Q1 2021 Viomi Technology Co Ltd Earnings Call
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Thank you for standing by for Bio Me Technology Company Limited earnings Conference call for the first quarter of 2020.1.
At this time all participants are in a listen only mode. Today's conference call is being recorded I will now turn the call over to your host Ms. Cecilia Li IR head of the company. Please go ahead Cecilia.
Thanks, operator.
Every once in a walk from 2 bomber technology called imagery to earnings conference call for the first quarter 'twenty 'twenty 1 as a reminder, this conference is being recorded like how many financial and operating results were issued a press release earlier today and it feels the online you can download the earnings press releases for the company's email distribution list.
For the T&D average fiction now at the company's website at IR day bombing Dot com participating today co on Mr. Xiaoping Chen the founder Chairman of the board of Directors, and Chief Executive Officer, and Mr. She'll be about our new president and Mr. Wage on tied to shed on that financing the Germany's management to begin with.
Their remarks, and the call will conclude with EQ and efficient.
You've only continue please note today's discussion will contain forward looking statements made on there just didn't have a provision of the U S. Private Securities Litigation Reform Act of 1995.
Forward looking statements involve inherent risks and uncertainties as such the company. That's true results maybe materially different from the music's grabs 2 day well.
For information regarding these and other risks and uncertainties is included in accounts annual report on form 20-F, and other filings as filed with the U S cigarettes and Exchange Commission.
The company doesn't assume any obligation to update any forward looking statements, except as required by law.
Please also note the bomb its earnings press release, and there's countless call includes discussions Delphine audited GAAP financial information as well as in audited non-GAAP financial measures. The Army's twice release contains a reconciliation of the Arlington non-GAAP measures to the audited most directly comparable GAAP measures.
I will now turn the call over to our foundry on C O. Mr. Xiaoping Chen Mr.
Mr Channel will deliver his remarks in Chinese followed immediately by English translation Mr.
Please go ahead.
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Thank you Mr. Chang I won't take any true play down from just remarks people discussing our financial performance for the first quarter of 'twenty 'twenty 1.
Hello, everyone. Thanks for joining on our first quarter 'twenty 'twenty wondering has come from co now breaking the optimization there that would put that book volume new product sales growth and enhance the brand recognition, we deliver strong net revenue that exceeded our previous guidance, increasing 64 per se on from the same period in 2020, well we're on.
Operations were impacted by COVID-19.
I haven't got margin recovered to 21, 1% from 18.8 points on a year ago, primarily attributable to net product portfolio optimization.
Our continued growth over the past several years has been driven by continued optimization is on the Iot products and holistic solutions.
Mission and integration is co sponsoring technologies alongside a deep understanding of that where you just don't need debt April we hosted I was tragic me for that launching down to with the theme on a IHOP. So with introduction on the AI strategy, new products, including the mineral water Purifier E L Ax and AI.
Smart-alec I bought it could their wisdom says that he's able to monitor human health debt.
And I want to hate it when she was able to have stopped into water quality, new AI air conditioners, the ranch with eyeball too and the best dog with AI assisted cooking functionalities.
I would put that on design to women on health care smarter vacation homes guarantee and natural AI voice interaction some new products encrypted wisdom on Sirius and supported by AI algorithms are able to collect the home into human health standup with users consent.
In addition, we focused our resources on developing key product category and they're rolling out more differentiated and industry, leading Kodak's. Some example on that's here we introduced a series of plenty of water purifiers that she has 2 per 1000 gallon tell the hundred gallon and envision jumped on to be honest here.
When did you realize large blocks into mill ratios of waste on the purified water.
Our cage T. A ph D who has been working on research and development for 3 years based on cancer feelings and kisses up water quality data to inbound our mineral water picked by our E I'll ask.
Richard Kim beneficial minerals for him in house during the purification process they.
They could do with nice margin youngster, there's multiple fly per Doctor is also able to adjust water quality to meet high end use those needs. We are happy in Danbury and water purification and have accumulated a significant number of innovative technology with more than 700 registered parachute, yes at the end of the first quarter.
Some of this pattern has been.
Got it on China excellent happened to walk off the ROI for by China National intellectual property on administration and the World intellectual property organization as well as recognized by China Association for quality inspection and other authorities.
