Core Insights - Tuya Inc. has filed its annual report on Form 20-F for the fiscal year ended December 31, 2023, with the SEC on April 24, 2024 [1] - The company has released its inaugural Environmental, Social and Governance (ESG) Report to showcase its ESG strategies and sustainability goals [1] Company Overview - Tuya Inc. is a global leading IoT cloud development platform focused on building an IoT developer ecosystem [2] - The company offers a comprehensive suite of services including Platform-as-a-Service (PaaS), Software-as-a-Service (SaaS), and smart solutions for IoT devices [2] - Tuya enables developers to create a vibrant IoT ecosystem involving brands, OEMs, partners, and end users through a wide range of smart devices [2]

Financial Performance - Revenue for 2023 reached $229.99 million, an increase of 10.5% compared to $208.17 million in 2022[7] - Gross profit for 2023 was $106.66 million, up from $89.42 million in the previous year, reflecting a gross margin improvement[7] - Operating loss decreased to $105.82 million in 2023 from $168.19 million in 2022, indicating improved operational efficiency[7] - Net loss for 2023 was $60.32 million, significantly reduced from $146.18 million in 2022[7] - Total revenue for the year ended December 31, 2023, was $230.0 million, an increase of approximately 10.5% year-over-year from $208.2 million[8] - The overall gross margin improved to 46.4%, up 3.4 percentage points from 43.0% in the previous year[8] - The company achieved a non-GAAP net profit margin of 8.9%, marking the first time it reached annual breakeven[11] - The net loss was $60.3 million for the year ended December 31, 2023, a reduction of 58.7% compared to $146.2 million in 2022[23] - The operating loss narrowed by 37.1% to $105.8 million for the year ended December 31, 2023, from $168.2 million in 2022[22] - The adjusted net profit under non-GAAP was $20.4 million for the year ended December 31, 2023, compared to a non-GAAP net loss of $77.2 million in 2022[23] Assets and Liabilities - Total assets as of December 31, 2023, amounted to $1.07 billion, slightly up from $1.06 billion in 2022[7] - Current assets decreased to $847.80 million from $1.02 billion in 2022, indicating a shift in asset management[7] - Total liabilities increased marginally to $95.84 million from $93.97 million in 2022, maintaining a stable financial position[7] - Cash and cash equivalents, along with short-term and long-term investments, totaled $984.3 million as of December 31, 2023, compared to $952.0 million as of December 31, 2022[25] - The company had no interest-bearing bank or other borrowings as of December 31, 2023, resulting in a debt-to-equity ratio of zero[29] Revenue Streams - IoT PaaS revenue reached $167.7 million, up about 9.7% from $152.9 million in the previous year[8] - SaaS and other revenue grew to $35.8 million, reflecting a year-over-year increase of approximately 20.0% from $29.8 million[8] - Smart device distribution revenue rose 4.2% to $26.5 million in 2023, from $25.4 million in 2022, mainly due to increased smart device solution revenues[17] Customer and Market Dynamics - The number of IoT PaaS customers decreased to approximately 4,000 from 5,100 in the previous year, while total customers fell to about 6,100 from 7,600[9] - The number of registered IoT developers increased by 40.3% to approximately 993,000 from about 708,000[9] - The net expansion rate for IoT PaaS based on revenue was 103%, significantly up from 51% in the previous year[9] - The company has established a large active community of approximately 993,000 registered IoT developers, supporting a diverse customer base across various industries[10] Research and Development - Management highlighted ongoing research and development efforts aimed at enhancing technology offerings and market competitiveness[5] - The research and development expenses decreased by 29.4% to $102.3 million for the year ended December 31, 2023, from $144.9 million in 2022[20] - The company continues to enhance its product offerings, including the development of energy-saving solutions and smart temperature control devices[14] Corporate Governance - The company is committed to maintaining high