Q1 2024 Tuya Inc Earnings Call
Operator: This period is due to the Chinese New Year.
New year.
Unnamed Speaker: Since the company went public in March 2021, we have gone through a lot of unprecedented and unexpected things. We have also made many changes to the business through active and regular business adjustments and responses. We continue to build a long-term support network and expand our business. [inaudible] From the point of view of Tuya's customer and product support services, we have been working with Tuya for four years. Four years ago, our main focus was to help customers to achieve higher-end and more competitive performance, especially in the field of AI, which is also a part of our IoT business.
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Unnamed Speaker: Since we went public in March 2021, we have navigated numerous unprecedented microeconomic events. Through proactive and ambitious strategy adjustments, we have driven significant qualitative transformations in our business. While achieving non-gap profitability, we continue to build long-term competitive moats and extend the total addressable market.
Speaker Change: Since we went public in March 2021, we have navigated numerous unprecedented macroeconomic events.
Speaker Change: Through proactive and ambitious strategy adjustments, we have driven significant quantitative transformations in our business.
Speaker Change: Achieving non-GAAP profitability, we continue to build long term competitive moat and extend our total addressable market.
Unnamed Speaker: From the perspective of the customers and scenarios supported and served by Tuya, we have evolved significantly over the past four years. Initially, our focus was on helping customers more efficiently and compatibly achieve device intelligence through our IoT path business. Today, we have expanded into spatial intelligence solutions in industries such as apartments, hotels, communities, parks, mobility, and energy. Furthermore, we have advanced to offering comprehensive smart solutions through a cloud platform that includes parts, software, and smart devices, including our smart cube cloud. This enables us to build enterprise-level intelligence platforms for global giants using KubeCloud. As a result, our time is now far larger.
Speaker Change: From the perspective of the customers and scenarios supported and served by Julia we have evolved significantly over the past four years. Initially our focus was on helping customers more efficiently. The comparatively achieved device intelligence through our Iot Pos business today, we have expanded into.
Fisher intelligence solutions, and industrials, such as apartments hotels community parks mobility and energy. Furthermore, we have advanced two offering comprehensive smart solutions through our cloud platform that includes part stock and smart devices, including our smart cards.
Speaker Change: This enables us to build enterprise level intelligence.
Speaker Change: Platforms for global Giants using puke out.
Speaker Change: Results our attempt is now far larger.
Unnamed Speaker: In the first quarter, we made a comprehensive recovery of the largest part-time and part-year income. We continue to maintain a strong trend of growth. This growth is partly due to the recovery of overseas supply and demand and the improvement of global smart demand documents. On the other hand, it is because we are constantly increasing our market share. The main competitors today are in the 2022 and 2023 industrial price cycles. We can see that more head-to-head brands have moved from an internal self-developed IoT platform to our platform. We also continue to develop and innovate new products to help our brand customers quickly launch new smart products. All of these factors contribute to our economic growth.
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Unnamed Speaker: In the first quarter, we witnessed a comprehensive recovery in our largest revenue segment, the past business, maintaining a strong year-over-year growth trend. This growth is attributed to two main factors. The first is the recovery in overseas demand for consumer electronics and the steady increase in the global demand for smart solutions. Secondly, our market share is expanding as major competitors exit the market during the industry downturn from 2022 to 2023. More leading brands are transitioning from in-house IOT development to our platform. We also continue to drive innovation through new product development, helping our brand customers quickly launch new smart products. These factors collectively contributed to our increasing market share.
Speaker Change: In the first quarter, we witnessed a comprehensive recovery our largest revenue segment, the Pos business, maintaining a strong year over year growth trend.
Speaker Change: This growth is attributed to two main factors.
Speaker Change: As the recovery in overseas demand for consumer electronics, and the steady increase in global demand for Smart solutions.
Speaker Change: Secondly, our market share is expanding as major competitors exited the market during the industry downturn from 2022 to 2023.
Speaker Change: Leading brands are trends transitioning from in house Iot developments to our platform. We also continue to drive innovation through new product development, helping our brand customers quickly launched new smart products.
Speaker Change: These factors collectively contributed to our increasing market share.
Unnamed Speaker: We observed that some of the new face developers and brand customers in the cloud platform are growing rapidly. Among them, there are some companies that have developed brand capabilities more than four or five years ago, a group of Chinese e-commerce companies, and some players of well-known brands such as North America, India, and Europe, who are more focused on decentralized service models.
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Unnamed Speaker: We observed a new batch of developers and brand customers are thriving on the cloud platform. Among them are Chinese e-commerce companies venturing overseas, which now possess stronger R&D and branding capabilities compared to four or five years ago. Additionally, well-known brands in North America, India, and Europe are growing steadily under a more localization-focused service model. Our robust foundation of both new and existing customers enables our growth rate to surpass the industry average
Speaker Change: We observed a new batch of developers and brand customers are screaming.
Speaker Change: Scrubbing, our cloud platform among them are Chinese e-commerce companies, eventually overseas, which now possess stronger RMB and branding capabilities compared to two four or five years ago. Additionally, well known brands in North America, India, and Europe are growing steadily and there are more.
Speaker Change: More localization focused service model, our robust foundation of both new and exciting existing customers enabled our growth rate to surpassed the industry average.
Unnamed Speaker: This year, the European market welcomes the French government's energy subsidy policy, and French clients receive smart devices and solution orders. [inaudible] In Southeast Asia, we are continuously innovating and exporting technology products in the field of the telecommunications industry. [inaudible] This year, in the European market, we responded to the French government's energy subsidy policy by securing orders for temperature control and energy-saving smart devices solutions from French customers. We have integrated our solutions with two government-designated green energy technology platforms, and the value of initial orders is over $1 million.
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Speaker Change: European markets, we have responded to the French governments energy subsidy policy by securing orders for temperature control and energy savings smart devices solutions from French customers.
Speaker Change: We have integrated our solutions with two government designated Green energy technology platforms and the value of initial orders is over $1 million.
Unnamed Speaker: At the Frankfurt Lightning Fair in Germany, we showcased our innovative net-zero solutions with cutting-edge hardware and software products, helping our partners accelerate their transition to a low-carbon era. In the Latin American market, we have partnered with FiberX, a leading ISP channel in Brazil, whose downstream network ultimately covers millions of households across the country. In the Southeast Asia region, we continue to make breakthroughs in the telecom operator sector through KubeCloud technology and product innovation. In the first quarter, several telecom operator group customers began deploying Kube private cloud solutions, as well as comprehensive smart solution cooperation models.
Speaker Change: And frankly <unk> fair in Germany, we are showcasing our innovative <unk> solutions with cutting edge hardware and software products, helping our partners accelerate their transition to a low carbon era.
Speaker Change: In the Latin American market, we have partnered with <unk>, a leading ISP channel in Brazil, whose downstream network ultimately ecommerce millions of households across the country in the Southeast Asia region, we continue to make breakthroughs in the telecom operator sector through <unk> cloud technology.
Speaker Change: And product innovation.
Speaker Change: In the first quarter several telecom operator group customers began deploying <unk> private cloud solutions also comprehensive smart solution Corporation models.
Unnamed Speaker: Our total income is about 8.3% of the demand from overseas. By covering all major regions of the world, we can focus on innovative business models for our free and self-governing society. [inaudible] The war between the Communist Party of China and the Communist Party of China has been a fierce battle for 13 consecutive years. The more balanced global business model supports Tuya's business to build a more sustainable economy in the next three years. We can feel and capture the innovation and innovation trends in various regions of the world and better serve Tuya's global customers than China's manufacturing companies.
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Unnamed Speaker: Overseas markets are approximately 83% of total revenue, balanced across all major regions, driven by our innovative business model of private cloud and smart solutions, coupled with a customer-focused approach. The Asia-Pacific region outside of China and the Latin American region are growing rapidly. Their combined revenue demand contribution increased for the third consecutive year. This more balanced global business has made Tuya's operations more resilient and opportunities compared to three years ago. We are now more adept at sensing and capturing new smart technology trends worldwide, enabling us to better serve our global customers and support Chinese manufacturing enterprises in expanding overseas.
