Viomi Technology Co., Ltd Reports First Quarter 2020 Unaudited Financial Results
Viomi Technology Co., Ltd. (NASDAQ: VIOT) reported its unaudited financial results for Q1 2020, revealing net revenues of RMB765.5 million (US$108.1 million), up 13.2% year-over-year. However, net income dropped to RMB17.8 million (US$2.5 million) from RMB41.3 million in Q1 2019. Gross margin declined to 18.8% from 28.0% due to a shift in product mix and lower selling prices. Despite challenges from COVID-19, household users grew to over 3.7 million. The company anticipates Q2 2020 revenue between RMB1.25 billion and RMB1.28 billion, reflecting a growth outlook of 7.7% to 10.3%.
- Net revenues increased by 13.2% year-over-year to RMB765.5 million.
- Household users grew to over 3.7 million, up from 2.0 million in Q1 2019.
- Expecting Q2 2020 revenues between RMB1.25 billion and RMB1.28 billion, a growth of 7.7% to 10.3%.
- Net income decreased to RMB17.8 million from RMB41.3 million in Q1 2019.
- Gross margin fell to 18.8% compared to 28.0% from the previous year.
- Revenue from smart water purification systems decreased by 10.0% year-over-year.
GUANGZHOU, China, May 26, 2020 (GLOBE NEWSWIRE) -- 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 of13.2% from the first quarter of 2019. - Gross margin was
18.8% . - Net income was RMB17.8 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 to17.9% as of the end of 2019 and15.2% as of the end of the first quarter of 2019. - Number of Viomi offline experience stores was approximately 1,500, compared to approximately 1,700 as of the end of 2019.
1 “Non-GAAP net income” is defined as net income excluding share-based compensation expenses. See “Reconciliation of GAAP and Non-GAAP Results” at the end of this press release.
“Despite challenging industry conditions and ongoing macro uncertainties as a result of the COVID-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
“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 our state-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 premium AI-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 among end-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 of COVID-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
IoT-enabled smart home products. Revenues from IoT-enabled smart home products increased by
- 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-digit year-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 of COVID-19.
Consumable products. Revenues from consumable products increased by
Value-added businesses. Revenues from value-added businesses increased by
Cost of revenues increased by
Gross profit was RMB144.0 million (US
Total operating expenses decreased by
Research and development expenses increased by
Selling and marketing expenses decreased by
General and administrative expenses decreased by
Income from operations was RMB12.5 million (US
Income before income tax expenses was RMB17.9 million (US
Income tax expenses were RMB0.1 million (US
Net income was RMB17.8 million (US
Non-GAAP net income was RMB31.4 million (US
2 “Non-GAAP operating income” is defined as income from operation excluding share-based compensation expenses. See “Reconciliation of GAAP and Non-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
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% to10.3% .
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:
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| 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:
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| International: | +1-412-317-0088 |
| Replay Passcode: | 10144139 |
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 the Company, non-GAAP net income attributable to ordinary shareholders, non-GAAP basic and diluted net income per ordinary shares and non-GAAP basic and diluted net income per 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 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. 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.
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
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, | |||||
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| 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 other non-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 | |||
| Total non-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 | |||
| Total non-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, | ||||||
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| RMB | RMB | US$ | |||||
| Shareholders’ equity | |||||||
| Class A Ordinary Shares (US | 6 | 6 | 1 | ||||
| Class B Ordinary Shares (US | 6 | 6 | 1 | ||||
| Additional paid-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: | |||||||
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| 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 | ||||
| Other non-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 the non-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$ | |||
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| 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 | ||||
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| 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 and Non-GAAP Results
(All amounts in thousands, except shares, ADS, per share and per ADS data)
| Three Months Ended | ||||
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| 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 calculating Non-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 calculating Non-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: The non-GAAP adjustments do not have any tax impact as share-based compensation expenses are non-deductible for income tax purpose.
FAQ
What were Viomi's Q1 2020 net revenues?
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What is Viomi's revenue outlook for Q2 2020?
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