Q2 2021 Viomi Technology Co Ltd Earnings Call

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Hello, Ladies and gentlemen, thank you for standing by for <unk> Technology Co Ltd earnings Conference call for the second quarter of 2021 at this time all participants are in listen only mode. Today's conference call is being recorded I would now.

Let's turn.

Over to your host Mr. Qi, Li IR director of <unk> Company. Please go ahead to failure.

Thank you operator, Hello, everyone and welcome to Vomit Technology Co Ltd earnings Conference call for the second quarter of 2021 as a reminder, discount France is being recorded it comes financial and operating results.

<unk> issued a press release earlier today and are posted online you can download the earnings press release and sign up for the county email distribution list by visiting the Asics you of the company's website.

Alabama Dot com.

Bidding todays call Mr. Xiaoping, Chen the founder Chairman of the board of Directors and Chief Executive Officer.

Nicole will now need to wait sometime.

Our finance Department Chemical management will begin with prepared remarks, and the call will conclude with a Q&A session.

Before we continue please note today's discussion will contain forward looking statements made under the safe Harbor provisions of the U F public against Litigation Reform Act of 1995.

Forward looking statements involve inherent risks and ethnic income.

As such actual results may be materially different from the views expressed today further information regarding these and other with an answer and it is included in our annual report on form 20-F, and other filings as filed a worthy as SBC become dozens.

Any obligation to update any forward looking statements, except as required by law.

He's awesome melted down its earnings press release in this conference call also include discussions of an audited GAAP financial information as well as unaudited non-GAAP financial measures Wellness press release contains a reconciliation I'll be an oddity.

Non-GAAP measures to the unaudited most directly comparable GAAP measures.

I will now turn the call over Chao founder and CEO, Mr. Xiaoping Chen Mr. Chen will deliver his remarks in Chinese I mean, typically by English translation. Mr. Chan. Please go ahead.

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Thank you Mr. Chen Albuquerque had it sounds like you're fine.

Before discussing our financial performance for second quantum theory.

Hello, everyone. Thanks for joining our second quarter 2021 earnings conference call during the second quarter, we optimized our product portfolio for certain categories and increasing sales of new products with higher gross margins for the housing our business operations.

With improving market and profit.

Our second quarter net revenue reached $1.66 bidding oriented.

The market why is that the only the neighboring both year over year of alcohol Alpha quota increases.

Reaching 21, 2%.

Non-GAAP net income.

People go to ordinary shareholders of the company increased by 45% year over year significantly improving the profit.

I think you're gonna have working in these accounts exploration when we have the balance and part D.

Iot home sector, which impact depending on what your framework and algorithm spike.

It was a modest sensors smart hardware and cloud storage is kept true encourages Florida implementation that were one stop Iot home solutions, providing our users with my hometown.

Smart home devices and software services called Tom scenarios.

It enables intelligent connection.

Iot can go products.

Our house, forming intelligently because the film for daily living and creating a comp is my home experience for users.

To increase output that challenges appear more younger users, we officially announced our champion technology branding strategy.

She is underscored.

From our product from China operations, and the marketing team.

First of all with respect to our product offerings are we continue to focus on AI applications and innovation to support our AI healthful products Jadson. Following the successful April it bought it with steroids with new products, including the E. R O X mineral Watson.

Meyer this space all direction air conditioning at the Alpha two paths premiums to wafer level and I bought a ice motwani, which came on to the human help that have there with money launched a superpower 1000 handed down water purifier I would close to the X one AI enabled wrenches and other new AI products.

Like knowledge out great.

Many of these cutting edge products, a leading industry consumption shrimp during Chinese 618 E Commerce shopping festivals many of our products became the marrow hits and the rest upon a top 10 best sellers, including the Alpha to pro Premier swayed from bubble the Navy to use Easter.

The patient air Conditioner, and EMEA, My Washington Guy here.

In terms of the channels are we implemented our larger store bathroom merchant channel strategy, we have.

Have collaborated with high quality more chance with Doe Doe operations experienced two alpha library ceilings doors and improved store image.

There was this larger stores provide users with more account treehouses immersive narrow based experiences and services and helping with more.

You can see our champion technology brand image.

We have established a floor as far as actually having ceilings doors in comparison over to Congress.

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Kansas and it effectively.

Now, let's say guns to a young and other publishers to offer self installation and after sales services.

Furthermore, the Kendall County, promote fond of south be crazy, if customer acquisition cost and the guys have all their offline Madden girl.

Well according to the national residential market research with poor 2020, the total new development of Pineland confections nationwide exceeded 150000 square meters in 2020 with equal more than 10 million units based on our estimation for agents each potential source of growth for the.

Well it sounds as much yet.

We also increased our investments in R&D and marketing.

Thereby reaching more diverse consumer growth with our omni channel marketing tools and Bradley apples waiting by Covid, one of China's top celebrities people come out of a point that spokesperson.

Our brand recognition among younger generations to.

To target more consumers in cities, we collaborated with focus media and she's telling me to advertising along 100 major cities across the nation.

Whereas three tuck them ethic airline Nancy to increase our exposure to high end.

Don't think of it.

Furthermore, we plan to advertise on TV and other channels in the following months.

We alpha Jochen, our new channel marketing on social media, including adult in the later wrap up through a shelf for them they do and the tail on that drilling.

That's.

Okay.

Yeah, just to strengthen our Tianjin technology brand positioning as well as grow our customer base.

We are also expanding our local market town.

This expansion is our slipper rubber business is progressing in line with our predictions I in addition to our printer.

I believe in more than 10 countries in Europe, Asia, and Australia, we began selling unions in India, Saudi Arabia, Thailand in North European countries in the second quarter.

As we shared in our previous earnings call I'll put out were launched on you asked Amazon in August marking our official.

Actual entry into the North American market, but we'll continue to expand globally and to begin development of this.

Operating mode in the second half of Europe.

Furthermore, our product pipeline to our Syracuse newspaper mobile product for both domestic and overseas markets.

In addition to our other mad at Us.

The collection and the UV disinfection technology, we are making great strides with laser and optical avoidance technology upgrades.

We believe that there are three major drivers that would benefit the intelligent transformation and development of the smart home industry.

But the main consumer groups.

I know it all and it's the only stuck to transformation the income of the 19th.

The increase and the younger generation has become a major construction driver in China. According to the research conducted by our third party consultants.

Look 19th generation Cliff Rosemont technology to put that in a more.

More likely to demands and purchase my home accountancy.

I can write the development of new energy vehicles over the past two years has created an emotional connection between customers and the smart codec and.

Other industries have also enjoyed the intelligence era.

Yeah.

Mark for that to go drive the amount of smart home industry in the late two in increasing consumer acceptance.

Certainly Chinese five giga infrastructure, we have been pretty quickly over the past two years. According to a report issued by the Ministry of industry and information technology of Chinese government.

The personal use their penetration rate of the flight you will exceed the 40% and the average annual growth rate of five dizziness will likely 200 person by 'twenty 'twenty two.

The administrative finishing the data my life and my home will be key parts in promoting Iot application a national policy.

Importantly, also benefited the development of the Iot Smart home industry.

We are committed to becoming the leading walked up Iot home solutions provider locking balancing our whole core technologies all looking to the second half. This year, we will continue to improve our product innovation is actually our luck.

It is absorbed bathroom merchant count don't really have much reality Atkinson, our counting technology branding.

With the ongoing development of him modification, China, we remain confident in Europe at a team to capitalize on opportunities and deliver long term growth as well as contribute positively to our consumers.

Roger and industry wide intelligent transformation.

So this concludes our fondest remarks, let's now turn to the detailed financial review of the second part of the Europe as well as the Alex Let's say call it.

Net revenue decreased slightly by one 5% to $1.66.

Like RMB from $1.68 anywhere in People's second quarter last year.

And increased by 43% compared to the same Piroot Alpha 2019.

The slight year over year decrease was primarily due to first the cells the choices and what the two fires in small towns is resulting.

Being are definitely Bollywood Jasmine for margin expansion and second a high base effect. During the same period of last year due to promotional activities. After COVID-19 Pandemics Pik.

Revenue from Iot and home portfolio increased by seven 9% to $1.15 billion RMB.

On the Palm one points Europe, excluding R&D for the second quarter of last year. The growth was primarily driven by sales increases in certain product areas I think pillar Elizabeth Bentley brand, the superbowl boats and washing machines.

Kelly from our home water solutions.

Great by 18% to want to 218.

Nine many R&D from 266 point sleep anywhere I mean for the second quarter GAAP, you're the decline was primarily due to a decrease in sales of Xiaomi branded water supply is resulting from our product portfolio Jasmine.

Partially mitigated by the sales increases and balmy blended what if a buyer.

Due to the product portfolio, Jasmine and Xiaomi branded and watch the fire, we achieved year over year and quarter over quarter increases in gross margin alcohol marches solutions category.

Revenue from consumables increased by 18, 2% to $102.2 million RMB.