Speaker Change: Overseas markets are approximately 83% of total revenue balanced across all major regions.
Speaker Change: Driven by our innovative business model of private cloud and smart solution, coupled with our customer focused approach.
Speaker Change: The Asia Pacific region outside of China, and the Latin American region are growing rapidly.
Speaker Change: Their combined revenue demand contribution increased.
Speaker Change: Third consecutive year.
Speaker Change: This more balanced global business has made us operations more resilient and op and op opportunities compared to three years ago. We are now more adept at dancing in capturing new smart technology trends worldwide, enabling us to better serve our global customers and support Chinese manufacturing and process.
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Unnamed Speaker: [inaudible] 75% Among them, the smart air conditioner, the air conditioner, the whole industry, the leading brand, the growth rate is more than 100%. [inaudible] In the first quarter of this year, we can clearly see that PASP products have entered a stable and healthy growth trend.
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Unnamed Speaker: On the product front, our consumer security and sensor categories are growing substantially faster than the industry average, maintaining the strong momentum established in 2023. The revenue contribution from Tuya Power's small and large home appliances grew about 75% year-over-year in the first quarter. Notably, smart appliances such as air conditioners, thermostats, and temperature control valves driven by leading industry brands grew by more than 100%. The lighting category also experienced healthy year-over-year growth driven by customers actively replenishing their inventories. All categories within our past portfolio entered into a trend of healthy growth in the first quarter of this year.
Speaker Change: Yes.
Speaker Change: On the product front, our consumer securities and it stands our categories are growing substantially faster than the industry average maintaining the strong momentum established in 2023, the revenue contribution from Tuohy powers Smart, it's more in the large home appliances grew about 75% year over year.
Speaker Change: In the first quarter.
Speaker Change: Not really smart appliances, such as air conditioners.
Speaker Change: And temperature control, while driven by leading industry brands grew by more than 100%.
Speaker Change: The lighting category also experience.
Speaker Change: Year over year growth driven by customers' activity.
Speaker Change: Managing their inventories all categories within our power portfolio entered.
Speaker Change: <unk> entered into a trend of healthy growth in the first quarter of this year.
Unnamed Speaker: As a company based on technical products, Tuya embraced Sensor AI comprehensively in early 2023. The fast integration of Sensor AI technology paved the way for the application of big models on smart devices. The CEO of OpenAI, Sam Edmonds, said in an online podcast that there will be new artificial intelligence devices. AI models will also become more efficient and more cost-effective. In this way, they can be applied to mobile phones and other devices.
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Unnamed Speaker: This will lead people to have a more natural relationship with humanity, for example, through voice-to-speech interpretation. Based on our cloud platform, we will fully invest in the development of AI in the ecosystem of smart hardware and gradually achieve some results in the AI device experience and AI space products.
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Unnamed Speaker: As a technology-driven company, we fully embraced generative AI at the beginning of 2023, iterating on generative AI technology and paving the way for the application of large models in smart devices. Recently, Stan Altman mentioned on the All In podcast that new AI devices will emerge, with AI models becoming more efficient and affordable. This will enable their integration into devices like smartphones, allowing people to interact with AI in a more natural way, such as through voice.
Speaker Change: Yes.
Speaker Change: As a technology driven company, we fully embraced generative AI at the beginning of 2023 the rapid.
Speaker Change: Iteration op generated AI technology is paving the way for application of large models in their smart devices.
Speaker Change: As <unk> mentioned on the all in podcast, that's new AI device, where emerge with AI models, becoming more efficient and affordable.
This will enable the integration into devices like smartphones.
Allowing people to interact with AI.
Speaker Change: More natural way such as through voice.
Speaker Change: Leveraging our cloud platform technology and extensive.
Unnamed Speaker: Leveraging our cloud platform technology and extensive Smart Hardware Ecosystem, we are fully committed to generative AI research. We aim to achieve milestones in AI device experience and AI spatial use cases, rapidly advancing opportunities in device intelligence, spatial intelligence, and smart solutions.
Speaker Change: Hardware ecosystem, we are fully committed to generate reshape AI research, we aim to achieve milestones in AI devices.
Speaker Change: Experience and AI special use cases rapidly advancing opportunities in device intelligence spatial intelligence and smart solutions.
Unnamed Speaker: In the space market, we want to add AI capabilities to the daily management of space scenes, so that users can gain the functionality and management experience of intelligent AI. The experience of AI-driven intelligent scenes, or the recommendation of scene analysis and linkage solutions, will be launched at the Global Developers Conference on May 29 next week. Tuya's own AI model, the space model, [inaudible] based on the customer's IoT data and specific scenario needs. According to the energy consumption of magnetic space, AI generates the best energy storage strategies. In the field of spatial intelligence, we provide A.I. technology value to our customers and users.
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Unnamed Speaker: in the direction of spatial intelligence. We are integrating these AI capabilities into the daily management of spatial use cases. This allows users to experience AI-driven device functionalities and management, AI-driven smart spaces, and environment analysis with synchronized solution recommendations. At our upcoming Global Developer Conference on May 29, we will introduce Tuya's own AI large model, the Spatial Large Language Model. Benefiting from the vast scale of smart devices within Tuya's ecosystem, the Spatial Large Language Model, including the net zero carbon model used in energy saving use cases, will generate optimal energy saving and emission reduction strategies based on real-time spatial energy consumption data. This will provide leading AI technology value to customers and users in the field of AI.
Speaker Change: In the direction of special in tagging.
Speaker Change: We are integrating these AI capabilities into the daily management of special use cases.
Speaker Change: This allows users to experience <unk>, driven device functionality and a management team.
Speaker Change: German small spaces and environments analysis with synchronized solution recommendations.
Speaker Change: At our upcoming global developer conference on May 29, we were introduced to US all AI Lodge model to spatial Lodge language model benefiting from the vast scale of smart devices with Intuit ecosystem. So special large language model, including the net zero carbon model used in energy saving use cases.
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Speaker Change: This will provide leading AI technology value to customers and users in the field of spatial intelligence.
Unnamed Speaker: In this quarter, our smart devices sold 100 units. After more than a year of business, we have officially changed our name to... Smart Solutions. Do it if you find it. Smart Production is the way we combine the cloud software capabilities of Sensor AI and our reputation in the global market. In addition, it gives customers the ability to create high-value software-integrated digital solutions that have strong control over China's equipment supply chain.
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Unnamed Speaker: For example, in devices such as the Trump House, the Trump-era Chinese Communist Party, the Zhaoming power plant, the large-scale power plant, and renewable energy, the ability to expose the voice of Sensor AI to the user can bring a comprehensive experience and efficiently enhance it. For example, in smart pet devices, through the content of Sensor AI, it can provide an emotional boost.
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Unnamed Speaker: This quarter, our smart device distribution segment has been officially branded as the smart solutions segment after more than a year of business transformation. The Smart Solutions segment integrates generated AI, managed operating systems, cloud software capabilities, and our strong reputation in global markets, along with our robust control over the Chinese device supply chain to deliver high-value integrated smart solutions to our customers. For example, incorporating generative AI power voice capabilities in wearables, central control lighting and electrical devices, small and large home appliances, as well as mobility and energy devices, enhances user interaction and efficiency significantly. In smart pet devices, generative AI can also create content that adds emotional value.
Speaker Change: This quarter, our smart device distribution segment has been officially branded after smart solution after more than a year of business transformation.
Speaker Change: The smart solutions pigments integrates generated AI managed operating systems cloud software capabilities, and our strong reputation and global market along with our robust control over the Chinese <unk>.
Chen: Hi, Chen to deliver high value.