standards of corporate governance to enhance performance, transparency, and accountability[120] - The board includes independent directors with diverse backgrounds in finance, technology, and management[115][116] - The company has established a written guideline for employees regarding securities trading to prevent insider trading[123] - The company has received annual independence confirmations from all independent non-executive directors, affirming their compliance with independence guidelines[129] Future Outlook - The company plans to expand its market presence and invest in new product development to drive future growth[5] - Future outlook indicates a focus on product iteration, service improvement, and expanding quality customer base amidst ongoing economic challenges[16] Legal and Compliance - The company is involved in a securities class action lawsuit filed in the U.S. District Court for the Southern District of New York, which alleges misleading statements in the registration statement related to its U.S. listing[110] - The company is subject to regulatory scrutiny regarding its contractual arrangements with consolidated affiliated entities, which may impact its financial condition and investment value[50] Shareholder Information - The company has not declared or paid any cash or stock dividends in the past and does not plan to do so in the near future, retaining most available funds for business operations and expansion[148] - The board of directors does not recommend the distribution of a final dividend for the year ending December 31, 2023[72] Employee and Workforce - The workforce consisted of 1,465 employees as of December 31, 2023, with 1,047 in research and development[34] - The company has a gender ratio of approximately 2.2 males for every female employee[147] Financial Reporting and Audit - The consolidated financial statements for the fiscal year ending December 31, 2023, were audited by PwC, with no changes in auditors over the past three years[81] - The independent auditor has confirmed the company's responsibility for the preparation of the consolidated financial statements for the year ending December 31, 2023[155] Risk Management - The company has established a risk management and internal control system to identify, manage, and mitigate risks associated with business operations and financial reporting[156] - The internal audit department conducts independent reviews of the adequacy and effectiveness of internal controls, reporting any issues to the audit committee[157]

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 (Mark One) FORM 20-F ☐ REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934 OR ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2023. OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 ☐ SECURITIES EXCHANGE ACT OF 1934 E-mail: ir@tuya.com 10/F, Building A, Hua ...

THE HAGUE, Netherlands, March 21, 2024 /PRNewswire/ -- Tuya Smart (NYSE: TUYA, HKEX: 2391), a global IoT developer service provider, shared front-line insights at a cyber norms forum co-hosted by the Research Center for Global Cyberspace Governance (RCGCG) and the Cyber Security Governance of Leiden University to further advance discussions on cybersecurity regulation in Europe. The forum gathered experts in cybersecurity and international relations from institutions, organizations and enterprises to deepen ...

Revenue Growth - Total revenue for the year ended December 31, 2023, was $230.0 million, an increase of approximately 10.5% compared to $208.2 million for the year ended December 31, 2022[2]. - IoT PaaS revenue for the year ended December 31, 2023, was $167.7 million, up about 9.7% from $152.9 million for the year ended December 31, 2022[2]. - SaaS and other revenue for the year ended December 31, 2023, was $35.8 million, reflecting a growth of approximately 20.0% compared to $29.8 million for the year ended December 31, 2022[2]. - The company’s revenue growth is driven by its focus on IoT solutions and expanding its SaaS offerings[48]. Profitability and Loss - Operating loss margin improved to negative 46.0%, a 34.8 percentage point improvement from negative 80.8% for the year ended December 31, 2022[2]. - Net profit