Half Year 2023 Viomi Technology Co Ltd Earnings Call
Okay.
Hello, ladies and gentlemen, thank.
You for standing by for Biobased Technology Company Limited's earnings Conference call for the first half of 2023.
At this time, all participants are in listen only mode.
Today's conference is being recorded.
I will now turn the call over to your host Ms. Claire T. The IR director of the company. Please go ahead Claire.
Thank you Allison and Hello, everyone and welcome to round Me Technology Company Limited earnings Conference call for the first half of 2023. Although a reminder, this conference is being recorded the company's 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 at IR <unk> com.
Participating this call Mr Xiaoping Chen.
The founder Chairman of the board of Directors, and the Chief Executive Officer, and Mr. Joe and John the head of our capital markets.
The company's management will begin with prepared remarks, and the call will conclude with a Q&A session.
Before we continue please note that today's discussion will contain forward looking statements made under the safe Harbor provisions of the U S. Private Security Litigation Reform Act of 1995 forward looking statements involve inherent risks and uncertainties. The companys actual results may be materially different from the wheels.
What's the date further information regarding this and other risks and uncertainties.
They are in the company's annual report on form 20-F, and other filings filed with the U S Securities and Exchange Commission.
Company does not assume any obligation to update any forward looking statements, except as required by law.
There's also no doubt well Miss earnings press release, and this conference call includes discussion of another he's got financial information about the unaudited non-GAAP financial measures in our nation well made properly contains a reconciliation of all this non-GAAP measure so I'll go to the most directly comparable GAAP measures.
I will now turn the call over to our founder and CEO . Mr. Xiaoping Chen Mr. Chen will deliver his remarks in Chinese followed immediately by English translation. Mr. Chen. Please go ahead.
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Thank you Mr. Chad I'll quickly translate Alexandre remarks, before discussing our financial performance for the first half of 2010 I'm sorry.
Hello, everyone and thank you for joining US today, our earnings conference call for the first half of 2023.
Driven by both our local while consumer sentiment and the company's strategic adjustments during the first half of 2023, our total revenue recorded RMB, one 1 billion, representing a decrease of 20% year over year, while gross margin declined by one nine percentage points year over year. However.
We continue to streamline our organizational structure and enhance operational efficiency. Our operating results is a way of recovery well see a year over year decline started flying 30% in operating expenses and a one four percentage point decrease in net loss margin.
Over the past six months.
Our product mix by focusing our core product categories driving our increase in the revenue contribution of our water purification products, so kind of 2% from 14% a year ago, we believe that optimizing our product category structure, well benefit of sustainability off out of Atlanta.
Development.
Additionally, we have achieved a market leading industrial channel capability in the water purification products, we have independently mastered the banca filtration technology and the material manufacturer and progressive empowering us to research develop and produce core component. Moreover.
We have developed a comprehensive set of pork greater solutions, including the capability of conflict.
Unless you know assembly compromised automated product production line and end to end data collection and analyzed in July one of the only technology covenant limits at one of our subsidiaries well if that's the magic of the other national level specialize on innovative lethal giant enterprise.
Owing to its remarkable R&D and innovation capabilities in the water purification industry is one of the highest level and the most authoritative nice nationwide enterprise valuation rating.
That's on a recognized and affirmed our comprehensive strength in the industrial channel of water purification in regards to our other product categories, we utilize flexible.
Nature of OEM, and independent R&D and lay out our product mix and in the meantime, we constantly see they'll never invest time, Inc, and control all of our core technology.
Developed differentiate depreciating are encouraging on the whole house product.
I'm able to April .
April 28 2023.
We introduced a series of high Tech flowback.
At our spring you called out Lunching Fisher.
Fisher, Inc has the integration of our one stop Iot in home solution.
Yes, Michael its very pro for Matahari movie vertical Air Conditioner.
I'm, a simple two crore and vertical Eric Foundation already pushed the wave of fresh air system.
To improve the indoor air quality you could protect users house. We also debuted at our Master three Ultra thing building, a refrigerator and Washington, the handset, which is currently setting a new trend in the home decoration industry, although it's not feel great probe gas electric hybrid water heater, our brand new in town.
