Tuya Inc (TUYA) 2023 Q3 法說會逐字稿

Good morning and good evening, ladies and gentlemen. Thank you for standing by and welcome to Tuya Inc.'s third-quarter 2023 earnings conference call. I'll now turn the call over to the first speaker today, Mr. Reg Chai, Investor Relations Director of Tuya. Please go ahead, sir.

早安，晚上好，女士們先生們。感謝您的耐心等待，歡迎參加塗鴉公司 2023 年第三季財報電話會議。我現在將電話轉給今天第一位發言者，塗鴉投資者關係總監 Reg Chai 先生。請繼續，先生。

Thank you. Hello, everyone, welcome to our third-quarter 2023 earnings call. Joining us today are Founder and CEO of Tuya, Mr. Jerry Wang; and our CFO, Ms. Jessi Liu. The third-quarter 2023 financial results and webcast of this conference call are available at ir.tuya.com. A. replay of this call will also be available on our website in a few hours.

謝謝。大家好，歡迎參加我們的 2023 年第三季財報電話會議。今天加入我們的是塗鴉創辦人兼執行長王傑瑞先生；以及我們的財務長 Jessi Liu 女士。 2023 年第三季財務業績和本次電話會議的網路直播可在 ir.tuya.com 上取得。答：幾個小時後我們的網站上也將提供本次電話會議的重播。

Before we continue, I refer you to our safe harbor statement in our earnings press release, which applies to this call as we will make forward-looking statements. With that, I will now turn the call over to our Founder and CEO, Mr. Jerry Wang. Jerry will deliver his remarks in Chinese, which will be followed by corresponding English translation. Thank you.

在我們繼續之前，我請您參閱我們的收益新聞稿中的安全港聲明，該聲明適用於本次電話會議，因為我們將做出前瞻性聲明。現在，我將把電話轉給我們的創辦人兼執行長王傑瑞先生。 Jerry將以中文發表講話，隨後將有相應的英文翻譯。謝謝。

Hello, everyone, thank you for joining the Tuya 2023 Q3 earnings conference call. Total revenue for the third quarter of 2023 reached $60.1 million, marking a return to year-over-year growth, thanks to the industry and economic downturn at the end of 2021. Revenue grew an impressive 35.7% year-over-year or approximately 43% when adjusting for exchange rate fluctuations. We've again achieved a record overall gross margin of 46.7% for the second consecutive record.

大家好，感謝大家參加塗鴉2023年第三季財報電話會議。由於 2021 年底的行業和經濟低迷，2023 年第三季的總收入達到 6,010 萬美元，標誌著恢復了同比增長。收入同比增長了 35.7%，增幅約為 43%，令人印象深刻。根據匯率波動進行調整時的百分比。我們再次連續第二次創下 46.7% 的總毛利率紀錄。

Our firmly focus on cost reduction and operating efficiency improvements resulted in a 26.2% year-over-year decline in our non-GAAP total operating expenses in Q3. More importantly, our non-GAAP net profit soared to $10.1 million, an increase of almost 5.7 times sequentially, representing a net profit margin of 16.5%. Net cash flow from operations improved both year-over-year, and sequentially, with a net inflow of about $16.1 million. Our net cash position at quarter's end was a strong $961 million, underpinning our long-term strategic development.

我們堅定地致力於降低成本和提高營運效率，導致第三季非 GAAP 總營運費用年減 26.2%。更重要的是，我們的非 GAAP 淨利潤飆升至 1,010 萬美元，季增近 5.7 倍，淨利潤率為 16.5%。營運淨現金流量較去年同期均有所改善，淨流入約 1,610 萬美元。截至季末，我們的淨現金部位高達 9.61 億美元，支撐了我們的長期策略發展。

Overall, the third quarter saw robust improvement across all key financial metrics, signaling a positive turning point as we navigate out of the industry's cyclical downturn. Despite persistent challenges like fluctuating exchange rates and subdued consumer spending, our impressive performance in Q3 underscores our confidence for the post destocking cycle and a broader recovery in the IoT sector. As we look ahead, we are committed to expanding our quality customer base, enhancing product streams and the entry into new markets beyond consumer electronics. Let me now share more detail about developments since the start of the third quarter.

總體而言，第三季所有關鍵財務指標均出現強勁改善，標誌著我們走出產業週期性低迷的正面轉折點。儘管匯率波動和消費者支出低迷等挑戰持續存在，但我們在第三季度的出色表現凸顯了我們對去庫存週期後和物聯網行業更廣泛復甦的信心。展望未來，我們致力於擴大優質客戶群、增強產品流並進入消費性電子產品以外的新市場。現在讓我分享有關第三季初以來進展的更多細節。

In terms of our customer base and competitive position, our IoT PaaS unit has weathered nearly two years of industrial downturn. During this challenging period, several competitors, particularly IoT divisions of large enterprises, exceeded the market due to limited competitiveness of their products and uncertain investment returns. This shift to open opportunities for Tuya, as we feel that we now have that global influence and competitiveness compared to two years ago to attack the more leading brands seeking efficiency, improved margins, and cost effectiveness in certain PaaS reality platforms. We've forged new collaborations with top-tier customers such as Midea for it's overseeing home appliance billings, [higher than the bull] for new added the product IOT platform, and Bosch for smart door locks solutions.

