Viomi Technology Co (NYSE:VIOT) Q2 2020 Earnings Conference Call - Final Transcript

Aug 24, 2020 • 08:00 am ET

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Viomi Technology Co (NYSE:VIOT) Q2 2020 Earnings Conference Call - Final Transcript

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Q & A
Operator
Operator

[Operator Instructions] The first question today comes from Hanli Fan of Morgan Stanley. Please go ahead.

Executive
Shun Jiang

Yes. Thank you, Hanli. I'll take your questions one by one. So, the first question is on sales recovery and channel performance. So, since the February lows, there has been a noticeable month on month recovery in sales performance across online, as well as offline channels. For online channels, the year-on-year recovery has been most evident since beginning around May where we started to re-enjoy very healthy double-digit year-on-year growth. For Viomi-branded products, the key drivers have been the various kitchen products, water purifiers, as well as small appliances, as well as of course air conditioning systems.

For offline channels, year-on-year growth has reemerged since around June and has continued to accelerate into July. Together with our offline channel partnerships, as well as new stores and points of sales, we're cautiously optimistic about the continued recovery of our offline sales channel performance going into the second half.

We haven't really seen any slowdown in online channels heading into July or August or either. I think, that the Viomi-branded product sales through online channels, as discussed more than doubled across the '618' sales season and continued similar levels of strong performance heading into the third quarter, albeit off a relatively low base in 2019. I think, if you look at our quarterly performance in 2019, it was more volatile and you should expect a smoother quarter-on-quarter performance this year.

Nevertheless, I think, based on the current trends, we expect strong performance as we have guided, for the third quarter, continuing -- going deeper into the second half and into the Double 11 shopping festival towards the year-end. So, strong performance across both, offline as well as online channels, based on current indicators in the third quarter so far.

The second question, based on -- excuse me, second quarter based on what was the question on small appliances. So, as you can see, by -- with the performance of our value-added businesses, or soon to be renamed to the small appliances and others category, small appliances have indeed performed very well in the second quarter, as well as the first half of 2020 in general, due to your aforementioned trends. The segment experienced close to 50% year-over-year growth in the quarter. Some of the key products within this category include fans, vacuum cleaners, water dispensers, blenders, kettles, and of course sweeper robots, so all quite popular products for the stay-at-home dynamic in the first half.

Small appliances, in addition will be a key growth category for our Company going forward. And we have formed a specialized team focusing on trendsetting small appliance product innovation and development. We believe there significant growth and market opportunities to be captured in the space. And we'll be devoting the necessary resources to create the appropriate incentives to ensure this initiative will become a success. So, we look forward to sharing more progress to the market on this aspect in the quarters