Tuya Reports First Quarter 2023 Unaudited Financial Results
First Quarter 2023 Financial Highlights
- Total revenue was
US$47.5 million , down approximately 14.2% year over year (1Q2022:US$55.3 million ). - IoT platform-as-a-service ("PaaS") revenue was
US$33.6 million , down approximately 19.6% year over year (1Q2022:US$41.8 million ). - Software-as-a-service ("SaaS") and others revenue was
US$8.5 million , up approximately 47.2% year over year (1Q2022:US$5.8 million ). - Overall gross margin for the quarter increased to 44.3%, up 3.1 percentage points year over year (1Q2022: 41.2%). Gross margin of IoT PaaS for the quarter decreased to 40.5%, down 1.8 percentage points year over year (1Q2022: 42.3%).
- Operating margin for the quarter was negative 68.0%, up 32.3 percentage points year over year (1Q2022: negative 100.3%). Non-GAAP operating margin for the quarter was negative 31.5%, up 36.9 percentage points year over year (1Q2022: negative 68.4%). Net margin for the quarter was negative 44.3%, up 55.0 percentage points year over year (1Q2022: negative 99.3%). Non-GAAP net margin for the quarter was negative 7.8%, up 59.6 percentage points year over year (Q12022: negative 67.4%).
- Total cash and cash equivalents, and short-term investments were
US$937.5 million as ofMarch 31, 2023 , compared toUS$954.3 million as ofDecember 31, 2022 .
First Quarter 2023 Operating Highlights
- IoT PaaS customers[1]for the first quarter 2023 were approximately 2,000 (1Q2022: approximately 2,600). Total customers for the first quarter 2023 were approximately 2,800 (1Q2022: approximately 3,900). The Group's implementation of its key-account strategy enabled it to be more focused on serving strategic customers.
- Premium IoT PaaS customers[2]for the trailing 12 months ended
March 31, 2023 were 261 (1Q2022: 303). In the first quarter 2023, the Group's premium IoT PaaS customers contributed approximately 80.2% of its IoT PaaS revenue (1Q2022: approximately 85.6%). The decrease in premium IoT PaaS customers was primarily attributable to a reduction in order size among certain previous premium customers, thus falling below the premium customer revenue contribution threshold, which is$100,000 in the last 12 months. - Dollar-based net expansion rate ("DBNER")[3]of IoT PaaS for the trailing 12 months ended
March 31, 2023 was 49% (1Q2022: 122%). - Registered IoT device and software developers, or registered developers, were over 782,000 as of
March 31, 2023 , up 10.6% from approximately 708,000 developers as ofDecember 31, 2022 .
1. The Group defines an IoT PaaS customer for a given period as a customer who has directly placed orders for IoT PaaS with the Group during that period.
2. The Group defines a premium IoT PaaS customer as a customer as of a given date that contributed more than
3. The Group calculates DBNER of IoT PaaS for a trailing 12-month period by first identifying all customers in the prior 12-month period (i.e., those have placed at least one order for IoT PaaS during that period), and then calculating the quotient from dividing the IoT PaaS revenue generated from such customers in the current trailing 12-month period by the IoT PaaS revenue generated from the same group of customers in the prior 12 month period. The Group's DBNER may change from period to period, due to a combination of various factors, including changes in the customers' purchase cycles and amounts and the Group's customer mix, among other things. DBNER indicates the Group's ability to expand customer use of the Tuya platform over time and generate revenue growth from existing customers.
Mr. Xueji (Jerry) Wang, Founder and Chief Executive Officer of Tuya, commented, "Even amidst a relatively complex macroeconomic landscape this quarter, our strategic pivot towards key customers and high-value offerings has enabled us to stabilize our operations and support our growth. This improved approach contributed to a 5% sequential revenue growth in the first quarter of 2023, typically a period characterized by extended holidays and softer performance. We also made further progress in managing our pricing structures, helping us maintain solid gross margin profiles. Looking ahead, we will continue our focus on high-yield, cost-effective products and solutions to solidify our leadership position in the IoT industry. With our innovative capabilities, extensive device ecosystem, and comprehensive solutions, we are well-positioned to seize emerging market opportunities."