就我們的客戶群和競爭地位而言，我們的物聯網PaaS部門經歷了近兩年的行業低迷。在這個充滿挑戰的時期，一些競爭對手，特別是大型企業的物聯網部門，由於產品競爭力有限和投資回報不確定而超越了市場。這種轉變為塗鴉打開了機會，因為我們認為與兩年前相比，我們現在擁有全球影響力和競爭力，可以攻擊在某些PaaS 現實平台中尋求效率、提高利潤和成本效益的更多領先品牌。我們與頂級客戶建立了新的合作，例如美的負責監督家電賬單，[高於公牛]新增加的產品物聯網平台，以及博世的智能門鎖解決方案。

Meanwhile, we want and serve customers worldwide through differential strategies and innovative products. This approach solidified our competitive standing globally and enabled us to effectively cater to meet market demands. The integrated hardware and software solution product strategies we initiated this year is already outing strategic new customers and wins scalable revenue growth. For example, like Europe, America, and Japan, we actively participated in the voting matter and there was technology and products as our focus, at the forefront of the global application and commercialization matter, implementing our IoT ecosystem, expanding our global influence in the IoT vis-a-vis race.

同時，我們希望透過差異化策略和創新產品服務全球客戶。這種方法鞏固了我們的全球競爭地位，使我們能夠有效地滿足市場需求。我們今年啟動的軟硬體一體化解決方案產品策略已經贏得了策略性新客戶並贏得了可擴展的收入成長。例如像歐美、日本一樣，我們積極參與投票事務，以技術和產品為重點，走在全球應用和商業化事務的最前沿，落實我們的物聯網生態系統，擴大我們在全球的影響力。物聯網與競賽。

In emerging market like Saudi Arabia, our ability to provide cost-effective customized solutions lead to breakthroughs with two major operators. In Africa, our now there was up the hardware integrated solutions tailored to unique electricity pricing challenges led to appeal the order from the now supermarket chain with over 200 stores in South Africa. Importantly, our initial success in Africa can be repeated across the region. Furthermore, in South America, the Tuya developed the platform successfully replicate our Chinese OEM model to support local manufacturing in Brazil. We're leaving some of that and the water purifier factory seeking our software solution for device management systems.

在沙烏地阿拉伯等新興市場，我們提供經濟高效的客製化解決方案的能力使我們與兩大營運商取得了突破。在非洲，我們針對獨特的電價挑戰量身打造了硬體整合解決方案，吸引了南非擁有 200 多家門市的 Now 連鎖超市的訂單。重要的是，我們在非洲取得的初步成功可以在整個地區複製。此外，在南美洲，塗鴉開發的平台成功複製了我們中國的OEM模式，支援巴西本地製造。我們將放棄其中的一些，並讓淨水器工廠尋求我們的設備管理系統軟體解決方案。

We are optimistic about the e-commerce channel as a huge market for practical consumer electronic devices like smart electricals, dancers, and outdoor products, helping this line we can't reach achieve rapid promotion, distribution, and end-user aggregation. Over the past two years, we have consistently surpassed the potential Chinese e-commerce trends and growing into leading brands. For instance, several Tuya customers are now prominent in (technical difficulty) top 10 inch more sockets, Aldo sockets, and Bluetooth mini locks. We are unwavering in our commitment to product to focus innovation and improvements.

我們看好電商通路作為智慧電器、舞者、戶外產品等實用消費性電子設備的龐大市場，幫助我們無法到達的這條線實現快速推廣、分銷和終端用戶聚合。兩年來，我們不斷超越潛在的中國電商趨勢，成長為領導品牌。例如，塗鴉客戶現在在（技術難度）頂級10英寸以上插座、Aldo插座和藍牙迷你鎖方面表現突出。我們堅定不移地致力於產品的創新和改進。

In the circular after 18 months of development, our laser sweeping robot vacuum solution reached mass production. Our low-power audio video solution for smart door locks benchmark against industrial leaders also achieved the mass production, with the pro version of our home door lock products Q3 deployment volume increasing by over 100% year-over-year. We have also enhanced our overseas central control product line such as the US-backed product matches and added industry capabilities of [Prezista] marketing engineering installations in China. Our smart central control, large screen integrating local union in the compound and the cloud-native capabilities, innovatively bridge indoor and outdoor intelligence.

通報中，經過18個月的研發，我們的雷射掃地機器人吸塵解決方案達到了量產。對標產業領先的智慧門鎖低功耗音訊視訊解決方案也實現量產，家用門鎖產品專業版第三季部署量較去年同期成長超100%。我們也豐富了美國支持的產品配套等海外中控產品線，並增加了[Prezista]在中國行銷工程裝置的產業能力。我們的智慧中控、小區連動大螢幕以及雲端原生能力，創新地搭建了室內外智慧的橋樑。

We continued to strengthen our traditionally strong categories like smart electrical, which will remain a significant contributor to the IoT consumer electronics sector in the long-term, forcing downstream demand recovery for this smart like practical IoT devices. We are committed to helping customers seize opportunities. For [downfall], we released adult brand router smart socket solution to address the common issue of nick to band routers, significantly improving the network powering success rate and experience. A3, a customer and optic solution has seen its brand sales explode, now ranking in the top 10 on Amazon's platform.

我們持續強化智慧電氣等傳統優勢品類，長期來看，該品類仍將是物聯網消費性電子領域的重要貢獻者，迫使下游對此智慧實用物聯網設備的需求復甦。我們致力於幫助客戶抓住機會。針對【垮台】，我們發布成人品牌路由器智慧插座解決方案，解決路由器常見的缺口帶問題，大幅提升網路供電成功率與體驗。客戶和光學解決方案A3的品牌銷售量爆炸性成長，目前在亞馬遜平台上排名前十。

We're actively working to extend beyond the field of consumer electronics, bringing Tuya's mature outlook capabilities to more specialized areas. In Q3, we further refined our new energy and outdoor transportation products. For new energy, we released an integrated app supporting the storage, charge, and use of solar power, completing the energy management use case from energy monitoring to energy low link scheduling. Global-leading politic brands like Agro Solar and the DMEGC. Again, those groups have chosen Tuya's IoT PaaS for the new energy storage business.

