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spk04: Good morning and good evening, ladies and gentlemen. Thank you for standing by and welcome to TUYA Inc's first quarter 2020 earnings conference call. At this time, all participants are in listen-only mode. We will be hosting a question and answer session after management's prepared remarks.
spk05: I will now turn the call over to the first speaker today, Mr. Reg Chai, Investor Relations Associate Director of TUYA.
spk04: Please go ahead, sir.
spk02: Thank you. Hello, everyone. Welcome to our first quarter 2021 earnings call. Joining us today are founder and CEO of Tuya, Ms. Carrie Wong, and our CFO, Ms. Jessie Liu. You can refer to our first quarter of 2021 nature results on our conference investor relations website at ir.tuya.com. You can also access a replay of this course when it becomes available in a few hours on our IR website. Before we start, please note that this course may contain forward-looking statements made present through the Safe Harbor Provision for the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on management's current expectations and observations that involve known and unknown risks, uncertainties, and other factors not under the company's control, which may cause actual results, performance, or achievements of the company to be materially different from the results, performance, or expectations implied by these overlooked statements. All looking forward statements are expressly qualified in their entirety by the cautionary statement risk factors and the details of the conference signing with SBC. The company undertakes no duty to revise or update any following statements or selected events or circumstances after the date of this conference call. I will now turn the call to our first speaker today, founder and CEO of Tuya, Mr. Jerry Wang.
spk03: Hello, everyone. I am the CEO of Tuya. I would like to thank everyone for attending Tuya's first recording call. First of all, I am very happy to report to everyone that in 2021, we recorded our total revenue growth of 200% to $56.9 million. Our main business, IoT PaaS and SaaS, have achieved more than 220% of the total growth. The overall net profit of the company is 10.8%, which is 41.1%. This strong performance is mainly due to three factors. First, the global IOT product and service demand is growing widely. Second, the cloud platform has a unique, extensive, and high-price value. Supporting our old customer groups to be the leading IOT companies in their respective areas and enjoy a huge sustainable growth. Hello, everyone. I am the founder and CEO of Qya. My name is Wang Xueji, and thank you for joining us on our first earnings call as a public company.
spk04: We're very pleased to report a 200,000 year-over-year growth in our total revenues, achieving US$50.9 million for the first quarter of 2021. Revenues for our primary IoT PaaS businesses and our SaaS businesses both achieved over 220% year-over-year growth. We're very happy that we were able to accomplish all of this while continuing to improve our growth margin, which increased by 10.8 percentage points year over year to 41.1%. Such robust results were driven by three main factors. First, we capitalized on strong global demand for IoT products and services. Second, we cultivated sustainable growth in demand from our partners by empowering them with our innovative and scalable cloud platform to become leading IoT companies in their respective industries. Third, we attracted a large number of new customers from various industries and broadened the range of industry verticals we serve by leveraging our reputable brand equity and the network effects of our 2R ecosystem.
spk03: Thank you. Thank you. a global consumer's habit of using smart devices at home. This also directly promotes a global developer who is very active on the cloud platform. The number of registered developers has increased from more than 260,000 last year to more than 320,000. In the same way, in public products, this kind of non-contact interaction will become a single demand. For example, some similar needs such as non-contact accommodation in hotels are growing rapidly. These usage habits will be fixed in the post-pandemic era, and will accompany people's daily life, work, entertainment, and learning. According to the CIC forecast, from 2019 to 2024, the global IOT PATH will increase by 18.9% annually and reach $17.17 billion by 2024. First, I'll go into greater detail about the demand recovery. During the quarter, more than 39 million smart devices were deployed with our IoT path services, showing a strong growth of demand for IoT products.
spk04: During the first quarter, the global economy rebounded as COVID vaccine coverage improved in major economic regions around the world. Over the last year, forced closures and quarantines have instilled new habits of using smart devices at home. This led to rapid increase in the number of registered smart device developers on our platform from approximately 260,000 at the end of last year to more than 320,000 at the end of the first quarter. Furthermore, contactless services are becoming the new standard for many transactions in the post-COVID economy. For example, the demand for contactless check-in at hotels has grown rapidly. This shift in user habits is becoming increasingly prominent in the post-pandemic era and changing the way people work, study, and entertain themselves. According to CIC, the worldwide IoT path total addressable market is forecasted to grow at a caper of 18.9% to $171.7 billion by 2024. In addition, based on IDC's forecast data, the worldwide IoT software's total addressable market is Forecasted to grow at a CAGR of 12.9% to US$237 billion by 2024. 关于第二点,主要独创的极具延展性和高价值的云平台支持我们的老客户群体以惊人的速度在各自的区域带到成为头部的企业,并享受巨大的可持续增长。
spk03: Within the past 12 months of March 31, 2021, our IoT PaaS business income growth rate, DBMEA, reached 210%. This is the average level of the cloud industry for the sixth consecutive quarter since we finalized this indicator. The main reason behind this is the unique IoT PaaS of Tuya, which makes our customers fully enjoy the high value brought by Tuya Cloud Platform. customers can use extremely low investment to quickly and easily produce highly competitive high-performance smart products. In addition, with the support of millions of SKUs and covering more than 200 countries and regions around the world, we can quickly expand our product range and sales area. The operating model is completed from traditional sales-oriented business to an online IoT business that uses user service as a guide.