margin was negative 26.2%, improving by 44.0 percentage points from negative 70.2% for the year ended December 31, 2022[2]. - The company reported a net loss of $60.3 million for the year ended December 31, 2023, an improvement of 58.7% compared to a net loss of $146.2 million in 2022[8]. - The operating loss for the year ended December 31, 2023, was $105.8 million, narrowing by 37.1% from $168.2 million in the previous year[7]. - Non-GAAP operating loss improved from $99,167,000 in 2022 to $25,071,000 in 2023, representing a reduction of approximately 74.7%[66]. - Non-GAAP net loss margin improved from -37.1% in 2022 to 8.9% in 2023, indicating a significant turnaround[66]. Cash and Investments - Cash and cash equivalents, along with short-term and long-term investments, totaled $984.3 million as of December 31, 2023, compared to $952.0 million as of December 31, 2022[3]. - The company generated a net cash inflow from operating activities of $36.4 million for the year ended December 31, 2023, compared to a net cash outflow of $70.7 million for the year ended December 31, 2022[13]. - The company had no interest-bearing bank loans or other borrowings as of December 31, 2023, resulting in a debt-to-equity ratio of zero[15]. - Cash and cash equivalents increased to $498,688,000 as of December 31, 2023, up from $133,161,000 at the end of 2022, marking a growth of approximately 274.5%[45]. Customer Metrics - The number of IoT PaaS customers was approximately 4,000 as of December 31, 2023, down from 5,100 as of December 31, 2022[3]. - The number of registered IoT developers increased by 40.3% to approximately 993,000 as of December 31, 2023, compared to about 708,000 as of December 31, 2022[3]. - The company’s DBNER for IoT PaaS was 103% for the trailing twelve months, indicating revenue growth from existing customers[11]. Operating Expenses - Operating expenses for the year ended December 31, 2023, were $212.5 million, a decrease of 17.5% compared to $257.6 million for the same period in 2022[6]. - Research and development expenses for the year ended December 31, 2023, were $102.3 million, down 29.4% from $144.9 million in 2022, primarily due to strategic streamlining of the R&D team[6]. - Sales and marketing expenses adjusted for stock-based compensation decreased from $48,837,000 in 2022 to $34,994,000 in 2023, a reduction of approximately 28.5%[66]. - General and administrative expenses adjusted for stock-based compensation and long-term investment credit-related impairment increased from $20,011,000 in 2022 to $20,090,000 in 2023, a slight increase of approximately 0.4%[66]. Corporate Governance and Compliance - The company has adhered to all corporate governance codes as of December 31, 2023, with the exception of the separation of the roles of Chairman and CEO[22][23]. - The audit committee reviewed the unaudited consolidated financial statements for the reporting period, with no disagreements on accounting policies[26]. - The company is involved in an ongoing securities class action lawsuit filed in August 2022, with a partial approval of its motion to dismiss as of March 5, 2024[31]. Future Plans and Strategy - The company plans to continue iterating and improving its products and services while diversifying revenue sources and optimizing operational efficiency in response to market changes[12]. - The company aims to seek strategic partnerships and investments to implement its long-term growth strategy, with 15% of the net proceeds allocated for this purpose, amounting to HKD 10.5 million[29]. - The company plans to enhance IoT technology and infrastructure, allocating approximately 30% of the net proceeds for this purpose, which equates to HKD 21.0 million[29]. Taxation - The company has maintained a 15% preferential tax rate for its foreign-invested enterprise in China, valid until December 31, 2024[50]. - The company reported a current income tax expense of $3,249 for the year ended December 31, 2023, compared to $1,880 in 2022, indicating an increase of 72.5%[52]. - The actual tax rate for the year ended December 31, 2023, was (5.7%), compared to (1.3%) for the year ended December 31, 2022, reflecting changes in tax liabilities[54].

