Operator
Hello, ladies and gentlemen. Thank you for standing by for Veomi Technology Co. Ltd.'s earnings conference call for the second half and full year of 2025. At this time, all participants are in listen-only mode. Today's conference call is being recorded. I will now turn the call over to your host, Ms. Claire Gee, the IR Director of the company.
Please go ahead, Hello, everyone, and welcome to Veomi Technology Co. Ltd.'s earnings conference call for the second half and the full year of 2025. As a reminder, this conference is being recorded. The company's financial and operating and posted online. You can download the earnings price release and sign up for the company's email distribution list by visiting the IR section of the company's website at ir.biomi.com. Participating today's call, Mr. Xiaoping Chen, the founder chairman of the board of directors and the chief executive officer and Sam Young, the head of our capital and the investment department. The company's management will begin with prepared remarks and the call will conclude with a Q&A session. Before we continue, please note that the company's discussion will contain forward-looking statements made under the state cover provisions of the U.S. Private Security Litigation Reform Act of 1995. forward-looking statements involve inherent risks and uncertainties. As such, the company's actual results may be materially different from the views expressed today. Further information regarding this and other risks and uncertainties is included in the company's annual report on the Form 20 Act and other feelings as filled with U.S. Security and Exchange Commission. The company does not assume any obligation to update any forward-looking statements except as required by law. Please also note that WellMe's earnings press release and this conference call include discussions of unaudited gap financial information as well as unaudited non-gap financial measures. In addition, WellMe's press release contains a recommendation of an unaudited non-gap measure to unaudited most directly comparable gap measure. I will now turn the call over to our founder, Mr. Xiaoping Chen. Mr. Chen will deliver his remarks in Chinese, forward immediately by English translation. Mr. Chen, please go ahead.
Thank you very much. Thank you very much. Thank you so much for joining us. 亮相美国艾阿米的WQA的水展 这是全球水处理行业最具影响力的盛会之一 我们将向北美乃至全球的伙作伙伴 展示明美对于Bedwater的这么一个全新的产品定义 在制造和研发专 我们持续的夯实核心竞争力 明美的进水超级工厂 全球化的布局迈出了关键一步 海外的精品工厂已部署完毕 产现集成 集热 制冷 制冰等模式化产品 为北美 欧洲 东南亚等海外市场的差距化提供敏捷的供应链的支撑 截至2025年 年底 全球的专利突破1950项 估计是四个国家和地区 对在AI的制冷算法 矿物质的精准调节和制冷的资金界等等领域 构筑去系统性的技术壁垒 为全球的业务拓展 奠定坚实的基础 In the stock exchange, we announced that in the 2020 7th year, we received $0.88 million of the special market. The company received $2,000 million of the total return of the stock exchange. In the 2020 7th year, we received $2,000 million of the total return of the stock exchange. Thank you very much. 四个方面取得突破 第一个就是聚焦海外 深耕战略市场拓展更多的国家和地区 依托进水超级工厂的敏捷优势 持续推出文字化的新品 推高品牌的影响力向更多的市场前身 第二 坚持走差异化的路线 国内持续强化困难系列的健康新制 以技术差异化和产品创新引领品质升级 提升云米在技术市场的行业地位 第三 进水技术领航 加大AI和技术的深度综合 让技术创新的技术上升级 提升云米在技术
Thank you, Mr. Chen, and I'll quickly translate our funders' remarks before discussing our financial performance. Hello, everyone. Thank you for joining us today on our earnings conference call for the second half and full year of 2025. In the second half of 2025, amid the face-down of the national subsidies gain for home appliance trading and the company's strategic investments in the overseen market expansion, new product development, and brand building, We delivered a total revenue of 951 million RMB and the net income attributable to ordinary shareholders of the company of 21.2 million RMB. For the full year, our core business remained solid, achieving total revenue of 2.4 billion RMB, representing the year-over-year increase in 14.6%. Net income attributable to ordinary shareholders of the company stood at 141.6 million RMB, with a net profit margin of 5.8%. Over the past year, our global water strategy has continued to achieve milestones highlighted by the establishment of a multinational professional team covering North America, Southeast Asia, and Europe. Empowered by a global perspective across R&D and market expansion, we have constantly achieved technological breakthroughs addressing users' diverse