86 points find many R&D for the second quarter of <unk>, primarily due to the increased demand for our water purifier so to put up.

Revenue from more offensive and others decreased by 28, 8% to 191 five many R&D from 268 eight.

And be friendly for the second quarter of 2020, primarily due to continued product quality optimization for higher gross margin in that category.

Gross profit increased by 46% to 351 point, Amy RNB and gross margin was 21, 2% compared to 14 point.

Throughput down for the second quarter of last year.

Sure I'll be your inquiries in gross margin was primarily driven by our efforts to shift the business and put that makes to what higher gross margin products.

This includes increased the revenue contribution from South of Nobel Me branded water purifiers, and slipper ball boxes more <expletive>.

As cost control measures and the margin optimization across our product lines.

Total operating expenses increased by 29, 4% to 309 points coming many R&D, primarily due to the increase in selling marketing expenses.

Morgan Pal R&D expenses.

Increased by nine 1% at this point.

Corn too many R&D from six key points. So many R&D for the same quarter of last year, primarily due to the increase in R&D X, where they were late to the salaries and expenses.

Selling and marketing expenses increased by 32, 5% to 214.

Pinpoint aim anywhere and be from 162.1, meaning R&D a year ago, primarily attributable to the increase of advertising and marketing activities.

The house of Commons, Brandy and Mark have origination.

G&A expenses increased by 72.6.

Two 6% to 28 point say mini RMB compared to 16 points, eliminating R&D for the second quarter of last year, primarily due to an increase of the ASP and make it allows for accounts and notes receivable together with adult basic sat up lease expenses attributable to the lease expense exemption policies in fad.

70 same period of last year due to the call me 19.

Net income attributable to ordinary shareholders that would tell me increased by 367, 4% to.

$46.1 million RMB and then go net income attributable to ordinary shareholders of the company's increased by 40.

Drilling down one 9% to 15 nine find anywhere.

Additionally, our balance sheet remains healthy as of June 30th going 'twenty, one we had a cash and cash equivalents of $667.6 million were in with big Red.

Kashi up 21.5 arms.

Child trimmed apologize of $66 five any R&D and short term investments of 393 point Amy RMB.

Now, let's turn to our outlook for.

The third quarter of 2021 we kind of take a stab at net revenue to be between 1 billion RMB, one 1 billion.

Oh, yes.

We expect to sell so xiaomi branded sweeper robot to decrease from the third quarter and the own brand consumer mobile business to achieve faster growth, which will become one is our main categories.

Oh about Alex is based on the current market conditions and it reflects.

Hiring and preliminary estimates of market and in our opinion conditions. The couch my demand went to Austin to change.

Oh, well. This concludes our prepared remarks, and we will now open the Crosby well for the Q&A session. The head of our finance department as to what how we're going to finish it in alpha classroom.

Operator, Please go ahead.

Yeah.

Thank you.

If you wish to ask a question please signal, but personally star one on the telephone keypad, if you're using a speaker phone. Please ensure that your mute function is turned off again press star one for our question. We were no pause for just one moment.

Our first question comes from Lillian Lou from Morgan Stanley. Please go ahead.

Thank you I have three questions first before can you give us a breakdown of the Iot at the home part of our portfolio in particular, how much.

The contribution came from the robots sleeper paradox in second quarter and.

I'll say, what kind of sales momentum, we're seeing in July August and the near term.

That's a first one what don't we shot the Eagle then Tina.

Guang.

<unk> a woman the Georgia, Utah do go up on quite a show rule on them.

Both of them are tied to Asia G go up and he ultimately all the talking later course, yet Toby issue a woman. She says she does Jacob let you know south each issue doesn't know Jacob Goshen to argued with Astra door shop, I mean, why don't you buy.

Yeah like handle while women to Asia to L. P. Later, you go till shooting Kwangju somebody younger Yamal was hinting you show me, how you were not willing to I, maybe I'll, just pause and I will ask the rest of two question later.

Okay. Thanks.

Millions of questions.

About the Iot.

Turning to the home portfolio, we have.

More than.

Hence more categories.

Refrigerators washing machines water heaters should lift in both in the structure.

My mouth Goose Rami.

Canadian Thanksgiving at around 20% revenue yourself Iot at home.

<unk> branded washing machines contributed around 10% and the only brand issue if a rowboat contribute around 10%.

Why don't we branded shoots of rubber was still the biggest.

<unk> or Iot or home goods.

The slow pace of its class impossible with revenue contribution.

Revenues from wellness robust decreased by multiple clouds.

To the second quarter of last year.

Yeah.

Thank you and any any color on the near term trend in terms of the gross momentum, including Oh, what her solutions as well tell me you have a little bit sense.

Yeah.

As we as we mentioned.

As we mentioned we continue to ask June quarter to.

Florida Optimizations, John is in the second quarter.

So we rollout with additional new products with higher margin in the high eight skus in particular some disease.

Including say it wasn't pure plays.

In addition to introducing more high end, while we wanted to advice. We also shift the focus a bit more on supplying more large baas Sheldon water purifiers with better gross margin.

Thus to improve the oprah or ESPN gross margin and together our revenue as contribution.

How many quarters.

Okay. Thank you and my second question is on the.

E S P a and the margin trend.

Do you have any plans for any price changes I E. Given your rising raw material costs.

That's one and I think the implication to margin because in second quarter. We have a very good margin improvement in the west are there's a mix shift and the adjustment on the part of our portfolio a week on a.

See a similar pattern of margin, especially in the in the second half.

Tiago and tissue Guangzhou, Jake a shocker.

Digitally you'll need a T shirt women tragic our conduct and turned out to them, they're selling from the Dana team Hall, Italian meal Giacobbe and leave it to you qualify somebody in the U N V. A P. Shomali duties on the patrol and then Michelle Danielle but usage.

Half of them interest you don't need to go to tell Joe malaria has you could kind of argue John told you on the told me their digital chunk of them, though.

Oh, Yes, we will.

Oh <expletive> E a normal course.

In the second quarter.

Totally.

The amount of weight compared to the previous months.

Also contribute to increase ASP piece of course, the industry as well as for some of our products.

Well about the about the margin.

We have started some advertising and.

This.

This is the second quarter.

To enhance to enhance our brand and positioning in the connection.

We will invest in more selling and marketing expenses compared to last year, but in a prudent and reasonable way.

We expect such expenses.

This will increase that's lower.

The margin right.

We have taken product optimization strategy and the overall gross margin has been improving and we're looking forward to continue improving within this will mitigate the impact of the increase operating.

Market is this on.

Net profit margin.

We don't see a material cost increase will impact on the margin.

To the first quarter and we have taken serious cost control measures and we don't see any material impact from such kind of.

I think its impact right.

Okay. Thanks, a lot and my last question is on the a new part of our strategy I think that Mr. Chen in the opening remark mentioned quite a few new part I'll be in no way down and put a market in a second quarter in the first half.

So what kind of.

Our strategy in terms of Alpha Holly actually make all this U S keys, a more meaningful contribution to the revenue Oh, it's only gonna tissue by eating peanut tends onsite at Kashi. That's your hall H O T. T. Chairman you know what Matt how should cause actual Amanda.

Tissue targeting the Shin <unk> no.

Shypoo, though.

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Okay.

Yeah.

A woman junior and treat with a Google option later.

She'll attempting.

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Dolby vision is you've got the shows which it goes through its own cauldron that Hittite quite attempting to work shoulder to shoulder gosh. They go mouldy Jacobs look I think there should be some Asia.

Korea, Florida today.

Sure.

And central to vehicle.

But how did the organization. She lives you can measure yourself. So D. G. I O <unk>. She said she hired you saw in Malaysia and of course, you only pay say she E. G. The egencia comes in the country overall I'm encouraged by the digital change.

Because you're attempting to chauffeur terminology I think with the <unk>.

<unk> option, they social although we've shipped that were shipping.

So who's your pin number to this should we just say Jason I'll, let you go kudos on what you'd have to go definitely could be easily with your two minute chicken wing timber.

Did that continue that shouldn't have a tutor.

Well <expletive> I'm buying if I'm glad to fit onto Mueller.

Oh, Okay, Oh, you're talking about.

Sounds like that's all.

Yeah.

Oh, Yeah, I'll quickly translate Mr. Chen's comments. So we have there's there'll be not to production. This year Oh, So first of this.

Seriously I've been out to our product can help how to make the margin expansion, which you can see from the quarter and second quarter, and then make hour I'll put that portfolio.

And burst and at.

That sounds such a stomach can use a different product a chunk. That's remember about Boston D. I'll ask whether people fire as well as the all direction Air Conditioners can also help increase do you have any contributions in their categories with back to life. So we think this.

Are you more apt to use and Oh the margin.

It can also help out to improve the.

The overall gross margin of our business as well as to help drive our other alcohol.

Yeah.

She said Oh, well the one team a lot of things that's all my questions.

The next question comes from brewed WIC from C. O S. T. SEC. Please go ahead.