Financial Data and Key Metrics Changes - The total revenue for Q4 2023 was approximately $64.4 million, reflecting a year-over-year increase of 42.2% [4][18] - Non-GAAP net profit reached around $12.6 million, a quarter-over-quarter increase of about 25% [5] - The blended gross margin achieved a new high of 47.3% [5][24] - Net cash from operating activities was approximately $31.8 million, contributing to a total net cash position of about $984 million by the end of Q4 [6][28] Business Line Data and Key Metrics Changes - IoT PaaS revenue in Q4 was $47.2 million, representing a year-over-year increase of 44.6% [18] - The smart device distribution segment generated revenue of approximately $7.8 million, achieving a year-over-year growth of 64.6% [22] - SaaS and other sectors recorded revenue of $9.5 million in Q4, reflecting a 19.3% year-over-year increase [23] Market Data and Key Metrics Changes - The company observed stronger growth momentum in Southeast Asia and Latin America compared to Europe and America [31] - Inventory normalization began in Q3 2023, leading to healthy restocking activities in retail channels [34] Company Strategy and Development Direction - The company is focusing on engaging high-quality customers, enhancing product offerings, and improving cost efficiency [7] - A key account strategy has been implemented to secure and better serve large customers with long-term potential [8] - The company aims to expand into new smart domains beyond consumer electronics [7] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in emerging from the industry downturn, with expectations of moderate growth in global discretionary smart device spending for 2024 [31][35] - The company anticipates that the inventory level will remain healthy, with downstream enterprises optimistic about their smart business outlook for 2024 [34] Other Important Information - The company has seen a significant increase in its developer community, with approximately 993,000 registered developers by Q4 [15] - The company has established partnerships with major telecom operators and industry leaders to enhance its smart solutions [9][10] Q&A Session Summary Question: 2024 revenue growth outlook and margin expectations - Management expects moderate growth in global discretionary smart device spending, with Southeast Asia and Latin America showing stronger momentum [31][35] - The gross margin is expected to remain stable, with contributions from IoT PaaS and SaaS segments [36][38] Question: Impairment loss and balance sheet outlook - The company reported a total credit loss of around $15.5 million in 2023, primarily due to strategic investments in underperforming partners [39][40] Question: SaaS segment outlook and key customer progress - The SaaS segment is expected to maintain good momentum, with a steady increase in enterprise customers using cloud storage technology [42][44] Question: Operating expenses and headcount plans for 2024 - Operating expenses are expected to remain stable, with a focus on maintaining the current team size and moderate investments in marketing [48][49]

Financial Performance - Total revenue for Q4 2023 was $64.4 million, representing a year-over-year increase of approximately 42.2% compared to $45.3 million in Q4 2022[6] - The company reported a non-GAAP net profit of $12.6 million in Q4 2023, compared to a non-GAAP net loss of $5.2 million in the same quarter last year[13] - The net loss narrowed by 52.4% to $10.8 million in Q4 2023, down from $22.7 million in Q4 2022[13] - Revenue for the three months ended December 31, 2023, was $64,411,000, representing a 42.3% increase from $45,286,000 in the same period of 2022[26] - Gross profit for the same period increased to $30,463,000, up from $20,186,000, indicating a significant improvement in profitability[26] IoT Platform as a Service (PaaS) Performance - IoT Platform as a Service (PaaS) revenue reached $47.2 million, up about 44.6% year-over-year from $32.6 million in Q4 2022[6] - The net expansion rate for IoT PaaS based on revenue was 103%, significantly up from 51% in Q4 2022[7] - The contribution of high-quality IoT PaaS customers to revenue was approximately 82.7%, up from 77.0% in Q4 2022[7] - The gross margin for the IoT PaaS segment improved to 44.8% in Q4 2023 from 41.5% in the same quarter last year[10] Cash Flow and Financial Position - Operating cash flow was $31.8 million, a significant improvement from a cash outflow of $0.1 million in Q4 2022[6] - Cash and cash equivalents, along with short-term and long-term investments, totaled $984.3 million as of December 31, 2023, compared to $952.0 million as of December 31, 2022[6] - Cash and cash equivalents increased significantly