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VIOT Viomi Technology

Participants
Cecilia Li Senior Investor Relations-Manager
Xiaoping Chen Founder, Chairman & Chief Executive Officer
Lillian Lou Morgan Stanley
Xudong Chen CICC
Vincent Yu Needham & Company
Call transcript
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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 participants are in listen-only mode. Today's conference call is being recorded. the to turn host, now will call your over Ms. I the Senior IR Li, company. Manager Cecilia of Please go ahead, Cecilia.

Cecilia Li

the full operator. to Ltd for Viomi you, Technology quarter Thank Hello, Co. earnings everyone conference XXXX. year and welcome fourth and call

recorded. As financial company's in press and is and today issued net release were The earlier a results are conference reminder, the this being operating posted online.

by our earnings press for distribution list up website release our at section ir.viomi.com. sign the visiting and download IR can You at the e-mail

the Directors of of Executive Chief begin Xiaoping prepared Mr. Chairman will our Head Officer, Founder, Our [Indiscernible] session. Board with and will the Mr. Finance Chen Q&A Team, join remarks; of and

continue, under Reform Securities we forward-looking Litigation note Harbor contain of US will statements the XXXX. Private Before Act made today's provisions please discussion Safe of the

most translation. Chen please and Chinese deliver ahead. I in of include unaudited Mr. XX-F Form as information of involve risks the from required Mr. filed non-GAAP reconciliation any expressed note the measures. his any the turn except financial statements, comparable release on results non-GAAP release uncertainties company unaudited with GAAP and forward-looking English the this as Forward-looking measures conference risks regarding uncertainties call press obligation Mr. well law. views to other Report in Please immediately assume and go earnings the and mostly is as press different The unaudited a SEC. our and call that will such discussions company's now will directly these Chen, by may contains materially by also statements company's as unaudited doesn't GAAP inherent financial and Viomi's followed to Annual US be information update CEO, measures. to today. the Further the filings our actual Xiaoping Chen. over Founder included other remarks

Xiaoping Chen

Language] [Foreign

Cecilia Li

we earnings quarter and discussing the financial Thank I on performance his full you, we uncertainties before up fourth robust to meaningful communicated whole that improved In for what XX.X% of will quality with margin. the quarter XXXX. optimized recovery the delivered fourth fourth third quarter Thanks XX.X%, our and of the quarter gross our call. for growth call, business environment for earnings Chen. for mix further challenging business line in translate joining XX.X% Hello executed year and remarks growth for XXXX. XX.X% We our fourth in on Okay. operations on and the quarter, conference the from XXXX strategy Mr. industry. product macroeconomic a realizing our Gross of quarter year our and year despite everyone. for quickly increased fourth margin that full the

on this in to services IoT [ph] algo to past our as our AI R&D based as a key holistic In to modules have momentum developing cross-scenario with In the sensors, industry. protocol be two the this teaching technology be structure services We integrates been smart to in the IoT home channel cross-product through in solutions and algorithms, IoT industry a products, execute scenario years, team. on health we recent branding hardware flourishing years, invest our which IoT interactions and resources IoT growth more hardware to application framework, and the in for XG deliver intensity. modules. and a We strategy home have develop will with area continue see and we well the continue seen

AI we with more roll quality continue our As and seamless growth strategy out with a to R&D, technology. on an diversified part the focus products important of and new of focus our IoT integration

water flux IoT protection in and under process, series water chips. Quanxian, we AI routers order products, as washer-dryers, well SKUs home double including and users average as innovative technologies demands applied particular, In premium to main osmosis of months, well in with address XG tackle EyeBot purifier we realize washing the Super sector, as water the uplift. environmental Vision a as the to In concerns, reserve larger leaves and purification soon user large-screen higher refrigerators, when of to meet our higher efficiency. smart will water gross minerals which SKUs purifier together selling during purifiers to CPE Further, New drivers high-end the XG we purifier, with the health. machines, have margin Wind margin IoT human innovative of introduced prices are beneficial improve comes sub-brand Our demand introduce series it new past purification our of new of and new XXFace AI a allowing devices, water the in water us

of The In development overseas water key profitability of technologies water purification industry was robots our group, industry-leading fourth factory. commenced Academy dust channel of from of been similar new of Engineering experts. the water successful collection the introduction quarter, series. dedicated and Immediately this technologies. of that and overall a we for experts rapid expanded pillar was result and robots group manufacturing out sweeper launch further purification Last the academic the by was [ph] Chinese its of improvement. purposes the sweeper organizations were mineral and area. sweeper recognized in was for this the of sweeper week, household for in purification in University, innovations our including of What in Alpha this Engineering our such came Association water auto launched. Our have and our a assessment Viomi-branded professional highly Quality China purifier Tsinghua recognized School technology of also assessment officially of domestic The assessment development own Inspection, potential a in our application participated after team, as with as the robot two robot

