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| Statement |
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| By steadily improving our products’ perception of space and environment and upgrading our AI voice interaction technology, we have successfully transitioned our whole-house intelligence from the era of control, which emphasizes connectivity, to the era of perception, characterized with active intelligence and proactive service |
| We believe that the intelligent lighting system is indispensable part of the whole-house intelligence solutions and will provide reasonable improvement to the smart home experience of our one-stop IoT solutions |
| Third, we will keep deepening our industrial layout, strengthening our ability in cost control, increasing our operation efficiency and expanding our operation channels to further improve operational performance |
| This is a powerful recognition of our brand leading position in the industry |
| We believe that optimizing our product category structure will benefit the sustainability of our long-term development |
| Additionally, we have achieved market-leading industrial chain capabilities in the water purification products |
| Last but not least, we will deepen our industrial layout, heighten our cost controls, increase our operational efficiency and strengthen our product competitiveness to further improve operational performance |
| And back to your question on sales, our air conditioners and water purifiers achieved quite good sales performance during the 618 season |
| Over the past six months, we enhanced our product mix by focusing on core product categories, driving an increase in the revenue contribution of our water purification products to 22% from 14% a year ago |
| First, we will further deepen our roots in the water purification industry and roll out more industry-leading products, creating value for consumers with higher quality, more advanced technology and more comprehensive services |
| As the peak season of air conditioners came in earlier than past years, we observed an increase in sales of air conditioners starting from March this year and the revenue contribution of such products to the total revenue increased from 15% same period last year to 18% this year |
| Additionally, our balance sheet remained healthy |
| Jinling Zhang In the first half of 2023, we introduced a series of new products at the Spring New Product launching events, featuring enhanced rations of our one-stop IoT home solutions, such as our Master 3 Pro formaldehyde-removing AI vertical air conditioner and Super 2 Pro AI vertical air conditioner equipped with fresh air system, both of which improved the indoor air quality and benefit the health of our users’ family members |
| As one of the highest-level and most authoritative nationwide enterprise evaluation ratings, this honor recognizes and affirms our comprehensive strength in the industrial chain of water purification |
| Total operating expenses decreased by 30.3% to RMB361.8 million from RMB519.4 million for the same period of 2022, mainly attributable to the streamlined organizational structure and overall improved operational efficiency |
| With the widespread adoption of new energy vehicles and smart terminal devices, as well as the breakthrough in generative AI technology, we believe the era of intelligence has arrived, integrating AI’s power into whole-house intelligence will not only enable a revolutionary user experience, but also inspire unprecedented creativity across the whole-house intelligent industry |
| Net loss attributable to ordinary shares -- ordinary shareholders of the company was RMB54.9 million and non-GAAP net loss attributable to ordinary shareholders of the company was RMB53.7 million despite the decrease in revenue scale, our loss from operations narrowed by 43.6%, indicating an improvement in our operational efficiency |
| In July, Guangdong Lizi Technology Company Limited, one of our subsidiaries was designated as the national-level specialized and innovative, ‘Little Giant enterprise, owing to its remarkable R&D and innovation capabilities in the water purification industry |
| But on the right side, the total SKU number decreased by 30% and thus the overall age of the inventory also decreased accordingly, which helped us get better prepared for the big promotion season |
| On April 2000 -- April 28, 2023, we introduced a series of high-tech products at our Spring New Product Launching Event, featuring enhanced iterations of our one-stop IoT home solutions, such as our Master 3 Pro formaldehyde-removing AI vertical air conditioner and Super 2 Pro AI vertical air conditioner equipped with a fresh-air system, which improve the indoor air quality to protect users’ health |
| First, we will further deepen our roots in the water purification industry and provide consumers with more products of higher quality, leading technology and with more comprehensive services |