spk04: Next, I'll discuss the sustainable growth and demand we have cultivated from existing customers. By delivering the best value possible through our innovative, highly scalable cloud platform, we enable customers to grow into IoT leaders in their respective industries. As a result, their demand for our services grow as they expand the number of products that they develop on our platform. Our dollar-based net expansion rate for IoT PaaS was 210% for the trailing 12 months, and it matched the first 2021. We have now surpassed the industry average for the sixth consecutive quarter since we began tracking the metric. We were also able to achieve this primarily because of the quality and scope of our LoneStop IOC products, which deliver tremendous value to our customers on the cloud platform. Our customers can develop competitive and cost-effective products with very little R&D investment. We also enable customers to expand into new product categories and geographic regions on our platform. which supports hundreds of thousands of products that can be used in over 200 countries and regions around the world. Our platform enables customers to upgrade their business models from a traditional sales-oriented business to a service-oriented IoT business.
spk03: 大量的客户在主要运营台上飞速成长为自己代表上的头部的IoT的企业。 A large number of customers on the Triacwell platform have developed into IoT leaders in their respective industries.
spk04: As of March 31, 2021, the number of premium customers who contributed over $100,000 in revenue during the trailing 12-month period grew to 1,216 from 188 as of December 31, 2020. During the first quarter of 2021, 89 of our brand customers placed more than five times the number of orders from the same period last year.
spk03: Regarding the third point, the full network effect of the print business, the outstanding brand reputation in the end customer group, allows us to continue to obtain a large number of new customers in different industries. The print negative energy market has a large scale of more brand new IoT devices, In the end, the users of smart devices need multiple brand devices to be controlled by an app. Brand companies are deeply aware of this final trend. Being able to connect with thousands of brands on the Tuya cloud is very valuable for brand customers. It also brings a very high competitive network effect for Tuya. The more brands we have on our platform, the more new brands will join the Tuya cloud platform to form a network.
spk04: Next, I will give more color on how we leverage the network effects of our Chuiya ecosystem and our brand's application to acquire new customers from different industries. It is the general consensus for IoT brands that end users need to have the ability to control multiple smart devices with one single application. Therefore, being able to connect with thousands of other brands on the Chuiya Cloud Platform brings tremendous value to our customers. This network effect develops synergy between our partners and also creates significant barriers to entry from our competitors. The more brands we have on our platform, the more new brands want to join our platform.
spk03: In the first quarter of this year, our IOT's PaaS customer number increased by 160%. Of which, IOT's PaaS new customers exceeded 600%. At the same time, the number of low-energy brand customers has increased from 2,700 at the end of last year to more than 3,000. More and more customers from all walks of life have joined our platform. For example, the world-class self-cooling, self-heating energy equipment brand, Danfoss Group, which is located in Denmark, and the leading German brand company, Molenhoff, which is the leading German brand in the global heating and ventilation industry, have taken over half of the market share. A.O. Smith, Selling more than 3,500 active products. All channels cover North America and South America. 85,000 home appliances. American home appliances brand, Jetsco. Brazil's first electric brand, Stag. Covering industrial and commercial areas. In three major scenarios. More than 50 electric products. Indian IoT giant, Vipula, worth $4 billion. And China's OPPO brand, Realme. In the first quarter of this year, we acquired over 600 new IoT PaaS customers, increasing the number of IoT PaaS customers by nearly 160% year over year.
