Q2 2021 Tuya Inc Earnings Call
Good morning, and good evening, ladies and gentlemen, thank you for standing by and welcome to Korea, Inc. Second quarter 2021 earnings conference call at.
At this time all participants are in a listen only mode.
We will be hosting a question and answer session after management prepared remarks.
And I will now turn the call either Judy Fox speakers today are Mr. Richard <unk> Investor Relations supposed to get direct us to Europe. Please go ahead Sir.
Okay.
Okay. Thank you.
Hello, everyone and welcome to our second quarter 2021 earnings call joining us today our founders.
In Europe, too young, it's Gerry Wang and our CFO, Mr. Jesse Neal.
You can refer to our second quarter of 2021 financial results all of our company's IR website at IR Dot two dot dot com.
Also access a replay of this call when it becomes available in a few hours.
Website before we start please note that this call may contain forward looking statements made cars onto the safe Harbor provisions for the private Securities Litigation Reform Act of 1995. These forward looking statements are based on our management's current expectations and observations that involve known and unknown risks.
Certainties and other factors not under the company's control, which may cause actual results performance or achievements of the company to be materially different from the results performance or expectations implied by these forward looking statements. All forward looking statements are expressly qualified in their entirety by cautionary statement.
The factors and details of the company's filing with the SEC. The company undertakes no duty to revise or update any forward looking statements for the selected events or circumstances. After the date of this conference call I will now turn the call to the first speaker today, founder and CEO of <unk>, Mr. Jerry one.
Okay.
Particularly with Angelina Jolie effect.
Definitely.
Hello, everyone and thank you for joining us cloud second earnings call since going public earlier this year.
Oh free time negotiation that halfway Bob O'brien.
Yeah from what I'm reading into data center and it does anything change there.
For the year.
Yeah, you can assume that salaries are central bouts attentiveness and that's it.
I'm very pleased to report that you are seeing a sustained its strong momentum across the entire business as we continue to successfully execute our growth strategy. Despite the macro headwinds that are impacting the industry.
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Michelle.
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Can we all delivered robust results in the second quarter as our total revenues grew by 118% year over year to age of four 7 million U S dollars revenue for all Cuddly IOC pass business and all SaaS business, both achieved over 160% year over year growth.
Our gross margin, so a steady quarter over quarter increase to 42, 2%.
During the second quarter global chip shortage became more severe but thanks to our highly scalable and valuable global Iot platform. The strong network effects of our business model and the economy of scale. We have built as a first mover you know industry, we were able to continue providing comprehensive and cost effective Iot.
Services and unique solutions, such as our Iot microcontroller alternative solution, so both our existing and new customers on the Iot platform in.
In doing so we enhance their competitiveness in their respective industries support them and dealing with the chip shortage and so to enable them to quickly enter the market and grow into Iot leaders.
In addition, during the quarter, we ceased the opportunity to reserve talents and optimize the operating efficiency.
Operating margin, excluding the impact of share based compensation costs further improved year on year.
Paul Tomkins than we do.
Okay, its elements, particularly checking that chamber.
Next I would like to share some updates in terms of customer acquisition product development I know general progress.
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Union, it's easy to look our team within that at all.
You have to do more of the Yum by Baidu.
As a leading global Iot platform in the business of empowering enterprise customers with technology, helping our customers achieve success is what motivates and drives us every day.
For the trailing 12 months ended June 32021, the dollar based net expansion rate for all Iot Paas services was 211% exceeding the industry average for the seventh consecutive quarter. Since we began tracking this metric.
The number of premium customers, which are defined as customers contributing over 100000 U S dollars in Iot past revenue during the trailing 12 month period grew to 285 as of June 13th 2021 from jumped up from 216 as off much just there.
First <unk> 2021.
Income from it but if you don't want the ILD past Fortunately cowboy <unk> got some cool so food a couple of times. So it won't be sent down to EBIT Easter timing coincidence, we implement ERP I quickly into incentive to work with them.
The fundamentals of our team within that now thank you.
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During the quarter, we acquired over 700, new Iot past customers growing our Iot past customer count by nearly 113% year over year.
Meanwhile, the number of brands on our platform grew to over 3300 from approximately 3000 at the end of the first quarter.