我們正在積極向消費電子領域之外延伸，將塗鴉成熟的外觀能力帶到更專業的領域。第三季度，我們進一步完善了新能源和戶外交通產品。在新能源方面，我們發布了支援太陽能儲存、充電和使用的一體化應用程序，完成了從能源監控到能源低鏈路調度的能源管理用例。 Agro Solar 和 DMEGC 等全球領先的政治品牌。這些集團再次選擇了塗鴉的物聯網PaaS來開展新能源儲存業務。

In HV Asia integrated products, Tuya's industry subsystems have basically achieved the full functionality for measuring industry demand. And it also informed close the loop solution with the system outlet. As for other products, our 4G cellular BCU central control product has landed on back products. Besides focusing on high quality, innovative, and valuable products as our core competitiveness, we're meeting the emerging needs of large group private clouds with our Cube smart farming cloud comprehensive solution. For example, we have made good progress in Southeast Asia we have to keep. Lastly, let's talk about the continuous growth of Tuya's foundational developer platform and ecosystem.

在HV Asia整合產品中，塗鴉的行業子系統已基本實現了測量行業需求的全部功能。並且它還通知了與系統插座的閉環解決方案。至於其他產品，我們的4G蜂巢BCU中控產品已經落地後面的產品。除了專注於高品質、創新、有價值的產品作為我們的核心競爭力外，我們還透過立方體智慧農業雲端綜合解決方案來滿足大型集團私有雲的新興需求。例如，我們在東南亞取得了良好的進展，我們必須保持這一進展。最後，我們來談談塗鴉基礎開發者平台和生態系統的持續發展。

In the third quarter, we focused intensely on the foundation of [tillers] of PaaS [2.0.] This is tillers encompass full category interconnectivities, seamless inter-operational stability, rigorous security standards, independent and manageable development process, and distinct product differentiation. Our efforts were channelled towards refining the developer experience, significantly enhancing both usability and operational efficiency. This strategic move has further empowered developers, granting greater independence from the need for direct support from Tuya.

第三季度，我們將重點放在PaaS[2.0.]的[tillers]基礎。這個tillers包含全品類互聯、無縫互通穩定性、嚴格的安全標準、獨立可管理的開發流程以及獨特的產品差異化。我們的努力致力於改善開發人員體驗，顯著提高可用性和營運效率。這項策略舉措進一步賦予了開發者權力，讓開發者更獨立，不再需要塗鴉的直接支援。

In line with this, we have unified and restructured our official website, developed platforms, [aot.tuya.com]; developer site, developer.tuya.com; and developed the documentation standards. Additionally, we launched (technical difficulty) new development, forming at 3.2.tuyauya.com. This platform acts as a dynamic card offerings, time saver, resulting in a collaborative spaces where developers can change ideas, combo shoots challenges, and (technical difficulty) from any potential, marking a significant milestone.

為此，我們統一重組了官方網站，開發了平台【aot.tuya.com】；開發者網站，developer.tuya.com；並制定了文件標準。此外，我們也推出了（技術難度）新開發，形成於3.2.tuyauya.com。該平台充當動態卡片產品，節省時間，形成一個協作空間，開發人員可以在其中改變想法、組合拍攝挑戰以及任何潛在的（技術難度），這標誌著一個重要的里程碑。

The number of developer registered with Tuya soared to about 990,000 by quarter end, reflecting the impressive year-over-year growth of approximately to 40% to 45%. We've also emphasized the implication empowerment of the develop talent in the commercial sector. This approach is designed to empower our brand clients, enabling them to profit and refine bespoke 2B solutions. A prime example of this strategy in action was at our Developer Conference this September hosted at the [Johnson's Bay] in China.

截至季末，塗鴉註冊的開發者數量飆升至約 99 萬，年增約 40% 至 45%。我們也強調了商業領域開發人才的意義賦權。這種方法旨在增強我們的品牌客戶的能力，使他們能夠獲利並完善客製化的 2B 解決方案。這項策略付諸實施的一個典型例子是我們今年 9 月在中國[約翰遜灣]舉辦的開發者大會。

During this event, we signed a cooperation agreement with Osram. We quickly advanced commercial functionality such that have to develop a platform at our disposal, while collaboratively guiding Osram in developing their own distinctive hardware and software integration. It's also our branding solution encompasses areas such as entire homes and real assets, hotels, rentals, commercial lightings, and the building management, among others.

在此次活動期間，我們與歐司朗簽署了合作協議。我們快速推進商業功能，因此必須開發一個可供我們使用的平台，同時協作指導歐司朗開發自己獨特的硬體和軟體整合。這也是我們的品牌解決方案，涵蓋整個住宅和不動產、飯店、租賃、商業照明和建築管理等領域。

In conclusion, I have shared with you today the comfort outcomes of our strategic initiatives in business and in product development. This accomplishments are a testament to Tuya's dynamic response and the strategic recalibration in response to the challenges we have faced over the past two years. As we approach the final stage of inventory normalization and winding down the consumer electronics sectors definitely finding its footing, we are confident that our persistent efforts will yield sustained positive results.

最後，我今天與大家分享了我們在業務和產品開發方面的策略性舉措所帶來的舒適成果。這些成績證明了塗鴉對於過去兩年所面臨的挑戰的動態反應和策略調整。隨著我們接近庫存正常化的最後階段以及消費性電子產業的逐步結束，我們相信我們的持續努力將產生持續的正面成果。

These strategies are set to guide Tuya back to a path of house growth, ensuring we are profitable and efficient. Going forward, we are focused on striking the balance between growth and profitability, thus ensuring we create enduring value for our customers, the wider industry, our shareholders, and our dedicated employees. That concludes my remarks. Next, I will hand over to our CFO, Jessi, to introduce our financial data.

