Viomi Technology Co., Ltd

Hello, ladies and gentlemen. Thank you for standing by for Viomi Technology Company's LTD's earnings conference call for the second quarter of 2022. At this time, all participants are in a listen-only mode. Today's conference call is being recorded. I would now like to turn the call over to your host, Ms. Claire Gee from the company's IR department. Please go ahead, Claire.

Thank you, Anita. Hello, everyone, and welcome to Valme Technology Co., Ltd.' 's earnings conference call for the second quarter of 2022. As a reminder, this conference is being recorded. The company's financial and operating results were issued in a press release earlier today and are posted online. You can download the earnings press release and sign up for the company's email distribution list by visiting the IR section of the company's website at ir.valme.com. Participating in today's call are Mr. Chen Xiaoping, the founder, chairman of the board of directors, and the chief executive officer, and Mr. Cai Weicheng, the head of our finance department. The company's management will begin with prepared remarks, and the call will conclude with a Q&A session. Before we continue, Please note that today's discussion will contain forward-looking statements made under the safe harbor provision of the United States Private Security Litigation Reform Act of 1995, forward-looking statements involving inherent risks and uncertainties. As such, the company's actual results may be materially different from the views expressed today. Further information regarding this and other risks and uncertainties is included in the company's annual report on Form 20F. and other failings as filed with the United States Securities and Exchange Commission. The company does not assume any obligation to update any forward-looking statements, except as required by law. Please also note that the well-missed earnings price release and this conference call include discussions of unaudited gap financial information, as well as unaudited non-gap financial measures. In addition, Viomi's press release contains a reconciliation of the unaudited non-GAAP measures to the unaudited, most directly comparable GAAP measures. I will now turn the call over to Viomi's finder, the CEO, Mr. Chen Xiaoping. Mr. Chen will deliver his remarks in Chinese forward immediately by an English translation. Mr. Chen, please go ahead.

Hello, everyone. Thank you for joining us in the second quarter of 2022. In the second quarter, we achieved a sales income of about 9.24 billion RMB, meeting our previous expectations. The main two reasons for the same decline in sales revenue are the following. The first is that compared to last year, the high sales volume of the same-age Xiaomi phone, we have completely stopped the business of Xiaomi phones this year. The second is that we have seen that since this year, the epidemic has repeated in various places, and the market efficiency in the second quarter has continued to decline. The overall demand for home appliances is relatively weak. In order to cooperate with the high-end new products and the high-end transformation of the brand, we continued to increase the promotion of the brand in the second quarter, increasing the appropriate investment of advertising fees. In addition to continuing to put in e-sports and flat advertisement, we also entered into the young target group and cooperated with Tmall to jointly sponsor this program of designer idealists who are famous in Mango TV. In a relatively remote period of the red market, our promotion of brands and products temporarily used the loss of the second quarter of business. But we believe that these mistakes can help us build a long-term brand awareness. From the sales situation of our 618 and the recent high-end products in the past few months, the marketing investment in the past few seasons has helped us improve the sales ratio of high-end products and strengthen the brand influence of our technology brand. In the second quarter, we continue to implement high-quality business strategies in three aspects. First, continue to improve the product structure of SQ. Second, focus on the business and product line of core products to build the product. The third is the reduction in the production and supply of products. Our production quality has been continuously improved. In the second quarter, the net profit has been increased by 1% since the same period last year. Since the fourth quarter of 2020, the net profit has been continuously increased. Even though we faced many challenges in the first half of the year, such as the recurrence of the epidemic and the deterioration of consumer market, it brought some pressure to our sales section. But in the past few months, with the development of our full-fledged smart solution program, we have made a lot of progress in product innovation, channel deepening, and strategic cooperation. We have investigated the long-term impact of product power and brand influence. First of all, at the product end, we launched a series of AI new products at the internal product launch conference at the end of March this year. For example, the high-end AI large-capacity refrigerator BOS equipped with the AI monitoring function of the full-fledged new air-cooled air-cooled air-cooled air-cooled air-cooled air-cooled air-cooled air-cooled air-cooled air-cooled air-cooled air-cooled air-cooled air-cooled air-cooled air-cooled air-cooled air-cooled air-cooled Super series water purifier, and Royal series high-end AI double washing machine. Among them, the air conditioner, water purifier, intelligent interactive screen, and other new products have been interviewed in the second quarter. In addition, we have continued to launch a series of new intelligent home appliances, including the upgraded 3D structure light human face recognition i-LINKER series intelligent door lock, and the AI voice control panel HomePad Plus, which manages all equipment and intelligent scenarios. The AI technology with these new products improves the user's intelligent experience, providing a good market reputation and feedback. Our high-end products' sales growth and product influence are also constantly growing. In this year's 618 grand opening, some of our high-end products are leading the way in the product sales on the e-commerce market, such as the Space series air conditioner, AIG Super and RC Face AI refrigerator and other products. At the same time, based on the high-end series of products designed by Li Zhan Shi and Qian Wu Si Rong, they have also continued to land all over the country. In the first quarter, in Beijing, Guangzhou, Shanghai Changsha, Kunming, and other local offline stores have signed a series of orders of 200,000 to 400,000 customers. Then, in Chengdu, Zunyi, Yinchuan, and other local offline stores, customers have ordered more than 230,000 to 340,000 high-end sets of set meals in the second quarter. Consumers have been recognized for our high-end products and set plans. It is also the result of our brand's continuous transformation and development of AI products. Taiwan Taiwan Taiwan Taiwan Taiwan I bought an AI remote control, a kind of visual detection module, and the smart switching method of the remote control. In July of this year, it won the 23rd Chinese patent excellence award. Our independent research and development, equipment and assembly modules, and in April, it won the 8th Guangdong patent award. These are all recognition of our technological innovation, as well as recognition of our intellectual property rights. Secondly, in terms of channels, we continue to carry out the channel strategy of large business and large electricity in the country, with offline commercial cooperation. In the second quarter, we will open a number of new CS and WES facilities in Hulan, Anhui, Guizhou, and other places. These large stores will use the experience of unified store decoration and pure gold, to pass on the brand charm of technology to consumers, to help us as long as it is a fast landing of a comprehensive solution. In the overseas sector, we are also under the influence of the international market in the second quarter. The price of oil is high, and the demand for general materials continues to rise. Europe's consumption continues to decline, which brings certain challenges to our overseas sales in the second quarter. However, we have made positive progress in our channel optimization and China-made products. With the stable cooperation of our new large-scale agents, we will also expand and expand the Southeast Asian market. With the high-endization and high-end sales ratio of our overseas small-scale machines, in the second half of the year, we will further enrich the product layout of smart cleaning items, At the same time, other products overseas will also make some progress. Thirdly, we will continue to deepen strategic cooperation in the second quarter to promote the industrial co-improvement of smart home appliances. In the first half of this year, we reached strategic cooperation partners with Jindong, Tianmao and China Telecom. In May, we also reached strategic cooperation with domestic home design companies. The two sides will deeply integrate the full-fledged smart and full-fledged customized business to speed up the development of full-fledged smart solutions. We will continue to focus on four aspects in the second half of the year. SQ continues to optimize our product structure. Increase innovation and innovation, while creating AI products, deepening the smart experience of full-scale scenarios. Third, create more offline immersive consumer scenarios, promote more one-stop full-scale smart solution solutions, improve consumer experience and long-term brand value. Fourth, carry out stricter cost and cost control, establish a solid foundation for long-term health growth. Thank you, Mr. Chen.