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VIOT Viomi Technology

Participants
Cecilia Li IR
Xiaoping Chen Founder and CEO
Lillian Lou Morgan Stanley
Roger Duan Needham and Co
Call transcript
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Operator

Thank you for standing by for Viomi Technology Company, Limited Earnings Conference Call for the First Quarter of 2021. At this time, all participants are in a listen only mode. Today's conference call is being recorded. I will now turn the call over to your host. Ms. Head company. IR the Li, of the Cecilia Please Cecilia. go ahead,

Cecilia Li

everyone, welcome operator. first Technology Co., Thanks, quarter Viomi XXXX. the Limited and for to Hello, call earnings of conference

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

today's Q&A Board list Xiaoping of press management Executive of website IR Officer; Jiang the Bao, conclude prepared section the Xiufei session. our the company's and the You Mr. a it begin sign Head of will for President; visiting Mr. Directors, can earnings the and download Mr. the and the company's by up Chief ir.viomi.com. our call Participating will Founder, Chairman remarks in new The at and Chen, with Finance Team. all release Shun with company's are email distribution at

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

inherent involve risks uncertainties. statements Forward-looking and

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

Xiaoping Chen

language] [Foreign

Cecilia Li

before portfolio, Thank you, XXXX. financial Mr. our Chen. performance for I Leveraging will Hello, remarks we conference net and exceeded XX% sales first growth, first for quarter of earnings from briefly the impacted product delivered previous our everyone. same XXXX operations optimization new strong guidance, recognition, Thanks our the by revenues when joining brand our discussing were enhanced of the our founder's COVID-XX. that period in XXXX our of call. product translate quarter increasing

recovered from primarily year gross to to XX.X% a XX.X% ago, portfolio product attributable Our optimization. margin the

went several holistic our continued past been Helpful, IoT AI: deep optimization innovation products our introduction alongside by a Strategic April, Launch This of of with of Product and New we the our hosted cross-boundary the theme functionalities. over event has with years growth the the of technologies, driven series AI the understanding continued new to needs. of EyeBot, strategic able and Our toilet, with the conditioners AI-assisted solutions, equipped water users' EyeBotX; data; heater, through integration with able products, health and AI of water smart that to that air a soften mineral new with monitor AI human including AI is quality; purifier, in sensors which desktop is cooking and water EROx;

interaction. eye with on smartification, Our and home healthcare, AI natural an designed security, products are voice

consent. home products, and human and to algorithms, new AI Some able by data collect equipped with sensors users' are health supported with

categories developing rolled industry-leading and In and more we focused differentiated our key resources product out addition, on products.

Vision Pro large-flux a purified we water which last series X,XXX-gallon, water. as For low then of waste realize such series, and example, X,XXX-gallon X,XXX-gallon, ratios purifier year, of and premium and introduced X

human which health on for data tens water years in to our EROx, water working based the margin research on development process. beneficial three been happy able -- mineral in quality during invent the this minerals high-end cases innovative purification also product purifier, Our quality THT THD Equipped billions with to and technologies registered team sensors, for fast of to We're has and as of needs. than users' purifier meet of number a XXX patents is quarter. with the water endeavoring more end have the water of of accumulated in first retains adjust significant water purification area

and Some recognized of Intellectual and well other authorized been Excellent by awarded Quality Patent China have China as these Intellectual Award, patents Association National Organization, as by World Administration China Property for the Property Inspection authorities.

first business markets has growth. as development well represents of in drivers particular been rapid and quarter our in robot sweeper overseas applied Our that key of one the

business, fourth mid-Europe, in into export Australia, last year expanded and robot also and North Europe, this has Korea, the has sweeper Asian additional launched which regions, quarter Southeast year. Asia, rapidly of countries and in we Our developed other

the offline We second North counter with American our an recently of we robot our to launched added are our robot products. the on automatic a series markets. in the two sweeper half introduced robots sweeper on We patents. stores compact expanding find In year of show market, AI-led well. last new sweeper year and recently Amazon as We KA collection and store with registered of sells and a the different cooperate Amazon data some will this out

product distances, and a high-end obstacles upgrade. identify four various and to It of AI by as detection rooms, in Some angles with substitutes, sensors and range robots avoidance. sweeper as to OTA wider supported equipped well able support was the laser this map of patent is the and low for algorithm majority market, capture

