Financial Data and Key Metrics Changes - Total revenue for Q2 2022 was $62.5 million, a sequential growth of 13.1% but a year-over-year decline of 26.1% [4][20] - IoT PaaS revenue decreased by 38.1% year-over-year to $47.6 million, while SaaS and other segments grew by 114.3% year-over-year to $7.2 million [4][20] - Gross margin for the quarter was stable at 42.8%, with IoT PaaS gross margin at 42.5% [6][21] - Non-GAAP operating loss narrowed by 15.9% to $22.3 million, and non-GAAP net loss narrowed by 19.1% to $18.7 million [25] Business Line Data and Key Metrics Changes - IoT PaaS business saw a decline in DBNER to 84% due to inventory pressures and reduced orders from customers [6] - SaaS and other segments maintained over 110% year-over-year growth for ten consecutive quarters [4] - The number of IoT PaaS premium customers decreased from 285 to 267 year-over-year [8] Market Data and Key Metrics Changes - Major markets like the U.S. and Europe experienced significant slowdowns, while China showed slight growth [20] - Consumer electronics retail quantity in the U.S. was down about 30% year-over-year, with European customers reporting similar declines [32][33] - In China, smartphone shipments declined by around 15% year-over-year, and total retail sales of consumer goods fell by 4.6% [34] Company Strategy and Development Direction - The company aims to leverage technology and product strengths to explore new opportunities despite economic challenges [17] - Focus on expanding into stable industries beyond consumer electronics, including industrial and energy-related sectors [20][36] - Continued investment in product and technology iterations, with a focus on efficiency and profitability [19][24] Management's Comments on Operating Environment and Future Outlook - Management does not expect a demand recovery until inflation improves and inventory backlogs are cleared [31] - The global economic environment is complex, with rising energy and commodity prices adding downward pressure [34] - The company remains committed to achieving breakeven as a top priority [46] Other Important Information - The company repurchased approximately 11.2 million ADS for about $30 million during the quarter, reflecting confidence in long-term growth prospects [28] - Cash and short-term investments totaled $951.5 million as of June 30, 2022, providing sufficient liquidity for future needs [27] Q&A Session Summary Question: What is the management outlook in terms of the demand inflection point? - Management has not seen signs of a turning point in overseas demand for IoT devices, expecting improvement only with significant inflation reduction and inventory clearance [31][32] Question: What are the plans for headcount and cost control measures in the second half? - The company will continue to manage operations and drive expense control while dynamically evaluating employee numbers based on market demand [42][46]

Tuya, Inc. (NYSE:TUYA) Q1 2022 Earnings Conference Call June 14, 2022 8:00 PM ET Company Participants Reg Chai - Capital Market Associate Director Jerry Wang - Founder, CEO and Director Jessie Liu - Senior VP, CFO and Director Conference Call Participants Yang Liu - Morgan Stanley Operator Good morning and good evening, ladies and gentlemen. Thank you for standing by, and welcome to Tuya Incorporated First Quarter 2022 Earnings Conference Call. [Operator Instructions] I'll now turn the call over to the fir ...

Financial Data and Key Metrics Changes - In Q4 2021, total revenue reached $75 million, exceeding previous guidance by approximately 3% [20] - For the full year 2021, total revenue was $302.1 million, up 67.9% year-over-year, while IoT PaaS revenue was $261.4 million, up 72.3% year-over-year [20][21] - Gross profit for Q4 increased by 34.1% to $32.4 million, with gross margin improving to 43.2% from 38.3% [25] - The dollar-based net expansion rate for IoT PaaS was 153% for the trailing 12 months ended December 31, 2021 [21] Business Line Data and Key Metrics Changes - SaaS and other business segments achieved year-over-year growth of more than 170% for four consecutive quarters, with revenue increasing to $7.3 million in Q4 and $18.6 million for the full year [5][23] - Premium IoT PaaS customers increased from 188 to 311, contributing approximately 87.3% of IoT PaaS revenue [21] - Home safety and sensor products, home appliances, and entertainment energy-saving products grew significantly faster than electrical and lighting products [21] Market Data and Key Metrics Changes - The IoT PaaS business acquired nearly 1,000 new customers in Q4, with a total customer base increase of 41% year-over-year [7] - Emerging markets, particularly in Asia and South America, showed significantly higher growth rates compared to developed markets [11] - China's cross-border e-commerce brands accounted for about 30% of the sales of products powered by Tuya [22] Company Strategy and Development Direction - The