Viomi Technology at Deutsche Bank ADR: Strategic Shift to Water Solutions

On Thursday, 15 May 2025, Viomi Technology (NASDAQ:VIOT) presented a strategic business update at the Deutsche Bank ADR Virtual Investor Conference. The company highlighted its successful reorganization towards home water solutions, reporting strong financial performance in 2024. While focusing on AI-powered water purification, Viomi also acknowledged challenges such as managing U.S. tariffs. The company remains optimistic about future growth.

Key Takeaways

• Viomi reported a significant turnaround with net revenues of RMB2.1 billion and net income of RMB62.3 million in 2024.
• The strategic focus on AI-powered smart water purification solutions is driving growth.
• Viomi’s global expansion includes a strong presence in the U.S. and Southeast Asia.
• The company anticipates continued revenue growth and improved margins in 2025.

Financial Results

• Full year net revenues reached RMB2.1 billion, reversing previous losses.
• Net income from operations totaled RMB62.3 million, with a 25% increase in diluted EPS.
• Q2 net revenues increased by 42.8% to RMB1,282.4 million from the previous year.
• Viomi maintains RMB2.0 billion in cash reserves, highlighting a strong financial position.

Operational Updates

• Viomi completed a strategic reorganization in August, focusing on core home water solutions.
• The company filed nearly 1,800 global patent applications, showcasing its commitment to innovation.
• New product launches include the Qunlin AI purifier series and tankless large flux water purifiers.
• Viomi expanded into the U.S. market through Amazon and a successful crowdfunding campaign.

Future Outlook

• Viomi aims to strengthen its water purification product portfolio and expand in domestic markets.
• The company plans to build recurring revenue streams via after-sales service and subscription models.
• Further investment in AI technology is expected to accelerate product innovation.
• Viomi is confident in achieving single-digit growth in China’s water purification industry in 2025.

Q&A Highlights

• The Kunlun product line launched in China met expectations and is set for upgrades.
• Post-COVID, increased health concerns are driving demand for water solutions.
• Strategies are in place to manage U.S. tariffs, ensuring long-term growth.
• Viomi foresees stable growth in China and continued revenue growth driven by demand for fresh, mineral water solutions.

For more detailed insights, readers are encouraged to refer to the full conference call transcript.

Full transcript - Deutsche Bank ADR Virtual Investor Conference:

Zafar Ziz, Deutsche Bank Team, Deutsche Bank: Hello, and welcome to the Deutsche Bank Depository Seats Virtual Investor Conference, DBVIK. I’m Zafar Ziz from the Deutsche Bank team. I’m pleased to announce that our next presentation will be from Viomi Technology Company Limited. Before I introduce our speaker, a few points to note. Please submit your questions in the questions box.

All today’s presentations were recorded and could be accessed by the Deutsche Bank website, adr.db.com. At this point, I’m very pleased to welcome Viomi Technology Limited, which trades on Nasdaq under VIOT.

Sam Young, Head of Capital and Investment Department, Viomi Technology Company Limited: Thank you for having us. Hello, everyone. Welcome to Viomi’s technology business update section. I’m Sam Young, head of capital and investment department. I will begin by sharing our recent strategic development and updated financial highlights followed by our Q and A section.

Before we proceed, please note this discussion will include forward looking statements made under the Safe Harbor provisions of The U. S. Private Securities Litigation Reform Act of 1995. These statements involve inherent risks and uncertainties materially from the views expressed today. Now, let’s take a look of overview of Viomi.

The completion of our strategic reorganization in August marked pivotal milestone for the company, enabling us to sharpen our focus on core home water solutions. This strategic shift has driven strong performance in 2024. Net revenues reaching RMB2.1 billion remedy at RMB29 per year and a net income of RMB62.3 million reversing the losses reported over the past two years. Diluted EPS from continuing business was RMB0.7, an increase of 25% from last year. We also maintain RMB0.2 2,000,000,000 remedy.

Additionally, as of today, we have filed nearly 1,800 global patent applications, including over 600 inventions, significantly outpacing the industry average. Viomi is well positioned to leverage AI technology to provide better drinking water solutions for household worldwide. There are four reasons why we believe Viomi is a great investment. First, we are leveraging innovative AI technology to power our solutions. This allows us to offer holistic intelligent water purification solutions that meet a wide variety of customer needs.

Second, we have been focused on home water business for over ten years. That experience has helped us lead the industry innovation backed by our large portfolio of patents. Third, we are expanding our presence through omni channel distribution and international market that is in line with the global market expected to grow at a CAGR of ground 6% actually 7% through 02/1933. And finally, our strong financial position is a key asset. Solid performance, substantial cash reserves that support our global expansion plans and a long term growth.

