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Viomi Technology Co., Ltd Reports 2021 Unaudited Financial Results

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    • Fourth quarter net revenues exceeded the previous guidance
    • Fourth quarter gross margin continued to improve, reaching 25.6% from 23.5% a year ago  

    Viomi Technology Co., Ltd (“Viomi” or the “Company”) (NASDAQ: VIOT), a leading IoT @ Home technology company in China, today announced its unaudited financial results for the fourth quarter and full year ended December 31, 2021.

    Fourth Quarter 2021 Financial and Operating Highlights

    • Net revenues reached RMB1,332.8 million (US$209.1 million), compared to RMB1,889.0 million for the fourth quarter of 2020.
    • Gross margin increased to 25.6% from 23.5% for the fourth quarter of 2020.
    • Net income attributable to ordinary shareholders of the Company was RMB22.7 million (US$3.6 million).
    • Non-GAAP net income attributable to ordinary shareholders of the Company[1] was RMB33.5 million (US$5.3 million).
    • Number of cumulative household users reached approximately 6.6 million, compared to approximately 6.3 million as of the end of the third quarter of 2021 and approximately 5.1 million as of the end of the fourth quarter of 2020.
    • Percentage of household users with at least two connected products reached 21.5%, compared to 21.1% as of the end of the third quarter of 2021 and 20.0% as of the end of the fourth quarter of 2020.

    [1] “Non-GAAP net income attributable to ordinary shareholders of the Company” is defined as net income attributable to ordinary shareholders of the Company excluding share-based compensation expenses. See “Use of Non-GAAP Measures” and “Reconciliation of GAAP and Non-GAAP Results” included in this press release.

    Full Year 2021 Financial and Operating Highlights

    • Net revenues reached RMB5,303.8 million (US$832.3 million), compared to RMB5,825.6 million for 2020.
    • Gross margin increased to 22.6% from 18.6% for 2020.
    • Net income attributable to ordinary shareholders of the Company was RMB88.6 million (US$13.9 million).
    • Non-GAAP net income attributable to ordinary shareholders of the Company was RMB136.0 million (US$21.3 million).

    “In the past few months, we continued to enhance our one-stop IoT home solutions, with an increasing sales contribution from our high-end products. Thanks to our ongoing product portfolio adjustments, we achieved a gross margin of 25.6% for the fourth quarter, maintaining a consecutive year-over-year growth since the fourth quarter of 2020 and once again demonstrating the strengths of our product lineup and growing brand recognition,” said Mr. Xiaoping Chen, Founder and Chief Executive Officer of Viomi.

    “At our strategic new product launch event in March 2022, we introduced our upgraded one-stop IoT home solution, ‘1=N44,’ which includes (i) the comprehensive product portfolio of smart home appliances and home devices across home scenarios; (ii) four major smart home capabilities supported by HomeMap, our whole-home visualization technology, including automatic networking, active intelligence, spatial awareness and natural interactions; and (iii) additional four services for our users, such as smart home solution design, OTA upgrades, a membership system and value-added services. Furthermore, we enriched our bundled smart home solution offerings with packages designed for various types of households, including our RMB60,000 – RMB80,000 Super packages for large apartments worth over one million RMB, our RMB200,000 Space packages for penthouses, and our RMB300,000 Royal series for houses valued at over one hundred million RMB, which we believe can collectively deliver a premium customized AI experience for the high-end market.”

    “As a pioneer in one-stop IoT home solutions, we view our products as the carrier that can bring an upgraded whole-home IoT experience and we optimize product functionalities through software and AI application. At the March event we also introduced a series of high-end products with our currently most advanced AI technology, underscoring our ‘trending technology’ branding positioning. These new products include our all-space AI air conditioner Space Pro, which utilizes active manganese to help remove formaldehyde; Boss, our AI business refrigerator equipped with 3D somatosensory sensors; Super 2, our 2000G large-flux water purifier, which uses ultra-micro bubbles to remove agricultural residues; and a new series of smart home devices such as HomePad Plus, our AI screen-based control interface and Cyber 2T, our smart lock with 3D facial recognition and video functions. We also launched several new products under our premium brand coKiing, including the Royal Pro series of double-screen refrigerators and AI twin-tub washing machines, as well as the Royal series of AI dishwashers featuring ionic sterilization and AI laser interactive smart screens.”