Ms. Yao (Jessie) Liu, Director and Chief Financial Officer of Tuya, added, "Our first-quarter financial performance reflects our resilience and adaptability. Importantly, we have illustrated our commitment to prudent financial management by trimming our non-GAAP total operating expenses by over 40% - a testament to our stringent budget controls and efficient cost-saving practices. These efforts contributed to a substantial reduction in our non-GAAP net loss, reaching the lowest level since 2019. For the remainder of 2023, we acknowledge the possibility of persistent market challenges, leading to limited visibility in the industry. Despite these uncertainties, we are confident that our improved financial position, marked by reduced losses and a strong cash reserve, provides us with a solid base to support our strategic goals and foster future growth."
First Quarter 2023 Unaudited Financial Results
REVENUE
Total revenue in the first quarter of 2023 decreased by 14.2% to US$47.5 million from US$55.3 million in the same period of 2022, mainly due to the decreases in IoT PaaS revenue and smart device distribution revenue, partially offset by the increase in SaaS and other revenue. More particularly:
- IoT PaaS revenue in the first quarter of 2023 decreased by 19.6% to
US$33.6 million fromUS$41.8 million in the same period of 2022. During the quarter, the Group's customers remained cautious in their purchase decisions due to the persistent inventory backlog pressure in the downstream supply chain caused by the mismatch between supply and demand in the discretionary consumer electronics sector. Additionally, although the global inflation has shown some signs of relief in recent months, it continues to affect consumer sentiment, resulting in continued soft discretionary consumer electronics spending in multiple regions. Also, an adverse impact ofUS$2.5 million , or 6.0 percentage points, was caused by foreign exchange rate fluctuations compared to the same period of 2022. As a result of these factors, the Group's DBNER of IoT PaaS for the trailing 12 months endedMarch 31, 2023 decreased to 49% compared to previous periods. - SaaS and others revenue in the first quarter of 2023 increased by 47.2% to
US$8.5 million fromUS$5.8 million in the same period of 2022. During the quarter, the Group remained committed to offering value-added services ("VAS") and various software products with strong value propositions, including SaaS and Cube private cloud solution, to its customers. - Smart device distribution revenue in the first quarter of 2023 decreased by 30.3% to
US$5.4 million fromUS$7.8 million in the same period of 2022, primarily due to the fluctuating timing and volume of customer demands and purchases.
COST OF REVENUE
Cost of revenue in the first quarter of 2023 decreased by 18.6% to
GROSS PROFIT AND GROSS MARGIN
Total gross profit in the first quarter of 2023 decreased by 7.9% to
- IoT PaaS gross margin in the first quarter of 2023 was 40.5%, compared to 42.3% in the same period of 2022, primarily due to the changes in product mix and pricing structure, as well as a negative 0.8 percentage points impact caused by a provision of
US$0.3 million recorded for certain slow-moving IoT chips and raw material inventory in relation to the IoT PaaS business during the quarter. - SaaS and others gross margin in the first quarter of 2023 was 74.1%, compared to 77.1% in the first quarter of 2022.
- Smart device distribution gross margin in the first quarter of 2023 was 21.0%, compared to 9.1% in the first quarter of 2022, primarily due to higher-value products solution we provided to our customers during the quarter.