這些策略旨在引導塗鴉回到房屋成長的道路，確保我們獲利和高效。展望未來，我們致力於實現成長和獲利之間的平衡，從而確保我們為客戶、更廣泛的行業、股東和敬業的員工創造持久的價值。我的發言到此結束。接下來請我們的CFO Jessi介紹我們的財務數據。

That concludes the remarks by Jerry. As I review our results and provide more colors on the numbers, please note that all amounts are in US dollars and all comparisons are on a year-over-year basis, unless otherwise stated. In the third quarter of 2023, our total revenue reached $61.1 million, up 35.7% year-over-year and continue to show a strong sequential improvement over the past four consecutive quarters. Similarly, during the quarter, we were still under depreciation impact of the RMB against USD, which adversely hits our total revenue by 7.3% points.

傑瑞的發言到此結束。當我審查我們的結果並在數字上提供更多顏色時，請注意，除非另有說明，所有金額均以美元為單位，所有比較均以同比為基礎。 2023 年第三季度，我們的總收入達到 6,110 萬美元，年增 35.7%，並在過去連續四個季度中繼續呈現強勁的環比改善。同樣，本季我們仍然受到人民幣兌美元貶值的影響，這對我們的總收入造成了 7.3% 的不利影響。

Our IoT PaaS revenue in the third quarter was $45.8 million, a year-over-year increase of 48.1%. In terms of categories, in the third quarter, the most impacted discretionary consumer electronics categories over the past two years are smart lighting and electrical products, constituted the main portion of this year-over-year rebound, with the segment revenue grew about 140% year-over-year. Small and the big home appliance grew by 50% year-over-year.

第三季我們的物聯網PaaS營收為4,580萬美元，年增48.1%。分品類來看，第三季近兩年受影響最大的非必需消費性電子品類為智慧照明及電器產品，構成年比反彈的主要部分，該板塊營收成長約140%一年又一年。小家電和大型家電年增50%。

The third quarter of last year was the most severe time for downstream destocking and the growth of this quarter benefited greatly from the end of destocking cycles. Moreover, with execution of product focus and enhancement strategies, our core products lines such as vacuum robots, breakers, and home locks with technological depth have grown by approximately 100% to 180% year-over-year. Regarding customers, our third quarter revenue primarily driven by the recovery in customer order size and improved customer revenue efficiency, taking our main IoT PaaS business as an example, our premium customers' IoT PaaS revenue per customer in the third quarter increased by 56% year-over-year. And the same metric for ordinary customers also grew by about 49%.

去年三季是下游去庫存最嚴重的時候，本季的成長很大程度上受益於去庫存週期的結束。此外，隨著產品聚焦和增強策略的執行，我們的核心產品線如具有技術深度的真空機器人、斷路器、家居鎖等同比增長約100%至180%。客戶方面，我們第三季營收主要由客戶訂單規模恢復和客戶收入效率提升推動，以我們主營的物聯網PaaS業務為例，第三季度我們優質客戶的每客戶物聯網PaaS營收年增56% -同比。普通客戶的相同指標也成長了約 49%。

Overall, our platform and products served over 3,000 customers in the third quarter, with an average revenue per customer exceeding USD20,000, setting a new historical high. Our smart device distribution business, now maybe more accurately called IoT smart device solutions, achieved a revenue of $6.8 million in the third quarter, a year-over-year increase of 32.1%. With the continuous advancement and the implementation of the smart device solutions strategy, we are now quite proficient in this business model and continue to generate robust scalable revenue. For instance, the smartwatch solution alone secured about USD3 million of orders in the form of finished devices in Japan since this Q3, to be delivered according to customers' demand schedules.

整體而言，第三季我們的平台和產品服務了超過3,000名客戶，每位客戶的平均收入超過20,000美元，創下了歷史新高。我們的智慧設備分銷業務，現在也許更準確地稱為物聯網智慧設備解決方案，第三季實現收入680萬美元，較去年同期成長32.1%。隨著智慧型設備解決方案策略的不斷推進和實施，我們現在已經相當精通這種商業模式，並持續產生強勁的可擴展收入。例如，自第三季以來，僅智慧手錶解決方案就在日本獲得了約 300 萬美元的成品訂單，並將根據客戶的需求時間表進行交付。

The SmartTag locator solution also contributed significantly to orders and revenue and so on. Our staff and others business had a revenue of $8.5 million in the third quarter, reflecting a 5% year-over-year decline. Excluding the exchange rate impact, this segment's revenue in the third quarter was actually relatively stable, showing a slight increasing trend year-over-year. As a collection of Cube smart private cloud value added services and the customers software and also various subsegment of SaaS, they show different trends according to business strategy and execution.

SmartTag定位器解決方案也對訂單和收入等做出了顯著貢獻。我們的員工及其他業務第三季營收為 850 萬美元，年減 5%。排除匯率影響，該板塊第三季的營收其實比較穩定，較去年同期呈現小幅成長的趨勢。作為Cube智慧私有雲加值服務和客戶軟體以及SaaS各個細分市場的集合，它們根據業務策略和執行呈現出不同的趨勢。

For example, the cloud storage value added services contributed about USD2.5 million in revenue in this quarter, maintaining a very robust and a continuous month-over-month growth. The acceptance and the delivery of the Cube private cloud project generated over RMB5 million in revenue. Customer development and some other new customer number-based onetime value added services decreased by about 15% to 20% year-over-year, under the execution of our customer focus strategy. We focus on expanding high quality customers.

例如，雲端儲存增值服務本季貢獻了約250萬美元的收入，維持了非常強勁且持續的環比成長。 Cube私有雲專案驗收交付，營收超500萬元。在我們以客戶為中心的策略執行下，客戶開發和其他一些基於新客戶數量的一次性增值服務年減約15%至20%。我們專注於拓展優質客戶。

Going forward, we anticipate a gradual shift in smart and other business segment toward a more core business-centric structure. Regarding the overall revenue recovery in different regions, we have observed healthy growth in Europe, Southeast Asia, and Latin America. Our blended gross margin in the third quarter was 46.7%, sustaining the historical high level for the second quarter. Each of the three business segments exhibited strong margin profiles, notably the gross margin of the smart device distribution segment in the third quarter reach 26.9%, a substantial increase from 12.9% in the same period last year, setting a new historical high. We believe that gross margin is the most direct reflection of the value of our smart device solution.