company aims to expand its partnerships and product offerings, focusing on high-growth categories such as home safety, appliances, and outdoor products [10][12] - Tuya plans to invest in research and development to maintain its competitive edge and capitalize on the under-penetrated market [18] - The strategy includes optimizing operational efficiency and focusing on cost-effective solutions to navigate macroeconomic challenges [38][52] Management's Comments on Operating Environment and Future Outlook - Management expressed caution regarding the impact of high inflation and geopolitical tensions on consumer demand and overall business performance [34][36] - The company anticipates challenges in 2022 but remains optimistic about growth in its IoT PaaS business, particularly in China [38][52] - Management highlighted the importance of maintaining a strong cash position to weather economic uncertainties and capitalize on strategic opportunities [51] Other Important Information - The company repurchased approximately 4.3 million ADS for a total consideration of about $25.1 million, reflecting confidence in long-term growth prospects [28] - The company has a cash balance of $1.07 billion as of December 31, 2021, sufficient to meet current liquidity and working capital needs [27] Q&A Session Summary Question: Impact of the Ukraine war on IoT PaaS from multinational customers - Management is closely monitoring inflation and economic conditions, noting that high inflation is suppressing consumer demand, particularly for non-essential goods [34][36] Question: Growth strategy for SaaS and other key products - The focus will remain on developing SaaS business in China, with tailored strategies for each segment to ensure robust growth [39][41] Question: Gross margin outlook in the current supply chain environment - Management expects gross margins to remain stable or slightly higher, with a focus on optimizing costs and increasing revenue from higher-margin segments [44][46] Question: Adjustments to business operations due to macroeconomic pressures - The company plans to strengthen its core value proposition, improve customer satisfaction, and enhance operational efficiency to navigate the challenging environment [51][52]

[Report Overview](index=1&type=section&id=Report%20Overview) [Fourth Quarter 2021 Financial Highlights](index=1&type=section&id=Fourth%20Quarter%202021%20Financial%20Highlights) Tuya Inc's Q4 2021 revenue grew 19.0% YoY to $75.0 million, driven by a 204.8% surge in SaaS and other revenue | Metric | Fourth Quarter 2021 (Million USD) | YoY Growth (%) | | :--- | :--- | :--- | | Total Revenue | 75.0 | 19.0% | | IoT PaaS Revenue | 62.1 | 13.9% | | SaaS and Other Revenue | 7.3 | 204.8% | | Overall Gross Margin | 43.2% | +4.9pp | | IoT PaaS Gross Margin | 42.5% | +2.4pp | | Operating Margin | -68.8% | -39.1pp | | Non-GAAP Operating Margin | -45.3% | -20.5pp | | Cash, Cash Equivalents & Short-term Investments (as of 12/31/2021) | 1,070.0 | - | | Share Repurchase | 25.1 | - | [Full Year 2021 Financial Highlights](index=1&type=section&id=Full%20Year%202021%20Financial%20Highlights) For fiscal year 2021, total revenue grew 67.9% to $302.1 million, with strong performance in both IoT PaaS and SaaS segments | Metric | Fiscal Year 2021 (Million USD) | YoY Growth (%) | | :--- | :--- | :--- | | Total Revenue | 302.1 | 67.9% | | IoT PaaS Revenue | 261.4 | 72.3% | | SaaS and Other Revenue | 18.6 | 203.0% | | Overall Gross Margin | 42.3% | +7.9pp | | Operating Margin | -60.8% | -22.0pp | | Non-GAAP Operating Margin | -38.9% | -5.3pp | | Share Repurchase | 53.6 | - | [Operating Highlights](index=2&type=section&id=Operating%20Highlights) The company saw significant growth in its customer base and registered developers in 2021, maintaining a high dollar-based net expansion rate | Metric | Fourth Quarter 2021 | Fiscal Year 2021 | YoY Growth (%) | | :--- | :--- | :--- | :--- | | IoT PaaS Customers | ~3,300 | ~5,500 | - | | Total Customers | ~4,800 | ~8,400 | - | | Premium IoT PaaS Customers (as of 12/31/2021) | - | 311 | - | | Premium IoT PaaS Customers' Contribution to IoT PaaS Revenue (Q4) | 87.3% | - | - | | Premium IoT PaaS Customers' Contribution to IoT PaaS Revenue (FY) | - | 88.6% | - | | IoT PaaS Dollar-Based Net Expansion Rate (DBNER) (as of 12/31/2021) | - | 153% | -28pp (YoY) | | Registered Developers (as of 12/31/2021) | - | >510,000 | 94.7% | [Management Commentary](index=2&type=section&id=Management%20Commentary) Management expressed satisfaction with 2021 performance despite macro challenges and outlined a focus on core strengths and operational efficiency - CEO Xueji Wang was pleased with the company's first year as a public company, noting customer growth to **approximately 8,400** and a **DBNER above 150%** despite the pandemic, macro uncertainties, and supply chain constraints[7](index=7&type=chunk) - The company will focus on its core competitive advantages, solidify its market