Viomi Technology (VIOT) 6-K Viomi Technology Co., Ltd Reports First Quarter 2020 Unaudited Financial Results

Exhibit 99.1

Viomi Technology Co., Ltd Reports First Quarter 2020 Unaudited Financial Results

First quarter net revenues increased by 13.2% year-over-year, exceeding previous guidance

GUANGZHOU, China, May 26, 2020 — Viomi Technology Co., Ltd (“Viomi” or the “Company”) (NASDAQ: VIOT), a leading IoT @ Home technology company in China, today announced its unaudited financial results for the first quarter ended March 31, 2020.

First Quarter 2020 Financial and Operating Highlights

• Net revenues were RMB765.5 million (US$108.1 million), representing an increase of 13.2% from the first quarter of 2019.

• Gross margin was 18.8%.

• Net incomewasRMB17.8 million (US$2.5 million), compared to RMB41.3 million for the first quarter of 2019.

• Non-GAAP net income¹ was RMB31.4 million (US$4.4 million), compared to RMB53.1 million for the first quarter of 2019.

• Number of household users reached more than 3.7 million, compared to approximately 3.2 million as of the end of 2019 and approximately 2.0 million as of the end of the first quarter of 2019.

• Percentage of household users with at least two connected products reached 18.4%, compared to 17.9% as of the end of 2019 and 15.2% as of the end of the first quarter of 2019.

• Number of Viomi offline experience storeswas approximately 1,500, compared to approximately 1,700 as of the end of 2019.

“Despite challenging industry conditions and ongoing macro uncertainties as a result of theCOVID-19 outbreak, we successfully delivered better-than-expected results in the first quarter of 2020,” said Mr. Xiaoping Chen, Founder, Chairman of the Board of Directors and Chief Executive Officer of Viomi. “Net revenues for the first quarter increased 13.2% year-over-year, exceeding our previous guidance and demonstrating the resilience and diversified nature of our business.”

¹  “Non-GAAP net income” is defined as net income excluding share-based compensation expenses. See “Reconciliation of GAAP andNon-GAAP Results” at the end of this press release.

“Since the start of the second quarter, our business and supply chain operations have largely returned back to normal. In addition, we have seen meaningful signs of an overall industry recovery and we have accelerated the execution of our growth strategy for this year. Last week, we hosted our virtual 5G IoT Strategy and 2020 New Product Launch Event, where we presented our vision and product strategy for the imminent 5G + IoT era. The centerpiece of the event was the introduction of ourstate-of-the-art 21Face Interactive Smart Screen (TV). Equipped with industry-leading specifications, innovative motion-control capabilities and rich content offerings, this product will complete our vision for the fully-integrated and screen-filled IoT @ Home lifestyle experience. In addition, we announced a series of exciting next-generation products, including new lines of water purifiers, 21Face large-screen refrigerators, washing machines, various smart kitchen products and smart devices, together with new online content offerings and partnerships to enhance our user engagement. Moreover, we are expanding our premiumAI-centric ‘coKiing’ brand with introductions of additional product categories across full home scenarios, further diversifying our brand and our consumer market. We expect these key initiatives, built upon our successes over the past several years, to bring the Viomi brand to the forefront and the standard-bearer of 5G + IoT for the home environment,” Mr. Chen added.

“Looking ahead in 2020 and beyond, we will adhere to dynamic and prudent business practices while maintaining stable expansion under our 5G + IoT strategic framework. We are fully committed to and confident in achieving our ‘3511’ long-term objectives, our roadmap to becoming a large-scale, high-tech leader in the IoT @ Home space,” concluded Mr. Chen.

“We achieved a solid double-digit increase in net revenues, exceeding our previous guidance, despite the adverse industry conditions in the first quarter. This can be largely attributed to our diversified business, product and channel mix as well as our ever-increasing brand awareness across sales channels and amongend-consumers. We also continued to sustain a healthy level of profitability, having implemented a number of stringent cost control measures to offset the adverse industry-wide impacts ofCOVID-19, while maintaining our commitment to research and development. The Company’s balance sheet remained strong, with approximately RMB1.2 billion of cash and cash equivalents, short-term deposits and investments as of March 31, 2020,” Mr. Shun Jiang, Chief Financial Officer of Viomi, commented.

