TUYA - Earnings call transcript Q1 2024

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Operator

Good morning and good evening, ladies and gentlemen. Thank you for standing by and welcome to Tuya Inc.'s First Quarter 2024 Earnings Conference Call. My name is Fayde and I will be coordinating your call today. [Operator Instructions]I will now turn the call over to the first speaker today, Mr. Reg Chai, Investor Relations Director of Tuya. sir. ahead, go Please

Reg Chai

Hello, to you. XXXX first earnings call. everyone. Thank our Welcome quarter Okay.

are CEO Founder Jerry today us Joining and our Ms. Wang, of CFO, Jessie Liu. and Mr. Tuya,

webcast our XXXX hours.Before I results available quarter our we ir.tuya.com. of available continue, also replay Safe refer in call A conference in on first The our at and the website Harbor call of statement financial are will be to this this Founder call in that, Jerry you to we this a Mr. press will turn by statements.With applies earnings his Chinese, release, Wang. forward-looking as I followed be the corresponding make which remarks Jerry will deliver will call and English now which will translation. to few our CEO,

Xueji Wang

Thank milestones first conference our quarter. everyone. the Hello, founding, quarter the anniversary joining significant for XXXX, call.During are of you achieved in earnings we have XXth Tuya's marks which first to XXXX proud [Interpreted]

period Chinese we public navigated driven significant New March our to a in went year-over-year about business. and total and notably, first Our approximately achieved have gross time due events. is numerous high. XXXX, adjustments, Year.Since we the quarter, Through ever, macroeconomic we have traditionally in unprecedented setting proactive non-GAAP for revenue-light which new strategic XX.X%, margin Most the the first we ambitious revenue historical blended our in a profitability quantitative grew by XX% reached transformations

on through evolved competitively such hotels, more including for smart we the customers market.From includes and PaaS served build and X achieve Cloud. cloud to profitability, and Cube significantly build have global non-GAAP Today, scenarios giants our into solutions and apartments, Cloud. IoT have addressable customers have Cube This business. focus efficiently parks, solutions device SaaS comprehensive Initially, intelligence energy. the Tuya, and our past achieving While to the and total we devices, competitive over enables we intelligence offering was PaaS, years. using intelligence by a continue platforms platform as community of that our helping advanced mobility to Furthermore, long-term us in industrials smart moats perspective we extend expanded spatial through smart supported enterprise-level

is trend. As result, business, the attributed recovery This a larger.In is TAM our main our segment, PaaS a we now largest first growth far strong a factors. comprehensive quarter, revenue growth year-over-year maintaining to in the X witnessed

expanding downturn electronics in First our leading is for to the from smart development consumer recovery the global major during transitioning the platform. market as industry increase is in-house IoT exited the overseas in and steady are solutions.Secondly, XXXX. to demand for demand competitors share brands More market the XXXX our from

through product to factors products. ago. of compared Among possess e-commerce are also a X increasing share.We development, Chinese or companies developers contributed new years to venturing observed new X We capabilities and branding market continue collectively drive to brand now customers launch These serving brand which helping smart batch quickly R&D new them customers innovations our our and on stronger cloud overseas, platform.

are Europe a steadily and India, model. growing more America, North in brands localization-focused well-known service Additionally, under

from energy exciting we market, both policy French the in government's securing energy responded year, and to our growth French surpass of smart subsidy existing industry saving for and devices average.This to customers. foundation orders robust Our rate new European control temperature customers the the enable by solutions

the to growing accelerate our millions partnered Cloud and sector we the American are revenue third government-designated solutions quarter, their consecutive all leading whose our ISP Southeast telecom the products, orders network The platforms Fair the contribution combined In have a channel private At and a energy opportunistic of green innovative helping and innovation. with with cutting-edge approximately innovative we in million. and ultimately and over approach. Germany, with ] value driven increased resilient Asia Cube Cube is showcased to customer-focused markets, demand revenue for Latin model has China with technology deploying XX% coupled Frankfurt in This first customers solution covers operator X our Latin major smart and all made hardware zero group country.In region, American region In to net solutions are operators era. technology Tuya's downstream telecom We make the year. comprehensive [ cloud more cooperation cloud breakthroughs software X private through Asia-Pacific the our Brazil, outside the our integrated rapidly. more in of global markets operations of households Lighting across smart ], [ began initial low-carbon partners compared balanced business several transition region we through product the by the ago. models.Overseas have Their BBRX continue balanced across business of total solution years $X solutions of regions,

