Viomi Technology (VIOT) Q2 2024 earnings summary

Executive summary

• Returned to net profitability in H1 2024 with RMB5.6 million net income and RMB16.1 million non-GAAP net income, reversing a net loss in H1 2023.

• Net revenues declined to RMB1,040.2 million from RMB1,304.4 million year-over-year due to a strategic shift away from IoT and small appliances.

• Strategic focus shifted to home water solutions, with a major business reorganization and divestment of underperforming IoT businesses announced in July 2024.

• AI-driven innovation and product upgrades enhanced user experience, with cumulative household users rising to approximately 8.7 million and 4,598 authorized patents.

• Free cash assets totaled RMB914.3 million as of June 30, 2024.

Financial highlights

• Net revenues were RMB1,040.2 million, down 20% year-over-year, mainly due to the strategic shift.

• Gross margin improved to 24.8% from 22.0% year-over-year, driven by an optimized revenue structure.

• Net income was RMB5.6 million; non-GAAP net income was RMB16.1 million.

• Operating expenses decreased 19.2% year-over-year to RMB292.3 million; adjusted operating expenses fell 21.8%.

• Cash assets totaled RMB914.3 million as of June 30, 2024, including cash, short-term deposits, and investments.

Outlook and guidance

• Full-year 2024 revenue for continuing business expected between RMB1.7 billion and RMB1.9 billion.

• Income from operations for continuing business projected at RMB110 million to RMB130 million.

• Divestment of IoT @Home portfolio (excluding range hoods, gas stoves, and water heaters) expected to close by end of August 2024.

• Strategic reorganization may slightly reduce business scale short-term but is expected to enhance profitability and drive sustainable growth.