展望未來，我們預期智慧及其他業務領域將逐步轉向更以核心業務為中心的結構。從不同地區的整體收入復甦來看，我們觀察到歐洲、東南亞和拉丁美洲的健康成長。第三季綜合毛利率為46.7%，維持第二季歷史高點。三大業務部門的毛利率均表現強勁，其中智慧設備分銷板塊第三季毛利率達到26.9%，較去年同期的12.9%大幅提升，創下歷史新高。我們認為毛利率是我們智慧型設備解決方案價值最直接的體現。

Moving on to our operating activities and related expenses, we are presenting our operating expenses on a non-GAAP basis by excluding share-based compensation expenses and the credit-related impairment loss from our GAAP numbers. We believe this provides a better clarity on the trend of our operating expenses, aligning with how our management team reviews our performance. In the second quarter of 2023, our non-GAAP total operating expenses decreased by 26.2% to $32 million from $43.4 million in the same period last year. Our employee related costs, excluding share-based compensation, declined by 28.9% year-over-year in Q3, and the costs related to offices and the property leasing concurrently decreased by 13.9%.

繼續我們的營運活動和相關費用，我們按照非公認會計原則列報我們的營運費用，從我們的公認會計原則數據中排除基於股票的補償費用和與信用相關的減損損失。我們相信，這可以更清楚地了解我們的營運支出趨勢，與我們的管理團隊評估我們績效的方式保持一致。 2023 年第二季度，我們的非 GAAP 總營運費用從去年同期的 4,340 萬美元下降 26.2% 至 3,200 萬美元。第三季度，我們的員工相關成本（不包括股權薪酬）年減 28.9%，與辦公室和物業租賃相關的成本同時下降 13.9%。

Collectively, this cost request represented about 74% of the total of our non-GAAP operating expenses in Q3. As of now, our team size has been adjusted to a relatively stable state at just under 1,500 headcounts. Marketing and promotion expenses decreased by 23.9% year-over-year. This disciplined approach to cost control of promotion expenses, coupled with the noteworthy rebounding revenue, served as a testament to the importance of operating with efficiency.

總的來說，這項成本請求約占我們第三季非 GAAP 營運支出總額的 74%。截至目前，我們的團隊規模已調整至1,500人以下的相對穩定狀態。行銷及推廣費用較去年同期下降23.9%。這種嚴格的促銷費用成本控制方法，加上顯著的收入反彈，證明了高效率營運的重要性。

Travel related expenses also decreased 20.4% year-over-year. As revenue returned to growth, we are ready to make investments in the business as needed to further pursue business opportunities. But the overarching premise is always to maintain a balance between business investment and the profitability. Additionally, in the third quarter, non-GAAP G&A related expenses overall increased mainly due to routine compliance related professional services projects, such as consulting fees, legal, advisory fees, et cetera.

差旅相關費用也較去年同期下降 20.4%。隨著收入恢復成長，我們準備根據需要對業務進行投資，以進一步尋求商機。但首要前提始終是維持商業投資與獲利之間的平衡。此外，第三季度，非公認會計準則一般管理費用相關費用整體增加，主要是由於常規合規相關專業服務項目，如諮詢費、法律費、諮詢費等。

In the third quarter, we obtained about $13.1 million in financial income, mainly interest income. Our net cash included cash bank demand deposits as well as time deposits, recorded as short-term and long-term investments totaling nicely, $51 million. We believe this funds can well-balance the company's short-term business working capital needs and the long-term development requirements. For example, we are evaluating some feasible plans related to our own office buildings and land use rights with objective of achieving long-term cost saving and supporting the company's long-term operational needs.

第三季度，我們獲得了約1,310萬美元的財務收入，主要是利息收入。我們的淨現金包括現金銀行活期存款和定期存款，記錄為短期和長期投資，總計 5,100 萬美元。我們相信這筆資金能夠很好地平衡公司短期業務營運資金需求和長期發展需求。例如，我們正在評估一些與我們自己的辦公大樓和土地使用權相關的可行計劃，目的是實現長期成本節約並支持公司的長期營運需求。

Finally, as a result of our consistent efforts over several quarters, the company's non-GAAP net income expanded significantly by [67%] to $10 million in the next third quarter, a substantial turnaround from a negative $15.3 million in the same period last year. Similarly, our net operating cash flow also showed same trend, increasing by 114% to $16 million in the third quarter, a huge improvement from the spend of $13.5 million in the same period last year. Overall, the comprehensively improved financial results not only means that the major strategic direction we set last year and this year has helped us achieve continuous improvement importantly financial results, but also indicates the company's on the right track. With that, operator, we're now ready to take questions. Thank you.

最後，由於我們幾季的持續努力，公司的非 GAAP 淨利潤在接下來的第三季度大幅增長 [67%] 至 1,000 萬美元，較去年同期的負 1,530 萬美元大幅扭轉。同樣，我們的淨營運現金流也呈現出同樣的趨勢，第三季成長了114%，達到1,600萬美元，比去年同期的1,350萬美元支出有了巨大的改善。總體而言，財務業績的全面提升不僅意味著我們去年和今年制定的重大策略方向幫助我們實現了財務業績的持續改善，也標誌著公司走上了正確的軌道。接線員，我們現在準備好回答問題了。謝謝。

(Operator Instructions) Meng Yang, CICC.

（操作員指令） 孟陽，中金公司。

Now let me translate myself. Thank you, management, for taking my questions. First off, congrats on your strong performance. I like clearly primary concerns this mine. And my questions are as follows: first, is about the outlook for downstream in next year; and second, is about the path. In path, which categories shows the most growth potential? And in our path, which downstream scenarios are comparatively more promising? My third questions is that, what are the strategic pace and growth outlook across different global regions? Thank you.

