After the third-quarter report was released, Insta360's revenue for the first three quarters was brought to the table: CNY 9.436 billion, a year-on-year increase of 42.73%, just one step away from CNY 10 billion.
In a year when most companies struggled, this growth rate deserves serious attention.
But the financial statements go beyond one page. Looking further back, over the same nine months, net profit attributable to shareholders was CNY 47.8356 million, a year-on-year decline of 93.96%; net profit after deducting non-recurring gains and losses was CNY 5.1344 million, a year-on-year drop of 99.31%.
Deducting non-recurring items means removing all income unrelated to core sales, such as subsidies and wealth management returns, and looking only at how much the main business earned on its own. CNY 5.13 million spread over every day of the nine months amounts to less than CNY 20,000.
The single quarter in Q3 was slightly better, with revenue of CNY 3.919 billion and net profit attributable to shareholders of CNY 17.4282 million, finally turning around from the single-quarter loss in Q2. However, for a company with quarterly revenue nearing CNY 4 billion, earning only CNY 17 million in a quarter is too thin to support the term "profitability."
In other words, while revenue is running fast, profits are evaporating. More importantly, the growth rate has also declined.
This does not seem like an order rhythm issue in any specific quarter, but rather that the market capacity can no longer sustain higher speeds.
According to IDC's second-quarter report, Insta360's sales share in panoramic cameras rose from 66% in 2025 to 72.5%, hitting a new high. In a narrow segment where it defines the pricing, Insta360 has already captured nearly three-quarters. To go higher, the remaining space is only one-quarter, and it must be squeezed bit by bit from competitors.
However, if the same report widens the scope to handheld smart cameras (including panoramic, action, and gimbal cameras), the picture immediately reverses. Competitors hold 73%, while Insta360 holds about 20%, widening the gap by another 10 percentage points in a single quarter.
Jiuqian Zhongtai's estimates cover a different quarter, but the direction is consistent. In the first quarter of this year, under the broader scope, competitors' revenue share was approximately 61%, while Insta360's was about 28%, expanding both year-on-year and quarter-on-quarter.
One metric looks at shipment volume, the other at channel revenue; despite differences in quarters and scopes, they point to the same thing: the center of gravity of the overall market is not on Insta360's side:
No market share was lost; everything that needed to be defended was held, even reaching new highs. But the pool for panoramic cameras is simply not large enough.
At this stage, the plateauing of growth is not just a judgment about speed; it simultaneously dictates the next steps for expansion. Outside the pool lies territory dominated by others, and the only levers available to exchange for position may be price and profit.
1How Did Gross Margin Disappear?
Insta360's gross margin dropped by 13.95% over the past year. This year's Q3 stood at 33.70%, compared to 47.64% in the same period last year. It declined not only year-on-year but also by 4.64% sequentially from Q2.
As gross margins fell, costs surged upward.
Operating costs for the first three quarters increased by 75.07% year-on-year. Single-quarter costs in Q3 reached CNY 2.599 billion, growing by 68.81%, which was more than 35% higher than the revenue growth rate.
Costs rising faster than revenue is a dangerous signal for any hardware company.
Of course, the pressure does not lie entirely with Insta360 itself.
Storage chip capacity has been squeezed by AI computing demand, keeping prices high throughout the year. The occupation of high-end capacity by AI infrastructure has transmitted along the supply chain to PCBs, resistors, capacitors, and MLCCs, resulting in widespread price increases. These exogenous, industry-wide factors are nearly impossible for a single hardware company to hedge against on the procurement side.
For Insta360, the trouble is not just that costs have risen, but that it lacks the ability to pass these increases onto selling prices.
Competitors' panoramic models launched right into Insta360's price range, forcing Insta360 to respond with end-user discounts and channel concessions. Ultimately, upstream prices rose while downstream prices fell, leaving the difference in the middle without any third party to absorb it.
There is also a more subtle line of dilution: product structure is shifting downward.