global will success the roll to domestic export out we of this differentiated expand momentum, markets. its and robots and growth more of SKUs With into more sweeper continue and

purchase content. our value-added introduced services comprehensive to updates, solutions, we discounts product services business, more provide Internet with seeking With also and IoT to IoT as of a packages, series consisting are well software including content. as regards housing product entertainment content of service We internet maintenance experiences,

upgrade our large-screen we our We experience, R&D, further third Douguo. Douyin, to and in Leveraging performance expanded to our patent well stickiness. and cooperation endeavors Internet innovation. Music, resources, achieved as with with party following recently Ximalaya platforms large-screen ITE, continue differentiated as scenario enrich additional solid refrigerator system, cooperation operating our have investment user We increase kitchen in create Kugou

the domestic were of recognized and new top already technology XXX were in recognition one which the January, accumulative As last of reached over X,XXX, End demonstrating of companies of as innovative Guangdong we further over IoT X,XXX market. of end among number year, had patent application in our consumer global our registered.

have with we on through introduction execute lower growth As of continued we phasing to the our out new high-end margins. products specific progress and strategy lines XXXX, quality product SKUs optimization into of

service more expansion and early system terminal to invest from launch smartification, well home With R&D Spring user new optimize will for April. products. robots, conditioners to the IoT off-line upcoming system channels off-line including user and Among the to sales a branding our products operations. water launch expand IoT XG optimize and also We products focus in as our in our IoT product service Home sales will in more event Further, our purifiers, we sweeper meaningful on resources and and and we new business experience experience. will system as others, air the smart realize AI

home launched AI by promoted and the construction of The All the innovation, of construction key applied the of of is Information our this It important on this ecology July technology of Industry departments development. We Ministry Internet, that the of be product national guidelines area. with was will more home the service and by development. continuous of application to rapid drivers as be smart and application product will will of National the and other long-term IoT pointed of has in the as rapid home infrastructure released Technology, IDC, be application well China's the experience devices IoT last as by connected XG of in demonstrated scenarios. for XX% optimization, more era to in are believe An be System data to out the industries in improvement XXXX. will way. official and IoT that, commercial and smart XX% one of the According the IoT connected Standards and XG

our We and in robust in as our industry are stable growth, concludes confident to healthy founder's That level deliver position our a shareholders. well leading this bringing as value to long-term capabilities maintaining of profitability remarks. while our

total water greater previous to portfolio from products, machines, some guidance solutions of in profitability. others fourth XX.X% contribution in low-end Revenues XXXX. for to expected in by offset as Viomi-branded business and well by sales primarily make growth primarily slate prices partially introduction now series in specific our billion washing the successful X.X% The This the step financial by demand to XXXX, sales million, selling new solution and as purifier due which @ particular to lower year-over-year margin outlook decreased with increased driven and decreased to to compared increased home the robots. quarter room net purifier fourth The for million. average RMBXXX.X to decreases across lower margins just of detailed is by category. was product increased the decline our gross Xiaomi-branded a purifier's quarter of shift to XXXX. high-end of million, launch billion due this products. water water sweeper certain rollout from million previous home products, margin the quarter the was sweeper by and quarter of X.X%, turn representing to was of around for Viomi-branded home stop quarter-over-quarter review purifiers to increase margin prices including selling and proactive third narrowed lines. quarter water the last the XXXX. for Revenues increases the revenues product our for year-over-year and to primarily RMBX.XX higher toward of for and decline such due The our large-screen mix sweeper fourth RMBX.XX new RMBXXX.X XX.X% order product contribution greater XX.X% the average were sustained in well as XXXX, alongside Revenues increase new gross solutions XX.X% was Gross are our our products, XX.X% the gross in our robot appliances by profit well RMBXXX.X from quarter. our of the the the Viomi-branded to to margins, increased expected some primarily of sales water optimization by consumables the Viomi-branded the portfolio Let's optimization for RMBXXX.X of XX% improve The compared of in year-over-year our make XXXX. as RMBXXX robots, small of in from first by of refrigerators water due to gross water primarily primarily machines, purifiers the business the and to make XX.X% washing for new million, were product and increased from products. below the and driven Revenues revenues IoT our as refrigerators slightly gross X.X%. Home as business efforts to for the to to categories margin filter by net water higher as year,

in flexibility As and Mr. our capabilities. line the was gross meaningful our recovery with execution strategy, margin Chen strong business demonstrating growth discussed, quality in