to $498,688,000 as of December 31, 2023, from $133,161,000 a year earlier, marking a growth of 274.5%[29] - Total assets rose slightly to $1,066,400,000 in 2023 from $1,056,139,000 in 2022, indicating stable asset management[25] Operating Expenses and Margins - Operating expenses rose by 2.0% to $54.1 million in Q4 2023, while non-GAAP operating expenses decreased by 13.5% to $30.7 million[11] - The company’s operating loss decreased by 28.0% to $23.6 million in Q4 2023, compared to $32.8 million in Q4 2022[12] - Non-GAAP operating margin improved to -0.4%, up 33.4 percentage points from -33.8% in Q4 2022[6] - The company reported a non-GAAP net loss margin of 16.8% for Q4 2023, an improvement from 50.2% in Q4 2022[30] Customer Metrics - The number of IoT PaaS customers was approximately 2,200, down from about 2,400 in Q4 2022, while total customers were around 3,200, down from 3,400[7] - The number of registered IoT devices and software developers grew to approximately 993,000, a 40.3% increase from about 708,000 developers as of December 31, 2022[7] Future Outlook and Strategy - The company expressed confidence in its financial foundation and growth momentum to support business expansion and product profitability in 2024[8] - The company anticipates continued inflation impacting discretionary consumer electronics spending, while downstream inventory levels are expected to normalize, providing greater flexibility for manufacturers and retailers[17] - The company is committed to iterating and improving its products and services, enhancing software and hardware capabilities, and diversifying revenue sources to optimize operational efficiency[17] Conference Call and Reporting - The upcoming earnings conference call is scheduled for February 27, 2024, at 7:30 PM EST, with access details provided for participants[18] General Information - Tuya Inc. is a leading IoT cloud development platform, offering a comprehensive suite of products including PaaS and SaaS to empower a vibrant IoT ecosystem[19] - The company uses non-GAAP financial metrics to assess business performance, which may not reflect all operating expenses and could limit comparability with other companies[20] - Forward-looking statements are subject to inherent risks and uncertainties, with actual results potentially differing significantly from those projected[21]

Financial Performance - Total revenue for Q4 2023 was US$64.4 million, representing a 42.2% increase year over year from US$45.3 million in Q4 2022[2] - Non-GAAP net profit for Q4 2023 was US$12.6 million, compared to a non-GAAP net loss of US$5.2 million in Q4 2022[17] - The net loss attributable to Tuya Inc. decreased to $10,816 thousand in Q4 2023 from $22,730 thousand in Q4 2022, reflecting a reduction in losses by approximately 52.4%[37] - Non-GAAP net profit turned positive at $12,555 million in Q4 2023, compared to a non-GAAP net loss of $5,220 million in Q4 2022[41] - Net loss decreased from $22,730 million in Q4 2022 to $10,816 million in Q4 2023, representing a decline of about 52.4%[41] Revenue Breakdown - IoT PaaS revenue increased by 44.6% year over year to US$47.2 million, up from US$32.6 million in Q4 2022[2] - Tuya Inc. reported revenue of $64,411 thousand for the three months ended December 31, 2023, representing a 42.4% increase from $45,286 thousand in the same period of 2022[35] Margins and Profitability - Overall gross margin improved to 47.3%, up 2.7 percentage points from 44.6% in Q4 2022[2] - The gross profit for the same period was $30,463 thousand, up from $20,186 thousand, indicating a gross margin improvement[35] - Non-GAAP loss from operations improved from $15,320 million in Q4 2022 to $253 million in Q4 2023, indicating a substantial reduction in operational losses[41] - Non-GAAP net margin improved significantly from -11.5% in Q4 2022 to 19.5% in Q4 2023[41] - The operating margin improved from -72.5% in Q4 2022 to -36.7% in Q4 2023, showing a positive trend in operational efficiency[41] Cash Flow and Liquidity - Net cash generated from operating activities was US$31.8 million, compared to a net cash used of US$0.1 million in Q4 2022[3] - The company reported a net cash generated from operating activities of $31,760 thousand for Q4 2023, a significant turnaround from a cash outflow of $138 thousand in Q4 2022[39] - Total cash and cash equivalents as of December 31, 2023, were US$984.3 million, up from US$952.0 million a year earlier[19] - Cash and cash equivalents increased significantly to $498,688 thousand as of December 31, 2023, compared to $133,161 thousand at the end of 2022, marking a growth of 274.5%[31] Operational Efficiency - Operating margin improved to negative 36.7%, a 35.8 