Chen: Integrated smart solutions to our customers.
For example, incorporating generated AI powered voice capabilities in wearable central controls lighting and electrical devices.
Chen: It's more in large home appliances, as well as mobile and energy devices.
Chen: This user interaction and efficiency significantly.
Chen: Smart pad devices generated AI can also create content that as emotional value.
Unnamed Speaker: As a global developer platform, we are also committed to integrating AI technology into the product development environment of the development platform to bring young, convenient, and high-end development experiences to developers. Developers can use simple dialogue and interaction methods to generate UI interfaces in the development process, or use AI to check questions, design, and implement code changes. In terms of product operation, NCI also helps customers to analyze the product functions based on users' feedback in an excellent way, and it also helps developers to make product changes and innovation. Since the first quarter, the number of digital developers on our platform has exceeded 1 million.
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Unnamed Speaker: As a global cloud developer platform, we are also committed to integrating generative AI technology into the core development processes of our platform, providing developers with advanced, convenient, and efficient development experiences. For example, developers can enter the development process through simple compositional interactions, generate UI interfaces, or use AI to check logs and return code suggestions. In product operations, generative AI will also help customers analyze the strength and weakness of product features based on user feedback, facilitating Product Improvement, Iteration, and Innovation. As of the end of the first quarter, the number of registered developers on our platform exceeded one million.
Speaker Change: As a global hub developer platform. We are also committed to integrating generated by AI technology into our core development processes of our platform, providing developers with advanced convenient and efficient development.
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Speaker Change: As of the end of the first quarter the number of readjusted developers on our platform has exceeded 1 million.
Jerry: Finally, after 2024, we are confident about our competitive edge and the future of the smart track. This is the end of my report. I will introduce the other data related to finance to our CFO, Jesse.
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Jerry: As we look forward to the rest of 2024, we are confident in our competitive edge, our position in the competitive landscape, and the future of the smart technology sector. With that, I will now hand over to our CFO, Jesse, who will share additional financial details with you.
Speaker Change: Yes.
Speaker Change: As we look forward to the rest of 2024, we are confident in our competitive H.
Speaker Change: Our position with the competitive landscape and the future of the smart technology sector with that I will now hand over to our CFO Jessi, who will share additional financial details with you.
Jesse: That concludes Jerry's remarks. As I discuss our financial results that provide more detail on the numbers that Jerry didn't cover, please note that all figures are in US dollars, and all comparisons are on a year-over-year basis unless otherwise stated. In the first quarter of 2024, our total revenue reached $61.7 million, up 29.9% year-over-year. We're surpassing the market consensus of around 15% year-over-year growth. This marks an encouraging start to the year.
Speaker Change: That concludes the remarks by Jerry.
Jessi: Thus, our financial result that provide more detail on the numbers that Jerry didn't cover.
Jessi: Please note that all figures are in U S dollars and all comparisons are year over year basis, unless otherwise stated in.
Jessi: In the first quarter of 2024 hour total revenue reached $61 $7 million.
Jessi: Up 29, 9% year over year, whereas surpassing the market consensus of around 15% year over year growth.
This marked an encouraging start to the year.
Jesse: Excluding the adverse impact of exchange rates between the US dollar and the RMB, the year-over-year growth would be an even more impressive 35%. Our IOT past revenue in the first quarter was $45.6 million, representing a year-over-year growth of 35.7%. This was driven by the normalization of downstream inventory compared to the same period last year and our commitment to delivering high-value products to our customers. Regarding product categories, we saw robust demand growth across all categories, with home appliances experiencing the highest year-over-year growth of over 75% from a regional revenue demand.
Jessi: Excluding the adverse impact of exchange rates between the U S dollar and RMB, so year over year growth would be an even more impressive 35%.
Jessi: Our Iot Pos revenue in the first quarter was 45.
Jessi: 45.
Jessi: $6 million, representing a year over year growth of.
Jessi: 35, 7% this was driven by the normalization of downstream inventory compared to the same period last year, and our commitment to delivering high value products to our customers with.
Jessi: Regarding product categories, we saw robust demand growth across all categories.
Jessi: With home appliances experiencing the highest year over year growth of over 75%.
Jessi: From a regional revenue demand.
Jesse: In my perspective, Europe continues to be the largest market, accounting for a little bit over one-third of the total revenue demand. The Asia-Pacific region and Latin America have seen accelerated demand growth, clearly rising compared to last year. Consequently, the Asia-Pacific region around it for around one-third of the total revenue demand, while Latin America's demand contribution increased to more than 10%, a little bit shy away from 15% in the first quarter.
Jessi: Perspective, Europe continues to be the largest market accounting for.
Jessi: A little bit over one third of the total revenue demand.
Jessi: The Pacific region.
Jessi: And Latin America have seen accelerated demand growth.
Jessi: Clearly rising compared to last year.
Jessi: Consequently.
Jessi: The Asia Pacific region.
Jessi: Around it well.
Jessi: And one third of the total revenue demand.
Jessi: Latin America demand contribution increased to more than 10% a little bit shy away from 15% in the.
Jessi: First quarter.
Jesse: On the customer front, we served approximately 3,000 customers in the first quarter of 2024, a slight increase from the same period last year, with the number of IoT PaaS customers remaining stable year-over-year. The changes in the customer numbers reflect our focused customer acquisition strategy. We continue to be prudent in our customer service and acquisition efforts, focusing on a targeted, strategic, and efficient method. As a result, our per capita revenue and per capita growth profit saw a significant year-over-year increase of about 60% to 70% this quarter. Additionally, our 12-month DBNER returned to 116% at the end of the quarter.
Jessi: On the customer front, we served approximately 3000 customers in the first quarter of 2020 for a slight increase from the same period last year with a number of Iot customers remaining stable year over year.
Jessi: The change in the customer number reflect.
Jessi: Our focused customer acquisition strategy will continue to be prudent in our customer service and acquisition efforts.
Jessi: Targeted strategic efficient method.
Jessi: As a result, our per capita revenue and per capital gross profit.
Jessi: So significantly year over year increase of about 60% to 70%. This quarter. Additionally, our 12 months <unk> returned to.
116% at the end of the quarter.
Jesse: The growth margin of IOT paths improved significantly year over year this quarter, driven by a higher, proper ration of higher-margin products in our portfolio and, to a certain extent, due to the high base of inventory write-downs from the same period last year. Our smart solution segment represents an upgrade of our smart device distribution business. By integrating our gen-AI and software capabilities along with our extensive familiarity with the consumer electronic supply chain, we are offering smart devices enriched with our proprietary software capabilities, especially those combined with Drain-AI for end use.
Jessi: The gross margin of Iot path improved significantly year over year this quarter driven by a higher.
Jessi: Proper duration of higher margin.
Jessi: Products in our portfolio and to certain extent due to the high base of England tree write downs from the same period last year.
Jessi: Our smart solutions segment represent an upgrade of our smart device distribution business before by integrating our Gen AI and software capabilities, along with our extensive familiarity with the consumer electronics supply chain, where offerings must devices enriched with our Piper tree softwood.
Jessi: We have capabilities.
Jessi: Especially those combined with to an AI to end users. This segment recorded revenue of U S. Dollar $35 million in Q1, an increase of approximately 37, 3% year over year.
Jesse: The segment recorded revenue of US dollars $7.5 million in Q1, an increase of approximately 37.3% year over year. This quarter, we continued to achieve strong results in Outdoor, Gateway, and Central Control Devices Solutions, with increasingly stable customers and reorders. In addition to enhanced software capabilities, we saw the advantages of Tuya's ecosystem in the smart device solution business. Customers and users are willing to pay for products like smart central control and a smart watch powered by Tuya, which can easily control all their other Tuya-powered devices.
Jessi: This quarter, we continued to achieve strong results.
Jessi: In outdoor gateway and a central control devices solutions with increasingly stable customer.