It's very exciting for us to see our customers from various industries all over the world flex their credit creativity, and Iot product and market development.
Empowered by the Triage platform. These brands channels service providers and more are able to see their innovative idea come to life in the form of smart devices and software services, serving a vast and diverse number of use cases and need for various industries.
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Jonathan Yoyo, sometimes.
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Jonathan do you plan the way the highway it can get a campaign with Janssen.
So as you pay for the Iot piece.
For example, Goodyear Europe, one of the top four tier brands in the World shows all Iot pass emphasis to empower their scooter product and features our power by Chagall logo or as we like to call. It. The P. P T mobile on its products to showcase the brand influence about Iot.
Past engaging in.
Engaging ecosystem.
And the wine industry, but was most of bouygues wine storage organization in the wine cellar industry joined Westwood to explore the use of smart cold storage for one.
In the home furnishing industry and international furniture group with thousands of offline stores and in online B to B platform develops what height adjustable tables and chairs on all platforms.
These products are the first pieces of furniture to be powered by Julia.
In addition, our world we now been trio in European Bill T and personal care brands also chose to have a platform to develop smart makeup mirrors, so dispensers and more.
Finally in overseas cleaning product business owned by a well known public home appliance scrubbing, China chose to yeah to be its first Iot platform provider.
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<unk> you John.
<unk> grew more than 10 countries.
Jonathan.
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We have also seen many highly experienced retail channels working towards providing their customers with better product experiences through their private label products powered by <unk>.
Some of these channels include one of the largest local online channels in Latina America favorite by the capital markets day.
H C, which is a home appliance and furnishing retail channel listed on the Hong Kong stock exchange with hundreds of stores in Hong Kong and Macau.
One of the most popular shopping apps and e-commerce platform in Asia.
And missile a domestic global fast fashion retail channel from China, et cetera et cetera.
Kung Yeung, who the triage.
Hi, Hello, Cherilyn, we are selling fully owned shop when in fact, the idea to rebrand Tula Suzuka, we often end up <unk> <unk>.
<unk> for the social experiences.
Yes.
During the second quarter, we leverage our Iot brand ecosystem and strong network effects to help dozens of customers establish new channels and obtain exposure through the resources of the number of global retail Giants.
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In addition to acquiring new customers in various industry. We also continue to empower entirely new product categories.
In the second quarter yesterday youth empowered by Julia reached 410000 compared to 310000 at the end of the first quarter.
We further expanded our P. B T product line capabilities and continue to help customers and the market with unprecedented opportunities.
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Tommy Kim CRT the woman Lewis <unk>, let you see the Chinese dumping mid campaign towards hunting from guidance to assign you can get them.
So we have seen higher prices from the pool.
This is linked to the Iot, who told me pay your planning them kind of lead times.
With that with the Hanjin Subic, one kind of changing for container.
Well well established lighting product lines, we launched and supported a series of professional lighting products during the quarter that cover various marched agricultural commercial and industrial use cases.
Agricultural applications as an example, we began supporting various Iot plunge lighting and cultivation management capabilities, which have broad prospects for planting and cultivation and greenhouses.
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Jan.
Hi, Paul at the time painful.
And the robotics product line, we upgraded the Iot capabilities needed for robotics, sweepers, and rich app interaction and Iot transmission capabilities and improved our various development products and services across all our product categories.
Scott anytime in zone, Woodson and John <unk> <unk>.
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During the quarter, we gained traction with home appliance brands, including companies developing smart capsule coffee machines.
As with smart recipe capabilities and food approach.
Utilizing our knowledge of the industry, we optimize compatibility and interfaces to enable our customers to develop products that are on par with the leading international teaching appliance brands.
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We continue to observe and react quickly to changes in the booming smart pet product market, which has been growing rapidly since 2020, we introduce innovative products such as much pets with containers leashes and boy, we continue to maintain a quarterly iteration wage of more.
Five versions for existing pet choice and food defenses.
Listen I won't take you start the year with chicken.
Next I would like to share some updates on our SaaS segment.
The ability to.
<unk>.
<unk> rented and sometimes so accident Fabien Simon then decrease in signing more of an annuity.