spk04: Meanwhile, we have grown the number of brands on our platform to over 3,000 from 2,700 brands at the end of 2020. More and more brands from various industries are recognizing the value of our platform and are developing their products on our platform. Some of these customers include Denfoss, a Danish multinational air conditioning and energy solutions provider, Molenhof, a well-known German pioneer in heating and ventilation technology, Archilic, one of the largest white goods producers in Europe with over 50% of market share in Turkey, and its sub-brand Beko being the second largest brand in Europe. Lock and Lock, a world-renowned household kitchenware brand in South Korea. iHome, a healthcare and beauty electronics manufacturer with products in tens of millions of homes and millions of hotel rooms in North America. A.O. Smith, an American water heating and water treatment solutions provider with a multi-billion dollar market cap and 147 years of history. Jesco, an American home electronic company with 3,500 products sold in 85,000 stores across North and South America. tech and leading electronic brands in brazil offering over 50 types of electronics with industrial commercial and residential use cases wafer an indian i.t giant with 40 billion us dollars market cap realme opens housing smart device brand worldly group the largest security door company in china Sinopharm Fuxing, the smart elderly care operator in China, which is a subsidiary of Sinopharm Group, China's largest pharmaceutical company, and many more.
spk03: 另外今年以来更多的各区的头部零售渠道, 包括健康云商选择涂押IoT Pass, 来赋能他们的权限的自由品牌的自然设备, 比如印尼最大的连锁零售商,爱洛加亚, Indonesia's largest telecom company, Telekom, and Germany's largest mail-order company, Power. In fact, in the past few years, there have been more than 40 leading retail brands, Powered by Tuya, including PPT, such as Lidl, the largest food retail channel in Europe. The largest retail channel in the North American region has also selected a full-line free brand, Powered by Tuya, this year.
spk04: 在今年四季度开始,陆续会出货。 Meanwhile, we're seeing more regional retail channel leaders, including telecom operators, choose 3S IoT path services to empower their private brand smart devices. This includes companies such as Aerojaya, the largest Indonesia retail chain store, Telkom, the largest telecommunication operator in Indonesia, Power, a well-known Nordic retail channel, Perl, the largest mail-order company in Germany, and many more. In fact, over the past few years, private labels from more than 40 leading retail companies in Europe were all powered by Chuya, or as we like to say, PBT. Lidl, the largest food retail company in Europe, is one such company. During the quarter, several top retail companies in North America have also chosen to be powered by Tuya for its private-label smart products. Deployments of these products are expected in the fourth quarter of this year.
spk03: The supply chain has a great extension. SKU, which we support, has expanded from 250,000 to 310,000 in the last quarter. In the first quarter, we expanded a lot of PVT product lines. The following new products already have global brand customers and OEMs in the market, as well as new mass-produced products. For example, mass-produced products in transport at tens of millions of units a year. Two-wheeled electric vehicles, skateboarding vehicles, annual sales of digital accessories of hundreds of millions of dollars, such as fast-forwarding equipment, game bandages, etc. Annual sales of smart bandages of hundreds of millions of dollars, such as watch bracelet, warm bandages, etc. Huge sports health products, such as jump rope, dumbbells, feather ball, shoulder pads, shoulder pads, fascia, roller skates, etc. running machines, industrial and commercial industries. For example, in the industry, we have developed a series of low-power products, such as low-power doorbells, cameras, locks, etc. This is a huge number of products. More new product lines in the energy and functional industries are being developed. We will announce the future records one after another.
spk04: In addition to acquiring new customers, we also expanded our services to include entirely new product categories. Leveraging the scalability of our platform, we grew the number of SKUs supported by our IoT path segment to 210,000 by the end of the first quarter from 250,000 at the end of last year. During the first quarter, we expanded into many new PBG product lines. Many international brands and OEMs have entered into trial or mass production of products such as personal transport devices including unicycles and scooters with annual shipments in the tens of millions. Digital appliances including fast charging devices and gaming light strips with annual shipments in the hundreds of millions. Smart wearables including watch, bracelets, and wall wear with annual shipments in the billions. Sports and health products, including jump ropes, dumbbells, badminton rackets, rowing machines, and treadmill, et cetera, et cetera. Industrial and commercial gateways. And finally, lighting products, such as high bay lights and landscape lights. In the first quarter, we also developed a series of low power security products, such as low power doorbells, cameras, locks, and more. This is also a category with very strong and consistent demand. Above all, we are also developing IoT PaaS products for new energy, industrial, and agricultural verticals. We'll share more details with everyone regarding these new verticals in coming quarters.
spk03: 以上三点是我们IoT PaaS强劲增长的主要因素。 接下来我再给大家讲一下SaaS业务的一些进展。 我们在2019年底开始陆续组建SaaS业务。 目前有智慧地产、社区、 smart hotel apartment, smart civilian shelter, smart three-way, large business is in the early stage of exploration, and is in the process of presentation. Our biggest advantage is that we have hundreds of thousands of global IoT developers on the cloud platform. It is a medium-sized open platform, so it can provide IoT customers with a choice of smart hardware of multi-brand, multi-brand smart hardware.
