Viomi Technology Co., Ltd Reports Second Quarter 2020 Unaudited Financial Results
Viomi Technology reported Q2 2020 financial results with net revenues of RMB1,684.4 million (US$238.4 million), a 45.2% year-over-year increase. Gross margin declined to 14.3%, down from 26.6% in Q2 2019. Net income decreased to RMB10.3 million (US$1.5 million), significantly lower than RMB88.9 million in Q2 2019. The company maintains a positive outlook for Q3 2020, expecting net revenues of RMB1.40 to RMB1.45 billion, with 30.8%-35.5% growth. The total number of household users grew to 4.2 million with 19.0% using multiple connected products.
- Year-over-year net revenue growth of 45.2% to RMB1,684.4 million.
- Cumulative household users increased to over 4.2 million.
- Successful product launches, including air conditioning systems.
- Gross margin declined to 14.3% from 26.6% in Q2 2019.
- Net income decreased to RMB10.3 million from RMB88.9 million in Q2 2019.
- Revenues from smart water purification systems dropped by 22.6%.
GUANGZHOU, China, Aug. 24, 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 second quarter ended June 30, 2020.
Second Quarter 2020 Financial and Operating Highlights
- Net revenues reached RMB1,684.4 million (US
$238.4 million ), an increase of45.2% from the second quarter of 2019. - Gross margin was
14.3% . - Net income was RMB10.3 million (US
$1.5 million ). - Non-GAAP net income1 was RMB41.5 million (US
$5.9 million ). - Number of cumulative household users reached more than 4.2 million, compared to approximately 3.7 million as of the end of the first quarter of 2020 and approximately 2.3 million as of the end of the second quarter of 2019.
- Percentage of household users with at least two connected products reached
19.0% , compared to18.4% as of the end of the first quarter of 2020 and16.1% as of the end of the second quarter of 2019. - Number of Viomi offline experience stores remained steady at approximately 1,500.
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.
“We saw meaningful improvements in operating conditions in the second quarter as both the industry and the overall economy continued to rebound from the impact of COVID-19 earlier this year. Driven by a robust ‘618’ sales season, combined with successful new product launches such as our Viomi-branded air conditioning systems, we are pleased to report that our second quarter growth was significantly stronger than expected,” said Mr. Xiaoping Chen, Founder, Chairman of the Board of Directors and Chief Executive Officer of Viomi.
“The backbone of our growth over the years has been our continued product innovation and new product launches under our IoT @ Home strategic framework. With the recent successful introductions of our Viomi-branded air conditioning systems and our 21Face Interactive Smart Screen (TV), we now have a comprehensive presence across the entire range of major scenarios in the home environment. We also achieved positive advancements in developing additional content partnerships for our flagship 21Face large-screen refrigerators, having entered into a strategic collaboration agreement with Kugou Music, a leading interactive digital music-related services provider in China and subsidiary of Tencent Music Entertainment Group. This partnership is in line with our 5G IoT strategy, and will enrich our content offerings as well as enhance the cross-scenario and cross-screen interactivity of Viomi’s large-screen products,” added Mr. Chen. “To provide innovative and exciting content for the imminent 5G + IoT era, we continue to seek strategic partnerships with entertainment and social media platforms. We believe these collaborations will help further increase our user stickiness, create additional potential monetization channels and further differentiate us from our peers.
“The recent ‘618’ online shopping festival and related promotional events were positive signs of an overall recovery trend in the industry. Looking ahead to the second half, the broader rebound in market demand, together with the ramp-up of many of our newly launched products, including air conditioning systems as well as the next-generation Viomi-branded water purifiers and various small appliances products, will provide us with the foundation to further strengthen our industry positioning, enhance our brand recognition and deliver attractive returns. Having successfully navigated these unprecedented and challenging market conditions in the first half of 2020, we will continue to execute our long-term strategies with a focus on high-quality growth, stable cash flows and prudent risk control, while positioning our Company to realize greater operational efficiencies and economies of scale,” concluded Mr. Chen.
