Viomi Technology Co., Ltd

Ladies and gentlemen, thank you for standing by for Viomi Technologies Co. Limited'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. I will now turn the call over to your host, Ms. Cecilia Lee, the Senior IR Manager of the company. Please go ahead, Cecilia.

Thank you, operator. Hello, everyone, and welcome to VOMI Technology Core Limited Earnings Conference Call for the fourth quarter of the year 2020. As a reminder, this conference is being recorded. The company's financial and operating results were issued in press release earlier today and posted online. You can download the earnings press release and sign up for our email distribution list by visiting the IR section at our website at ir.vomi.com. Our founder, Chairman of the Board of Directors, and Chief Strategic Officer, Mr. Xiaoping Chen, will begin with prepared remarks, and the head of our finance team, Mr. Wei-Chang Cai, will join the Q&A session. Before we continue, please note that this discussion will contain forward-looking statements made under the CEPPER provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements involve heavy risks and uncertainties. As such, the company's actual results may be materially different from the views expressed today. Further information regarding these and other risks and uncertainties is included in the company's annual report on Form 20F and other filings filed with the U.S. SEC. The company doesn't assume any obligation to update any forward-looking statements, except as required by law. Please also note our earnings press release and this conference call into discussion of inaudited gap financial information as well as inaudited non-gap financial measures. Valmy's press release contains a reconciliation of the inaudited non-gap measures to the inaudited mostly direct comparable gap measures. I will now turn the call over to our founder and CEO, Mr. Xiaoping Chen. Mr. Chen will deliver his remarks in Chinese. Follow me definitely by English translation. Mr. Tang, please go ahead.

Hello, everyone. Thank you for attending our 4th quarter and the full-year conference. In 2020, we experienced an uncertain macroeconomic environment and industry. We achieved a growth of nearly 25.3% year-on-year. For example, in the last conference, we communicated with the mayor that we will carry out a growth strategy in the 4th quarter to improve the product structure and further improve the quality of the product. We have achieved a real-time recovery of the profit margin. The profit margin increased from 17.1% in the third quarter of last year and 19.9% in the same period in 2019 to 23.5%. We will continue to implement this strategy this year. At the same time, we will increase the development of three aspects of brand power, product technology innovation, and service channel construction. In recent years, we have seen the development trend of the internet industry continue to grow. We expect smart homes to become an important application scene in the IoT industry. The overall solution of cloud integration will be the trend in the future IoT home industry. In the past two years, we have built a 5G IoT home architecture, including 5G IoT home automation architecture from the technical architecture, AI algorithm, chip module, smart sensor, smart terminal, and cloud service. Through the establishment of a unified bottom-level IoT connection protocol and module, we have realized the complete integration of smart hardware terminal. will become a complete intelligent experience. We will continue to focus on AI and IoT technology, and continue to launch more new products. As a key part of the business strategy of quality growth, and as an important direction for our IoT products, these higher ASP and higher horsepower innovation products will continue to improve our overall horsepower level. In the past few months, we have launched high-end technology brands like Super and Vision, series of water purifiers, RCFACE 5G large bottle refrigerator series of new products, iBot AI washing machine, AI new wind washing machine, as well as a series of intelligent home appliances, such as 5G IoT CPE router and IoT chips, etc. Especially in the water purifier field, we use the user's needs to start environmentally friendly, and use innovative dual RO film technology to achieve super large volume and greatly improve the efficiency of water purification. We will also China China China The two technologies of the power generation machine and the anti-dust machine are at the top level in China and have a good application prospects. After the meeting, the group standard was officially issued by the Chinese Paper Test Association to organize the family use and similar use of the mineral water machine. The successful launch and rapid development of our free brand new business is also an important driving force for our overall profit level. From the fourth quarter, we have started to expand our free-of-charge machine business and quickly expand our free-of-charge machine team. In the production and production of free-of-charge factories, we have launched automated free-of-charge machines such as the Alpha series, which are already differentiated, and successfully opened up the overseas market to present a good growth trend. In the near future, we will launch more differentiated free-of-charge machine new products and continue to expand the overseas market. We also strive to provide users with a perfect IoT home solution solution, including IoT product experience, service, content, etc. In terms of LTE's real-time business, we have launched a series of user real-time business service packages that cover software upgrades, maintenance and maintenance, repurchase benefits, entertainment audio and other content. We will continue to upgrade the system version of the big refrigerator and continue to work with us and Douyin to purchase music, We have expanded our cooperation with the third-party content platform to further enrich the large-scale Internet content, build a high-definition kitchen scene experience, and strengthen user connectivity. With the continuous investment and accumulation of our technical research and development in the past few years, we have achieved a good performance in terms of patent innovation. By the end of 2020, we have acquired more than 3,000 patents abroad and more than 2,400 patents. In January of this year, we successfully entered the Guangdong Innovative 100 Wall, representing Yunmi's recognition of the new technology innovation in the consumer market in the family online market. We will continue to advance this strategy of intelligent growth in 2021. We will launch diversified products and continue to optimize the product line, eliminating some low-power SKUs, and at the same time developing brand power, smart product development, and IoT service channel construction to optimize our 5G IoT home system and user experience. We will use AI and automation as a product innovation direction. At the upcoming Spring New Year release conference in early April this year, we will launch a series of AI water purifiers with higher technology content, vacuum cleaners, air conditioners, and power outlets, and optimize the offline service system at the same time, expand the offline sales and service network, and gradually realize the practical expansion from end-to-end sales to user operations. These product technologies, IoT experience and service upgrades are key to our long-term sustainable development. China's 5G infrastructure has achieved tremendous progress in the past two years. The era of IoT commercialization is also coming. According to the data released by IDC this year, 85% of devices will be included in the Internet platform by 2020, and 15% will be included in the Internet. In July last year, five departments, including the Ministry of Industry, Industry and Industry, jointly published the National New Generation Artificial Intelligence Standard System Construction Manual. Thank you.