Earnings call transcript Q2 2023

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Operator

Hello, ladies and gentlemen. Thank you for standing by for Viomi Technology Company Limited Earnings Conference Call for the First Half of 2023. At this time, all participants are in listen-only mode. Today’s conference is being recorded.

I will now turn the call over to your host, Ms. Director company. IR the Ji, of the Claire Please Claire. go ahead,

Claire Ji

XXXX. and everyone. you, for to of Viomi Thank the welcome half call Technology hello, conference And Allison, earnings Company first Limited

recorded. As The were a in release online. are press today the conference reminder, is issued company’s and operating this financial results and posted earlier being

the e-mail by visiting the can press and release list You at sign up section distribution of company’s download earnings for website ir.viomi.com. the company’s IR

Founder, [ph], call Chairman and Markets today’s Participating Q&A of will are prepared and management of Officer; Chen, the begin our company’s the Mr. Directors a remarks of session. in the the and Xiaoping Board Mr. the Capital Executive will Chief call The with with Jinling Department. Zhang Head conclude

today’s continue, Litigation will under the please statements made provisions that Safe Securities U.S. Private we XXXX. forward-looking note the of contain Harbor of Act discussion Reform Before

risks statements uncertainties. involve inherent Forward-looking and

Further views XX-F any included U.S. does this company’s Exchange company’s filings uncertainties and materially is report today. law. in be the actual with filed assume as required company other other and Commission. Securities and as obligation Form on statements, expressed not may to such, any annual update forward-looking by As The results risks from information and the different the except the regarding

financial Please GAAP well as information, financial also note discussion that, Viomi’s unaudited earning press as release include of and this unaudited measures. conference non-GAAP call

the a of GAAP contains press unaudited measures addition, In directly release unaudited reconciliation comparable to non-GAAP Viomi’s measures. the most

immediately Chen, ahead. his remarks Xiaoping over by I followed will deliver Mr. Founder Chen. turn Chen to and our Chinese, Mr. will please translation. English Mr. call the go now in CEO,

Xiaoping Chen

[Foreign Language]

Claire Ji

for company’s adjustments us of both Chen. financial quickly of half on and before half the discussing consumer joining our Mr. a everyone. conference during for remarks XXXX. Thank XXXX. strategic performance Founder’s translate today first the Constrained you, for first lukewarm of our first will sentiment Hello, XXXX. half earnings call our you I the the Thank by

while billion, Our declined total RMBX.X revenue X.X by recorded year-over-year, points representing decrease percentage of gross margin XX% a year-over-year.

streamline XX.X% we operating However, way of We to year-over-year a results loss a X.X-percentage-point operating decline our in and and see expenses continue net of enhance as efficiency, in organizational recovery. our is our decrease operational on margin. structure

the our months, a focusing optimizing mix of purification enhanced increase in categories, our core long-term revenue an six XX% the year from structure Over past benefit believe We XX% contribution we our ago. of development. that will by product product driving sustainability on products our the product water to category

have in products. Additionally, industrial market-leading capabilities we achieved chain the purification water

We develop have independently to processes, and research, mastered and us produce technology filtration empowering manufacturing material core components. advanced

end-to-end solutions, have production developed a collection and the of of automated capability set data including we comprehensive lines customized product assembly, machine Moreover, analyze. and complete proprietary

Lizi Limited, the specialized innovative, subsidiaries Technology its In Giant enterprise, in our purification ‘Little as capabilities Company remarkable one of and to and July, innovation was designated R&D Guangdong the industry. water national-level owing

industrial chain most As affirms the water comprehensive ratings, honor of nationwide this evaluation the highest-level recognizes strength and and one of purification. our authoritative in enterprise

and control to product we meantime, independent in of deepened a we regards to intelligent investment In R&D constantly differentiated, combination products. utilized our out whole-house And the product our to categories, in flexible other mix. core our OEM lay and technologies develop and over