    “Beyond these new products, we also continued to execute our ‘larger store, better merchant’ channel strategy. We are opening additional immersive offline stores encompassing over 200 or 300 square meters in tier-one, new tier-one and tier-two cities to enhance our ‘trending technology’ branding positioning as well as provide our customers with a more comprehensive, premium smart home experience,” Mr. Chen added.

    “Moreover, we optimized our product portfolio on new content channels and continued to improve our brand marketing during the quarter. Following the establishment of a dedicated content marketing and sales team for new channels such as Pinduoduo and Douyin last year, we have continually refined our product categories on these channels by adding products with mid- and high-end positioning or high gross margins. We also continued to strengthen our ‘trending technology’ brand awareness and increase our exposure on these new channels through key opinion leaders (“KOL”) live streaming and recommendations, as well as other marketing activities.”

    “In addition, we also had some progresses on our overseas market business. In the fourth quarter, we entered into markets in SingaporeGermanyItaly and other countries. Further, our cooperation with international sales agents has been fruitful, leading to new partnerships with large-scale agents in northern Europe and Germany, among others. We also extended our self-operated model to new overseas markets. Besides the U.S. Amazon store we launched last August, we just opened a self-operated Amazon store in Italy in March 2022, with additional self-operated European Amazon stores to come into service in the coming months.”

    Mr. Chen concluded, “By strategically shifting from ‘selling products’ to ‘selling solutions,’ we believe we have pioneered a new business model in the smart home industry while improving our smart products, IoT capabilities and services for our one-stop IoT home solutions. We have also strengthened our ‘trending technology’ branding as we enter the high-end market. Looking into this year, we will increase our investments in marketing and channels to promote our strategic products and brand recognition. Meanwhile, we will also continue to optimize our product lines and upgrade our technology, achieving healthy, long-term growth.”

    Fourth Quarter 2021 Financial Results

    REVENUE

    Net revenues were RMB1,332.8 million (US$209.1 million), compared to RMB1,889.0 million for the fourth quarter of 2020. Net revenues exceeded the Company’s previous guidance. The year-over-year decrease was mainly due to (i) the continued significant decrease in sales of Xiaomi-branded sweeper robots; (ii) product portfolio adjustments for margin expansion in other categories; and (iii) the overall weaker consumer demands for certain categories.

    • IoT @ Home portfolio. Revenues from IoT @ Home portfolio decreased by 37.9% to RMB692.0 million (US$108.6 million) from RMB1,114.6 million for the fourth quarter of 2020. The decline was primarily due to the decrease in sales of Xiaomi-branded sweeper robots and the continued product portfolio adjustments for margin expansion in some categories, both contributing to the overall gross margin improvement for IoT @ Home portfolio.

    • Home water solutions. Revenues from home water solutions decreased by 27.5% to RMB263.3 million (US$41.3 million) from RMB363.0 million for the fourth quarter of 2020. The decline was primarily due to weaker consumer demands for the overall industry during the quarter, as well as a product portfolio adjustment involving a decrease in small-flux water purifiers. As a result of the product portfolio adjustments, the Company once again achieved year-over-year gross margin recovery for this category.

    • Consumables. Revenues from consumables decreased by 24.8% to RMB120.4 million (US$18.9 million) from RMB160.2 million for the fourth quarter of 2020, primarily due to decreased demands for purifier filter products.

    • Small appliances and others. Revenues from small appliances and others increased by 2.3% to RMB257.1 million (US$40.3 million) from RMB251.2 million for the fourth quarter of 2020.

    GROSS PROFIT

    Gross profit was RMB341.5 million (US$53.6 million), compared to RMB443.8 million for the fourth quarter of 2020. Gross margin increased to 25.6% from 23.5% for the fourth quarter of 2020, primarily driven by the Company’s continued efforts to shift the business and product mix toward higher gross margin products.

    OPERATING EXPENSES

    Total operating expenses increased by 2.7% to RMB340.7 million (US$53.5 million) from RMB331.8 million for the fourth quarter of 2020, primarily due to the increase in research and development expenses and general and administrative expenses.

    Research and development expenses increased by 5.1% to RMB97.8 million (US$15.3 million) from RMB93.1 million for the fourth quarter of 2020, mainly due to the increase in research and development experts and related salaries and expenses.

    Selling and marketing expenses decreased by 1.2% to RMB214.8 million (US$33.7 million) from RMB217.4 million for the fourth quarter of 2020.

