Viomi Technology Co., Ltd Q4 FY2022 earnings call

• Due to pandemic and macro headwinds, revenue declined in Q4 2022 and business scale was affected in 2022. - Q4 2022 gross margin increased 3.2% quarter-over-quarter due to product portfolio optimization. - Full-year 2022 gross margin was stable compared to 2021. - Focused on accelerating business scale recovery and optimizing operations in Q4 2022. - Strengthened product portfolio, with AI water purification product sales up 6% Y/Y and 133% Q/Q in Q4. - Implemented disciplined cost control, reducing selling and marketing, R&D expenses in Q4. - Hosted virtual 2022 Fall Software Launching Event, improved one-stop IoT home solutions. - Viomi's HomeMap app awarded Precision Science and Technology Award. - Launched new AI smart home appliances, including Super 2 Max, etc. - Established doctoral and postdoctoral workstations. - Over 100 new stores opened in 2022, mainly in prep decoration market.

In the fourth quarter of 2022, IoT@Home portfolio revenue was RMB 359.2 million, a 48.1% decline from Q4 2021. Home water solutions revenue was RMB 279.2 million, a 6% increase from Q4 2021. Consumables revenue was RMB 116.2 million, a 3.5% decline from Q4 2021. Small appliances and others revenue was RMB 155.9 million, a 39.3% decline from Q4 2021. For full-year 2022, IoT@Home portfolio revenue was RMB 1,619.9 million, a 52.4% decline from 2021. Home water solutions revenue was RMB 681.1 million, an 8.3% decline from 2021. Consumables revenue was RMB 358.4 million, a 2.4% decline from 2021. Small appliances and others revenue was RMB 573.3 million, a 27.7% decline from 2021.

• Offline scale expected to achieve over 30% growth compared to 2022. - Overseas expansion focused on enriched product categories and expanded regions. - Aiming for overseas sales to double in 2023.

• Adverse impact of pandemic and macro headwinds. - Competitive pricing pressure in robot vacuum market. - Challenges in overseas markets like geopolitics and high energy prices.

Q: How was the company trending year-to-date in January and February 2023? And as robot vacuum competitors are lowering prices, how do you see market growth going forward and your market share?

A: In past months of 2022, offline channel showed recovery, but recent epidemic impact led to decreased offline shipment. Offline scale steadily increased month over month, expected to grow over 30% vs 2022. For robot vacuums, overseas sales decreased due to multiple factors, domestic market is highly competitive with leading brands having large share.

Q: How was the overseas market performing in 2022 and outlook for this year?

A: Overseas sales in 2022 were heavily affected by factors like high natural gas prices and geopolitics, decreased over 50%. Enriched product categories and expanded regions in overseas, aiming for recovery and to mitigate decline of smart cleaning products.