Tuya Inc. (NYSE:TUYA) Q4 2024 Earnings Call February 26, 2025 8:00 AM ET Company Participants Reg Chai - Investor Relations Jerry Wang - Founder and Chief Executive Officer Alex Yang - Co-Founder and Chief Financial Officer Conference Call Participants Timothy Chow - Goldman Sachs John Roy - WTR Brenda Zhao - CICC Research. Yang Liu - Morgan Stanley Operator Good morning, and good evening, ladies and gentlemen. Thank you for standing by, and welcome to Tuya Inc. Fourth Quarter 2024 Earnings Conference Call. ...

Revenue and Profitability - Total revenue for the year ended December 31, 2024, was $298.6 million, an increase of approximately 29.8% compared to $230.0 million for the year ended December 31, 2023[5]. - IoT Platform as a Service (PaaS) revenue reached $217.1 million, up approximately 29.4% from $167.7 million in the previous year[5]. - Net profit for the year was $5.0 million, marking a significant recovery from a net loss of $60.3 million in the previous year[7]. - The net profit for the year ended December 31, 2024, was $5.0 million, compared to a net loss of $60.3 million for the year ended December 31, 2023, marking the first fiscal year of net profitability under GAAP[15]. - The adjusted net profit for the year ended December 31, 2024, was $75.3 million, a 268.5% increase from $20.4 million in 2023, indicating strong profitability under non-GAAP measures[15]. - Non-GAAP net profit for 2024 is projected at $75.308 million, with a non-GAAP net profit margin of 25.2%[98]. - The company reported a net loss attributable to common shareholders of $60.315 million for 2023, with a projected profit of $4.997 million for 2024[91]. Cash and Investments - Cash and cash equivalents, along with short-term and long-term investments, totaled $1,016.7 million, up from $984.3 million as of December 31, 2023[7]. - The net cash provided by operating activities for the year ended December 31, 2024, was $80.4 million, a 120.5% increase from $36.4 million in 2023[18]. - The company had no interest-bearing bank loans or other borrowings as of December 31, 2024, resulting in a debt-to-equity ratio of zero[25][28]. - The company made significant investments in government bonds, with total purchases amounting to approximately $156.8 million within an authorized limit of $400 million[30]. - Total cash and cash equivalents are projected to rise to $653,384,000 by the end of 2024, up from $498,688,000 at the end of 2023[68]. Customer Metrics - The number of IoT PaaS customers was approximately 3,700, down from 4,000 in the previous year, while total customers were about 5,800, down from approximately 6,100[7]. - The number of registered IoT developers exceeded 1,316,000, a growth of 32.6% from approximately 993,000 developers in the previous year[7]. - The company’s focus on strategic customers contributed to a net expansion rate (DBNER) of 122%, up from 103% in the previous year[7]. - The DBNER for IoT PaaS for the year ended December 31, 2024, was 122%, indicating revenue growth from existing customers[20]. Operating Performance - Operating profit margin improved to -15.9%, an increase of 30.1 percentage points from -46.0% in the previous year[5]. - The operating loss for the year ended December 31, 2024, was $47.6 million, a 55.0% improvement from the $105.8 million loss in the same period of 2023[14]. - The adjusted operating loss for 2023 was $(105.824) million, expected to improve to $(47.620) million in 2024[96]. Research and Development - The adjusted R&D expenses for the year ended December 31, 2024, were $80.7 million, down from $87.5 million in 2023, reflecting a 7.1% decrease[14]. - Research and development expenses are expected to decrease to $95,049,000 in 2024 from $102,277,000 in 2023, reflecting a focus on cost management[64]. Corporate Governance and Compliance - The company has adhered to all corporate governance codes as per the Hong Kong Stock Exchange, with a noted exception regarding the dual role of the chairman and CEO[38]. - The audit committee reviewed the unaudited consolidated financial statements for the reporting period, with no disagreements on accounting policies[42]. - The company has confirmed compliance with the standard code for securities trading by directors for the fiscal year ending December 31, 2024[41]. Future Outlook and Strategy - The company aims to enhance its product and service offerings through the application of emerging technologies like generative AI, while also diversifying revenue sources[21]. - The company plans to allocate 30% of the proceeds to enhance IoT technology and infrastructure, amounting to approximately 21.0 million HKD[47]. - The company is committed to expanding its market presence and enhancing its product offerings through continuous innovation in AI and cloud services[54]. Shareholder Returns - The company has approved a dividend of USD 0.0608 per share, totaling approximately USD 37 million, to be funded from retained earnings[48]. - The company declared a special dividend of $0.0589 per share, totaling $33 million, to be paid in October 2024[90]. - During the reporting period, the company repurchased 223,773 American Depositary Shares for a total consideration of approximately USD 0.4 million[50]. Taxation - The effective tax rate for 2024 is expected to be 30.0%, significantly higher than the statutory rate of 25.0% due to various jurisdictional impacts[86]. - The company has accumulated tax losses of approximately $576,439, primarily from its subsidiaries in China, which will expire between 2025 and 2034[88]. - The company expects to continue benefiting from the preferential tax rate as a qualified high-tech enterprise, impacting its overall tax expenses positively[86].