Our Smith for Volvo business represents rapid development as well in particular in Albertas market and has been 1 of the key drivers of our first quarter to supply growth.
Our square the Robo export business, which was launched in the fourth quarter of last year has developed rapidly in mid April.
Southeast Asia, Korea, Australia, and other region and it has also expanded into North Europe. In addition, though Asian countries. This year.
We are expanding to a north American market.
We were somehow they registered our store on Amazon and accounts to sell on Amazon in the second half of this year and they will co operating with some K a off nice doors as well.
In the comparative split about rub on Montana, we find out when you show with our differentiated products. We introduced a C. Ourself automatic debt collection slip on both next year and the recently launched an 8 ideas or read on sweeper robot Alpha to pass.
Compared to the majority of high on sweeper robots and the market gets product encrypted with 4 days on sensors and are supported by AI I'll go with them for epitope, whose detection and avoidance is able to identify that really no obstacles camera, a wider range of angles and distances.
Well as NAV roofs, and support O T outbreak.
Well they'll continue to roll out more of the fish edits for available products and enhance our market shares in those domestic chemical bull market.
In addition to focusing on technology upgrades for the innovation.
Innovation, we also make efforts to enhance our I O T. A holistic home solutions and provides for where they can value added services and new content, including software update probably does maintain their services, we purchase discount and the Internet entertainment content as well as strengthened our service of timber sales.
Channel.
We think that off like CRE and C&I lending capabilities are the keys to Iot home industry, we have been vigorously promoting them offline comprehensive service model and 1 that he wants to know how we select high quality stores in each of raising our service on life and provides users with 1 stops.
Services, including self experience after sell in installation services.
With the rapid consumption upgrade and evolving yields on me users I cant on brown with debt fashion and bow in ethical quality all day to promote our 351 long term strategy and further develop out that the training ground for Audi home area. We are pleased to warmly welcome Mr. Bob bile acid.
Company's president prior to joining us Bob served as the general manager of painting and he has extensive experience in the consumer industry with more than 20 years.
We believe Barber will bring new energy and insight to our brand new development.
Looking ahead, we will execute on our growth judge from 3 per statute.
First it will cause got on top of Iot holistic home solutions 2 hours on 5 G tests AI types I O T put that strategy a second were looking bad debt related counts in improving for any influence in a position, yes, yes discounting wound in the Iot home solutions.
And third we will expand offline dos to integrity scenario based experienced in our services.
We believe that with the March for upgrades to our product marketing and channel as well as increasing pumping there was nation Yelp Helms modification, well, but they never for stand and helping you on maintaining our uniqueness in Iot home solutions area and bring long term shareholder value.
Oh, so that concludes our fondest remarks on let's now get into the detailed financial review of the first quarter 'twenty 'twenty, 1 as well as Alex for the second quarter.
On the net revenues were $1.26, Feeney R. M B, representing an increase of 64 per cent a year over year, primarily due to the continuous because that's for real out and if any of the increase in sales of new products or is this market expansion as well as in DAU basis on first quarter of last year due to.
COVID-19.
Our revenues from Iot at home portfolio increased by 111, 5% to 919.2, meaning RMB from 430 for poor selling many R&D for the first call you on last year. The growth was primarily driven by sustained sales increases for certain new product series.
Particular day bound me, Brian just went for about boats on the smart kitchen products.
Revenues from our home water solutions decreased by 4 per steel to 100, and the 3 points on 8 many RMB. The decline was primarily due to the decrease in average selling prices of xiaomi branded water purifier products and.
This was partially offset by the successful introduction and the increased test out there for new starts at Balmy, Brian do you watch a purified per day, which narrowed the year over year decline for home mortgage solution compared to previous quarters.
Our revenues from consumables were at 64 point, Amy RMB compared to 65 million RMB for the first quarter of last year revenue from small accounts fishing, others increased by $6.4 per cent to 167 for him. Many OMB from 157.8, meaning R&D for the first quarter that match here.
Gross profit increased by 84.
1 price down to 265 mini RMB and gross margin was 21, 1% compared to 18.8 presents for the first quarter at net up last year.
This is primarily driven by our efforts to shift the business and to put that mix toward higher gross margin for IDEXX, including the rollout of the new balmy binding why do people buy us and sway blah blah blah alongside the optimization of margin calls per day.