to conditioner X our improve featuring air Pro X we vertical health. home Event, protect indoor Master conditioner with formaldehyde-removing Super and solutions, Product XXXX, Pro a introduced Spring vertical equipped air the AI products which Launching enhanced quality a of one-stop On XXXX April fresh-air AI -- our system, at air users’ such iterations IoT of our New series as high-tech April XX,

home the home as currently is category X our debuted Master brand-new Master X washing trend and within our lighting setting ultra-thin smart machine which refrigerator in our system water set, well hybrid intelligent devices Pro gas-electric industry, made heater, also decoration also a as built-in debut. We new a

list to to brand. worth China’s of brand XXXX XXXrd Turning included the smart in on were ranked the their billion. sector valuation that [inaudible] are ranking. Top home on two our XXX brands, We of proud There of way be RMBX.XXX brands made only this

a them. We are one our of the honored brand leading of be to industry. is This powerful in position recognition

several Shenzhen China including -- World Expo in channels, Creative China recovering with Appliance Decoration offline the July. we in the & held large May with participated in held as offline AWE Building Week in in acquisitions, International and April, our market in held and Guangzhou As gradually, consumer Electronics scale Shanghai Fair

distributors this event, and offline and During visit supporting attracted immersive the future of a sales. our our experience to whole-house consumers offline to comprehensive an recovery solution we lives, showcased

decline in new Furthermore, we our over for up the overseas for offering accounting categories enrich our in smart products markets of made overseas sales our product revenue cleaning for overseas, with which effectively of markets. XX%

believe the power new With widespread of will only enable not experience, AI well of devices, intelligence in but into the as unprecedented energy whole-house technology, and smart era generative inspire intelligence vehicles whole-house the user we breakthrough arrived, has terminal the intelligent as adoption a creativity also industry. integrating across revolutionary AI’s

of whole-house Viomi technology, perception upgrading the service. connectivity, this era our our and our space we the fashionable and active of and at transitioned voice see characterized control, have By of the intelligence emphasizes of products’ we brand revolution. from environment and with steadily to proactive era successfully improving hi-tech our which forefront AI With perception, is positioning, interaction intelligence

operations, capitalize the our continue to following optimize areas. will on our Moving forward, three on concentrating strengths to and explore we

roll comprehensive roots with our industry-leading consumers water technology out more value in creating deepen and for further will products, purification quality, we advanced services. industry the more First, higher and more

our to deliver whole-house Second, solutions. our intelligent matrix our home user-friendly and mix product product and one-stop we IoT will more fine-tuning products’ and experience improving keep on intelligent focusing elevate iterating and helpful

our further improve our layout, deepen our efficiency performance. industrial will heighten product our we and to increase controls, least, not but competitiveness cost operational Last strengthen operational

same sparing create robust growth, all no we goals to brand and sufficient value users the to for maintain time, At capital sustainable our to these of shareholders. and effort consolidate support will reserves and our drive long-term

Thank That Jinling will Capital turn Zhang now to our you. Head performance. remarks. Thank discuss over concludes call of to financial our Markets, the our Mr. I Founder’s you.

Jinling Zhang

Thank Chen unaudited XXXX. today. everyone the you, Mr. and first over thanks results go half and for us our joining for to Claire, will of I financial

same RMBX,XXX.X were well portfolio, a period as million to revenues decrease as for decline last in the net Our appliances and mainly of due IoT@Home the was compared small The year. revenues from million, RMBX,XXX.X to others.

robots. for RMBXXX.X The XXXX. RMBXXX.X due and SKUs decreased period million streamlining portfolio was of from of to in the Revenues same million the from smart IoT@Home XX.X% decline primarily refrigerators the by smart sweeper to

solutions effort water driven from was Revenues to RMBXXX.X million the on by X.X% increased from last million water to focus for primarily RMBXXX.X same our period home purification by The increase year. of products.