Revenue Growth - Total revenue for Q4 2024 was $82.1 million, representing a year-over-year increase of approximately 27.4% compared to $64.4 million in Q4 2023[10]. - Total revenue for the fiscal year 2024 was $298.6 million, a year-over-year increase of approximately 29.8% from $230.0 million in 2023[14]. - In 2024, the company achieved total revenue of $298.6 million, a year-over-year increase of nearly 30%[16]. - Total revenue for 2024 increased by 29.8% to $298.6 million from $230.0 million in 2023, driven by growth in IoT PaaS and smart solutions revenue[29]. IoT Platform as a Service (PaaS) Performance - IoT Platform as a Service (PaaS) revenue reached $59.3 million, up about 25.7% from $47.2 million in Q4 2023[10]. - The company's IoT PaaS revenue in Q4 2024 increased by 25.7% to $59.3 million, driven by global economic recovery and strategic focus on customer needs[17]. - The company reported a significant increase in IoT PaaS revenue, which rose by 29.4% to $217.1 million for the year ended December 31, 2024[30]. - The company's DBNER (dollar-based net expansion rate) for IoT PaaS was 122% as of December 31, 2024, up from 103% in Q4 2023[16]. Profitability - Net profit for Q4 2024 was $9.8 million, compared to a net loss of $10.8 million in Q4 2023[10]. - The company achieved a net profit of $5.0 million for the year ended December 31, 2024, compared to a net loss of $60.3 million in 2023, marking its first net profit under GAAP[37]. - The net profit margin for the year ended December 31, 2024, was 1.7%, an increase of 27.9 percentage points from a net loss margin of 26.2% in 2023[37]. - The company's non-GAAP net profit for the year ended December 31, 2024, was $75.3 million, a 268.5% increase from $20.4 million in 2023[37]. Cash Flow and Financial Position - Operating cash flow for Q4 2024 was $30.2 million, slightly down from $31.8 million in Q4 2023[10]. - The company reported a total cash and cash equivalents of $1,016.7 million as of December 31, 2024, compared to $984.3 million as of December 31, 2023[10]. - The net cash balance at the end of Q4 2024 was approximately $1.017 billion, marking seven consecutive quarters of positive operating cash flow[16]. - Cash and cash equivalents, along with short-term and long-term investments, totaled $1,016.7 million as of December 31, 2024, up from $984.3 million as of December 31, 2023[39]. Operating Expenses and Margins - Gross margin for the overall business was 47.8%, an increase of 0.5 percentage points from 47.3% in Q4 2023[10]. - The company's non-GAAP operating profit margin in Q4 2024 was 10.3%, a significant improvement from a loss of 0.4% in Q4 2023[24]. - Operating costs for the year ended December 31, 2024, rose to $157.2 million, up 27.4% from $123.3 million in 2023, consistent with the revenue growth trend[30]. - Operating expenses decreased by 11.0% to $189.1 million for the year ended December 31, 2024, compared to $212.5 million in 2023[33]. Research and Development - R&D expenses for Q4 2024 were $23.7 million, remaining stable compared to $22.8 million in Q4 2023[23]. - Research and development expenses decreased by 7.1% to $95.0 million for the year ended December 31, 2024, from $102.3 million in 2023[35]. - Research and development expenses for the year ending December 31, 2023, were $102,277,000, which is projected to decrease to $95,049,000 in 2024, reflecting a reduction of about 7%[64]. Future Outlook - The company is optimistic about its business outlook, citing a stable macroeconomic environment and effective implementation of customer and product strategies, particularly leveraging AI technologies[41]. - The company plans to expand its market presence and invest in new product development to drive future growth[56]. - The company acknowledges potential challenges ahead, including shifts in consumer spending patterns and geopolitical uncertainties[41]. Dividend Information - The board approved a dividend of $0.0608 per ordinary share or ADS, totaling approximately $37 million, to be paid in cash from retained earnings[42]. - The dividend payment date for ordinary shareholders is expected around April 9, 2025, and for ADS holders around April 15, 2025[43].

Financial Data and Key Metrics Changes - In Q3 2024, the company achieved total revenue of $81.6 million, reflecting a year-over-year increase of 33.6% [9][10] - The non-GAAP operating margin was approximately 9.1%, while the non-GAAP net profit margin was around 24.7% [12][10] - The gross margin for Q3 was reported at 46%, remaining stable compared to the same period in 2023 [10][11] Business Line Data and Key Metrics Changes - Revenue from the IoT PaaS segment reached $57.9 million, representing a year-over-year growth of 26.4% [10] - The Smart Solutions segment saw over 100% year-over-year revenue growth, driven by strong market demand, particularly in home appliances [3][4] - Revenue from SaaS and other segments grew by approximately 17% year-over-year, with core cloud software value-added services increasing by over 50% [3][4] Market Data and Key Metrics Changes - The dollar-based net expansion rate stood at 124%, indicating healthy growth among existing customers [5][10] - Europe remained the largest market, exhibiting stable demand and smooth progress in partnerships with both new and existing clients [5][4] - New customer acquisitions occurred in various regions, including Canada and Brazil, indicating expansion into emerging markets [5][4] Company Strategy and Development Direction - The company focuses on energy-efficient products and solutions, aligning with global demand trends [3][4] - Strategic partnerships with key customers are emphasized to adapt to market needs and enhance product planning [3][4] - The company aims to leverage AI capabilities to enhance user experience and product functionality [4][21] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism for Q4, despite limited visibility due to seasonal factors and ongoing tariff discussions [14][15] - The company noted that customer behaviors have adapted to tariff changes, with supply chains being relocated as necessary [15][14] - Future growth is anticipated in the IoT and AI sectors, with a belief that these technologies will become fundamental in the coming years [23][24] Other Important Information - The company welcomed a new significant shareholder, reflecting confidence in its vision and international expansion strategy [8][9] - The number of registered developers on the Tuya platform increased to approximately 1.26 million, indicating strong community engagement [6][7] Q&A Session Summary Question: Outlook for Q4 and customer behavior changes due to tariffs - Management indicated that Q4 is expected to be a steady season, with positive momentum despite limited visibility due to seasonal factors and tariff impacts [14][15] Question: Stability of gross profit margin - Management noted that while the gross margin may gradually decrease due to the growth of smart solutions, this is considered healthy as each segment remains competitive [16][15] Question: Expectations for IoT PaaS business and shareholder returns - Management highlighted a rebound in demand for IoT PaaS, driven by customer reinvestment and project kick-offs, and emphasized a commitment to shareholder returns through potential dividends based on profitability [17][19] Question: Advances in AI and revenue guidance - Management discussed ongoing AI initiatives, including integrating AI capabilities into devices and developing AI-based services, with plans to showcase more use cases by the end of 2024 [21][22]

Revenue Growth - Total revenue for Q3 2024 was US$81.6 million, representing a year-over-year increase of approximately 33.6% from US$61.1 million in Q3 2023[14] - IoT platform-as-a-service (PaaS) revenue reached US$57.9 million, up approximately 26.4% year-over-year from US$45.8 million[14] - Smart solution revenue surged by 102.9% year-over-year to US$13.8 million, compared to US$6.8 million in Q3 2023[15] - Revenue for the three months ended September 30, 2024, increased to $81,617 thousand, up 33.5% from $61,090 thousand in the same period of 2023[60] Profitability Metrics - Overall gross margin was 46.0%, a slight decrease of 0.7 percentage points from 46.7% in Q3 2023[15] - Non-GAAP operating margin improved to 9.1%, up 14.8 percentage points year-over-year from negative 5.7%[16] - Operating margin in Q3 2024 was negative 21.0%, an improvement of 9.3 percentage points from negative 30.3% in Q3 2023[37] - The Company reported a net loss of US$4.4 million in Q3 2024, compared to a net loss of US$4.9 million in Q3 2023[38] - Non-GAAP net profit for Q3 2024 was US$20.1 million, up 99.5% from US$10.1 million in Q3 2023[39] - Net margin in Q3 2024 was negative 5.4%, improving by 2.6 percentage points from negative 8.0% in Q3 2023[40] - Non-GAAP net profit for the three months ended September 30, 2024, was $20,143 thousand, a significant increase from $10,095 thousand in the same period of 2023, marking a 99.9% growth[67] - Non-GAAP net margin for the three months ended September 30, 2024, improved to 24.7%, compared to 16.5% in the same period of 2023[67] Cash Flow and Liquidity - Net cash generated from operating activities was US$23.9 million, an increase from US$16.1 million in Q3 2023[17] - Cash and cash equivalents, time deposits, and treasury securities totaled US$1,023.9 million as of September 30, 2024, up from US$984.3 million as of December 31, 2023[42] - Net cash generated from operating activities for the three months ended September 30, 2024, was $23,851 thousand, compared to $16,070 thousand for the same period in 2023, reflecting a 48.1% increase[64] - Cash and cash equivalents at the end of the period for September 30, 2024, were $611,055 thousand, compared to $166,274 thousand at the end of the same period in 2023, indicating a substantial increase in liquidity[64] Customer and Market Metrics - The number of IoT PaaS customers increased to approximately 2,200, up from approximately 2,100 in Q3 2023[18] - The Dollar-based net expansion rate (DBNER) for IoT PaaS was 124%, significantly up from 78% in the previous year[19] - Registered IoT device and software developers exceeded 1,260,000, reflecting a 26.9% increase from approximately 993,000 developers as of December 31, 2023[19] Assets and Equity - Total assets increased from US$1,066.4 million as of December 31, 2023, to US$1,115.7 million as of September 30, 2024[56] - Total shareholders' equity rose from US$970.6 million as of December 31, 2023, to US$989.7 million as of September 30, 2024[58] Operating Expenses - Total operating expenses for the nine months ended September 30, 2024, decreased to $146,016 thousand, down from $158,392 thousand in the same period of 2023, a reduction of 7.8%[60] - Research and development expenses for the nine months ended September 30, 2024, were $71,344 thousand, down from $79,471 thousand in the same period of 2023, a decrease of 10.3%[60] Future Outlook - The Company aims to enhance software and hardware capabilities, expand its customer base, and invest in innovations and new opportunities[45] - The Company is optimistic about its business prospects due to a stabilizing macroeconomic environment and effective implementation of customer and product strategies[44]

Revenue Performance - Total revenue for Q3 2024 was $81.6 million, representing a year-over-year increase of approximately 33.6% compared to $61.1 million in Q3 2023[10] - IoT Platform as a Service (PaaS) revenue reached $57.9 million, up about 26.4% from $45.8 million in Q3 2023[10] - Smart Solutions revenue surged by 102.9% year-over-year to $13.8 million, compared to $6.8 million in Q3 2023[10] - In Q3 2024, the company's total revenue increased by 33.6% year-over-year to $81.6 million, up from $61.1 million in Q3 2023[17] - IoT PaaS revenue rose by 26.4% year-over-year to $57.9 million, driven by increased demand from global economic recovery[18] - Smart solutions revenue surged by 102.9% year-over-year to $13.8 million, reflecting growing customer demand for differentiated smart device solutions[18] Customer and Market Growth - The number of IoT PaaS customers increased to approximately 2,200, up from about 2,100 in Q3 2023[14] - The company achieved a net expansion rate (DBNER) of 124%, significantly up from 78% in Q3 2023[14] - The company aims to enhance its developer community, which has grown to over 1.26 million registered developers, a 26.9% increase from approximately 993,000 as of December 31, 2023[14] Financial Performance - The company reported a net cash flow from operating activities of $23.9 million, compared to $16.1 million in Q3 2023[12] - The overall gross margin was 46.0%, a slight decrease of 0.7 percentage points from 46.7% in Q3 2023[10] - Operating costs increased by 35.4% year-over-year to $44.1 million, aligning with the overall revenue growth trend[19] - Gross profit rose by 31.5% year-over-year to $37.5 million, with a gross margin of 46.0%, slightly down from 46.7% in Q3 2023[21] - The company reported an operating loss of $17.1 million, narrowing from a loss of $18.5 million in Q3 