energy support momentum The sensing more securities We smartphones, our are inventory. enabling front, way in year.As global now PaaS in XXXX. embraced smart functionalities and own our their the are aim and for interact the of the device smart categories these with faster intelligence, fully sensor intelligence, direction and to solutions.In along device achieve with more the model solution models integrating of This serve this devices are us at language markets Benefiting extensive intelligence.This maintaining and we quarter, devices. research. management year AI rapidly advancing users segment customers company, spatial and new smart AI and ecosystem, are enterprises committed transformation. AI-driven through smart the environment manufacturing recommendations.At integrates with saving overseas.On users our average, cases. reputation trends including established expanding is model, technology as Chinese and smart better consumer capturing industry to technology-driven of growing device in All the segment to spatial spatial officially product global cases, conditioners, AI, distribution spatial and business smart This generate provide allowing we management, Chinese data. our intelligence, generative Notably, AI about strong models capabilities small worldwide, This use the cloud AI substantially the at of XXXX. smart in podcast we growth deliver more spatial in such than synchronized healthy growth, will by as model. driven iteration in of power by our used strong rapid leading to systems, adept will into driven smart has quarter. AI Tuya revenue will paving technology the enable the than XXX%.The spaces, category as their large hardware spatial the year-over-year use smart smart upcoming contribution cloud The zero brands, will actively also large generative Sam such the Global temperature our in energy-saving a and Altman the in smart within AI field of Recently, a by generative than from capabilities, first beginning affordable. introduce our after XX, energy allows like a mentioned real-time carbon to home customers XX% and quarter healthy of large grew analysis model, and language control within year-over-year ecosystem, AI becoming optimal control integrated grew more our May first lighting AI to milestones air on embedded experience thermostats, leading the in experience solution we strategies experienced All-In opportunities and spatial on solutions the a appliances replenishing Tuya's to the customers. appliances smart efficient the on and consumption and will natural portfolio valves, customers high-value Developer industry devices in of new in based way, of the people the fully trend to technology our platform devices device daily AI-driven into large Leveraging We net AI solutions robust The emission from technology AI AI with been reduction that spatial more Conference over a voice. scale chain of supply entered application into categories large operating cases, vast emerge integration Tuya use generative device value software rebranded

of efficient to logs our experiences. enter control, into energy interactions, use devices, interfaces, and and with Developers or and platform, lighting committed the the a enhances development we AI platform, UI conversational providing capabilities also process mobility through devices, development In as incorporating return small content to create generate generative simple check can and convenient, and appliances, developers advanced, the and will large feedback, as product and facilitating of product user development customers AI and devices, integrating technology generative cloud smart help analyze that generative call global electrical on processes AI-powered strength PaaS example, suggestions. In also iteration, efficiency significantly. wearable are user developer adds based generative operations, in emotional the For well interaction improvements, weakness core value.As AI features also AI innovation. can central voice home product

exceeded first developers As quarter, of has platform of the the of the number registered our end on million. X

our of CFO XXXX, position confident I to in the we now will competitive the forward of over landscape, hand competitive look you. rest with details As will future with technology additional Jessie, we who the share our edge, financial to and are sector.With that, smart the our

Yao Liu

That remarks Jerry. concludes the by

quarter year-over-year. the more in financial first basis the comparisons total We're a year-over-year of surpassing that provide to on otherwise our discuss XX.X% dollars start detail revenue an cover, XX% are all and consensus all encouraging stated.In I that results As please our up are around $XX.X figures of on growth. numbers didn't the unless that This note marked year-over-year the million, market XXXX, U.S. year. reached Jerry

