: what proportion of stores are inefficient, and is additional investment or store closure needed. Opening-day queues cannot substitute for per-store revenue, customer acquisition cost, inventory turnover and payback period.

In the first half of the year, Insta360's overseas main business revenue accounted for 63.40%. While supplementing directly operated stores, its overseas sales still rely relatively heavily on platforms such as Amazon and local distributors.

What Insta360 needs to prove in the next stage is not how many more stores it can open, but whether the store network can continue to create high-quality sales. Site selection standards, per-store accounting, store closure mechanisms and ROI management will determine whether channels are brand assets or a cost burden.

Relaxed culture and organizational efficiency

The "golden blind box" incident in the China Entrepreneur report provides a cross-section for observing Insta360's organizational culture.

During Insta360's tenth-anniversary celebration, an employee mistakenly ordered 4,200 units of materials instead of 3,600, producing about 300,000 yuan worth of extra materials. Liu Jingkang did not pursue accountability, but decided to consume them internally or give them to channel distributors, suppliers and partners.

A 300,000 yuan mistake is not enough to prove that procurement and financial management have failed. Liu Jingkang's handling also genuinely helps reduce employees hiding problems out of fear of making mistakes. For a company that has grown by defining products through non-consensus, tolerating failure and encouraging experimentation is an important part of an innovation culture.

But tolerating employee mistakes and allowing processes to lack checks are two different things.

At the startup stage, many problems can be solved through founder intervention, small-team communication and rapid remediation; when the company's revenue reaches the tens of billions level while managing multiple categories, global channels and several billion yuan in inventory, if similar laxness appears in procurement, stocking or channel links, the loss will not be just 300,000 yuan.

Complex products also raise organizational requirements. The ability to divide organizational work and coordinate systems is itself part of product competitiveness. A respondent familiar with Insta360's internal situation said: "Many modules have no one managing them, and the algorithm too... letting a software product manager do the whole device."

This statement cannot replace a comprehensive judgment of the company's organizational condition, but it points to a question: if key modules lack stable owners and cross-department interfaces are unclear, many problems in core products need to be examined from both technical and organizational coordination perspectives.

Insta360 does not need to eliminate organizational vitality for the sake of efficiency, but it can leave "relaxation" for creativity and "strictness" for processes: innovative projects may be allowed to fail, but failure without review and investment without boundaries must not be allowed.

04 Born of passion and dreams, awaiting Insta360's next answer

Over the past eleven years, passion and dreams have been genes carved into Insta360's bones, and "think bold" has always driven this company from niche beginnings gradually into public view. From fun-filled panoramic cameras to today's active exploration of cutting-edge fields such as smart glasses, photography robots and mirrorless cameras, Insta360 has always maintained a crazy exploration of and extreme love for the boundaries of the imaging industry.

At the same time, founder Liu Jingkang has extremely strong marketing acumen. Looking across China's hardware sector, Insta360 is exceptionally good at leveraging giants to complete brand leaps: whether by entering Apple Store early and using the world's most stringent and top-tier retail channel to endorse its high-end positioning and technological attributes, or by launching cross-sector cooperation with phone giants such as Honor and cleverly entering the mobile imaging ecosystem, Insta360 can always precisely stand on the shoulders of giants to amplify its voice. This genius-like marketing sense and keen insight into traffic are the key engines that have enabled Insta360 to quickly break out globally and accumulate tens of millions of units in shipments.

But the cruelty of the business world is that when a company is about to cross the threshold of tens of billions in revenue and transform from a "star startup team" into a "mature technology enterprise," it faces the business world's standards of judgment.

What can support an enterprise through a downturn and resist macroeconomic risks is a realistic ledger, abundant positive cash flow and rock-solid self-generated cash capability. Insta360's current problem is that the evolution speed of its corporate operating capability has failed to match the pace of its dream expansion.

In the second half of the game that follows, it must quickly prove to the market and investors that beyond passion and dreams, it can respect financial bottom lines and ultimately convert those innovative and vibrant products into healthy, sustainable real money. This is what the market and the industry expect of it.

* Note: Xu Heng, Chen Xu, Lin Zhou, Han Shuo, Zheng Yuan, Zhou Xiao, Liang Che, Cheng Ye, Su Ning, Tang Jun and Fang Jin in this article are all pseudonyms.