| At the same time, we will maintain sufficient capital reserves to support these goals and consolidate our brand to drive robust and sustainable growth, sparing no effort to create long-term value for all of our users and shareholders |
| Second, we will keep focusing on fine-tuning our product mix and improving and iterating our whole-house intelligent product matrix to elevate our products’ intelligent experience and deliver more helpful and user-friendly one-stop IoT home solutions |
| In the second half of 2023, we expect the sales of sweeper robots to have a slight rebound with the influences of these headwind factors gradually getting relieved since July this year |
| For the second half of 2023, as mentioned earlier, we will continue to explore and capitalize on our strength and optimize our operations, focusing on the following three aspects |
| And second, we will remain focused on fine-tuning our product mix and iterating our whole-house intelligent product matrix to deliver more helpful and user-friendly one-stop IoT home solutions and improve our users’ home experience |
| Revenues from home water solutions increased by 1.7% to RMB286.6 million from RMB281.9 million for the same period of last year |
| In the meantime, as we put more efforts on promoting water purifier products, the revenue contribution of large flex water purifiers increased to 22%, compared to 17% in the same period last year |
| On one hand, we enriched our product categories offered in the overseas market and the revenues brought about by these new categories accounted for over 60% of our overseas market revenues in the first half of 2023 |
| Therefore, in the future, we will keep focusing on optimizing our product mix, mainly by expanding the percentage of those products with better profit margins such as our water purifiers and smart kitchen products and lay out more products with changing end market acknowledged features to meet the greatly recovering market demands |
| Statement |
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| During the geopolitical crisis and foreign currency fluctuations occurred in the first half of 2023 in the European market, our sales of sweeper robots suffered a significant drop, especially in the second quarter |
| About the market demand during the 618 promotion season, we did observe the recovery of the consumption market, but such recovery is still subdued and the overall sales did not meet our expectations |
| In the meantime, to make up for the decline in overseas sales of our robotics vacuum cleaners |
| Our total revenue recorded RMB1.3 billion, representing a decrease of 20% year-over-year, while gross margin declined by 1.9 percentage points year-over-year |
| Revenues from the IoT@Home portfolio decreased by 21.8% to RMB691.7 million from RMB884.7 million for the same period of 2022 |
| Constrained by both a lukewarm consumer sentiment and the company’s strategic adjustments during the first half of 2023 |
| Revenues from consumables decreased by 21.0% to RMB135.9 million from RMB172.1 million for the same period of last year |
| In the first quarter, we pushed hard on SKU streamlining and down market product clearance, which resulted in a lower profit margin than the same period last year |
| Revenues from small appliances and others decreased by 36.1% to RMB190.2 million from RMB297.6 million for the same period of 2022, primarily due to the ongoing product portfolio adjustment within this category |
| The decline was mainly due to a decrease in revenues from the IoT@Home portfolio, as well as small appliances and others |
| With the competition on the e-commerce platforms getting fiercer, companies are driven to compete with one another with lower price in order to maintain their sales volume, and at the end of the day, this competition further reduced the profit margin |
| The decrease was primarily due to the decrease in the sales volume of water purifier filters sold to Xiaomi |
| As the first quarter always comes at a flat season with lower revenue scale |
| The business scale of our robotic vacuum cleaners has shrunk largely since last year |
| Such shrinking is mainly caused by the overdependence of our robotic vacuum cleaners in the overseas market, especially in the Europe |
| The decline was primarily due to a lower selling price of certain clean-up products and was partially offset by increasing sales of higher gross margin products as a result of product portfolio adjustments |
| As we all know that the competition on the robotic vacuum cleaners become very fierce this year |
| But to be frank, we haven’t seen any clear signals of recovery in this product category, neither overseas, nor domestic and the competition is getting fiercer day-by-day |
| The decline was primarily due to the streamlining of SKUs in smart refrigerators and smart sweeper robots |
| In greater detail, research and development expenses decreased by 31% to RMB109.5 million from RMB158.7 million for the same period of 2022, mainly driven by a decrease in personnel costs and optimization of our ongoing R&D projects |
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