Viomi Technology Co., Ltd Reports Third Quarter 2021 Unaudited Financial Results

GUANGZHOU,China,Nov. 24,2021 -- 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 30,2021.

Third Quarter 2021 Financial and Operating Highlights

Net revenues reached RMB1,056.5 million (US$164.0 million),compared to RMB1,486.7 million for the third quarter of 2020.

Gross margin was 22.7%,compared to 17.1% for the third quarter of 2020.

Number of cumulative household users reached approximately 6.3 million,compared to approximately 5.9 million as of the end of the second quarter of 2021 and approximately 4.6 million as of the end of the third quarter of 2020.

Percentage of household users with at least two connected products reached 21.1%,compared to 20.7% as of the end of the second quarter of 2021 and 19.5% as of the end of the third quarter of 2020.

"During the third quarter,we further enhanced our one-stop IoT home solutions platform to realize AI-driven IoT home scenarios. We also continued to optimize our product portfolio and execute our 'trending technology' brand marketing and 'larger store,better merchant' channel strategy. Moreover,we increased our investment in R&D and expanded our AI,algorithms and hardware research and development teams to accelerate AI product innovation and technology accumulation,which significantly increased our R&D expenses. To enhance brand awareness,we also invested in additional advertising and marketing resources in the third quarter. Due to the substantial increase in R&D and marketing expenses,our bottom line declined temporarily while our strategy adjustment and resource investment once again generated gross margin recovery,increased brand recognition and more diversified,balanced sales channels equipped to handle sales and service of our smart home products. Our overall business is developing in a high-quality,healthy direction," said Mr. Xiaoping Chen,Founder,Chairman of the Board of Directors and Chief Executive Officer of Viomi.

"With respect to product development,we have developed our product strategy from three perspectives: (i) we increased our investment in R&D as well as technology innovation and AI application,enhancing our brand influence through product optimization; (ii) we provide users with customized bundle purchase solutions rather than solely selling individual products; (iii) we focus on scenario innovation and will complete our smart home category to provide a more comprehensive smart home experience. We introduced a series of new AI products in the first half of 2021,including the all-direction air conditioner,premium sweeper robot Alpha 2 Plus,EyeBot range rood,and 800G-1200G Super series large-flux water purifiers. We also launched the Cyber series of our smart wet/dry vacuums in September. All of these products demonstrated strong sales performance in the third quarter,driving continued gross margin recovery. Furthermore,we introduced new SKUs in the smart home category,such as EyeLink 2T smart lock with AI face recognition technology. We will roll out exciting new product lines in the coming quarters,including smart home,smart kitchen,water purifier,and cleanliness products,among others."

"Second,to enhance our branding influence,we invited one of China's top celebrities,Deng Lun,to become our global branding spokesperson and established our 'trending technology' brand positioning. In the second half of this year,we broadened our omni-channel marketing and advertising activities including elevator advertisements,print media,television and social media. Our brand's search frequency on major search engines has climbed and our internal data shows an increase in post-90s users and users from new tier-one and tier-two cities over the past few months."

"Third,we increased our exposure and sales on new content channels such as Pinduoduo,Douyin and Kuaishou. We have built an exclusive team for these new sales channels to boost traffic and attract more young consumers,and our short-form video marketing and KOL livestreaming has enhanced brand awareness and contributed to an increase in sales. The revenue contribution from these new channels has increased in the past few months as well."

"With respect to our offline channels,we continued to execute our 'larger store,better merchant' strategy to provide our users with 'one-stop smart home' solutions,integrating bundle purchases,scenario-based shopping experience and installation and after-sale services. These efforts have also strengthened our 'trending technology' brand positioning. In the second half,we accelerated our nationwide 4s and 5s store portfolio expansion and will open additional large-scale Viomi experience stores nationwide," added Mr. Chen.

"We are also developing our overseas business by upgrading channels,diversifying our operation model and expanding product categories. We recently cooperated with renowned agents in Germany,Russia,Malaysia and Northern Europe to transform our overseas channels from small distributors into high-quality international sales agents. We plan to optimize our overseas business operation by leveraging their local resources,reputation and import sales experience. Following the successful opening of our first self-operated store on U.S. Amazon,we are preparing to launch our online store on European Amazon and will introduce sweeper robot products in the near future. Going forward,we will expand our global business into additional countries and regions to capture the cleanliness product sector's tremendous growth opportunities."

"We have completed the first step in establishing our one-stop IoT home solutions platform by building comprehensive product lines across home scenarios and will now turn our focus to product smartification upgrades and scenario application innovation. Looking ahead to the next year,we will continue to refine our product portfolio and further stabilize our gross margin recovery. We will also increase our investment in AI application and technology innovation,enhance our 'trending technology' branding and improve our overall business operation quality,creating long-term value and returns for our users and shareholders," Mr. Chen concluded.

