By Lu Wen

Edited by Zhang Xiao

The Double 11 shopping festival is drawing to a close. Buoyed by national subsidies and trade-in programs, home appliances continue to lead in scale. Yet the festive enthusiasm cannot dispel the chill that settled over the robot vacuum industry in the third quarter.

Every year, the third quarter falls in the lull between the 618 and Double 11 shopping festivals—traditionally a slow season for robot vacuums. But in 2026, the industry chill was more biting than in years past. According to Yisen online retail database statistics, the domestic robot vacuum online market moved 602,000 units in the third quarter, down 10.8% year-on-year; sales revenue reached 1.89 billion yuan, down 19.1% year-on-year—both volume and price fell.

The third-quarter reports of leading players gave this pressure a concrete shape.

Ecovacs' third-quarter report, disclosed on October 31, shows operating revenue of 4.647 billion yuan for the quarter, up 10.61% year-on-year; net profit attributable to shareholders of the listed company was just 121 million yuan, down sharply by 72.43% year-on-year; the comprehensive gross margin stood at 39.63%, down 10.17 percentage points from the same period last year and down 7.9 percentage points from the second quarter.

The contrast—revenue growth without profit growth—looks even starker against peers. Roborock, which released its financial report the same day, saw revenue grow 34.85% year-on-year in the same period, net profit attributable to the parent company grow 33.01%, and gross margin decline by only 2.16 percentage points.

Facing the same external shocks—rising memory chip prices and RMB appreciation—the two companies traced completely different profit curves. The divergence stems both from deliberate trade-offs in pricing strategy and product mix after national subsidies receded, and from differences in category deployment rhythm and brand architecture choices.

From a longer industrial perspective, household penetration of robot vacuums in China sits at 5%–7%, and even the mature U.S. market is only about 20%. The track still has room to run, but the vast market has not translated into inclusive benefits shared across brands.

New players keep pouring in, competition for existing users intensifies, and the industry has entered an all-front war of attrition ahead of schedule—price wars, channel wars, and patent litigation are intertwined, and profit and gross margin have become competitive chips that must be paid.

01 Revenue Up, Profit Down

Judging from cumulative data for the first three quarters, Ecovacs' overall operations still maintained an expansion trend, but pressure on the profit side has gradually surfaced. In the first three quarters of 2026, the company achieved total operating revenue of 14.988 billion yuan, up 16.39% year-on-year; net profit attributable to the parent company after deducting non-recurring gains and losses was 1.031 billion yuan, down 19.71% year-on-year.

The pressure was concentrated in the third quarter. On a single-quarter basis, revenue was 4.647 billion yuan, up 10.61% year-on-year and down 14.56% from the second quarter—consistent with off-season sales patterns. But net profit attributable to the parent company fell 72.43% year-on-year and 85.66% quarter-on-quarter, a decline far exceeding the fluctuation in revenue.

The divergence in business structure is one of the underlying sources of profit pressure.

Although the third-quarter report did not disclose segment data, the interim report reveals the growth gap between the two main businesses.

In the first half of 2026, Ecovacs brand service robots achieved revenue of 6.094 billion yuan, up 26.82% year-on-year, still in a high-growth range; Tineco brand smart lifestyle appliances revenue was 4.051 billion yuan, up 10.66% year-on-year, with growth clearly slowing.

After years of explosive growth, the floor washer track has entered a stage of full competition, with rapid price declines and narrowing gross margin space. What was once the second growth curve now plays more of a role as the base business. The business accounting for about 40% of total revenue is approaching single-digit growth, directly weakening the company's overall profit space.

At the same time, the business investment brought by the migration of growth engines is also weighing on short-term profit performance.

In the first half of the year, the share of the company's overseas revenue in brand revenue increased by 8.2 percentage points to 49%, surpassing the domestic market for the first time in the second quarter; overseas revenue of new categories such as window cleaning, lawn mowing, and pool cleaning grew 75% year-on-year, becoming a new growth driver.

What followed was that channel construction in new markets, brand promotion, and after-sales system building, as well as capacity ramp-up and R&D investment for new categories, all required cost sacrifices in the early stage of scaling, further eroding profit.

What is more worrisome is the pressure front-loaded on the balance sheet.

As of the end of September, Ecovacs' inventory scale reached 5.410 billion yuan, up 66% from the end of 2025 and up 58.5% from the same period last year; accounts receivable were 2.738 billion yuan, up 25.5% year-on-year. Both growth rates were significantly higher than the 16.39% revenue growth in the first three quarters.