Lives on the cost control measures.
Total operating expenses increased by 63, 8 person to $219.8 million RMB, primarily due to the growth of our business.
R&D expenses increased by 10, 7% to 65.6, meaning RMB from 15.9 3 many RMB for the first quarter of last year on many due to debt increase those R&D experts in there related to salaries and expenses.
Selling and marketing expenses increased by 100, pinpoint a person to 138 mini RMB from 65 point find anywhere in the a year ago on primarily attribute book to Bill No base, if backed out the first quarter last year due to COVID-19.
When day Count me and it is very limited marketing and advertising activities.
G on the E. <unk> expenses increased by 17.1.3 per cent to 16 point to me anyway, it would be compared to $9.5 meaning R&D for the first quarter of last year.
Well I do true the increase of personnel and other related salaries and expenses.
Net income attributable to ordinary shareholders. Other company increased by 173, 2% to $49, 1, meaning R&D and non-GAAP net income attributable to ordinary share how would you assume to county increased by 106, 8% to 65.3, meaning our M D.
Additionally, our balance sheet remained healthy as of March 31st 2 on 'twenty, 1 we had cash and cash equivalents of my hand on your 6.3 mini RMB a restricted cash of 45.2 meeting on M. B, a short term deposits of 97 per gallon meteoric.
Be assured investment 596, when non many on me.
Now, let's turn to our knowledge.
For the second quarter of 'twenty 'twenty, 1 all we currently cause bad debt net revenues to be between $1.72 bidding RMB and the 1 point H 5 N E. R. M. B a represented a year of the your growth they want to 0.1 per cent to 9.8%.
On the about Lilly is based on the current market conditions and reflects the company's current and preliminary estimates of market operating conditions and costumer demand, which are all subject to change.
Well this concludes our prepared remarks.
Now I'll turn the call for a Q&A session. The head of our finance team is total weight per well drilling decision and answer the question.
Operator, Please go ahead.
We will now begin the question and answer session to ask a question you May Press Star then 1 on your Touchtone phone. If you were using a speaker phone. Please pick up your handset before pressing the keys. If at any time. Your question has been addressed and you would like to withdraw on your question. Please press Star then 2.
For the benefit of all participants on today's call. If you wish to ask your question to the company's management and Chinese. Please immediately repeat your question in English at this time, we will pause momentarily to assemble our roster.
Yeah.
The first question comes from Lillian Lou with Morgan Stanley. Please go ahead.
Yeah, Thanks allowed regimen and Mr. Chen I have 2 questions first 1 is on the sweeper robots.
What kind of growth we're looking for this year overall, because obviously in first Q has a very strong growth and momentum and strength. Just mentioned now we have to plan to expand our the region overseas and in second half, we will get into the U S on Amazon for any particular guidance on.
Or explanation of how weak on a squirrel that business overseas will be very helpful.
And the second question is on the a real major price increase impact.
Cause for SKU, we already saw day gross margin decrease on sequel.
I shall basis versus fourth quarter last year. So how are we going to look at the momentum of trends in the following quarters. Thank you.
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The margin are lumpy feel shots young law not so much cash since I just told me that she shot show a day homey and found that you do though Jay So all you wouldn't be taking shots sushi.
Yeah.
Okay. Thank you for let me ask a question for the first question about the strength of Wobble all true up for all of our business grows for us in particular in view of all my Granddad for parole book and we just bad for rapid growth for <unk>.
Brian This with a robust we continue.
On the domestic shrimp on roomba market.
Adjusted for market. According to always stayed on the market price all the shrimp for robot they expanded to rich ofer can be there and I am be by 'twenty 'twenty 1.
Gross tools tend to be there on I M b by 'twenty 'twenty 2.
There are more players in the industry.
And we also the market share yourself, Neil Bruce has been increasing since 'twenty 'twenty and this trend is expected to continue.
We also from our niche with all differentiated products, including a series of automated boss collections through our per well bolt on.
Yeah I know.
They used to Laredo simple robo, we recently introduced.
On research on this such a situation on the observation on the market B bounce off of him sweep of all boats we.
We are positive for our market share in domestic market.
Yes.
In terms of the global market. The market size is also a huge on promising we think.
For our research the thing deal on law potential opportunities, particularly in the Europe and North America.