drinking water demand. By leveraging AI technology to enhance user experience, we are establishing Xiaomi as a world-leading water technology company. In the North American market, our Amazon channel delivered an outstanding performance in the second half. achieving triple-digit growth in sales on a sequential basis. During the Black Friday promotional season, our products ranked 19th in the water purifier category and 4th in the under-sink RO tanking segment. Our premium flagship products, the Master One Mineral Water Purifier, further enriched our product portfolio. In the Southeast Asia market, we continue to deepen our strategic cooperation with offline channels in Malaysia through the launch of the compact mineral water dispenser tailored for the local market featuring both mineralization and cooling functions. On the brand building front, we are engaged famous actresses and singers from different countries to serve as brand ambassadors. They participate in offline launch events and visit our facilities, strengthening our brand technology and health image. In April 2026, we will unveil our new brand series at the WQA convention in Miami, showcasing our latest AI technologies and innovations as one of the most influential professional events in the global water treatment industry and presenting our redefined vision of better water to partners in North America and around the world manufacturing and R&D we kept boosting our competitive edge we achieved a key milestone in the global expansion of wellness water purifier gigafactory commencing full operations of our overseas premium production line this production line integrates module functions, such as instant heating and cooling and ice making, providing agile supply chain support to meet differentiated needs and markets in North America, Europe, and Southeast Asia. As of the end of 2025, our global patent application has surpassed 1950, spanning 14 countries and regions, we have built highly competitive technological capabilities in areas such as AI-driven water quality algorithms, precision mineral control, and intelligent self-cleaning, laying out a solid foundation for the continued expansion of our global business. In terms of shareholder returns, we declared a special dividend of .088 U.S. dollars per ADS in July 2025. In August of the same year, we authorized a new share repurchase program of $20 million U.S. dollars. By the end of 2025, we had repurchased a total of 1.03 million ADS, amounting to approximately 2.5 million U.S. dollars. In our recently purchased and published earnings release, we declared another special dividend of $0.066 per share, with an aggregated amount of 31 million RMB for shareholder returns. As a gesture of gratitude for the longstanding trust and support of our shareholders, we deeply value the journey we take with our shareholders and remain committed to creating long-term value for them. In 2026, we will pursue our global water vision with greater determination targeting breakthroughs in four key areas. First, for overseas markets, we will deepen our precise in-call strategic markets, such as North America and Southeast Asia. We will actively expand into more countries and regions, leveraging the agility of our water purifier gigafactory. We will continue to launch new localized production, extending our brand influence into broader markets. Second, to advance our differentiations in the domestic market, we will further strengthen the health-centric positioning of the Quinlan series with its alkaline mineral concept. Third, on the technology front, we will deepen the integration of AI across water purification scenarios, making technological innovations the core engine that enables Velmi to navigate market cycles and achieve sustained growth. Fourth, we will continue to strengthen collaborations with global strategic partners, fully leverage the scale effects of water purifier Gigafactory to elevate both scale and efficiency. Through this committed long-term approach, WellMe will continue to create value for global users and deliver sustainable return to our shareholders. Thank you. And that concludes our founder's remarks. I'll now turn the call over to our Head of Capital and Investment Department, Mr. Sammy Yang, to discuss our financial performance. Thank you.