leadership, and optimize operational efficiency to navigate the macroeconomic downturn[7](index=7&type=chunk) - CFO Yao Liu highlighted that 2021 total revenue **exceeded $300 million**, gross margin improved to **42.3%**, and the company holds **over $1 billion in cash reserves**, enabling continued investment in R&D and services while optimizing for profitability[7](index=7&type=chunk) [Fourth Quarter 2021 Unaudited Financial Results](index=3&type=section&id=Fourth%20Quarter%202021%20Unaudited%20Financial%20Results) [Revenue (Q4)](index=3&type=section&id=REVENUE_Q4) Q4 2021 total revenue grew 19.0% YoY to $75.0 million, driven by a 13.9% increase in IoT PaaS and a 204.8% surge in SaaS and other revenue | Revenue Category | Q4 2020 (Million USD) | Q4 2021 (Million USD) | YoY Growth (%) | | :--- | :--- | :--- | :--- | | Total Revenue | 63.0 | 75.0 | 19.0% | | IoT PaaS Revenue | 54.5 | 62.1 | 13.9% | | SaaS and Other Revenue | 2.4 | 7.3 | 204.8% | | Smart Device Distribution Revenue | 6.2 | 5.6 | -8.8% | - IoT PaaS revenue growth was driven by increased SKUs and product categories, higher sales from existing customers, and new customer acquisition[10](index=10&type=chunk) - SaaS and other revenue growth was primarily driven by increased market demand for complex industry SaaS products and value-added services[11](index=11&type=chunk) [Cost of Revenue (Q4)](index=3&type=section&id=COST%20OF%20REVENUE_Q4) Q4 2021 cost of revenue increased by 9.6% YoY to $42.6 million, primarily due to the company's business growth | Metric | Q4 2020 (Million USD) | Q4 2021 (Million USD) | YoY Growth (%) | | :--- | :--- | :--- | :--- | | Cost of Revenue | 38.9 | 42.6 | 9.6% | [Gross Profit and Gross Margin (Q4)](index=3&type=section&id=GROSS%20PROFIT%20AND%20GROSS%20MARGIN_Q4) Total gross profit for Q4 2021 rose 34.1% YoY to $32.4 million, with the overall gross margin improving to 43.2% | Metric | Q4 2020 | Q4 2021 | Change | | :--- | :--- | :--- | :--- | | Total Gross Profit (Million USD) | 24.1 | 32.4 | +34.1% | | Total Gross Margin | 38.3% | 43.2% | +4.9pp | | IoT PaaS Gross Margin | 40.1% | 42.5% | +2.4pp | | SaaS and Other Gross Margin | 73.8% | 73.4% | -0.4pp | | Smart Device Distribution Gross Margin | 8.8% | 10.6% | +1.8pp | - The increase in IoT PaaS gross margin was mainly due to improved economies of scale, enhanced deployment efficiency from R&D initiatives, and product line expansion[13](index=13&type=chunk) [Operating Expenses (Q4)](index=3&type=section&id=OPERATING%20EXPENSES_Q4) Q4 2021 operating expenses increased 95.9% YoY to $83.9 million, mainly driven by higher share-based compensation and employee-related costs | Expense Category | Q4 2020 (Million USD) | Q4 2021 (Million USD) | YoY Growth (%) | | :--- | :--- | :--- | :--- | | Total Operating Expenses | 42.8 | 83.9 | 95.9% | | Research and Development | 25.5 | 46.2 | 81.4% | | Sales and Marketing | 11.8 | 18.4 | 56.3% | | General and Administrative | 6.2 | 21.0 | 237.8% | | Other Operating Income | 0.7 | 1.7 | - | - The increase in R&D expenses was primarily due to higher share-based compensation and the expansion of R&D staff, with headcount **growing by approximately 56% YoY**[15](index=15&type=chunk) - The significant increase in G&A expenses was mainly due to higher share-based compensation, employee-related costs, and professional service fees[17](index=17&type=chunk) [Loss from Operations and Operating Margin (Q4)](index=4&type=section&id=LOSS%20FROM%20OPERATIONS%20AND%20OPERATING%20MARGIN_Q4) The operating loss for Q4 2021 widened to $51.6 million, with the operating margin deteriorating to negative 68.8% | Metric | Q4 2020 (Million USD) | Q4 2021 (Million USD) | Change | | :--- | :--- | :--- | :--- | | Loss from Operations | 18.7 | 51.6 | Widened | | Non-GAAP Loss from Operations | 15.7 | 33.9 | Widened | | Operating Margin | -29.7% | -68.8% | -39.1pp | | Non-GAAP Operating Margin | -24.8% | -45.3% | -20.5pp | [Net Loss and Net Margin (Q4)](index=4&type=section&id=NET%20LOSS%20AND%20NET%20MARGIN_Q4) Q4 2021 net loss was $48.8 million with a net margin of negative 65.2%, both deteriorating compared to the prior year period | Metric | Q4 2020 (Million USD) | Q4 2021 (Million USD) | Change | | :--- | :--- | :--- | :--- | | Net Loss | 18.4 | 48.8 | Widened | | Non-GAAP Net Loss | 15.3 | 31.2 | Widened | | Net Margin | -29.2% | -65.2% | -36.0pp | | Non-GAAP Net Margin | -24.3% | -41.6% | -17.3pp | [Basic and Diluted Net Loss per ADS (Q4)](index=4&type=section&id=BASIC%20AND%20DILUTED%20NET%20LOSS%20PER%20ADS_Q4) Basic and diluted net loss per ADS was $0.09 in Q4 2021, while the non-GAAP equivalent was $0.06 | Metric | Q4 2020 (USD) | Q4 2021 (USD) | | :--- | :--- | :--- | | Basic and Diluted Net Loss per ADS | 0.08 | 0.09 | | Non-GAAP Basic and Diluted Net Loss per ADS | 0.07 | 0.06 | [Cash and Cash Equivalents, and Short-term Investments (Q4)](index=4&type=section&id=CASH%20AND%20CASH%20EQUIVALENTS%2C%20AND%20SHORT-TERM%20INVESTMENTS_Q4) As