現在讓我自己翻譯一下。謝謝管理層回答我的問題。首先，恭喜你的出色表現。我顯然喜歡這個我的主要關注點。我的問題如下：第一，關於明年下游的前景；第二，關於路徑。在路徑中，哪些品類最具成長潛力？在我們的路徑中，哪些下游場景相對更有前景？我的第三個問題是，全球不同地區的策略步伐和成長前景如何？謝謝。

Okay, thank you. Firstly, overall, we have found that IoT consumer electronics are highly sensitive to inflation. During the year of high inflation from last year to early this year, the growth trend in discretionary electronic consumption, which including IoT devices, slowed down significantly compared to 2021. Afterward, although it reached a relatively stable new balance as inflation slowed, it was suppressed again with the shock rebound of inflation in like July, August, and September this year. However, at present, we observe the end purchase of consumer electronics is in a moderately positive direction, which is in line with our expectation for long-term growth in IoT penetration.

好的謝謝。首先，整體而言，我們發現物聯網消費性電子產品對通膨高度敏感。從去年到今年初通膨高位的一年，包括物聯網設備在內的可自由支配電子消費的成長趨勢較2021年明顯放緩。此後，雖然隨著通膨放緩達到了相對穩定的新平衡，但今年7、8、9月通膨衝擊反彈再次受到抑制。然而，目前我們觀察到消費性電子產品的終端購買正朝著適度正面的方向發展，這符合我們對物聯網滲透率長期成長的預期。

From the perspective of [annual] sales, specifically by region and categories, we observe the following: by categories, since October, annual sales in all categories have recovered to some extent, with household appliances, especially robotic vacuum cleaners and security sensors performing very well. Electrical products also showed a good recovery trend. However, lighting devices, is still in a pretty weak demand situation. In terms of the region, we found out Southeast Asia, South America, and also in Europe, the 50 products are doing pretty well. And also, other categories are gradually recovering in a pretty healthy direction.

從銷售額，特別是分地區和品類來看，我們觀察到：從品類來看，10月份以來，各品類的年銷售額都有一定程度的恢復，家用電器，尤其是掃地機器人和安防傳感器表現非常好。出色地。電器產品也呈現良好的復甦態勢。然而，照明設備的需求仍處於相當疲軟的狀況。從地區來看，我們發現東南亞、南美，還有歐洲，這50款產品表現都還不錯。此外，其他類別也正在朝著相當健康的方向逐漸復甦。

In China, apart from home appliance and the robotic vacuum, other categories are relatively weak, but a trend is upward since Q4. The US region shows overall rather relatively weak performance, but electrical and security categories are showing good signs of recovery. Overall, each region, according to its economy and the environment characteristics, has different trends in IoT electronics consumption. And we will continue to maintain communications with downstream customers to actually respond and seek opportunities according to different market situations.

在中國，除了家電和掃地機器人外，其他品類表現相對疲軟，但從第四季開始呈現上升趨勢。美國地區整體表現相對疲軟，但電氣和安防類別呈現良好的復甦跡象。整體而言，各地區根據其經濟和環境特徵，物聯網電子產品消費趨勢有所不同。我們將繼續與下游客戶保持溝通，根據不同的市場狀況做出實際反應並尋求機會。

However, it should be noted that our IoT PaaS revenue is affected by both the destocking cycle and the sales. We observed that the year-over-year performance of annual sales in some categories is not completely aligned with our shipment downstream. For example, the lighting category showed relatively weak end sales in Q3 on, basically from our brands to consumers. But our shipments achieved a significant year-over-year growth in Q3 in terms of IoT path.

但值得注意的是，我們的物聯網PaaS收入受到去庫存週期和銷售的影響。我們觀察到，某些類別的年銷售額較去年同期表現與我們下游的出貨量並不完全一致。例如，照明品類在第三季的終端銷售相對疲軟，基本上是從我們的品牌到消費者。但就物聯網路徑而言，我們的出貨量在第三季實現了年比顯著成長。

This is mainly due to the downstream of replenishing their lighting inventory and lighting products due to the large price difference between smart and non-smart versions were the most affected categories in terms of inventory destocking Q3 last year. In terms of the downstream inventory, the overall situation is in line with our expectations. Combining Tuya's IoT PaaS shipments end sales in the same way as we previously noted, we estimate that inventory held by downstream business, which include OEMs, brands, and the retail channels has decreased from over a year at its peak time, to about four to five months now and will further reduce by the end of this year, returning to a level of 2019.

這主要是下游補充照明庫存所致，而智慧與非智慧版本價差較大的照明產品是去年第三季去庫存影響最大的類別。下游庫存方面，整體狀況符合我們的預期。結合塗鴉的 IoT PaaS 出貨量和終端銷售額，我們估計下游企業（包括主機廠、品牌商和零售通路）的庫存已從高峰期的一年多下降至約 4 至 4 億美元。現在已經減少了五個月，到今年底將進一步減少，回到2019年的水準。

Therefore, we feel that inventory destocking cycle is nearing its end and returning to a relatively normal state. And in terms of the SaaS part, as we mentioned, the PaaS and others and revenue have including several different products. We have seen great growth potential in Cube, which we promoted this new product. It's a private cloud IoT software we are prepared for large groups globally for those companies to realize their own IoT capabilities. This potential stems partly from Cube's smart private cloud serving those large conglomerates, allow it reach revenue levels in millions of US dollars when implemented to those large corporates.

