Viomi Technology Co., Ltd — FY2022 Form 20-F
Reporting period: Fiscal year ended December 31, 2022. This is an annual report, not a standalone fourth-quarter filing; the supplied text does not provide clear Q4-only financial results. Financial statements are prepared under U.S. GAAP. Unless noted otherwise, figures below are RMB.
Business context
Viomi develops and sells IoT-enabled smart-home appliances, water-purification products, consumables and related services, primarily in China. It operates through PRC subsidiaries and variable interest entities (VIEs) controlled by contractual arrangements; VIEs contributed 86.8% of FY2022 revenue. Xiaomi is a strategic partner, shareholder and major customer.
Financial performance and position
| Metric | FY2022 | FY2021 | Change / context |
|---|---|---|---|
| Revenue | RMB3,232.7m | RMB5,303.8m | Down 39.0% |
| Gross profit / margin | RMB737.1m / 22.8% | RMB1,198.1m / 22.6% | Gross profit down 38.5%; margin up 0.2 percentage points |
| Operating expenses | RMB1,036.5m | RMB1,160.5m | Down 10.7%; 32.1% of revenue versus 21.9% |
| Operating income (loss) | (RMB277.3m) | RMB64.7m | Turned to operating loss |
| Net income (loss) | (RMB282.6m) | RMB88.9m | Turned to net loss; basic and diluted EPS both (RMB1.32) |
| Operating cash flow | (RMB284.2m) | RMB309.0m | Shifted to cash outflow |
| Cash, cash equivalents and restricted cash | RMB813.2m | RMB622.8m | Up RMB190.4m |
| Total assets / liabilities | RMB2,885.7m / RMB1,456.5m | RMB3,276.7m / RMB1,625.8m | Both declined |
| Borrowings | RMB134.8m | RMB16.1m | RMB20.2m current and RMB114.6m long-term |
Current assets were RMB2,495.0m and current liabilities RMB1,326.9m, a current ratio of approximately 1.9. Cash, restricted cash, short-term deposits and short-term investments totaled approximately RMB1,181.8m. The company stated that available cash and expected operating cash flows should cover anticipated needs for at least 12 months. This assessment should be considered alongside the FY2022 operating cash outflow.
Investing activities provided RMB314.5m, mainly reflecting maturities of short-term investments; financing activities provided RMB113.6m. Capital expenditures were RMB200.0m, and capital commitments outstanding were RMB89.0m, primarily for the Viomi IoT Technology Park.
Material changes versus FY2021
- Revenue fell 39.0%, principally from the IoT @ Home portfolio and small appliances and others. IoT @ Home portfolio revenue declined 52.4%, following the end of Xiaomi-branded sweeper-robot sales and product-line adjustments. Home water solutions fell 8.3%; consumables fell 2.3%; small appliances and others fell 27.7%.
- Xiaomi revenue fell from RMB2,295.6m to RMB1,403.4m, but remained 43.4% of total revenue. Revenue from Xiaomi was 43.3% in FY2021.
- Gross margin edged up from 22.6% to 22.8% as product mix shifted toward higher-margin products, partly offset by lower selling prices for certain cleaning products.
- Operating expenses decreased in absolute terms, but increased sharply as a share of revenue. R&D spending was RMB300.0m (9.3% of revenue), selling and marketing RMB614.9m (19.0%), and general and administrative expenses RMB121.7m (3.8%).
- Accounts and notes receivable declined to RMB602.1m, while receivable days increased to 69 from 57. Inventory fell to RMB502.3m, but inventory turnover days increased to 79 from 45. Accounts and notes payable declined to RMB844.1m; payable days increased to 140 from 92.
Outlook, risks and unusual items
- Guidance: The filing provides no quantified revenue or earnings guidance. Management expects available liquidity to meet anticipated needs for at least 12 months and plans to retain earnings for operations rather than pay regular dividends in the foreseeable future.
- Customer concentration: Xiaomi accounted for 43.4% of FY2022 revenue. The company warns that termination, non-renewal or reduced promotion of Xiaomi products could materially affect results.
- Credit and inventory: The allowance for credit losses rose to RMB87.9m from RMB34.9m, including an increased allowance for receivables from a third-party customer. FY2022 inventory write-downs were RMB32.8m, up from RMB8.1m in FY2021.
- Financial reporting controls: Management concluded disclosure controls and internal control over financial reporting were not effective as of December 31, 2022. Material weaknesses included insufficient U.S. GAAP/SEC reporting resources and policies, deficient input-VAT calculation controls, and ineffective financial-statement review. The filing reports balance-sheet adjustments after the March 2023 unaudited results release: prepaid expenses and other current assets decreased RMB84.4m, accounts and notes payable decreased RMB85.3m, and accrued expenses and other liabilities increased RMB0.9m. Management is implementing remediation measures; full remediation was not established.
- Structure and regulation: Investors own shares in a Cayman Islands holding company, not equity in the VIEs. The enforceability of VIE contractual arrangements and evolving PRC rules remain material risks. The filing also discusses potential CSRC filing requirements for future offshore offerings and data, cybersecurity and privacy regulation.
- Audit access: The PCAOB removed mainland China and Hong Kong from its non-inspection list in December 2022; the company said it did not expect to be identified under the HFCAA after this filing, while noting future inspection access could change.
- Other items: The company reported no material legal or administrative proceedings. COVID-related disruption, macroeconomic uncertainty, competition, supply-chain exposure and currency controls remain risks. Construction of the technology park’s first phase was over 80% complete at year-end.
Important facts for investors to verify
- Review audited FY2022 statements and the VAT-related balance-sheet adjustments against the March 2023 unaudited release; assess management’s progress in remediating the reported control weaknesses.
- Track subsequent revenue, gross margin and operating cash flow, particularly whether the steep FY2022 decline and cash burn persist.
- Assess Xiaomi’s revenue share, product cooperation terms and the company’s ability to replace discontinued Xiaomi-branded sweeper-robot sales.
- Examine collectability of third-party receivables, the increased credit-loss allowance, inventory aging and the higher inventory turnover days.
- Confirm cash availability and transferability across subsidiaries and VIEs, borrowing maturities, capital commitments and required spending on the technology park.
- Monitor VIE enforceability, PRC regulatory developments, CSRC filing obligations for future capital raising and PCAOB inspection access.