Third Quarter 2021 Financial Results

REVENUE

Net revenues were RMB1,486.7 million for the third quarter of 2020. Net revenues were in line with the Company's previous guidance and the decrease was mainly due to the significant decrease in sales of Xiaomi-branded sweeper robots,as well as product portfolio adjustments for margin expansion in other categories.

- IoT @ Home portfolio. Revenues from IoT @ Home portfolio decreased by 39.3% to RMB643.5 million (US$99.9 million) from RMB1,060.2 million for the third quarter of 2020. The decline was primarily due to (i) the decrease in sales of Xiaomi-branded sweeper robots; (ii) product portfolio adjustments for margin expansion in some categories.

- Home water solutions. Revenues from home water solutions increased by 7.9% to RMB157.0 million (US$24.4 million) from RMB145.4 million for the third quarter of 2020. The growth was primarily driven by the Company's product portfolio adjustment in this category,which contributed to increased sales of and demand for new and larger flux water purifiers as well as a gross margin expansion.

- Consumables. Revenues from consumables increased by 11.7% to RMB79.6 million (US$12.4 million) from RMB71.3 million for the third quarter of 2020,primarily due to increased demand for the Company's water purifier filter products.

- Small appliances and others. Revenues from small appliances and others decreased by 15.9% to RMB176.5 million (US$27.4 million) from RMB209.9 million for the third quarter of 2020,primarily due to the Company's continued product portfolio optimization to obtain a higher gross margin in this category.

GROSS PROFIT

Gross profitwas RMB239.7 million (US$37.2 million),compared to RMB254.3 million for the third quarter of 2020. Gross margin increased to 22.7% from 17.1% for the third quarter of 2020,primarily driven by the Company's continued efforts to shift the business and product mix toward higher gross margin products.

OPERATING EXPENSES

Total operating expenses increased by 28.2% to RMB290.3 million (US$45.1 million) from RMB226.4 million for the third quarter of 2020,primarily due to the increase in research and development expenses and selling and marketing expenses.

Research and development expenses increased by 56.1% to RMB82.2 million (US$12.8 million) from RMB52.7 million for the third quarter of 2020,mainly due to the increase in research and development experts and related salaries and expenses,as well as increased investment in research and development of new products.

Selling and marketing expenses increased by 20.4% to RMB183.4 million (US$28.5 million) from RMB152.2 million for the third quarter of 2020,primarily attributable to an increase in advertising and marketing activities to enhance the Company's branding and market recognition.

General and administrative expenses increased by 15.2% to RMB24.7 million (US$3.8 million),compared to RMB21.4 million for the third quarter of 2020,primarily due to an increase in the estimated allowance for accounts and notes receivables,together with increased lease expenses due to the workplace expansion.

INCOME (LOSS) FROM OPERATIONS

Loss from operations was RMB38.7 million (US$6.0 million),compared to income from operations of RMB36.4 million for the third quarter of 2020. The loss was primarily due to the increases in R&D expenses and S&M expenses.

Non-GAAP operating loss[1],which excludes the impact of share-based compensation expenses,was RMB31.6 million (US$4.9 million),compared to non-GAAP income from operations of RMB58.9 million for the third quarter of 2020.

[1] "Non-GAAP operating income (loss)" is defined as income (loss) from operation excluding share-based compensation expenses. See "Use of

Non-GAAP Measures" and "Reconciliation of GAAP and Non-GAAP Results" included elsewhere in this press release.

NET INCOME (LOSS)

Net lossattributable to ordinary shareholders of the Company was RMB29.3 million (US$4.5 million),compared to net income attributable to ordinary shareholders of the Company of RMB34.9 million for the third quarter of 2020.

Non-GAAP net loss attributable to ordinary shareholders of the Company[2] was RMB22.2 million (US$3.4 million),compared to non-GAAP net income attributable to ordinary shareholders of the Company of RMB57.4 million for the third quarter of 2020.

[2]"Non-GAAP net income (loss) attributable to ordinary shareholders of the Company" is defined as net income (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 elsewhere in this press release.

BALANCE SHEET

As of September 30,2021,the Company had cash and cash equivalents of RMB771.7 million (US$119.8 million),restricted cash of RMB25.6 million (US$4.0 million),short-term deposits of RMB67.0 million (US$10.4 million) and short-term investments of RMB463.5 million (US$71.9 million),compared to RMB504.1million,RMB70.6 million,nil and RMB696.1 million,respectively,as of December 31,2020.

OUTLOOK

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

- Net revenues to be between RMB1.2 billion and RMB1.3 billion.

The Company expects the sales of Xiaomi-branded sweeper robots continue to decrease in the fourth quarter and the own-branded sweeper robot business to achieve faster growth,which will become one of the main categories.