2023, with a non-GAAP operating profit of $7.4 million[26] - Net loss for Q3 2024 was $4.4 million, an improvement from a net loss of $4.9 million in Q3 2023, with a non-GAAP net profit of $20.1 million, up 99.5% year-over-year[27] Cash and Assets - As of September 30, 2024, cash and cash equivalents totaled $1,023.9 million, an increase from $984.3 million as of December 31, 2023[12] - Cash and cash equivalents, along with short-term and long-term investments, totaled $1,023.9 million as of September 30, 2024, compared to $984.3 million at the end of 2023[30] - The company's cash and cash equivalents increased from $498,688 thousand as of December 31, 2023, to $610,901 thousand as of September 30, 2024, reflecting a rise of about 22.5%[45] Liabilities and Equity - Total current liabilities rose from $87,534 thousand to $122,573 thousand, marking an increase of approximately 40%[45] - Shareholders' equity increased from $970,565 thousand to $989,749 thousand, showing a growth of about 2%[46] - The company reported a net loss of $579,636 thousand as of September 30, 2024, compared to a net loss of $574,848 thousand as of December 31, 2023, indicating a slight increase in losses[46] Operational Insights - Tuya Inc. utilizes non-GAAP financial metrics to assess operational performance, which includes non-GAAP operating expenses and non-GAAP net profit metrics[37] - The company emphasizes the importance of considering both GAAP and non-GAAP financial indicators for a comprehensive evaluation of its performance[38] - Tuya Inc. is focused on expanding its cloud developer platform capabilities, integrating cloud computing and generative AI to enhance its service offerings[36] - The company aims to foster a vibrant global developer community, which includes brands, OEMs, AI agents, and system integrators, to create smart solutions[36] Future Outlook - The company remains optimistic about future business prospects, focusing on product innovation, expanding quality customer base, and diversifying revenue sources while acknowledging potential challenges[32] - Tuya Inc. will hold a conference call on November 18, 2024, to discuss its financial performance and future outlook[33]

[Company Information](index=2&type=section&id=Company%20Information) [Executive Summary](index=4&type=section&id=Executive%20Summary) The company achieved strong financial and operational growth in H1 2024, with total revenue up 29.1% to $134.9 million, improved gross margin to 47.9%, first-time non-GAAP operating profit, and a significant increase in IoT PaaS DBNER to 127% [Financial Highlights](index=4&type=section&id=Financial%20Highlights) For the six months ended June 30, 2024, the company significantly improved its financial performance, with total revenue growing 29.1% to $134.9 million, overall gross margin increasing to 47.9%, substantial narrowing of losses, non-GAAP profitability, and operating cash flow reaching $26.3 million Key Financial Indicators for H1 2024 | Indicator | H1 2024 | H1 2023 | YoY Change | | :--- | :--- | :--- | :--- | | **Total Revenue** | $134.9 million USD | $104.5 million USD | +29.1% | | **IoT PaaS Revenue** | $99.9 million USD | $74.7 million USD | +33.7% | | **SaaS and Other Revenue** | $18.2 million USD | $17.8 million USD | +2.1% | | **Overall Gross Margin** | 47.9% | 45.6% | +2.3 percentage points | | **IoT PaaS Gross Margin** | 47.1% | 42.5% | +4.6 percentage points | | **Net Profit Margin** | -0.3% | -42.7% | +42.4 percentage points | | **Non-GAAP Net Profit Margin** | 24.5% | -2.1% | +26.6 percentage points | | **Net Cash Generated from Operating Activities** | $26.3 million USD | -$11.4 million USD | +331.1% | - As of June 30, 2024, the company held a robust financial position with total cash, cash equivalents, and short/long-term investments amounting to **$1,000.1 million**[6](index=6&type=chunk) [Operational Highlights](index=5&type=section&id=Operational%20Highlights) As of June 30, 2024, the company's operational strategy focused on large clients, increasing premium IoT PaaS clients to 280, contributing 85.1% of PaaS revenue, while the IoT PaaS DBNER significantly rose from 58% to 127%, and registered developers grew by 20.1% Key Operational Indicators for H1 2024 | Indicator | As of June 30, 2024 | As of June 30, 2023 | Change | | :--- | :--- | :--- | :--- | | **Premium IoT PaaS Clients** | 280 units | 251 units | +29 units | | **Premium Client PaaS Revenue Contribution** | 85.1% | 81.1% | +4.0 percentage points | | **IoT PaaS DBNER** | 127% | 58% | +69 percentage points | | **Registered Developers** | >1,192,000 units | (As of 2023/12/31) ~993,000 units | +20.1% (vs. end of 2023) | - Although the total number of IoT PaaS clients slightly decreased from 2,900 to 2,700, the growth in premium clients and their increased revenue contribution indicate the success of the company's large client strategy[7](index=7&type=chunk) [Management Discussion and Analysis](index=6&type=section&id=Management%20Discussion%20and%20Analysis) This section details the company's H1 2024 financial performance, highlighting revenue growth driven by strong demand in IoT PaaS and smart solutions, improved gross margins from product optimization, significantly reduced operating expenses leading to narrowed losses and non-GAAP operating profit, and a healthy cash flow position with no interest-bearing debt [Financial Performance Analysis](index=7&type=section&id=Financial%20Performance%20Analysis) In H1 2024, total revenue grew 29.1% to $134.9 million, with IoT PaaS and smart solutions showing strong growth, overall gross margin improved to 47.9% due to PaaS, operating expenses decreased by 18.0%, and operating loss significantly narrowed to $26.7 million, achieving non-GAAP operating profit of $6.8 million Revenue and Gross Margin by Business Segment | Business Segment | H1 2024 Revenue (million USD) | YoY Growth | H1 2024 Gross Margin | YoY Change | | :--- | :--- | :--- | :--- | :--- | | IoT PaaS | 99.9 | +33.7% | 47.1% | +4.6pp | | SaaS and Other | 18.2 | +2.1% | 71.6% | -2.7pp | | Smart Solutions | 16.8 | +41.1% | 27.5% | +5.4pp | Operating Expense Changes | Expense Item | H1 2024 (million USD) | H1 2023 (million USD) | YoY Change | | :--- | :--- | :--- | :--- | | Research and Development Expenses | 46.5 | 54.5 | -14.8% | | Sales and Marketing Expenses | 18.4 | 20.1 | -8.5% | | General and Administrative Expenses | 32.3 | 41.1 | -21.3% | | **Total Operating Expenses** | **91.4** | **111.4** | **-18.0%** | - Net loss significantly narrowed by **99.1%** from **$44.6 million** in the prior year period