Jessi: Preorders in addition to enhance.
Jessi: Software capabilities to restore the advantages of <unk> ecosystem in the smart device solution business customers and the users are willing to pay for products like smart central control and smart watch powered by <unk>, which can easily control or are there other powered by tier devices.
Jesse: The smart solution segment achieved a growth margin of approximately 28.3%, an increase of 7.3 percentage points, year over year, with some device solutions reaching growth margins of 30% to 40%, and some even exceeding 50%. In addition, we believe that the addition of AIGC capabilities will further enhance user experience and value. Our South and other sector recorded revenue of $8.6 million in the first quarter of 2024. Due to adjustments in revenue structure, it was a stable quarter. However, revenue related to customized technical services decreased in Q1 due to seasonal and business positioning factors.
Jessi: Our solutions segment achieved a gross margin of approximately 28, 3% an increase of seven three percentage points.
Jessi: Year over year with some device solutions, reaching gross margin of 30% to 40% and some even exceeding 50%. In addition, we believe that the addition of ait's capabilities with further enhanced user experience and value.
Jessi: Our first and other sector recorded revenue of.
Jessi: $8 6 million in the first quarter of 2024 due to adjustments in revenue structure. It was a stable quarter revenue related to customize the technical services decreased in Q1 due to seasonal and the business position in practice, but the growth of high value software value added services such as <unk>.
Jesse: But the growth of high-value software value-added services, such as cloud storage, remained substantial growth. The overall growth margin of SaaS and others slightly decreased due to product mix and increased costs in some technical services projects. But it remained stable within our expectations. For operating activities and expenses, I will provide a detailed view on a non-GAAP basis, which excludes certain items for a clearer picture of our operational efficiency. We continue to present our operating expenses primarily on a non-GAAP basis, excluding share-based compensation expenses and credit-related impairment losses from our GAAP figures.
Jessi: Storage remained substantial growth the overall gross margin of SaaS and others slightly decreased due to.
Jessi: Product mix and increased costs in some technical services projects, but it remained stable within our expectations.
Jessi: While operating activities and expenses I will provide a detailed view on non-GAAP basis.
Jessi: Which excludes certain items will a clearer picture of our operational efficiency, we continue to.
Jessi: Present, our operating expenses, primarily on a non-GAAP basis.
Jessi: Excluding share based compensation expenses and the credit related impairment losses from our GAAP figures in Q1 2024 hour non-GAAP.
Jesse: In Q1 2024, our non-GAAP total operating expenses decreased by 16.6% to $30 million from $36 million a year ago, largely due to reduced employee-related costs, as we now maintain a more streamlined team compared to the first quarter of last year. Since the start of this year, our workforce has remained relatively stable. Regarding sales and marketing activities, we increased our market and promotional budget as our revenue is on a stable growth trajectory.
Jessi: Total operating expenses decreased by 15, 6% to $30 million from $36 million, a year ago, largely due to reduced employee related costs.
Jessi: We now maintain a more streamlined team compared to the first quarter of last year.
Jessi: Since the start of this year, our workforce has remained relative.
Jessi: This stable regarding sales and marketing activities, we increased our market and our promotional budget as our revenue is on a stable growth trajectory, we will dynamically evaluate and potentially increase the budget this year to ensure.
Jesse: We will dynamically evaluate and potentially increase the budget this year to ensure effective investment in marketing and customer acquisition. This quarter, our general and administrative expenses decreased due to relatively low external professional service fees. Additionally, it is worth mentioning that MSCI recently upgraded our ESG rating to A, surpassing some industry giants. Therefore, we will continue to strengthen our efforts in ESG data security compliance and other related areas to become a more contributive company to our customers, industry, investors, and society.
Jessi: Effective investment in marketing and customer acquisition.
Jessi: This quarter, our general and administrative expenses decreased due to relatively low external profession.
Jessi: Professional service fees.
Jessi: Additionally, it is worth mentioning that MSCI recently upgraded our ESG rating to Amy surpassing some industry Giants.
Jessi: So we will continue to strengthen our efforts ESG data security compliance and other related area to become a more contributed company two hour cut.
Jessi: Customers industry in West Coast in our society.
Jesse: Overall, our non-GAP operating loss in the first quarter of 2024 narrowed to only $600,000, nearly breakeven. Achieving such operational results in the traditionally low first quarter is very encouraging, indicating that our business and operational leverage are making significant progress under the right strategy. Regarding interest income and cash, we earned approximately $12.8 million in interest income in Q1, providing additional capital for our daily operations. This reflects our adept cash management, prioritizing the security of our principal.
Jessi: Overall, our non-GAAP operating loss in the first quarter of 2024 narrowed tool.
Jessi: Only $600000 nearly breakeven achieving such operational results in the traditionally low first quarter is very encouraging indicating that our business and operational.
Jessi: Leverage making significant progress under the right strategy regarding interest income and our cash.
Jessi: Earned approximately $12 $8 million in interest income in Q1, providing additional capital for our daily operations.
Jessi: This reflects our adapt cash management prioritizing D C.
Jessi: Security of our principle by the end of March 2024, our net cash position, which comprises cash and cash equivalents.
Jesse: By the end of March 2024, our net cash position, which comprises cash and cash equivalents, Bank Time Deposits, and U.S. Treasury. [inaudible] Looking ahead, we are committed to driving top-line growth, sustaining strong growth margins, and optimizing operating leverage. We believe our performance in the first quarter allows us to look forward to the future with more optimism.
Jessi: Bank time deposits in the U S treasuries.
Jessi: Securities totaled about $998 8 million.
Jessi: An increase of about $14 $5 million compared to the end of 2023, despite a payments for annual expenses such as employee bonus in Q1.
Jessi: Looking ahead, we are committed to drive top line growth sustaining strong gross margins and optimizing operating leverage we believe our performance in the first quarter allows us to look forward to the future.
Speaker Change: With more optimism with that operator, we're now ready to take questions. Thank you.
Operator: With that, operator, we are now ready to take questions. Thank you. Thank you. Ladies and gentlemen, if you would like to ask a question...
Operator: Thank you. Ladies and gentlemen, if you would like to ask a question, please press star followed by 1 on your telephone keypad now. If you change your mind, please press star followed by 2 to withdraw your question. When preparing to ask your question, please ensure your phone is unmuted locally. Additionally, when asking a question, please state your questions in Chinese first and then immediately translate them into English for the convenience of everyone on the call. Thank you. Our first question comes from the line of Yang Liu from Morgan Stanley. Yang, your line is open.
Speaker Change: Thank you.
Speaker Change: Ladies and gentlemen, if you would like to ask a question. Please press star followed by one on your telephone keypad now if it changed your mind. Please press star followed by two to withdraw your question when preparing to ask a question. Please ensure your phone is muted locally. Additionally, when asking a question. Please state your questions in Chinese first then immediately.
Translate them into English for the convenience of everyone on the call.
Speaker Change: Yes.
Speaker Change: Okay.
Speaker Change: Okay.
Okay.
Speaker Change: Yes.
Speaker Change: Okay.
Speaker Change: Thank you. Our first question comes from the line of <unk> Yang Liu from Morgan Stanley Yang.
Speaker Change: Your line is open.
Yang Liu: Thank you for the opportunity to ask questions. First of all, congratulations to the company for its very strong performance. I have two questions. First, we can see that the company's revenue increase in the first quarter is very high. Combined with the recent macro environment, China's export situation is quite optimistic.
Speaker Change: Okay.
Speaker Change: Sure Shannon gumshoe, consisting on changing that.
No what you are paying only on Guangzhou.
Speaker Change: Sure.
Speaker Change: The show was also featured on the call.
Speaker Change: So as you know <unk>.
Speaker Change: <unk> shutdown.