of December 31, 2021, the company held $1.07 billion in cash, cash equivalents, and short-term investments | Metric | As of Dec 31, 2020 (Million USD) | As of Dec 31, 2021 (Million USD) | | :--- | :--- | :--- | | Cash and Cash Equivalents, and Short-term Investments | 179.8 | 1,070.0 | [Net Cash Used in Operating Activities (Q4)](index=4&type=section&id=NET%20CASH%20USED%20IN%20OPERATING%20ACTIVITIES_Q4) Net cash used in operating activities for Q4 2021 was $53.2 million, a significant increase from the prior year period | Metric | Q4 2020 (Million USD) | Q4 2021 (Million USD) | | :--- | :--- | :--- | | Net Cash Used in Operating Activities | 9.0 | 53.2 | | Percentage of Revenue | 14.3% | 71.0% | - The increase in net cash outflow from operating activities was primarily due to employee-related expenses and changes in working capital[22](index=22&type=chunk) [Share Repurchase (Q4)](index=5&type=section&id=SHARE%20REPURCHASE_Q4) In Q4 2021, the company repurchased approximately 4.3 million ADSs for a total consideration of about $25.1 million | Metric | Q4 2021 | | :--- | :--- | | ADSs Repurchased | Approx 4.3 million | | Total Consideration | Approx $25.1 million | [Outstanding Ordinary Shares Under Equity Incentive Plan (Q4)](index=5&type=section&id=OUTSTANDING%20ORDINARY%20SHARES%20UNDER%20EQUITY%20INCENTIVE%20PLAN_Q4) The company issued 5.0 million Class A ordinary shares in October 2021 for future equity incentive awards to employees - On October 18, 2021, the company issued 5.0 million Class A ordinary shares to The Bank of New York Mellon for future equity incentive awards to employees[24](index=24&type=chunk) [Strategic Investments (Q4)](index=5&type=section&id=STRATEGIC%20INVESTMENTS_Q4) The company made strategic equity investments totaling $30.7 million in several private IoT-related companies during Q4 2021 - In Q4 2021, the company invested in several private IoT-related companies to enhance the development of its IoT ecosystem[25](index=25&type=chunk) | Metric | As of Dec 31, 2021 (Million USD) | | :--- | :--- | | Total Strategic Investments | 30.7 | [Fiscal Year 2021 Unaudited Financial Results](index=5&type=section&id=Fiscal%20Year%202021%20Unaudited%20Financial%20Results) [Revenue (FY)](index=5&type=section&id=REVENUE_FY) Fiscal year 2021 total revenue grew 67.9% YoY to $302.1 million, driven by strong growth in IoT PaaS and SaaS segments | Revenue Category | FY 2020 (Million USD) | FY 2021 (Million USD) | YoY Growth (%) | | :--- | :--- | :--- | :--- | | Total Revenue | 179.9 | 302.1 | 67.9% | | IoT PaaS Revenue | 151.7 | 261.4 | 72.3% | | SaaS and Other Revenue | 6.1 | 18.6 | 203.0% | | Smart Device Distribution Revenue | 22.1 | 22.2 | 0.5% | [Cost of Revenue (FY)](index=5&type=section&id=COST%20OF%20REVENUE_FY) Fiscal year 2021 cost of revenue increased by 47.7% YoY to $174.2 million | Metric | FY 2020 (Million USD) | FY 2021 (Million USD) | YoY Growth (%) | | :--- | :--- | :--- | :--- | | Cost of Revenue | 117.9 | 174.2 | 47.7% | [Gross Profit and Gross Margin (FY)](index=5&type=section&id=GROSS%20PROFIT%20AND%20GROSS%20MARGIN_FY) Total gross profit for fiscal year 2021 increased 106.4% YoY to $127.9 million, with the overall gross margin improving to 42.3% | Metric | FY 2020 | FY 2021 | Change | | :--- | :--- | :--- | :--- | | Total Gross Profit (Million USD) | 61.9 | 127.9 | +106.4% | | Total Gross Margin | 34.4% | 42.3% | +7.9pp | | IoT PaaS Gross Margin | 35.9% | 42.4% | +6.5pp | | SaaS and Other Gross Margin | 75.6% | 73.7% | -1.9pp | | Smart Device Distribution Gross Margin | 13.0% | 14.9% | +1.9pp | [Operating Expenses (FY)](index=5&type=section&id=OPERATING%20EXPENSES_FY) Fiscal year 2021 operating expenses rose 136.3% YoY to $311.4 million, mainly due to a significant increase in share-based compensation | Expense Category | FY 2020 (Million USD) | FY 2021 (Million USD) | YoY Growth (%) | | :--- | :--- | :--- | :--- | | Total Operating Expenses | 131.8 | 311.4 | 136.3% | | Research and Development | 77.4 | 174.3 | 125.1% | | Sales and Marketing | 37.6 | 75.4 | 100.7% | | General and Administrative | 17.9 | 71.6 | 300.7% | | Other Operating Income | 1.1 | 9.8 | - | - The increase in operating expenses was primarily due to share-based compensation expenses, which **rose from $9.4 million to $66.1 million**[29](index=29&type=chunk) [Loss from Operations and Operating Margin (FY)](index=6&type=section&id=LOSS%20FROM%20OPERATIONS%20AND%20OPERATING%20MARGIN_FY) The operating loss for fiscal year 2021 widened to $183.6 million, with the operating margin deteriorating to negative 60.8% | Metric | FY 2020 (Million USD) | FY 2021 (Million USD) | Change | | :--- | :--- | :--- | :--- | | Loss from Operations | 69.8 | 183.6 | Widened | | Non-GAAP Loss from Operations | 60.4 | 117.5 | Widened | | Operating Margin | -38.8% | -60.8% | -22.0pp | | Non-GAAP Operating Margin | -33.6% | -38.9% | -5.3pp | [Net Loss and Net Margin (FY)](index=6&type=section&id=NET%20LOSS%20AND%20NET%20MARGIN_FY) Fiscal