to **$0.4 million**, primarily due to operational improvements and **$25.3 million** in interest income, while non-GAAP net profit reached **$33.1 million**[13](index=13&type=chunk) [Liquidity and Capital Resources](index=9&type=section&id=Liquidity%20and%20Capital%20Resources) The company maintains a robust financial position with total cash, cash equivalents, and investments reaching $1,000.1 million as of June 30, 2024, significantly improved operating cash flow of $26.3 million, no interest-bearing bank borrowings or asset pledges, and strategic investments in treasury bonds for capital preservation and appreciation - As of June 30, 2024, total cash and cash equivalents, along with time deposits and treasury bonds classified as short-term and long-term investments, amounted to **$1,000.1 million**, which the company deems sufficient to meet its liquidity and working capital needs[15](index=15&type=chunk)[17](index=17&type=chunk) - During the reporting period, the company acquired treasury bonds with a book value of **$123.2 million** under shareholder authorization, representing approximately **11.3%** of total assets, generating approximately **$2.9 million** in investment income[20](index=20&type=chunk) - As of June 30, 2024, the company had no interest-bearing bank borrowings, asset pledges, or capital expenditure commitments, indicating a healthy financial structure[17](index=17&type=chunk)[18](index=18&type=chunk)[21](index=21&type=chunk) [Risk Management](index=12&type=section&id=Risk%20Management) The company's primary risk exposures are foreign exchange and interest rate risks; fluctuations in RMB to USD exchange rates impact reported earnings as most revenues and expenses are RMB-denominated, with no current hedging, while interest rate risk from idle cash is not considered material - The company's primary foreign exchange risk arises from conversion differences between RMB-denominated business activities and USD as the reporting currency, with no hedging instruments currently held[22](index=22&type=chunk) - Interest rate risk is primarily associated with interest income from interest-bearing bank deposits, and the company does not anticipate significant risk from interest rate changes[23](index=23&type=chunk) [Employees and Remuneration Policy](index=13&type=section&id=Employees%20and%20Remuneration%20Policy) As of June 30, 2024, the group had 1,450 salaried employees, with research and development personnel comprising the majority at 1,041, supported by competitive compensation, benefits, and a systematic recruitment and training system Number of Employees by Function (as of June 30, 2024) | Function | Number of Employees | | :--- | :--- | | Research and Development | 1,041 | | Sales and Marketing | 302 | | General and Administrative and Others | 107 | | **Total** | **1,450** | [Business Review and Outlook](index=14&type=section&id=Business%20Review%20and%20Outlook) In H1 2024, Tuya Smart achieved a historic breakthrough with its first quarterly non-GAAP operating profit and declared its first special dividend, driven by strong IoT PaaS growth and successful smart solutions transformation, while fully embracing generative AI to enhance products and developer platforms, expressing confidence in future innovation despite macroeconomic uncertainties [Business Review for the Reporting Period](index=14&type=section&id=Business%20Review%20for%20the%20Reporting%20Period) In Q2 2024, the company achieved its first quarterly non-GAAP operating profit and declared a special cash dividend of approximately $33 million, marking a new phase of sustainable development, with IoT PaaS growing 33.7% and smart solutions 41.1%, while deepening global partnerships and enhancing smart solutions' revenue and gross margin through high-value software integration - The company achieved its first-ever quarterly operating profit on a non-GAAP basis in Q2 2024, with an operating profit of approximately **$7.4 million**[25](index=25&type=chunk) - The company announced its first cash dividend of approximately **$33 million**, roughly equivalent to its non-GAAP net profit for H1 2024, demonstrating confidence in future cash flows[25](index=25&type=chunk) - The company expanded global collaborations, including a partnership with France's AX Tech Group to explore the energy-saving market, and collaborations with major telecom and internet service providers in Latin America and Asia-Pacific[26](index=26&type=chunk) - The smart device distribution segment was officially renamed 'Smart Solutions,' offering high-value products by integrating generative AI, operating systems, and cloud software, with this business's revenue growing **41.1%** year-over-year and a gross margin of **27.5%**[27](index=27&type=chunk) [Full Embrace of Generative AI](index=15&type=section&id=Full%20Embrace%20of%20Generative%20AI) Since early 2023, the company has fully embraced generative AI, deepening its application in device and edge AI in H1 2024 by integrating GenAI into products like smart light strips and pet cameras to enhance user experience and market competitiveness, and into smart scene configuration and developer platforms to lower user barriers and improve developer efficiency - The company leverages generative AI to enhance product intelligence, for instance, smart light strips can interpret user emotions to adjust lighting, and pet cameras can intelligently capture and generate videos[28](index=28&type=chunk) - The company plans to launch more generative AI-driven products in H2 2024 to enrich its solutions[28](index=28&type=chunk) [Outlook](index=16&type=section&id=Outlook) Looking ahead, with macroeconomic stability and normalized downstream inventory, the industry shows positive momentum; the company is confident in its business prospects, committed to product iteration, expanding premium clientele, and investing in innovation, while acknowledging challenges from changing consumer spending patterns and geopolitical uncertainties - The company maintains an optimistic outlook on future business prospects, primarily based on a stable macroeconomic environment, normalized downstream inventory, and growing demand for consumer electronics products[29](index=29&type=chunk) - The company will continue to focus on product iteration, enhancing software and hardware capabilities, expanding its premium customer base, investing in innovation, and optimizing operational efficiency[29](index=29&type=chunk) [Corporate Governance](index=16&type=section&id=Corporate%20Governance) This section outlines the company's corporate