Yang Liu: So I want to ask the management team whether they have a more optimistic expectation of annual income growth and whether they can increase the income guidance. Yes, this is the first question. The second question is, after we see that the company's management performance is very good, we are also thinking about whether the company can do more in terms of shareholder returns, including possible dividends, shares, or repurchase. Let me translate my questions.
Speaker Change: Please schon Williams.
Speaker Change: One is our shift to China.
Speaker Change: So we're talking John you're welcome Glenn.
Speaker Change: Our CFO.
Speaker Change: Sean.
Speaker Change: Sure the tree.
Speaker Change: Sure <unk>.
Speaker Change: Thiago in tissue.
Speaker Change: <unk> Thanks, Tom.
Speaker Change: Sandra holding shell with some pressure.
Speaker Change: We are also on their total at Ashford Inc.
Speaker Change: <unk> Ultra later.
Yang Liu: I have two questions. The first one is regarding the first quarter top line growth, almost 30%, pretty strong. And combining that with a very solid export trend in China recently, I would like to ask management whether it's possible to raise the full-year revenue guidance or become more optimistic about future growth. The second question is, after seeing the very strong operational performance and financial numbers, can management do more in terms of shareholder return, and what is the current plan? Thank you.
Speaker Change: Okay.
Speaker Change: So in Shanghai at the shelf.
Speaker Change: Let me translate my questions I have two questions. The first one is regarding the.
Speaker Change: First quarter topline growth almost a 30% pretty strong on the <unk>.
Speaker Change: Combining that with.
Speaker Change: A very solid.
Speaker Change: Export trend in China recently.
Speaker Change: I would like.
Speaker Change: I'd like to ask the management or whether it's possible to raise our full year revenue guidance I'll turn more.
Speaker Change: Optimistic about its future growth.
Speaker Change: Second question is after seeing the very strong operational performance.
Speaker Change: National numbers.
With our measurement and can do more in terms of shareholder return.
Speaker Change: Current plan. Thank you.
Unnamed Speaker: It seems that everyone has noticed excellent export performance in the first quarter. We've observed that Chinese concept stocks with large overseas segments have, in general, performed well. Indeed, Tuya's growth in the first quarter, particularly in our core parts business, has been quite robust. Furthermore, over 80% of our revenue comes from overseas, making us a prime example of a cutting-edge technology company with a globalized business. Based on the data and disclosures, we see some common characteristics among strong macro factors driving exports in the first quarter.
Speaker Change: Thanks Liam.
Speaker Change: Everyone has noticed the excellent export performance in the first quarter, we've observed that the Chinese concepts box with large overseas segment.
Speaker Change: <unk> has in general performed well indeed to ask growth in the first quarter, particularly in our core Pos business has been quite.
Quite a robot.
Speaker Change: About 80% of our revenue.
Speaker Change: It comes from overseas.
Speaker Change: As a prime example of cutting edge technology company.
Speaker Change: With a globalized business.
Speaker Change: Based on the data and disclosures, we see some common characteristics among strong macro factors driving exports in the first quarter.
Unnamed Speaker: Firstly, in general, we have seen almost cross-border overseas regions' demand pretty strong in Q1, especially the most dazzling growth from Asia-Pacific, including Southeast Asia, Australia, Japan, Korea, and those regions. This trend aligns closely with our business development and opportunities we have observed. For example, our revenue from Southeast Asia increased by approximately 70% over the year in the first quarter.
Speaker Change: Firstly in general we have seen.
Speaker Change: Almost cross board oversee region demand.
Speaker Change: Pretty strong in Q1.
Especially the most gasoline growth.
Speaker Change: Asia Pacific that including like Southeast Asia.
Speaker Change: Australia.
Speaker Change: Japan Korea dose regions.
Speaker Change: This change aligns closely with our business development and opportunities we have observed.
For example revenue from Southeast Asia increased by approximately 70% year over year in the first quarter.
Unnamed Speaker: This growth is partly due to Tuya's KubeSmart private cloud product, which has established strong replicable benchmark projects in countries like Thailand through collaborations with leading telecom operators, real estate groups, and conglomerates, and then expanded to other countries in Southeast Asia. And on the other hand, the products empowered by Tuya's technology are also highly favored by end users in Southeast Asia. So our ongoing projects, which combine private cloud and smart solutions in Vietnam with multiple Vietnamese telecom operators, are excellent examples.
Speaker Change: It is.
Speaker Change: This is partly due to a <unk> cube smart private cloud product, which has established strong replicable benchmark project.
Speaker Change: In countries like Thailand through collaborations with leading tell.
Speaker Change: Telecom operators real estate groups and the conglomerate.
Speaker Change: And then expand to other countries in southeast Asia and on the other hand the products in powered by <unk> technology also highly favored.
Speaker Change: By end users.
Speaker Change: Southeast Asia.
Speaker Change: Through our ongoing project, which combining private cloud and smart solutions in Vietnam with multiple non telecom operators.
Speaker Change: Excellent examples.
Unnamed Speaker: Secondly, the export of home appliances, and other electromechanical products, such as lawnmowers and robotic vacuum cleaners, performed very well. Consumer electronics, our main battleground, saw outstanding performance in our home appliance product line in the first quarter, with a year-over-year growth of around 75%. This has been mentioned previously.
Speaker Change: Secondly, export of home appliances.
Speaker Change: And other.
Speaker Change: Electrical mechanical products, such as lawn mowers.
Speaker Change: Robotic vacuum cleaners performed very well.
Speaker Change: <unk> electronics, our main battleground for outstanding performance.
Speaker Change: In our home appliance product line in the first quarter with a year over year growth of around 75%.
Speaker Change: This has been mentioned previously.
Unnamed Speaker: Additionally, the outdoor and cleaning robot sectors also performed excellently in the first quarter, areas that Tuya had previously identified and invested in. Other characters besides home appliances also showed impressive growth. For example, the lighting sector, previously impacted by the inventory reduction, saw encouraging growth in Q1 as overseas customers replenish their inventories. China's supply chain and manufacturing are highly efficient and cost-effective, allowing products exported worldwide to meet essential needs of various customers from different regions in terms of both price and quality.
Speaker Change: Finally, the outdoor.
Speaker Change: Cleaning robot sectors also.
Speaker Change: Formed.
Speaker Change: In the first quarter.
Speaker Change: Which are areas that we have previously identified and <unk>.
Speaker Change: Other categories. Besides home appliances also showed impressive growth.
Speaker Change: For example, the lighting sector previously impacted by.
Speaker Change: The inventory reduction saw encouraging growth in Q1 as oversea customers Rip.
Speaker Change: Replenish their inventories.
Speaker Change: China supply chain and our manufacturing have high efficiency.
Speaker Change: And cost effectiveness, allowing product exported worldwide to meet essential needs of various customers from different regions in terms of both price and quality to outpace our role in this process by leveraging <unk> unique cloud platform and software products.
Unnamed Speaker: Tuya plays a role in this process by leveraging its unique cloud platform and software products to support manufacturers and global brands, with technology capabilities helping OEMs serve global brands and large groups. Therefore, as end-user demands start to recover, driving a microeconomic recovery, Tuya has already made adjustments in the past two years under adverse conditions, preparing in various aspects, such as business technology, product operations, and internal organizations. Consequently, we're more optimistic about the full year outlook now compared to the beginning of the year.
Speaker Change: To support.
Speaker Change: Factors and global brands.
Speaker Change: Technology capabilities, helping Oems of global brands and large groups. Therefore end user demand start to recover driving micro economic recovery <unk> has already made adjustments in the past two years.
Speaker Change: And the adverse conditions preparing in various effects such as business technology.
Speaker Change: Operations and internal organizations.
Speaker Change: Consequently, we are more optimistic about our full year outlook now compared to the beginning of the year.