do net we in RMBXXX.X marketing higher-margin more by increased detail, RMBXX.X expenses marketing to million, greater margin million, not to growth from increased expenses recovery decreased XX.X% selling full by expenses and contribution Selling of million. to to the The categories million. expenses. expenses to phase and expect R&D X.X% as and G&A RMBXX.X generating XX.X% out In total degree The by and XX.X% product by lower-margin shareholders ordinary of to RMBXXX.X our experience ordinary products income million RMBXX.X% XX.X% our net efforts As to company, to of million. attributable to R&D to attributable our non-GAAP and RMBXXX.X on million business focus, operating the we company revenue as XXXX. increased well income continue SKUs, to increases increased RMBXXX.X of by the shareholders primarily in due gross expenses by and increased

sheet balance Additionally, our healthy. remained

our RMBXX.X they earnings As mentioned we had of press earlier, but equivalents RMBXXX.X won't on cash reviewed cash million, million cash our RMBXXX.X details of investments XXXX and short-term nil go million. can be of XXXX, XXst We into of as December full of deposits release. short-term year restricted on results, and

Now let's turn to our outlook.

is currently be growth which For of conditions RMBXXX quarter to the representing RMBXXX demand XX.X% above of customer conditions outlook million, net estimates, and and XX.X%. operating and on and to million first expect The XXXX, to subject current reflects change. around year-over-year the preliminary we market are revenue all between, and current based market

So this remarks. concludes our prepared

call our ahead. of the now for answer session. finance go session the will Question-and-Answer join team the Q&A [indiscernible] open the will We please Head Operator, Session And questions. and

Operator

Thank you.

[Operator now first today question-and-answer will session. Morgan Instructions] Stanley. ahead. from Lillian begin the Please The We comes Lou go question with

Lillian Lou

a lot. I Thanks questions. have [Foreign two Language]

in shifts some brands First So contribution off-line/online of little XXXX the particular from a Xiaomi online company's non-Xiaomi channel. on expansion And breakdown off-line channel, in when XXXX, we of channel much. number Thank shifts you is is, year because COVID-XX? by question brands? second of there of question kind for on to all, going the In channel is very by what's what guidance bit the strategy categories? channel, and XXXX, channel? in we expect? online last Xiaomi of are What's non-Xiaomi going and and a saw off-line, the on what's especially the more own strategy And the mix

Unidentified Company Representative

Okay.

For perspectives. question for for the can multiple business, Viomi-branded we first elaborate

on more Firstly, business margins as such we will introduction products of with refrigerators high-end as and and higher-margin with we regard the shift as washing more and some momentum, mix specific lower focus without advanced product phase will SKUs robots. With as product of SKUs diversification purifiers with the machines good sweeper categories water business low-end some with Viomi out key across such well more growth brand lines technologies, screens. and own-branded to toward

introduce sales will introduced. purifiers flux, data also in as large industry and the products series flux we We've seen as Quanxian water purifiers and new robust of of well second sales saw developed half show heating are the contribution of water a also purifiers purifiers large water to as purifiers water new Viomi-branded we large of water the such after the and For instant increasing. industry flux some XXXX heating instant of the

water revenues water expect home -- in both business revenue of purifiers to solutions good contribution overall of XXXX. greater We Viomi-branded in and deliver our

also solid market will in be We goal. more overseas sweeper we Viomi-branded robots in particular to invest a which our in expect

we channels revenue global will robot is the category Viomi-branded team contribution well. for following from we expanded have sweeper As our increase and as this additional markets and robots sweeper think

IoT In smartification upcoming terms focus will as introduce with we early event application we more of earlier, the the April, technology we launch will parts new reflect which discussed more In our on AI of products application. and product key products. in AI

the business, we Xiaomi-branded solid with continue and will Xiaomi. stable For cooperation

to more glad the seek also cooperation are Xiaomi with We in future.

XXXX. don't for expect short channel shift About Okay. channel, we in a the compared Xiaomi-branded term to major business

total While percentage will with our of overseas revenues a which in expansion the as increase XXXX. sales contribution

contributed -- business the are business approximately revenues business consists from then and year Xiaomi-branded With XXXX. and of Viomi-branded this robots. of half In within the terms exports XX% over Viomi-branded Viomi-branded which for and XXXX. revenue nearly from of are half online sweeper breakdown full of off-line from rest mainly from and

we recovery Within of the of with of COVID-XX the Tmall Jingdong contributor year XXXX, the online channels major quarter the full of in of XXXX online Xiaomi shift half the was XXXX. channels during Suning. followed didn't increase full Youpin a caused second We second contribution for and while channel by the saw year largest and by off-line see