Our AI powered smart solutions including the OnSync, Whole Home and the installation free products. And here is our product metrics designed to meet every needs. Starting from the left, we have the unSync RO series, which not only deliver clean fresh water, but also provides higher healthy mineralized water. In the middle, we offer whole house water filtration systems, including central purifies, softeners, water dispensers, and a part of an entry purifier covering all household water needs. And on the right, we have all installation free products, which can easily placed anywhere whether in the living room, bedroom, or even outdoors providing maximum flexibility.

Our business model is unique and also highly scalable creating a powerful snowball effect. The scale of water purified equipments brings ongoing household users. While AI technology enhance the user experience, this not only drives the recurring revenue, but also delivers high margin from the consumable sales. Finally in 2014, after the invention, the first intelligent water purifier in 2015, we have been constantly redefined and leading in water purification technology. We successfully ERO filtration technology, widely used in industry filtration to customer products, allowing us to adjust the beneficial elements in water to enhance health.

Our latest product, the Qunlin AI purifier series, futures in novel tool mineralization filter technology that enables us the sustained release of beneficial minerals. This makes the mineral composition of water nearly identical to natural mineral water. So users can enjoy fresh mineral rich water right at home. So these next generation innovations, we are leading the trend towards healthier drinking habits. Now, let me highlight some of major breakthroughs in technologies and product innovations.

For example, our tankless large flux water purifier provide fresh drinking water twenty four hours to seven days with a flow rate up to 2,000 gallon, which is 5.7 liters a minute. This expands to use scenarios from drinking to cooking, washing vegetables and more. In addition, we have introduced DIY filter replacement to reduce maintenance cost. By applying ERO technology and mineral ization filters, we can offer a range of water solutions from pure water to national natural mineral water, driving a new wave of a healthy living and wellness. We leverage AI technology to make better water.

Here is how we do it. First, our product equipment with the AI sensors that can detect various water data. These sensors monitor parameters like temperature, water pressure, entry point to water quality and a flow rate. Based on this data, our devices can intelligently adjust the factionality to optimize performance. All of our products are connected to the cloud system allowing them to proactive decision.

For example, our intelligent water way self cleaning technology system significantly actually extends field lifespan and reduce overall cost of water purification. We also have a prior to a platform that enables remote real time monitoring of water quality and usage. This system provides timely filter replacements reminders, support one click reordering and offers DIY replacement options. These innovations make our smart water purification products reliable, hassle free and affordable truly essential part of daily life. Our global leading integrity that water purified Gigafactory is designed to produce up to 5,000,000 units of water purifiers annually along with annual capacity of 30,000,000 filters.

The total investment in this state of art facility is talking about 1,000,000,000 RMB. We have established a comprehensive omni channel distribution network to support our global market access. Domestically, we sell the omni branded products through all major online platforms like Jindong, Tmall, PDD and others. We also maintain a national wide network of service centers to ensure excellent Alpha sales support. On the global front, our strategic partners including Xiaomi, Jingdong and Shenhen.

We collaborate with our network of dealers across the country and our products are available through dealers owned Realme offline stores. Before we expanded our global presence into The U. S. Market through a successful crop funding. Our Vortex series of the unsynced RO water purifies Amazon, where we received a high recognition and the positive feedback.

The strong customer demand. In January, we made our debut at a CES in Las Vegas, showcasing our intelligent home water solutions and reaffirming our position as a leader in smart water innovation. The global home water purification market is entering actually a high growth phase categorized by very levels of market penetration across major countries and regions. So far, The US market is the largest with a size of 6,800,000,000.0 US dollar, while China presents a significant potential due to its comparatively lower market penetration. And now it’s just 20% almost.

We see the growing public concern around drinking water quality along with the increasing awareness of health and environmental protection. Additionally, customer demand are becoming more diverse, seeking better taste, higher quality and more innovative solutions. These factors are driving the acceleration of their market penetration worldwide. Going forward, we will focus on four key strategic initiatives. First, we will continue fortify our water purification product portfolio and deepen our presence in the domestic market.

We aim to build recurring revenue streams through after sales service and a few other subscription models. Second, we will keep upgrading our automation and a smart manufacturing infrastructure at our water purifier Gigafactory to improve cost efficiency and scale ability. Third, we plan to invest further in AI technology to accelerate product innovation helping us to meet the increasing customer demand for elevated lifestyle. And finally, we will drive international expansion effort, especially in key markets such as North America and Southeast Asia by tailing products to regional preference and enhancing our brand positioning. We aim to boost Viomi’s global visibility and market share.