Hi, Thank you for the presentation I have two questions here.

The first is that we noticed the company has spent a lot promotion recently like cooperating.

Operating with focus media and we can also see the trend from the financial reports. So do we expect a higher selling and marketing expense Road show.

<unk> ratio this year and like would it be it would be even higher in the second half of the leap year.

And then can you share with us the promotion.

Promotion plans or our strategy with more detail.

Would it be the lens you should.

Chemical institution.

Sure totally different from Oh actually the asleep.

So I don't feel he's really people you'll be talking to.

The key show you when we can.

Tap out in Colorado, and then Mr. Wang <unk>.

I will say on the way.

Somebody else may come call module.

If you're a woman that you see.

In California and are trying to do the ashram should Clayton County that Vishal actress Awards at Eaglebank.

Yeah.

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And there's somebody in two inch and featured on Joshua Gordon, who do who is here to be sure Sean from a feed, albeit on the inkjet English isn't that an insurance wont ponder achievements from the acreage Youll mission much element to that.

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Q2 this.

Sure.

As an example, the dam so you.

Women.

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So <unk> to go through competitive to hold all.

All of it with some more shelter takeover guidance when country shallow Waddell Jimmy go tell me give me the total time in the short term pollution of Halloween.

Geez, I should say something about Liberty <unk> and I actually according to the diversity that pinpoint meant lower tonnage on the thin and so it is a <unk> right.

Well, maybe I heard you say it and you guys. Just gave so that you would pull down you.

You said some of these digital sin <unk> profile, particularly which are that you don't want Wuxi.

We are the <unk> you mean could you tell me the tornado competitively for a woman who has all kinds of molecular charity.

<unk> got channel would you tell me the commingled quiet so that there's somebody that ashish cause us you're seeing any because they aren't doing that they go through.

Oh.

Now, let's look it sounds like.

This last year, Yeah, Jeffrey Hammond here, we can see a like amount of younger generations. They have there are more like he.

Good afternoon.

This is my home Kodak.

It's my home is likely a hotter topic around them. So it's been probably we get one app Tanya.

Popular so that way he says I would put it.

And then we also do a lot of advertising August you can see.

Thanks, Joe and Jim.

Can you guess.

And Oh Gee, how about to encourage the brand name recognition. Okay. And then you mentioned the increase on the selling marketing expenses and we feel like such and document we ended the tightening in the market.

The big increase such benefits, but this will be partially.

Tom do you need to buy some of our south duck shock immigration basketball as some cost control measures.

And in the second half this year, where we will also continue to invest in some related.

Related expenses on advertising and it will go through the advertising on TV and some other channels and they'll Sunday internally.

I know that we can see that our brand recognition has increased due to all of the market and it ties into.

So we hope this will also how about two two increased our branding event.

Thank you.

Okay.

Oh, okay.

Thank you and my second question, it's about overseas market. Okay. You gave us a more detailed update about overstitch distribution channel development.

Online and offline and also are there any.

Negative impacts due to the shortage of shipping containers.

I think you should count until shall highlight the torch I could come back on you know judiciously tapped Mccann or do you think at all costs.

Oh I'm sure that you don't have end up winning.

Hi.

Oh, okay, well it sounds good.

So in the fourth quarter of 2020 in the first offer.

Our first quarter of this year as we mentioned that we already entering into more than 10 countries in Europe Asia and.

Australia and in the past few months and we also expanded into what they should know eight countries, including India, Thailand, Araban up Europe European countries and the United States.

So our exports part that's a slowdown both online and offline channels.

Most of our franchises so we build our products to those franchises and they're still on their offline as well as the online channels.

So we also are in the North American market and we just launched.

Launched a though you're asking them to a store and we are also seeking cooperation opportunities for offline channels that they can have this year.

County on the border selling conditions on Amazon.

Oh, well the craft you about a shortage of us shipping containers.

That's it.

Some.

Impactful some delayed orders, but we optimize the manufacturing and delivering tani.

Well as we plan to get out someone like locally the warehouses to mitigate that impact. So generally it doesn't cause any material impacts on our Alberta Martin.

Okay. Thank you Sir that's all my question.

Thank you.

Right.

Question comes from Vincent Yu from Needham and company. Please go ahead.

You should hit that point in time to show that she.

I know what you should take it once you hold on to a degree.

And the thing you should always going to go do that.

So it wouldn't be able to know what's your solution is going to change when it just never came above your D to facilitate go women to take on this just as usual missile magical.

She's a tissue Chen subject when you send them going into service.

They always had with the.

Jacob.

The answer to the Mis you send you to what you should do the guidance Tichy of mail Covid chances are cheaper.

The other thing I do 99 cause particular, Sheila mentioned Europe just.

Chairman Chen.

Your question was should do understand that the soldiers.

So in front of me.

When you see it.

No.

Oh, just yamauchi, who appointed Vijay.

She's not traditional wings are disappointing to me, saying that.

Thank you Shea.

I know you did some things into the tissues in Iot.

Awesome.

Hello <unk>.

Other nutrition.

Women since IPO and the.

Turning to our colleagues that I think you'll note that reduction that you didn't have in telecom, Ben just thought about equal.

John understood centralized call centers from Hana now.

Okay. That's helpful.

Same shack.

Hi management, Thanks for taking my questions.

So I have two questions and.

The analysts.

Yeah.

Sorry.

As already mentioned, so, but I would like to discuss a little bit more the first one is that it looks like we missed our guidance range this quarter.

Can management talk more about like which segments.

And you've got a couple of them.

As well as the previous expectation.

It did.

What are your ultimate nation contribute to the top line Miss.

As well and the first question is also wanted to touch on about the margins. So in terms of the.

On the spending commenced.

And mature how did the raw material trends in August compared to second quarter, and we think that we have seen the peak in terms of raw material prices. Thank you.

Yeah.

What's your plan there.

Actual events and other things that you said.

A buy up in Chicago.

If inflation.

Once I know, what you're going to treat the xiaomi shooting up at all.

Just a woman tundra and say Gee that's cool.

<unk>, Michigan demand column.

But with regard to essentially the group a little.

Sometimes illiquid popular xiaomi.

You're talking to me at the time that you saw.

I don't see cheap cheap you want to me to tell me that she said too deep to Thiago how do you go into Huawei you want that is like how many people you'll have the social that Omega somebody who's number one then well then.

Two our appeal your cart Okusanya woman nickel episode yesterday.

Mulder won the children's vehicle total Michelle did you go with kind of like you said just to achieve.

All 10 of those special rule Sheila you didn't.

Pin you down here. So you want to just take it out with an SEC.

What you should do that.

Because I felt totally go to.

<unk> THC.

If you go with the way that I don't know how exactly you go Oh holiday that you know when you did how many tutto Joel how does your guidance here, who do I should have feet on the swaps or did it kind.

Sure.

And invite you to what <unk> seen that you make.

So D G. How does your children Jacek.

Turning to the bubble of hits to him at HST isn't cheap to me.

How does that kind of deal with how do you think she said the pay down of some call order goes the way that I cannot actually will consolidate the projects. So you can withstand that.

Sure.

Bob Seger Assembly, the children's vehicles, which would tell me that timber has he didn't give me the graph aren't yet at all.

Okay.

Chuck Li.

For the second question first about Oh, My current house, Oh, we all already observed fluctuations.

Terry how like demonstrating a more stable until August.

So at the industry expects, we also think that caught the real my favorite topic has been a lot of Kimberly hypertension, and that will not likely to increase a lot.

So for your first question about.

The bread and butter guideline that second quarter revenue.

Call it guidance.

So we have a well.

We are shifting our focus on the part of that before you adapting them.

So that they can call during the third quarter.

Quanta and L. We have like two main points there first there when you will increase.

That was just some new contacts with potential growth and it will take some time to increase income.

<unk> I've been.

You cut out.

And that's in the World, where is that coming more R&D with sourcing from our own branded products.

A lifecycle blah blah.

Compute fire in home devices, and do we can see that in long term.

Category is going to put out can help out to drive the overall growth and long term.

So although in the third quarter.

The outdoor conservative about our selling and the guidance and the remainder focused.

They're putting out a portfolio of Jasmine.

I hope that helps.

Policy issue.

But he was like angle when she might not just sort of a woman should all woman she would say Oh Gee.

You keep saying they go towards the dollars you can change the game.

My cheap goods.

You heard it seemed like a good thing.

Chico's on Wednesday cable can do.

I was hoping you won't shouldn't Eugene Putnam, Oh Gee do you.

Now Holger Shaw I should show a woman and say.

Shall I go to shop on Yelp, we conducted conveniently fit you want something to go show, who pushes or somebody you Chino, well, where you'll you see so.

And the things.

We humans are finished.

He thinks there's thinking measurements on let me for one more question. So we mentioned that we are investing in new stores hiring you spoke to the spokesperson.

We have.

These expenses already incurred in second quarter, Cleveland and one in the world.

Or will we see sales and marketing expenses on a year over year basis.

Faster.