We have so I'll slip for wallboard in Europe, Southeast Asia, Australia, and the South score for sure below book for this first quarter.
This market is sitting on previous expectation.
Net.
It's been true North America markets.
We recently.
Successfully register on our stock on Amazon and we have started to sell swift for lumber products and for the second half of this year.
We also plan to sell all products on from offline channels into North America.
We are both Spansion in North America.
Well, we just on market.
On a constant the global market sales. So it will become an important driver for our overall business.
On for the second question about the gross margin.
Raw material prices rising.
As we discussed compared to 2020 O for gross margin for 'twenty 'twenty, 1 would demonstrate a minute for recovery.
When you also disappears from for some seasonal fluctuations due to some promo promotional event.
Just the coming June 18th campaign in the second quarter, which we expect to have some impacts on our gross margin.
Secondly.
The increase on this raw material cost will also be a factor that impacts the gross margin for the whole industry.
For this we have taken some cost optimization measures to mitigate the impact from raw material cost, including price agreements with suppliers.
And so I'm kinda co upgrade for cost same thing.
But we noticed and they just news that'd be government plans to take measures to control the raw materials price uptick.
We asked about this.
As for the pressure for from this increase in raw material costs to be released under the government's involvement.
Yes. Thank you.
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So Mr. Jim hit from common comment Yeah, I would just quickly translate.
So that's for the first question about development you have to obviously the rubber business.
So we have established in independent departments, though I was Super Bowl book category and there we have been attracting the talent from all walks of life them outside.
For the second co development, yet badly slipping blah blah business are within 2 to 3 years. So what other God. He has 1 other key categories debt that we're trying to do.
So we are very confident that debt put this category will be 1 other dry barriers go both to other top 9 adults as well as 2 done on a profitability yeah. So debt commentary comments on mob on Mr. Ted I Hope that's helpful.
So sometimes you know tens on a volume shall we say Asia etcetera.
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Attributable debt column clunky handle part of your book.
[laughter], Oh gosh, it depends a bit on gotcha.
Oh, yeah. So we already have some internal counsel regarding them on hours through the rubble category in terms of pro debt and establishment Yep Yep a team development in both debt.
Good day methane global market now and our aim is to develop a debt.
Instead of a robot on category Yep, that's it.
Yeah.
The next question is from the way he and Rudy way, let's see I see see please go ahead.
Hello, and thank you very much.
For example.
And actually I have 2 classrooms here for faster.
It was about the domestic market development.
We know the actually the carbon merger or if there isn't a book.
With Xiaomi is on.
And Ah ha powder com for named Kras to further promote the sales on the brand and the product on the domestic market.
Especially I preferred shares in our water purifiers, and a robot vacuum cleaners and the second on the classroom.
About it overseas.
For like are we going to promote or more categories to overseas or are currently we just are limits on the Calgary too like the water purifiers and robotic vacuum cleaners.
My classroom for sure.
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Yeah.
Oh, Okay, I will just quickly translate our.
So for the first question about how to develop Abbott on blended business in the met market.
So we still put a focus on developing our I O T at home holistic put that I'll do you do we have expanded into like unwound over 60 on cabin product categories and across the utmost of Ho Hum Thomas scenarios and then we also have some.
Key categories that have used other we aim to a.
The bad loans, most a deaf ear to drive other brand Amstel.
And the position that as yes, they're trending brands in I O T at home holistic solutions area.
So as wisely no doubt India had to have 2.1 year. The concept of Iot at home is going to vacation has increased in domestic market. So we are confident all debt.
We can have a better development in the domestic market with our advantages and negotiation on a show for that she categories. We think the watch or if you're firing swayed the rubber business are skewed a kid category.
Velocity, you're on the web will be bad involved and you're investing more on R&D and marketing resources, meaning debt..2 categories. Then we believe there's 2 categories will be hours. So the drivers for our top line.
Oh for Ya Oh, that's from classroom about overseas market expansion.
So oh, so definitely hour a day, we will still focus on the development of our slip a rubber business in the export market. So so far we don't plan to expand our categories.
But we will expand on a global markets as well as a child news and to increase our bonding in Florida in overseas market indefinitely route boat category.
Thank you.
Okay.
The next question comes from Roger doing with Needham and co. Please go ahead.
Alright. Thank you for taking my question on 2.