“While uncertainties remain, we believe our financial strength and operational flexibility will position us well to capture the opportunities ahead, as the industry and broader economy continue to recover,” Mr. Jiang concluded.

First Quarter 2020 Financial Results

Net revenues were RMB765.5 million (US$108.1 million), compared to RMB676.2 million for the first quarter of 2019, primarily due to the successful rollout and increased sales of certain Xiaomi-branded and Viomi-branded products, offsetting the broader industry-wide impacts ofCOVID-19.

IoT-enabled smart home products.Revenues from IoT-enabled smart home products increased by 8.0% to RMB542.7 million (US$76.6 million) from RMB502.5 million for the first quarter of 2019, primarily due to the continued successful rollout of the Company’s smart kitchen products and other smart products.

• Smart water purification systems. Revenues from smart water purification systems decreased by 10.0% to RMB108.0 million (US$15.3 million) from RMB120.0 million for the first quarter of 2019. The decline was primarily due to decreases in average selling prices, despite a double-digityear-on-year growth in sales volumes.

• Smart kitchen and other smart products.Revenues from smart kitchen and other smart products increased by 13.6% to RMB434.7 million (US$61.4 million) from RMB382.5 million for the first quarter of 2019. The growth was primarily driven by the continued successful rollout of certain new products, in particular the Xiaomi-branded sweeper robots, which offset the broader industry-wide impacts ofCOVID-19.

Consumable products. Revenues from consumable products increased by 35.0% to RMB65.0 million (US$9.2 million) from RMB48.1 million for the first quarter of 2019, primarily due to increased demand for the Company’s water purifier filter products.

Value-added businesses. Revenues from value-added businesses increased by 25.6% to RMB157.8 million (US$22.3 million) from RMB125.6 million for the first quarter of 2019, primarily due to new product introductions, together with increased demand for the Company’s small appliances.

Cost of revenuesincreased by 27.7% to RMB621.5 million (US$87.8 million) from RMB486.8 million for the first quarter of 2019.

Gross profitwas RMB144.0 million (US$20.3 million), compared to RMB189.4 million for the first quarter of 2019. Gross margin was 18.8%, compared to 28.0% for the first quarter of 2019. The decline in gross margin was primarily due to the shifts in the Company’s business and product mix, together with decreases in average selling prices of certain product categories, including the smart water purification systems, in the quarter.

Total operating expenses decreased by 12.4% to RMB134.2 million (US$19.0 million) from RMB153.1 million for the first quarter of 2019, primarily due to stringent expense control measures implemented during the quarter to offset the adverse industry-wide impacts ofCOVID-19, while continuing to invest in research and development.

Research and development expensesincreased by 62.0% to RMB59.3 million (US$8.4 million) from RMB36.6 million for the first quarter of 2019, primarily due to increases in employee-related expenses, expenses associated with new product development and expenses related to the application of patents.

Selling and marketing expensesdecreased by 35.1% to RMB65.5 million (US$9.2 million) from RMB100.9 million for the first quarter of 2019, primarily due to a decrease in logistics expenses as well as stringent expense control measures in relation to marketing and promotional activities and other selling and marketing related expenses, implemented during the quarter to offset the adverse industry-wide impacts ofCOVID-19.

General and administrative expensesdecreased by 39.5% to RMB9.5 million (US$1.3 million), compared to RMB15.6 million for the first quarter of 2019, primarily due to the Company’s stringent expense control measures implemented during the quarter to offset the adverse industry-wide impacts ofCOVID-19.