spk05: The three primary factors were the main growth drivers for our IoT Plus segment. Next, I will share some updates on our SaaS segment. We started to launch SaaS services at the end of 2019, and the current serves several segments, including smart communities and real estate, smart hotels and apartments, smart consumer security, and smart commercial lighting. Our SaaS business is still in the early stages of development and will continue to make great strides to improve and launch more SaaS products. In this segment, our biggest competitive advantage is the fact that our Tuya Cloud platform has hundreds of thousands of global IoT developers. Our platform is neutral and open platform that can provide IoT SaaS customers with a varied selection of multi-branded hardware choices.
spk03: In the first quarter, we are upgrading the 1.0 version of the smart real estate community of SARS. The integration of multi-end exchange routes completes the opening up of community capabilities. After more than a year, we have become the first team in the service of the smart real estate community of SARS in China. Since the first quarter, we have been serving China's top real estate groups, including Wanke Group, Yuanyuan Group, Zhonghai Real Estate. During the first quarter, we were actively working on version 1.0 SaaS upgrade for our smart community and real estate services to integrate multi-terminal interactive entrances.
spk04: After just a little bit over a year, we have joined the upper echelon of China's smart community and real estate SaaS service providers. We have now served in many of China's leading real estate groups, including Bunker Group, Suna Ocean Group, China Overseas Land and Investment, Kaiser Group, Sichuan Langguang Development, Douyin International Holdings, and Sunday Service Group. Our partnerships with China Overseas Land and Investment and Kaiser Prosper both began in the first quarter of this year.
spk03: We also released a premium version of our smart hotel and apartment SaaS solutions in the first quarter of this year.
spk04: The premium version expands our services from simple hotel room management to encompass hotel lobby and facility traffic management. The new version also supports energy management, a key vocal point for most hotel managers. QS Smart Hotel and Apartment SaaS solution already powers 25,000 rooms in China. Now with the pandemic situation improving around the world, we have begun to enter overseas markets.
spk03: This is the 2.0 version of the smart private security in the first quarter. The next step of security security is to be integrated into a smart security service platform. Customers can manage a family business with multi-business scenarios at a unified intersection. We are planning to close the business of family business and business search and search scenario service. And we have some standardized business interfaces with the third-party security security service in the world.
spk04: We also announced version 2.0 for our smart consumer security SaaS in the first quarter, upgrading the backend into smart security service platform. Customers can manage multiple households or commercial devices through a unified portal. By creating a closed-loop data connection between home devices and commercially managed security services, we're able to realize a standardized business interface with third-party security operators globally. Our smart consumer security SaaS has already received orders from a number of security operators in China and overseas, including GoldenVox Safety, the largest store security operator in China.
spk03: The 3M is a SaaS business that we started in the second quarter. In the first quarter of last year, the SaaS version of 3M was released. This year, the SaaS 1.0 version of 3M was released. It includes smart processing, remote monitoring, energy monitoring, and control operation functions. The increase in the mode of promoting commercial lighting business can be achieved by a customer experience that is hard to forget, or a large-scale energy saving. For example, a very good shopping experience has been achieved by the three-layer construction of a special group in Shenzhen. After some gas stations were destroyed, the three-layer construction achieved more than 40% of the energy saving effect. China's leading laser lighting, Smart Commercial Lighting SAS was launched in the second quarter of last year.
spk04: In the first quarter of 2021, we launched version 1.0 of our Smart Commercial Lighting SAS, which has functions in smart construction, remote monitoring, energy consumption monitoring, operations and maintenance, and more. Smart commercial lighting SaaS will promote the enhancement of commercial lighting business models, creating an unforgettable customer experience and substantial energy savings. For example, Xherps Group's three-story flagship store in Shenzhen used our commercial lighting SaaS to create a uniquely artistic shopping experience. Some gas stations have saved more than 40% in energy usage with our smart commercial lighting SaaS. Those of China's leading lighting companies, including NVC Lighting, Skyworth Lighting, and StrongLED, are all customers of Tuya SmartCommerce Lighting SaaS. The segment also has many customers, such as system operators in Europe, Hong Kong, and more.
spk03: Our SaaS business has also observed a very good trend in customer resale. For example, in 2019, the first hotel SaaS was launched. In the first quarter of this year, we had the first batch of rescheduled clients. The first batch of clients had more than 90%. Our first real estate SaaS group client, Wanke, signed a second contract with us at the beginning of this year. Our first SaaS group client in the community, Songdu Group, signed the first contract in August 2020. We signed the second contract in October. We signed the third contract in February this year. Our SaaS business is also showing early signs of high repurchase rates.