As of the end of September, Ecovacs' inventory turnover days had reached 143.85 days. In the same period, net cash flow from operating activities was -342 million yuan, a decrease of 2.305 billion yuan from 1.963 billion yuan in the same period last year.

Although stocking up in advance for the fourth-quarter shopping season and hedging against supply chain price increases are reasonable business actions, the rapid accumulation of inventory also means that if fourth-quarter sell-through falls short of expectations, the company will face the double squeeze of price-cut promotions and inventory impairment, and the profit side may come under further pressure.

02 The Gross Margin Dilemma

Ecovacs' single-quarter gross margin decline of more than 10 percentage points year-on-year is not a common phenomenon in the industry.

Roborock, which disclosed its financial report on the same day as Ecovacs, had third-quarter single-quarter revenue of 5.614 billion yuan, up 34.85% year-on-year; net profit attributable to the parent company of 479 million yuan, up 33.01% year-on-year; gross margin of 39.99%, down only 2.16 percentage points year-on-year.

Facing the same external environment of rising memory chip prices and a stronger RMB exchange rate, the two leading companies delivered completely different performance: one absorbed cost pressure amid growth, while the other exposed profit weaknesses amid growth.

Over a longer time span, the gross margin trends of the two companies reversed and then the gap gradually narrowed. In 2024, Ecovacs' gross margin was lower than Roborock's; in 2025 it overtook Roborock, with a leading advantage of up to 7.65 percentage points. But this advantage continued to shrink, from 7.07 percentage points in the fourth quarter of 2025 to 5.24 percentage points in the first half of 2026, until the reversal was completed in the third quarter of 2026.

This reversal was not accidental, but the result of the combined effects of external cost shocks, corporate strategic choices, business structure differences, and cyclical misalignment.

The rigid impact on the cost side is the most direct trigger. As the company mentioned in its financial report, significantly higher year-on-year procurement prices for memory chips and a stronger RMB exchange rate were the two major external factors behind the gross margin decline. In the core BOM of robot vacuums, electronic components such as memory chips, main control chips, and LiDAR account for a relatively high proportion, and the upward price trend of memory chips in 2026 created widespread cost pressure on finished-product manufacturers.

At the exchange rate level, the company's financial expenses in the first three quarters were 141 million yuan, compared with -132 million yuan in the same period last year, an increase of 273 million yuan year-on-year; single third-quarter financial expenses turned from -31 million yuan in the same period last year to 28 million yuan, with exchange losses directly eroding profit. For Ecovacs, whose overseas revenue accounts for nearly half, RMB appreciation simultaneously compressed the gross margin of export products and exchange gains, creating a double impact.

But cost factors cannot explain the nearly 8 percentage point difference in gross margin decline between the two companies. Pricing strategy and product structure choices are the more core internal causes.

After the national subsidy retreat in the first half of 2026, Ecovacs undertook demand through proactive price cuts and product self-subsidies, with the product structure tilting toward mid-range. Mid-range series such as T90 PRO and T80S became the main volume drivers, while the X12 series maintained a high-end positioning.

The volume ramp-up of mid-range models effectively drove market share—the company disclosed that its domestic online retail sales share of robot vacuums increased by 4.3 percentage points year-on-year—but it also directly lowered average product prices and overall gross margin. In essence, the company chose a strategy of "trading gross margin for share" during a market adjustment period.

Differences in business structure further amplified gross margin fluctuations.

Ecovacs adopts a layout of dual brands, multiple categories, and multiple markets. Its floor washer business is slowing, and new categories are in the investment stage, making them gross margin dilutive items during a cost uptrend. By contrast, Roborock's revenue structure is highly concentrated, with smart cleaning products and accessories accounting for 99.92%, and its single-product focus model gives it higher efficiency in cost pass-through and price control.

Facing the gross margin decline, Ecovacs also hedged through expense contraction. In the third quarter, the company's selling expenses decreased by 166 million yuan year-on-year, and the selling expense ratio fell from 31.1% to 24.6%; the overall period expense ratio fell 5.9 percentage points year-on-year, but the magnitude of expense contraction was still unable to cover the gap left by the gross margin decline.

Overall, Ecovacs' gross margin completed a redistribution across the industrial chain and cycle: part was transferred to consumers in exchange for market share, part was absorbed by upstream component price increases and exchange rate fluctuations, and part was invested in the long-term layout of new markets and new categories.

For Ecovacs, the real test is not whether short-term gross margin can rebound, but whether, after the industry's gross margin center approaching 40% becomes the new normal, a sustainable balance can be formed between scale expansion and profit quality—whether the share advantage can ultimately translate into structural profit improvement rather than a long-term trade of profit for scale.