In the second quarter, we launched our self service equipment sets. A pilot projects include self serve as co working spaces and our men's jeans, which we are operating in Beijing shaman and several other cities to test scalable commercial models.
So essentially it sounds as though we don't we license we can consider 30 cities visual one so as you saw from hurricane more medicines TD <unk>, Suzanne hanging on that too Jim that DRG to Sudhakar.
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Well Smart community SaaS segment, we completed upgrades and optimization for the core modules of our product around the top floor designs and community management needs. After feature committee. This allowed us to achieve component taxation of Iot capability for various things across smart.
During the quarter, several leading real estate groups in mainland, China, and Hong Kong, such as the Hong Kong listed on land groups and zinc ore Leach I'm group initiated partnership with us.
Thanks to all our bundled hardware ecology, and the software capabilities of our Iot platform recognitions and partnerships with many of these real estate companies have been sold it in many leading hardware companies in various verticals sharing their resources with us to participate in real estate community projects.
This is one of many examples that showcases the strong network effects of our business model.
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Well Smart hotel at an apartment SaaS solution, we continue to optimize the basic capabilities of our guest rooms and public area solutions in the second quarter means.
Meanwhile, we started to promote international version, signing several leading hotel and apartment service providers overseas paving the way for subsequent comprehensive marketing initiatives.
In the second quarter, the renewal rate of all hotel and apartment starts services remained at around 90% and we remain committed to maintaining a similar level of renewals going forward.
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Based on powerful Iot capabilities, our smart SaaS business components.
Complements our smart device ecology, advancing with our Iot past business side by sides utilizing these synergies our Iot business continue its.
Hello, and as part of Japanese signaling to the market on how to effectively serve the inelastic needs of the Iot era.
She said I wouldn't say that those will continue to be Iot cutback in that existing clients.
Next let's talk about our Iot development platform.
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The unique design of Algeria, Iot platform enables enormous scalability, we're committed to decoupling. Our many different operational features and use cases into individual components. So that develop developers on our platform. They can mix and match to meet their unique and evolving needs.
By extracting and recompose and these components.
Each existing feature can be reused and expanded into new development areas and we have pledged their integration into our Pos solutions in the future.
As a result, the number of developers increased to over 380000 a day.
End of the second quarter from standard 20000 at the end of the first quarter.
Example, technology driven residential service providers.
<unk> uses to Iot development platform to explore innovative smart living experiences.
In addition, one of the top smart kitchen platform service providers, serving the world's leading kitchen appliance black brands all developing various recipes on our platform.
Another leader in the professional equipment management industry has become a developer on our platform designing and developing a smart professional equipment storage box and building a complete set of smart device management solution.
These are there are countless cases like these as we continue to deepen our understanding of each industry and upgrade our respective products, we'll be able to also make prudent decisions on entering new Paas solution segment at the appropriate times to better serve developers around the world.
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Okay.
Finally, I have always regarded data security and compliance as a top priority and has invested heavily in this respect.
With built in all rounded guarantee system to cover the data Trinity of security defense privacy protection and system audits.
In addition, we are actively cooperating with the world's top security assessment companies audit institution and law firms in the industry to verify to consolidate and consolidate our security and compliance capabilities through independent testing in August by third parties.
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<unk>. Thank you.
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<unk> central to support them.
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And Kimberly Clark.
In the second quarter, we passed the assessment for Iot security certification from ILEC steel lines and were initiated at some member.
I like steel license is composed of over 200 industry, leading operators service providers, Santa Cruz, and compliance labs et cetera, committing to promoting the best security practices.
It's sports includes leading companies like Amazon and Google and Honeywell.
In the coming third quarter, we're launching a new round of deeper and more authoritative security testing with several independent third party firms with long standing reputations for professional ethics, Indeed, the street worldwide.
These firms will provide us with professional security assessment services and independent information security penetration pets.
These services will help us to ensure our platform always oppose the highest security standards and photo verify that the correct look at localization of data.
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Useful.
Data security and product R&D go hand in hand to ensure continued strategic focus in these areas. We continue to make investments in our workforce as of June 30th 2021 our employee count had increased to over 3500 from 2900 <unk>.
As of March 31st 2021.