governance structure, including its Weighted Voting Rights (WVR) framework granting founders Mr. Wang Xueji and Mr. Chen Liaohan greater voting power, compliance with most Corporate Governance Code provisions despite the Chairman and CEO roles being combined, and the establishment of audit, remuneration, nomination, and corporate governance committees to ensure balanced power and effective oversight [Weighted Voting Rights (WVR)](index=17&type=section&id=Weighted%20Voting%20Rights) The company employs a Weighted Voting Rights structure where Class A ordinary shares have one vote and Class B ordinary shares have ten votes, enabling WVR beneficiaries Mr. Wang Xueji and Mr. Chen Liaohan to exercise voting control without majority economic interest, ensuring long-term vision stability, with both beneficiaries collectively controlling approximately 64.91% of voting rights as of the latest practicable date - The company's share capital is divided into A (one vote per share) and B (ten votes per share) ordinary shares, with B shares held by Weighted Voting Rights beneficiaries Mr. Wang Xueji and Mr. Chen Liaohan[31](index=31&type=chunk) - As of the latest practicable date, Mr. Wang and Mr. Chen collectively controlled approximately **64.91%** of the effective voting rights[32](index=32&type=chunk) [Compliance with Corporate Governance Code](index=18&type=section&id=Compliance%20with%20Corporate%20Governance%20Code) During the reporting period, the company complied with all Corporate Governance Code provisions, with the sole deviation being the combined roles of Chairman and CEO held by Mr. Wang Xueji, which the Board believes facilitates effective strategy execution and information flow, with power balance maintained through independent non-executive directors and collective board decision-making - The company deviated from the Corporate Governance Code's provision requiring separation of Chairman and CEO roles, with founder Mr. Wang Xueji concurrently serving as Co-Chairman and CEO[35](index=35&type=chunk) - The Board believes this arrangement does not compromise the balance of power, as all significant decisions are made after collective discussion by the Board, including four independent non-executive directors[35](index=35&type=chunk) [Board Committees](index=19&type=section&id=Board%20Committees) The Board has established four committees—Audit, Remuneration, Nomination, and Corporate Governance—to oversee specific matters, each comprising multiple directors, with independent non-executive directors playing key roles and serving as chairpersons to ensure independence and professionalism, and the Audit Committee having reviewed the current financial statements - The Audit Committee comprises three independent non-executive directors, chaired by Mr. Huang Xuande, and is responsible for overseeing financial reporting and internal controls[38](index=38&type=chunk) - The Remuneration Committee consists of Mr. Wang and two independent non-executive directors, chaired by Mr. Qiu Changheng, and is responsible for reviewing remuneration policies[39](index=39&type=chunk) - The Nomination Committee comprises Mr. Chen and two independent non-executive directors, chaired by Mr. Qiu Changheng, and is responsible for director nominations and board composition[41](index=41&type=chunk) - The Corporate Governance Committee consists of two independent non-executive directors, chaired by Mr. Qiu Changheng, and is responsible for overseeing the implementation of corporate governance principles, particularly safeguards related to the Weighted Voting Rights structure[42](index=42&type=chunk) [Other Information](index=22&type=section&id=Other%20Information) This section provides supplementary information on director and major shareholder holdings, share incentive plans, dividend policy, share repurchases, use of proceeds, and significant litigation, noting stable holdings by core management and major shareholders, the adoption of a new share plan in 2024, the declaration of a special dividend, minor share repurchases, planned use of global offering proceeds, and an ongoing securities class action lawsuit in the US [Directors' and Major Shareholders' Interests](index=22&type=section&id=Directors%27%20and%20Major%20Shareholders%27%20Interests) As of June 30, 2024, company founders Mr. Wang Xueji and Mr. Chen Liaohan are controlling shareholders, holding significant Class A and B ordinary shares through their controlled entities and trusts, with other major shareholders including New Enterprise Associates and Tencent, indicating a clear ownership structure and strong alignment of core management interests with the company - Founders Mr. Wang Xueji and Mr. Chen Liaohan hold **61.79%** and **38.21%** respectively of the company's Class B ordinary shares, constituting the controlling shareholders and Weighted Voting Rights beneficiaries[44](index=44&type=chunk) - Among institutional investors, New Enterprise Associates holds approximately **21.76%** of Class A ordinary shares, and Tencent holds approximately **11.56%** of Class A ordinary shares[50](index=50&type=chunk) [Share Plans](index=25&type=section&id=Share%20Plans) On June 20, 2024, the company adopted a new '2024 Share Plan' and terminated the '2015 Share Incentive Plan,' aiming to better incentivize and retain talent in compliance with updated listing rules, while during the reporting period, a small number of restricted share units were granted and some share options exercised or lapsed under the old plan - The company adopted a new '2024 Share Plan' on June 20, 2024, and terminated the '2015 Share Incentive Plan,' with all new awards thereafter to be granted under the new plan[53](index=53&type=chunk)[56](index=56&type=chunk) - The total limit for the 2024 Share Plan is **57,459,259** Class A ordinary shares, representing approximately **10%** of the total issued shares on the adoption date[64](index=64&type=chunk) - As of June 30, 2024, under the 2015 Plan, there were **51,037,005** unexercised share options and **7,261,875** unvested restricted share units outstanding[58](index=58&type=chunk)[59](index=59&type=chunk)[61](index=61&type=chunk) [Dividends](index=36&type=section&id=Dividends) On August 26, 2024, the Board approved the declaration and distribution of a special dividend of **$0.0589** per ordinary share (or ADS), totaling approximately **$33 million**, marking the company's first dividend, funded by surplus cash - The company declared a special dividend of **$0.0589** per share, totaling approximately **$33 million**, to be paid from surplus