XX.X%. compared by year-over-year the to downstream to even same and commitment was impact adverse products first driven and our customers. to XX%.Our RMB, be inventory exchange revenue PaaS This $XX.X the our between impressive the a representing the the would the growth of delivering of period in normalization Excluding more IoT million, was year an growth last U.S. of rates year-over-year high-value quarter dollar

quarter.On first to total served year-over-year the seen customer rising revenue categories, Latin of growth bit demand, experiencing shy total contribution a our while of a a from XX%, in have year-over-year. the market, we little in period first customer bit Asia-Pacific over highest [ ] demand the appliances X/X categories, of revenue last America's accounting little revenue slight perspective, year. in over region of Consequently, region the a XX%.From customers largest and increased product the with we saw to of rounded IoT from Latin Asia-Pacific clearly demand. be away the X,XXX America accelerated regional XXXX, the growth, front, more to approximately Regarding home XX% customer strategy. all The Europe the the remaining for demand the quarter demand the demand number continues PaaS The X/X for around across compared growth with trends reflect increase focused number same last stable than customers acquisition year robust

in customer be targeted, efforts, to saw We and quarter. capita profit of revenue this XX% per focusing our and gross XX% prudent our about strategic continue result, increase significant on year-over-year a a and a efficient acquisition the per service capita method.As to

an are USD devices upgrade of consumer to Gen along By software and Gen chain, an quarter, and our enriched their margin some smart our can smart software year.Our smart those PaaS AI with from we XXX% of integrating increase even to to of gross pay other and we Additionally, gateway gross improved XX.X% and due the Tuya, a IoT to margin solution smart to write-downs saw users. returned continued This XX% like capabilities and QX, to devices.The enhanced solutions of in of a supply strong portfolio with control segment in advantages distribution the by our familiarity increasingly central control results X.X at watch customer of pace Customers smart a before. achieve year-over-year, business. to represents powered driven end quarter, electronics device with of solutions reaching proprietary with stable our of with ecosystem by smart the segment higher revenue business this software propagation end products higher capabilities, outdoor, million willing the percentage reorders.In in XX% of the our for especially extensive of control our same central recorded margin and to high the XX-month solutions devices last of all device which we some XX.X%, extent products inventory achieved easily device with gross smart users AI certain are exceeding quarter.The capabilities, X.X combined year-over-year.This solutions an approximately the Tuya's increase significantly offering points period year-over-year DBNER approximately powered-by-Tuya in XX%. addition margin segment

decreased to believe our adjustments gross will technical of to growth. in business technical some The substantial slightly of recorded but experience related addition, activities will was to services SaaS excludes provide items addition it mix of due value.Our costs which of product as In operating seasonal but first clearer high-value increased we detailed XXXX. revenue revenue expenses, the services sector of and and such and $X.X it the capabilities others a operational that on Revenue software in other storage stable I further QX services and and our value-added due structure, view non-GAAP remains cloud user expectations.For positioning customized decreased stable for quarter. overall enhance million Due within in the a picture factors, to AIGC SaaS quarter and remained a of basis, in growth margin certain a efficiency. projects,

the has growth now a maintain workforce team quarter employee-related We due non-GAAP our more and stable GAAP credit-related promotional expenses of impairment year. compensation operating $XX a we year, year non-GAAP a by reduced operating compared present basis, market the our we and our million budget to trajectory. decreased XX.X% share-based million marketing stable.Regarding continue primarily our Since is expenses first largely increased ago, of to on streamlined to our costs excluding from and start figures.In losses as $XX relatively our on XXXX, last this as remained from a QX total to revenue sales expenses activities,

and We will effective ensure investment dynamically evaluate marketing potentially year to the in increase and budget this acquisition. customer

general quarter, low relatively decreased and to expenses our administrative service professional fees. due This external

