GlobeNewswire Inc | May 27, 2021 05:30AM EDT

May 27, 2021

Net revenues increased by 64.0% year-over-year, exceeding previous guidance

Gross margin increased to 21.1% from 18.8% a year ago

GUANGZHOU, China, May 27, 2021 (GLOBE NEWSWIRE) -- Viomi TechnologyCo.,Ltd (Viomi or the Company) (NASDAQ: VIOT), a leading IoT @ Home technology company in China, today announced its unaudited financial results for the first quarter ended March 31, 2021.

First Quarter 2021 Financial and Operating Highlights

-- Net revenues reached RMB1,255.6 million (US$191.6 million), an increase of 64.0% from the first quarter of 2020. -- Gross margin was 21.1%, compared to 18.8% for the first quarter of 2020. -- Net income attributable to ordinary shareholders of the Company increased by 173.2% to RMB49.1 million (US$7.5 million) from RMB18.0 million for the first quarter of 2020. -- Non-GAAP net income attributable to ordinary shareholders of the Company1 increased by 106.8% to RMB65.3 million (US$10.0 million) from RMB31.6 million for the first quarter of 2020. -- Number of cumulative household users reached to approximately 5.6 million, compared to approximately 5.1 million as of the end of 2020 and approximately 3.7 million as of the end of the first quarter of 2020. -- Percentage of household users with at least two connected products reached 20.4%, compared to 20.0% as of the end of 2020 and 18.4% as of the end of the first 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 Reconciliation of GAAP and Non-GAAP Results at the end of this press release.

We started 2021 with an all-around robust performance in the first quarter. Leveraging the optimization of our product portfolio, new product sales growth and enhanced brand recognition, we delivered strong net revenues that exceeded our previous guidance, increasing 64.0% from the same period in 2020 when our operations were impacted by COVID-19. We also continued achieving a healthy recovery on gross margin, said Mr. Xiaoping Chen, Founder, Chairman of the Board of Directors and Chief Executive Officer of Viomi.

Our continued growth over the past several years has been driven by continuous optimization of our IoT products and holistic IoT solutions, through innovation and integration of cross-boundary technologies, alongside a deep understanding of our users needs. We remain focused on AI applications across our product portfolio and have introduced a series of strategic new AI-based products, including water purifiers, smart toilets, water heaters, range hoods, gas stoves and air conditioners, among others. Our products are designed with an eye on health care, smartification, home security and natural AI voice interactions. Some new products, equipped with sensors and supported by AI algorithms, are able to collect home and human health data with users consent, Mr. Chen added.

In addition, we focused our resources on developing key product categories and rolled out more differentiated and industry-leading products. Following our introduction of a series of premium large-flux water purifiers, we launched a mineral water purifier, EROx, which retains beneficial minerals for human health during the purification process to meet high-end users needs. We have accumulated a significant number of innovative technologies and patents in the area of water purification, with more than 700 registered patents as of the end of the first quarter. Some of these patents have been awarded the China Excellent Patent Award, authorized by China National Intellectual Property Administration and World Intellectual Property Organization, as well as recognized by China Association for Quality Inspection and other authorities.

First quarter growth was also attributable to our overseas market expansion. Our sweeper robot business which launched in the fourth quarter of last year has developed rapidly in Mid Europe, Southeast Asia, Korea, Australia and other regions and expanded to North Europe and additional Asian countries this year. We plan to expand to North American markets and channels in the second half of this year. The new sweeper robot products with differentiated functionalities we introduced earlier have been welcomed by domestic and global markets, and are expected to continue driving sales in overseas channels.

Looking ahead at the rest of 2021, we will continue to optimize our IoT product portfolio with a focus on AI application and technology innovation, strengthen our brand recognition through additional effective marketing and advertising tools, and improve our IoT home services including sales, experience, after-sale and installation services, enhancing overall 5G IoT home system and user experience while maintaining our leading position in the IoT home industry and bringing long-term shareholder value, concluded Mr. Chen.