to last consumables RMBXXX.X sales purifier year. the of decrease decreased by million The from decrease filters from due Revenues in RMBXXX.X was same to the period Xiaomi. XX.X% to million of primarily for the volume sold water

adjustment decreased same million due Revenues million the by product primarily within to portfolio category. of this from the period and RMBXXX.X XX.X% to small XXXX, for from ongoing RMBXXX.X appliances others

same million price margin due same XXXX. to partially was Gross increasing by gross of period product compared products XXXX. adjustments. for as lower portfolio RMBXXX.X to selling period clean-up of result profit primarily sales compared decline a and Gross XX.X%, offset of products was of million, a was for to the certain RMBXXX.X The the was higher of XX.X% margin

organizational from RMBXXX.X RMBXXX.X to operating operational million decreased mainly and XXXX, structure period of million the by expenses streamlined XX.X% to Total improved the same efficiency. overall for attributable

and greater optimization decrease mainly from personnel driven In the by a our RMBXXX.X by in ongoing of projects. costs expenses detail, period R&D for of same million development decreased XX% and RMBXXX.X research to XXXX, million

due from period for expenses XX.X% marketing to costs. decrease of year, in and million logistic related expenses, million same a expenses RMBXXX.X by and mainly last Selling personnel marketing RMBXXX.X decreased sales to the

to offset the primarily increase by estimated of expenses to decrease for allowance compared same -- receivables. the an a notes in million to and in personnel accounts RMBXX.X RMBXX.X General by administrative and X.X% partially costs, for period million, XXXX, due allowances decreased

was ordinary improvement an in million loss the of the scale, net RMBXX.X to despite our attributable shares efficiency. indicating company non-GAAP and ordinary was million loss loss to our company revenue the in shareholders Net XX.X%, -- decrease ordinary RMBXX.X attributable by shareholders from operational of narrowed operations

Additionally, our healthy. sheet remained balance

investments of of short-term As RMBXX.X June RMBXXX.X equivalents short-term of XX, RMBXXX.X XXXX, company’s and RMBXXX.X cash cash of million. million, cash and million deposits of the restricted million,

Claire Ji

our prepared remarks. This concludes Okay.

ahead. We will please Jinling will Mr. Chen, Mr. this Operator, now answer Q&A. for our and Founder; the questions. join and go session call open

Operator

have we CICC. CICC. ahead. of Thank Instructions] a from ahead. Liu And [Operator Jingsheng Instructions] first come from Liu [Operator once will Please question And again, you. today Please go question go from our Jingsheng

Jingsheng Liu

Okay.

this the and Sorry. Jingsheng Thanks by management and about I I one. ask them result is and one CICC will Liu have for from three the questions

So what in and Thank first categories first And question XXXX? quarterly -- performed my good did which any consumer and question. demand we how the of the first QX? revenue have is, QX from in improvement the you. the showed sales seen half That’s

Jinling Zhang

Liu, your you, for Thank Ms. question.

the scale. a pushed a It streamlining product at XXXX. down the In which in market lower same half last hard revenue XX% first first SKU resulted quarter, with revenue season in profit comes on the period always we than margin flat takes quarter first the around the As lower of and of year. clearance,

right on the But promotion thus XX% better overall decreased SKU number by the us age prepared which the total get for inventory of the big also side, the season. helped decreased and accordingly,

the season, still overall About such our consumption market, observe subdued promotion we the recovery demand did during the market and XXX not expectations. meet the of recovery sales did is but the

to volume, competition getting of reduced order another on their the to day, at one are maintain further price the fiercer, and profit in e-commerce compete this companies the the margin. With sales driven competition with with the lower platforms end

are durable among energy is products demand the young for in and customized market, the that, building, differentiated observation good increasing with generation is products quality, such becoming healthcare and popular consumers. more construction ultra-thin, as conservation concepts the Another

our Therefore, smart features more purifiers with mainly acknowledged focusing profit market and with better those by changing margins products in to the of lay products demands. out the on our expanding meet future, keep and market greatly we products water optimizing such end mix, recovering the will percentage as product kitchen

purifiers water the our during And and achieved sales, season. conditioners quite back air to question XXX performance sales good your on