因此，我們認為去庫存週期已經接近尾聲，回歸到相對正常的狀態。就 SaaS 部分而言，正如我們所提到的，PaaS 和其他產品以及收入包括幾種不同的產品。我們看到了Cube巨大的成長潛力，因此我們推廣了這款新產品。這是我們為全球大型集團準備的私有雲物聯網軟體，以便這些公司可以實現自己的物聯網功能。這種潛力部分源自於Cube的智慧私有雲服務於那些大型企業集團，使其在應用於這些大型企業時達到數百萬美元的收入水準。

Additionally, Cube's strategic position is not only limited to just one-time private cloud deployments. But in the long term, Cube is the tour and the bridge for establishing a long-term cooperation relationships with large key accounts for Tuya. And once those large corporates installed are the Cube cloud for themselves, they would start to connect the IoT devices, which are powered by Tuya to their own Cube. So we're confident that after the private IoT platform is built for those large corporates, we can unleash the value of Tuya's IoT capabilities and solutions, generating subsequent long-term IoT services related revenues.

此外，Cube的戰略地位不僅限於一次性私有雲部署。但從長遠來看，Cube是塗鴉與大客戶建立長期合作關係的橋樑和橋樑。一旦這些大企業安裝了自己的 Cube 雲，他們就會開始將由塗鴉支援的物聯網裝置連接到自己的 Cube。所以我們有信心，在為這些大企業打造私有物聯網平台後，我們可以釋放塗鴉的物聯網能力和解決方案的價值，產生後續長期的物聯網服務相關收入。

In certain other products, we are also optimistic about the hotel staff, commercial lighting side, and much real estate for our SaaS products. The hotel industry, with its massive room demand and market segmentation, offers immerse potential for west to number of non-luxury hotel brands seeking competitive differentiation. From that hotel experiences such as intelligent ordering, contactless check-in, and home management are significant competitive advantages. Commercial Lighting skimming expensive lighting needs and the potential for expansion beyond lighting to include energy savings, conservation, and management undoubtedly has a huge market space.

在其他一些產品中，我們也看好飯店員工、商業照明方面，還有很多房地產我們的SaaS產品。酒店業以其龐大的客房需求和市場細分，為西方眾多尋求差異化競爭的非豪華酒店品牌提供了巨大的潛力。由此看來，智慧訂購、非接觸式入住和家庭管理等飯店體驗是顯著的競爭優勢。商業照明撇去昂貴的照明需求以及超越照明擴展到節能、節約和管理的潛力無疑擁有巨大的市場空間。

The real estate industry has been subdued in China in recent years. But looking abroad, leveraging our strong input influential on outside China, we have identified the demand for smart real estate and for home IoT solution needed this year in Southeast Asia and Australia markets. And we plan to start serving this regional customers next year with Cube products combined with Tuya's of IoT solution and smart real estate solutions. And we have been signing contract with several large customers in Southeast Asia and Australia, including some very large distributor channel and the real estate conglomerate company in those regions. So this is my question and my answer to the first question. Operator, you can move to the next question.

近年來，中國的房地產業一直低迷。但放眼海外，憑藉我們在中國以外的強大投入影響力，我們已經確定了今年東南亞和澳洲市場對智慧房地產和家庭物聯網解決方案的需求。我們計劃明年開始使用 Cube 產品結合塗鴉的物聯網解決方案和智慧房地產解決方案來服務該區域客戶。我們已經與東南亞和澳大利亞的幾個大客戶簽訂了合同，包括這些地區的一些非常大的分銷渠道和房地產集團公司。這是我的問題，也是我對第一個問題的回答。接線員，您可以轉到下一個問題。

(Operator Instructions) Liu Yang, Morgan Stanley.

（操作員指示）劉洋，摩根士丹利。

Let me translate my question to English. The first one is regarding the geographic breakdown. I would like to ask management to provide more color on the geographic contribution to Tuya, specially like Southeast Asia, China, US, and Latin America, Europe area. The second question is regarding the IoT SaaS business. Because this quarter, Tuya strategically gave up some of the non-core south and other business. I would just like to confirm whether the approaches have come to an end or does there's still some ongoing impact in fourth quarter? Thank you.

讓我把我的問題翻譯成英文。第一個是關於地理細分。我想請管理層提供更多關於塗鴉的地理貢獻的信息，特別是東南亞、中國、美國、拉丁美洲、歐洲地區。第二個問題是關於IoT SaaS業務。因為本季，塗鴉策略性放棄了部分非核心的南方等業務。我只想確認這些方法是否已經結束，或者第四季是否仍然有一些持續的影響？謝謝。

Okay. Thank you, Yang. Yes, I'm happy to answer about regional revenue contribution question. And before that, I want to first give a background. When we talk about the regional revenue contribution, we actually accompany do a lot of analysis to the fundamental or revenue contribution.

好的。謝謝你，楊。是的，我很高興回答有關地區收入貢獻的問題。在此之前，我想先介紹一下背景。當我們談論地區收入貢獻時，我們實際上對基本面或收入貢獻做了許多分析。

For example, a European brand's using Tuya's IoT path to realize their IoT devices and then sell in Europe region, we will consider it an ultimate revenue from Europe. But from a financial statement, because all the brands they provide orders usually to a China OEMs and Chinese OEMs give orders to us. So from a financial statement. It will be a revenue from a China OEM customer, but ultimately from Europe. So right now, when we are talking about on the revenue contribution from region, we're talking about the ultimate revenues from which region.

例如，一個歐洲品牌使用塗鴉的物聯網路徑來實現其物聯網設備，然後在歐洲地區銷售，我們將認為它是來自歐洲的最終收入。但從財務報表來看，因為所有品牌他們通常都會給中國整車廠訂單，而中國整車廠又給我們下訂單。所以從財務報表來看。這將是來自中國 OEM 客戶的收入，但最終來自歐洲。因此，現在，當我們談論地區的收入貢獻時，我們談論的是哪個地區的最終收入。

So this is an analysis done by a company. It's not 100% accurate, but it's largely reflect the trend. So based on our calculation analysis in Q3, Europe has becoming the largest revenue contribution region. It's around 30%. And China and the United States each contribute to just less than a 20%, close to 20%. And Southeast Asia and also Australia, we call this region that basically exclude China, the Asia Pacific exclude China regions, has grown pretty well in Q3 and has grown to around 15% revenue contribution. And also the entire Latin America has shown a pretty good trend in the last few years.