OPERATING EXPENSES
Operating expenses decreased by 31.9% to
- Research and development expenses in the first quarter of 2023 were
US$28.1 million , down 41.1% fromUS$47.6 million in the same period of 2022, primarily because of the strategic streamlining of the Group's research and development team and operations. During this quarter, average salaried employee headcount of the Group's research and development team was down approximately 46.9% year over year, compared to the same quarter in last year. - Sales and marketing expenses in the first quarter of 2023 were
US$10.3 million , down 32.9% fromUS$15.3 million in the same period of 2022, primarily because of (i) the strategic streamlining of the sales and marketing team, and (ii) the Group's efforts to control expenditure and improve sales and marketing efficiency. - General and administrative expenses in the first quarter of 2023 were
US$16.8 million , down 6.9% fromUS$18.0 million in the same period of 2022, primarily due to the strategic streamlining of the general and administrative team. - Other operating income, net in the first quarter of 2023 was
US$1.8 million , primarily due to the receipts of software value-added tax ("VAT") refunds and various general subsidies for enterprises.
LOSS FROM OPERATIONS AND OPERATING MARGIN
Loss from operations in the first quarter of 2023 narrowed by 41.8% to
Operating margin in the first quarter of 2023 was negative 68.0%, up 32.3 percentage points from negative 100.3% in the same period of 2022. Non-GAAP operating margin in the first quarter of 2023 was negative 31.5%, up 36.9 percentage points from negative 68.4% in the same period of 2022.
NET LOSS AND NET MARGIN
Net loss in the first quarter of 2023 narrowed by 61.7% to
Net margin in the first quarter of 2023 was negative 44.3%, up 55.0 percentage points from negative 99.3% in the same period of 2022. Non-GAAP net margin in the first quarter of 2023 was negative 7.8%, up 59.6 percentage points from negative 67.4% in the same period of 2022.
BASIC AND DILUTED NET LOSS PER ADS
Basic and diluted net loss per ADS was
Non-GAAP basic and diluted net loss per ADS was US$0.01 in the first quarter of 2023, compared to US$0.07 in the same period of 2022.
CASH AND CASH EQUIVALENTS, AND SHORT-TERM INVESTMENTS
Cash and cash equivalents, and short-term investments were
NET CASH USED IN OPERATING ACTIVITIES
Net cash used in operating activities for the first quarter of 2023 was
SHARE REPURCHASE
During the quarter ended March 31, 2023, the Group repurchased approximately 0.6 million of ADSs, representing 0.6 million Class A ordinary shares, from the open market, for a total consideration of approximately US$1.1 million, subject to the relevant regulation on the volume of share repurchases.
Business Outlook
Global discretionary consumer spending in the consumer electronic industry is still expected to continue facing a range of challenges in 2023, including, among other things, a decline or continued weakness in the general economic conditions across various regions, global high inflation, inventory backlog experienced by players such as smart device manufacturers, brands and retail channels in the supply chain, fluctuations in foreign exchange rates, and geopolitical tensions and conflicts.
At present, downstream enterprises are expected to have varying perceptions after nearly three quarters of industry-wide destocking efforts. Some brands believe that the inventory pressure has somewhat eased, while other brands indicate that inventory pressure remains relatively high, and they need to continue monitoring the situation.
The Group will continue to make efforts to monitor the uncertainties caused by such challenges, and despite these challenges, the Group remains confident in its long-term growth prospects and stays committed to iterating its products and services, further enhancing its software and hardware layer capabilities, expanding customer base, diversifying revenue streams, and further optimizing operating efficiency.
Conference Call Information
The Company's management will hold a conference call at
Online registration: https://www.netroadshow.com/events/login?show=b2cf3458&confId=51502
The replay will be accessible through June 15, 2023 by dialing the following numbers:
International: | +44-20-3936-3001 |
United States: | +1-855-762-8306 |
Access Code: | 171541 |
A live and archived webcast of the conference call will also be available at the Company's investor relations website at https://ir.tuya.com.
About Tuya Inc.
Tuya Inc. (NYSE: TUYA; HKEX: 2391) is a global leading IoT cloud development platform with a mission to build an IoT developer ecosystem and enable everything to be smart. Tuya has pioneered a purpose-built IoT cloud development platform that delivers a full suite of offerings, including Platform-as-a-Service, or PaaS, and Software-as-a-Service, or SaaS, to businesses and developers. Through its IoT cloud development platform, Tuya has enabled developers to activate a vibrant IoT ecosystem of brands, OEMs, partners and end users to engage and communicate through a broad range of smart devices.
