Viomi Technology Co., Ltd Reports First Half 2023 Unaudited Financial Results

Rhea-AI Summary

Viomi Technology Co., Ltd announces unaudited financial results for H1 2023. Net revenues were RMB1,304.4 million ($179.9 million), a decrease of 20% YoY. Gross margin was 22.0%. Number of cumulative household users reached approximately 8.1 million. Percentage of household users with at least two connected products reached 22.9%. The decline in revenue was primarily due to a decrease in revenues from the IoT @ Home portfolio and small appliances and others. Loss from operations decreased by 43.6% to RMB68.2 million ($9.4 million). Net loss attributable to ordinary shareholders was RMB54.9 million ($7.6 million). Cash and cash equivalents were RMB691.5 million ($95.4 million) as of June 30, 2023.

Positive

• Gross margin of 22.0%
• Increase in cumulative household users
• Decrease in loss from operations

Negative

• 20% YoY decrease in net revenues
• Decrease in revenues from IoT @ Home portfolio and small appliances and others
• Net loss of RMB54.9 million ($7.6 million)

GUANGZHOU, China, Aug. 24, 2023 /PRNewswire/ -- 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 six months ended June 30, 2023.

First Half 2023 Financial and Operating Highlights 

• Net revenues were RMB1,304.4 million (US$179.9 million), compared to RMB1,636.4 million for the same period of 2022.
• Gross margin was 22.0%.
• Number of cumulative household users reached approximately 8.1 million, compared to approximately 7.2 million for the same period of 2022.
• Percentage of household users with at least two connected products reached 22.9%, compared to 22.0% for the same period of 2022.

Mr. Xiaoping Chen, Founder and CEO of Viomi, commented, "In the first half of 2023, constrained by a lukewarm consumer sentiment and as a result of the Company's strategic adjustments, our total revenue recorded RMB1.3 billion, representing a year-over-year decrease of 20%, while the gross margin declined by 1.9 percentage points year-over-year. Nevertheless, in the meantime, we optimized our product mix by focusing on our core product categories, leading to an increasing share of revenue from water purification products from 17% for first half of 2022 to 22% for the same period in 2023. We believe that optimizing our product mix will benefit the sustainability of our long-term development. Additionally, we streamlined our organizational structure and improved operational efficiency, translating to a narrowed net loss with a 30.3% decrease in operating expenses and a decline of 1.4 percentage point in net loss margin year-over-year for the first half of 2023."

"We have achieved market-leading industrial chain capabilities in the water purification products, which include: the capability of independently achieving advanced filtration technology and material manufacturing processes; the capability of researching, developing, and producing core components; and the capability of creating a comprehensive set of proprietary solutions which include complete machine assembly, customized automated production lines, and end-to-end data collection and analysis. In July, Guangdong Lizi Technology Co. Ltd., one of our subsidiaries, was designated as a national-level specialized and innovative 'Little Giant' enterprise, owing to its remarkable R&D and innovation capabilities in the water purification industry. As one of the highest-level and most authoritative evaluation ratings for nationwide enterprise, this honor recognizes and affirms our comprehensive strength in the industrial chain of water purification."

"In regard to the Company's other product categories, we utilize a flexible combination of original equipment manufacturer ("OEM") and independent R&D to lay out our product matrix, and in the meantime, we consistently deepen our investment in and control over core technologies to develop differentiated, intelligent whole-house products. On April 28, 2023, we introduced a series of high-tech products at our Spring New Product Launching Event, featuring enhanced iterations of our one-stop IoT home solutions, such as our Master 3 Pro formaldehyde-removing AI vertical air conditioner and Super 2 Pro AI vertical air conditioner equipped with a fresh-air system, which improve the indoor air quality to protect users' health. Our Master 3 ultra-thin built-in refrigerator and washing machine set, together with our Master 3 Pro gas-electric hybrid water heater and our brand-new intelligent lighting system, also made a debut, striving to set a new trend in the home decoration industry."