    General and administrative expenses increased by 31.4% to RMB28.0 million (US$4.4 million), compared to RMB21.3 million for the fourth quarter of 2020, primarily due to the increase in related personnel salaries and expenses.

    INCOME FROM OPERATIONS

    Income from operations was RMB9.1 million (US$1.4 million), compared to income from operations of RMB126.3 million for the fourth quarter of 2020.

    Non-GAAP operating income[2], which excludes the impact of share-based compensation expenses, was RMB19.9 million (US$3.1 million), compared to non-GAAP income from operations of RMB131.2 million for the fourth quarter of 2020.

    [2] “Non-GAAP operating income” is defined as income from operation excluding share-based compensation expenses. See “Use of Non-GAAP Measures” and “Reconciliation of GAAP and Non-GAAP Results” included in this press release.

    NET INCOME

    Net income attributable to ordinary shareholders of the Company was RMB22.7 million (US$3.6 million), compared to net income attributable to ordinary shareholders of the Company of RMB110.6 million for the fourth quarter of 2020.

    Non-GAAP net income attributable to ordinary shareholders of the Company was RMB33.5 million (US$5.3 million), compared to non-GAAP net income attributable to ordinary shareholders of the Company of RMB115.5 million for the fourth quarter of 2020.

    BALANCE SHEET

    As of December 31, 2021, the Company had cash and cash equivalents of RMB587.0 million (US$92.1 million), restricted cash of RMB35.8 million (US$5.6 million), short-term deposits of nil and short-term investments of RMB828.9 million (US$130.1 million), compared to RMB504.1 millionRMB70.6 million, nil and RMB696.1 million, respectively, as of December 31, 2020.

    Full Year 2021 Financial Results

    REVENUE

    Net revenues were RMB5,303.8 million (US$832.3 million), compared to RMB5,825.6 million for 2020.

    • IoT @ Home portfolio. Revenues from IoT @ Home portfolio decreased by 7.4% to RMB3,401.0 million (US$533.7 million) from RMB3,671.7 million for 2020.
    • Home water solutions. Revenues from home water solutions decreased by 15.9% to RMB742.9 million (US$116.6 million) from RMB883.3 million for 2020.
    • Consumables. Revenues from consumables decreased by 4.1% to RMB367.0 million (US$57.6 million) from RMB382.9 million for 2020.
    • Small appliances and others. Revenues from small appliances and others decreased by 10.7% to RMB792.9 million (US$124.4 million) from RMB887.7 million for 2020.

    GROSS PROFIT

    Gross profit was RMB1,198.1 million (US$188.0 million), compared to RMB1,083.0 million for 2020. Gross margin improved to 22.6% from 18.6% a year ago.

    OPERATING EXPENSES

    Total operating expenses increased by 24.6% to RMB1,160.5 million (US$182.1 million) from RMB931.8 million for 2020.

    Research and development expenses increased by 17.4% to RMB311.8 million (US$48.9 million) from RMB265.7 million for 2020.

    Selling and marketing expenses increased by 25.8% to RMB751.0 million (US$117.9 million) from RMB597.2 million for 2020.

    General and administrative expenses increased by 41.8% to RMB97.7 million (US$15.3 million), compared to RMB68.9 million for 2020.

    INCOME FROM OPERATIONS

    Income from operations was RMB64.7 million (US$10.1 million), compared to income from operations of RMB184.0 million for 2020.

    Non-GAAP operating income, which excludes the impact of share-based compensation expenses, was RMB112.1 million (US$17.6 million), compared to non-GAAP income from operations of RMB256.2 million for 2020.

    NET INCOME

    Net income attributable to ordinary shareholders of the Company was RMB88.6 million (US$13.9 million), compared to net income attributable to ordinary shareholders of the Company of RMB173.3 million for 2020.

    Non-GAAP net income attributable to ordinary shareholders of the Company was RMB136.0 million (US$21.3 million), compared to non-GAAP net income attributable to ordinary shareholders of the Company of RMB245.5 million for 2020.

    OUTLOOK

    For the first quarter of 2022, the Company currently expects:

    • Net revenues to be between RMB680 million and RMB730 million.

    The Company estimates that the year-over-year change in revenue will be mainly due to the high base effect of Xiaomi-branded sweeper robot business for the first quarter of 2021, which the Company has then subsequently scaled back that business, as well as the overseas market impact in the first quarter of 2022.

    The above outlook is based on the current market conditions and reflects the Company’s current and preliminary estimates of market and operating conditions and customer demand, all of which are subject to change.

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