Use of Non-GAAP Financial Measures
In evaluating the business, the Company considers and uses non-GAAP measures, such as non- GAAP operating expenses, non GAAP loss from operations (including non-GAAP operating margin), non-GAAP net loss (including non-GAAP net margin), and non-GAAP basic and diluted net loss per ADS, as supplemental measures to review and assess its operating performance. The presentation of non-GAAP financial measures is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with generally accepted accounting principles in
Non-GAAP financial measures are not defined under
Reconciliations of Tuya's non-GAAP financial measures to the most comparable U.S. GAAP measures are included at the end of this press release.
Safe Harbor Statement
This press release contains forward-looking statements. These statements are made under the "safe harbor" provisions of the
Investor Relations Contact
Tuya Inc.
Investor Relations
Email: [email protected]
The Blueshirt Group Gary Dvorchak, CFA
Phone: +1 (323) 240-5796
Email: [email protected]
TUYA INC. | |||
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS AS OF | |||
(All amounts in US$ thousands ("US$"), except for share and per share data, | |||
As of | As of | ||
2022 | 2023 | ||
ASSETS | |||
Current assets: | |||
Cash and cash equivalents | 133,161 | 74,815 | |
Restricted cash | – | 4,430 | |
Short-term investments | 821,134 | 862,724 | |
Accounts receivable, net | 12,172 | 14,206 | |
Notes receivable | 2,767 | 2,002 | |
Inventories, net | 45,380 | 42,126 | |
Prepayments and other current | 8,752 | 9,966 | |
Total current assets | 1,023,366 | 1,010,269 | |
Non-current assets: | |||
Property, equipment and software, | 3,827 | 3,313 | |
Operating lease right-of-use assets, | 9,736 | 8,916 | |
Long-term investments | 18,031 | 18,031 | |
Other non-current assets | 1,179 | 1,084 | |
Total non-current assets | 32,773 | 31,344 | |
Total assets | 1,056,139 | 1,041,613 | |
LIABILITIES AND | |||
Current liabilities: | |||
Accounts payable | 9,595 | 7,154 | |
Advances from customers | 27,633 | 27,060 | |
Deferred revenue, current | 6,821 | 6,339 | |
Accruals and other current liabilities | 33,383 | 27,179 | |
Lease liabilities, current | 3,850 | 3,876 | |
Total current liabilities | 81,282 | 71,608 | |
Non-current liabilities: | |||
Lease liabilities, non-current | 5,292 | 4,738 | |
Deferred revenue, non-current | 394 | 367 | |
Other non-current liabilities | 7,004 | 6,226 | |
Total non-current liabilities | 12,690 | 11,331 | |
Total liabilities | 93,972 | 82,939 | |
Shareholders' equity: | |||
Class A ordinary shares | 25 | 25 | |
Class B ordinary shares | 4 | 4 | |
Treasury stock | (86,438) | (71,801) | |
Additional paid-in capital | 1,584,764 | 1,586,511 | |
Accumulated other comprehensive | (22,115) | (20,487) | |
Accumulated deficit | (514,073) | (535,578) | |
Total shareholders' equity | 962,167 | 958,674 | |
Total liabilities and shareholders' | 1,056,139 | 1,041,613 |
TUYA INC. | |||
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF | |||
(All amounts in US$ thousands ("US$"), except for share and per share data, | |||
For the Three Months Ended | |||
2022 | 2023 | ||
Revenue | 55,324 | 47,485 | |
Cost of revenue | (32,504) | (26,457) | |
Gross profit | 22,820 | 21,028 | |
Operating expenses: | |||
Research and development expenses | (47,588) | (28,051) | |
Sales and marketing expenses | (15,278) | (10,259) | |
General and administrative expenses | (18,030) | (16,793) | |
Other operating incomes, net | 2,594 | 1,780 | |
Total operating expenses | (78,302) | (53,323) | |