"With the widespread adoption of new energy vehicles and smart terminal devices, as well as the breakthrough in generative AI technology, we believe the era of intelligence has arrived. In our opinion, integrating AI's power into whole-house intelligence will not only enable a revolutionary user experience, but also inspire unprecedented creativity across the whole-house intelligent industry. With our 'hi-tech and fashionable' brand positioning, we see Viomi is at the forefront of this revolution. By steadily improving our products' perception of space and environment and upgrading our AI voice interaction technology, we have successfully transitioned our whole-house intelligence from the era of 'control', which emphasizes connectivity, to the era of 'perception', characterized by active intelligence and proactive service."

"Moving forward, we will continue to explore and capitalize on our strengths to optimize our operations, concentrating on three areas. First, we will further deepen our roots in the water purification industry and roll out more industry-leading products, creating value for consumers with higher quality, more advanced technology, and more comprehensive services. Second, we will keep focusing on fine-tuning our product mix and improving and iterating our whole-house intelligent product matrix to elevate our products' intelligent experience and deliver more helpful and user-friendly one-stop IoT home solutions. Finally, we will deepen our industrial layout, heighten our cost controls, increase our operational efficiency, and strengthen our product competitiveness to further improve operational performance. At the same time, we will maintain sufficient capital reserves to support these goals and consolidate our brand to drive robust and sustainable growth, sparing no effort to create long-term value for all of our users and shareholders," Mr. Chen concluded.

First Half 2023 Financial Results

REVENUE

Net revenues were RMB1,304.4 million (US$179.9 million), compared to RMB1,636.4 million for the same period of 2022. The decline was mainly due to a decrease in revenues from the IoT@Home portfolio as well as small appliances and others.

-  IoT @ Home portfolio. Revenues from the IoT @ Home portfolio decreased by 21.8% to RMB691.7 million (US$95.4 million) from RMB884.7 million for the same period of 2022. The decline was primarily due to the streamlining of SKUs in smart refrigerators and smart sweeper robots.

-  Home water solutions. Revenues from home water solutions increased by 1.7% to RMB286.6 million (US$39.5 million) from RMB281.9 million for the same period of 2022. The increase was primarily driven by the Company's effort to focus on water purification products.

-  Consumables. Revenues from consumables decreased by 21.0% to RMB135.9 million (US$18.7 million) from RMB172.1 million for the same period of 2022. The decline was primarily due to the decrease in the sales volume of water purifier filters sold to Xiaomi.

-  Small appliances and others. Revenues from small appliances and others decreased by 36.1% to RMB190.2 million (US$26.2 million) from RMB297.6 million for the same period of 2022, primarily due to the ongoing product portfolio adjustment within this category.

GROSS PROFIT

Gross profit was RMB286.8 million (US$39.6 million), compared to RMB391.5 million for the same period of 2022. Gross margin was 22.0%, compared to 23.9% for the same period of 2022. The decline was primarily due to a lower selling price of certain clean-up products, partially offset by increasing sales of higher-gross margin products as a result of product portfolio adjustments.

OPERATING EXPENSES

Total operating expenses decreased by 30.3% to RMB361.8 million (US$49.9 million) from RMB519.4 million for the same period of 2022, primarily attributable to the streamlined organizational structure and overall improved operational efficiency.

Research and development expenses decreased by 31.0% to RMB109.5 million (US$15.1 million) from RMB158.7 million for the same period of 2022, mainly driven by a decrease in personnel costs and optimization of the Company's ongoing research projects.

Selling and marketing expenses decreased by 33.4% to RMB213.5 million (US$29.4 million) from RMB320.7 million for the same period of 2022, mainly due to a decrease in marketing expenses, logistic expenses, and sales related personnel costs.

General and administrative expenses slightly decreased by 2.8% to RMB38.8 million (US$5.4 million), compared to RMB39.9 million for the same period of 2022, primarily due to a decrease in personnel costs, partially offset by an increase in the estimated allowance for accounts and notes receivables.

LOSS FROM OPERATIONS

Loss from operations decreased by 43.6% to RMB68.2 million (US$9.4 million) from RMB120.9 million for the same period of 2022.

Non-GAAP operating loss^[1] was RMB66.9 million (US$9.2 million), compared to RMB106.9 million for the same period of 2022.