year 2021 net loss was $175.4 million with a net margin of negative 58.1%, both deteriorating compared to the prior year | Metric | FY 2020 (Million USD) | FY 2021 (Million USD) | Change | | :--- | :--- | :--- | :--- | | Net Loss | 66.9 | 175.4 | Widened | | Non-GAAP Net Loss | 57.5 | 109.3 | Widened | | Net Margin | -37.2% | -58.1% | -20.9pp | | Non-GAAP Net Margin | -31.9% | -36.2% | -4.3pp | [Basic and Diluted Net Loss per ADS (FY)](index=6&type=section&id=BASIC%20AND%20DILUTED%20NET%20LOSS%20PER%20ADS_FY) Basic and diluted net loss per ADS was $0.36 for fiscal year 2021, while the non-GAAP equivalent was $0.22 | Metric | FY 2020 (USD) | FY 2021 (USD) | | :--- | :--- | :--- | | Basic and Diluted Net Loss per ADS | 0.30 | 0.36 | | Non-GAAP Basic and Diluted Net Loss per ADS | 0.26 | 0.22 | [Net Cash Used in Operating Activities (FY)](index=6&type=section&id=NET%20CASH%20USED%20IN%20OPERATING%20ACTIVITIES_FY) Net cash used in operating activities for fiscal year 2021 was $126.1 million, a significant increase from the prior year | Metric | FY 2020 (Million USD) | FY 2021 (Million USD) | | :--- | :--- | :--- | | Net Cash Used in Operating Activities | 49.2 | 126.1 | | Percentage of Revenue | 27.4% | 41.7% | [Share Repurchase (FY)](index=6&type=section&id=SHARE%20REPURCHASE_FY) In fiscal year 2021, the company repurchased approximately 7.0 million ADSs for a total consideration of about $53.6 million | Metric | FY 2021 | | :--- | :--- | | ADSs Repurchased | Approx 7.0 million | | Total Consideration | Approx $53.6 million | [Outstanding Ordinary Shares Under Equity Incentive Plan (FY)](index=6&type=section&id=OUTSTANDING%20ORDINARY%20SHARES%20UNDER%20EQUITY%20INCENTIVE%20PLAN_FY) The company issued a total of 10.0 million Class A ordinary shares in 2021 for future equity incentive awards to employees - In 2021, the company issued a total of 10.0 million Class A ordinary shares to The Bank of New York Mellon for future equity incentive awards to employees[36](index=36&type=chunk) [Business Outlook](index=6&type=section&id=Business%20Outlook) The company forecasts Q1 2022 total revenue to be between $50 million and $57 million, subject to various macro and operational risks | Metric | Q1 2022 Forecast (Million USD) | | :--- | :--- | | Total Revenue | 50 - 57 | - The company's Q1 2022 revenue forecast is subject to various factors, including macroeconomic conditions, the COVID-19 pandemic, inflation, currency fluctuations, and geopolitical tensions[37](index=37&type=chunk) - Recent COVID-19 resurgences in multiple locations in China may cause delays in product delivery and acceptance, potentially deferring revenue recognition, leading to a wider guidance range[38](index=38&type=chunk) [Company Information](index=7&type=section&id=Company%20Information) [About Tuya Inc.](index=7&type=section&id=About%20Tuya%20Inc.) Tuya Inc is a leading global IoT cloud development platform that aims to build an IoT developer ecosystem and enable everything to be smart - Tuya Inc is a leading global IoT cloud development platform with a mission to build an IoT developer ecosystem and enable everything to be smart[40](index=40&type=chunk) - The company offers a full suite of Platform-as-a-Service (PaaS) and Software-as-a-Service (SaaS) products[40](index=40&type=chunk) [Conference Call Information](index=7&type=section&id=Conference%20Call%20Information) Company management will hold an earnings conference call on March 14, 2022, U.S. Eastern Time, to discuss the financial results - Company management will hold an earnings conference call on March 14, 2022, U.S. Eastern Time[39](index=39&type=chunk) - A live and archived webcast of the conference call will be available on the company's investor relations website[39](index=39&type=chunk) [Non-GAAP Financial Measures](index=7&type=section&id=Non-GAAP%20Financial%20Measures) [Use of Non-GAAP Financial Measures](index=7&type=section&id=Use%20of%20Non-GAAP%20Financial%20Measures) The company utilizes non-GAAP metrics, which exclude share-based compensation, as supplementary measures to evaluate its operational performance - The company uses non-GAAP operating expenses, non-GAAP loss from operations, non-GAAP net loss, and non-GAAP basic and diluted net loss per ADS as supplementary measures[41](index=41&type=chunk) - Non-GAAP measures are defined by excluding share-based compensation expenses, which management believes helps in assessing operational performance and business planning[41](index=41&type=chunk) - Non-GAAP financial measures are not defined under U.S. GAAP and have limitations; they should not be relied upon in isolation, and the company encourages a full review of financial information[43](index=43&type=chunk) [Reconciliation of Non-GAAP Measures](index=15&type=section&id=Reconciliation%20of%20Non-GAAP%20Measures) The report provides reconciliation tables for non-GAAP operating expenses, operating loss, and net loss to