And they're like total total revenue growth. Thank you.

Tightening trophy or shutdowns of that woman told them through and get.

Is that truly a record kind of saying goodbye to each other.

Oh.

Quite changed at the end of Covid.

She'd been hunting, which I believe is the same type of weird I thought you talked about Shaquille Helena, Montana tissue from at least should I'm not too sure chip.

One thing I know what you're doing.

Pink Petro Minatome unify happier.

And would you say.

How should you be sure sure of course.

Good day and traveling to Europe protocols.

There are a couple of things I tend to like it should of course.

What do you mean on the cheap and 10 day cause the accouterments you could imagine.

How does.

How did your evening Josh.

That's really the thing, which they're going to manufacture them.

It just didn't it almost.

Sounds like you know your company I'm sure do come from Federal one brief somehow about Chi Chi Chi Chi.

That's really good people and you want that you don't do them, but you didn't talk to them.

Do you have a bunch of them here that kind of how do you. How do you read our report that <unk> had a lot of unpaid Europe would be.

Two of them into the channel, which I won't read them to set up to the P&L.

The Huawei actually you got to you got hydrogen hasn't that hasn't happened in Canada.

Okay.

Okay.

So the selling and marketing expenses and impact on the operating margin.

Martin.

<unk> father isn't that Mount into I'll say, China.

The Capri through Wednesday March here.

<unk> opened up like doors and the merchants themselves.

To take care out there the accretion out of it.

Got a bond like where exactly.

Our operating expenses.

And it's why on its part and for selling and marketing like we have been conducted advertising and I think thats about person I think that they can order so the.

Alright.

Some of that's the only message sensors and the SEC.

Quad area and in the second half of this year, we will have some ongoing expenses on this part.

Compared to first half of this year are there expenses increase but we also see that in fact from our internal that's how I see.

I'll, let me just advertise and compete also help our online and offline. So we think this is in fact and well continue to do search advertising activities. Nothing you have okay. Thank you.

Thank you very much very clear thank you.

P J.

Next question comes from Sue go phone from Blue Lotus. Please go ahead.

Thank you.

So you know what that when Todd you highlighted.

Not sure whether you need probably a good idea.

Hi, John.

One of your poems people Rumaila computer I'll get that's also great. If you could go wrong. We'll go for three local water you see Wellington Chen religion bumping into them quickly.

Oh sure sure I'd have to go through.

Sure.

Oklahoma.

Where international sales play an increasing role.

Thus the management see international growth company or with the easing of pandemic managers had international growth slowed a bit.

Thank you.

Yes.

A woman G and how else you don't say curious, Florida Chen.

So I'm a cheetos dress shirt. So did you didn't mitra.

How about from Sangamo D grew more than <unk>.

Gotcha.

How many sample teamhealth numerous Cheshire la <unk>.

How many of them whether it be electric or how should we believe each of our political arena. The tweaking that you wouldn't be sweep from one quarter to quarter. It can they will get a door on my shop, Andy and Hot Retrans with Asia.

Could you just.

So when you're shopping electrical where magic box you got into the middle class.

Europe, some amount of beauty religion, Kipling drug or device you through each of their front end, how should you actually see an opportunity in the months from wechat meticulous equivalent I kind of flattish it sounded like some chunk of change out of social and finish also.

They'll do a woman just yet she mesh box you're going to be harder to know so not she said about net shipyard property with Amdocs federal magic challenges, particularly the Arctic Tony the Tiger that kind of Europe.

Oh, Okay. So for the first half and fear, we can see never a box of Dallas is the I would say it was all booked in the overseas market.

Uh huh.

You are of course, the pandemic stimulation semi families with countries about entering into that I think half of the year. We also see the pandemic Covid insurance take.

Hey, someone can do this all the time.

We remain conservatively under would seem there are some good stomach a certain pace.

And the global market, but so far that's out there that we see internally that their performance is good and our expectations are.

You are because they have a clue about the selling of it is market by weather, but also I take valley are good measures in the post COVID-19 than to wait Jamaica.

Cancel a promotion and I'm actually had pretty good in San Francisco.

Hum.

So two things you are working to partner with I don't know if any of you.

Thank you Sharon walk for surgical megawatt central Louisiana, what's already in South Dakota.

One off strip oil, putting millions, Australia, now, even better and they watch it all the way our corner.

Hum.

Are there any particular strategy for marketing in the U S market.

Yeah.

Oh, Thank you I'm showing truthfully you asked mark him I do know that our products were just now officially.

I'm not going to go out the door. So on one side, we will cooperate with us.

A local third party operator T offering to our I'm just go together so they know battery about yep operation Guy lives on Amazon, there's more out there that can cut too much contract.

On the other how do we also will start to do some marketing and PR activities down to the ASP in Montana.

He has the kayo alloy recommendations.

R&D habits, there like cameras on the top line grew about two how about alpha modest dollars.

He asked my account.

Hum.

Oh, okay.

Yeah.

So as there are no further questions now I will turn the call back over to Cecilia Li for closing remarks.

Oh, Thank you once again for joining us today.

If you have further questions. Please feel free to call me after the contact information on our website or the person he grew up our investor relations consultant.

You all have a good one.

This concludes the conference call you may disconnect your lines. Thank you.

[music].

[music].

[music].

Hello, Ladies and gentlemen, thank you for standing by for New Technology Co Ltd earnings Conference call for the second quarter.

Of 2021.

At this time all participants are in listen only mode. Today's conference call is being recorded I would now.

Turn the call over to your host Mr. Qi Li IR director of the company. Please go ahead and failure.

Thank you operator.

Hello, everyone and welcome to long read Technology Co Ltd earnings Conference.

For the second half 2021 alpha.

A reminder, this conference is being recorded at <unk> financial and operating results were issued in a press release earlier today and are posted online you can download the earnings press release and sign up for the company's email distribution list by visiting the IR section of the company's website.

It's.

<unk> com.

Participating in today's call Mr. Xiaoping, Chen the founder Chairman of the board of Directors, and Chief Executive Officer, and Mr. Wei County site to head up our finance Department canvas management will begin with prepared remarks, and the call will conclude with a Q&A session.

While we continue please note that.

All my discussion will contain forward looking statements made under the safe Harbor provisions of the U S. Harvest Litigation Reform Act of 1995 forward looking statements involve inherent risks and uncertainties such that actual results may be materially different from the views expressed today.

[noise] formation regarding these and other with an answer to me.

It is included in our annual report on form 20-F, and other filings is bother with a yes.

The company doesn't assume any obligation to update any forward looking statements, except as required by law.

Please also note well its earnings press release and this conference call also include discussions of unaudited GAAP financial information.

As well as unaudited non-GAAP financial measures.

Press release contains a reconciliation I'll be an audited non-GAAP measures to the unaudited most directly comparable GAAP measures.

I will now turn the call over to have longer and see all military shopping Chen Mr. Chen will deliver his remarks in Chinese followed.

Need to play by English translation.

It's their time to go ahead.

Oh gosh, it I've got like a young woman auditing our union deal that you do that gives you that you know always someone with a deep with a T shirt, Jean Trudel Women's I direct you to the hoop manipulation of excuse me the xiaomi to equal that should hold up so much and gentlemen go mouldy dose.

She would have been the soldier won't take one that he'd be able to do the social Shaw Sidoti and doing it I mean be motivated to treat attunity hope I'm butabarbital excuse them I don't know Archie I'll say non-GAAP, but that it was a joy shop, we usually put on the Geneva can be syndrome by Mr. Shaw you may disagree with it all Joe Docker shaft, well mentioned, Virginia.

And the lead times, you can biogen like you'd hope bolt on seafood Jaco somebody do you would you out to you that you can model as your general contractors, who are doing things on the Jimmy Choo you would your L. T that job in attaching them quite a cheetah, which I'll go to the woman you'd actually that you and what you don't do define about the woman that you'd actually show, which you don't need it but when you look what you can pull gotcha and what comes in the.

Job in General George you go round gift she.

Suzanne Duncan to them about you know, we're trying to get a general quote in the chinchilla with Eaton powder forgot your own courseware shooter. So happy she will you'll will go James bond on the channel would you don't yet I'm a woman to your home at a time when adult cooking engine the opportunity to Europe.

So the children.

Bob will have could you talk to them and you've got changing the people might be weak what are they doing you'll call them in the engine you can get in terms of course, some jumps in conjunction possible show home and are doing a lot of total cheadle Trojan attempting tempting prevent women, we don't yeah, Hey, before timing can be until you can watch other quadruple.

Perhaps in literature, we don't call that income comes in the general population.

From the time that she made publicly shop. It basically you should have actually been vocal quoted it's usually see Europe ex changed from the home health space.

Goldman is total Atg ARPA plus easy clean June 10, two at MTT in countries, where the ipod digital marketing goes up well.

And then two do you treat with a super poorly she did in shower back down in that document you can see across our tower E. The AI engine to its usual AI English on tissue via Tyco you want you mean hunger to salvage you said that you know.