Unnamed Speaker: Regarding shareholder returns, we first looked at non-GAAP because it excludes items such as stock-based compensation that are unrelated to actual quarterly business and performance and do not affect cash flow. As a company, the non-GAAP operating loss has essentially nearly broken even, with a very healthy cash flow status, and the gross profit developing as expected. Now we are, the management team is very actively exploring ways to enhance shareholder return. We hope to bring executable actions to the shareholders in the near future. That's my answer to Yang's question. We can go to the next one.
Speaker Change: Regarding the shareholder return.
Speaker Change: We first look at non-GAAP, because it excludes items such as stock based compensation.
Speaker Change: Unrelated to actual quarterly business and the performance and do not affect cash flow as the company non-GAAP operating loss has essentially nearly broke even and with a very healthy cash flow status.
Speaker Change: And the gross profit.
Speaker Change: Developing as expected we are now the management team are very actively exploring ways to enhance shareholder return.
Speaker Change: We hope to bring.
Speaker Change: Executable executable actions to the shareholders.
Speaker Change: A near future.
Speaker Change: That's my answer to <unk> question, we can go to the next one.
Speaker Change: Okay. Thank you. Thank you.
Yao Liu: Our next question comes from the line of Eunice Liu from Goldman Sachs. Eunice, your line is open.
Speaker Change: Our next question comes from the line of Uni Xu from Goldman Sachs. Your line is open.
Yao Liu: Thank you for accepting my question. I am Gao Shen, an analyst, and I have a question for Timothy Zhao. My question is about the outlook for 2024. How will the company balance income, growth, and profit in 2024 as well as the outlook for the profit-to-profit ratio? Thanks, management, for taking my question. This is Eunice from GS asking a question on behalf of our analyst, Timothy Zhao. My question is on the 2024 outlook. How will the company balance revenue growth and profitability this year? Thank you.
Speaker Change: Thank you.
That comes from Timothy.
Speaker Change: Timothy G Taylor.
Speaker Change: Tissue quality.
Speaker Change: Hello.
Speaker Change: Picasso Ghansham.
Dave: Thank you Dave.
Speaker Change: Yeah.
Speaker Change: Thanks management for taking my question. This is Ian is from Jess asking question on behalf of all analysts Timothy Zhao will question is R&D Tony Tony for.
Speaker Change: Although the company.
Speaker Change: Growth and profitability.
Speaker Change: Yes.
Speaker Change: Hugh.
Unnamed Speaker: Okay, thanks for all the Goldman Sachs analysts' questions. So, currently, and also in the past year, for the future few years, to well-balance growth and probability is our key principle. And we also feel this is being a responsible company with long-term growth. This is the right principle.
Speaker Change: Okay. Thanks for Goldman Sachs Analyst question.
Speaker Change: So.
Speaker Change: Currently.
Speaker Change: And also in the past a year for the future a few years to well balanced growth and profitability is our key principles.
Speaker Change: And we also feel this being a responsible company with long term.
Speaker Change: Trajectory of growth. This is the right principle, so giving our products.
Unnamed Speaker: So, given our products' ability to maintain their respective value propositions, we expect the path... Smart Solutions and SAS, and other segments to continue their overall chance of growth and profitability. Consequently, our overall growth margin will exhibit some structural fluctuations within a certain range, a small range, basically, depending on the revenue proportion changed among the three segments over time. After a year of adjustment in 2023, we believe our team, operations, and R&D are all well aligned.
Speaker Change: Products ability to maintain their respective value preposition, we expect the past.
Speaker Change: Smart solutions and is fast and other segments to continue their overall chance of growth and profitability. Consequently, our gross overall gross margin will exhibit some structural fluctuations within a certain range.
Speaker Change: A small range basically depending on the revenue.
Speaker Change: The proportion changes among the three segments over time.
Speaker Change: After a year of adjustment in 2023, we believe our team operations and R&D are all well aligned this has been validated by the per capital productivity in the customer efficiency data over the past three to four quarters.
Unnamed Speaker: This has been validated by the per capita productivity and customer efficiency data over the past three to four quarters. We are confident in maintaining this operational leverage, achieving customer acquisition and growth while staying efficient. For financial figures, our non-GAAP operating loss was approximately $600,000 in the seasonally low first quarter, excluding stock-based compensation and some non-operating expenditures. Our operating expenses will remain stable and controlled as revenue expands. Therefore, from the perspective of the structure of the income statement, our non-GAAP operating loss will be positively impacted by increasing revenue and gross profit in the coming quarter.
Speaker Change: We are confident in maintaining this operational leverage achieving customer acquisition and the growth while staying efficient.
Speaker Change: Our financial figures, our non-GAAP operating loss was approximately $600000 in the seasonally low first quarter, excluding stock based compensation.
Speaker Change: Non operational expenditure.
Our operating expenses will remain stable and controlled.
Speaker Change: S revenue expense, therefore from the perspective of the.
Speaker Change: The structure of the income statement, our non-GAAP operating loss will be positively impacted by increasing revenue and.
Speaker Change: Gross profit in the coming quarter.
Unnamed Speaker: We expect to achieve quarterly non-GAAP operating break-even soon this year. So, overall, we believe the IoT business still has a long way to grow, especially Gen AI will fundamentally change or increase the value of smart products, smart space, and a smart business for end users and customers. Given the IoT penetration rate is still relatively low, and also given the competition position of Tuya is very strong. Basically, the majority of the competitors have already closed down their business in the past two and a half years.
Speaker Change: We expect to achieve quarterly non-GAAP operating breakeven.
Speaker Change: In this year.
Speaker Change: So in overall, we believe.
Speaker Change: The Iot business still have a long way to grow, especially gen AI will fundamentally change.
Speaker Change: The increase the value of small products smart.
Speaker Change: Space and it's much.
Speaker Change: For the end users and the customers.
Speaker Change: Given the Iot penetration rate is still relatively low and also given the competition position of two years of very strong basically.
Speaker Change: Majority of the competitors already close down their business in the past.
Speaker Change: Two and half years.
Unnamed Speaker: So we believe we will see long-term growth for our business, and we are confident that we will maintain profitability while we continue to deliver long-term growth. That's my answer to the first question from Goldman Sachs, and we can go to the next question.
Speaker Change: So we believe we will see a long term growth for our business and we are confident to maintain.
<unk> will be up profitability, while we continue to deliver the long term growth.
Speaker Change: That's my answer to the first question from Goldman.
Speaker Change: <unk> and we can go to the next question.
Speaker Change: Thank you.
Kai Xiao: Our next question is from Kai Xiao from CICC. Kai, your line is open.
Speaker Change: Our next question is from Kai Hsiao from TICC tie your line is open.
Speaker Change: Yes.
Kai Xiao: I'm Xiao Kai, the CTO of TNT. First, I'd like to ask about the outlook for 2024. I would like to ask, if we look at the IoT path, which categories are more likely to grow? If we look at the demand side, where might the point of over-expectation come from?
Speaker Change: Paul.
Speaker Change: Hey, Joel.
Speaker Change: Sure.
Speaker Change: Thank you.
Speaker Change: Sure Yes.
Speaker Change: Jamie.
Speaker Change: Absolutely.
Speaker Change: Yes.
Speaker Change: Hip hop.
Speaker Change: Yes.
Speaker Change: Sure.
Speaker Change: Kim.
Speaker Change: Sure.
Speaker Change: Fox hole.
Speaker Change: Shall I answer your question.
Kai Xiao: This is the first question. The second question is about AI. I see that there is a lot of research in the field of AI.
Bob Daigle: This is Bob Daigle.
Speaker Change: Hi, Robert.
Speaker Change: Okay.
Kai Xiao: I'd like to ask you how much investment we will make in the field of AI in the future? How do you believe in the IoT path? I'd like to ask Guan Yiteng to share. And I'll also do a translation here.
Speaker Change: Yes.
Speaker Change: You realize on that Andy.
Sure.
Speaker Change: She can score probably Q2.
17, according to <unk>.
Thank you.
Speaker Change: Hello, Daniel.
Speaker Change: Okay.