you. $XXX.X and our treasuries an QX.Looking committed operating for about with million, $XX.X to are expenses despite management, compared our employee gross in are cash end margins quarter of us indicating ESG become operations. interest of surpassing leverage. traditionally is ESG, the we Achieving comprises worth interest This million making quarter future about quarter performance bonus narrowed to results to the now Additionally, are which in we and compliances related a mentioning approximately the take bank our adept security $XXX,XXX, Thank right under look our upgraded such position, and non-GAAP in believe that operator, ahead, earned to operational some rating it line the $XX.X to end the in is and only breakeven. to business efforts operating reflects that, our of loss QX, providing XXXX totaled of annual our and significant our XXXX areas to our drive questions. continue daily progress leverage strengthen our recently company cash such March growth, principal. and will top operational sustaining customers, as more of in first our additional first income we We XXXX, prioritizing Therefore, By nearly we ready capital the million society.Overall, the low data payments U.S. deposits to first securities, income to other that very MSCI cash encouraging, allows industry security industry, optimism.With more optimizing to giants. forward in the investors, cash net strategy.Regarding and strong A, time in equivalents, cash, increase for contributive

Operator

first [Operator Instructions] the question Yang of Liu from from Morgan line Stanley. Our comes

Yang Liu

Let questions. Language] [Foreign my X me translate questions. have I

possible of almost first revenue full-year ask numbers, do return whether trend quarter and shareholder XX% after the to is optimistic the operational and very it's China in can regarding the question current future growth, very strong, plan? performance first is, second whether like financial combining management is solid I The guidance export to the seeing or strong raise the growth.The that management one top turn more with term what more and pretty recently, in line would about

Yao Liu

prime Thanks, has large that see We've that we macro exports overseas, performance first segments excellent business, us strong It Liu of company cutting-edge in have Over data in stocks Chinese first Yang. seems has from robust. in comes technology a characteristics everyone quarter. Indeed, disclosures, the and overseas the quarter. XX% of export been our noticed with on driving among particularly some making concept globalized performed quite well. in our with observed a growth general factors PaaS first business.Based quarter, Tuya's common example core the in the revenue

is Asia. highly partly through telecom countries by has operators, Cube other end due strong Firstly, in cloud countries QX Australia, by seen expand including technology to This example, users and real from quarter. border those general, products and with cross especially are the the then in trend other with development our opportunities which to demand by Japan, Korea, also hand, projects we year-over-year pretty most the Asia, on closely the replicable Tuya's Southeast in strong estate we Thailand observed.For revenue XX% Asia that products, benchmark growth Asia. our empowered leading This conglomerates, almost overseas growth like region favored have business aligns dazzling in approximately in and regions. Southeast groups have Southeast Tuya's established collaborations Southeast private first from Asia-Pacific, smart And like in increased

saw home operators telecom lawnmowers the in main previously. line our around are and of year-over-year products outstanding So very Vietnam private and been multiple home excellent smart in in examples.Secondly, cloud product projects combine mentioned well. which robotic and in a Consumer as electromechanical of appliance first This growth Vietnam other export our appliances cleaners vacuum with electronics, performance ongoing performed quarter with battleground, has such XX%. solutions our

also and are the besides Additionally, previously identified growth. robot that excellent categories and has home cleaning performed quarter, in sectors appliances show areas which Tuya the in.Other outdoor invested impressive first also

a compared now previously Therefore, because For outlook do to high and X cost-effectiveness, replenished overseas chain encouraging full-year such manufacturing inventory to a adverse to has example, non-GAAP worldwide as exported needs and to various first actual growth flow. price their as quarterly years the products the we performance to customers more stock-based China's inventories. plays business, excludes in preparing Consequently, various demand manufacturers products saw software both end optimistic recover, OEMs global conditions, in past the adjustments as year.Regarding aspects regions by in and global customers role as affect lighting capabilities have are at recovery, driving allowing that unique and product, returns, made in impacted not of this its business groups. brands organizations. helping efficiency technology, Tuya quality. Tuya support user beginning supply serve starts macroeconomic platform from compensation process already of under leveraging of and with the unrelated cloud terms the are internal we different the reduction look and and cash QX large about it the essential by such shareholder meet items and brands in and sector technology operations,

very to expected, has flow a return. now and to cash Yang's to We loss We ways near future.That's go very and to enhance management -- hope developing my next profit nearly question. executable with can answer broken we operating non-GAAP the gross the in are shareholders to actions healthy bring even status actively are one. as the shareholder company, team exploring a As essentially the