“Despite the lingering impact of COVID-19 as well as ongoing macro uncertainties, we achieved year-over-year net revenues growth of
“While future industry-wide uncertainties and challenges will be difficult to fully predict, based on our assessment of the latest trends, we are cautiously optimistic that our financial strength, operational flexibility and strategic direction will allow us to continue delivering robust growth in the second half,” Mr. Jiang concluded.
Second Quarter 2020 Financial Results
Net revenues increased by
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
22.6% to RMB266.8 million (US$37.8 million ) from RMB344.8 million for the second quarter of 2019. The decline was primarily due to decreases in average selling prices, which offset the continued year-over-year growth in sales volumes. - Smart kitchen and other smart products. Revenues from smart kitchen and other smart products increased by
89.3% to 1,062.3 million (US$150.4 million ) from RMB561.2 million for the second quarter of 2019. The growth was primarily driven by the successful launch and continued rollout of certain products, in particular Viomi-branded air conditioning systems and Xiaomi-branded sweeper robots.
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 RMB241.0 million (US
Total operating expenses increased by
Research and development expenses were RMB60.7 million (US
Selling and marketing expenses increased by
General and administrative expenses decreased by
Income from operations was RMB8.7 million (US
Income before income tax expenses was RMB16.4 million (US
Income tax expenses were RMB6.1 million (US
Net income was RMB10.3 million (US
Non-GAAP net income was RMB41.5 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 June 30, 2020, the Company had cash and cash equivalents of RMB634.2 million (US
Outlook
For the third quarter of 2020, the Company currently expects:
- Net revenues to be between RMB1.40 billion and RMB1.45 billion, representing a year-over-year growth of approximately
30.8% to35.5% .
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 Monday, August 24, 2020 (8:00 p.m. Beijing Time on August 24, 2020) to discuss financial results and answer questions from investors and analysts. Listeners may access the call by dialing:
| US (Toll Free): | +1-888-346-8982 |
| International: | +1-412-902-4272 |
| Mainland China (Toll Free): | 400-120-1203 |
| Hong Kong (Toll Free): | 800-905-945 |
| Hong Kong: | +852-3018-4992 |
| Conference ID: | 10147261 |
A telephone replay will be available one hour after the call until August 31, 2020 by dialing:
| US (Toll Free): | +1-877-344-7529 |
| International: | +1-412-317-0088 |
| Replay Passcode: | 10147261 |
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 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 RMB7.0651 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 June 30, | |||||
| 2019 | 2020 | 2020 | ||||
| RMB | RMB | US$ | ||||
| Assets | ||||||
| Current assets | ||||||
| Cash and cash equivalents | 972,438 | 634,163 | 89,760 | |||
| Restricted cash | 30,567 | 45,430 | 6,430 | |||
| Short-term deposits | 60,000 | 72,636 | 10,281 | |||
| Short-term investments | 316,201 | 294,269 | 41,651 | |||
| Accounts and notes receivable from third parties (net of allowance of RMB2,006 and RMB4,216 as of December 31, 2019 and June 30, 2020, respectively) | 316,189 | 405,889 | 57,450 | |||
| Accounts receivable from a related party (net of allowance of nil and RMB73 as of December 31, 2019 and June 30, 2020, respectively) | 707,947 | 725,017 | 102,619 | |||
| Other receivables from related parties (net of allowance of nil and RMB12 as of December 31, 2019 and June 30, 2020, respectively) | 23,944 | 124,398 | 17,607 | |||