First Quarter 2021 Financial Results

REVENUE

Net revenues increased by 64.0% to RMB1,255.6 million (US$191.6 million) from RMB765.5 million for the first quarter of 2020, primarily due to the continued successful rollout and significant increase in sales of new products, overseas market expansion, as well as the low-base effect of the first quarter of last year due to COVID-19.

-- IoT @ Home portfolio. Revenues from IoT @ Home portfolio increased by 111.5% to RMB919.2 million (US$140.3 million) from RMB434.7 million for the first quarter of 2020. The growth was primarily driven by sustained sales increases for certain new product series, in particular Viomi-branded sweeper robots and smart kitchen products.

-- Home water solutions. Revenues from home water solutions decreased by 4.0% to RMB103.8 million (US$15.8 million) from RMB108.0 million for the first quarter of 2020. The decline was primarily due to the decreases in average selling prices of Xiaomi-branded water purifier products. This was partially offset by the successful introduction and increased sales of a new series of Viomi-branded water purifier products, which narrowed the year-over-year decline for home water solutions, compared to previous quarters.

-- Consumables. Revenues from consumables are RMB64.8 million (US$9.9 million), compared to RMB65.0 million for the first quarter of 2020. -- Small appliances and others. Revenues from small appliances and others increased by 6.4% to RMB167.8 million (US$25.6 million) from RMB157.8 million for the first quarter of 2020.

GROSS PROFIT

Gross profit increased by 84.1% to RMB265.0 million (US$40.5 million) from RMB144.0 million for the first quarter of 2020. Gross margin was 21.1%, compared to 18.8% for the first quarter of 2020, primarily driven by the Companys efforts to shift the business and product mix toward higher gross margin products, including the rollout of new Viomi-branded water purifiers and sweeper robots, alongside the optimization of margins across product lines and cost control measures.

OPERATING EXPENSES

Total operating expenses increased by 63.8% to RMB219.8 million (US$33.6 million) from RMB134.2 million for the first quarter of 2020, primarily due to the growth of the Companys business.

Research and development expenses increased by 10.7% to RMB65.6 million (US$10.0 million) from RMB59.3 million for the first quarter of 2020, mainly due to the increase of research and development experts and related salaries and expenses.

Selling and marketing expenses increased by 110.8% to RMB138.0 million (US$21.1 million) from RMB65.5 million for the first quarter of 2020, primarily attributable to the low-base effect of the first quarter of last year due to COVID-19 when the Company undertook very limited marketing and advertising activities.

General and administrative expenses increased by 71.3% to RMB16.2 million (US$2.5 million), compared to RMB9.5 million for the first quarter of 2020, primarily due to the increase of personnel and related salaries and expenses.

INCOME FROM OPERATIONS

Income from operations increased by 276.1% to RMB47.1 million (US$7.2 million) from RMB12.5 million for the first quarter of 2020.

Non-GAAP operating income2, which excludes the impact of share-based compensation expenses, increased by 142.2% to RMB63.2 million (US$9.7 million) from RMB26.1 million for the first quarter of 2020.

2 Non-GAAP operating income is defined as income from operation excluding share-based compensation expenses. See Reconciliation of GAAP and Non-GAAP Results at the end of this press release.

NET INCOME

Net income attributable to ordinary shareholders of the Company increased by 173.2% to RMB49.1 million (US$7.5 million) from RMB18.0 million for the first quarter of 2020.

Non-GAAP net income attributable to ordinary shareholders of the Company increased by 106.8% to RMB65.3 million (US$10.0 million) from RMB31.6 million for the first quarter of 2020.

BALANCE SHEET

As of March 31, 2021, the Company had cash and cash equivalents of RMB906.3 million (US$138.3 million), restricted cash of RMB45.2 million (US$6.9 million), short-term deposits of RMB97.7 million (US$14.9 million) and short-term investments of RMB596.9 million (US$91.1 million), compared to RMB504.1 million, RMB70.6 million, nil and RMB696.1 million, respectively, as of December 31, 2020.