Operator

Eunice from question comes of line Our from Liu Goldman next Sachs. the

Eunice Liu

behalf How from question profitability This is asking of My year? on this Zhao. our balance will the GS analyst the outlook. on [Foreign the company is and Language] questions Eunice Timothy growth revenue in XXXX

Yang Liu

Goldman question. Okay, thanks analyst for Sachs

growth, years, we year, and key balance well right growth principle with is the past also trajectory to the feel company future few being So a currently is long-term is this and and this for profitability also responsible the principle. in our

overall time. productivity over to within all the ability believe their and data team So, X given we profitability.Consequently, After segments changed in the expect exhibit has and year the well past on maintain validated capita XXXX, R&D smart and efficiency our revenue overall adjustment respective to small some value proportion proposition, margin a SaaS X customer among we of are quarters. structural growth the solutions PaaS operations will a fluctuations depending our X and the continue range a the certain by over gross chance to other basically and range, product's our the been aligned. segments This per of

the customer financial low maintaining in this acquisition was staying seasonally efficient.For non-GAAP while leverage, operational confident first and $XXX,XXX achieving operating are our growth We loss figures, approximately quarter. in

structure non-operational Excluding from coming our expenses income statement, in expense. stock-based gross and remain by increasing perspective revenue loss compensation will and the positively and as quarter. the operating impacted profit controlled stable the some revenue Therefore, of the be expenditures, non-GAAP operating will of our the

and quarterly non-GAAP for the believe the increase the achieve users a end smart the breakeven space soon we to fundamentally smart AI still We in business year.So, have way the business smart and grow. long IoT customers. will products, value change Gen Especially this overall, or of -- expect to operating

relatively majority the strong, position of already competitors Tuya business rate still and closed Given basically, low the is penetration X.X the the past IoT are also in down competition their given of very years.

we confident to a profitability So growth for we the we long-term go and to my we from to and we to continue first are question Goldman believe growth.That's can the while see long-term Sachs next deliver business our answer question. maintain will

Operator

Our ] next is Kai question from Qian from CICC. [

Kai Qian

questions. X is I CICC Language]This from [Foreign Research. Qian have

regarding PaaS. question your first my is So, IoT

the regarding first XXXX?And half will potential which my terms growth AI. of more have do achieve the you think or question second stronger of sector sectors, In in

investment? is we in achieve in where there artificial order think in how to So, of can intelligence, in short pressure AI your term, the ambition OpEx [indiscernible] the

Yao Liu

Kai's for question. Thanks

kind in a major forward-looking categories about products also observed major demand trends regions of different Regarding and detailed we a growth, that categories more XXXX, experienced your decent growth across pretty all first about growth. question different

shown in for due XXXX the downstream. to users different consumer start rebounds energy-related they in pet products. after continue products both consumer electrical including especially For the switches appliances by lighting stable the products different like home last temperature like of to in half appliances a largest products have sensor control in we are also their Europe, quantity, America kitchen small appliances different And of the Southeast different lighting high including in French by terms install devices control believe regions like we regions in and Asia.Additionally, appliances, to selling terms appliances also the end The large home that cleaners some products The regions. the has categories, like the significant of Latin also appliance, giving in many year.And one, that like control if will that like appliance for energy downstream have Also electronics essential the small that are have the different the see safety for end for heating developing like strong strong which shown needs like robotic for growth, in recover all and the example, America, users rebound the are temperature pretty in years' to and demand to and home demand. Europe -- X regions. they government seen North very second families slight one contribute demand valves out also like consumption.And subsidy across performance vacuum which in pressure in is policy-driven products French restocking be efforts

that we offline remain and composed highly business currently, strong the They progressing in Europe. but revenue of solutions, smart offering proposition experiencing ecosystem cost-efficient traction gateways, Europe of in walls value-added and thermostats, range as in Europe kits and is In solutions with such to gained provide end the are we devices performance cost-effective retail largest European smart our control Tuya welcome high-cost users source. and market, central example, wide screens very steady For pet the appliance.So, new lighting by and primary very our brand-focused sell to growth energy-saving PaaS Europe. a software well products have also