R&D staff maintain over 70% serving as a solid foundation for sustained future growth.
It sounds so what they did a tangent to that printer just on Iot and a woman the CFO jessi actually at home that high reaching one.
And that concludes my sharing off the second quarter I will now turn the call over to Jesse I'll CFO to review the financial details.
Thank you Sherry before I begin please note that all amounts are.
In U S dollars and all comparisons on.
Our year over year basis, unless otherwise stated I'm pleased to report that our total revenue for the second quarter.
Sensors.
Maintenance by approximately 5% the robust operational and financial growth, we achieved in the second quarter was mainly driven by the solid growth of all Iot Pos revenue, which increased 163, 9% to $76.9 million in particular notable growth in business.
From both existing and new customers combined with all the rapid deterioration of products and technologies led to our success during the quarter. We had about 230, Brent customers that increase their Iot past orders by more than five times.
The oldest in the same period last year, that's for all products.
More and more I'll I'll I'll keep hot product categories are achieving meaningful growth and are being recognized by major leaders in the global Iot market for example deployment.
Agricultural products empowered by our Iot Pos grew far more than tenfold and deployments of energy saving products were over eight times.
We also saw strong growth in deployment of new product lines, we released in the first quarter.
Including outdoor transportation low power consumption serious.
All revenue from others increased to $3.4 million, representing a 175% of year over year growth, we saw increasing demand from service providers eager to deliver a better software enabled services.
For smart things.
There are these combination of to your first.
PBT devices. Meanwhile, revenue from our non core business of smart device distribution decreased by.
48, 1% to $4.4 million.
Affected by customer purchase patterns in the business demands.
Gross profit increased by.
Two or three 9% to $35.7 million, while gross margin improved to 42, 2% from 33% same period last year.
Iot Pos.
Gross margin continued.
This increased to 42, 2% to 42, 4% from 32, 7% a year ago, representing the 10th consecutive quarter of improvement.
Primarily due to our increased economies of scale improved efficiency for Iot past deployment achieved through effective R&D and expansion into higher margin Iot parts product lines.
<unk> totaled 285 premium Iot Pos customers for the trailing 12 months ended June 30.
2021.
Or 14, 3% from 133 for the same period ended June 30.
2020 among this.
Incremental premium customers more than 50% well engaged in more on the big alliances kitchen appliances and the sensors business.
During the second quarter of 2021.
Premium customers accounted for approximately 86, 6% of all Iot Pos revenue.
It's all based on net expansion rates for all Iot power segment improved two two.
211.
11% for the trailing 12 months ended June 32021 up from 160% as of June 32020. This marks the seventh consecutive quarter, we have maintained a 160% or higher ever since we began tracking this metric this reflects our strong.
Our ability to extend our platform usage over time and the real revenues from existing customers.
Now turning to our operating expenses.
Please note that we are excluding share based compensation from our non-GAAP numbers to provide greater clarity on the trends of our actual operating expenses. So that you can reveal performance in the same way and solid management.
During the quarter non-GAAP R&D expenses increased by 153, 2% to $39.7 million, primarily as a result of increase in R&D personnel.
June 32021, the company had about 2570 on the employees.
Approximately 120% year over year as a percentage of total revenue non-GAAP R&D expenses increased to 46, 9% from 44% of a year ago, primarily because our well executed talent acquisition strategy.
<unk> achieved a faster expansion of our R&D team relative to our revenue growth during the quarter. The second quarter. It's usually peak season for talent recruitment, while most of last year's HR activities, including interviews hiring was suspended due to COVID-19.
Continued investment in R&D talent is critical to our growth strategy and allows us to expand our product coverage.
And enhance our service offerings and widen our lead in the Iot industry non-GAAP sales and marketing expenses increased by 146, 6% too.
$17.9 million.
Mainly due to increases in employee related costs and the marketing spending.
Marketing spending during the quarter includes cost related to holding events like TUI, a Bluetooth developer conference.
To which released between US all in Bluetooth development capability roadmap to enable Bluetooth developers to get ahead of the game. It also includes our TUI outdoor conference, which published lifting Iot capabilities.
Oh to travel on the transportation devices.