The Luna series gimbal cameras and lower-priced SKUs are ramping up production, diluting the weight of high-margin flagships. As low-margin products grow faster than flagships and their share increases, the weighted average gross margin naturally declines.
The impact of this line is smaller in magnitude than the cost factor, but its nature is more troublesome.
Costs are external; component prices will eventually fall, relieving the pressure. Product structure, however, is determined internally. Once cheaper devices ramp up, their share becomes fixed. Even if component prices drop later, the average gross margin cannot return to previous levels.
The situation regarding market share is similar. In the narrow panoramic market, Insta360 maintained new highs by matching competitors' price cuts and concessions. Market share was retained, but gross margin paid the bill.
Therefore, when some say Insta360 "loses money on every unit sold," this concept should not be read literally. With an overall gross margin still at 33.7%, each unit remains profitable on average. It refers to the low-price end, where per-unit gross profit is nearly zero, and individual models may even be negative.
Because Insta360 does not disclose product-specific costs, this calculation cannot be verified. But since incremental growth comes from the cheaper end, for every additional CNY of revenue, less falls into profit.
At this stage, revenue growth itself is no longer purely good news.
2The Cost of the Second Curve
Gross margin accounts for the old ledger: how much remains from each unit sold in existing businesses.
But for the company to move forward, relying solely on old products is insufficient. After the panoramic camera market plateaued, Insta360 needed a new category to take the baton. Creating a new category has no shortcuts; R&D requires investment, production lines need construction, and channels need deployment. These expenditures occur before revenue ramps up, so new businesses initially run at a loss on the books.
Insta360 placed this effort into a subsidiary named Yingling. The first product was the panoramic drone, Yingling A1. The extent of the losses is evident from the first-half data.
In the first half of 2026, Shenzhen Yingling Technology reported revenue of CNY 229.7 million and a net loss of CNY 290 million, with losses exceeding revenue. As of the end of June, net assets were approximately -CNY 540 million, indicating insolvency.
US Yingling, Singapore Yingling, and Kunshan Yingling incurred further losses of CNY 41.22 million, CNY 25.84 million, and CNY 9.86 million respectively. The four entities combined resulted in approximately CNY 367 million in losses (sum of standalone figures, not offsetting internal transactions, thus not equal to consolidated loss amount).
What is noteworthy is not the absolute amount but the distribution: R&D, supply chain, and overseas sales across the entire chain are losing money. If one link fails, it can be repaired; if the whole chain is bleeding, it indicates that this business is still operating on full-cost basis.
The panoramic drone sector, where Yingling A1 operates, enters the hinterland defended by competitors for years using share advantage and supply chain depth. New entrants can only exchange continuous R&D, production line construction, and channel deployment for scale effects that do not yet exist.
The first-half data shows that the cost of the market education phase is much higher than early estimates.
Insta360 stated that this business is "still in the market education phase," which is accurate. On the other hand, for every CNY of revenue generated in the first half, the books showed an additional CNY 1.26 in losses. Yingling did not disclose gross margins, making it impossible to determine if units were sold at a loss, but it is clear that selling more leads to faster losses.
The door to entering the category is already narrow enough; the door to going overseas is even narrower.
In December 2025, the US FCC included drones and key components produced outside the US in the Covered List, ceasing approval for new foreign-made model authorizations. The exemption rules in January 2026 opened only to models on the "Blue UAS Cleared List" or those "Made in USA," without opening a path for Chinese manufacturers.
The uniqueness of Yingling A1 lies in the fact that it obtained FCC certification before the list took effect, preserving the sales eligibility of existing models in the US. However, an existing window does not equate to a new model channel. Consumer electronics rely on annual iterations; once certification is cut off, it can only maintain existence through a single approved product.
For a business line that has not yet proven its profitability, this is not a one-off shock but a long-standing structural discount.
3What Can Be Bought, and What Cannot
Insta360's selling expenses for the first three quarters were CNY 1.617 billion, a year-on-year increase of 43.06%. Revenue grew by 42.73%, and selling expenses grew by 43.06%, meaning that for every additional CNY of revenue, selling expenses also increased by roughly CNY 1.