cash[69](index=69&type=chunk) [Purchases, Sales or Redemptions of the Company's Listed Securities](index=36&type=section&id=Purchases%2C%20Sales%20or%20Redemptions%20of%20the%20Company%27s%20Listed%20Securities) During the reporting period, the company repurchased **223,773** American Depositary Shares from the open market for a total consideration of **$0.4 million**, holding no treasury shares as of the reporting date - During the reporting period, the company repurchased **223,773** American Depositary Shares for a total consideration of **$0.4 million**[70](index=70&type=chunk) [Use of Proceeds from Global Offering](index=37&type=section&id=Use%20of%20Proceeds%20from%20Global%20Offering) The company's net proceeds of approximately **HK$70 million** from its July 2022 Hong Kong listing are being steadily utilized as planned in the prospectus, primarily for enhancing IoT technology, expanding product offerings, marketing, and strategic investments, with approximately **HK$41.8 million** remaining unused as of June 30, 2024 Use of Proceeds from Global Offering (million HKD) | Planned Use | Planned Amount | Unused as of 2024/6/30 | Expected Time of Use | | :--- | :--- | :--- | :--- | | Enhancing IoT Technology and Infrastructure | 21.0 | 12.6 | Next three and a half years | | Expanding and Enhancing Product Offerings | 21.0 | 12.6 | Next three and a half years | | Marketing and Branding Activities | 10.5 | 6.2 | Next three and a half years | | Strategic Partnerships, Investments, and Acquisitions | 10.5 | 6.2 | Next three and a half years | | General Corporate Purposes and Working Capital | 7.0 | 4.2 | Next three and a half years | | **Total** | **70.0** | **41.8** | | [Significant Litigation](index=39&type=section&id=Significant%20Litigation) The company is currently addressing a securities class action lawsuit filed in the US in August 2022, alleging materially misleading statements in its US listing registration statement, which remains ongoing with no estimable potential loss, and no other significant litigation or arbitration - The company and certain of its executives are named as defendants in a securities class action lawsuit in the US related to the company's 2021 US listing[76](index=76&type=chunk) - As of the reporting date, the lawsuit remains ongoing, and the company cannot estimate potential losses nor has it accrued significant liabilities in connection therewith[76](index=76&type=chunk) [Use of Non-GAAP Financial Measures](index=40&type=section&id=Use%20of%20Non-GAAP%20Financial%20Measures) The company uses Non-GAAP financial measures as supplementary metrics to assess operating performance, primarily excluding the impact of share-based compensation, credit-related impairment of long-term investments, and litigation expenses, with detailed reconciliations to the most comparable US GAAP measures provided in the report Reconciliation of Operating Loss to Non-GAAP Operating Profit (thousand USD) | Item | For the Six Months Ended June 30, 2024 | | :--- | :--- | | **Operating Loss (GAAP)** | **(26,711)** | | Add: Share-based compensation | 31,223 | | Add: Credit-related impairment of long-term investments | 189 | | Add: Litigation expenses | 2,100 | | **Non-GAAP Operating Profit** | **6,801** | Reconciliation of Net Loss to Non-GAAP Net Profit (thousand USD) | Item | For the Six Months Ended June 30, 2024 | | :--- | :--- | | **Net Loss (GAAP)** | **(415)** | | Add: Share-based compensation | 31,223 | | Add: Credit-related impairment of long-term investments | 189 | | Add: Litigation expenses | 2,100 | | **Non-GAAP Net Profit** | **33,097** | [Interim Financial Information Review Report](index=42&type=section&id=Interim%20Financial%20Information%20Review%20Report) PricewaterhouseCoopers, the company's independent auditor, has reviewed the interim financial information in accordance with International Standards on Review Engagements, concluding that nothing has come to their attention to suggest the interim financial information is not prepared in all material respects in accordance with US GAAP - Independent auditor PricewaterhouseCoopers reviewed the unaudited condensed consolidated financial statements for the six months ended June 30, 2024[82](index=82&type=chunk) - The review concluded that nothing significant came to their attention indicating the financial information was not prepared in accordance with US GAAP[83](index=83&type=chunk) [Unaudited Condensed Consolidated Financial Statements and Notes](index=43&type=section&id=Unaudited%20Condensed%20Consolidated%20Financial%20Statements%20and%20Notes) This section includes the company's unaudited condensed consolidated balance sheets, statements of comprehensive loss, changes in shareholders' equity, and cash flows as of June 30, 2024, along with detailed notes explaining accounting policies, account specifics (e.g., revenue, investments, share-based payments), and reconciliation differences with IFRS, showing total assets of $1.09 billion, total liabilities of $89.78 million, and shareholders' equity of $1 billion [Unaudited Condensed Consolidated Financial Statements](index=43&type=section&id=Unaudited%20Condensed%20Consolidated%20Financial%20Statements) As of June 30, 2024, financial statements show total assets increased to $1.09 billion, total liabilities decreased to $89.78 million, indicating a healthy balance sheet, while the statement of comprehensive loss shows net loss significantly narrowed to $0.415 million, and the cash flow statement reflects strong net cash inflow from operating activities of $116 million, with cash and cash equivalents reaching $615 million at period-end Condensed Consolidated Balance Sheets Summary (thousand USD) | Item | June 30, 2024 | December 31, 2023 | | :--- | :--- | :--- | | **Total Assets** | **1,089,650** | **1,066,400** | | Current Assets | 851,286 | 847,798 | | Non-current Assets | 238,364 | 218,602 | | **Total Liabilities** | **89,783** | **95,835** | | Current Liabilities | 84,938 | 87,534 | | **Total Shareholders' Equity** | **999,867** | **970,565** | Condensed Consolidated Statements of Comprehensive Loss Summary (thousand USD) | Item | For the Six Months Ended June 30, 2024 | For the Six Months Ended June 30, 2023 | | :--- | :--- | :--- | | Revenue | 134,941 | 104,489 | | Gross Profit | 64,677 | 47,669 | | Operating Loss | (26,711) | (63,713) | | **Net Loss** | **(415)** | **(44,594)** | Condensed Consolidated Statements of Cash Flows Summary (thousand USD) | Item | For the Six Months Ended June 30, 2024 | For the Six Months Ended June 30, 2023 | | :--- | :--- | :--- | | Net