Sales and marketing expense also include costs for business development related travel and meeting with customers as the world Reopens to strengthen good Faith Corporation in the world trusted relationships with our customers.
A percentage of total revenue non-GAAP sales and marketing expenses increased to 21, 1% from 18, 7% a year ago.
Non-GAAP G&A expenses increased by 111, 7% to $5.7 million, mostly due to team expansion and increased costs related to being a public company. We have hired and will continue to hire more professional and experienced employees consultants and service providers too.
Further improve.
Our internal management as.
As a percentage of revenue non-GAAP SG&A expenses decreased to six 8% from 7% a year ago.
In the second quarter, our non-GAAP loss from operations.
$26.5 million, while our non-GAAP net loss was $23.1 million, our GAAP and non-GAAP operating margin was negative 31, 3% narrowing full full percentage points from negative 35, 7% in the same period of 2020 and a non-GAAP.
Net margin was negative 27, 3% narrowing 613 percentage points from negative 33, 6% in the same period of 2020.
Net cash generated from operating activities for the second quarter of 2021 was $5.8 million.
Dollar or six 9% of revenue excluding a one off cash inflow from our IPO Depositary bank related to our IPO $7.2 million in net cash was used for operating activities in the second quarter or negative eight 6% of our revenue.
Compared to seven zero million net cash used to 18, 1% of revenue in the second quarter of 2020 the improvement in net cash used in operating activities as a percentage of revenue and the narrowing of our operating and net margins.
Whats mainly due to the increase in our operating leverage as we achieved very strong growth, while maintaining healthy margins, partially offset by the increasing expenses.
Moving on to the balance sheet as of June 32021, our cash cash equivalents and short term investments increased too.
1206, $56.1 million from $179.8 million as of December 31st 2020, primarily due to the net proceeds obtained from our successful lifting.
On the New York Stock exchange and the proceeds received from exercise of over <unk>.
Hello meant option by the underwriters in April this year. We believe this balance is sufficient to meet our current liquidity and working capital needs, while further enabling us to strengthen our business now.
Now turning to outlook for the third quarter of 2021, we expect total revenue to be in the range of $83 million to $86 million. This forecast reflects <unk> current and preliminary views on the market and our operating conditions, which are subject to change, although our customers face a series of challenges.
Including Amazon strict execution of solo policy rising raw material prices and a shortage of semiconductor components.
Rich surgeons, we continue to support our customers with tight over the near term difficulties by powerful capabilities of Iot platform innovations.
This concludes our prepared remarks for today operator, we're now ready to take questions. Thank you.
Thank you.
Ladies and gentlemen, we will now begin with the question and answer session anyone who wishes to ask a question. My press Star followed by one on that Touchtone telephone if you wish to remove yourself from the question queue. You May press star followed by Chi.
When asking a question. Please state your question in Chinese Fast then immediately repeat your question in English for the convenience of everyone in Nicole.
And he wanted to ask a question May Press Star followed by one at this time one moment for the first question. Please.
First question comes from the line of young with Morgan Stanley. Please go ahead.
Uh huh.
Hum.
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Please begin your call.
Well I will do a translation.
The first question.
Management give us more color.
You sure.
Serge replacement plan introducing good to.
Talk to you on the gross margin going forward.
Second question.
Uh huh.
You picked up any of the.
Gulfport is e-commerce stores.
I mean, what you see is actually to a customer.
With you.
Oh interesting Magoo, Steve Voorhees.
Sure.
Thank you.
Okay. Thank you yeah. So for the first question and our plan to.
We asked nine major product categories, all eligible for the MCU chipset to replacement plan.
We started this early this year to how cloud customers to overcome the difficulties of semiconductor shortage.
At present, our constant okay.
It's in the small home appliances sector benefiting from this plan. The most majority of clients who have a need for this plan will likely trough as planned.
We will introduce more chip replacement tenants in the future.
Our main mandate or chip manufacturers is to further design chips. According to our requirements and the computing power needs. So for example, we plan to replace those chips that currently cannot handle a certain degree of high precision ADC digital to analog conversion.
So a multiplex.
Motor driven equipment.
Part of our strategy is to help our customer to succeed so professional chipset replacements are similar to the industry applications in terms of being more vertically focused reducing customers all in costs improving value proposition and are solving the problems of chip shortages.