Thank you, Ms. Chen and Claire. Thank you to everyone for joining us today. Let's take a look at our unordered financial results for the second half of 2025. We recorded net revenue of 950.6 million RMB, decrease of 25.9% from 1,282.4 million RMB for the same period of 2024, primarily due to the decrease in the home water systems. Now let's look at the performance across three categories. Revenues from home water system were 628.2 million RMB, a decrease of 32.1% of 925.7 million RMB for the same period of 2024, primarily due to the decline in the national service for water purifiers. Revenues from consumables were 112.2 million RMB, a decrease of 17.9% from 133.7 million RMB for the same period of 2024, primarily due to the decreased sales of water purified to Xiaomi. Revenues from kitchen appliances and others were 210.2 million RMB, a decrease of 4.5% from 220 million RMB for the same period of 2024. Primarily due to the reduction in orders from Xiaomi as well as conjunction of Vietnamese brand product in this category. Cost profit or 223.8 million RMB compared to 289.5 million RMB for the same period of for 2024. Gross margin was 23.5% compared to 22.6 from the same period of 2024. The slight increase in gross margin was merely due to the elimination of the one-off cost incurred during the reimbursement of certain IoT at-home business and assets. Total operating expenses were 248 million remedy, an increase of 12% from 221.5 million remedy for the same period of 2024 due to increase selling and marketing expenses and a partial offset by decreasing in GNA expenses. In greater detail, R&D expenses were 76.3 million RMB, an increase of 12.7% from 67.7 million RMB for the same period of 2024, mainly attributable to an increase of investment in new product development. Selling and marketing expenses were 148.6 million RMB, an increase of 29.8% from 114.6 million RMB for the same period of 2024, mainly due to an increase in brand promotion investment as well as higher personnel costs resulting from channel expansion. G&A expenses were 23.1 million RMB, a decrease of 41.2% from 39.3 million RMB for the same period of 2024, primarily due to a decrease of employee compensation costs. The net income was 21.2 million RMB and the non-GAAP net income was 28.2 million RMB. Additionally, our balance sheet remained healthy. As of December 1st, 31st, 2025, the company had cash and cash equivalent of 806.6 million RMB, restricted cash of 164.4 million RMB, short-term deposit of 258 million RMB, and short-term investment of 82.6 million RMB. Next, let's briefly discuss key financial result and audit for the full year 2025. Then revenues were 2,428.2 million RMB, an increase of 14.6% from 2,119 million RMB for $686.6 million revenue, an increase of 12.6% from $1 billion, $498.4 million revenue for 2024. Revenues from consumables were $235.4 million revenue, a decrease of 14.2% from $277.7 million revenue for 2024. Revenues from kitchen, appliances, and others were 506.2 million RMB, an increase of 47.6% from 342.9 million RMB for 2024. Gross profit was 615 million RMB compared to 548.7 million RMB for 2024. Gross margin was 25.3% compared to 25.9% for 2024. Total operating expenses were 529.4 million remedy, an increase of 24.6% from 424.9 million remedy for 24. In greater detail, R&D expenses were 165.6 million RMB, an increase of 15.9% from 142.9 million RMB for 2024. Selling and marketing expenses were $277.7 million RMB, an increase of 31.5% from $211.2 million RMB for 2024. GNA expenses were $86.1 million RMB, an increase of 21.6% from $70.8 million for 2024. Net income attributable to ordinary shareholders of the company was $141.6 million. remedy. And the non-GAAP net income attributable to ordinary shareholders of the company was $155.7 million remedy. Thank you.
This concludes our prepared remarks. We will now open the call for Q&A. Mr. Chen, our founder, and Mr. Sam Yang will join this session and answer questions. Operator, please go ahead.
Operator
Thank you. To ask a question, you will need to press star one and one on your telephone and wait for your name to be announced. And to withdraw your question, please press star one and one again. For the benefit of all participants on today's call, if you wish to ask your question to management in Chinese, please immediately repeat your question in English. Please stand by for the first question. The first question today is from Jin Yu Zhang from CICC. Please go ahead. Okay.
Good evening, Viome's management team, and thank you very much for hosting this earnings call and giving me the opportunity to raise questions. Well, I have three questions covering brand development, overseas strategy, and profitability growth so first and foremost could you share the overall performance of the company's self-owned brand Wellme in 2025 and additionally what are the key investment priorities and initiatives for Wellme's brand building this year thank you Thank you.