NET LOSS

Net loss attributable to ordinary shareholders of the Company was RMB54.9 million (US$7.6 million), compared to RMB89.6 million for the same period of 2022.

Non-GAAP net loss attributable to ordinary shareholders^[2] of the Company was RMB53.7 million (US$7.4 million), compared to RMB75.6 million for the same period of 2022.

[1]   "Non-GAAP operating loss" is defined as loss from operation excluding share-based compensation expenses. See "Use of Non-GAAP Measures" and "Reconciliation of GAAP and Non-GAAP Results" included in this press release.

[2]   "Non-GAAP net loss attributable to ordinary shareholders of the Company" is defined as net loss attributable to ordinary shareholders of the Company excluding share-based compensation expenses. See "Use of Non-GAAP Measures" and "Reconciliation of GAAP and Non-GAAP Results" included in this press release.

BALANCE SHEET

As of June 30, 2023, the Company had cash and cash equivalents of RMB691.5 million (US$95.4 million), restricted cash of RMB128.1 million (US$17.7 million), short-term deposits of RMB260.2 million (US$35.9 million), and short-term investments of RMB64.3 million (US$8.9 million), compared to RMB737.1 million, RMB76.1 million, RMB171.5 million, and RMB197.1 million, respectively, as of December 31, 2022.

Conference Call

The Company's management will host a conference call at 8:00 a.m. Eastern Time on Thursday, August 24, 2023 (8:00 p.m. Beijing/Hong Kong time on August 24, 2023) to discuss financial results and answer questions from investors and analysts. Listeners may access the call by dialing:

United States (toll free):	+1 888-346-8982
International:	+1 412-902-4272
Hong Kong, SAR (toll free):	800-905-945
Hong Kong, SAR:	+852 3018-4992
Mainland China (toll free):	400-120-1203
Conference ID:	7994789

A telephone replay will be available one hour after the call until August 31, 2023 by dialing:

United States:	+1 877-344-7529
International:	+1 412-317-0088
Replay Access Code:	7994789

Additionally, a live and archived webcast of the conference call will be available at http://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 of Non-GAAP Measures 

The Company uses non-GAAP operating income, non-GAAP net income, non-GAAP net income attributable to ordinary shareholders of the Company, non-GAAP basic and diluted net income per ordinary share and non-GAAP basic and diluted net income per American depositary share ("ADS"), which are non-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 ordinary shareholders of the Company is net income attributable to ordinary shareholders excluding share-based compensation expenses. Non-GAAP basic and diluted net income per ordinary share is non-GAAP net income attributable to ordinary shareholders divided by weighted average number of ordinary shares used in the calculation of non-GAAP basic and diluted net income per ordinary share. Non-GAAP basic and diluted net income per ADS is non-GAAP net income attributable to ordinary shareholders divided by weighted average number of ADS used in the calculation of non-GAAP basic and diluted net income per ADS. The non-GAAP adjustments do not have any tax impact as share-based compensation expenses are non-deductible for income tax purpose.

The Company believes that non-GAAP financial measures help identify underlying trends in its business by excluding the impact of share-based compensation expenses, which are non-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 historical non-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. Reconciliations of the Company's non-GAAP financial measures to the most directly comparable GAAP measures are included at the end of this press release.

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 RMB7.2513 to US$1.00, the effective noon buying rate for June 30, 2023 as set forth in the H.10 statistical release of the Federal Reserve Board. No representation is made that the RMB amounts could have been, or could be, converted, realized or settled into US$ at that rate on for June 30, 2023, 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 Fourth 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 and relevant regulatory environment relating to the Company's industry and/or aspects of the business operations 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
Claire Ji
E-mail: ir@viomi.com.cn 

Piacente Financial Communications
Hui Fan
Tel: +86-10-6508-0677
E-mail: viomi@tpg-ir.com 

In the United States:

Piacente Financial Communications
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 June 30,
		2022		2023		2023
		RMB		RMB		US$
Assets
Current assets
Cash and cash equivalents		737,139		691,458		95,356
Restricted cash		76,070		128,133		17,670
Short-term deposits		171,541		260,181		35,881
Short-term investments		197,058		64,290		8,866
Accounts and notes receivable from third parties     (net of allowance of RMB87,563 and RMB98,205,     as of December 31, 2022 and June 30, 2023,     respectively)		241,652		295,933		40,811
Accounts receivable from a related party (net of     allowance of RMB272 and RMB249 as of     December 31, 2022 and June 30, 2023,     respectively)		360,497		330,161		45,531
Other receivables from related parties (net of     allowance of RMB19 and RMB29 as of December     31, 2022 and June 30, 2023, respectively)		25,021		39,030		5,382
Inventories		502,291		509,860		70,313
Prepaid expenses and other current assets		183,708		202,831		27,973
Total current assets		2,494,977		2,521,877		347,783
Non-current assets
Prepaid expenses and other non-current assets		22,856		19,366		2,671
Property, plant and equipment, net		236,432		256,134		35,322
Deferred tax assets		12,660		6,179		852
Intangible assets, net		13,671		12,265		1,691
Right-of-use assets, net		14,649		8,111		1,119
Land use rights, net		60,449		59,813		8,249
Long-term deposits-non-current portion		30,000		30,000		4,137
Total non-current assets		390,717		391,868		54,041
Total assets		2,885,694		2,913,745		401,824
Liabilities and shareholders' equity
Current liabilities
Accounts and notes payable		844,058		821,473		113,286
Advances from customers		118,369		132,169		18,227
Amount due to related parties		11,548		4,157		573
Accrued expenses and other liabilities		308,845		275,656		38,015
Short-term borrowing		-		100,000		13,791
Income tax payables		16,674		17,416		2,402
Lease liabilities due within one year		7,233		4,096		565
Long-term borrowing due within one year		20,215		25,735		3,549
Total current liabilities		1,326,942		1,380,702		190,408
Non-current liabilities
Accrued expenses and other liabilities		8,245		10,397		1,434
Long-term borrowing		114,552		129,355		17,839
Lease liabilities		6,792		2,451		338
Total non-current liabilities		129,589		142,203		19,611
Total liabilities		1,456,531		1,522,905		210,019

 

 

 

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 June 30,
		2022		2023		2023
		RMB		RMB		US$
Shareholders' equity
Class A Ordinary Shares (US$0.00001 par value;    4,800,000,000 shares authorized; 104,539,463    and 103,340,963 shares issued and outstanding as    of December 31, 2022 and June 30, 2023,    respectively)		6		6		1
Class B Ordinary Shares (US$0.00001 par value;    150,000,000 shares authorized; 102,854,550 and    102,764,550 shares issued and outstanding as of    December 31, 2022 and June 30, 2023,    respectively)		6		6		1
Treasury stock		(74,703)		(77,687)		(10,714)
Additional paid-in capital		1,357,397		1,356,216		187,031
Retained earnings		174,385		119,459		16,474
Accumulated other comprehensive loss		(24,335)		(1,209)		(167)
Total equity attributable to shareholders of the Company		1,432,756		1,396,791		192,626
Non-controlling interests		(3,593)		(5,951)		(821)
Total shareholders' equity		1,429,163		1,390,840		191,805
Total liabilities and shareholders' equity		2,885,694		2,913,745		401,824

 

 

 

VIOMI TECHNOLOGY CO., LTD
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF
COMPREHENSIVE INCOME
(All amounts in thousands, except shares, ADS, per share and per ADS data)
			Six Months Ended
			June 30, 2022	June 30, 2023	June 30, 2023
			RMB	RMB	US$
Net revenues:
A related party			623,756	571,307	78,787
Third parties			1,012,603	733,084	101,097
Total net revenues			1,636,359	1,304,391	179,884
Cost of revenues			(1,244,861)	(1,017,584)	(140,332)
Gross profit			391,498	286,807	39,552
Operating expenses
Research and development expenses			(158,746)	(109,494)	(15,100)
Selling and marketing expenses			(320,744)	(213,544)	(29,449)
General and administrative expenses			(39,901)	(38,801)	(5,351)
Total operating expenses			(519,391)	(361,839)	(49,900)
Other income, net			7,022	6,827	941
Loss from operations			(120,871)	(68,205)	(9,407)
Interest income and short-term investment income, net			7,237	15,595	2,151
Other non-operating income			1,199	1,839	254
Loss before income tax expenses			(112,435)	(50,771)	(7,002)
Income tax credits (expenses)			18,349	(6,513)	(898)
Net loss			(94,086)	(57,284)	(7,900)
Less: Net loss attributable to the non-controlling interest     shareholders			(4,485)	(2,358)	(325)
Net loss attributable to ordinary shareholders of the     Company			(89,601)	(54,926)	(7,575)