RECENT DEVELOPMENT

The Company has appointed Mr. Xiufei (Bob) Bao as its president, effective on May 24, 2021. Prior to joining Viomi, Mr. Bao served as the general manager of Beingmate Baby & Child Food Co., Ltd., from July 2018 to January 2021. Mr. Bao received his EMBA degree from Zhejiang University in 2011, and his bachelors degree from Anhui University of Finance and Economicsin 1991.

Mr. Chen commented, With the rapid consumption upgrade and evolving user needs, users are keen on brands that are fashionable and of good quality. In order to promote our 3511 long-term strategy and further develop us as the trending brand in IoT home area, we warmly welcome Bob to join Viomi as our president. We believe Bob will bring new energy and insights to our branding development with his extensive experience in the consumer industry.

OUTLOOK

For the second quarter of 2021, the Company currently expects:

-- Net revenues to be between RMB1.72 billion and RMB1.85 billion, representing a year-over-year growth of approximately 2.1% to 9.8%.

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

Conference Call

The Companys management will host a conference call at 8:00 a.m. Eastern Time on Thursday, May 27, 2021 (8:00 p.m. Beijing/Hong Kong time on May 27, 2021) to discuss financial results and answer questions from investors and analysts. Listeners may access the call by dialing:

United States (Toll Free): +1-888-346-8982International: +1-412-902-4272Mainland China (Toll Free): 400-120-1203Hong Kong (Toll Free): 800-905-945Hong Kong: +852-3018-4992Conference ID: 10156541

A telephone replay will be available one hour after the call until June 3, 2021 by dialing:

United States: +1-877-344-7529International: +1-412-317-0088Replay Passcode: 10156541

Additionally, a live and archived webcast of the conference call will be available at http://ir.viomi.com.

About Viomi Technology

Viomis mission is to redefine the future home via the concept of IoT @ Home.

Viomi has developed a unique IoT @ Home platform consisting an ecosystem of innovative IoT-enabled smart home products, together with a suite of complementary consumable products and value-added businesses. This platform provides an attractive entry point into the consumer home, enabling consumers to intelligently interact with a broad portfolio of IoT products in an intuitive and human-like manner to make daily life more convenient, efficient and enjoyable, while allowing Viomi to grow its household user base and capture various additional scenario-driven consumption events in the home environment.

For more information, please visit: http://ir.viomi.com.

Use of Non-GAAP Measures

The Company uses non-GAAP operating income, non-GAAP net income, non-GAAP net income attributable to the Company, non-GAAP net income attributable to ordinary shareholders, non-GAAP basic and diluted net income per ordinary share and non-GAAP basic and diluted net income per American depositary share (ADS), which are non-GAAP financial measures, in evaluating its operating results and for financial and operational decision-making purposes. Non-GAAP operating income is income from operations excluding share-based compensation expenses. Non-GAAP net income is net income excluding share-based compensation expenses. Non-GAAP net income attributable to the Company is net income attributable to the Company excluding share-based compensation expenses. Non-GAAP net income attributable to ordinary shareholders is net income attributable to ordinary shareholders excluding share-based compensation expenses. Non-GAAP basic and diluted net income per ordinary share is non-GAAP net income attributable to ordinary shareholders divided by weighted average number of ordinary shares used in the calculation of non-GAAP basic and diluted net income per ordinary share. Non-GAAP basic and diluted net income per ADS is non-GAAP net income attributable to ordinary shareholders divided by weighted average number of ADS used in the calculation of non-GAAP basic and diluted net income per ADS. The non-GAAP adjustments do not have any tax impact as share-based compensation expenses are non-deductible for income tax purpose.