另外就是在美国的亚马逊 那在这个渠道里面我们精髓解释的销量是在第19位 如果我们再看细一点 我们把北美分线上跟线下来看的话呢 我们将来会用不同的品牌跟这个定位来说 来提升我们品牌的这个声量 我们会在美国的圣地亚哥的WOC的这个奖会 我们会参加 and then we will also participate in the WQA event. We will use a new product and a new series. This is what we are looking at at the first stage. It is also what we will show to the world, and to the international partners that we are looking for better water.
Okay, and to answer your question, in 2025, our brand revenue was primarily from domestic online channels, and we have ranked the 10th place among the annual brands listed on Jindong, and we also ranked 19th place in sales on Amazon USA, which is a great progress. And moving forward, we will adapt a differentiated strategy in North America by launching distinct brands and positionings on online and offline channels. In particular, in April, we will participate in the World of Coffee Fair in San Diego, and we will debut our new brand series at WQA Convention in Miami. And this marks the first step into North American offline market and showcasing the partners across the U.S. and the world, our redefined vision of better water. Thank you.
Thanks to Sam and Claire. It's very clear. So here moving to my second question on overseas expansion. So, Wyoming has successfully entered the U.S. and the Malaysia markets. So, what are the differences in your market strategies between these two regions? And what key challenges have you encountered? And how do you plan to mitigate them? And also, could you outline the overseas expansion goals for 2026?
Thank you. 好问题 我们来回答一下第二题 在美国跟马来我们都组了本地的团队 美国我们是主打线上的亚马逊的自行渠道 所以我们在亚马逊我们推出了全RO的竞争器 那这个卖的还不错 然后接下来我们会针对北美的线下 我们会推出一系列的这种新品 它就会覆盖全屋的系统 就不单纯是除下的RO进制器 在马来我们主要还是聚焦在线下 线下的话它的产品形态主要是以台面为主 当然马来人比较喜欢喝冰水 所以我们会叠加冰水的这样的一个功能 它会比较符合当地的饮水的需求 而我们会进一步的去拓展线下的这个合作伙伴跟这个产品界 当然海外的这个市场呢 有比较大的这个不确定性啊 当然地缘政治当下也其实也比较多变 但我们认为呢 其实海外的机会呢 是很广阔的 我们是具备这种核心竞争力的 所以呢 海外市场呢 是对于我们公司来讲的话呢 是我们的中长期战略的一个重要的着眼点 And to answer your question, we have built local teams for both United States and Malaysia.
And especially in United States, we launched the Valme branded under-sink water purifiers on Amazon, which is the online channel. And next, we will bring new brands and products tailored for the U.S. offline market in the second quarter. And this will cover not only the under-sink products, but also the whole house of nutrition systems. And in Malaysia, our focus is offline, with countertop units of the main product format, adding features like ice and cold water that match the local drinking habits, and that will extend more offline partnerships and diversify our product lineups. But for the overseas markets in total, in the future, there are still plenty of uncertainties overseas, and the geopolitical tensions continue to create high winds. Still, we see strong opportunities globally. And we believe we are well positioned. That's why the global extension will remain a key part of our long-term strategy. And for 2026, we expect triple-digit growth in the overseas revenue. Thank you.
Yes, very clear. Thank you, Sam and Claire. So my last question comes to the company's profitability. Well, we see the company's profitability improved notably in 2025 after focusing on the water business. So for 2026 and moving forward like next two to three years, what are the core pathways for further enhanced profitability and sustain this positive momentum?
Thank you. 这是长期的持续的能够改善盈利的驱动力。 That's why our company's sales sales will continue to increase. It will likely increase in the future of 1-2 years. And the third thing is that we're going to close our product. We're going to take a look at the top of the product, including different features, We have a lot of fun and fun and fun. We will cover all of these products. We will cover all of these products. These products will be more complete. It will also make our product more wider. to覆蓋这个全球的市场?
