By Echo Wang
NEW YORK, Feb 23 (Reuters) – The creator of the Facetune photo editing app, Lightricks, is splitting its consumer app business from its generative AI video platform LTX, according to an internal memo seen by Reuters, better positioning itself to capture the growth in artificial intelligence as it reshapes traditional software businesses.
The design software developer is the latest company to separate its legacy operations from higher-growth AI initiatives as investors reassess the value of established software businesses amid rising focus on artificial intelligence.
Facetune is an example of a profitable software model that defined the past decade: recurring users and incremental product improvements. It generated about $100 million in profits last year, according to a person familiar with the matter. LTX sits squarely in the generative AI boom, where investors are willing to pay up for the possibility of rapid, venture-style expansion.
Founded in 2024, LTX has received about $150 million from the parent company Lightricks. Its open-source AI model platform, was downloaded 3 million times in its first month on Hugging Face, a popular hub for sharing and running machine learning models, the company said.
Investor demand played a role in the decision to split the business. The high-growth, business-to-business LTX unit has attracted more interest than the mature, business-to-consumer Facetune app, as investors seek the potential for outsized returns they think AI will generate, the people said. The separation could also pave the way for LTX to raise external capital or pursue a spin-off down the line, highlighting stronger market appetite for pure-play AI growth than for diversified software platforms.
“Even if you grow 25%, the software business, you won’t get the same valuation you get for a pure disruptive AI, which has a $600 billion market opportunity ahead of it,” said Shlomo Dovrat, co-founder of venture capital firm Viola Ventures, and a board member of Lightricks.
He said the separation is not solely a financial decision but about running two distinct businesses, and that carving them into separate units creates optionality — including a possible spin-off or other steps — with the founders set to focus on leading the AI side.
“We’re making amazing returns just on the software business, we believe we will do even much, much better on the AI side,” he added.
(Reporting by Echo Wang in New York; Editing by Dawn Kopecki and Nick Zieminski)
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