Income from operations was RMB12.5 million (US$1.8 million), compared with RMB37.1 million for the first quarter of 2019.Non-GAAP operating income², excluding the impact of share-based compensation expenses, was RMB26.1 million (US$3.7 million), compared with RMB48.9 million for the first quarter of 2019.

Income before income tax expenseswas RMB17.9 million (US$2.5 million), compared to RMB47.2 million for the first quarter of 2019.

Income tax expenseswere RMB0.1 million (US$18 thousand), compared to RMB5.9 million for the first quarter of 2019.

Net incomewas RMB17.8 million (US$2.5 million), compared to RMB41.3 million for the first quarter of 2019.

Non-GAAP net incomewas RMB31.4 million (US$4.4 million), compared to RMB53.1 million for the first quarter of 2019.

²  “Non-GAAP operating income” is defined as income from operation excluding share-based compensation expenses. See “Reconciliation of GAAP andNon-GAAP Results” at the end of this press release.

Balance Sheet

As of March 31, 2020, the Company had cash and cash equivalents of RMB445.9 million (US$63.0 million), restricted cash of nil, short-term deposits of RMB143.0 million (US$20.2 million) and short-term investments of RMB603.3 million (US$85.2 million).

Outlook

For the second quarter of 2020, the Company currently expects:

• Net revenues to be between RMB1.25 billion and RMB1.28 billion, representing a year-over-year growth of approximately 7.7% to 10.3%.

The above outlook is based on the current market conditions and reflects the Company’s current and preliminary estimates of market and operating conditions and customer demand, which are all subject to change.

Conference Call

The Company’s management will host a conference call at 8:00 a.m. Eastern Time on Tuesday, May 26, 2020 (8:00 p.m. Beijing Time on May 26, 2020) to discuss financial results and answer questions from investors and analysts. Listeners may access the call by dialing:

US (Toll Free):	+1-888-346-8982
International:	+1-412-902-4272
Mainland China (Toll Free):	400-120-1203
Hong Kong (Toll Free):	800-905-945
Hong Kong:	+852-3018-4992
Conference ID:	10144139

A telephone replay will be available one hour after the call until June 2, 2020 by dialing:

US (Toll Free):	+1-877-344-7529
International:	+1-412-317-0088
Replay Passcode:	10144139

Additionally, a live and archived webcast of the conference call will be available athttp://ir.viomi.com.

About Viomi Technology

Viomi’s mission is to redefine the future home via the concept of IoT @ Home.

Viomi has developed a unique IoT @ Home platform consisting of an ecosystem of innovative IoT-enabled smart home products, together with a suite of complementary consumable products and value-added businesses. This platform provides an attractive entry point into the consumer home, enabling consumers to intelligently interact with a broad portfolio of IoT products in an intuitive and human-like manner to make daily life more convenient, efficient and enjoyable, while allowing Viomi to grow its household user base and capture various additional scenario-driven consumption events in the home environment.

For more information, please visit:http://ir.viomi.com.

Use ofNon-GAAP Measures

The Company usesnon-GAAP operating income,non-GAAP net income,non-GAAP net income attributable to the Company,non-GAAP net income attributable to ordinary shareholders,non-GAAP basic and diluted net income per ordinary shares andnon-GAAP basic and diluted net income per ADS, which arenon-GAAP financial measures, in evaluating its operating results and for financial and operational decision-making purposes.Non-GAAP operating income is income from operations excluding share-based compensation expenses.Non-GAAP net income is net income excluding share-based compensation expenses.Non-GAAP net income attributable to the Company is net income attributable to the Company excluding share-based compensation expenses.Non-GAAP net income attributable to ordinary shareholders is net income attributable to ordinary shareholders excluding share-based compensation expenses. Thenon-GAAP adjustments do not have any tax impact as share-based compensation expenses arenon-deductible for income tax purpose.

The Company believes thatnon-GAAP financial measures help identify underlying trends in its business by excluding the impact of share-based compensation expenses, which arenon-cash charges, and these measures provide useful information about the Company’s operating results, enhance the overall understanding of the Company’s past performance and future prospects and allow for greater visibility with respect to key metrics used by the Company’s management in its financial and operational decision-making.