So by pushing into the international markets and growing the shares of our own branded sales, we can improve the profitability. And the second path is about the consumables revenue. The consumables revenue from our own branded product will be a long-term driver of the margin improvement. As more people are using Xiaomi water purifiers globally, the consumable revenues will start to kick in. about one to two years after the equipment sale, and we start to see the trends. And third, we will broaden our product lineup, which is adding more countertop options like ice makers, multifunctional countertop water dispensers, and higher margin whole home filtration systems. These new categories will help us reach more customers and build a stronger, more complex product portfolio and for the global expansion. Thank you.
Yes, very clear. Thank you very much for your time and the detailed answers. I have no further questions. Thank you, Jingyu.
Operator
We'll now take the next question. This is from Shi Jingxing from CMS. Please go ahead.
Okay, I'll quickly translate a question first. Can you analyze the impact of the national safety reduction on the domestic market, especially when we see in the second half of 2025, the negative impact has caused the revenue decline? And can you forecast the future impacts and offer some guidance? And also, we recently noticed the B, E, N, and the business development. Can you offer some heads up about the top line contribution about cooperation with China Gas, this kind of business development? Thank you.
Thank you, Mr. Chairman. I'll just answer the question. Thank you very much. 品类的伸出率还是比较低的 那在这个中国来看的话 它的需求其实还没有释放 所以我们预计啊 就整个2026年应该会 这个行业啊 它会回归正常值 进水这个品类呢 其实对于这个消费下行呢 是有抗这个下行周期的能力的 我认为呢 就是会有越来越多的 这个消费者会选择进水期 这个趋势应该是不可逆 然后2026年啊 我们看其实进水期在国家层面呢 已经没有补贴了 所以大家其实也可以看到 虽然有些品牌可能显示 还会有15%左右这样的一些补贴 但有些品牌其实没有做了 对我们而言的话 我们已经停止了这个字 另外就是需要是提的 关于我们跟这种燃气公司的合作 比如像中燃 新澳这些燃气公司 我们觉得这种合作 其实是一种互惠互利的这种全新的一种合作模式 因为第一是他们的展厅跟服务广点在中国是很多的 他们基本上可以覆盖将近5000多万个家庭 而且他那个使用的场景也是中安装的 所以跟我们筹下的建议器又特别吻合 我们觉得那个品类也是高度互补 我们是一个很好的这种进入下沉市场的一个通路
Okay, I'll quickly translate the answer. As you can see, the impact of the national subsidy on water purifier is obvious in 2025. Due to the high base last year, the domestic market will face challenges in the first half of 2026. For products like water purifiers, however, where penetration is still relatively low, so the customer demand is still growing, we expect 2026 to return to the category's normal growth pace growth pace, and they remain relatively resilient even of consumer spending softens. As we see, more and more people are choosing to use water purifiers, and we believe that trend is unreversible. And starting in 2026, water purifiers are no longer covered by national subsidies. You might see some brands still offering 15% off on online commerce platforms, while others don't. We didn't offer that percentage off, and we have faith in our product competitiveness. And to answer your questions about the corporations with the gas companies, We recently reached a corporation with China Gas and ENN Energy, companies like this. And the way we see is we are exploring new partnership models with these companies. And there are showrooms and service centers across the country, reaching over 50 million household users. and both of our products highly rely on the installation survey support and the production scenario fits perfectly with under sink water purifiers and the product categories complement each other. This gives us an efficient way to enter lower tier markets and 2026 will be a pilot year for the partnership. This is We expect it to be a great opportunity for both parties, and we expect it will bring incremental growth. Thank you.
So you'd like to have a positive look at how to enter the market, and you'd like to buy something cheaper and make a discount So, in the market, I don't know if it will run on your market So you'd like to have a positive value for the market we'd like to have a positive goal of looking at the market This is a problem we have.