their most comparable U.S. GAAP measures | Metric (Million USD) | Q4 2020 | Q4 2021 | FY 2020 | FY 2021 | | :--- | :--- | :--- | :--- | :--- | | **Operating Expenses Reconciliation:** | | | | | | R&D Expenses (GAAP) | (25,467) | (46,187) | (77,430) | (174,289) | | Add: Share-based compensation | 961 | 4,093 | 2,596 | 14,542 | | R&D Expenses (Non-GAAP) | (24,506) | (42,094) | (74,834) | (159,747) | | Sales and Marketing Expenses (GAAP) | (11,792) | (18,433) | (37,556) | (75,384) | | Add: Share-based compensation | 404 | 1,634 | 1,529 | 6,702 | | Sales and Marketing Expenses (Non-GAAP) | (11,388) | (16,799) | (36,027) | (68,682) | | General and Administrative Expenses (GAAP) | (6,220) | (21,011) | (17,868) | (71,589) | | Add: Share-based compensation | 1,687 | 11,900 | 5,321 | 44,845 | | General and Administrative Expenses (Non-GAAP) | (4,533) | (9,111) | (12,547) | (26,744) | | **Loss from Operations Reconciliation:** | | | | | | Loss from Operations (GAAP) | (18,705) | (51,556) | (69,846) | (183,560) | | Add: Share-based compensation expenses | 3,052 | 17,627 | 9,446 | 66,089 | | Loss from Operations (Non-GAAP) | (15,653) | (33,929) | (60,400) | (117,471) | | Operating Margin (Non-GAAP) | (24.8)% | (45.3)% | (33.6)% | (38.9)% | | **Net Loss Reconciliation:** | | | | | | Net Loss (GAAP) | (18,381) | (48,844) | (66,912) | (175,424) | | Add: Share-based compensation expenses | 3,052 | 17,627 | 9,446 | 66,089 | | Net Loss (Non-GAAP) | (15,329) | (31,217) | (57,466) | (109,335) | | Net Margin (Non-GAAP) | (24.3)% | (41.6)% | (31.9)% | (36.2)% | [Legal & Investor Information](index=8&type=section&id=Legal%20%26%20Investor%20Information) [Safe Harbor Statement](index=8&type=section&id=Safe%20Harbor%20Statement) This press release contains forward-looking statements protected under the "safe harbor" provisions of the U.S. Private Securities Litigation Reform Act of 1995 - This press release contains forward-looking statements that are subject to the "safe harbor" provisions of the U.S. Private Securities Litigation Reform Act of 1995[45](index=45&type=chunk) - Forward-looking statements involve inherent risks and uncertainties, and actual results may differ materially from those contained in the statements[45](index=45&type=chunk) - The company does not undertake any obligation to publicly update any forward-looking statement, except as required under applicable law[45](index=45&type=chunk) [Investor Relations Contact](index=8&type=section&id=Investor%20Relations%20Contact) Contact information for Tuya Inc and The Blueshirt Group is provided for investor relations inquiries - Investors may contact ir@tuya.com or Gary Dvorchak of The Blueshirt Group for investor relations information[46](index=46&type=chunk) [Unaudited Condensed Consolidated Financial Statements](index=9&type=section&id=Unaudited%20Condensed%20Consolidated%20Financial%20Statements) [Unaudited Condensed Consolidated Balance Sheets](index=9&type=section&id=UNAUDITED%20CONDENSED%20CONSOLIDATED%20BALANCE%20SHEETS) As of December 31, 2021, total assets grew significantly to $1.25 billion, driven by a substantial increase in cash and short-term investments | Metric (Thousand USD) | As of Dec 31, 2020 | As of Dec 31, 2021 | | :--- | :--- | :--- | | **Assets:** | | | | Cash and cash equivalents | 158,792 | 963,938 | | Short-term investments | 20,976 | 102,134 | | Total assets | 267,323 | 1,248,150 | | **Liabilities:** | | | | Total liabilities | 98,323 | 134,489 | | **Shareholders' Equity:** | | | | Total shareholders' equity | (164,667) | 1,113,661 | - As of December 31, 2021, the company's cash, cash equivalents, and short-term investments totaled **$1.066 billion**, a substantial increase from $179.8 million at the end of 2020[49](index=49&type=chunk) [Unaudited Condensed Consolidated Statements of Comprehensive Loss](index=12&type=section&id=UNAUDITED%20CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20COMPREHENSIVE%20LOSS) For both Q4 and fiscal year 2021, the company's net loss and comprehensive loss widened compared to the prior year periods | Metric (Thousand USD) | Q4 2020 | Q4 2021 | FY 2020 | FY 2021 | | :--- | :--- | :--- | :--- | :--- | | Revenue | 63,015 | 74,967 | 179,874 | 302,076 | | Net loss | (18,381) | (48,844) | (66,912) | (175,424) | | Comprehensive loss | (16,687) | (47,276) | (64,030) | (173,585) | | Net loss per ADS, basic and diluted | (0.08) | (0.09) | (0.30) | (0.36) | | Total share-based compensation expenses | 3,052 | 17,627 | 9,446 | 66,089 | [Unaudited Condensed Consolidated Statements of Cash Flows](index=14&type=section&id=UNAUDITED%20CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20CASH%20FLOWS) Net cash used in operating activities increased significantly in both Q4 and fiscal year 2021, while financing activities provided a major cash inflow for the full year | Metric (Thousand USD) | Q4 2020 | Q4 2021 | FY 2020 | FY 2021 | | :--- | :--- | :--- | :--- | :--- | | Net cash used in operating activities | (9,006) | (53,194) | (49,211) | (126,103) | | Net cash provided by/(used in) investing activities | 25,537 | 23,627 | (7,852) | (112,957) | | Net cash (used in)/provided by financing activities | (172) | (43,841) | (172) | 1,041,802 | | Cash and cash equivalents at end of period | 158,955 | 964,576 | 158,955 | 964,576 |