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

Conference Call

The Company's management will host a conference call at 7:30 a.m. Eastern Time on Wednesday,November 24,2021 (8:30 p.m. Beijing/Hong Kong time on November 24,2021) to discuss financial results and answer questions from investors and analysts. Listeners may access the call by dialing:

United States (toll free): +1 888-346-8982

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: 10161880

A telephone replay will be available two hours after the call until December 1,2021 by dialing:

United States: +1 877-344-7529

International: +1 412-317-0088

Replay Access Code: 10161880

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 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 (loss),non-GAAP net income (loss),non-GAAP net income (loss) attributable to the Company,non-GAAP net income (loss) attributable to ordinary shareholders,non-GAAP basic and diluted net income (loss) per ordinary share and non-GAAP basic and diluted net income (loss) 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 (loss) is income (loss) from operations excluding share-based compensation expenses. Non-GAAP net income (loss) is net income (loss) excluding share-based compensation expenses. Non-GAAP net income (loss) attributable to the Company is net income (loss) attributable to the Company excluding share-based compensation expenses. Non-GAAP net income (loss) attributable to ordinary shareholders is net income (loss) attributable to ordinary shareholders excluding share-based compensation expenses. Non-GAAP basic and diluted net income (loss) per ordinary share is non-GAAP net income (loss) attributable to ordinary shareholders divided by weighted average number of ordinary shares used in the calculation of non-GAAP basic and diluted net income (loss) per ordinary share. Non-GAAP basic and diluted net income (loss) per ADS is non-GAAP net income (loss) attributable to ordinary shareholders divided by weighted average number of ADS used in the calculation of non-GAAP basic and diluted net income (loss) 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 (loss) from operations,net income (loss),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 RMB6.4434 to US$1.00,the effective noon buying rate for September 30,2021 as set forth in the H.10 statistical release of the Federal Reserve Board. No representation is made that the RMB amounts could have been,or could be,converted,realized or settled into US$ at that rate on for 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

Cecilia Li

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

VIOMI TECHNOLOGY 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,

2020

2021

2021

RMB

RMB

US$

Assets

Current assets

Cash and cash equivalents

504,108

771,732

119,771

Restricted cash

70,601

25,625

3,977

Short-term deposits

-

67,029

10,403

Short-term investments

696,051

463,495

71,933

Accounts and notes receivable from third parties (net of

allowance of RMB9,246 and RMB28,628 as of

December 31,2020 and September 30,

respectively)

427,352

288,228

44,732

Accounts receivable from a related party (net of

allowance of RMB61 and RMB332 as of December

31,respectively)

609,094

315,039

48,893

Other receivables from related parties (net of allowance of

RMB9 and RMB60 as of December 31,2020 and

September 30,respectively)

88,038

55,647

8,636

Inventories

439,375

541,165

83,987

Prepaid expenses and other current assets

87,280

163,671

25,403

Long-term deposits-current portion

10,000

60,000

9,312

Total current assets

2,931,899

2,751,631

427,047

Non-current assets

Prepaid expenses and other non-current assets

19,803

24,460

3,796

Property,plant and equipment,net

72,436

105,421

16,361

Deferred tax assets

14,189

25,263

3,921

Intangible assets,net

7,681

10,337

1,604

Right-of-use assets,net

20,529

21,083

3,272

Land use rights,net

62,982

62,040

9,628

Long-term deposits-non-current portion

50,000

-

-

Total non-current assets

247,620

248,604

38,582

Total assets

3,179,519

3,000,235

465,629

Liabilities and shareholders' equity

Current liabilities

Accounts and notes payable

1,001,371

859,612

133,410

Advances from customers

112,613

95,976

14,895

Amount due to related parties

124,192

5,605

870

Accrued expenses and other liabilities

335,488

321,646

49,917

Income tax payables

50,962

35,441

5,500

Lease liabilities due within one year

9,481

11,706

1,817

Total current liabilities

1,634,107

1,329,986

206,409

Non-current liabilities

Accrued expenses and other liabilities

3,400

5,775

896

Long-term borrowing

-

16,106

2,500

Lease liabilities

11,693

10,050

1,560

Total non-current liabilities

15,093

31,931

4,956

Total liabilities

1,649,200

1,361,917

211,365

VIOMI TECHNOLOGY CO.,LTD

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS (CONTINUED)

(All amounts in thousands,

2020

2021

2021

RMB

RMB

US$

Shareholders' equity

Class A Ordinary Shares (US$0.00001 par value;

4,800,000 shares authorized; 104,163,686 and

107,381,750 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; 103,554,546 and

103,314,546 shares issued and outstanding as of

December 31,

respectively)

6

6

1

Treasury stock

(54,600)

(54,600)

(8,474)

