Viomi Technology Co., Ltd (NASDAQ:VIOT) Q4 2020 Earnings Conference Call March 25, 2021 8:00 AM ET Company Participants Cecilia Li - Senior Investor Relations-Manager Xiaoping Chen - Founder, Chairman & Chief Executive Officer Conference Call Participants Lillian Lou - Morgan Stanley Xudong Chen - CICC Vincent Yu - Needham & Company Operator Hello, ladies and gentlemen, thank you for standing by for Viomi Technology Co. Ltd's Fourth Quarter and Full Year 2020 Earnings Conference Call. At this time, all part ...

Financial Data and Key Metrics Changes - The company's second quarter revenues reached more than RMB 1.68 billion, representing a year-over-year increase of 45.2% [7][18] - Net income was RMB 10.3 million compared to RMB 88.9 million for the second quarter of 2019, with non-GAAP net income at RMB 41.5 million compared to RMB 99.3 million [25] - Gross profit was RMB 241 million with a gross margin of 14.3%, down from 26.6% in the same quarter last year [21][22] Business Line Data and Key Metrics Changes - Revenues from IoT-enabled smart home products increased by 46.7% to RMB 1.3 billion from RMB 906 million for the second quarter of 2019 [18] - Revenues from smart kitchen and other products surged by 89.3% to RMB 1.06 billion, driven by the successful launch of air conditioning systems and strong performance of Xiaomi-branded sweeper robots [19] - Revenues from smart water purification systems decreased by 22.6% to RMB 266.8 million, primarily due to decreases in average selling prices [18] Market Data and Key Metrics Changes - The company reported its best-ever performance during the '618' sales season, more than doubling related retail sales value across its entire product range year-over-year [7][8] - The cumulative household users reached more than 4.2 million [17] Company Strategy and Development Direction - The company is focusing on product innovation and new product launches under its IoT @ Home strategic framework, with significant progress in 5G initiatives [9][10] - Strategic partnerships have been established to enhance content offerings and improve user engagement, including collaborations with Kugou Music and Hunan Friendship & Apollo Commercial Co. Ltd. [11][12][13] - The company aims to strengthen its industry positioning and enhance brand recognition through the ramp-up of newly launched products in the second half of the year [14] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism about continued recovery in sales performance across both online and offline channels, with strong performance expected in the third quarter [30][31] - The company anticipates a degree of gross margin uplift in the second half, driven by recovering industry conditions and premiumization of its product portfolio [22][34] - Future revenue guidance for the third quarter is expected to be between RMB 1.4 billion and RMB 1.45 billion, representing a year-over-year growth of approximately 30.8% to 35.5% [27] Other Important Information - Total operating expenses increased by 13.3% to RMB 239.4 million, primarily due to business growth and increased share-based compensation [23] - The company implemented a share incentive plan in the second quarter to attract and retain talent, awarding approximately 15.6 million share options [15][54] Q&A Session Summary Question: Update on recent business operations, particularly in July and August - Management noted a noticeable month-on-month recovery in sales performance across online and offline channels, with strong growth indicators heading into the third quarter [30][31] Question: Strategy for small appliances and niche products - Management highlighted that small appliances will be a key growth category, with a specialized team focusing on product innovation and development [32][35] Question: Outlook for net profit margin - Management expects some degree of uplift in net profit margin in the second half, driven by recovering industry conditions and premiumization of the product portfolio [34][36] Question: New product launches in the second half - Key growth drivers include the continued ramp-up of new product categories launched earlier in the year, such as air conditioning systems and next-generation water purifiers [39][40] Question: Collaboration with Kugou Music - The partnership aims to enhance user experience and engagement with products, particularly the 21Face large-screen refrigerators, through content and entertainment offerings [42][43] Question: Growth potential in product lines for the second half - Air conditioners are expected to be a significant contributor to growth, along with next-generation water purifiers and small appliances [46] Question: Monetization opportunities from internet services initiatives - The focus is on enhancing user experience and building the user base, with monetization strategies to be explored in the future [48][49]

Viomi Technology Co Ltd (NASDAQ:VIOT) Q1 2020 Earnings Conference Call May 26, 2020 8:00 AM ET Company Participants Cecilia Li - The Piacente Group Xiaoping Chen - Founder, Chairman & CEO Shun Jiang - CFO Conference Call Participants Hanli Fan - Morgan Stanley Xudong Chen - CICC Robert Cowell - 86Research Limited Vincent Yu - Needham & Company Operator Hello, ladies and gentlemen. Thank you for standing by for Viomi Technology Co., Ltd Earnings Conference Call for the First Quarter of 2020. [Operator Instr ...