Financial Data and Key Metrics Changes - In Q3 2021, Tuya achieved total revenues of approximately $85.6 million, reflecting a year-over-year growth of roughly 45% [5][18] - The gross margin increased slightly to 42.6% from 34.4% year-over-year, indicating improved efficiency and economies of scale [22] - Non-GAAP net loss was $31.2 million, with a non-GAAP net margin of negative 36.5%, down from negative 17% in the same period of 2020 [27] Business Line Data and Key Metrics Changes - IoT PaaS revenue reached $72.6 million, achieving year-over-year growth of 37.4% [18] - SaaS and other segments saw revenue increase to $5.6 million, representing a year-over-year growth of 214.2% [20] - The number of premium IoT PaaS customers grew to 306, up 87.7% from the previous year [19] Market Data and Key Metrics Changes - The dollar-based net expansion rate for IoT PaaS was 179%, maintaining a strong performance for eight consecutive quarters [6][20] - The company acquired over 1,000 new IoT PaaS customers, growing customer accounts by 46% year-over-year [7] Company Strategy and Development Direction - Tuya aims to strengthen its competitive barriers in cross-device connectivity and expand its product reach through outdoor product lines and IoT device capabilities [9] - The company is focusing on creating an open PaaS platform to enable developers to create personalized and differentiated products [10] - Tuya is launching private cloud solutions to meet customer demands for data privacy and control, which is expected to open a new market [15][46] Management's Comments on Operating Environment and Future Outlook - Management acknowledged challenges such as chip shortages and shipping difficulties but expressed confidence in long-term growth prospects [5][14] - The company expects total revenue for Q4 2021 to be in the range of $72 million to $77 million, reflecting cautious optimism amid macroeconomic uncertainties [30] Other Important Information - Tuya's cash, cash equivalents, and short-term investments increased to $1,179.6 million, providing sufficient liquidity for operations [29] - The company repurchased approximately 2.8 million ADS for about $28.6 million, demonstrating confidence in its long-term growth [29] Q&A Session Summary Question: What are the development plans for the SaaS business? - Management highlighted strong growth in the SaaS segment and plans to expand into various business scenarios beyond home applications [32][33] Question: What is the outlook for domestic revenue? - Management indicated a balanced distribution of business across global regions and plans to increase the proportion of revenue generated in China [41][42] Question: What is the financial contribution from the newly released IoT PaaS on private cloud? - Management clarified that the private cloud PaaS is in early development and aims to open a new market rather than replace existing offerings [46] Question: What is the outlook for next year's demand from premium customers? - Management noted that customers are cautious due to macroeconomic factors but expressed interest in expanding new product categories next year [48]

Financial Data and Key Metrics Changes - Total revenues grew by 118% year-over-year to $84.7 million [5] - IoT PaaS revenue increased by 153.9% to $76.9 million, while SaaS revenue rose by 175% to $3.4 million [22][24] - Gross profit increased by 203.9% to $35.7 million, with gross margin improving to 42.2% from 30.3% year-over-year [24] - Non-GAAP operating margin was negative 31.3%, narrowing from negative 35.7% in the same period of 2020 [29] Business Line Data and Key Metrics Changes - IoT PaaS business achieved over 160% year-over-year growth, while SaaS business also saw significant growth [5] - The number of premium customers grew to 285, up from 216 in the previous quarter [7] - The number of IoT PaaS customers increased by nearly 113% year-over-year, reaching over 700 new customers [8] Market Data and Key Metrics Changes - North America contributed about 30% of revenue, Europe about one-third, with strong growth observed in Latin America, particularly Mexico, which saw a fourfold increase in revenue [39] - Revenue contribution from lighting and electrical products dropped to around 56-57%, while appliance products contributed over 15% [40] Company Strategy and Development Direction - The company is focused on leveraging its IoT platform to help customers navigate challenges such as semiconductor shortages [6] - Continued investment in R&D is critical for growth, with R&D personnel increasing by approximately 120% year-over-year [26][21] - The