Non-GAAP financial measures should not be considered in isolation or construed as alternative to income from operations, net income, or any other measure of performance or as an indicator of the Company’s operating performance. Investors are encouraged to review the historicalnon-GAAP financial measures to the most directly comparable GAAP measures.Non-GAAP financial measures presented here may not be comparable to similarly titled measures presented by other companies. Other companies may calculate similarly titled measures differently, limiting their usefulness as comparative measures to the Company’s data. We encourage investors and others to review its financial information in its entirety and not rely on a single financial measure.

Exchange Rate

The Company’s business is primarily conducted in China and the significant majority of revenues generated are denominated in Renminbi (“RMB”). This announcement contains currency conversions of RMB amounts into U.S. dollars (“US$”) solely for the convenience of the reader. Unless otherwise noted, all translations from RMB to US$ are made at a rate of RMB7.0808 to US$1.00, the effective noon buying rate for March 31, 2020 as set forth in the H.10 statistical release of the Federal Reserve Board. No representation is made that the RMB amounts could have been, or could be, converted, realized or settled into US$ at that rate on for March 31, 2020, or at any other rate.

Safe Harbor Statement

This announcement contains forward-looking statements. These statements are made under the “safe harbor” provisions of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as “will,” “expects,” “anticipates,” “future,” “intends,” “plans,” “believes,” “estimates,” “confident” and similar statements. Among other things, the business outlook and quotations from management in this announcement, as well as Viomi’s strategic and operational plans, contain forward-looking statements. Viomi may also make written or oral forward-looking statements in its periodic reports to the United States Securities and Exchange Commission (the “SEC”), in its annual report to shareholders, in press releases and other written materials and in oral statements made by its officers, directors or employees to third parties. Statements that are not historical facts, including statements about the Company’s beliefs and expectations, are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties. A number of factors could cause actual results to differ materially from those contained in any forward-looking statement, including but not limited to the following: the Company’s growth strategies; the cooperation with Xiaomi, the recognition of the Company’s brand; trends and competition in global IoT-enabled smart home market; development and commercialization of new products, services and technologies; governmental policies relating to the Company’s industry and general economic conditions in China and around the globe, and assumptions underlying or related to any of the foregoing. Further information regarding these and other risks is included in the Company’s filings with the SEC. All information provided in this press release and in the attachments is as of the date of this press release, and the Company undertakes no obligation to update any forward-looking statement, except as required under applicable law.

For investor and media inquiries, please contact:

In China:

Viomi Technology Co., Ltd

Cecilia Li

E-mail:ir@viomi.com.cn

The Piacente Group, Inc.

Emilie Wu

Tel:+86-21-6039-8363

E-mail:viomi@tpg-ir.com

In the United States:

The Piacente Group, Inc.

Brandi Piacente

Tel:+1-212-481-2050

E-mail:viomi@tpg-ir.com

VIOMI TECHNOLOGY CO., LTD

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

(All amounts in thousands, except shares, ADS, per share and per ADS data)