The Company believes that non-GAAP financial measures help identify underlying trends in its business by excluding the impact of share-based compensation expenses, which are non-cash charges, and these measures provide useful information about the Companys operating results, enhance the overall understanding of the Companys past performance and future prospects and allow for greater visibility with respect to key metrics used by the Companys management in its financial and operational decision-making.

Non-GAAP financial measures should not be considered in isolation or construed as alternative to income from operations, net income, or any other measure of performance or as an indicator of the Companys operating performance. Investors are encouraged to review the historical non-GAAP financial measures to the most directly comparable GAAP measures. Non-GAAP financial measures presented here may not be comparable to similarly titled measures presented by other companies. Other companies may calculate similarly titled measures differently, limiting their usefulness as comparative measures to the Companys data. We encourage investors and others to review its financial information in its entirety and not rely on a single financial measure. Reconciliations of the Companys non-GAAP financial measures to the most directly comparable GAAP measures are included at the end of this press release.

Exchange Rate

The Companys business is primarily conducted in China and the significant majority of revenues generated are denominated in Renminbi (RMB). This announcement contains currency conversions of RMB amounts into U.S. dollars (US$) solely for the convenience of the reader. Unless otherwise noted, all translations from RMB to US$ are made at a rate of RMB6.5518 to US$1.00, the effective noon buying rate for March 31, 2021 as set forth in the H.10 statistical release of the Federal Reserve Board. No representation is made that the RMB amounts could have been, or could be, converted, realized or settled into US$ at that rate on for March 31, 2021, or at any other rate.

Safe Harbor Statement

This announcement contains forward-looking statements. These statements are made under the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as will, expects, anticipates, future, intends, plans, believes, estimates, confident and similar statements. Among other things, the business outlook and quotations from management in this announcement, as well as Viomis strategic and operational plans, contain forward-looking statements. Viomi may also make written or oral forward-looking statements in its periodic reports to the United States Securities and Exchange Commission (the SEC), in its annual report to shareholders, in press releases and other written materials and in oral statements made by its officers, directors or employees to Fourth parties. Statements that are not historical facts, including statements about the Companys beliefs and expectations, are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties. A number of factors could cause actual results to differ materially from those contained in any forward-looking statement, including but not limited to the following: the Companys growth strategies; the cooperation with Xiaomi, the recognition of the Companys brand; trends and competition in global IoT-enabled smart home market; development and commercialization of new products, services and technologies; governmental policies relating to the Companys industry and general economic conditions in China and around the globe, and assumptions underlying or related to any of the foregoing. Further information regarding these and other risks is included in the Companys filings with the SEC. All information provided in this press release and in the attachments is as of the date of this press release, and the Company undertakes no obligation to update any forward-looking statement, except as required under applicable law.

For investor and media inquiries, please contact:

In China:

Viomi Technology Co., LtdCecilia LiE-mail: ir@viomi.com.cn

The Piacente Group, Inc.Emilie WuTel: +86-21-6039-8363E-mail: viomi@tpg-ir.com

In the United States:

The Piacente Group, Inc.Brandi PiacenteTel: +1-212-481-2050E-mail: viomi@tpg-ir.com

VIOMI TECHNOLOGY CO., LTDUNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS(All amounts in thousands, except shares, ADS, per share and per ADS data)