Cash from Operating Activities | 26,319 | (11,387) | | Net Cash from Investing Activities | 90,085 | (22,335) | | Net Cash from Financing Activities | 150 | (2,067) | | **Cash and Cash Equivalents at End of Period** | **614,919** | **94,542** | [Notes to Financial Statements](index=52&type=section&id=Notes%20to%20Financial%20Statements) The notes provide detailed explanations and supplementary information to the financial statements, including revenue recognition (Note 13) detailing segment revenues, share-based compensation (Note 16) disclosing equity incentive plan details and expense recognition, commitments and contingencies (Note 19) outlining contractual commitments and significant litigation, fair value measurements (Note 21) presenting financial asset hierarchy, and Note 24 offering a detailed reconciliation between US GAAP and IFRS, primarily differing in accounting for share-based compensation, operating leases, and long-term investments - Note 13 (Revenue): Details the amounts for the three major revenue streams: IoT PaaS, Smart Solutions, and SaaS and Others[127](index=127&type=chunk) - Note 16 (Share-based Compensation): As of June 30, 2024, unrecognized share-based compensation expenses related to share options and restricted share units were **$38.8 million** and **$14.9 million**, respectively[137](index=137&type=chunk)[139](index=139&type=chunk) - Note 19 (Commitments and Contingencies): The company has non-cancelable contractual commitments related to third-party cloud infrastructure, with a remaining amount of **$13.81 million**[151](index=151&type=chunk) - Note 24 (US GAAP and IFRS Reconciliation): Key differences between the two accounting standards resulted in a net profit of **$19.82 million** for H1 2024 under IFRS, compared to a net loss of **$0.415 million** under US GAAP, primarily due to differing recognition methods for share-based compensation expenses[171](index=171&type=chunk)[176](index=176&type=chunk) [Definitions](index=84&type=section&id=Definitions) This section defines key terms used in the report, such as different share classes (Class A, Class B), company entities, share incentive plans, Weighted Voting Rights structure, and related beneficiaries, providing essential background information for understanding the report's content

Financial Data and Key Metrics Changes - In Q2 2024, total revenue reached $73.3 million, reflecting a year-over-year growth of 28.6%, with a non-GAAP operational profit margin of 10% achieved for the first time [22][19][30] - Non-GAAP net profit reached $20.8 million, setting a new quarterly record, while operating cash flow exceeded $10 million [30] - The company maintained a stable gross margin of 71% for SaaS and other services, with IoT PaaS gross margin at 47.6%, showing a year-over-year improvement of around 3 percentage points [26][24] Business Line Data and Key Metrics Changes - IoT PaaS revenue was $54.3 million, up 32% year-over-year, with home appliances showing the highest growth at approximately 65% [22][23] - Smart solutions segment recorded revenue of $9.4 million, increasing by about 44.2% year-over-year, driven by strong demand for outdoor and energy-saving device solutions [25] - SaaS and other sectors generated $9.6 million in revenue, remaining stable due to adjustments in revenue structuring [26] Market Data and Key Metrics Changes - Europe remains the largest market, accounting for about one-third of total revenue, while Asia Pacific and Latin America showed accelerated demand growth, with Latin America's contribution increasing to nearly 10-15% [23] - The Asia Pacific region accounted for around one-third of total revenue demand, indicating a balanced regional revenue structure [23] Company Strategy and Development Direction - The company aims to enhance long-term revenue growth and profit margins while focusing on smart technology integration, particularly through GenAI [5][10] - Tuya's strategy includes leveraging its established ecosystem to win with volume and pricing, enhancing customer stickiness through smart solutions [25][26] - The company plans to continue investing in devices and edge AI to improve product competitiveness and user experience [15][17] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about sustaining year-over-year growth despite a high base from the previous year, citing a stable macroeconomic environment and strong demand in emerging markets [33][38] - The company is positioned to capitalize on opportunities in the smart technology landscape, with a focus on customer needs across various industries [36][38] Other Important Information - A special cash dividend of approximately $33 million was announced, reflecting the company's non-GAAP net profit for the first half of 2024 [19][45] - The current CFO will step down, with the co-founder Alex Yang set to succeed, indicating a transition in leadership [20][31] Q&A Session Summary Question: Future demand outlook and sustainability of growth - Management acknowledged the challenges of maintaining growth rates due to high bases but remained optimistic about continued year-over-year growth in core business [33][38] Question: Forward-looking operating profitability and cash dividend - Management emphasized that achieving profitability is a long-term goal, with a focus on balancing growth and profitability while maintaining cost control [41][42] - The special dividend was based on non-GAAP net profit, with plans for sustainable shareholder returns while ensuring the company can invest in growth [45] Question: Progress on GenAI and monetization strategies - Management detailed ongoing development of smart devices with GenAI capabilities, with plans for trial productions and revenue generation expected to begin next year [49][51]

Exhibit 99.1 Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this announcement, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this announcement. Tuya Inc. 塗鴉智能* (A company controlled through weighted voting rights and incorporated in the Cayman Islands with limited liability ...

香港交易及結算所有限公司及香港聯合交易所有限公司對本公告的內容概不負責，對其準確性 或完整性亦不發表任何聲明，並明確表示，概不就因本公告全部或任何部分內容所產生或因依 賴該等內容而引致的任何損失承擔任何責任。 Tuya Inc. 塗鴉智能* （於開曼群島註冊成立以不同投票權控制的有限責任公司） （香港聯交所股份代號：2391） （紐約證券交易所股票代碼：TUYA） 截至2024年6月30日止六個月中期業績公告 及 宣派特別股息 全球領先雲平台服務提供商Tuya Inc.（「Tuya」或「本公司」，聯交所代號：2391及 紐交所代號：TUYA）今日公佈本公司、其附屬公司及合併聯屬實體（「本集團」） 截至2024年6月30日止六個月（「報告期」）的未經審計財務業績連同截至2023年6 月30日止六個月之比較數字，以及宣派特別現金股息。 | --- | --- | |-------|---------------------------------------------------------------------------------------------------------------------- ...