 

 

 

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)
			Six Months Ended
			June 30, 2022	June 30, 2023	June 30, 2023
			RMB	RMB	US$
Net loss attributable to ordinary shareholders of the     Company			(89,601)	(54,926)	(7,575)
Other comprehensive income, net of tax:
Foreign currency translation adjustment			25,542	23,126	3,189
Total comprehensive loss attributable to ordinary     shareholders of the Company			(64,059)	(31,800)	(4,386)
Net loss per ADS*
-Basic			(1.29)	(0.80)	(0.11)
-Diluted			(1.29)	(0.80)	(0.11)
Weighted average number of ADS used in calculating net loss     per ADS
-Basic			69,598,770	68,944,237	68,944,237
-Diluted			69,598,770	68,944,237	68,944,237
Net loss per share attributable to ordinary shareholders of the Company
-Basic			(0.43)	(0.27)	(0.04)
-Diluted			(0.43)	(0.27)	(0.04)
Weighted average number of ordinary shares used in calculating net loss per share
-Basic			208,796,309	206,832,712	206,832,712
-Diluted			208,796,309	206,832,712	206,832,712
*Each ADS represents 3 ordinary shares.
(1) Share-based compensation was allocated in operating expenses as follows:
			Six Months Ended
			June 30, 2022	June 30, 2023	June 30, 2023
			RMB	RMB	US$
General and administrative expenses			3,616	1,173	162
Research and development expenses			9,183	131	18
Selling and marketing expenses			1,175	(44)	(6)

 

 

 

VIOMI TECHNOLOGY CO., LTD
Reconciliations of GAAP and Non-GAAP Results
(All amounts in thousands, except shares, ADS, per share and per ADS data)
			Six Months Ended
			June 30, 2022	June 30,  2023	June 30, 2023
			RMB	RMB	US$
Loss from operations			(120,871)	(68,205)	(9,407)
Share-based compensation expenses			13,974	1,260	174
Non-GAAP operating loss			(106,897)	(66,945)	(9,233)
Net loss			(94,086)	(57,284)	(7,900)
Share-based compensation expenses			13,974	1,260	174
Non-GAAP net loss			(80,112)	(56,024)	(7,726)
Net loss attributable to ordinary shareholders of the Company			(89,601)	(54,926)	(7,575)
Share-based compensation expenses			13,974	1,260	174
Non-GAAP net loss attributable to ordinary shareholders of     the Company			(75,627)	(53,666)	(7,401)
Non-GAAP net loss per ADS
-Basic			(1.09)	(0.78)	(0.11)
-Diluted			(1.09)	(0.78)	(0.11)
Weighted average number of ADS used in calculating Non-GAAP net loss     per ADS
-Basic			69,598,770	68,944,237	68,944,237
-Diluted			69,598,770	68,944,237	68,944,237
Non-GAAP net loss per ordinary share
-Basic
-Diluted			(0.36)	(0.26)	(0.04)
			(0.36)	(0.26)	(0.04)
Weighted average number of ordinary shares used in calculating Non-     GAAP net loss per share
-Basic			208,796,309	206,832,712	206,832,712
-Diluted			208,796,309	206,832,712	206,832,712
Note: The non-GAAP adjustments does not have any tax impact as share-based compensation expenses are non-deductible for income tax purpose.

 

 

 

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SOURCE Viomi Technology Co., Ltd