| Inventories | 418,015 | 412,217 | 58,347 | |||
| Prepaid expenses and other current assets | 62,314 | 82,106 | 11,621 | |||
| Total current assets | 2,907,615 | 2,796,125 | 395,766 | |||
| Non-current assets | ||||||
| Prepaid expenses and other non-current assets | 11,170 | 33,111 | 4,687 | |||
| Property, plant and equipment, net | 67,293 | 63,112 | 8,933 | |||
| Deferred tax assets | 12,276 | 15,587 | 2,206 | |||
| Intangible assets, net | 4,357 | 5,668 | 802 | |||
| Right-of-use assets, net | 19,762 | 21,989 | 3,112 | |||
| Long-term deposits | - | 60,000 | 8,492 | |||
| Total non-current assets | 114,858 | 199,467 | 28,232 | |||
| Total assets | 3,022,473 | 2,995,592 | 423,998 | |||
| Liabilities and shareholders’ equity | ||||||
| Current liabilities | ||||||
| Accounts and notes payable | 1,043,159 | 1,113,989 | 157,675 | |||
| Advances from customers | 103,150 | 75,056 | 10,623 | |||
| Amount due to related parties | 25,106 | 27,487 | 3,891 | |||
| Accrued expenses and other liabilities | 325,042 | 286,313 | 40,525 | |||
| Short-term borrowing | 95,868 | - | - | |||
| Income tax payables | 33,522 | 21,332 | 3,019 | |||
| Lease liabilities due within one year | 6,993 | 8,476 | 1,200 | |||
| Total current liabilities | 1,632,840 | 1,532,653 | 216,933 | |||
| Non-current liabilities | ||||||
| Accrued expenses and other liabilities | 1,795 | 3,872 | 548 | |||
| Lease liabilities | 13,391 | 14,393 | 2,037 | |||
| Total non-current liabilities | 15,186 | 18,265 | 2,585 | |||
| Total liabilities | 1,648,026 | 1,550,918 | 219,518 | |||
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, | ||||||||
| 2019 | 2020 | 2020 | |||||||
| RMB | RMB | US$ | |||||||
| Shareholders’ equity | |||||||||
| Class A Ordinary Shares (US | 6 | 6 | 1 | ||||||
| Class B Ordinary Shares (US | 6 | 6 | 1 | ||||||
| Treasury stock | - | (14,325 | ) | (2,028 | ) | ||||
| Additional paid-in capital | 1,192,332 | 1,241,120 | 175,669 | ||||||
| Retained earnings | 195,596 | 220,583 | 31,221 | ||||||
| Accumulated other comprehensive loss | (19,145 | ) | (8,670 | ) | (1,227 | ) | |||
| Total equity attributable to shareholders of the Company | 1,368,795 | 1,438,720 | 203,637 | ||||||
| Non-controlling interests | 5,652 | 5,954 | 843 | ||||||
| Total shareholders’ equity | 1,374,447 | 1,444,674 | 204,480 | ||||||
| Total liabilities and shareholders’ equity | 3,022,473 | 2,995,592 | 423,998 | ||||||
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 | |||||||
| June 30, 2019 | June 30, 2020 | June 30, 2020 | |||||
| RMB | RMB | US$ | |||||
| Net revenues: | |||||||
| A related party | 487,736 | 813,012 | 115,074 | ||||
| Third parties | 672,417 | 871,352 | 123,332 | ||||
| Total net revenues | 1,160,153 | 1,684,364 | 238,406 | ||||
| Cost of revenues (including RMB5,025 and RMB217,482 with related parties for the three months ended June 30, 2019 and 2020, respectively) | (851,876 | ) | (1,443,402 | ) | (204,301 | ) | |
| Gross profit | 308,277 | 240,962 | 34,105 | ||||
| Operating expenses(1) | |||||||
| Research and development expenses (including nil and RMB541 with a related party for the three months ended June 30, 2019 and 2020, respectively) | (59,573 | ) | (60,670 | ) | (8,587 | ) | |
| Selling and marketing expenses (including RMB22,434 and RMB21,338, with related parties for the three months ended June 30, 2019 and 2020, respectively) | (129,498 | ) | (162,107 | ) | (22,945 | ) | |
| General and administrative expenses | (22,219 | ) | (16,665 | ) | (2,359 | ) | |
| Total operating expenses | (211,290 | ) | (239,442 | ) | (33,891 | ) | |
| Other income | 1,877 | 7,220 | 1,022 | ||||
| Income from operations | 98,864 | 8,740 | 1,236 | ||||
| Interest income and investment income | 4,002 | 7,097 | 1,005 | ||||