Likewise based on what you think I Love Smart home device category also made their debut.
Turning to our brand we were proud to be included on the list goes on and put a great. China's top 100 brands ramp of 443rd quick words upfront about valuation upsetting one through five billing arms. There are only two brands in the smartphone sector that made their way on this lung cancer. We are all meant to be.
One of them. This is a powerful reclamation of our leading position in the industry.
With a flatter in offline channels with the offline consumer market recovering gradually we participated in several allowed scout.
Exhibitions, including the China appliance and electronics.
Or actual eight W E. How inside in April and the syndrome created we held in May and the China International building decoration staff held in Guangzhou in July during this event, we showcased a comprehensive whole house solution to our offline distributors and attracting consumers to visit.
And I guess, you're an immersive future future lie.
The recovery of our awful lot of lung cells. Furthermore were enrich our product offering.
Our overseas market with new categories accounting for over 60% of our revenue.
Well lets see where she facts will be made up for the declines in south of my cleaning products and oversea market.
With the widespread adoption of new energy vehicles, and smart terminal devices.
That was the breakthrough in generative AI technology, we believe the air of inheritance has Iraq integrating AI superpowers into whole housing Paddington will not only enable a revolutionary user experience.
Despite unprecedented data creativity across the whole housing that Oh, how can cause an industry with other high tech on the fashionable brand positioned me well see well me.
And at the forefront of this revolution by steadily improving our product process shelf space and environment and upgrading our AI voice interaction technology, we'll have successful so.
Transition our whole house intelligence from the air of control, which emphasize connectivity. So the error of conception kept her lives with active intelligence on the proactive service.
Moving forward, we will continue to explore and capitalize on our strengths to optimize our operations concentrating on the following three areas first we will further deepen our roots in the water purification industry and rule out more industry, leading pro that creating value for consumers.
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More advanced technology and the comprehensive services.
We will remain focused on fine tuning, our product mix and improving <unk>.
<unk>, our whole housing Patterson.
Product matrix to elevate our Kodak intelligent experience and deliver more helpful. I mean user friendly one stop Iot home solution.
Last but not least we will deepen our industrial layout Hudson our cost controls in place our operational efficiency and tourism in our product competitiveness.
So further improve operational performance at the same time, we will maintain sufficient capital reserve to support their skulls and consolidate our brands to drive robust and sustainable growth sparing no effort to create long term value for all of our users on the shareholder. Thank you that concludes our bond offering.
I will now turn the call over to our head of capital markets, Mr. Joe and Joe to discuss our financial performance. Thank you.
Thank you, Mr Cheng and clear and thanks to everyone for joining us today, and we will go over our unaudited financial results for the first half of 2023.
Our net revenues were RMB $1304 4 million compared to RMB 1600 <unk>.
$65 4 million for the same period of last year.
The decline was mainly due to a decrease in revenues from the Iot at home portfolio as well as small appliances and others.
Revenues from the Iot at home portfolio.
Decreased by 21, 8.8% to RMB $691 7 million from RMB 800.
And $84 7 million for the same period of 2022.
<unk> was primarily due to the streamlining of our Skus being smart refrigerators and smart sweeper robots.
Revenues from home water solutions increased by one 7%.
M B to Hungary, and AG 6.6 million from RMB two.
200 <unk>.
And $81 9 million for the same period last year.
The increase was primarily driven by our efforts to focus on water purification production.
Revenues from consumables decreased by 21% to RMB 135 point.
9 million from RMB 107.
$72 1 million for same period last year.
The decrease was primarily due to the decrease in the Salisbury of water purifiers theaters, so to xiaomi.
Revenues from smart appliances, and others decreased by 30.
36, 1%.
And the $190 2 million from RMB two hungry.
97, 6 million for same period of 2022, primarily due to the ongoing product portfolio adjustments, we think with this category.
Gross profit was RMB 286, 8 million compared to RMB $391 5 million for the same period last year.
<unk> margin was 22% compared to 23, 9% for the time period of 2022.
The decline was primarily due to a lower selling.