About you didn't want to talk on <unk>.

ARPA or broader Jamaica, Salvador U D G OUI towards Europe.

And up until now of it Tayo just she leaves you Neil Simpson can wave coming at about <unk> shoulder the published sometime.

Total funeral home in EMEA opinion going to useful Apache on by the end of <unk> say make a tone change your thoughts in the T. S them in depth and getting men. Dennis showed you that shows you the xiaomi.

Johnson tens I could not help manage Omega trying to end up impacting xiaomi somewhat once you tell your thought here you know when you hope you can go onto agenda 10 piece of the tongue TNF.

No more women say Chen wash the wash them, who would you like would you do a thorough job young by somebody each on the Cisco versus TNF, when you're watching T and social.

Sure sure.

I'm going to come as you call them neither of them again not much select Chen.

We're talking about Amboy croissant won the high switching power goes to the to me the two Jody somebody who could have been some sort of change that treat all the green button down.

Are they aren't a huge chunk or could actually come in you do bogo.

<unk> Rd Nanchang quite a few.

Youre down pulp war shoe lumpy bump.

We're starting to watch them go at Union Bank I should say, we Chen with How're you sounded to me that she has gone out.

I know I'm watching him to make the dominator puncture that goes on the off the shelf, Michigan general choose either able to know who does that change I mean, you got somebody calling it grew more and more with.

For me its IPO practically you can just help me.

Hometown backyard actual job on a total weight option.

Shouldn't authorial hottest obesity tied on virtually all the usual normally Aegean champion are correlating with the museum Dayan ban when the major European pilot tempting.

Caught up in Virginia, and Tennessee, Malone soon but I know that you don't need.

I'm a woman to be single family Shinto Comdata hoods.

Oh, no them to ensure that an agent can be celebrated about jewelry whole Commission agent.

Triangle Cobra you buy the two ship Susan correlative, receiving telephone won't go BJ, then sander whose budget.

Oh, no the children the Milligan Goldman this opportunity coming in or Mike do you want that didn't shoot.

I bought it.

On the go no go to select what my day, so in Shanghai.

Since you made it she talks about one machine can make it to yourself and what does it mean.

And to the board to measure a function thats interrupting attitude, we do attempting to watching these are tier one.

Wondering if somebody infected yet how many accounting treat all you want <unk> you talking about with uncle woman.

And then John could you talk either came back quite a television.

I wish you all put out your day until Washington Women's home digital TV digital Eni seem sort of who got older Gaucho, who are older that Chicago goes out the origin was in Dallas Chaco.

The high Court did you buy OTT to some to the public who don't you like after each.

Attempting Tommy Shang Chuang Juliet, Tim should they make what it got much until just non-GAAP number.

Got you got you maybe pushed it up they may shut down 70 in women junk tissue told them. They may cause she thought to the xiaomi.

Richard I'll go with you in our guidance even more so when you see that seemed like all of us that have actually don't go again.

She may jump ship Cleveland.

Why don't you tell without doing the Toyota going on EMEA that she said she won't be double digit on the conditions of our financing yeah, well minimum wage that way that if I'm gonna come in John you'll leave your children do you have any other general heart wrenching for product.

Just what are you going to put in English TV Chalybeate, Julian Cuda 10, where you show up with it what is your vision.

I'm Gonna sure sure clubs with them got no more can be someone that's going to go to you go to somebody that doesn't gigawatt, Joe Woody you called engine comes out at the at home cooking, which I don't have any shouldn't shale with Xiaomi works you don't have enough.

We can go there.

That would just assuming that's your choice at Gucci the opinion leaders who are they go quiet certify that we are getting attention.

Cleveland somehow should docks over to Ginger punctuate, though how many actually quite a substantial reduction in Nevada.

What date on children's attitude about that confusion silver the human rights, usually don't do these languages.

But you can't take it out again and it goes to the bottom end of your consumables probably outside you got somebody that you know already our fan yet what's either Gordon.

Political would you teach them talk about it.

This issue, which is what they want.

Julian on unions and not all go about read out by the Mattoon yen symbol Chiang Shang walks you don't judge easily Cleveland you don't wouldn't want me, we're not going to apologize what that can look at the Virginia deal. What do you want to know tattooed up quite a bit by that.

Well I mean sounds like GCT anything interesting tempting.

<unk> Bosch and I'm going to end up she talked earlier could you talk to other people I think we thought that it could you ship Judy you can wait you guys showed up Chen I won't you don't let you define that the haynesville physical but you don't Jive W to Nevada classified I hope when negotiating with him when he got hung up on the balance sheet again, Thomas you Linda we shall be the table.

What's your gunkel EMEA to Nevada, quite you've got some surgical Chen oxygen.

Thank you Mr. Chen Albuquerque had a chunk lay up on his remarks before discussing our financial performance for second quarter every year.

Hi, everyone. Thanks for joining our second quarter 2021 earnings conference call during the second quarter, we optimized our product portfolio.

Volume for certain category and an increase of sales of new products with higher gross margins for the housing our operations, improving apparel golf market and profitability.

Our second quarter net revenue reached $1.66, stating oriented with the market once again delivering both Europe.

I'll be your alcohol every quarter increases.

Reaching 21, 2% yeah. It does.

Non-GAAP net income attributable to ordinary shareholders of the company increased by 45% year over year. It can be it depends on the improving the profit expenses.

I think you're going to have working in the accounts exploration.

You know we have been valid part D Iot home sector, which integrates a technology framework, yeah I'll go with them find your Iot chip modules sensors smart hardware and cloud storage is structure encourages Florida implementation.

One stop Iot home solution, providing our users with smart home.

Townsend Smart home devices and software services called Tom scenarios.

It enables intelligent interconnection from single product to the entire house, forming intelligence ecosystem for daily living and creating a complex my home experience for users.

To increase output.

So that drives juice appeal among younger users, we I'll be showing out our champion technology branding strategy, which is underscored by our products from China operations and the marketing team.

First of all with respect to our product offerings are we continue to focus on AI applications and innovation to support our.

I have full product strategy. Following the successful April did brought it up the stairs with new products, including the E. R. O X minimum walk through fire. This space all direction Air conditioners, the alpha to past previous wave for mobile and I bought AI smartwatch, which came on to the human help that helps all do with money launched our superb.

1000, Hendrick gallon water could flyer I would close to X one AI enabled rent, who and other new AI products and the technology upgrades.

Many of these cutting edge products, a leading industry consumption trend.

China 618 E Commerce shopping festivals many of our products that came.

The marrow hits and the rest are born a top 10, best sellers, including the Alpha to pro Premier sweeping bubble, the novae to UV sterilization air conditioners, and the new Washington dire.

In terms of the channel we implemented our larger store bathroom merchant channel strategy, we have collateral.

We operated with high quality more channels with strong operational experience to ultra luxury feeling schools and improved store image. This larger stores provide users with more account balances immersive merial based experiences and services, helping with more.

You can see our champion technology.

The brand image.

We have established a floor as in flight as Nextgen expand one store in comparison over 200 square meters, three Kansas clammy to effectively equal amount, let's say guns to the young and the other publishers to offer self installation and after sales services.

The Tango child do you promote bundle sale decrease its customer acquisition cost and the judge at Alder offline much ago.

Well according to the National residential market Research report 2020, the total new development apartment transactions nationwide exceeded 150000 square.

Square meters in 2020 with equal more than 10 million units based on our estimation, creating huge potential source of growth for the smart home in pounds as much yet.

We also increased our investments in R&D and marketing.

Thereby reaching more diverse consumer growth with our omni channel.

Well, the marketing tools and brand the apples.

I invite you to one of China's top celebrities to become a point that's spokes person I have.

Our brand recognition among younger generations.

To target more consumers in cities, we collaborated with focus and rigor and it shouldn't telemundo to advertising you're wrong.

100 major cities across the nation.

Cause, whereas three talk I'm ethic airline Nancy to increase our exposure to high end consumer.

The more we tend to advertise on TV and other channels in the following months.

We Alpha Johnson, our new channel marketing on social media, including.

Don in the lead.

To wrap up through short form videos and the tail on that drilling.

Okay.

Okay.

Okay.

Yes, it is to strengthen our champion technology brand positioning as well as grow our customer base.

We're also expanding.

Our local market half pound on the overseas expansion is our slipper mobile business is progressing in line with our predictions.

They shouldn't you have a privilege coverage in more than 10 countries in Europe Asia, and Australia, we began selling unions in India, Saudi Arabia, Thailand in North European countries in the second.

Quarter as.

As we shared in our previous earnings call I'll put out were launched it on you asked Amazon in August marking our official entry into the North American market also continued to expand globally and to begin development of the self operating mode in the second half of the year.

Well.

Codec pipeline to our Syracuse newspaper mobile core that's for both domestic and overseas markets.

In addition to our automated data collection and the UV disinfection technology, we are making great strides with laser and optical avoidance technology upgrades.

We believe that there are.