Ben: Hi, this is Ben from Therapeutic Research. I have two questions. So my first question is regarding your IoT path. In terms of the sector, which sector do you think will achieve stronger growth or have more potential for the future of 2024? And my second question regarding AI: so in order to achieve your ambitions in artificial intelligence, will there be some opex pressure in the short term? How can we think of the future of AI investment?
Garrett: Hi, This is Garrett broke their pick your search.
Unnamed Speaker: Thanks for Chai's question. Regarding your first question about a more detailed kind of forward looking about different products, growth, and different categories growth in 2024, we observed that demand trends across major regions and also major catalysts all experienced pretty decent growth. For example, consumer safety and the sense of product quality continue to be essential needs for end users in Europe, North America, and also in developing regions like Latin America and Southeast Asia. Additionally, home appliances, including both small appliances and the larger appliances, more appliances like pet supplies, and kitchen appliances.
Speaker Change: I have two questions.
Speaker Change: So my first question is regarding your housekeeper.
Speaker Change: In terms of the fixtures, which Victor do you think.
John Glenn: John Great growth.
John Glenn: Sure.
John Glenn: Our 2024.
Speaker Change #100: Thanks for the question regarding <unk>.
Speaker Change #101: So are there to achieve your ambition in application intelligence.
Speaker Change #100: That is.
Speaker Change #100: <unk> pretty sure in the short term all companies.
Speaker Change #102: How are you.
Speaker Change #103: Thank you.
Unnamed Speaker: In high demand, the rebound of especially home appliances is pretty strong across different regions. Also, we see very strong demand for products like robotic vacuum cleaners and also energy-related products like temperature control devices, which is policy-driven in Europe that governments like the French government are giving out significant subsidies for all the families in France if they install temperature control valves to control the heating energy consumption. And electrical products, including switches, have shown stable performance in many different regions.
Speaker Change #104: Thanks, Lou Tice question.
Speaker Change #105: Regarding your first question about <unk>.
Speaker Change #105: And more detailed.
Kind of forward looking about different products.
Growth different categories growth in 2024.
Speaker Change #105: We observed that demand trends across.
Speaker Change #105: Major regions and also major.
Speaker Change #105: <unk> all experienced.
Speaker Change #105: Pretty decent.
Speaker Change #105: For example, consumers 50 understands their products continue to be essential needs will end uses in like Europe, North America and also in <unk>.
Speaker Change #105: Developing regions like Latin America Southeast Asia.
Speaker Change #105: Additionally, home appliance, including both small appliances and the larger appliances like small appliances like pass appliance kitchen appliances.
Speaker Change #105: In high demand the.
Speaker Change #105: The rebound of especially likes.
Speaker Change #105: Home appliances are pretty strong.
Speaker Change #105: <unk> also across different regions.
Speaker Change #105: Also we see that very strong demand for products like robots robotic vacuum cleaners.
Speaker Change #105: And also.
Speaker Change #105: The.
Speaker Change #105: Energy related like temporary temperature control devices, which is policy driven.
Speaker Change #105: In Europe that like French government are giving out a significant subsidy for all the families and friends if they are in store.
Temperature control wants to control the heating energy consumption.
Speaker Change #105: And also like electrical products, including switches have shown stable performance.
Speaker Change #105: In in many different regions.
Unnamed Speaker: The last one, the lighting products, which contribute in terms of quantity, the largest one in home, home consumer electronics, by categories. After two years of pressure, the lighting products have shown a rebound due to the restocking efforts by the downstream.
Speaker Change #105: The last one the lighting products, which contributed in terms of quantity the largest one in home.
Speaker Change #105: Home <unk> consumer electronics.
Speaker Change #105: By categories after two years.
Speaker Change #105: Two years.
Speaker Change #105: Pressure that the lighting products have shown a rebound due to the restocking efforts by the downstream and we believe downstream have seen that the selling to the end users will start to recover in the second half year.
Unnamed Speaker: And we believe downstream have seen that selling to end-users will start to recover in the second half year. And in terms of different regions in 2024 for their growth, they have some slight different demand for different products. For example, Europe remains our largest revenue source. In the primary offline retail and brand-focused European market, we have gained traction by offering high-cost performance and a wide range of Tuya ecosystem products, such as energy-saving kits, collections of thermostats, valves, and gateways, new cost-effective lighting solutions, central control screens, and the PET appliance.
Speaker Change #105: And in terms of different regions.
In 2024 hour for their growth.
Speaker Change #105: They have some slight dip.
Speaker Change #105: Different demand for different products for example, Europe remained our largest to revenue.
Speaker Change #105: Yes.
Speaker Change #105: In the in the primary our offline retail and brand focus the European market, we have gained.
Speaker Change #105: Section by offering high cost.
Speaker Change #105: Performance.
Speaker Change #105: <unk> a wide range of to our ecosystem products, such as energy saving kits.
Accomplished.
Speaker Change #105: Most of that dwarfs, and gateways, new cost effective lighting solutions central control screens and pet appliance.
Unnamed Speaker: So currently, past business in Europe is experiencing steady growth, and our smart solutions are also progressing very well in Europe. They welcome that we provide highly cost-efficient but with very strong software-value-added preposition smart devices to sell to end users in Europe. Southeast Asia, in comparison, is a newer, promising, emerging market with very rapid development. We target professional channels such as leading telecom operators covering 100 million households in Southeast Asia. Currently, more than half of the telecom operators in the entire Southeast Asia are in cooperation, as a total solution has achieved great results. The demand for smart devices from brands or comprehensive smart business platform from corporate groups is strong in this region. For instance,
Speaker Change #105: So currently prosthesis in Europe is experiencing steady growth in our smart solutions are also progressing very well.
In Europe they.
Speaker Change #105: They will come that we provide.
Speaker Change #105: Highly cost efficient.
Speaker Change #105: With very strong software value added.
Speaker Change #105: Proposition smart devices to sell to the end users in Europe.
Speaker Change #105: Also to Asia in comparison is the newer promising emerging market.
Speaker Change #105: With very rapid development, we target.
Speaker Change #105: Professional channels, such as leading telecom operators.
Speaker Change #105: Covering 100 millions of households in southeast Asia currently more than half of the telecom operators in the entire southeast Asia are in cooperation with two year, using tweezers cube, plus fast past smarter devices.
Speaker Change #105: As a total solution.
Speaker Change #105: Let's shift to <unk> result, the demand for smart devices from brands, our comprehensive market business platform.
From corporate groups.
Speaker Change #105: Strong in this region splitting since.
Unnamed Speaker: Singapore has significant comprehensive energy-saving needs requiring smart meters and controllable devices as well as effective energy-saving software algorithms. Meanwhile, telecom operators demand integrated smart platform to provide smart, home use cameras and smart water purifiers with recurring cloud storage or recurring water purifying services as their revenue source to hundreds of millions of families in Southeast Asia. The Latin American market is somewhat similar to a combination of Europe and South Asia. Product demand is akin to Europe, primarily driven by our past-enabled devices, with strong demand in the first quarter.
Speaker Change #105: Singapore has significant comprehensive.
Speaker Change #105: Energy saving needs, requiring smart meters and the controllable devices as well as effective energy saving software algorithms. Meanwhile, telecom operators.
Speaker Change #105: <unk> integrated.
Speaker Change #105: Smart platform.
Speaker Change #105: To provide smart.
Hello, mirrors cameras and smart water purifiers.
Speaker Change #105: With recurring.
Cloud storage.
Speaker Change #105: Recurring water purifying services.
Speaker Change #105: Their revenue source $200.
Speaker Change #105: Millions of families in southeast Asia.
Speaker Change #105: The Latin American market, it's somewhat similar.
Speaker Change #105: Two.
Speaker Change #105: A combined combination of the European Association of product demand.
Speaker Change #105: Sticking to Europe, primarily driven by our past enabled devices with strong demand in the first quarter.