The thing is this with the quality of my market Let me add a little bit about this question. In the 2016 year, we have a few points to do. The first is to continue to expand the規模. The main path is through the international market. Especially in the US and the US market. We will have more products, and we will go into more channels. The second thing is about what we will do in the three steps. In the three steps, we will increase our revenue revenue. We know that in the past 1-2 years, we have a lot of revenue revenue. That's the reason that the year is the demand for the year, our revenue of the revenue will be in progress, the revenue of the revenue is a huge gap. That's one of the other. The other one, the size of the market is the size of the market. We will increase the size of the market. In the past, we have a size of the market. We hope that through the previous market So we can increase our product and increase our product, and increase our product. The last thing is about our product. The entire product is based on our product. 除下机我们的毛利其实在行业的平均水平 那我们现在会推出一些高毛利的产品 那这些高毛利产品包括我们做的这种叫全屋的 以及这种叫复合功能的这种台面机 这些我们会提升单价以及毛利 所以我们希望说通过这些几个组合的动作做下去 能够让我们的毛利有一个保障 you have a good performance.
For example, for the United States, we have explored offline channels for the first time with new brands and new products with higher margins. And the second strategy is to increase the consumable revenues. As you can see, the consumable revenues has a very promising guarantee of the improvement of profitability. and we have our own branded water purifier sales has increased during the past few years and we see the trend of consumable revenues to kick in after one to two years after the equipment sales. So this will be a long-term driven factor for the margin expansion. And thirdly, it's to improve our own brand revenue contribution by both overseas expansion and the product portfolio expansion. And lastly, we will have more diversified product lines. As of today, most of our revenues come from the under-sink water purifier product format. And our profit margin is within the industry level. However, we will extend more diversified products with higher profit margins than ASPs, like the whole house water filtration systems and the countertop products equipped with diversified functions like cooling, ice making, and so on. Thank you.
Okay, thank you so much for joining us. Thank you.
Operator
Thank you. We'll now take the next question. And this is from Brian Lantier from Zach's Small Cap Research. Please go ahead.
Thank you very much. Most of my questions have already been covered. I just wanted to say I'm encouraged by the move to offline distribution in the U.S. And then just sort of big picture, looking out the impact of the subsidies is significant, it, obviously, in your six-month results. But I think if you look year over year, you have a 14% top-line growth rate. If I'm looking out over the next three to five years, is that sort of what you view as the normalized growth rate for the business, 10 to 15% top-line? 整体的收入是有14个多点的一个提升 那我想问一下就是在接下来就是公司怎么看这个常态 未来三年或者是更长一段时间的一个常态化的一个增长预期
因为我们有些投资人可能是说中文的 所以我就用中文回答一下 待会那些再用英文回答 我们现在看了就是行业的这个常态的增长呢 其实在高三位数 如果我们看我们自由品牌的话 我们应该是高于行业 这主要是有几个原因 第一个是我们自由品牌的品牌力在不断地提升 然后我们在国际市场在进一步的开拓 然后另外一个部分 就是我们的增长是跟大客户 就是我们讲说非云米业务 就是我们非云米品牌的这个业务呢 是跟大客户是同频的 比如像这个小米 所以在当前的这个情况下呢 我认为其实增长呢是特别珍贵的 我们预期呢应该是在2027年以后 我们会进入低单位数的常态化的这个增长 这样一个阶段 Okay I will translate the answers to your question According to our estimation, we see the industry's normal growth rate would be at a high single-digit level without the impact of the national subsidy and so on.
And while the Wyoming brand growth rate will be higher than the industry, mainly because driven by the enhancement of our brand strength and the expansion of our international market growth. However, another major part of our business revenue is our key clients' business, such as Xiaomi. This will be aligned with the key accounts' business performance. And in the current environment, the growth is precious. So overall, we anticipate that the company has the potential to enter into a nominal growth rate of a low double-digit growth in the 2027. Thank you.
Great. Thank you. That's all I had.
Operator
Okay. Thank you, Dan. Thank you. That concludes the question and answer session. I would like to turn the conference back over to management for any additional or closing comments.
Okay, thank you once again for joining us today. If you have further questions, please feel free to contact us through the contact information on our website or our investor relationship consultant, PS&T Financial Communications. Thank you.
Operator
Thank you. This concludes today's conference call. Thank you for participating and you may now disconnect.