Our gross margin will remain similar although the cost of chips will increase slightly our product price will also increase.
Passes to the customer.
So regarding the second question about the impacts of Amazons pending.
Cross border E Commerce stores. So first this was an unexpected event happened in the last couple of months.
The majority of our customers sell their Iot products through offline retail channels are we roughly estimate 80% of power by two young.
Iot devices were sold through offline retail channel.
So there are a limited number of e-commerce customers were impacted by this unexpected event.
Our e-commerce customers all have deep experience in product development supply chain and E Commerce operation and they are very resilient.
For a limited.
Number of e-commerce customer impacted there very actively responding to the changes.
They are opening new starting on the phone and also opening stores in other online platforms setting up their own independent E Commerce tool and also.
Through all the help explore offline retail channels.
So this in fact at the Q3 result in a limited scale and was already reflected in our Q3 revenue guidance.
From a seasonality perspective July and August usually our off season for consumer electronics Oems and the Pyxis and run from September to December and the holiday sales and also making up of long vacation of Chinese new year.
So we believe this impacted.
Our impacted e-commerce customers, we will have a decent recovery in Q4 and this is a one time event we remain confident.
Our full year result.
Thank you.
Okay.
So we can now take questions from.
Second.
Harris.
The next question comes from the line of Emerson Chan with Banc of America Securities.
Please go ahead.
Okay, well, thank you everybody.
Give me a deal.
So this is why you saw Walnut Hill funds Hog T D.
The truth is equal so Doug this is.
<unk>.
Hi, Thank you management I just have one quick question.
My question is regarding all roughly a mixed fiber for the category and by region in the second quarter. Thank you.
Sure. Thanks, Emerson so in terms of.
The revenue by region.
Our second quarter, it's not very different from the previous quarters, we disclosed so north America contribute to about 30% Europe.
Europe contribute to about one third and the remaining of the road, China and other places contribute to the rest.
We see.
All the regions showing strong growth in demand for Iot device and also Iot stuff.
And some regions show very.
Surprisingly a strong need for example in Q2 in Latin America.
A big market opportunity for example, medical the revenue contribution from Mexico increased four times in Q2 this year.
And also we saw very strong growth in our bridge.
British German.
Netherlands.
So we will continue our the region diversification.
And we will continue to grow revenue from the globe in terms of the product mix.
Let me get into the Iot part I think thats, usually the question about so last quarter. During the conference call. We disclosed the revenue contribution from lighting and electrical products with close to 60%.
In Q2, it's dropped a little bit too.
Around 50, 657%.
The revenue contribution from appliance, which including fixed small time is the kitchen appliance Patrick Pas contributing.
Contributing over 15% increase a lot we saw a very.
Strong growth from our appliance product for example, pet product.
Vacuum robot vacuums.
He has contributed to continuous revenue contribution growth from our pilots and also the contribution from sensors and the security products.
Bill to about 15% of the total Iot revenue.
The breast product, it's usually the new products.
We are folk songs.
Including like outdoors.
Energy related product.
And attainment products agricultural products or those that we combined into the second one we call others on your new segments. That's also contribute to close to 15%.
Also in the past few years, we do see a great trending that the revenue contribution from lighting and electronic products a continued drop.
The very strong growth from appliance from Samsung the security products and other new segments.
Thank you.
As a reminder, if you'd like to ask a question. Please press star followed by one on your telephone.
The next question comes from the line of Kai Qian with C. I T. SEC. Please go ahead.
Yeah.
And can cause future vehicles.
Oh hi.
I sure hope so.
Archie.
Well so on the one meal deal and she knows how to you syndrome macondo to assure that they ship to me.
Hum.
Thank you <unk>.
<unk> excuse me and no ammonia Schwartz to pencil.
Cool.
No profit.
There are ones that you are going to welcome Eric Hugel.
Could you walk all the three cohorts.
She has a question.
Yeah.
Paul.
Listen the hardest Shuang Hugo.
Wage in Colorado.
Oh go ahead sorry.
On the material component.
Oh. Thank you. Thank you John.
Chris.
The first one.
Present, which categories.
Oh cool posture.
