Viomi Technology Co., Ltd. — FY2023 Form 20-F
Business context and reporting period. This is an annual report for the fiscal year ended December 31, 2023, filed April 25, 2024—not a standalone 2023 Q4 report. Viomi develops and sells IoT-enabled smart-home products and water-purification solutions, primarily in China. Financial statements are prepared under U.S. GAAP and reported in RMB; U.S. dollar figures are translations. The company is a Cayman Islands holding company operating in China through subsidiaries and contractual VIE arrangements.
Key financial metrics
Amounts below are RMB millions unless noted.
| Metric | FY2023 | FY2022 | Change |
|---|---|---|---|
| Revenue | 2,493.4 | 3,232.7 | -22.9% |
| Gross profit / margin | 569.5 / 22.8% | 737.1 / 22.8% | Profit -22.7%; margin unchanged |
| Operating income (loss) / margin | (119.2) / -4.8% | (277.3) / -8.6% | Loss narrowed |
| Net income (loss) | (89.3) | (282.6) | Loss narrowed |
| Net loss per ordinary share | RMB (0.41) | RMB (1.32) | Improved |
| Operating cash flow | (103.2) | (284.2) | Cash use narrowed |
| Capital expenditure cash outflow | 110.5 | 200.0 | Lower |
Revenue by business line: IoT@Home portfolio products RMB1,220.9 million (-24.6%); home water solutions RMB604.0 million (-11.3%); consumables RMB314.4 million (-12.3%); and small appliances and others RMB354.2 million (-38.2%). Cost of revenue was RMB1,923.9 million.
Liquidity and debt. At year-end, cash and cash equivalents were RMB491.7 million, restricted cash RMB144.6 million, short-term deposits RMB365.8 million, and short-term investments RMB70.4 million. Total current assets were RMB2,282.7 million versus current liabilities of RMB1,266.6 million. Borrowings totaled approximately RMB256.7 million, including RMB100.0 million short-term borrowing, RMB28.0 million current long-term borrowing, and RMB128.7 million long-term borrowing. Total liabilities were RMB1,410.8 million and shareholders’ equity RMB1,343.6 million. Restricted cash included RMB119.9 million for bank acceptance bills and RMB24.7 million in judicially frozen funds.
Working-capital indicators worsened: inventory turnover days rose to 90 from 79, and receivable turnover days to 84 from 69; payable turnover days increased to 143 from 140. Xiaomi receivables were RMB324.2 million. Management stated that cash resources and expected operating cash flows should cover anticipated needs for at least 12 months.
Material changes versus FY2022
- Revenue contracted across all four reported business lines. Management attributed the decline mainly to product-line streamlining, lower sales of certain smart appliances, lower water-purifier volume to Xiaomi, and weaker filter demand.
- Xiaomi revenue fell to RMB1,317.3 million from RMB1,403.4 million, but rose to 52.8% of total revenue from 43.4% as overall sales declined.
- Operating expenses fell 31.9% to RMB706.2 million. Selling and marketing expense declined 34.7%; R&D declined 25.7%; G&A declined 33.0%, partly because FY2022 included a larger expected-credit-loss allowance.
- Operating loss and net loss narrowed, while gross margin held at 22.8%. Operating cash use also narrowed, but remained negative.
- Cash, cash equivalents and restricted cash decreased to RMB636.4 million from RMB813.2 million. Net cash used in investing activities was RMB198.9 million, including equipment purchases and placements of deposits and investments.
Outlook, commentary, risks and unusual items
- No numerical revenue, earnings or cash-flow guidance is provided. Management describes a strategy focused on water purification, continued AI/IoT product development, channel development and overseas expansion. The first phase of the Viomi IoT Technology Park was completed in 2023; remaining capital commitments were RMB42.2 million.
- Customer concentration is substantial: Xiaomi accounted for 52.8% of FY2023 revenue. The current business cooperation agreement runs to March 2025 and contains termination provisions. The company also reported that VIEs contributed 85.2% of revenue; investors hold shares in the Cayman Islands holding company, not equity in the VIEs.
- Other material risks include China regulatory and VIE enforceability uncertainty; data privacy and cybersecurity regulation; supply-chain and contract-manufacturer dependence; competition; product quality and inventory risk; and currency-conversion and dividend-transfer restrictions. The company reported no material legal or administrative proceedings, while noting ordinary-course claims and litigation uncertainty.
- Inventory write-downs were RMB31.1 million in 2023; the year-end inventory write-down provision was RMB66.0 million against gross inventory of RMB508.3 million. The auditor identified inventory net realizable value estimation as a critical audit matter and issued an unqualified opinion on the financial statements.
- Management concluded that disclosure controls and internal control over financial reporting were not effective at year-end. Two material weaknesses remain: insufficient U.S. GAAP/SEC reporting resources and incomplete accounting policies and reporting procedures. Management said separate weaknesses concerning input VAT controls and financial-statement review identified in 2022 were remediated in 2023.
- The PCAOB had regained inspection access to auditors in mainland China and Hong Kong in 2022; the company said it did not expect to be identified under the HFCAA for FY2023, but future inspection access remains a risk. The company reported no material cybersecurity incident as of the filing date.
Most important facts for investors to verify
- Whether revenue declines stabilize and whether expense reductions can be sustained without impairing product development or demand.
- Whether Xiaomi cooperation renews on acceptable terms, given its rising share of revenue and the agreement’s March 2025 end date.
- Cash conversion, receivable collections, inventory aging and write-down assumptions, including the concentration of receivables in Xiaomi and a major third-party customer.
- Progress in remediating the remaining internal-control material weaknesses and whether future filings report effective controls.
- Practical access to cash held in China, restrictions on transfers and dividends, and enforceability of the VIE contractual structure.
- Required approvals or filings for future offshore financing, and ongoing PCAOB inspection access relevant to HFCAA trading risk.