Now, let’s take a look at our financial performance. We delivered strong result with full year net revenues reaching RMB2.1 billion and income from operation totaling million, both exceeding our previous guidance. We achieved net revenues of RMB1282.4 million, an increase of 42.8% from RMB897.9 million for the same period of 2023. This growth was primarily driven by the expansion of water home water system business. To better align with our strategic focus, we have re classed our revenue streams starting from the second half of twenty twenty four into three categories.

Home water systems, which included revenues from smart water purification products, water heaters, water kettles, watercolor meters and other business. Consumables, which include revenues from water filters designed for the smart water purifiers. Teaching appliances and others, which included revenues from a range hood, gas stove and other appliances and installation services from Viomi products. In the second half of twenty twenty four, we aimed RMB1282.4 million, an increase of 42.8% from RMB897.9 million for the same period of 2023. Again, primarily driven by expanding home water system business.

Additionally, we enhanced operational efficiency with the net income from continued business rising 24% to million. Most importantly, we achieved a net revenue of RMB62.3 million reversing the losses reported over for the past Thank you for your attention. We now welcome your questions and looking forward to discussions in the Q and A section. This is a question that is the Kunlun product in line meeting expiration since your launch?

Well, this is a good question. Actually, last year we launched the Kunlun product in China and it was a hit in the Douyin. Actually, we we do it in China. This is a very famous sales channel and recently is very popular in China. And we we meet our expectation.

And this year we launched the upgraded Kunlun four and it’s going to be happen in actually in coming days. Today is May 15 and it will be launched tomorrow actually. So we believe it will be a big success. Thank you. And let’s go to the next question.

Have your customer behavior changed since post COVID? Okay. Let’s just get to the question. In China, even worldwide, I think the COVID is in the period of the COVID, it’s a very the habit of that the customer has already changed actually. People are more concerned about health.

Before people don’t realize that the health is that important. And then now we realize that the customer more and more concerned about the health. So they are demand for vast demand of the water solutions. And now in China, we see that is the train of the habit of the people that they are request more and more mural waters. So that we launched the Kunlun series in China.

And then we are going to launch this kind of the series worldwide, but it will be happen just in the second half of this year. Thanks. And let’s go to can you speak to your sales channels in North America and how the ongoing tariff negotiation between The U. S. And China affect your business?

Well, let’s just see we launched the sales in Amazon, which actually it’s the December of last year. And before we launched to Amazon, we did it in Kickstarter and we got a quick success. It’s 10 times our expectation. And once we go to the Amazon and we expect that the tariff will be happen that we prepared some shipment actually in December of last year and that we shipped our products actually to The US. So the quick question to answer this is if we talk about the sales of, Amazon, for the time being, we don’t have any effect impact for the time being.

But, if we talk about the long run, we it’s manageable actually. So we have means and we have several approach to minimize the tariffs to keep profit in a reasonable level. And let’s go to the next question. Have you see fairly stable demand in China markets thus far in 2025. Yes.

If we talk about the China, we have a stable growth. The kicker for this year, we I think it’s it’s a single digit growth. So for the water purification industry, we remain a strong growth for China. And that’s we can see that the revenue can keep the same speed, but at least just like last year. And we believe that with the demand of the people that in China, they are demand more and more fresh water, the mineral water and also that demand for variety of the water solutions in China.

So once the penetration rate enhanced that in China, we have more cells we believe, and this is a quick potential in China. And can you provide more details around the factors driving your increase in revenue and income? Do expert similar growth in 2025? Well, this is a good question. The success of 2024 is coming from number one is the focus strategy.

You know, before we have a variety of products for the whole industry and we have a lot of things. And now we focus on water solution. That means we we are totally changed, not unlike before. And this keeps as a team just focused on what we can do and what we can do for the future. So people are more focused and the strategy is strict and, it’s very clean and we just deliver what we can do.

This is number one. And then number two is we take the chance that just like I mentioned before, the market is growing and we just do more than we expected. That comes from the team’s effort and also we are establishing the capability of the team. Right now, the the company is is doing more about the IPMS that is a system that controlling the marketing strategy and in line with the whole supply chain and R and D and a lot of things. So that the synergy can just come out naturally.

And number three is we are going to the international. That is very important for the future growth, especially if we are talking about it this year. Last year we launched the sales in Amazon and also we started the business in Southeast and it’s a good starting. And this year are confident that growth is continue. So it will be we have a growing revenue and also we have a better gross margin and we have higher absolute amount of the net profit actually.

So, it’s good. And also you can see that the fundamental of the company We have sufficient cash and we have we are making money and this company is still growing. And even that this the whole situation worldwide is not that good. So I guess we have all the questions here.

So thank you once again for joining us today. Questions, please feel free to contact us through the contact information on our website or our investor relationship consultant, TPG. Thank you.

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