Financial Performance - Net revenues increased from RMB 312,574 thousand in 2016 to RMB 4,647,513 thousand in 2019, representing a growth of approximately 1,387%[15] - Gross profit rose from RMB 80,030 thousand in 2016 to RMB 1,082,404 thousand in 2019, reflecting an increase of about 1,352%[15] - Operating expenses grew from RMB 65,241 thousand in 2016 to RMB 807,215 thousand in 2019, a rise of approximately 1,136%[15] - Net income attributable to the Company increased significantly from RMB 16,259 thousand in 2016 to RMB 292,170 thousand in 2019, marking an increase of about 1,795%[15] - Cash and cash equivalents at the end of 2019 were RMB 1,003,005 thousand, up from RMB 156,930 thousand in 2016, indicating a growth of approximately 539%[19] - Total current assets increased from RMB 276,166 thousand in 2016 to RMB 2,907,615 thousand in 2019, representing a growth of about 950%[18] - Total liabilities rose from RMB 136,886 thousand in 2016 to RMB 1,648,026 thousand in 2019, an increase of approximately 1,103%[18] - The Company reported net cash provided by operating activities of RMB 245,484 thousand in 2019, up from RMB 15,499 thousand in 2016, reflecting a growth of about 1,487%[19] Market and Competition - The Company operates in a highly competitive market, facing challenges from both traditional home appliance companies and other smart home solution providers[22] - The IoT-enabled smart home products market in China has experienced rapid growth, but uncertainties in the macro-economy may affect future growth rates[40] - Sales to Xiaomi accounted for 84.7%, 51.2%, and 45.4% of net revenues in 2017, 2018, and 2019, respectively, highlighting the dependency on a single customer[63] Operational Challenges - The company has limited operating history since its establishment in May 2014, making it difficult to evaluate future growth prospects[27] - The company aims to expand its product offerings and may face challenges in accurately anticipating user demand, potentially leading to inventory issues[38] - User engagement is critical to the company's business model, and any decline could adversely impact operating results[41] - The company relies on contract manufacturers for production, and any operational difficulties could materially affect business results[47] - Recent increases in market prices for raw materials, particularly for refrigerators, may negatively impact financial results if costs cannot be recovered through price increases[46] - The company is susceptible to supply shortages and interruptions, which could disrupt the supply chain and adversely affect operations[44] - Inventory management challenges may arise from inaccurate demand forecasting, leading to excess inventory or product shortages[60] - The company relies on third-party logistics and after-sales service providers, which may affect customer experience if these services are disrupted[67] Strategic Initiatives - The company has implemented an AI + IoT + 5G strategy to prepare for technological advancements, including the introduction of 5G customer premise equipment products in 2019[43] - The development of Viomi IoT Technology Park is expected to be completed in two phases over a ten-year period, enhancing the company's manufacturing and R&D capabilities[51] - The company emphasizes the importance of expanding and maintaining its ecosystem partners to drive net revenue growth and enhance product attractiveness[73] Regulatory and Compliance Risks - The company operates through variable interest entities (VIEs) in China, which may face regulatory scrutiny and potential penalties from the PRC government[108] - The imposition of penalties by the PRC government could materially and adversely affect the company's ability to conduct its business and consolidate financial results[110] - The PRC legal system presents uncertainties that could limit the company's ability to enforce contractual arrangements and adversely affect business operations[125] - The evolving regulatory environment in China poses uncertainties regarding the legality of foreign investments in internet-related businesses[133] - Compliance with SAFE Circular 37 mandates PRC residents to register offshore investments, affecting capital injection and profit distribution capabilities[145] Financial Reporting and Governance - The company identified three material weaknesses in its internal control over financial reporting, which could lead to inaccuracies in financial statements[96] - The lack of sufficient resources regarding financial reporting and accounting personnel with understanding of U.S. GAAP has been highlighted as a significant issue[97] - The company is classified as an "emerging growth company," allowing it to take advantage of reduced reporting requirements, including exemptions from certain auditor attestation requirements[177] - The dual-class share structure may prevent the inclusion of the company's ADSs in major indices, potentially leading to a less active trading market[176] Economic Factors - Economic downturns may adversely affect consumer discretionary spending, impacting demand for the company's products and services[75] - The Chinese economy experienced a 6.8% drop in GDP in Q1 2020 compared to the same period in 2019, indicating significant economic challenges[130] - Rising labor costs in China and increasing raw material prices may adversely affect the company's profitability[93] Shareholder Rights and Dividends - The board of directors has complete discretion over dividend distribution, which may depend on future results, cash flow, and capital requirements[185] - Holders of ADSs may not receive dividends or distributions if it is illegal or impractical to make them available[187] - The deposit agreement limits the rights of ADS holders to pursue claims, including waiving the right to a jury trial[195] Technology and Innovation - The company has joint ownership of technology properties with Xiaomi, which may lead to competition if Xiaomi develops similar products[84] - The company has obtained exclusive rights to use 11 patents from its founder, which are crucial for its operations[85] Human Resources - The company's ability to attract and retain highly skilled personnel is critical for its future success, with potential disruptions from the loss of key personnel[103]

Viomi Technology Co., Ltd (NASDAQ:VIOT) Q4 2019 Earnings Conference Call March 26, 2020 8:00 AM ET Company Participants Cecilia Li - The Piacente Group Xiaoping Chen - Founder, Chairman of the Board of Directors and Chief Executive Officer Shun Jiang - Chief Financial Officer Conference Call Participants Lillian Lou - Morgan Stanley Xudong Chen - CICC Robert Cowell - 86Research Limited Vincent Yu - Needham & Company Operator Hello, ladies and gentlemen. Thank you for standing by for Viomi Technology Co. Lim ...