	As of December 31,		As of March 31,
	2019		2020		2020
	RMB		RMB		US$
Assets
Current assets
Cash and cash equivalents		972,438		445,860		62,967
Restricted cash		30,567		—		—
Short-term deposits		60,000		142,994		20,195
Short-term investments		316,201		603,278		85,199
Accounts and notes receivable from third parties (net of allowance of RMB2,006 and RMB4,688 as of December 31, 2019 and March 31 2020, respectively)		316,189		279,628		39,491
Accounts receivable from a related party (net of allowance of nil and RMB32 as of December 31, 2019 and March 31, 2020, respectively)		707,947		317,299		44,811
Other receivables from related parties (net of allowance of nil and RMB4 as of December 31, 2019 and March 31, 2020, respectively)		23,944		38,264		5,404
Inventories		418,015		371,120		52,413
Prepaid expenses and other current assets		62,314		94,172		13,300
Total current assets		2,907,615		2,292,615		323,780
Non-current assets
Prepaid expenses and othernon-current assets		11,170		11,354		1,603
Property, plant and equipment, net		67,293		61,712		8,715
Deferred tax assets		12,276		13,896		1,962
Intangible assets, net		4,357		5,578		788
Right-of-use assets, net		19,762		18,893		2,668
Long-term deposits		—		60,000		8,474
Totalnon-current assets		114,858		171,433		24,210
Total assets		3,022,473		2,464,048		347,990
Liabilities and shareholders’ equity
Current liabilities
Accounts and notes payable		1,043,159		742,729		104,893
Advances from customers		103,150		40,778		5,759
Amount due to related parties		25,106		4,737		669
Accrued expenses and other liabilities		325,042		208,005		29,376
Short-term borrowing		95,868		—		—
Income tax payables		33,522		31,035		4,383
Lease liabilities due within one year		6,993		6,643		938
Total current liabilities		1,632,840		1,033,927		146,018
Non-current liabilities
Accrued expenses and other liabilities		1,795		1,725		244
Lease liabilities		13,391		12,815		1,810
Totalnon-current liabilities		15,186		14,540		2,054
Total liabilities		1,648,026		1,048,467		148,072

VIOMI TECHNOLOGY CO., LTD

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS (CONTINUED)

(All amounts in thousands, except shares, ADS, per share and per ADS data)

	As of December 31,			As of March 31,
	2019			2020			2020
	RMB			RMB			US$
Shareholders’ equity
Class A Ordinary Shares (US$0.00001 par value; 4,800,000,000 shares authorized; 98,444,732 and 98,724,008 shares issued and outstanding as of December 31, 2019 and March 31, 2020, respectively)		6			6			1
Class B Ordinary Shares (US$0.00001 par value; 150,000,000 shares authorized; 110,850,000 shares issued and outstanding as of December 31, 2019 and March 31, 2020, respectively)		6			6			1
Additionalpaid-in capital		1,192,332			1,206,876			170,443
Retained earnings		195,596			211,029			29,803
Accumulated other comprehensive loss		(19,145	)		(7,831	)		(1,106	)
Total equity attributable to shareholders of the Company		1,368,795			1,410,086			199,142
Non-controlling interests		5,652			5,495			776
Total shareholders’ equity		1,374,447			1,415,581			199,918
Total liabilities and shareholders’ equity		3,022,473			2,464,048			347,990

Note: On January 1, 2020, the Company adopted ASC326, “Financial Instruments-Credit Losses” using modified-retrospective transition approach. Following the adoption of this guidance, a cumulative-effect adjustment to retained earnings, amounting to RMB2.4 million, was recognized as of January 1, 2020.

VIOMI TECHNOLOGY CO., LTD

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF

COMPREHENSIVE INCOME

(All amounts in thousands, except shares, ADS, per share and per ADS data)

	Three Months Ended
	March 31, 2019			March 31, 2020			March 31, 2020
	RMB			RMB			US$
Net revenues:
A related party		251,880			404,979			57,194
Third parties		424,329			360,527			50,916
Total net revenues		676,209			765,506			108,110
Cost of revenues (including RMB9,194 and RMB14,593 with related parties for the three months ended March 31, 2019 and 2020, respectively)		(486,787	)		(621,540	)		(87,778	)
Gross profit		189,422			143,966			20,332
Operating expenses(1)
Research and development expenses (including nil and RMB596 with a related party for the three months ended March 31, 2019 and 2020, respectively)		(36,572	)		(59,261	)		(8,369	)
Selling and marketing expenses (including RMB8,134 and RMB8,080 with related parties for the three months ended March 31, 2019 and 2020, respectively)		(100,948	)		(65,470	)		(9,246	)
General and administrative expenses		(15,624	)		(9,458	)		(1,336	)
Total operating expenses		(153,144	)		(134,189	)		(18,951	)
Other income		812			2,741			387
Income from operations		37,090			12,518			1,768
Interest income and short-term investment income		9,707			5,336			754
Othernon-operating income, net		431			90			13
Income before income tax expenses		47,228			17,944			2,535
Income tax expenses		(5,900	)		(126	)		(18	)
Net income		41,328			17,818			2,517
Less: Net income (loss) attributable to thenon-controlling interest shareholder		138			(157	)		(22	)
Net income attributable to the Company		41,190			17,975			2,539
Net income attributable to ordinary shareholders of the Company		41,190			17,975			2,539