Which of your categories.
Opportunity to recall on.
On the second one.
Commodities ultra large cosmos was high with countries are not what you should know pursuits onto our platform.
Please give more color.
Thank you.
Okay. Thank you.
For the first question.
The relatively large scale product categories the growth rate.
Appliance.
And our sense of security products grow very fast they each grew more than three times in the second quarter.
The flaw.
In the new small scale categories are the growth rates of entertainment.
It did grow to more than four times and sports and fitness exceed six times energy conservation category exceeds eight times and also growth offer smart agricultural category is 10 times.
So we do do you see the very strong growth opportunities for those categories and we'll continue that growth by supporting our customers.
We spent into more such creative Iot devices.
And there's a potential for it products in each of the major categories really depending on the region timing.
And the circumstances.
After evaluating the macro environment, we are optimistic about the growth of.
The following categories.
First we will continue to support the outdoor and the variable products with broader application scenarios.
And also the digital product.
We also see a very big potential for example, including the fast charging product.
And also the high end on the youthful appliance, including the robot vacuum.
Which has been a very popular and they still have plenty room for market expansion.
So.
And also the entertainment product.
So for the for the second questions.
Our platform, we do see continuous strong growth of our.
Premium customers and every quarter there are customers.
They grow into.
Premium customers.
The characteristics, we observed from those customer with high growth potential and repurchase pattern.
In summary, they they have a few common things first state.
That's our strong belief in and the passion for Iot and to have a clear understanding of small products and a small business, but they also have a very clear blueprint for planning in the Iot business. They recognize the threat intelligence isn't just about a wifi connection.
Not just about a up they're willing to invest in smart products in the business and also a second they have a very clear understanding of the consumer.
Humira demand.
So we empower them to be smarter to focus more on the product R&D.
And thirdly, they usually have.
Quite strong channel resources.
And understand how to do the consumer traffic operations, leveraging close loop business ecosystem enabled by us.
Iot platform. So they are able to obtain positive market insight, which foster a virtual cycle of development. We also see some original difference. So for example in India, usually new players from other industry tend to be more successful.
In in expanding their small products versus the traditional consumer electronics companies.
And then last one about our sock business.
We have continued our strong growth momentum of soft business in Q2. This year now let me give some more details. So for example.
But he a smart community.
Soft business we have.
Developed business.
Contract with a feel a Hong Kong listed companies are one example.
Is the leaching Legion group.
And also the other ones L V T M group International and diversify the group companies.
And the second one for the hotel business, we established the cooperation with.
From a group of top tier hotel chain covering more than 300 cities in China with its 15 hotel brands and also.
China, Hong Kong, the largest provider of comprehensive services for long term apartment rental business.
Hong Kong covering 53 cities in China are managing 6 million apartment rentals.
Software offerings, So Oh channel cannot become our developers and.
Take our Iot apartment sauce for the apartments.
Software offering.
In terms of the Smart hospital.
Commercial lighting.
All of our team completed a high and a C T nursing home project.
In Singapore and also.
Had a cooperation with the semi layer by layer opened.
The retail stores are in China, though they opened 800 stores in China. This year so.
Each store that would take our commercial lighting stuff.
And there are a lot more.
Examples like this for the self service US we just started we already have a <unk>.
Very.
A very important client that's C on group, which was listed in.
Hong Kong. So we worked with say on group to develop a self service.
Offices are very tiny coupe placed in the shopping mall.
And the the office building.
The group operates.
To provide a convenient kind of couple of ourself.
Neat for those customers in the retail shopping malls and also who are probably come to a meeting but a few hours earlier, so they need a such a oh places to do the work.
So we expect our.
This business will continue.
Strong momentum in the second half year and also are we.
We start to us given the COVID-19.
Took the Covid it was getting.
A better a more countries will open up so we are taking the fastest is market share overseas I think second half year.
Okay.
Okay.
Okay.
Okay.
As there are no further questions at this time I would like to hand back to our management.
Instrument for closing remarks.
Yes.
Yeah.
Okay. So thank you again for joining our call. If you have any further questions. Please feel free to.
Context also request through our IR website, we look forward to speaking with everyone. In our next earnings call have a good night.
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