percentage point improvement from negative 72.5% in Q4 2022[16] - Operating expenses for Q4 2023 were $54,087 thousand, slightly higher than $53,016 thousand in Q4 2022, with R&D expenses decreasing to $22,806 thousand from $27,792 thousand[35] - Research and development expenses decreased from $27,792 million in Q4 2022 to $22,806 million in Q4 2023, a reduction of approximately 17.9%[41] - Adjusted sales and marketing expenses slightly decreased from $9,592 million in Q4 2022 to $9,475 million in Q4 2023, a decline of about 1.2%[41] - General and administrative expenses increased significantly from $16,181 million in Q4 2022 to $23,754 million in Q4 2023, an increase of approximately 46.8%[41] Growth and Development - Registered IoT device and software developers reached approximately 993,000, a 40.3% increase from 708,000 in Q4 2022[4] - The dollar-based net expansion rate (DBNER) for IoT PaaS was 103%, significantly up from 51% in the previous year[4] - The company plans to enhance product capabilities and expand its customer base while navigating potential market challenges[22] - Tuya Inc. continues to focus on expanding its IoT cloud development platform, aiming to enhance its developer ecosystem and smart device offerings[24] Assets and Liabilities - Total assets rose to $1,066,400 thousand in 2023 from $1,056,139 thousand in 2022, showing a modest increase of 1.1%[33] - Tuya's total current liabilities increased to $87,534 thousand in 2023 from $81,282 thousand in 2022, reflecting a rise of 7.8%[31] - The company’s total shareholders' equity increased to $970,565 thousand in 2023 from $962,167 thousand in 2022, indicating a growth of 0.4%[33] Shareholder Information - Basic non-GAAP net profit per share increased from -$0.01 in Q4 2022 to $0.02 in Q4 2023, indicating a turnaround in profitability[41] - The weighted average number of diluted shares increased from 554,121,595 in Q4 2022 to 589,438,606 in Q4 2023, reflecting a growth in shareholder base[41]

Core Viewpoint - Tuya Inc. will report its fourth quarter 2023 unaudited financial results on February 27, 2024, after market close [1] Group 1: Financial Reporting - The financial results will be discussed in a conference call scheduled for 07:30 P.M. Eastern Time on February 27, 2024 [2] - Participants must complete an online registration process to join the conference call, receiving access details upon registration [2] - A live and archived webcast of the conference call will be available on the Company's investor relations website [2] Group 2: Company Overview - Tuya Inc. is a leading global IoT cloud development platform focused on building an IoT developer ecosystem [3] - The company offers a comprehensive suite of services, including Platform-as-a-Service (PaaS) and Software-as-a-Service (SaaS) [3] - Tuya enables a vibrant IoT ecosystem by connecting brands, OEMs, partners, and end users through a variety of smart devices [3]

Core Insights - Tuya Smart has successfully implemented Amazon Aurora as its core database engine to manage billions of real-time online devices, ensuring high performance and low latency [3][4][9] - The collaboration between Tuya and AWS aims to enhance IoT applications' performance, stability, scalability, and security, thereby driving innovation in the industry [5][9] Company Overview - Tuya Smart is a leading technology company focused on IoT solutions, connecting a wide range of devices and improving product value for partners and customers [2] - As of September 30, 2023, Tuya's IoT Developer Platform has over 909,000 registered developers from more than 200 countries, covering various industries [3] Database Implementation - Tuya selected Amazon Aurora for its unmatched performance and global availability, addressing challenges related to high-frequency data reads and writes from billions of devices [3][4] - Aurora's architecture allows for low-latency replication and read-write separation, enhancing system throughput and enabling Tuya to manage peak traffic effectively [3][4] Security and Compliance - Amazon Aurora provides physical encryption for database products, aiding Tuya in meeting diverse regional data compliance regulations, such as GDPR [4] - Tuya is exploring innovative features of Aurora, including Enhanced Binlog and zero-ETL, to further enhance its business capabilities [4] Future Collaboration - Tuya and AWS are committed to advancing the cloud experience and fostering innovation through their partnership, with a focus on providing a secure and reliable cloud environment for developers [5][9] - Tuya aims to continue leveraging Amazon Aurora's innovations to support its global business strategy and enhance operational efficiency [8][9]