roll both global more with ranges shares We different will continue sweeper enhance and robot and to the markets. in products market out domestic our

as our offline channel. the repurchase services, to appliances internet key also focusing solutions industry. IoT demanding we well product services including and update We home the provide to and the content, efforts holistic on and software and IoT product our series related innovation, to and enhance capabilities discounts, entertainment content, on value-added and addition maintain system-based make our technology think service In strengthening home our as are upgrades

and one offline our one after and stores as We installation model them including high-quality select selling, promoting store. self-services have the been services. with users provide vigorously allies comprehensive and We sales city, service iterate as service experience, one

Bob extensive and evolving development. the brand our Bob than user believe with as promote on new Prior years. are us good rapid the to Viomi fashionable home IoT XXXX has Bob industry the Bao in further order pleased trending Mr. XX consumption welcome of consumer bring company's that us, to joining and more With President. We branding as insights General users are and as a Manager long-term to will the of experience and we energy served develop brands keen warmly our and strategy quality. needs, In in upgrade and area, are

our Looking on ahead, will three strategy execute perspectives. we from growth

construct our we'll through product First, strategy. IoT-type solutions our IoT holistic XG-type, home

model's in sustain the to scenario-based the of the area, our position healthy channel, area. We Second, will in algorithm our develop to home IoT and experience improving home branding solutions with services. growth, trending our influence increasing in as IoT third, in brand attain believe of related bringing as spends popularization we in will uniqueness stores well we integrate will And long-term marketing a value. product, solutions deliver, access at-home modification, shareholder offline expand

concludes our remarks. that So formats

our The from series well Revenues and sweeper to company from XX.X% XX.X expenses R&D this a successful toward due to to Xiaomi-branded over to across rollout primarily to gross year, XX.X introduction RMB in the as XXX.X last increase a second increased shareholders well And company products, from XX.X a last RMB alongside growth XXX income advertising financial increased profit Selling And XX.X% water X% XX.X% million smart new growth to million. last The rollout margins portfolio product and the RMB due robots decreased the increase first partially decline last X.XX RMB to of as Viomi-branded first by million. new XX.X% the primarily to now expansion, XXX.X% and net to mainly XX.X in company and increased by the year water representing the prices RMB of ago, decreases by is ordinary to RMB from solutions very XXX.X% increased salaries by income efforts Gross Viomi-branded by new and purifier the due This average XXX.X increased increased of by to Viomi-branded selling RMB the successful of increase personnel was by primarily the and of a of control due operating water primarily sales our home continued expenses. quarter robots, products. the when by was last driven quarter. IoT million shareholders kitchen new net attributable for of purifier million offset and lines year an increased for was year. effect Revenues million, to increased sales million measures. to Total The of X.X quarter the by particular first RMB first to by which business. undertook overseas and quarter primarily the million, Let's the home RMB to optimization million year-over-year of ordinary compared primarily for million the effect year. primarily limited XXX.X and year, year. and to the solutions, quarter million revenues the cost year, first RMB salaries last to compared related of COVID-XX. the marketing XXX review higher quarter appliances due detailed for to the previous attributable year of business the by year. RMB of the of XX.X and of home for XXX.X% expenses. sales products, our increase to as million. G&A experts from margin purifiers XX.X low-base as consumables outlook RMB product were XXX.X XX.X% million, R&D marketing of for quarter from XXX.X XXXX, million by narrowed year XX RMB of first first RMB small Net non-GAAP to X.X% and of quarters. expenses from Revenues to of market mix increased significant the the attributable of including and last quarter XXX.X of expenses first the XX.X others million, turn the in of driven the of sustained due increased compared related and RMB from RMB product compared for RMB of to the RMB for COVID-XX XX% million increases to activities. of expenses was to to due million sweeper Revenues to low-base products, the water series, decline quarter products. gross water were by shift million XX.X%, certain at first XX.X% quarter margin last for

