Release Date: August 27, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Tuya Inc (TUYA, Financial) achieved a robust year-over-year revenue growth of approximately 29% in Q2 2024.
- The company recorded its first quarterly non-GAAP operational profit with a margin of around 10%.
- IoT PaaS business experienced a year-over-year growth of approximately 32%, driven by industrial recovery and increased demand in Asia.
- Revenue from smart solutions grew by approximately 44% year-over-year, maintaining a gross margin of nearly 27%.
- Tuya Inc (TUYA) has a strong financial position with over $1 billion in net cash and positive operating cash flow for five consecutive quarters.
Negative Points
- The number of customers served in Q2 2024 decreased slightly compared to the same period last year.
- There is a potential slowdown in momentum for household appliances exports, which could impact future growth.
- The company faces challenges in providing accurate year-over-year growth numbers for Q3 due to high base comparisons from 2023.
- GAAP operating profit or loss and net profit may experience quarterly fluctuations due to non-operational factors such as share-based compensation expenses.
- The company’s future profitability and dividend distribution are subject to market volatility and interest rate changes.
Q & A Highlights
Q: What is the future demand outlook given the high base starting from the second half of last year? Can the almost 30% growth in the first half be sustained in the second half?
A: (Yi Yang, Co-Founder, COO, Director) The macroeconomic environment has stabilized after a recovery in the first half of this year. We observed robust growth in household appliances and smart lighting. Despite a slight slowdown in July, the industry remains positive. Tuya's strategy involves leveraging its comprehensive capabilities across diverse customer needs, industries, and geographical regions. We remain optimistic about continuing year-on-year growth in our core business in the second half of this year.
Q: What is the forward-looking operating profitability and long-term view of cash dividends?
A: (Yao Liu, CFO) Achieving profitability is about the business model and strategic direction. We aim to expand our revenue scale to make profit figures more meaningful. Our business model allows additional gross profit to translate directly into profit under effective cost control. We will maintain rigorous cost control while modestly increasing market and sales investments as needed. (Yi Yang, Co-Founder, COO, Director) The special dividend of approximately $33 million corresponds to Tuya's non-GAAP net profit for the first half of this year. We prioritize performance first and aim to build a long-term and sustainable shareholder return model.
Q: Could you share progress on GenAI, including key AI functions, customer feedback, and monetization?
A: (Yi Yang, Co-Founder, COO, Director) We are developing several smart devices based on GenAI technology, such as smart watches, rings, AI headphones, and smart speakers. These products aim to provide a more personalized and intelligent user experience. We plan to launch smart speaker products with GenAI capability in Q4. Monetization approaches include integrating GenAI capabilities into products for customers and developers or including GenAI capability as an additional feature within our products.
Q: What are the key financial results and growth strategies for Tuya in the second quarter of 2024?
A: (Yao Liu, CFO) Our total revenue reached $73.3 million, up 28.6% year-over-year. We achieved non-GAAP operational profitability for the first time with a profit margin of 10%. IoT PaaS revenue was $54.3 million, up 32% year-over-year. We saw robust demand growth across all product categories, with home appliances experiencing the highest growth. Our smart solutions segment recorded revenue of $9.4 million, up 44.2% year-over-year. We continue to focus on delivering high-value products and maintaining a stable gross margin.
Q: How does Tuya plan to balance growth with profitability moving forward?
A: (Yao Liu, CFO) We will continue to balance growth with profitability by expanding our revenue scale and maintaining rigorous cost control. Our business model allows additional gross profit to translate directly into profit under effective cost control. We aim to maintain a similar level of non-GAAP quarterly operating margins as in Q2 while ensuring capital protection and securing supplementary financial gains.
Q: What are the key factors contributing to Tuya's strong financial and operational performance in the second quarter of 2024?
A: (Yao Liu, CFO) Strong revenue growth, enhanced efficiency, a stable gross margin, and excellent control over expenses and costs contributed to our first-ever non-GAAP operational profitability. Our gross profit has seen considerable growth alongside revenue, and our cost control measures have been effective. We continue to prioritize the protection of our capital while maximizing fund supplements.
Q: What are Tuya's strategies for customer acquisition and market expansion?
A: (Yi Yang, Co-Founder, COO, Director) Tuya operates a cubic model, covering diverse customer needs, industries, and geographical regions. We offer PaaS products, smart device solutions, and SaaS software products to meet various customer requirements. Our global presence and comprehensive capabilities provide a solid foundation for tackling regional challenges and seizing opportunities. We continue to expand our customer base and enhance customer loyalty through high-value integrated intelligent solutions.
Q: How does Tuya plan to leverage GenAI technology to enhance its product offerings and customer experience?
A: (Yi Yang, Co-Founder, COO, Director) We are actively developing smart devices with GenAI technology to provide a more personalized and intelligent user experience. Products like smart watches, rings, AI headphones, and smart speakers will integrate large model capabilities. We plan to launch smart speaker products with GenAI capability in Q4 and gradually introduce AI capabilities into our PaaS offerings for developers. These enhancements will create better customer engagement and user experience.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
