Viomi Technology Co., Ltd Reports Third Quarter 2022 Unaudited Financial Results

GUANGZHOU,China,Nov. 23,2022 -- 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 third quarter ended September 30,2022.

Third Quarter 2022 Financial and Operating Highlights

Net revenuesreached RMB685.8 million (US$96.4million),compared to RMB1,056.5 million forthe third quarter of 2021.

Gross margin was 19.8%.

Number of cumulative household usersreached approximately 7.4 million,compared to approximately 7.2 million as of the end of the second quarter of 2022 and approximately 6.3 million as of the end of the third quarter of 2021.

Percentage of household users with at least two connected products reached 22.3%,compared to 22.0% as of the end of the second quarter of 2022 and 21.1% as of the end of the third quarter of 2021.

Mr. Xiaoping Chen,Founder and CEO of Viomi,commented,"In the third quarter of 2022,the resurgence of COVID-19 pandemic in China led to increased uncertainties in various means in the macro environment. As a result,the overall market demand remained weak,and our total revenue came in below our expectations. However,despite external challenges,we have made good progress in product innovation,brand promotion and channel expansion over the past few months. Underpinned by our effective,long-term brand and product development strategy,we continued to strengthen our 'trending technology' brand positioning."

"In terms of product innovation and technological development,we held our inaugural annual Scientific and Technological Meeting in August,where we generously rewarded our technological innovation teams and individuals in order to stimulate ongoing R&D innovation. Also,we hosted 'AI: Helpful 2.0,' our autumn online software launch event on October 25th,which focused on our software upgrades and product iteration across four dimensions,including health care,energy conservation and environmental protection,active intelligence,and natural interaction,further improving our one-stop IoT home solutions from the software side. At the same time,on the hardware side,we launched a series of new smart home appliances,including Alpha,our AI range hood with AI smart eye suction; Master Pro,our 1200G Quanxian AI water purifier with integrated heat purification; Alpha 3 Pro,our AI sweeping robot equipped with an all-purpose base station; and Super 2 Max,our AI gas water heater with intelligent temperature control. In the category of smart home products,we introduced Super 2 AI smart door locks with an ultra-wide-angle digital peephole. These new products achieved good results and have received broad consumer recognition in their pre-sale and crowdfunding stages. By deeply integrating our software and hardware,we provide richer home use scenarios and more intelligent user experiences,empowering more users to enjoy the convenience and ease of IoT home solutions."

"On the branding side,in addition to our ongoing elevator and print ad campaigns,we jointly launched a video interview program with Langchao Studio and Gongmao Home Appliances. In this program,we dove deeper into the topic of 'how the IoT home solution is reshaping the future home of Chinese people' with Zhang Quanling,senior media specialist and investor,and Li Feng,Chairman of Gongmao Home Appliances. In the interview,'Asking about the Whole-Home Intelligence,' we responded to senior media specialist,Yi Lijing's questions about smart home development with in-depth information on our one-stop IoT home solution and our four capabilities,four services approach to the smart home. With smart home appliances and smart home products covering all scenarios,we believe more people would now choose to live in smart homes. Given the continuous expansion of the customer base for whole-home intelligence,the industry is approaching an inflection point,and Viomi has taken the lead by completing the hardware and software integration and upgrade necessary to create a truly smart home. We believe our communications with consumers and our explorations of the future of smartification will encourage more consumers to become smart home users."

"Furthermore,we continued to execute our 'larger store,better merchant' channel strategy in the third quarter and opened additional Viomi 4S flagship stores encompassing over 200 to 400 square meters in provinces including Hebei,Anhui,Hubei,and Fujian,among others. Meanwhile,the sales volume of our bundled home solutions increased steadily. With various solution options and prices to meet consumers' demand,our offline merchants signed whole-home solution orders ranging from tens of thousands to hundreds of thousands of RMB with customers in Hunan,Guangdong,Ningxia and other areas during this quarter. As to our overseas business,in September,we showcased a number of our new products at IFA 2022 in Berlin,marking our first appearance at one of the world's most significant technology marketplaces for the consumer and electronic industries. We were pleased to receive positive feedback from the European market,helping us to further enrich our overseas product category offerings."