spk04: Following its launch in late 2019, our hotel SaaS business welcomed its first group of contract renewals with a renewal rate of over 90%. Zancou Group, our first real estate SaaS customer and one of the largest real estate groups in China, signed a second phase SaaS contract with us at the beginning of this year. Sandy Service Group, our first smart community SaaS customer and a top 100 real estate group in China, has signed a third phase SaaS service contract with us in February this year. This contract follows their first phase contract in August 2020 and second phase contract in October 2020. Going forward, we'll continue to polish our SaaS products and advance our gradual entry of various SaaS services into global markets.
spk03: Last but not least, let me talk about the development of Tuya's cloud platform system. The Tuya cloud platform is at the core of our pursuit to provide the ultimate user experience.
spk04: In the first quarter, we continue to invest R&D resources in the construction of infrastructure for our cloud platform to ensure that we can maintain efficient product iteration in the IoT industry. Meanwhile, we have proposed a number of innovative industry solutions to provide basic capabilities for customers to quickly enter the market.
spk03: For example, in the first quarter of 2021, we launched the J&M Energy Cloud product, Through the analysis and prediction of the energy consumption data of the user's smart device, we can provide customers with the energy consumption monitoring, warning, long-term energy consumption management and operation capabilities, and quickly build a complete energy application product system for customers with negative energy in private, commercial, industrial, and other industries.
spk04: For example, in the first quarter of 2021, we launched energy-saving style products. By analyzing and predicting the energy consumption data of users' smart devices, we are able to provide customers with energy consumption monitoring, alert, renewable energy management, operation, and maintenance. We empower our customers across consumer, commercial, and industrial sectors by enabling them to quickly build a complete set of energy application product systems.
spk03: And in terms of cloud security, we obtained four certifications from ISO and IEC, the founding members of the British Standard Association, BSI, such as CSA, Star, Cloud Security, etc. It can be said that it is the world's first IoT cloud platform that has obtained these four certifications at the same time. In addition to these four certifications, we have also completed the SUB2 PIPO analysis report provided by Anion in the first quarter. The research and development of focused products and data security have always been the focus of the company's strategy. Moreover, we provide a healthcare service cloud product system for smart device manufacturers in the healthcare industry.
spk04: In terms of cloud security, we have obtained four certifications, including the Cloud Security Alliance Star certification issued by the British Standard Institution, an organization instrumental to the formation of the ISO and IEC. XUYA is the world's first IoT cloud platform to hold these four certifications at the same time. We also successfully completed the Service Organization Control 2 Type 2 certification performed by EMR in the third quarter. Our R&D capabilities and data security have always been essential to our growth strategies. As of March 31st, 2021, our number of employees has increased to almost 2,900 from 2,258 at the end of 2020. 70% of which are R&D headcounts. This allows us to lay the foundation for our sustainable development going forward.
spk03: That concludes my prepared remarks for the first quarter. Now I'll turn the call over to Jesse, our CFO, to review the financial details.
spk05: you all for joining us let me start by reviewing our financial results for the first quarter of 2021 and then i will discuss our outlooks for the second quarter before i begin please note that all amounts are in u.s dollars and all comparisons are on a year-over-year basis unless otherwise stated first of all i'd like to highlight that our total revenue for the first quarter has beaten straight consensus estimates by approximately 14 percent We achieved robust operational and financial growth in the first quarter. Our total revenue grew 200% to $56.9 million. Such strong growth was mainly driven by the solid growth of our IoT PaaS revenue, which increased 227% to $49.8 million. Several categories of our IoT PaaS powered products achieved notable year-over-year growth in particular our revenue of iot paths empowering security and essential products grew more than 300 percent our revenue of iot paths empowering sports and awareness products grew approximately 700 percent and our revenue of iot paths empowering education entertainment and network portal products grow more than 20 fold I also would like to remind everyone that every year, there are seasonal fluctuations in our revenues and sales. Typically, we experience lower revenues in the first quarter, while the fourth quarter is historically our strongest quarter of the year. This is due to the operation patterns of our customers' global consumer electronics brands and OEMs. Besides POS, our revenue from SaaS and others increased by 224% to 3.3%. to 2.3 million dollars our brand agnostic starts offerings continue to attract customers interested in increasing their efficiency and productivity in