So it implies a certain cleaner products and it was partially offset by increasing sales of higher gross margin products as a result of product portfolio adjustments.
Yeah.
Total operating expenses decreased by 30.3% to RMB 360.
61.8.
8 million from RMB 519 point full meeting for same period of 2022.
Mainly attributable to the streamlined organizational structure and overall improved operational efficiency.
In greater detail.
Search and development expenses decreased by 31% to RMB 195 million from RMB 100, and.
$58 7 million for same period of 2022.
Many driven by a decrease in personnel costs, and then optimization of ongoing R&D projects.
Selling and marketing expenses.
Decreased by 33, 4% to RMB 200, and a $13 5 million from RMB.
327.
<unk> 7 million for the same period last year, mainly due to a decrease in marketing expenses logistics expenses and sell related to personnel costs.
General and administrative expense decreased by two 8%.
RMB 38 8 million.
<unk> to RMB.
$39 9 million for same period of 2022, primarily due to a decrease in personnel costs, partially offset by an increase in the estimated annoyances alloys.
House and notes receivables.
Net loss attributable to ordinary shares.
Ownership coders.
The company was RMB $54 9 million and a non-GAAP net loss attributable to ordinary shareholders of the company was RMB 53 7 million. Despite the decrease in revenue scale, our loss from operations narrowed by 43 point.
6%, indicating an improvement.
Operational efficiency. Additionally, our balance sheet remains healthy.
As of June 32023, the company has cash and cash equivalent so RMB $691 5 million restricted cash of RMB one hungry.
$8 1 million short term deposits of RMB 262 million and short term investments of RMB $64 3 million.
Okay. This concludes our prepared remarks, well now open the call for Q&A. Mr. Chang Our fonder makes her John will join this session and answer questions. Operator. Please go ahead.
Thank you we will now begin the question and answer session to ask a question you May Press Star then one on your Touchtone Chad.
Youre using a speakerphone please pick up your handset before pressing the keys.
Withdraw your question. Please press Star then two for the benefit of all participants on today's call. If you wish to ask your question to management in Chinese please.
Please immediately repeat your question in English.
Yeah.
And our first question today will come from Jamie Shen Lee of TICC. Please go ahead.
Yeah.
Pardon me please standby for questions.
One moment, while we cannot.
<unk>. Thank you.
Please standby.
[noise].
Ladies and gentlemen, please standby if you wish to ask a question.
Please press Star then one.
Once again it is star and then one for questions and please standby.
And once again, we have a question.
From Jim Chin Lee from <unk>. Please go ahead.
Oh, Okay, alright, thanks for the management and the dancing drums, TICC and I have three questions.
The result in the I'll ask them one by one.
So the first question is.
How did the culturally rafting perform in Q1 Q2 and have we seen any into from the consumer demand and.
Which categories showed good sales.
First off of Tien Tsin Huang.
That's my first question.
Thank you Mr. Lee for your question.
As the first quarter always comes at the slack season.
Lower revenue scale it takes around 40% of their revenue in the first half of 2023.
In the first quarter.
We pushed hard on SKU, streamlining and down market at Botox clearance.
Which resulted in a drilled well profit margin than the same period last year.
But on the bright side, the total SKU number decreased by 30% and.
The overall.
Age of the inventory also decreased accordingly.
Which helped us get a better prepared for the big promotion season.
About the market men Darien.
618 promotion season.
Did up to a recovery of the consumption market.
That's such a recovery is still subdued.
And the overall sales did not meet our expectations.
With the competition.
e-commerce platforms getting PSU.
Companies are driven to compete with one another with lower price in order to maintain their sales volume.
At the end of the day this competition and further reduce the profit margin.
Another observation is that the demand.
For good quality durable and differentiated products is increasing in a consumption market.
With concepts such as ultra thin.
Customized beauty healthcare.
Energy conservation are becoming more popular among the young generation consumers. Therefore in the future we will keep focusing on optimizing our product mix, mainly by expanding the percentage off road product with better profit margin such as our what's your fires and it's mark.
Kitchen paradox, and lay out more products with pending and market acknowledge it features.
To meet the greater the recovering market demand.
And back to your question also on <unk>.