Additional paid-in capital

1,278,004

1,325,901

205,777

Retained earnings

363,051

427,220

66,304

Accumulated other comprehensive loss

(59,384)

(64,172)

(9,959)

Total equity attributable to shareholders of the Company

1,527,083

1,361

253,650

Non-controlling interests

3,236

3,957

614

Total shareholders' equity

1,530,319

1,638,318

254,264

Total liabilities and shareholders' equity

3,629

VIOMI TECHNOLOGY CO.,LTD

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF

COMPREHENSIVE INCOME

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

Three Months Ended

September 30,

2020

September 30,

2021

September 30,

2021

RMB

RMB

US$

Net revenues:

A related party

624,822

427,307

66,317

Third parties

861,922

629,219

97,653

Total net revenues

1,486,744

1,056,526

163,970

Cost of revenues (including RMB143,072 and RMB7,690 with

related parties for the three months ended September 30,2020

and 2021,respectively)

(1,232,481)

(816,797)

(126,764)

Gross profit

254,263

239,729

37,206

Operating expenses(1)

Research and development expenses (including RMB156 and

RMB690 with a related party for the three months ended

September 30,2020 and 2021,respectively)

(52,674)

(82,201)

(12,757)

Selling and marketing expenses (including RMB23,210 and

RMB23,579 with related parties for the three months ended

September 30,respectively)

(152,247)

(183,364)

(28,458)

General and administrative expenses

(21,447)

(24,716)

(3,836)

Total operating expenses

(226,368)

(290,281)

(45,051)

Other income,net

8,537

11,896

1,846

Income (loss) from operations

36,432

(38,656)

(5,999)

Interest income and short-term investment income,net

9,985

2,769

430

Other non-operating income

580

549

85

Income (loss) before income tax expenses

46,997

(35,338)

(5,484)

Income tax (expenses) credits

(11,890)

6,191

961

Net income (loss)

35,107

(29,147)

(4,523)

Less: Net income attributable to the non-controlling interest

shareholder

187

116

18

Net income (loss) attributable to ordinary shareholders of the Company

34,920

(29,263)

(4,541)

VIOMI TECHNOLOGY CO.,LTD

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF

COMPREHENSIVE INCOME (CONTINUED)

(All amounts in thousands,

2021

RMB

RMB

US$

Net income (loss) attributable to the Company

34,541)

Other comprehensive (loss) income,net of tax

Foreign currency translation adjustment

(24,956)

989

153

Total comprehensive income (loss) attributable to the Company

9,964

(28,274)

(4,388)

Net income (loss) per share attributable to ordinary

shareholders of the Company

-Basic

0.17

(0.14)

(0.02)

-Diluted

0.16

(0.14)

(0.02)

Weighted average number of ordinary shares used in calculating net

income (loss) per share

-Basic

209,159,767

210,472,257

210,257

-Diluted

217,768,082

210,257

Net income (loss) per ADS*

-Basic

0.50

(0.42)

(0.06)

-Diluted

0.48

(0.42)

(0.06)

Weighted average number of ADS used in calculating net income

(loss) per ADS

-Basic

69,719,922

70,157,419

70,419

-Diluted

72,589,361

70,419

*Each ADS represents 3 ordinary shares.

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

Three Months Ended

September 30,

2021

RMB

RMB

US$

General and administrative expenses

6,270

2,584

401

Research and development expenses

12,963

6,682

1,037

Selling and marketing expenses

3,211

(2,219)

(344)

VIOMI TECHNOLOGY CO.,LTD

Reconciliations of GAAP and Non-GAAP Results

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

Three Months Ended

September 30,

2021

RMB

RMB

US$

Income (loss) from operations

36,999)

Share-based compensation expenses

22,444

7,047

1,094

Non-GAAP operating income (loss)

58,876

(31,609)

(4,905)

Net income (loss)

35,523)

Share-based compensation expenses

22,094

Non-GAAP net income (loss)

57,551

(22,100)

(3,429)

Net income (loss) attributable to the Company

34,541)

Share-based compensation expenses

22,094

Non-GAAP net income (loss) attributable to the Company

57,364

(22,216)

(3,447)

Net income (loss) attributable to ordinary shareholders

34,094

Non-GAAP net income (loss) attributable to ordinary

shareholders

57,447)

Non-GAAP net income (loss) per ordinary share

-Basic

0.27

(0.11)

(0.02)

-Diluted

0.26

(0.11)

(0.02)

Weighted average number of ordinary shares used in calculating

Non-GAAP net income (loss) per share

-Basic

209,257

Non-GAAP net income (loss) per ADS

-Basic

0.82

(0.32)

(0.05)

-Diluted

0.79

(0.32)

(0.05)

Weighted average number of ADS used in calculating Non-GAAP net income (loss) per ADS

-Basic

69,419

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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