Xiaoping Chen

Chen's quickly will our comments. additional translate Mr. Okay. I --

expansion. points So for our of three strategy channel he said the

increase think our across the of off-line first improve operating outlets as to experience the second channels And we as off-line the will and And new channels lastly, be meaningful and Mr. online XXXX. stores Suning off-line maintain our including the off-line have for marketing well our and Chen. with been expanding system the market. we cetera. good expansion new That's design. of with media, will very and et development well And our system -- digital channel a we recovery media answer And is will the Douyin XXXX. capabilities the tools IoT from such for into China operating we training marketing and for Youpin, XXXX So the such development heading overall expand saw for Kuaishou. and user will channels Jingdong, as we as that the we And

hope helpful. that's So

Operator

The next question comes CICC. with from Xudong Please ahead. go Chen

Xudong Chen

question. my [Foreign you Language] for Thank taking

recovered question. That's margin that have one will follow-up. margin this this gross this gross profit first The has my quarter. first is continue XXXX? your will What is, And And profit observed the I reason in recovery? a trend biggest in I for

Xiaoping Chen

on executing following strategy on margin on side, the We the quality perspectives. recovery been confident have the as are we growth

margin, of will the as And some with We've such actions, Due introduced shift of machines higher gross these been SKUs We continue above higher-margin lower-end screens XXXX. to we product lower just some continue SKUs the revenue phase business out will increase. some across refrigerators and lines, new washing towards taking product without of we diversification. more expect mix we've as high-end Viomi-branded margin now. in and products will recover products to to to the specific the And ASPs. and mentioned contribution

Xudong Chen

since like [Indiscernible] have platform And Xiaomi good you is, business with a relationship IoT my have question their also and like has you and your second Xiaomi own that. --

your platform question. and platform? balance you your and Xiaomi second my can the how So, product That's

Xiaoping Chen

Language] [Foreign

Cecilia Li

I translate Mr. will quickly back. Okay. Chen

just from the perspectives. answer three can we elaborate So

connects regarding the our the which [Indiscernible]. IoT and So first to is Xiaomi products, platform of

also we growing market. some of that with are of seen from emphasized show we the our they also have be sold in clearly senior welcome. products that products And recently can platform. IoT Xiaomi and their [Indiscernible] can management we we firstly, shipment on IoT the [Indiscernible]. our connected saw have So on stage very been most And Actually, those platform Youpin of -- -- of many a

sweeper about robot Secondly business. is the

we product you as the expand And to and with global So that cooperating Xiaomi. robot as sweeper have opportunities our with seeking well market. the them more business future. know And will cooperation are have expand since robot thirdly, own Viomi-branded sweeper the helped cooperation as many domestic actually develop us we Xiaomi more XXXX with the we and to on this think, we also in and to category

for So question. that's the answer the

Xudong Chen

lot. a help That’s you. Thank Yes.

Operator

Needham next The with Vincent is ahead. Yu question from go Company. & Please

Vincent Yu

for questions. I questions. Thank you, taking have management two my

terms about view in the we appliance on two is, Are home first quarter in question cause demand? big see Thank can that talk pressure months and this we the an XXXX And fourth is management into market of of competitive the of far The which industry war? overall seeing may the second the question can grow contributed price first so going how was My opportunity in how market XXXX? much leaders from consumer about international you. how XXXX?

Xiaoping Chen

[Foreign Language]

Cecilia Li

I translate. Okay. will

saw the saw of into due pressures But to to the growth -- the in their the earnings. we industry. top XXXX, as heading year So of XXXX, line the recovery regard as we well the industry COVID-XX the growth with whole whole of

many that the towards and recently start of And think consumers market to many And traditional we hosted the quickly well, has smart this home increased the AWE some we any a the during to robot develop focus we the whole lot we that put very and compared of -- And smart IoT a can consumers products that domestic the they their products. lot the think previously. that products we and see Specifically, well competition, the well of as smart saw the on see home especially of since sweeper to attention can year. shift more you people paid focus as products and regarding more companies IoT industry recognition their products. or experience IoT the gained IoT appliances as as has

the perspective. we we this experience well remain to think think is position So or services, IoT But IoT as solutions this with the we in regards holistic leading as a trend.

the the increase will resources and solutions branding in experience. we question. so holistic And R&D and to That's first our improve the comprehensive our IoT answer IoT for in the

Xiaoping Chen

Language] [Foreign

Cecilia Li

Okay. I will translate.

terms see we growth this know we the heading and year. And market, robust about business, Viomi-branded export expansion, talking like global we this think trend And So, the also as multiple-fold into solid will our category you market. rapidly from first our of in the been our as more well. global quarter in seeking global quarter in market. fourth year, sweeper of of market global have as last expanding we expanded some very the channels robot market have especially our that a for gain growth also are we continue, And we very since

is hope Okay. this helpful. I

Vincent Yu

Yes. Thank it. you. Appreciate

Operator

questions, further no back to closing the I'd the now call are like turn company to there As for over remarks.

Cecilia Li

us joining Thank once you today. again for

a questions, contact other or us and website have our Group, on Thank Relations all. night. information you day contact The consultant. Investor you through Piacente good If please our Have the

Operator

This conference has now concluded.

You Thank lines. may you. disconnect your