As of December As of March 31, 31, 2020 2021 2021 RMB RMB US$ Assets Current assets Cash and cash equivalents 504,108 906,342 138,335Restricted cash 70,601 45,192 6,898Short-term deposits - 97,670 14,907Short-term investments 696,051 596,929 91,109Accounts and notes receivable from thirdparties (net of allowanceof RMB9,246 and 427,352 262,869 40,122RMB8,711, as of December 31, 2020 and March31, 2021, respectively)Accounts receivable from a related party (netof allowance of RMB61 and RMB27 asof 609,094 272,918 41,655December 31, 2020 and March 31, 2021,respectively)Other receivables from related parties (netof allowance of RMB9 and RMB4 as ofDecember 88,038 35,268 5,38331, 2020 and March 31, 2021, respectively)Inventories 439,375 592,076 90,368Prepaid expenses and other current assets 87,280 128,255 19,575Long-term deposits-current portion 10,000 10,000 1,526 Total current assets 2,931,899 2,947,519 449,878 Non-current assets Prepaid expenses and other non-current assets 19,803 27,743 4,237Property, plant and equipment, net 72,436 67,529 10,307Deferred tax assets 14,189 16,056 2,451Intangible assets, net 7,681 7,550 1,152Right-of-use assets, net 20,529 25,315 3,864Land use rights, net 62,982 62,676 9,566Long-term deposits-non-current portion 50,000 50,000 7,631 Total non-current assets 247,620 256,869 39,208 Total assets 3,179,519 3,204,388 489,086 Liabilities and shareholders? equity Current liabilities Accounts and notes payable 1,001,371 1,128,146 172,189Advances from customers 112,613 91,306 13,937Amount due to related parties 124,192 47,852 7,304Accrued expenses and other liabilities 335,488 256,187 39,102Income tax payables 50,962 48,628 7,422Lease liabilities due within one year 9,481 11,355 1,733Total current liabilities 1,634,107 1,583,474 241,687 Non-current liabilities Accrued expenses and other liabilities 3,400 2,889 441Lease liabilities 11,693 14,201 2,167Total non-current liabilities 15,093 17,090 2,608 Total liabilities 1,649,200 1,600,564 244,295

VIOMI TECHNOLOGY CO., LTDUNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS (CONTINUED)(All amounts in thousands, except shares, ADS, per share and per ADS data)

As of December As of March 31, 31, 2020 2021 2021 RMB RMB US$ Shareholders? equity Class A Ordinary Shares (US$0.00001 parvalue; 4,800,000,000 shares authorized;104,163,686 and 105,756,638shares 6 6 1 issued and outstanding as of December31, 2020 and March 31, 2021,respectively)Class B Ordinary Shares (US$0.00001 parvalue; 150,000,000 shares authorized;103,554,546 and 103,524,546shares 6 6 1 issued and outstanding as of December31, 2020 and March 31, 2021,respectively)Treasury stock (54,600 ) (54,600 ) (8,334 )Additional paid-in capital 1,278,004 1,299,789 198,387 Retained earnings 363,051 410,410 62,641 Accumulated other comprehensive loss (59,384 ) (55,288 ) (8,439 ) Total equity attributable to 1,527,083 1,600,323 244,257 shareholders of the Company Non-controlling interests 3,236 3,501 534 Total shareholders? equity 1,530,319 1,603,824 244,791 Total liabilities and shareholders? 3,179,519 3,204,388 489,086 equity

VIOMI TECHNOLOGY CO., LTDUNAUDITED CONDENSED CONSOLIDATED STATEMENTS OFCOMPREHENSIVE INCOME(All amounts in thousands, except shares, ADS, per share and per ADS data)

Three Months Ended March 31, March 31, March 31, 2020 2021 2021 RMB RMB US$Net revenues: A related party 404,979 585,869 89,421 Third parties 360,527 669,723 102,220 Total net revenues 765,506 1,255,592 191,641 Cost of revenues (including RMB14,593and RMB1,922 with related parties for (621,540 ) (990,571 ) (151,191 )the three months ended March 31, 2020and 2021, respectively) Gross profit 143,966 265,021 40,450 Operating expenses^(1) Research and development expenses(including RMB596 and RMB750 with arelated party for the three months (59,261 ) (65,601 ) (10,013 )ended March 31, 2020 and 2021,respectively)Selling and marketing expenses(including RMB8,080 and RMB13,004 withrelated parties for the three months (65,470 ) (138,024 ) (21,067 )ended March 31, 2020 and 2021,respectively)General and administrative expenses (9,458 ) (16,204 ) (2,473 ) Total operating expenses (134,189 ) (219,829 ) (33,553 ) Other income, net 2,741 1,894 289 Income from operations 12,518 47,086 7,186 Interest income and short-term 5,336 6,518 995 investment income, netOther non-operating income 90 633 97 Income before income tax expenses 17,944 54,237 8,278 Income tax expenses (126 ) (4,859 ) (742 ) Net income 17,818 49,378 7,536 Less: Net income (loss) attributable tothe non-controlling interest (157 ) 264 40 shareholder Net income attributable to ordinary 17,975 49,114 7,496 shareholders of the Company