The more I mean major drivers that will benefit the intelligent transformation and development of the smart home industry.

But the main consumer groups in China, and it's the only structural transformation of income off the pills 19th.

The increase and the younger generation has become a major construction driver in China.

According to the research conducted by our third party consultants that took nike's generation CRISPR, a small technology products and are more likely to demands and purchase my home accountancy.

I can write the development of new energy vehicles over the past two years has created an emotional connection.

I've seen customers the smog put us in EMEA.

Other industries have also entered the intelligence era.

Demand for smart codecs know drives it about mountain smart home industry in the late two in increasing consumer acceptance.

Certainly Chinese five giga infrastructure we.

It became pretty quickly over the past few years. According to a report issued by the Ministry of industry and information technology of Chinese governments are the personal use their penetration rate of the flights if you will.

40% and the average annual growth rate of five students will exceed 200% by 2022.

Has the minister Ministry on them and that of my life in my home will be key parts in promoting Iot application.

National policy support and we also benefited the development of the Iot Smart home industry.

We are committed to becoming the leading walked up Iot home solutions provider.

Balancing our.

For technologies, all looking to the second half this year, we will continue to improve our product through AI innovation is actually our larger store bathroom merchant channel, we have materiality and strength of our challenging technology branding.

With the ongoing development of Hilmes modification, China, we remain confident in Europe.

Europe any team to capitalize on opportunities and deliver long term growth as well as contributing positively to our consumer calls with life and industry wide intelligent transformation.

So this concludes our fondest remarks, let's now turn to the detailed financial review of the second part of Europe as well.

Alex let's say call it.

Net revenue decreased slightly by one 5% to $1.66, being R&D from $1.58 anywhere and people thinking pointed out to you.

And increased by 43% compared to the same Piroot Alpha 2019.

The slide.

And I'll be your decrease was primarily due to up versus elxsi choices and what the two fires in small towns is resulting from the product portfolio of Jasmine for margin expansion and second a high base effect. During the same period of last year due to promotional activities. After COVID-19 pandemic.

Right.

Revenue from Iot and home portfolio increased by seven 9% to $1.15 billion RMB from one point there could be new R&D for the second quarter of last year. The growth was primarily driven by sales increases in certain product areas, particularly the Bellamy brand the superbowl boats in the washing.

Thanks Kim.

70 from our homework solutions decreased by 18% to want to $218 nine many R&D palm tree I guess, it seems to point sleep anywhere I mean for the second quarter of last year.

The decline was primarily due to a decrease in sales of xiaomi branded water to fly it.

My starting from a product portfolio, Jasmine, they'll partially mitigated by the self inclusive and Bonnie branded water whose buyers.

So I'll go to the product portfolio, Jasmine and Xiaomi branded and watch the fire, we achieved year over year and quarter over quarter increases.

Gross margin alcohol more two solutions category.

Revenue from consumables increased by 18, 2% to $102.2 million RMB from 86 point find many R&D for the second quarter up 21, primarily due to the increased demand for our water purifiers bill to put up.

Revenue from more offensive and others decreased.

Like 28, 8% to 191, five many R&D from 268, Amy R&D for the second quarter of 2020, primarily due to continued product volume optimization for higher gross margin in this category.

Gross profit increased by 46% to three.

851 point and many are N P and work Martin with 21.2 points down compared to 14.3 put down for the second quarter of last year. The Europe. Your inquiries in gross margin was primarily driven by our efforts to shift the business and put that mix toward higher gross margin product.

And this includes.

The increased revenue contribution from south of new Bellamy branded water Purifiers and Super Bowl boxes, more as cost control measures and the marketing optimization across all product lines.

Total operating expenses increased by 29, 4% to 309 points down with many R&D.

Primarily due to the increase in selling marketing expenses.

Morgan Pal R&D expenses increased by nine 1% usage.

Too many RMB from six key points someone mini RMB for the same quarter of last year, primarily due to the increase in R&D expert they were late to the salaries and expenses.

Selling and marketing expenses increased by 32, 5% to $214.8 million RMB from 162 point.

One, meaning R&D a year ago, primarily attributable to the increase of advertising and marketing activities. All in all the tea House of Commons Brandy and Mark have origination.

G&A expenses increased by 72.6, 72, 6% to 28 point mini RMB compared to 15 points, eliminating R&D for the second quarter of last year, primarily due to an increase of the ASP and make allowance for accounts and notes receivable together with adult basis that out.

Expenses attributable to the lease expense exemption policies in fact during the same period of last year due to the call the 19th.

Net income attributable to ordinary shareholders going to tell me increased by 367, 4% to $46.1 million RMB and.

And then beyond that income attributable to ordinary shareholders of the company's increased by 44, 9% to 15 nine five anyway.

Additionally, our balance sheet remains healthy.

June 30th go in 'twenty, one we had a cash and cash equivalents of $667.6 million urine.

With big ticket a restricted cash of 21.5, many arms child trying to apologize at $66 find any army and short term investments of $393.8 million RMB.

Now, let's turn to our outlook for the SEC.

Quad area of 2021 we kind of take a stab.

So we need to be between 1 billion RMB.

And at 1.1 feeling.

Oh makes that the cell cell xiaomi branded sweeper robot to decrease from the third quarter and the own brand consumer mobile business to achieve faster growth, which will become one is our main categories.

Our outlook is based on the current market conditions and it reflects the commerce arena and preliminary estimates of market and operating conditions and customer demand, which are all subsea ought to change.

Oh, well. This concludes our prepared remarks, and we will now open the call to you for the Q&A session. The head of our financing.

And that remains true with Paragon to Fisher and Alpha classroom.

Operator, Please go ahead.

Thank you.

To ask a question to signal personal star one on the telephone keypad, if you're using a speaker phone. Please ensure that your mute function is turned off against press star one.

You asked about sure we went to a pause for just one moment.

So our first question comes from Lillian Lou from Morgan Stanley. Please go ahead.

Thank.

Firstly I have a few questions first before can you give us a breakdown of the Iot at home part of our portfolio in particular, how much of the contribution came from the robot sweeper products are in second quarter and.

Thank you say what kind of shelf momentum, we're seeing in July August and the near term. Our that's our first one were told we shot the Eagles on chemo.

Guang E. A woman the Joy Giacinta do go up on quite a show or a nominal bomber tried your esher G. Ghobadi all truly all the talking later.

Later calls yet Toby issue a woman. She says she does Jacob and let you know south each exceeded though Jay goggles Yan Chen argued without Guy should oil shocks me why don't you buy yet like handle while women Tricia to L. P. Later, you go so shooting clock or somebody else.

Yamal was hitting you shall hold me how are you.

On tea.

Maybe I'll, just pause and I will ask the rest of two question later.

Okay. That's helpful.

Medians question.

But all the iOS.

Trying to get home portfolio.

More than.

10 more categories.

Reading.

Refrigerators washing machines water.

Terrific well both in the structure.

Up goes well.

That's really the punch building around trying to percent revenue yourself Iot at home.

We have a branded washing machines contributed around 10%.

Oh me brand issue, if a rowboat contribute around 10%.

While these brands issuance of rubber was clearly the biggest driver to Iot of homes.

You could slow pace, it's that same philosophy and revenue contribution.

And your revenue.

Welcome Wellness robo decreased by multiple stage compared to.

Through the second quarter of last year.

Yeah.

Thank you and any any color on the near term trend in terms of the growth momentum.

Including Oh, what our solutions as well tell me you have a little bit sense.

Yeah.

As we as we mentioned as we mentioned, we continue to execute quarter to them.

For the Akamai faces challenges in the second quarter.

So we rollout with additional new products with higher margin in the high eight skus in particular with him. He said, we are including say it wasn't too close.

In addition to introduce more high end well, we wanted to advice, we also shift the focus a bit more on.

More large baas xiaomi water with.

With better gross margin.

Thus to improve the oprah or ESPN gross margin and together.

<unk> contribution in the coming quarters.

Okay. Thank you and my second question is on the.

E S P a and the margin trend.

Do you have any plans for a need price changes I E. Given the rising raw material cost, that's one and I think the implication to margin because in second quarter, we have a very good.

The margin improvement I wish all of this a mix shift and the adjustment on the part of that portfolio a week on a see a similar pattern of margin, especially in the in the second half.

Tiago and tissue Guangzhou, Jake our jogger, who are do you don't even need a T shirt woman.

Then try Jacob come out until the outcome of their social digital qinhuangdao, you'll meal giacobbe annoying, but to your quality wise Ah shall ammonia in the U N V. A P shomali duties under patrolling the Michelle Danielle, but usage Oh women Tricia Tammy do go to tell Joe Molly do Hush you could kind of argue do John pointed out the Toby, though digital shrunk down though.

Yes.

Akshay.

Cool.

In the second quarter.

The amount of weight compared to the previous months.

<unk> contributes to the increase of the ASP and of course, the industry as well as for some of our products.

About the about the margin.

We have started some more advertising and marketing activities since the second quarter.