Additionally, sheet remained healthy. our balance

restricted of XX, of we RMB and short-term million, XX.X cash deposits had As short-term March RMB equivalents cash of of RMB million, RMB XX.X of million, XXXX, investments million. cash XXX.X and XXX.X

to Now, our let's outlook. turn

reflects net quarter that The X.XX billion, X.X%. between subject preliminary market above operating which growth and to So outlook company's expects based XXXX, for and X.X% remarks. market year-over-year approximately revenue all currently demand, change. the estimates are and prepared to representing of to be of X.XX this second we RMB on RMB of Well, billion and is conditions current concludes conditions our and the customer current the

session Mr. call please ahead. open [indiscernible] team, session. a answering now for Q&A the in The the questions. will the Operator, go finance of head will join We our

Operator

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

Lillian Lou

two Thanks have I and Chen. lot, management questions. a Mr.

expand overseas, we very looking on Amazon. First and sweeper get are that growth overall, have second has and the because on just momentum, half, in the mentioned into Q Chen a U.S. is we region year plan growth this the to obviously, robots. kind and the for first of Mr. we'll What strong the

first second a basis Q, will guidance raw very or on increase on sequential So, to the question price how of the versus And last helpful. overseas business year. the we the margin decrease the already impact. any quarter be gross saw explanation material is grow particular fourth Because we're going

quarters? we Thank how following to the look at So, are the or going momentum you. trend in

Cecilia Li

language] [Foreign

Unidentified Company Representative

Okay. Lillian's for Thank question. you

of in sweeper the question And sweeper about first will robots the the fast, robot spot our Viomi-branded growth in For rapid robot. continue. grows business the sweeper sweeper we particular, own-branded robot,

brands and trend we to shares are of is the industry, our XX billion has to sweeper On and an to of the close market RMB more this is new observe agents' by expected billion been robot increasing players robot according sweeper and to domestic the XXXX. The size is XXXX, market continue. market expected by over market XXXX reach addressable in There RMB data. the XX since

niche also robot collection shares sweeper the the introduced. a including without such found are the the laser tax and demand and positive domestic AI automated years. radar sweeper situation our market robots, robots We we series products, sweeper differentiated of a following market observation the recently of market in and Under we in for our of

global the of huge markets, and the promising, think. terms we size also In is market

For our there of research, in potential America. Europe we lot and a think opportunities, North are particularly

sweeper We Europe, first overseas our previous both expectations. have in for Southeast and grew sold the this our robot quarter sweeper for robots Australia, market, Asia, in sales exceeding

half the Amazon, North America we will stock we recently to this sweeper year. registered products second sell in our on will to and start We Next, expand markets. of successfully robot

our America. sell offline products some plan to the We on channels North in also

in the We have America regions North additional expansion markets. and and

will global sales driver our business. are the become We of an important confident market overall

about due For promotional and which our question we quarter, such campaign some gross meaningful some for compared XXXX, the raw coming we XXXX expect demonstrate material rising, events the a to the the to second as season June recovery, have while margin our -- margin also gross seasonal we second as discussed, some on XX experienced would to prices the overall impacts margin. gross in fluctuations

impacts a gross industry. these Secondly, of the the margins material will increase factor raw for also costs be whole that the

with measures some and including impacts raw for taken agreements technical As cost-saving. law to price we the this, some upgrade costs, suppliers have material for mitigate cost-optimization for

take uptick. Third, we materials' to news to price that control measures the the latest government plans the raw noticed

relieved We increase expect be -- involvement. government's this from for costs you. the in will Thank spread the pressure under this to Yeah. raw material

Xiaoping Chen

[Foreign language]

Cecilia Li

has just Mr. I Yeah, So, Chen quickly on translate. comments Xiu's will comments.

they about obviously for yeah, our business. So, the this -- development, first question evolved

an our have we we outside. department from and established attracting been category evolve life talents the obviously all independent of So, from who have walks

of our development So, years. the two fold within we've three to second business evolved there was

So, key of we've categories already the had of one strategy. our

this profitability. comments be that -- to that's as from confident commentary the are to growth, that gain both one grow well Yeah, we category Hope Mr. helpful. very it's the so as So, will the drivers of top-line our Chen.