Mr. Chen concluded,"The uncertain economic environment continued to weigh on our sales during the third quarter. Going forward,we will concentrate on the following three aspects of operation optimization: (i) continuously refine our operational structure and implement disciplined cost control measures; (ii) expand channels and add premium offline merchants while rolling out more product categories in overseas markets; (iii) adhere to our solid development strategy with adequate funding reserves to support our operations. We have already significantly streamlined the number of SKUs and our operational optimization efforts have begun to bear fruit. Moving forward,we will continue to optimize our product portfolio,improve operation efficiency and enhance brand strength to bring long-term value to our users and shareholders."

Third Quarter 2022 Financial Results

REVENUE

Net revenues were RMB685.8 million (US$96.4 million),056.5 million for the third quarter of 2021. Net revenues were below the Company's previous guidance. The decline was mainly due to the ongoing product portfolio adjustments in some categories,as well as overall weakened consumer spending.

- IoT @ Home portfolio. Revenues from IoT @ Home portfolio decreased by 41.6% to RMB376.0 million (US$52.9 million) from RMB643.5 million for the third quarter of 2021. The decline was primarily due to the SKU adjustments for some categories,as well as the complete cutoff of sales of Xiaomi-branded sweeper robots.

- Home water solutions. Revenues from home water solutions decreased by 23.6% to RMB119.9 million (US$16.9 million) from RMB157.0 million for the third quarter of 2021. The decline was primarily due to the decreased demand for water purifiers.

- Consumables. Revenues from consumables decreased by 11.8% to RMB70.2 million (US$9.9 million) from RMB79.6 million for the third quarter of 2021,which was in line with the decreased demand for water purifiers.

- Small appliances and others. Revenues from small appliances and others decreased by 32.2% to RMB119.7 million (US$16.8 million) from RMB176.5 million for the third quarter of 2021,primarily due to the product portfolio adjustment within this category.

GROSS PROFIT

Gross profitwas RMB135.9 million (US$19.1 million),compared to RMB239.7 million for the third quarter of 2021. Gross margin was 19.8%,compared to 22.7% for the third quarter of 2021,the decline was primarily due to the temporary increase in the proportion of revenue from products categories with relatively low gross margins.

OPERATING EXPENSES

Total operating expenses decreased by 16.5% to RMB242.5 million (US$34.1 million) from RMB290.3 million for the third quarter of 2021,primarily due to the year-over-year decrease in selling and marketing expenses.

Research and development expenses decreased by 19.1% to RMB66.5 million (US$9.4 million) from RMB82.2 million for the third quarter of 2021,mainly due to the reduced expenses in product development,as well as the decrease in research and development experts and related salaries and expenses.

Selling and marketing expenses decreased by 22.0% to RMB143.1 million (US$20.1 million) from RMB183.4 million for the third quarter of 2021,mainly due to the decrease in sales related expenses and personnel costs.

General and administrative expenses increased by 33.0% to RMB32.9 million (US$4.6 million),compared to RMB24.7 million for the third quarter of 2021,primarily due to the increase in the estimated allowance for accounts and notes receivables recognized in the current period.

LOSS FROM OPERATIONS

Loss from operations was RMB97.2 million (US$13.7 million),compared to loss from operations of RMB38.7 million for the third quarter of 2021.

Non-GAAP operating loss[1] was RMB96.4 million (US$13.6 million),compared to non-GAAP operating loss of RMB31.6 million for the third quarter of 2021.

NET LOSS

Net lossattributable to ordinary shareholders of the Company was RMB79.6 million (US$11.2 million),compared to net loss attributable to ordinary shareholders of the Company of RMB29.3 million for the third quarter of 2021.

Non-GAAP net loss attributable to ordinary shareholders of the Company[2] was RMB78.7 million (US$11.1 million),compared to non-GAAP net loss attributable to ordinary shareholders of the Company of RMB22.2 million for the third quarter of 2021.