Loss from operations | (55,482) | (32,295) | |
Other income/(loss) | |||
Other non-operating income, net | 653 | 778 | |
Financial income, net | 121 | 11,470 | |
Foreign exchange loss, net | (101) | (34) | |
Loss before income tax expense | (54,809) | (20,081) | |
Income tax expense | (144) | (964) | |
Net loss | (54,953) | (21,045) | |
Net loss attributable to Tuya Inc. | (54,953) | (21,045) | |
Net loss attribute to ordinary | (54,953) | (21,045) | |
Net loss | (54,953) | (21,045) | |
Other comprehensive income | |||
Foreign currency translation | 649 | 1,628 | |
Total comprehensive loss attributable to | (54,304) | (19,417) | |
Net loss attributable to Tuya Inc. | (54,953) | (21,045) | |
Net loss attributable to ordinary | (54,953) | (21,045) | |
Weighted average number of ordinary | 556,808,050 | 553,994,418 | |
Net loss per share attributable to | (0.10) | (0.04) | |
Share-based compensation expenses | |||
Research and development expenses | 4,130 | 4,117 | |
Sales and marketing expenses | 1,653 | 1,606 | |
General and administrative expenses | 11,873 | 11,597 |
TUYA INC. | |||
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | |||
(All amounts in US$ thousands ("US$"), except for share and per share data, unless | |||
For the Three Months Ended | |||
2022 | 2023 | ||
Net cash used in operating activities | (57,374) | (18,882) | |
Net cash used in investing activities | (141,941) | (33,824) | |
Net cash used in financing activities | (21,751) | (2,171) | |
Effect of exchange rate changes on cash and cash | 1,328 | 961 | |
Net decrease in cash and cash equivalents, restricted | (219,738) | (53,916) | |
Cash and cash equivalents, restricted cash at the | 964,576 | 133,161 | |
Cash and cash equivalents, restricted cash at the end of | 744,838 | 79,245 |
TUYA INC. | |||
UNAUDITED RECONCILIATION OF NON-GAAP MEASURES TO THE MOST | |||
(All amounts in US$ thousands ("US$"), except for share and per share data, unless | |||
For the Three Months Ended | |||
2022 | 2023 | ||
Reconciliation of operating expenses to non- | |||
Research and development expenses | (47,588) | (28,051) | |
Add: Share-based compensation expenses | 4,130 | 4,117 | |
Adjusted Research and development expenses | (43,458) | (23,934) | |
Sales and marketing expenses | (15,278) | (10,259) | |
Add: Share-based compensation expenses | 1,653 | 1,606 | |
Adjusted Sales and marketing expenses | (13,625) | (8,653) | |
General and administrative expenses | (18,030) | (16,793) | |
Add: Share-based compensation expenses | 11,873 | 11,597 | |
Adjusted General and administrative expenses | (6,157) | (5,196) | |
Reconciliation of loss from operations to non- | |||
Loss from operations | (55,482) | (32,295) | |
Operating margin | (100.3) % | (68.0) % | |
Add: Share-based compensation expenses | 17,656 | 17,320 | |
Non-GAAP Loss from operations | (37,826) | (14,975) | |
Non-GAAP Operating margin | (68.4) % | (31.5) % | |
Reconciliation of net loss to non-GAAP net loss | |||
Net loss | (54,953) | (21,045) | |
Net margin | (99.3) % | (44.3) % | |
Add: Share-based compensation expenses | 17,656 | 17,320 | |
Non-GAAP Net loss | (37,297) | (3,725) | |
Non-GAAP Net margin | (67.4) % | (7.8) % | |
Weighted average number of ordinary shares used in | 556,808,050 | 553,994,418 | |
Non-GAAP net loss per share attributable to | (0.07) | (0.01) |
View original content:https://www.prnewswire.com/news-releases/tuya-reports-first-quarter-2023-unaudited-financial-results-301845436.html
SOURCE Tuya Inc.
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