TUYA(TUYA) - 2022 Q1 - Quarterly Report

Report Overview Fourth Quarter 2021 Financial Highlights 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 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 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 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] - The company will focus on its core competitive advantages, solidify its market leadership, and optimize operational efficiency to navigate the macroeconomic downturn[7] - 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] Fourth Quarter 2021 Unaudited Financial Results 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] - SaaS and other revenue growth was primarily driven by increased market demand for complex industry SaaS products and value-added services[11] Cost of Revenue (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) 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] Operating Expenses (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] - The significant increase in G&A expenses was mainly due to higher share-based compensation, employee-related costs, and professional service fees[17] Loss from Operations and Operating Margin (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) 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) 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) 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) 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] Share Repurchase (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) 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] Strategic Investments (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] | Metric | As of Dec 31, 2021 (Million USD) | | :--- | :--- | | Total Strategic Investments | 30.7 | Fiscal Year 2021 Unaudited Financial Results 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) 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) 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) 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] Loss from Operations and Operating Margin (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) 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) 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) 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) 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) 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] Business Outlook 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] - 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] Company Information About Tuya Inc. 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] - The company offers a full suite of Platform-as-a-Service (PaaS) and Software-as-a-Service (SaaS) products[40] Conference Call Information 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] - A live and archived webcast of the conference call will be available on the company's investor relations website[39] Non-GAAP Financial Measures Use of Non-GAAP Financial Measures 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] - Non-GAAP measures are defined by excluding share-based compensation expenses, which management believes helps in assessing operational performance and business planning[41] - 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] Reconciliation of Non-GAAP Measures 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 Safe Harbor Statement 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] - Forward-looking statements involve inherent risks and uncertainties, and actual results may differ materially from those contained in the statements[45] - The company does not undertake any obligation to publicly update any forward-looking statement, except as required under applicable law[45] Investor Relations Contact 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] Unaudited Condensed Consolidated Financial Statements Unaudited Condensed Consolidated Balance Sheets 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] Unaudited Condensed Consolidated Statements of Comprehensive Loss 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 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 |