2 questions for your first 1 was a follow up on <unk>.
Raw materials increase on price increase so can management give us a sense of just how much the raw material increasing the lifestyle for several quarters.
Do we have any plan to increase or a retail price is like others have done in our industry and the second question.
Around the pricing strategy for sweeper robots internationally.
It was the project strategy different internationally versus domestic and a role that continues to be a margin driver for the year. Thank you.
Sure.
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Because looking back against high on the General idea was particularly a book we should hold on women a communist chocolate and elite till the day you got to your Oklahoma interest a woman.
What do you the cash on their shoulders, you go Oh weighted towards a woman the tie your water multi you pick a whole different you'd have to go out on a country by country. She literally all day.
For sure, but we'll continue on to.
For each with the she ethiop in Shanghai, which will then be attempting did how many doors for Maldives adult Toyota coming from Alibaba.
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2 women on then channel channel, we'll put in literally the time into other part.
But pushing the Coco to social on pulpwood of shelf total you didn't talk about the shelf other eligible jump on good times on it from the jump from maybe women can tell shelves, where there's 1 share of women. They don't show, but it is a chocolate and got do it yourself with a little Kid, who do it quicker.
Click on how you're gonna be Autocad, Tricia will then day come into other that you could push it on my Tiago would features required for the robot to this how did you that they're doing with yourself.
They can go up she lays on women daughters, who can called Linda beautiful, but she tried for somewhere to go on that Joe ARPA plants don't have been on how does your pin on than the true mutual job. There was anything on the Kimball dogs aren't going away on generally tell me that from called on the drumbeat that day.
Shelby you Sumit on the channel that Chancellor they don't drink all I'm going to you're on a budget.
On the day, all equal what those shipyard commvault on debt, well then day Oh Joe.
Oh Joey.
Don what would you on the shoot on much at all but to me those would be on which actually made on the book from looping pipe the OPM co issue for months.
So I took a total from ill say call. It took away. The Wuxi you don't you don't pay your water.
You'll you'll come she lived on when he goes he got until the weighted cobalt you'd want that to me that he was general but she wanted to buy it didn't look on because she got shiga tie you called out from Goldman on the Jamaica could you come back home.
Okay, Alex actually translate so for the first clutching about impact from a GAAP increase to have day realm, Ontario, Calif, Dan did they impact while our pricing strategy.
So we have seen like the other inquiries up there real material accounts increase doesn't it for cardiovascular and Dell we have taken like a 3 measures to mitigate impacts so first on.
As some other company debt.
And the street that we increased our E. S piece on some of our product to some and with no breaks down. So second we also optimized the south end of product structures.
So we promote sales more products with higher margin for example in the smart kitchen products, we sell more a me too high and away for Demetrius, there's higher growth market.
Oh very good we have been increasing the person trains a day round and the contribution from the bond of the house too.
To mitigate the impact up debt real material cash price I believe that for single product.
So just stay on for a fair question first quite a true.
So for your second question about depressing strategy for hours spent by real volume domestic domestic and global market. So we are positioned now, let's say barbell Bally asked me too high on the products in both our domestic.
Domestic and global market itself for for the domestic market. So most of our sleep on Bell box.
The Arpus are wrong 2000 to 3000 RMB. So that's about the average U S. P stuffed up on some sort of a robot brands in China.
So we have some depress your anti functionality.
So she has oh see ourselves for the morale bar that we introduced last year, which he handed to the auto debt automatic that connection and the depth of your where you introduced a laser radar sweeping robot, which is also a differentiation for our so about rub on Calgary.
So for the local market, but I also am to position, yes, you have to meet to high end products for this category.
So the average selling prices it's above.
I'm off to a global brand.
Oh, so that's the comments from Mr Channel Hope that's helpful.
Thank you so much.
Uh huh.
[laughter].
As a reminder, if you have a question. Please press star then 1 to be joined into the queue.
As there are no further questions now I'd like to turn the call back over to Cecilia Li for closing remarks.
Oh. Thank you once again for joining US today, if you have for other questions. His contact through a day county information on our website or debt passing take you up on me Investor Relations, probably net Oh. Thank you all have a good 1 auctions isn't true.
Sure.
This concludes this conference call you May now disconnect. Your line. Thank you.
Yeah.