Tuya Inc. (NYSE:TUYA) Q4 2021 Earnings Conference Call March 14, 2022 8:00 PM ET Corporate Participants Reg Chai - Associate Director, IR Jerry Wang - Chief Executive Officer Jessie Liu - Chief Financial Officer Conference Call Participants Yang Liu - Morgan Stanley Liping Zhao - CICC Operator Good morning and good evening ladies and gentlemen. Thank you for standing by and welcome to Tuya Inc.'s Fourth Quarter 2021 Earnings Conference Call. At this time, all participants are in listen-only mode. We will be ...

[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]