R&D investment was heavier, at CNY 1.675 billion, growing by 54.29%, outpacing revenue growth.
Here is a point that can confuse people: CNY 1.675 billion represents "how much was invested," not "how much was spent this year." Only CNY 1.601 billion was actually recorded as current-period cost. The remaining CNY 74 million was capitalized according to accounting rules and amortized over subsequent years. Therefore, the profit burden for this year is CNY 1.601 billion, not CNY 1.675 billion.
Both growth rates exceeded revenue growth, but growth rates only indicate spending volume, not efficiency. To assess value, one must divide expenses by revenue to see how much of every CNY 100 in revenue is consumed by expenses.
First, calculate the selling expense ratio. For the first three quarters of 2025, it was 17.1% (11.30 ÷ 66.11); for the first three quarters of 2026, it was also 17.1% (16.17 ÷ 94.36). One year apart, the number remains the same.
For every CNY of revenue, CNY 0.17 is still spent to acquire it. Despite scale increasing by nearly half, marketing efficiency improved by not even a penny. This is likely the limit of marketing-driven performance. Money is mainly spent on market placement and offline channels, both of which competitors can replicate with the same amount of funds.
The proportion of R&D in revenue is also rising, at 17.8%, higher than 16.4% in the same period last year. Of this CNY 1.675 billion, chip customization and drone strategic projects account for a significant portion. This is not routine iteration budget, but tuition fees for the second curve and self-developed chips.
Money was spent, buying channels, placements, iteration pace, and a customized chip—all tangible assets. But the final outcome does not rest on these. The truly hard-to-buy things often come with a price tag issued in court.
In March 2026, competitors sued Insta360 domestically over drone patent ownership. Ownership questions who these assets originally belong to, digging deeper than infringement issues. Insta360 responded that multiple competitor products fall within the protection scope of its 28 patents. This figure of 28 is based on unilateral internal statistics and does not equal the number of formally filed counterclaims.
In the US direction, Insta360 filed five invention patent counterclaims against competitors in June, involving gimbal stabilization, pointing control, smooth anti-shake, and panoramic video anti-shake, responding to infringement lawsuits and injunction applications initiated by competitors on the launch day of Luna. The costs of defense and counterclaims have constituted a substantive diversion of profits.
Comparing the two lists reveals a positional difference: Insta360's strengths lie in panoramic stitching, stabilization, anti-shake, and structural components. Competitors' main battlegrounds are flight control, power, and image transmission, areas where Insta360 has almost no accumulation.
At this point, the competition is not about quantity, but about whose patents lie on the mandatory path the other must traverse.
Competition moves upstream from parameters and prices to rights confirmation. A company lacking depth in upstream bargaining power and underlying technical assets, relying on expenses to buy growth, will likely see its profit statement eroded faster.
What can be bought, others can also buy. What cannot be bought can only be paid for to others.
4Epilogue
The inability to defend gross margin stems from here. Channels can be paved, placements can be bought, and products can iterate annually, but upstream bargaining power and underlying technical assets are not on the shelf.
Therefore, "losing money on every unit sold" is not a pricing error, but a position. Downward is per-unit gross profit, upward is category gross margin, and outward is the cost structure of the second curve. For every additional unit sold, less remains at the margin.
This year, Insta360 proved something difficult: in the most competitive year, it pushed revenue to the doorstep of CNY 10 billion. What it has not yet proven is whether selling more brings it closer to making money.
The exam question for the second curve is not about parameters. Whether Yingling A1 can match competitors is an engineering problem solvable with investment. The real question is whether, before the market education phase ends, it can accumulate those things that cannot be bought:
Supply chain depth, underlying technical assets, and an ecosystem that can survive without parental funding.
Disclaimer: This article is written based on publicly available information or information provided by interviewees, but DecodeNewSight and the author do not guarantee the completeness or accuracy of such information. Under no circumstances shall the information or opinions expressed herein constitute investment advice to anyone.