[1]"Non-GAAP operating loss" is defined as loss from operation excluding share-based compensation expenses. See "Use of Non-GAAP Measures" and "Reconciliation of GAAP and Non-GAAP Results" included in this press release.

[2] "Non-GAAP net loss attributable to ordinary shareholders of the Company" is defined as net loss attributable to ordinary shareholders of the Company excluding share-based compensation expenses. See "Use of Non-GAAP Measures" and "Reconciliation of GAAP and Non-GAAP Results" included in this press release.

BALANCE SHEET

As of September 30,2022,the Company had cash and cash equivalents of RMB760.1 million (US$106.9 million),restricted cash of RMB65.0 million (US$9.1 million),short-term deposits of RMB83.7 million (US$11.8 million) and short-term investments of RMB259.5 million (US$36.5 million),compared to RMB587.0 million,RMB35.8 million,nil and RMB828.9 million,respectively,as of December 31,2021.

Conference Call

The Company's management will host a conference call at 7:30 a.m. Eastern Time on Wednesday,November 23,2022 (8:30 p.m. Beijing/Hong Kong time on November 23,2022) to discuss financial results and answer questions from investors and analysts. Listeners may access the call by dialing:

United States (toll free):

+1 888-346-8982

International:

+1 412-902-4272

Hong Kong (toll free):

800-905-945

Hong Kong:

+852 3018-4992

Mainland China (toll free):

400-120-1203

Conference ID:

1605945

A telephone replay will be available one hour after the call until November 30,2022 by dialing:

United States:

+1 877-344-7529

International:

+1 412-317-0088

Replay Access Code:

1605945

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

About Viomi Technology

Viomi's mission is to redefine the future home via the concept of IoT @ Home.

Viomi has developed a unique IoT @ Home platform consisting of 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 ordinary shareholders of the Company,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 ordinary shareholders of the Company 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 Company's operating results,enhance the overall understanding of the Company's past performance and future prospects and allow for greater visibility with respect to key metrics used by the Company's 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 Company's 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 Company's 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 Company's non-GAAP financial measures to the most directly comparable GAAP measures are included at the end of this press release.

Exchange Rate

The Company's 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 RMB7.1135 to US$1.00,the effective noon buying rate for September 30,2022 as set forth in the H.10 statistical release of the Federal Reserve Board. No representation is made that the RMB amounts could have been,or could be,converted,realized or settled into US$ at that rate on for September 30,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 Viomi's 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 Company's 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 Company's growth strategies; the cooperation with Xiaomi,the recognition of the Company's brand; trends and competition in global IoT-enabled smart home market; development and commercialization of new products,services and technologies; governmental policies and relevant regulatory environment relating to the Company's industry and/or aspects of the business operations 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 Company's 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.,Ltd

Claire Ji

E-mail: ir@viomi.com.cn

The Piacente Group,Inc.

Emilie Wu

Tel: +86-21-6039-8363

E-mail: viomi@tpg-ir.com

In the United States:

The Piacente Group,Inc.

Brandi Piacente

Tel: +1-212-481-2050

E-mail: viomi@tpg-ir.com

VIOMITECHNOLOGY CO.,LTD

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

(All amounts in thousands,except shares,ADS,per share and per ADS data)

As of December 31,

As of September 30,

2021

2022

2022

RMB

RMB

US$

Assets

Current assets

Cash and cash equivalents

586,955

760,145

106,859

Restricted cash

35,831

64,980

9,135

Short-term deposits

-

83,678

11,763

Short-term investments

828,867

259,524

36,483

Accounts and notes receivable from third parties

(net of allowance of RMB34,385 and RMB58,269,

as of December 31,2021 and September 30,

respectively)

302,336

307,917

43,286

Accounts receivable from a related party (net of

allowance of RMB368 and RMB201 as of December

31,respectively)

320,939

222,887

31,333

Other receivables from related parties (net of

allowance of RMB104 and RMB18 as of December

31,respectively)