Unnamed Speaker: The presence of many system integrators and independent software vendors in Latin America has also resulted in demand for telecom operators' models and comprehensive smart platform solutions. Currently, PATH in Latin America is growing steadily. We will focus on promoting the smart solution business, which we see that the government of Latin America, both in Brazil and China, is very interested in. They're trying to install, for example, smart lamps on the streets, then controlled by a SaaS business.
Speaker Change #105: The presence of many system integrators and independent software vendors in Latin America also result in demand.
Speaker Change #105: From telecom operators models, and the comprehensive smart platform solutions.
Speaker Change #105: Currently pass in Latin America is growing steadily.
Speaker Change #105: We will.
Speaker Change #105: Focus on promoting smart solution business, which we see that the government of Latin America Bolting like Brazil.
Speaker Change #105: Medical.
Speaker Change #105: Sure.
Speaker Change #105: They are trying to install for example, like the.
Speaker Change #105: So much lance.
Speaker Change #105: On the streets.
Speaker Change #105: Controlled by Us.
Speaker Change #105: SaaS business, so that's a product.
Unnamed Speaker: So that's a product solution we already have that we have already installed in China and in some European corporates so that we can promote it to Latin America. In terms of the Chinese market, due to the economic recovery, Chinese market growth is relatively slower. However, we continue to face a few key opportunities.
Speaker Change #105: Solution, we already have that we were already in stores in China and in Europe.
Speaker Change #105: Corporate so that we can promote it to Latin America.
Speaker Change #105: Yes.
Speaker Change #106: In terms of China market due to the the economy recovery Chinese market growth is relatively slower however will continue to assist our few key opportunities.
Unnamed Speaker: The expansion of multinational customers' business in China, such as the Philips Project, and e-commerce customers with product and technology capabilities targeting international markets and the extensive influence of live streaming channels selling selected high-quality products. Additionally, our main battleground for industry SaaS-based intelligence is still the Chinese market. So, for example, our smart hotel business continued to grow steadily in China in the first quarter. The business in North America is currently stable.
Speaker Change #106: Expansion of multinational customers.
Speaker Change #106: <unk> in China, such as Philips project.
Speaker Change #106: And e-commerce customers with product and technology capabilities targeting.
Speaker Change #106: International markets and extensive influenced of live streaming channels selling selected high quality products.
Speaker Change #106: Additionally, our main battleground for industry staff based intelligence in China market.
Speaker Change #106: So for example, our smart hotel business continued to grow steadily in China in the first quarter.
Speaker Change #106: The business in North America is currently stable we have introduced.
Speaker Change #106: Smart solution.
Unnamed Speaker: We have introduced a smart solution into retail channels directly, and we'll continue to expand that efficiently in this segment. So overall, we are more optimistic about the Latin America and Southeast Asia markets. And also, we believe the European market will maintain healthy growth.
Speaker Change #106: Into retail channels directly and we'll continue to expand it.
Speaker Change #106: Efficiently in this segment.
Speaker Change #106: So overall, we are more optimistic about Latin America.
Speaker Change #106: In the southeast Asia market.
Speaker Change #106: And also we believe European market will maintain a healthy growth.
Unnamed Speaker: In terms of GMAI, we will have a large developer conference in Shenzhen next week. [inaudible] On May 29th, we welcome all the analysts and investors to attend and can tell you more about our IR team. So on that day, we will thoroughly discuss our efforts in GNI from three different perspectives and with all our developers, customers, our suppliers, and partners. The first part is to apply Gen-AI to smart devices through some creation that doesn't request very deep investment. For example, connect China GPT mobile language capability to some devices that you can control with free mobile conversations, and that creates very interesting experiences and value for consumers.
Speaker Change #106: In terms of our journey.
Speaker Change #106: We will have a large developer conference in London next week.
Speaker Change #106: Al.
Speaker Change #106: May 29th we welcome all the analyst and the lessors to attend and can tell our IR team. So on that day, we will thoroughly discussed our efforts.
Speaker Change #106: In Gen AI on three different perspectives.
Speaker Change #106: And to all our developers customers, our suppliers and partners.
Speaker Change #106: Partners.
Speaker Change #106: The first.
Speaker Change #106: For the first part is too.
Speaker Change #106: Our Pi Gen AI to smart devices.
Through some.
Speaker Change #106: More creation that doesn't request very deep.
Speaker Change #106: RMB.
Speaker Change #106: <unk> investment for example connect.
Speaker Change #106: GBP global language capability.
Speaker Change #106: To some devices that.
Speaker Change #106: You can control devices.
Speaker Change #106: By three global conversations.
Speaker Change #106: And thats create very interesting.
Speaker Change #106: Experiences and value for our consumer users.
Unnamed Speaker: For example, you can describe whatever you want to the lighting product. You can talk to a speaker verbally, say that, hey, can you create a lighting effect based on a poem I like, or like a song I like, and that the chat GPT or another, the large language model would understand that and create a feeling that's similar to what you want.
Speaker Change #106: For example, you can describe whatever you want to.
Speaker Change #106: Two to the the lighting products you can talk to speaker.
Speaker Change #106: Globally say debt to a create a slight effect.
Speaker Change #106: Like a point, unlike like a song I like and that the chatter CBD or other.
Speaker Change #106: The larger language model would understand that.
Speaker Change #106: Create a fee.
Speaker Change #106: Feeling that.
<unk> two what you want so that will be much more interesting than.
Unnamed Speaker: So that will be much more interesting than that set of eight different lighting effects that you can only choose one of in the app. And the second, aspects in terms of Gen-AI. I said we're going to release the first space model, that's a net zero model, and there will be much more details at our developer conference. And the third one is, we have implemented the Gen-AI capability in our IoT developer platform, iot.tuya.com, that enables developers to understand and go through our developer platform to create differentiated products, like basically smart devices or fast services, much more effectively and quickly than before. So we are excited about this. And again, I welcome everyone to join our developer conference in Shenzhen on May 29. So that's my answer to your questions.
Speaker Change #106: That set eight different.
Speaker Change #106: Lighting effects that you can only chose one of that eight in the app.
Speaker Change #106: In the second.
Speaker Change #106: FX in terms of Gen II us that we're going to release the first space model.
Speaker Change #106: That the net zero model and there will be much more details in our developer conference.
Speaker Change #106: And the third one is we have.
Implemented the.
Speaker Change #106: <unk> AI capability in our Iot developer platform, the Iot Dot two dot com.
Speaker Change #106: That enables.
Speaker Change #106: Developers to understand and to.
Speaker Change #106: Go through our developer platform to create <unk>.
Speaker Change #106: <unk> eight products.
Speaker Change #106: Like basically smart devices or fast services, much more effectively and quickly than before.
Speaker Change #106: So we're excited about this and again welcome everyone to join our developer conference in Shenzhen.
Speaker Change #106: May 29.
Speaker Change #106: So that's my answer to the question.
Speaker Change #106: Yeah.
Operator: Thank you. There are no additional questions at this time. I will now hand you over to the management team for any closing remarks.
Speaker Change #107: Thank you there are no additional questions at this time I will now hand back to the management team for any closing remarks.
Unnamed Speaker: Okay, thank you again for joining our call. If you have any further questions, please feel free to contact us or request them through our IR website. We look forward to speaking with everyone on our next earnings call. Have a good day.
Speaker Change #108: Okay. Thank you again.
Speaker Change #109: You May now core if you have any further questions. Please feel free to contact us I'll request through our IR website, we look forward to speaking with everyone. In our next earnings call have a good day.
Speaker Change #108: Okay.
Speaker Change #108: Okay.
Operator: Ladies and gentlemen, this concludes today's call. Thank you for joining us. You may now disconnect your lines.
Speaker Change #110: Ladies and gentlemen. This concludes today's call. Thank you for joining you may now disconnect your lines.
Speaker Change #110: [music].