managing their business and smart device products our customer account for this segment has increased by about 183 percent meanwhile our non-core business smart distribution revenue grew by 58 percent to 4.8 million dollars driven by increases in customer purchases and demands Our gross profit increased by 307.4% to $23.4 million, while gross margin improved to 41.1% from 30.3%. Our IoT PaaS growth margin increased to 41.7% from 30.5% a year ago, primarily due to three reasons. First, our increased economies of scale. Second, our improved efficiency for IoT PaaS deployment achieved through effective R&D. And third, our expansion into higher margin IoT PaaS product lines. Our IoT PaaS growth margin has improved for nine consecutive quarters. Our premium IoT PaaS customers were 216 for the trillion 12 months ended March 31st, 2021. Up 73% from 125 for the same period ended March 31st, 2020. During the first quarter of 2021, they accounted for approximately 86% of IoT PaaS revenue. Dollar-based net expansion rate for our IoT PaaS segment improved to 210% for the trailing 12 months ended March 31, 2021, from 173% for the same period ended March 31, 2020. The improvement reflects our strong ability to expand our platform usage over time and to grow revenues from existing customers. Our dollar-based net expansion rate has been higher than 160% for six consecutive quarters since we began checking it for the trillion-12-month period ended December 31, 2019. Now, turning to our operating expenses, please note that we're excluding share-based compensation from our non-GAAP numbers to provide greater clarity on the trends of our actual operating-based expenses so that you can review performance in the same way as our management during the quarter non-gap imd expenses increased by 100 to 30.9 million dollar primarily as a result of increased imd personnel as of march 31st 2021 the company had about 2080 research and development employees up approximately 93% year-over-year. As a percentage of total revenue, non-GAAP IMD expenses decreased to 54% from 81% a year ago. Continued investment in IMD talent is critical for our growth strategy and allows us to expand our product coverage, enhance our service offerings, and widen our lead in the IoT industry. Now, gap sales and the marketing expenses increased by 74% to $14.3 million, mainly due to increase in employee-related costs and the marketing spending. The marketing spending includes costs related to hold events, like the TrueYard IoT Online Expo, an expo that connects brands, OEMs, and other developers to explore business opportunities within the TrueYard platform and ecosystem. It also includes costs for developer conference led by Each developer conference attracts thousands of developers from different backgrounds to share their views on the latest IoT trends and development practices. As a percentage of total revenue, non-GAAP sales and marketing expenses decreased to 25% from 43% a year ago. Non-GAAP CNA expenses increased by 124% to $5.3 million, mostly due to team expansion. IPO-related expenses, and increased public company costs. We have hired and will continue to hire more professional and experienced employees to further improve our internal management. As a percentage of revenue, Nungap's G&A expenses decreased to 9.3% from 12.4% a year ago. In the first quarter, our Nungap loss from operation was $24.5 million, while our Nungap net loss was $23.8 million. Our non-GAAP operating margin was negative 43%, narrowing 62 percentage points from negative 105% in the same period of 2020. And the non-GAAP net margin was negative 41.8%, narrowing 57.6 percentage points from negative 99.4% in the same period of 2020. The narrowing of operation and the net margin is mainly due to the increase in our operating leverage as we achieved very strong growth while maintaining healthy margins. Net cash using operating activities for the first quarter of 2021 was $32.7 million or 57.4% of revenue compared to $31 million or $163.8 million percentage of our revenue in the first quarter of 2020. The decrease in net cash using operating activities as a percentage of revenue was due to our rapid business growth and the continued improvement in operating efficiency. Moving on to the balance sheet, as of March 31st, 2021, our cash equivalents and short-term investments increased to $1.22 billion from $179.8 million as of December 31, 2020, primarily due to the net proceeds obtained from our successful listing. We believe this balance is sufficient to meet our current liquidity and the working capital needs to support our strong growth. Now turning to outlook, for the second quarter of 2021, we expect total revenues to be in the range of $78 million to $81 million, which has been raised by approximately 19% to 23% compared with straight consensus estimates. This forecast reflects our current and preliminary views on the market and our operating conditions, which are subject to change. This concludes our prepared remarks for today. Operator, we are now ready to take questions. Thank you. Thank you. To ask a question, you'll need to press star 1 on your telephone, and to withdraw a question, press the pound key.
spk04: As a reminder, when asking the question, please take your question in Chinese first, then immediately repeat your question in English for the convenience of everyone in the call. Please stand by while we compile the Q&A roster. Your first question comes from the line of Kai Chun with CICC. Your line is open.