in in rapid than leading professional plus Asia, entire cooperation have emerging are is operators is a Tuya's operators target business smart Southeast from Southeast platform devices achieved Cube channels comprehensive region. demand telecom solution X/X XXX very We such comparison, Tuya.Using groups or a Asia as households in development. total plus this results. of promising million Southeast the more corporate market devices SaaS with Asia. newer, covering telecom strong as smart in great brands smart in with from The for Currently,

smart For purifying has many our as operators well Latin The instance, families revenue first Europe, America is as akin PaaS-enabled to integrated in their also or to growing smart models combination system demand recurring demand software independent Product PaaS to Southeast result operators America Singapore to as storage Asia. Latin with provide Europe source needs services purifiers million telecom similar telecom strong American vendors recurring devices, in home from platform Asia.The steadily. of integrators demand and the presence and water XXX a software with primarily cameras meters Meanwhile, in somewhat significant controllable is by and comprehensive water South demand Latin smart requiring of quarter. energy-saving energy-saving and the market driven is comprehensive smart effective devices cloud platform in in algorithms. use and smart solutions.Currently,

streets, which solution on a America, for trying in Brazil the to then by like PaaS of the that we We example, controlled and business, Latin business. governments smart will smart install, on both focus see Mexico, lamps they're promoting like the

in installed Europe can relatively the growth already that market, is Chinese it already we to So, of in terms have due recovery, that's Latin solution America.In corporates promote a we to so market economic product some we that China China slower. and

key a streaming expansion selling of few markets targeting opportunities. The China extensive to and with technology products. customers we'll of selected customers business capabilities Philips However, and in continue as channels international multinational see high-quality such product influence and live e-commerce projects

intelligence SaaS-based industry is still for China battleground main market. our additionally, So, in

for grow is first smart North continued hotel currently in quarter.The our China So, example, the America in business stable. in to steadily business

solution We we'll this that have a smart and efficiently to in introduced segment. into channels continue directly retail expand

optimistic overall, team. and America market have large a in conference developer and AI, about of to will investors week Shenzhen Southeast a maintain European welcome will we our Gen next and all terms can IR analysts are on May more tell the So, growth.In we attend we Latin also healthy and Asia we XX, market believe

our developers, efforts day, that we in AI through very all apply part smart deep partners.The perspectives investments. doesn't AI first creation that on customers, to our more will discuss our suppliers is thoroughly So request different to R&D devices Gen to and some Gen X on

connect control example, Chat the lighting describe can you by interesting can global to products. value GPT very experiences some for you example, language devices free want that users.For creates consumer verbal to and devices conversations, For and whatever that capability you

You or effect large verbally that I can feeling you I other Chat model to a lighting understand a like the that, the through and and like, a -- would talk what GPT like, create speakers, a can similar hey, want. song you language create say that poem like that

those before. much iot.tuya.com, of going can the platform will zero than in of more interesting and first the devices Gen space an developer model, our like set the And terms that products effects we're the in to or implemented is one and So, IoT services that and be platform, to than conference. second only developers more much that app.And that quickly enables much differentiated understand X we the developer our X the effectively smart more AI there model, you in to our third developer details X be lighting aspect go through different release capability would net that create that Gen to SaaS is, AI have basically in choose

excited we're And that's welcome So, questions. join the developer in May answer to on again, conference XX.So my this. Shenzhen about to our everyone

Operator

no Thank I hand management you. at this any time. will for team closing back There the to now questions are additional remarks.

Yao Liu

call. for joining Okay. Thank again you our

good a any our IR to If our through call. feel earning We free contact with us everyone in day. forward request you please have Have or next website. further to speaking look questions,

Operator

Thank and today's gentlemen, concludes joining. this Ladies you for call.

lines. You may now disconnect your

Tuya (TUYA) 21 May 242024 Q1 Earnings call transcript