To enhance to enhance our brand positioning and the conviction.

We will invest in.

And more selling and marketing expenses compared to last year, but in a prudent and reasonable way.

We expect such expenses will increase that's lower.

Good margin right.

As we have taken format optimization strategy and the overall gross margin as students.

Mhm.

We're looking towards to continue improving.

Israel mitigation and empower.

Operating expenses.

Net profit margin.

We don't see a material cost increase and perhaps on the margin.

To the first.

And we have taken serious cost control measures and we don't see any material impact from such kind of.

Cost impacts right.

Okay.

Okay. Thanks for that my last question is on the new part of our strategy.

<unk> single, Mr. Chen in the opening remark.

Mentioned quite a few new part I'd be in no way does it put any market in second quarter and the first half.

So what kind of.

<unk> strategy in terms of how we actually make all of this U S keys, a more meaningful contribution to the revenue Oh, it's only going to teach you something that turns on.

I'm, sorry, I should ask you haul a O T T I'm chairman Yellen now how should total amount or a tissue tungsten CMP noma shypoo, though why well then you'll mail Jacob Chicago. They claim they don't seem to know what you're trying to pull it out and if you want a unit.

I cannot wait to Omega way library, social showroom dummies, yet they did that.

Just yeah.

Okay.

A woman Julien.

Google apps, you may lose your 12 inch and the time, Jim what do you call you.

I mean, I know, it's oil do you go to water intrusion.

Dolby vision is you've got the show to just go through some got run out of your tower you want attempting to one of three children gosh.

If you go to a guy, saying there should be some each and Tucson Caribbean, Florida to the mix would be.

I always hate to potential that the eagle telephone hydrogen woman. She knows you can lay out the vision.

So D G. I assume came out and she said she hired you saw him and they ship a fraudulent tax say she E. G. The egencia comes in the country overall.

We promote high quality digital change when the jacuzzi, all because you're attempting to show who don't really care, who they may go up should be the social although we'll ship the worshipping who's had been limited this year like I say, Jason I'll, let you go Cuttino prudently.

Agree with you two minutes, you're going to hear about some people that continue that she is having to do with about five years.

So once you don't fight in the garden bar to get onto a buildup.

Oh, okay. So it sounds like it sounds like that's all.

Okay.

Oh, Yeah, we couldn't translate Mr. Chen's comments. So we have there's there'll be not to production. This year. So first is this a.

Sirius there'd be no tis.

Product can help how to make the margin expansion, which you can see from the quarter and second quarter, and then make hour I'll put that portfolio more diverse now so that's it on such a stomach to use all of this innovative product the chance to Super Bowl Boston D. I'll ask why the Butte fire as well as all dauch and air conditioners.

We also help increase do you have any contributions in the categories with back to life. So I think this this new app to use and adopt the margin expansion can also help out to improve the.

The overall gross margin of our business as well as to help drive our overall growth.

Cancel.

Yeah.

[noise] TCA or whatever.

Thanks, that's all my questions.

Next question comes from brewed Wyk from C. O S. T. SEC. Please go ahead.

Hi, Thank you for the presentation.

I have two questions here.

The first is that we noticed that the company has done a lot promotion recently like cooperating with focused media and we can also see the trend from the financial reports. So do we expect a higher selling and marketing road show.

All.

The ratio this year and like would it be at the higher end the second half of the year and can you share with us the promotional class or a strategy with more detail.

Sure sure I think kind of constitution holiday sabulous totally different from o'clock at Toledo.

Sleep.

I don't see all of these really well you'll be talking to the key show you when we can take a stab.

How about anything contrary I know myself I'm going to go say normally to be somebody else or you can call module only.

The woman health.

I'm going to try to do the accuracy.

Yeah sure that easily.

Well, what I would say to you tip off sheet aren't going down I'm not sure. If I can chewing in case, you Oh, Gee and there's somebody new to an ancient indeed shouldn't judge you, they're going to do what's usual doomed to chunk of them are feeling pain on the inkjet English isn't that an inch and a growing part of achievement from the old quickly they'll get China Europe.

Misha much into that.

You've been around it should be it is paid off we don't call it a syndromes easier.

Thank you in terms of the what you've owned apartment to buy it because the O J so much going on that give us the liquidity within the central the Bim three women.

I wanted to circle in my opinion, Kasha, Chen band and Tim did you need to draw people that they and they.

Okay.

I've got a really good one golf ops medical unless we think that we're going to sell what.

Or does the high school your competition.

On the museum market.

She's been on and go to a competitor to them.

Sure.

From a new angle comments when a shoulder.

So the child, who do that kind of October each geography, Lee how should we do something.

Something that cause you to kind of push on to golden bedroom to ensure that our people need but its one.

So in Dubuque EMEA, which.

We choose to go to penetrate them to hold all of it with LIBOR Sionko to your go to Guy from one country to show what else you. Jimmy go tell me give me the total tremendous social puncture the Halloween are pretty cheap.

Geez, I should say something about barstool.

Liberals yet <unk>.

According to the diversity and what that can break them into lower tonnage on the thin and so that is the most intelligent way well maybe I heard you say it and you guys. Just gave so they could pull down you said go we wish all these digital seen shouldn't kill POC.

You'll see the commission later, when the cobalt, which are that you don't want Wuxi ego.

We are the <unk> me there could you tell me to go maybe go competitively to a woman who would be a real kind of similar to those you Archie Dragoo Domenico Sharon would you like to me. The company requires so that if somebody said to me that she should do this year.

I'm talking about they just didn't go up.

Oh.

Okay I'll Cook it sounds.

So this last theory out there per tablet here, we can see a line of moms of younger generations. They have there are more like he has got to know them.

My home product and it's my home is like a hotter topic around them.

And probably we by tier one tonya's are very popular.

And that way since our products are critical.

And then we also do a lot of advertising on this you can see up and go and change how media and Oh Gee, how about to encourage the brand their explanation.

Okay, and then you mentioned the increase on the selling marketing expenses and the way you like.

As such and document we ended the tightening in the market.

Well little bit increase such defensive but well.

Well, they partially mitigated by some of our south doctor optimization as well as some Coca control measure.

And in the second half this year, where we will also continue to bring back in some.

<unk> related expenses on advertising and I will go through the advertising on TV and some other tunnels and they'll someday internal desktop we can see that our brand recognition has increased due to all of the marketing and it ties into so we hope this will also help out too.

Two to increase our branding image.

Bill.

Yeah.

Oh, Okay. Thank you and my second question, it's about overseas market. Okay. You gave us a more detailed update about overstitch distribution channel development.

Online and offline and also are there any negative impacts due to the shortage of shipping containers.

And you should count or shall highlight what Jakob great going back on you know judiciary Hamilton or do you think at all costs and how they can shop at home.

You want me I'll show about counter you don't have in the pudding.

Yeah.

Oh, Okay, I will go through the past as well.

So in the fourth quarter of 2020 in the first.

First quarter of this year.

Mentioned that we already entered into more than 10 countries in Europe.

As you know what I mean, do we have in Australia, and the past few months and we also expanded into.

They shouldn't know eight countries, including India tally on Saudi Arabia, Europe European countries, and the United States.

So our export products are sold on both online and offline channels and.

And then most of our franchises so we slowed our products to those.

Intuitive and they still on your alpha as well as all the channels.

So we also are in the North American market and we've just launched a though you're asking them to the store and we are also seeking cooperation opportunities for offline channels that they can have this year, but the county on the border selling conditions.

When calgon Miss them.

Oh, well the question about the shortage of us shipping containers, yes, it'd be good to see some impactful some delayed orders, but we optimize the manufacturing and delivering tani.

Well as we plan to get out some of like locally the warehouses.

Uh-huh to mitigate that impact so generally it doesn't cause any material impact on our all the smartphone.

Okay.

Okay. Thank you Sir that's all my questions.

Thank you.

Our next question comes from Vincent Yu from Needham and company. Please go ahead.

But if you say hey at that point in time, the tissue that you Wouldnt know what you should take it once you work on.

And the thing you should do we can get good.

So it wouldn't be able to know what's your solution is going to change that you see.

Yes.

This is about your D to C O J Goldman <unk>, Jason just as usual mythological shooting.

Sure John So I think when you send them going on just the Alexandria for.

Jay Good Shanda RGB missed you send you to what you should do the guidance just E mail Covid charms are cheaper.

The other thing as you know.

As Sheila mentioned Europe just.

Chairman Chen.

Your question was should do understand that sort of shows with the.

Sooner, you'll you'll you see is just the chinchillas.

So it's just still when he or she dollar there's real funded with Jacob.

Traditional wings as if you're going to hear that.

Thank you sure.

You're entitled to a different but similar to the tissue and Iot should the value of them.

I'll give you some view on the kind of with EMEA and you can find on attrition.

Sure.

And the challenge of a college that is if you look on reduction that you didn't have in telecom than just your thought about equal.

John I guess your centralized call centers from Hana.

Okay. That's helpful.