| Other non-operating income | 435 | 594 | 84 | ||||
| Income before income tax expenses | 103,301 | 16,431 | 2,325 | ||||
| Income tax expenses | (14,364 | ) | (6,114 | ) | (865 | ) | |
| Net income | 88,937 | 10,317 | 1,460 | ||||
| Less: Net income attributable to the non-controlling interest shareholders | 556 | 460 | 65 | ||||
| Net income attributable to ordinary shareholders of the Company | 88,381 | 9,857 | 1,395 | ||||
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 | ||||||
| June 30, 2019 | June 30, 2020 | June 30, 2020 | ||||
| RMB | RMB | US$ | ||||
| Net income attributable to the Company | 88,381 | 9,857 | 1,395 | |||
| Other comprehensive (loss)/income, net of tax | ||||||
| Foreign currency translation adjustment | 14,415 | (839 | ) | (119 | ) | |
| Total comprehensive income attributable to the Company | 102,796 | 9,018 | 1,276 | |||
| Net income per ADS* | ||||||
| -Basic | 1.28 | 0.14 | 0.02 | |||
| -Diluted | 1.23 | 0.14 | 0.02 | |||
| Weighted average number of ADS used in calculating net income per ADS | ||||||
| -Basic | 69,266,667 | 69,648,247 | 69,648,247 | |||
| -Diluted | 72,060,847 | 71,654,656 | 71,654,656 | |||
| Net income per share attributable to ordinary shareholders of the Company | ||||||
| -Basic | 0.43 | 0.05 | 0.01 | |||
| -Diluted | 0.41 | 0.05 | 0.01 | |||
| Weighted average number of ordinary shares used in calculating net income per share | ||||||
| -Basic | 207,800,000 | 208,944,742 | 208,944,742 | |||
| -Diluted | 216,182,540 | 214,963,969 | 214,963,969 | |||
| *Each ADS represents 3 ordinary shares. | ||||||
| (1) Share-based compensation was allocated in operating expenses as follows: | ||||||
| Three Months Ended | ||||||
| June 30, 2019 | June 30, 2020 | June 30, 2020 | ||||
| RMB | RMB | US$ | ||||
| General and administrative expenses | 1,764 | 6,410 | 907 | |||
| Research and development expenses | 5,431 | 22,945 | 3,248 | |||
| Selling and marketing expenses | 3,136 | 1,863 | 264 | |||
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 | ||||
| June 30, 2019 | June 30, 2020 | June 30, 2020 | ||
| RMB | RMB | US$ | ||
| Income from operations | 98,864 | 8,740 | 1,236 | |
| Share-based compensation expenses | 10,331 | 31,218 | 4,419 | |
| Non-GAAP operating income | 109,195 | 39,958 | 5,655 | |
| Net income | 88,937 | 10,317 | 1,460 | |
| Share-based compensation expenses | 10,331 | 31,218 | 4,419 | |
| Non-GAAP net income | 99,268 | 41,535 | 5,879 | |
| Net income attributable to the Company | 88,381 | 9,857 | 1,395 | |
| Share-based compensation expenses | 10,331 | 31,218 | 4,419 | |
| Non-GAAP net income attributable to the Company | 98,712 | 41,075 | 5,814 | |
| Net income attributable to ordinary shareholders | 88,381 | 9,857 | 1,395 | |
| Share-based compensation expenses | 10,331 | 31,218 | 4,419 | |
| Non-GAAP net income attributable to ordinary shareholders | 98,712 | 41,075 | 5,814 | |
| Non-GAAP net income per ADS | ||||
| -Basic | 1.43 | 0.59 | 0.08 | |
| -Diluted | 1.37 | 0.57 | 0.08 | |
| Weighted average number of ADS used in calculating Non-GAAP net income per ADS | ||||
| -Basic | 69,266,667 | 69,648,247 | 69,648,247 | |
| -Diluted | 72,060,847 | 71,654,656 | 71,654,656 | |
| Non-GAAP net income per ordinary share | ||||
| -Basic | 0.48 | 0.20 | 0.03 | |
| -Diluted | 0.46 | 0.19 | 0.03 | |
| Weighted average number of ordinary shares used in calculating Non-GAAP net income per share | ||||
| -Basic | 207,800,000 | 208,944,742 | 208,944,742 | |
| -Diluted | 216,182,540 | 214,963,969 | 214,963,969 | |
Note: The non-GAAP adjustments do not have any tax impact as share-based compensation expenses are non-deductible for income tax purpose.
FAQ
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