company aims to expand its SaaS business and has established partnerships with leading real estate and hotel groups [48] Management's Comments on Operating Environment and Future Outlook - Management noted macro headwinds impacting the industry but expressed confidence in the company's growth strategy [5] - For Q3 2021, the company expects total revenues to be in the range of $83 million to $86 million, reflecting current market conditions [32] - Management remains optimistic about recovery in Q4, particularly for e-commerce customers affected by recent challenges [37] Other Important Information - The company passed security certifications from IOXT Alliance, enhancing its compliance capabilities [20] - Employee count increased to over 3,500, with R&D staff making up over 70% [21] Q&A Session Summary Question: Could management give more color on the MCU chipset replacement plan? - Management stated that all major product categories are eligible for the MCU chipset replacement plan, which aims to help customers overcome semiconductor shortages [34] Question: What is the impact of Amazon or other e-commerce stores? - Management indicated that the majority of customers sell IoT products through offline channels, estimating that 80% of Tuya IoT devices were sold offline, with limited impact on e-commerce customers [36] Question: What is the revenue mix by product category and region in Q2? - Management reported that North America contributed about 30% and Europe about one-third of revenue, with strong growth in Latin America [39] Question: Which SaaS business categories are growing faster? - Management noted that appliance and sensor security products grew more than three times, with entertainment and energy conservation categories showing even higher growth rates [44]

Financial Data and Key Metrics Changes - Total revenue for Q1 2021 reached $60.9 million, representing a 200% year-over-year growth [6][24] - Gross margin improved by 10.8 percentage points year-over-year to 41.1% [6][26] - Gross profit increased by 307.4% to $23.4 million [26] - Non-GAAP net loss narrowed to $23.8 million, improving from a loss of $99.4 million in the same period of 2020 [30] Business Line Data and Key Metrics Changes - IoT PaaS revenue grew 227% year-over-year to $49.8 million [24][26] - SaaS revenue increased by 224% to $2.3 million [25][26] - Revenue from IoT PaaS empowering security and sensor products grew more than 300% [25] - Revenue from IoT PaaS empowering sports and wellness products grew approximately 700% [25] Market Data and Key Metrics Changes - Over 39 million smart devices were deployed with IoT PaaS services during the quarter [7] - The number of registered smart device developers on the platform increased from approximately 260,000 to over 320,000 [8] - The worldwide IoT PaaS total addressable market is forecasted to grow at a CAGR of 18.9% to $171.7 billion by 2024 [8] Company Strategy and Development Direction - The company aims to expand its services into new product categories and geographic regions [10][15] - Focus on R&D investment to enhance technology and product innovation [35] - Plans to build a new office in Shanghai with a team of 500 to focus on business expansion in the auto and mobility scenario [36] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the growth driven by strong global demand for IoT products and services [6] - The company expects total revenues for Q2 2021 to be in the range of $78 million to $81 million, reflecting a 19% to 23% increase compared to Street consensus estimates [32] - Management highlighted the importance of maintaining stable margins despite challenges in the chip industry [41] Other Important Information - The number of premium customers contributing over $100,000 in revenue grew to 216 from 188 year-over-year [10][27] - The company has obtained four cloud security certifications, enhancing its credibility in the market [22] Q&A Session Summary Question: SaaS solutions expansion plan for this year - Management emphasized the development of an open platform for various industries and expects strong growth in SaaS business [34] Question: Focus on R&D investment - R&D will focus on developer platforms, business expansion in auto and mobility, and enhancing user experience [35][36] Question: Synergy between Philips and Tuya - Cooperation with Philips is expected to accelerate through Hillhouse's support, enhancing IoT product development [37] Question: Revenue split among different categories - Revenue contribution from lighting and electrical segments is now less than 60%, with home appliances and security contributing more than 10% each [40] Question: IoT PaaS pricing strategy amid chip shortages - The company plans to pass chip price increases downstream while maintaining stable margins [41] Question: Investment focus of the new IoT fund - The IoT fund aims to support entrepreneurs in the IoT industry and strategically grow the sector [42]