88,367

20,103

2,826

Inventories

576,351

604,322

84,956

Prepaid expenses and other current assets

156,127

183,339

25,773

Long-term deposits-current portion

50,000

-

-

Total current assets

2,945,773

2,506,895

352,414

Non-current assets

Prepaid expenses and other non-current assets

27,321

30,656

4,310

Property,plant and equipment,net

145,993

212,047

29,809

Deferred tax assets

35,304

68,393

9,615

Intangible assets,net

12,176

14,285

2,008

Right-of-use assets,net

18,425

16,568

2,329

Land use rights,net

61,722

60,767

8,542

Long-term deposits-non-current portion

30,000

30,000

4,217

Total non-current assets

330,941

432,716

60,830

Total assets

3,276,714

2,939,611

413,244

Liabilities and shareholders' equity

Current liabilities

Accounts and notes payable

1,069,108

838,995

117,944

Advances from customers

99,632

109,259

15,359

Amount due to related parties

5,415

5,847

822

Accrued expenses and other liabilities

365,718

288,803

40,600

Income tax payables

43,343

21,613

3,038

Lease liabilities due within one year

11,312

11,816

1,661

Long-term borrowing due within one year

-

7,928

1,115

Total current liabilities

1,594,528

1,284,261

180,539

Non-current liabilities

Accrued expenses and other liabilities

7,558

8,799

1,236

Long-term borrowing

16,105

97,779

13,746

Lease liabilities

7,596

7,592

1,067

Total non-current liabilities

31,259

114,170

16,049

Total liabilities

1,625,787

1,398,431

196,588

VIOMITECHNOLOGY CO.,LTD

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS (CONTINUED)

(All amounts in thousands,

2021

2022

2022

RMB

RMB

US$

Shareholders' equity

Class A Ordinary Shares (US$0.00001 par value;

4,800,000,000 shares authorized; 105,516,779

and 105,104,786 shares issued and outstanding as

of December 31,

respectively)

6

6

1

Class B Ordinary Shares (US$0.00001 par value;

150,000 shares authorized; 103,214,547 and

102,854,550 shares issued and outstanding as of

December 31,

respectively)

6

6

1

Treasury stock

(66,668)

(73,365)

(10,313)

Additional paid-in capital

1,337,281

1,352,289

190,102

Retained earnings

449,900

280,731

39,465

Accumulated other comprehensive loss

(73,120)

(15,926)

(2,240)

Total equity attributable to shareholders of the

Company

1,647,405

1,543,741

217,016

Non-controlling interests

3,522

(2,561)

(360)

Total shareholders' equity

1,650,927

1,541,180

216,656

Total liabilities and shareholders' equity

3,244

VIOMITECHNOLOGY CO.,LTD

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF

COMPREHENSIVE INCOME

(All amounts in thousands,per share and per ADS data)

Three Months Ended

Nine Months Ended

September

30,2021

September

30,2022

September

30,2022

September

30,2022

RMB

RMB

US$

RMB

RMB

US$

Net revenues:

A related party

427,307

265,028

37,257

1,746,051

888,784

124,943

Third parties

629,219

420,795

59,154

2,224,971

1,433,398

201,504

Total net revenues

1,056,526

685,823

96,411

3,971,022

2,322,182

326,447

Cost of revenues

(816,797)

(549,896)

(77,303)

(3,114,440)

(1,794,757)

(252,303)

Gross profit

239,729

135,927

19,108

856,582

527,425

74,144

Operating expenses

Research and development expenses

(82,201)

(66,527)

(9,352)

(213,990)

(225,393)

(31,685)

Selling and marketing expenses

(183,364)

(143,081)

(20,114)

(536,165)

(463,730)

(65,190)

General and administrative expenses

(24,716)

(32,877)

(4,622)

(69,690)

(72,753)

(10,227)

Total operating expenses

(290,281)

(242,485)

(34,088)

(819,845)

(761,876)

(107,102)

Other income,net

11,896

9,400

1,321

18,860

16,422

2,309

(Loss) income from operations

(38,656)

(97,158)

(13,659)

55,597

(218,029)

(30,649)

Interest income and short-term investment income,net

2,769

1,086

153

18,147

8,323

1,170

Other non-operating income

549

632

89

780

1,831

257

(Loss) income before income tax expenses

(35,338)

(95,440)

(13,417)