VIOMI TECHNOLOGY CO., LTDUNAUDITED CONDENSED CONSOLIDATED STATEMENTS OFCOMPREHENSIVE INCOME (CONTINUED)(All amounts in thousands, except shares, ADS, per share and per ADS data) Three Months Ended March 31, March 31, March 31, 2020 2021 2021 RMB RMB US$ Net income attributable to the Company 17,975 49,114 7,496 Other comprehensive (loss) income, net of taxForeign currency translation adjustment 11,314 4,096 625 Total comprehensive income attributable 29,289 53,210 8,121to the Company Net income per share attributable to ordinary shareholders of the Company-Basic 0.09 0.24 0.04-Diluted 0.08 0.22 0.03 Weighted average number of ordinaryshares used in calculating net income per share-Basic 209,304,658 207,876,562 207,876,562-Diluted 215,830,463 223,072,146 223,072,146 Net income per ADS^* -Basic 0.26 0.71 0.11-Diluted 0.25 0.66 0.10 Weighted average number of ADS used in calculating net income per ADS-Basic 69,768,219 69,292,187 69,292,187-Diluted 71,943,488 74,357,382 74,357,382 *Each ADS represents 3 ordinary shares.

(1) Share-based compensation was allocated in operating expenses as follows:

Three Months Ended March 31, March 31, March 31, 2020 2021 2021 RMB RMB US$ General and administrative 2,376 2,472 377expensesResearch and development expenses 8,240 10,270 1,567Selling and marketing expenses 2,970 3,404 520

VIOMI TECHNOLOGY CO., LTDReconciliations of GAAP and Non-GAAP Results(All amounts in thousands, except shares, ADS, per share and per ADS data) Three Months Ended March 31, March 31, March 31, 2020 2021 2021 RMB RMB US$ Income from operations 12,518 47,086 7,186Share-based compensation expenses 13,586 16,146 2,464 Non-GAAP operating income 26,104 63,232 9,650 Net income 17,818 49,378 7,536Share-based compensation expenses 13,586 16,146 2,464 Non-GAAP net income 31,404 65,524 10,000 Net income attributable to the Company 17,975 49,114 7,496Share-based compensation expenses 13,586 16,146 2,464 Non-GAAP net income attributable to the 31,561 65,260 9,960Company Net income attributable to ordinary 17,975 49,114 7,496shareholdersShare-based compensation expenses 13,586 16,146 2,464 Non-GAAP net income attributable to 31,561 65,260 9,960ordinary shareholders Non-GAAP net income per ordinary share -Basic 0.15 0.31 0.05-Diluted 0.15 0.29 0.04 Weighted average number of ordinaryshares used in calculating Non-GAAP net income per share-Basic 209,304,658 207,876,562 207,876,562-Diluted 215,830,463 223,072,146 223,072,146 Non-GAAP net income per ADS -Basic 0.45 0.94 0.14-Diluted 0.44 0.88 0.13 Weighted average number of ADS used in calculating Non-GAAP net income per ADS-Basic 69,768,219 69,292,187 69,292,187-Diluted 71,943,488 74,357,382 74,357,382

Note: The non-GAAP adjustments does not have any tax impact as share-based compensation expenses are non-deductible for income tax purpose.