Lillian Lou

[Foreign language]

Xiaoping Chen

[Foreign language]

Lillian Lou

[Foreign language]

Cecilia Li

Yes.

the of and already aim in accounts brands we top is robot data category. regarding our in in development Yes, that's So, of sweeper the market. develop some category global and team have robot management our it. terms both sweeper internal product domestic And to

Operator

ahead. That's Waye] and the question is next from [Waye He Rudy with CICC. Please go

Unidentified Analyst

Thank have for And I very the much Hello. presentation. you here. questions actually, two management's

categories market should about and just that's profit further especially, and the water going Xiaomi suppose, the plans Yes, businesses second currently, are purifiers vacuum promote my purifiers the, the overseas? limit and is first the quite The about water cleaners? is to robotic self-owned in promote Since we And more the brand categories the robotic Or domestic questions. know markets, with we to the development. we company cleaners? I overseas. like to how of Like And margin to the domestic be actually, vacuum low. the question is the products the like the

Cecilia Li

[Foreign language]

Xiaoping Chen

[Foreign language]

Cecilia Li

translate. quickly will I Okay.

So own for first the how business our at develop the IoT Latin developing portfolio. branded so product about our on we Home to still question holistic could market, focus in

also we solutions at and to in categories scenarios. drive aim to to expanded this product we position the over mostly around have that And we have the our the as and brand home Home area. across SKUs the branding categories key holistic year XX So trending IoT influence like some develop

the market. one has at increased concept that in far past Home IoT of domestic know half as So, in to year, modification the as we

that market our have confident are the can with differentiation. domestic and a development we in better advantages So the we

for we for think also the our drivers will key categories, and for So and purifier two more and business, the categories are us resources develop the marketing categories two in two we line. the top categories, water invest be in this those sweeper robots year, those we'll the and and build, believe R&D key

overseas For market your about second question the expansion.

our business So the the we robot still that will export of in this on development sweeper focus year, market.

the far, as so we markets, plan the category. to sweeper the to increase we market the our expand as you. So, in categories, global expand well and inflows in Thank branding robots will but channels, overseas don't

Operator

The go with comes and next Please question ahead. Co. Duan Needham from Roger

Roger Duan

Hi. Thank you two for questions taking my I question. have here.

last strategy Is much is for First others driver internationally for us one raw [Foreign question And the have several the quarters? prices margin internationally. sweeper a the strategy to around increase Can in pricing is Thank the And in year? a on price our like follow-up just to of second versus will different material And material how any increase. give sense plan do industry? continue increase you. language] retail the domestic? that a the done pricing we have management be the the the robots raw

Xiaoping Chen

Language] [Foreign

Cecilia Li

OK. I will quickly translate.

about impact pricing of the the for material the for increase So of impact the raw and costs first strategy. our the question

like the seen have has year, So three the since we to quarter raw like and of taken increase impact. we measures mitigate the last that increased have material of first

So our and of we first, in other that to whole increased as ASPs reasonable industry some extent. some the some of products companies the

So product structures. and second, optimized sales also the the we

more with and margins. we higher sell So products promote

refrigerators in the kitchen sell For we smart gross high-end example, with more margin. product, mid- the higher to

to [Indiscernible] Third, impact from for we the contribution the the price been product. material mitigate single the of have raw revenue bundle increasing percentage, sales cost the

question. the So, this answers first

domestic for global about second your our in question market. strategy for pricing the So sweeper and robots

mid- our So, in domestic at market. global the of to robots and high-end position products both sweeper we

around so sweeper are robots China. RMB ASPs So, average for ASPs X,XXX in sweeper X,XXX, the of brands above the our most some that's RMB domestic robots, of the market, to

introduced aims which dust robot which differentiation the collection. year, as introduced functionalities, So the radar also this a laser we And category. we have differentiated to dust that sweeper for we our some robot, last a -- automatic sweeper [indiscernible] such is sweeper auto year, robot

the we this also for for category. to global market, products mid- know, position, high-end the So aim to you

brands. average the global selling some So the is price of above

So comments that's I the of that's Chen. hope Mr. helpful.

Operator

are [Operator back turn to now instructions] Li As call closing over for like Cecilia further no questions, to remarks. the I'd there

Cecilia Li

once joining you thank again So, us today. for

Have have you further our through The or contact our partner. please information good a us one. you website on relations all. questions, the Piacente Group, If investor contact Thank

Xiaoping Chen

language] [Foreign

Operator

call. conference the concludes This

You may now disconnect your lines. you. Thank