spk01: Thank you. I'm Tian Kai. First of all, congratulations to Guan Licheng for achieving such a good performance. Not only is it a high-speed increase in income, but we also see a very good margin increase in profits. I have three questions. I will first speak Chinese and then I will speak English. The first question is what Jerry just mentioned about the SaaS industry. We noticed that in April, the company released nine solutions for the social industry. So I'm more concerned about what kind of expectations we have for the expansion of our SaaS business next year. This is the first question. The second question is about our R&D investment. I would like to know about our investment in R&D in the future, this year and next year. For example, what are the characteristics of PaaS and Saas? The third question is about Gaoling. A while ago, Gaoling announced the acquisition of Philippe's family business. So, first of all, congratulations on this strong quarter one result for the Manning team. I have three questions. The first one is, about the SaaS solutions. So we know that Tuya newly launched a new vertical SaaS solution in April. So could you give us some more color on SaaS business expansion plans for this year? The second one is regarding the 2D R&D investment. So what is Tuya's focus on this year, on the beyond? And could we have a breakdown across different segments, including SaaS or PaaS? the server regarding to the Hill House acquired the Philips domestic compliance business. So what's the synergy between the Philips and the Tuya regarding to the Hill House investment in future? Thank you.
spk05: Okay. First, let me take the first question about nine industry solutions. So Tuya has been always developing an open and neutral platform for all the industry developers, and we encourage developers more than the home electronics to join the platform to help grow the business, IoT business, beyond the consumer electronics, like commercial electronics. commercial IoT business, industry, agriculture, energy, health, entertainment. So that's why this year we published the non-industry solution to all the developers. And we will continue to invest in R&D to provide better solutions for broader industries. And this is beyond our thoughts. So our thoughts will still focus on the four business Jerry has mentioned. real estate and the community, hotel and apartment, commercial lighting, and the consumer security. So for the SaaS business, we expect it will also benefit from the non-industry solutions. And we still expect our SaaS business will have a very strong growth, continue the Q1 momentum, and for the long-term future.
spk03: The amount of research and development will always be very high. In fact, our technology innovation and product innovation are the most long-term competitiveness of our company. So we will focus on the following points in this year's development investment. The first is on the investment of our entire developer platform, which is the development of our current customer hardware products, as well as the development of IoT apps, as well as the development of the cloud platform of IoT. We provide our customers with the three-point system of a developer product. So this is a very important improvement of our R&D system, which is called the R&D system of the developer platform. The second is the expansion of our overall business line and product line, especially our outdoor line. In the past few years, because of the pandemic, there may have been an increase in the number of new products, as well as the current trend of IoT products by the entire user, as well as an increase in their demand. However, as the pandemic subsides, and the overall situation becomes normal, the development of IoT in the outdoor system will be a very important trend. So this year, we will actively invest in the structure of the entire outdoor development system. In particular, we are planning to open a new office in Shanghai. We will plan to open a company office in Shanghai that costs more than RMB500. This is also a very important investment system that we have developed. The third is about our overall structure this year. A very good multiple user experience. Our name is 1 plus 6 plus N. That is, we want to form a very good one. One of the most important is a dry need for six scenarios. Especially a healthy dry need for users. And a safe dry need for users after IoT power supply. And a dry need for energy saving after IoT power supply. There is also a product of efficiency, like Gansu. There is also a product of entertainment, like Gansu. There are a total of six Gansu systems. So these are the three most important points for us this year.
spk04: So let me take the second question. In terms of the R&D investment and its planning for this year, we are going to focus on several things. But before that, let me just reiterate the importance of R&D for our company. Actually, since the inception of our company, we've always prioritized the development of technology because it is in our DNA to innovating the technology. And our company is a R&D-driven or technology-driven company. And that is why we are able to construct a high entry barrier or a competitive of moat in the past seven years. That is because we've been deeply rooted in technology and R&D. And so going forward, we will continue to spend a lot in our investment in technology and product innovation. Now, for this year, we are going to invest in three main aspects. The first one is our developer R&D platform, which will continue to enable the R&D of hardware and support the IoT apps development and IoT cloud platform development. The second investment will be in the business expansion, especially in the outdoor and mobility scenario now in the past and as a result of the pandemic we were mainly focusing on we were mainly focused on smart home scenario and it has allowed us to actually grow our business in a very solid ground however in the post pandemic era people are beginning to actually go outdoors and people are beginning beginning to travel and we saw strong demands for this segment So that is why we are building a new office with a team of 500 people in Shanghai this year that are going to focus on this expansion. And we are going to invest in a lot of R&D that can empower this kind of business expansion. And the third area of investment will be in actually what we call the ultimate user experience for the final users. And we call it actually the six plus end experience. So basically this is about solving the rigid demands of the market in terms of all of the needs that we observe from the market, including energy savings, efficiency, improvement, entertainment, fitness, et cetera, et cetera. We are solving these six plus end demands. And we hope that through this investment, we are able to continue to drive the profitability of our company and also expand our business. Thank you.