The condition is and what water purifiers achieved quite good.
During the 618 season.
As the peak season off air Conditioner, Kenny earlier than in past years, we observed an increase in sales of air conditioners, starting from March this year.
And the revenue contribution of such products to the total revenue increased 15% same period last year to 18% this year.
The meantime, as we put more efforts on promoting water purifiers kodak's.
The revenue contribution of large blocks of water purifiers increased to 22% compared to 17% in the same period last year.
Thank you.
Okay. Thank you.
My second question is.
What is the pipeline for the new products launched this year.
The company launched any new category products, and what will be the business focused on the second half of this year. Thank you.
In the first half of 2023, we introduced a series of new products and the spring new product launching events featuring enhanced iterations of our one stop Iot of home solutions, such as our Master three pro format.
For Mt formaldehyde, removing AI vertical air conditioners, and stupid to pro AI vertical air conditioners equipped with a fresh air system.
Both of which improved the indoor air quality and it benefits the house of our users family members. We also debuted debilitate, our master three ultra thank building refrigerators and washing machines.
<unk>, which is currently setting new chance thing the home decoration industry.
With respect to the new product category.
We recently launched a series of intelligent lightening system drove that we creatively empowered and will kick.
Empowerment of the basic functions of lining system with our software capability.
Our intelligent lending system products to satisfy different needs of our users in different scenarios.
If you go with the different or customized home decorating designs.
We believe that.
Intelligent lighting system.
In dispenser bolt pipe off the whole house intelligence solutions, and we will provide a reasonable improvement.
In the smart home experience of our one stop Iot solutions.
For second half of 2023 at MS. Chen mentioned earlier, we will continue to explore and to capitalize on all risk Janice and optimize our operations.
Focusing on the following three aspects first we will further.
To deepen our ruse low water purification industry.
And providing consumers with more products of higher quality, leading technology.
With more comprehensive services.
We remain focused on fine tuning our product mix.
And it is rating our whole house intelligent product metrics to deliver more helpful and user friendly one stop Iot at home solutions and improve our users.
Spirits.
Third.
We will keep deepening our industrial.
Lay out strengthening our ability in cost control, increasing our operation efficiency.
And expanding our operation channels to further improve operational performance.
Thank you.
Okay. Thank you. Thank you and my last question is about the real bad Cobaltic of outcomes.
And as we all know that the competition in a row.
I'll take that can cleaner become very peers this year.
So our holidays business performed in the first half.
Great. Thank you that's my last question.
Okay.
Thank you.
The business scale of our robotic vacuum cleaner clean Earth has shrunk largely since last year.
But shrinking is mainly caused by the overdependent itself Oliver robotic vacuum cleaner in the overseas market, especially in the euro.
During the geopolitical crisis and foreign currency fluctuations all occurred in the first half of 2023 and the European market, our sales of sweeper robot suffered a significant job, especially in the second quarter.
In the second half of 2023, we expect the sales of sweeper robots to have a slight rebound.
With the influence of these headwinds, Texas gradually getting really if the things July this year.
But to be Frank we haven't seen any clear signals of recovery in this product category, neither overseas nor domestic.
And the competition is getting a fierce here day by day.
Nevertheless.
Essential part of our one stop Holthaus intelligence solution, we will keep this product line and provide several motives mentally through Oems.
In the meantime to make up for the decline in overseas sales of all our robotics.
Thank you and clean Earth.
On one hand, we enriched our product categories offered in the overseas market and the revenues brought about by this.
New categories accounted for over 60% of our oversea market revenues in the first half of 2023.
Hans.
We are also making efforts to explore our I won't say market, particularly seeking new commercial opportunities in the emerging markets, especially in the rapidly growing southeast Asian market. Thank.
Thank you.
[noise] and that concludes the question and answer session I would like to turn the call back over to management for.
For any additional or closing remarks.
Okay.
Okay.
Thank you once again for joining us today, if you have any further questions. Please feel free to contact us through the contact information on our website or our investor relations with consultants. The Piacente group. Thank you.
Thanks.
The conference has now concluded. Thank you for attending today's presentation and you may now disconnect.