As increase sales to came we of this March period XX% than starting the this conditioners same of earlier conditioners from contribution total last year revenue the year. such and air to increased from in the past year air observed years, revenue peak XX% season of in an products

you. promoting more the In products, water to water year. purifiers flex large we of XX%, same purifier meantime, contribution XX% put the period efforts last revenue as Thank in increased to on the compared

Jingsheng Liu

is, question will new for the on second my this second the and launch launched And company products what is year you. Thank and of business be focus products the what Thank will Okay. half you. this pipeline year? new any the the category

Jinling Zhang

air indoor the the we events, air quality X system, of with home IoT AI In half first X of AI of Super solutions, users’ air rations introduced the formaldehyde-removing conditioner our which as Master conditioner new products Pro Spring both and air benefit one-stop equipped of series at fresh featuring New such our the enhanced vertical Product of health family Pro and our members. launching XXXX, vertical a improved

ultra-thin on setting chains new set, is Master in X built-in the We currently washing also which our refrigerator home industry. decoration and machine debuted

and intelligent we category, system keep lighting with recently products of improvement smart our is intelligent and With lending the launched solutions empowerment a basic enabling product scenarios go capability, We customized respect or IoT system provide to different of functions solutions. of the our home of lighting reasonable easily will the different indispensable products. that the in part empowered satisfy series will our the users our and We systems lighting whole-house designs. to experience software one-stop believe on new needs system home creatively of with intelligent different decorating of the intelligence the to

following operations, our mentioned as continue and will second to on the XXXX, the aspects. earlier, our explore three on strength and half capitalize focusing of optimize For we

in First, deepen higher the will water industry purification leading quality, our consumers we and roots more products with technology provide with services. more further of and comprehensive

focused IoT experience. solutions home user-friendly helpful remain mix product will users’ our iterating our intelligent one-stop more improve And our product matrix deliver we and fine-tuning whole-house to home and second, and on

efficiency and Third, we strengthening increasing cost operation will channels operational our performance. industrial layout, our control, in Thank operation our ability you. further improve deepening our keep expanding to

Jingsheng Liu

you. Thank about last Okay. is my vacuum. the And question robotic

year. vacuum we that As fierce on all become this very competition the know the robotic cleaners

XXXX. of you. the Thank So performed my this how first question. has in business half That’s last

Jinling Zhang

cleaners you. of last is in robotic overseas since caused our The our shrinking by business the overdependence of mainly the year. has robotic Such vacuum Thank Europe. the cleaners largely scale especially vacuum shrunk market, in

the foreign the of During our quarter. sweeper in fluctuations XXXX the market, robots occurred gradually sales of have European second of this sales getting half significant sweeper currency the the July In factors of crisis robots we year. influences second a rebound the in suffered a with and XXXX, expect headwind slight geopolitical first of since these the in drop, half relieved to especially

through keep to OEMs. this nor competition line essential day-by-day. domestic product frank, whole-house will product one-stop of this provide haven’t getting and part we and signals of But be is our any in several clear the category, intelligence overseas, seen Nevertheless, neither mainly we fiercer recovery solution, models being

hand, sales of robotics enriched product overseas overseas our market revenues vacuum the over our one brought to categories new overseas first accounted offered about for meantime, On for XX% and revenues our In these of up half XXXX. by the cleaners. in market the the of the decline categories we in make in

other growing Southeast also seeking commercial new markets, to making emerging market. Thank the are market, especially opportunities we the particularly On Asian in in explore you. overseas our rapidly the hand, efforts

Operator

would And remarks. that session. like any for turn concludes to I the management call or additional the back closing over question-and-answer to

Claire Ji

again once Thank for today. Okay. you us joining

questions, you Relationship through information If Thank further our Investor feel the any our to have The or contact website Piacente us Group. on you. Consultant, contact please free

Xiaoping Chen

you. Thank

Operator

disconnect. now presentation concluded. now has and may conference you attending you for today’s The Thank

Viomi Technology (VIOT) 24 Aug 232023 Q2 Earnings call transcript