spk05: For the third question, Hill House was our primary shareholder prior to going public and one of our cornerstone IPO investors. They have been very supportive of Tuya and have introduced many customers in their portfolio to us, and we also help Hill House portfolio companies to accelerate their business intelligence and generate greater value through IoT. So Philips was already our customer before, and Hillhouse indeed did introduce a broader team of Philips to us. And we believe the cooperation with Philips will accelerate through the help of Hillhouse. And we should be able to support Philips to develop a wider range of IoT products in the future.
spk04: All right, your next question comes from the line of Yang Liu with Morgan Stanley. Your line is open.
spk00: Thank you. I have three questions. First of all, we see that the company is constantly achieving new results in the development of new products. I would like to ask the management team if they can help us figure out the current ratio according to the product category, whether it is income or quantity, especially in terms of lighting, power supply, wearable bags, or large and small home appliances. I don't know what kind of classification would make the most sense. I just want to ask about the ratio and the trend in the future. This is the first question. The second question is to ask about the pricing strategy of IoT Path, especially considering that there may be a shortage of chips on the market, or a price increase in such an environment. What will be the pricing strategy of future companies? Especially in the second quarter, we saw a very strong index of revenue. I would like to ask more about the interest rate situation. The third question is also about the IOT fund established with Gaoling. I would like to ask about the investment strategy of the current fund or some of the key investment points. I will translate the question briefly. The first one, could management share about the rough split for revenue or volume among different categories like lightning or electrical wearables and home appliances, et cetera, and what is the mixed outlook in future? The second question is IoT path pricing strategy, especially in an environment of ship shortage or rising price. Especially given the 2Q very strong revenue guidance, what should be the growth margin outlook for the second quarter? The third question is that could management share about the investment focus or strategy of the newly established IoT investment fund together with Hugh House? Thank you.
spk05: OK. Thank you, Luya. So let me take all three questions. So first, in the past seven years, Tuya has been helping the developers and global customers to quickly expand their products. As all of our investors know, when we started back to 2015, 2016, we started from lighting and electrical segment of products. However, we have expanded into other product lines very quickly. As Jerry also mentioned, in Q1, we expanded into more very interesting high-demand IoT products. to support those new IoT products. So back to 2018, for example, the IoT path revenue contribution from lighting and the electrical segment were close to 90%. But today, for example, in Q1 2020, the revenue contribution from lighting and electrical is now less than 60%. The home appliance, including large appliance, small appliance, and the kitchen appliance, contributes more than 10% of our IoT Pass revenue. The security and the sensor segment of the IoT Pass revenue contributes also more than 10%. The remaining, which were quite fragmented, including, for example, the health and sports, the education gateways, agriculture, energy, all those, a lot of new segments of the IoT products, our IoT path in part, they also contribute more than 10%. So we believe in the long-term future, we will be more diversified. We like to make the IoT platform very flexible to support all the IoT devices that customers, including the individual customers, and the corporate customers strong demand for a second question about the pricing so what happened in the the chip industry this year in terms of the pricing and shortage has been once of time in the last 30 years so it is a tough time for the entire industry for all the the downstream industry has been impacted. So we have been working very closely and carefully with our partners, including our supplier partners and our customers. So in terms of pricing, we will pass the increase from the chips to the downstream, but at the meanwhile, to work hard in terms of the R&D, in terms of the operation efficiency to help to drop the cost as much as possible to help our customers to maintain a reasonable price for the end users. So we expect our margin will remain stable in the next quarter. Also, in terms of the supply, we will work very closely continuously in the monitoring situation to ensure that our growth can be supported. The last question is about the defund. We expect in Q2 we will finish the setup of the IoT funding and also building up the team. This IoT fund, the purpose of the IoT fund is to focus on the both upstream, downstream of the IoT industry and also the broad developer industry to help the entrepreneurs in this industry to grow their business and also strategically grow the IoT industry to be a bigger time for all of us. So we will also build up an experienced investment team to carefully select the project on the entrepreneur team with high potentials. which help our partners, customers, suppliers, developers, and also help Tuya to grow faster.
spk00: Thank you.
spk05: So that's all the three questions.
spk04: Thank you. This is the end of the Q&A session. I'd like to hand the conference back to our management for closing remarks.
spk05: So thank you again for joining our call. If you have further questions, please feel free to contact us or request through our IR website. We look forward to speaking with everyone in our next earning call. Have a good day.
spk04: This concludes today's conference call. Thank you for participating. You may now disconnect.
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