VIOMI TECHNOLOGY CO., LTD

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF

COMPREHENSIVE INCOME (CONTINUED)

(All amounts in thousands, except shares, ADS, per share and per ADS data)

	Three Months Ended
	March 31, 2019			March 31, 2020		March 31, 2020
	RMB			RMB		US$
Net income attributable to the Company		41,190			17,975		2,539
Other comprehensive (loss) income, net of tax
Foreign currency translation adjustment		(14,083	)		11,314		1,598
Total comprehensive income attributable to the Company		27,107			29,289		4,137
Net income per ADS*
-Basic		0.60			0.26		0.04
-Diluted		0.57			0.25		0.04
Weighted average number of ADS used in calculating net income per ADS
-Basic		69,266,667			69,768,219		69,768,219
-Diluted		71,720,196			71,943,488		71,943,488
Net income per share attributable to ordinary shareholders of the Company
-Basic		0.20			0.09		0.01
-Diluted		0.19			0.08		0.01
Weighted average number of ordinary shares used in calculating net income per share
-Basic		207,800,000			209,304,658		209,304,658
-Diluted		215,160,587			215,830,463		215,830,463

* Each ADS represents 3 ordinary shares.

(1) Share-based compensation was allocated in operating expenses as follows:

	Three Months Ended
	March 31, 2019		March 31, 2020		March 31, 2020
	RMB		RMB		US$
General and administrative expenses		1,871		2,376		336
Research and development expenses		6,106		8,240		1,164
Selling and marketing expenses		3,817		2,970		419

VIOMI TECHNOLOGY CO., LTD

Reconciliations of GAAP andNon-GAAP Results

(All amounts in thousands, except shares, ADS, per share and per ADS data)

	Three Months Ended
	March 31, 2019		March 31, 2020		March 31, 2020
	RMB		RMB		US$
Income from operations		37,090		12,518		1,768
Share-based compensation expenses		11,794		13,586		1,919
Non-GAAP operating income		48,884		26,104		3,687
Net income		41,328		17,818		2,517
Share-based compensation expenses		11,794		13,586		1,919
Non-GAAP net income		53,122		31,404		4,436
Net income attributable to the Company		41,190		17,975		2,539
Share-based compensation expenses		11,794		13,586		1,919
Non-GAAP net income attributable to the Company		52,984		31,561		4,458
Net income attributable to ordinary shareholders		41,190		17,975		2,539
Share-based compensation expenses		11,794		13,586		1,919
Non-GAAP net income attributable to ordinary shareholders		52,984		31,561		4,458
Non-GAAP net income per ADS
-Basic		0.75		0.45		0.06
-Diluted		0.75		0.44		0.06
Weighted average number of ADS used in calculatingNon-GAAP net income per ADS
-Basic		69,266,667		69,768,219		69,768,219
-Diluted		71,720,196		71,943,488		71,943,488
Non-GAAP net income per ordinary share
-Basic		0.25		0.15		0.02
-Diluted		0.25		0.15		0.02
Weighted average number of ordinary shares used in calculatingNon-GAAP net income per share
-Basic		207,800,000		209,304,658		209,304,658
-Diluted		215,160,587		215,830,463		215,830,463

Note: Thenon-GAAP adjustments do not have any tax impact as share-based compensation expenses arenon-deductible for income tax purpose.