74,524

(207,875)

(29,222)

Income tax credits (expenses)

6,191

14,271

2,006

(7,878)

32,620

4,586

Net (loss) income

(29,147)

(81,169)

(11,411)

66,646

(175,255)

(24,636)

Less: Net income (loss) attributable to the non-

controlling interest shareholders

116

(1,598)

(225)

721

(6,083)

(855)

Net (loss) income attributable to ordinary

shareholders of the Company

(29,263)

(79,571)

(11,186)

65,925

(169,172)

(23,781)

VIOMITECHNOLOGY CO.,LTD

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF

COMPREHENSIVE INCOME (CONTINUED)

(All amounts in thousands,2022

RMB

RMB

US$

RMB

RMB

US$

Net (loss) income attributable to ordinary

shareholders of the Company

(29,781)

Other comprehensive income (loss),net of tax:

Foreign currency translation adjustment

989

31,651

4,449

(4,788)

57,193

8,040

Total comprehensive (loss) income

attributable to ordinary shareholders of the Company

(28,274)

(47,920)

(6,737)

61,137

(111,979)

(15,741)

Net (loss) income per ADS*

-Basic

(0.42)

(1.15)

(0.16)

0.94

(2.43)

(0.34)

-Diluted

(0.42)

(1.15)

(0.16)

0.91

(2.43)

(0.34)

Weighted average number of ADS used in

calculating net income per ADS

-Basic

70,157,419

69,315,182

69,182

69,764,294

69,503,202

69,202

-Diluted

70,182

72,220,572

69,202

Net (loss) income per share attributable

to ordinary shareholders of the Company

-Basic

(0.14)

(0.38)

(0.05)

0.31

(0.81)

(0.11)

-Diluted

(0.14)

(0.38)

(0.05)

0.30

(0.81)

(0.11)

Weighted average number of ordinary shares

used in calculating net income per share

-Basic

210,472,257

207,547

207,547

209,292,882

208,509,606

208,606

-Diluted

210,547

216,661,717

208,606

*Each ADS represents 3 ordinary shares.

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

Three Months Ended

Nine Months Ended

September

30,2022

RMB

RMB

US$

RMB

RMB

US$

General and administrative expenses

2,584

722

101

6,990

4,312

606

Research and development expenses

6,682

328

46

24,630

9,632

1,354

Selling and marketing expenses

(2,219)

(251)

(35)

5,005

829

117

VIOMITECHNOLOGY CO.,LTD

Reconciliationsof GAAP and Non-GAAP Results

(All amounts in thousands,2022

September 30,

2022

September 30,

2021

September 30,

2022

September 30,

2022

RMB

RMB

US$

RMB

RMB

US$

(Loss) income from operations

(38,649)

Share-based compensation expenses

7,047

799

112

36,625

14,773

2,077

Non-GAAP operating (loss) income

(31,609)

(96,359)

(13,547)

92,222

(203,256)

(28,572)

Net (loss) income

(29,636)

Share-based compensation expenses

7,077

Non-GAAP net (loss) income

(22,100)

(80,370)

(11,299)

103,271

(160,482)

(22,559)

Net (loss) income attributable to ordinary shareholders

of the Company

(29,781)

Share-based compensation expenses

7,077

Non-GAAP net (loss) income attributable to

ordinary shareholders of the Company

(22,216)

(78,772)

(11,074)

102,550

(154,399)

(21,704)

Non-GAAP net (loss) income per ADS

-Basic

(0.32)

(1.14)

(0.16)

1.47

(2.22)

(0.31)

-Diluted

(0.32)

(1.14)

(0.16)

1.42

(2.22)

(0.31)

Weighted average number of ADS used in calculating

Non-GAAP net income per ADS

-Basic

70,202

Non-GAAP net loss (income) per ordinary share

-Basic

-Diluted

(0.11)

(0.38)

(0.05)

0.49

(0.74)

(0.10)

(0.11)

(0.38)

(0.05)

0.47

(0.74)

(0.10)

Weighted average number of ordinary shares used in

calculating Non-GAAP net income per share

-Basic

210,606

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

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