Thanks Chuck.

<unk>. Thanks for taking my question, so I have two questions and.

The analysts.

Yeah.

<unk> has already mentioned, so, but I would like to add.

You discussed a little bit more the first one is that it looks like we missed our guidance range this quarter.

Can management talk more about like which segments.

Didn't perform as well as the previous expected and.

It fits our footprint.

<unk> optimization contribute to the top line Miss.

As well and the first question is.

Also wanted to touch on about the margins so in terms of the.

Our ASP on our spending commandment show us how did the raw material trends in August compared to second quarter and do we think that we have seen the peak.

In terms of raw material prices.

Thank you.

Okay.

I had yoga Olympiad, usually the antenna.

The more pipe and cheap I have inflation.

Thoughts once I know, what you bumped the tree the xiaomi showing up at all.

Hi, Judah women <unk> de <unk>.

<unk>, Michigan demand column.

Genitalia, but which we had set we grew more than one chunk out in liquid biopsy to somebody who you're talking to me. The comeback is or how should we choose to pay and what it means to me that you said to each of the telco to Eagle and which would equate to one that you've got how many people you have the social the to me the committed number of women.

Well the de Coeur appeal your card I'll close on a woman nickel editorially I should say older.

Mulder women children vehicle total Michelle bridges little it sounded like you said just to achieve a special rule. Sheila you didn't have you calculated pin Bowl show you Danielle so towards that two thirds, which is huge because I felt totally siegel with <unk>.

But th Gordon answer the way that I don't know how exactly you go Oh holiday, but you know what you did how many <unk> how does your guidance, yet who do actually have feet on the swaps or did it kind of on a kasha Chen.

What are you gonna either pom pom in electrical with biotech. She mentioned, maybe we sell D. G. How does your children Jacek.

What are you talking about.

<unk> published its two came at <unk>.

Could you tell me what others have done without a doubt she said the pay down of <unk>.

Call it what it does shift the way.

No actually what I was hoping you could go check please.

And that kind of a high shortly bulks Hugo Assembly. The children Diego tell me the timber hedging and you'll see the graph on the top half.

Is it.

Oh, okay.

Chuck.

Richie comments for that.

The second question first about.

They'll mature accounts.

We all already observed reputation with Royal My parents house like demonstrating a more stable with Ontario.

Also at the industry is that we also think that the real market right.

<unk> has been a lot of Kimberly hypertension, and not likely to increase a lot.

So for your first question about <unk>.

The guideline.

Second quarter revenue.

Third quarter guidance.

So we have a well.

We are shifting our focus on the point.

All you are adapting them for.

For the second quarter as a quiet and Dell we have like two men point. So first of all when you will increase the Dallas dumped some new contacts with potential growth and it will take some time to increase contributions.

Our new product and they are paid.

And at that time.

Is that more R&D with sources and our own branded products in particular is down like simple not ball watching to fire and home devices and do we can see that in long term. They are categories that can help out to drive the all girl girl and long term.

And so although in the third quarter, although the outdoor conservative about our selling and the guidance and the remainder focused on them, putting a portfolio of GAAP number.

I hope that helps.

Policy issue.

Pause like angle when she might not just as a woman should all women's you would.

He's saying they got post the dollars you can change the.

Our whole me a cheap goods.

It seemed like the pay as you go or so on Wednesday can't book them. The good news hopefully you won't shouldn't Eugene Putnam, Oh, Gee do a whole juice all high social woman.

Do you feel like the stuff on your own.

<unk> convenience I'll say, you know something Jacob Schoen, who pushes Louis under each scenario.

So it was quite good.

We humans are finally, Josh.

Thanks, Bill Clinton measurements in EMEA.

For one more question. So we mentioned that we are investing you used.

Having your spokes spokesperson.

These expenses already encouraging second quarter, 2021 and will we see sales and marketing expenses on a year over year basis.

<unk> faster.

Then there are like total total revenue growth. Thank you.

Used to tie each of shutdowns of that woman told them <unk> got chewy.

Trulia hooker to kind of take them against each other.

Does that change at the end of Covid, what she does it have.

She'd been counting which I think is I think apple with I thought you talked about Shaquille, Helen I totally forgot Medina tissue from at least should I'm not you should take away.

Until then.

Thoroughpin Petro Minatome reunify children, who have been in per se.

How should we be issued a court.

On the day and how many children protocol called temperature until after they issued a quota. So he hired which income that you had 10 day cause the accouterments you could imagine pathology to teach.

And how that how the heating Johnson.

The thing that's been done.

And apart from the hemophilia, Michigan.

But it sounds like I mean, you've got people should do come from federal increase I'm not about Chi Chi Chi that you saw throughout Europe.

Anyone that you don't do it for Xiaomi, which you did the.

Do you have a box.

How do you how do you treat other product deep analyze from the payer.

The channel channel, which we don't have a setup to the pin map I'm kind of into the Huawei actually you got to you got hydrogen hazard.

Yeah.

Oh, okay.

So the selling and marketing expenses spending has on the operating margin.

Margin also photo that's mount into Opex.

Daniel.

They call breakthrough with the March him too.

<unk> opened up like door and Mark Hanson himself.

You take care out there the accretion and as well that are born Tonight.

Our operating expenses.

So its way on its part unfortunately.

If they cannot hitting like we have been conducted advertising and I think that's about person.

Are there so we already had some of the selling and marketing expenses in the second quarter and in our second half of this year, we will have some ongoing.

Based on this part.

Fair.

In the first half of this year.

<unk> expenses increased but we also see that in fact from our internal that helped like the Oh I'll at least advertise and can.

How is the health of our online and offline dealt with things business in fact, and well continue to do.

It's actually advertising activities nothing you have okay.

Thank you very much very clear thank you.

Nothing has changed.

Next question comes from Sue go phone from Blue Lotus. Please go ahead.

Yes.

So you know what that range out there for you highlighted a good point.

Sure.

Probably you're going to eat the huddle room for you.

What are you comfortable rumaila I'll get there.

It's also if you could go wrong, we'll go for theoretical what are you seeing anything religious bumping into them quickly.

Oh sure sure.

How 'bout, because she was Europe, where.

Oklahoma.

Where international sales play an increasing role.

The management see international growth company or with the easing of pandemic managers has the international growth slowed a bit.

Thank you.

Okay.

Implementing and how else you don't say curious, Florida would be a chance to elaborate on but she doesn't rush or how did you eat at Nitro cold.

<unk> grew more than $10.

Gotcha.

We're coming into a simple teamhealth or shall I E.

You know how many of them whether it be virtual go how should you believe.

Oh by the way political arena, the tweaking that you wouldn't be sleep to improve which we go to Q&A.

And my shop, and you're in a hot recharge recharge it because you just got to see.

So when you're shopping in a trickle.

How's your bulks, which each of them.

I assure you you sound on opportunity related to the drug or device you can go to each of their father and how could you elaborate.

You can oh, much kombucha mutated equivalent I kind of watch it sounded like that so it sounds like she has had a social and digital so she'll do a woman just yet.

Nashville Chico's behalf.

So now she said about niche be unhappy with that woman hazard Xiaomi is the particle Bianchi, Tony the Tiger that conjecture.

Oh, okay.

No no no.

First having fear, we can see you'd never a box of dialysis atmosphere for wallboard and Oh. This is mark here.

That's due to the of course, the pandemic information in some of these countries about entering into Dallas like half of the year. We also see the pay down this clearly shows our.

Depending it all the time and GAAP.

We remain conservative and there was there a second.

And the global market, but so far that's out there that we see internally that their performance is good and our expectation, but we view because they have a clue about.

Take them.

I think my Kid about weather, but also I take it badly those.

Measures and couldn't wait Jamaica and alpha.

Emotion and I'm actually had pretty good in San Francisco.

Hum Lindsay I'll do is go to change your outlook.

I'll just kind of any color you can.

Thank you for World War two critical.

So I'm gonna Lewisville, what's a range I'd be curious on any one offs or putting those into Australia and now you've got a new water at home play off on them.

Is there any particular strategy for marketing in the U S market.

Thank you.

Oh, Thank you I'm showing truthfully you asked Mark here I don't know that I would point out we're just not officially launched last week on out of the door.

So on one side, we will cooperate with us.

A local third party operator.

T offering to our I'm just go together so they know about.

I'm talking about yeah operation Guy like on Amazon, There's more out there that can cut too much kaczor and all the other how do we also.

Got to do some marketing and PR activities down there yes.

She has a tail alloy recommendations.

We already have if there was like a marathon.

Bad here in blocks goodbye to how about Alpha modest dollar thing you're asking my cap.

Okay.

Oh, okay.

Thank you.

So as there are no further questions now I will turn the call back over to.

On the purely for closing remarks.

Oh. Thank you once again for joining US today. If you have further questions. Please feel free to contact with the contact information on our website or the person who grew up our investor relations with Gorgon I think you'll all have a good one.

This concludes the conference call you may disconnect your lines. Thank you.