這是一家公司所做的分析。雖然不是100%準確，但在很大程度上反映了趨勢。所以根據我們第三季的計算分析，歐洲已經成為最大的營收貢獻地區。大約是30%。而中國和美國分別貢獻了不到20%，接近20%。東南亞和澳大利亞，我們稱之為基本上不包括中國的地區，亞太地區不包括中國的地區，在第三季度增長得相當不錯，已經增長到15%左右的收入貢獻。而且整個拉丁美洲在過去幾年也呈現出相當不錯的趨勢。

So Latin America now contribute to the revenue of just more than 10%. So that's the overall region contribution and we think this is a relatively balanced the contribution and we will continue to use our technology to serve the clients and from all the regions and to have the corporates and the consumers enjoy the value from the IoT technology. In terms of the second questions, the major transition in the SaaS businesses in the past, we have we have certain of revenue to related to one-time customers need. For example, OEM app, usually new brands, a huge percentage of new brands, they would like to pay a one-time fee of four OEM app Services.

所以拉丁美洲現在貢獻的收入只超過10%。這是整個地區的貢獻，我們認為這是一個相對平衡的貢獻，我們將繼續利用我們的技術來服務所有地區的客戶，讓企業和消費者享受物聯網技術的價值。關於第二個問題，過去SaaS業務的重大轉變，我們有一定的收入與一次性客戶的需求相關。例如，OEM應用程序，通常是新品牌，很大比例的新品牌，他們願意一次性支付四個OEM應用程式服務費用。

And also, there's customized software revenue from brand customers. So in the last two years, we have been focusing is first, is to focus on high-quality customer rather than a huge numbers of new customers. So this one-time new customer related OEM app revenue decrease, and this will maybe continue one or two more quarters then we would be stable. In terms of the customization software revenue, we feel recurring software revenue, for example, like the cloud storage and SaaS revenue, a more high value software revenue we wanted.

此外，還有品牌客戶的客製化軟體收入。所以這兩年我們一直在關注的第一點，就是專注於優質的客戶，而不是大量的新客戶。因此，與新客戶相關的 OEM 應用收入一次性下降，這種情況可能會持續一兩個季度，然後我們就會穩定下來。在客製化軟體收入方面，我們感受到經常性軟體收入，例如雲端儲存和SaaS收入，這是我們想要的更高價值的軟體收入。

And also, we want more developers to do the one-time customization work for brands for our conglomerates customers, though we also have introducing those one-time revenue opportunities to our developers. So that's why one-time revenue customized software income are also decreasing. This is pretty much stabilized by now. And going forward, we believe when the transition of SaaS others business stabilized, it will still continue a healthy growth. So that's my answer to Yang's question.

此外，我們希望更多的開發商為我們的企業集團客戶進行品牌的一次性客製化工作，儘管我們也向我們的開發商介紹了這些一次性收入機會。所以這就是為什麼一次性收入客製化軟體收入也在減少。目前這個情況已經基本穩定了。展望未來，我們相信當SaaS其他業務轉型穩定後，仍將繼續健康成長。這是我對楊老師問題的回答。

Thank you.

謝謝。

Timothy Zhao, Goldman Sachs.

提摩西·趙，高盛。

Let me translate myself. How does management see the competitive landscape in IoT industry and Tuya's competitive advantage? And also, the second question is what's the company's plan in using of capital? Thank you.

我自己翻譯一下吧。管理階層如何看待物聯網產業的競爭格局以及塗鴉的競爭優勢？另外，第二個問題是公司在資金運用上有何計畫？謝謝。

Okay. Thank you. We believe IoT market is one with extensive future potentials. So we have been keep on learning from the environment and improving our business model. And we believe Tuya occupy a unique position in IoT industry and our advantages in the developer and open ecosystem are primarily reflected the following perspective.

好的。謝謝。我們相信物聯網市場是一個未來潛力巨大的市場。所以我們一直在不斷地向環境學習並改進我們的商業模式。我們認為塗鴉在物聯網產業中佔據著獨特的地位，我們在開發者和開放生態方面的優勢主要體現在以下幾個方面。

We are broadly and inclusively supports various devices, types, and protocols, cloud access models and OEM app developments, offering this to developers, customers, and past partners with zero technical barriers for them, make it very user-friendly open for our customers and developers. So Tuya is positioned as a neutral technology provider, supports customer and the brands in establishing their own IoT business and joining our huge ecosystems for inter-operation of user experiences. This comprehensiveness and the compatibilities allowed us to be able to serve 95% of the global markets of independent commercial and brand customers.

我們廣泛且包容地支援各種設備、類型和協定、雲端存取模型和OEM 應用程式開發，以零技術障礙向開發者、客戶和過去的合作夥伴提供這些服務，使其非常人性化地向我們的客戶開放，開發商。所以塗鴉定位為中立的技術供應商，支援客戶和品牌建立自己的物聯網業務，加入我們龐大的生態系統，實現使用者體驗的互通性。這種全面性和相容性使我們能夠為全球 95% 的獨立商業和品牌客戶市場提供服務。

We also tailor our own capabilities to customer needs with a variety of products, generating long-term revenue, which business our main product share. This approach is not confined to the OS base model of cloud license module in IoT PaaS products, our key categories, IoT device solutions, nor is it limited to purely call the development capabilities for fast development or private cloud deployments. Tuya prioritized platform ecosystem and the customer service strategy overreach at the constraints of revenue model amounts of performance metrics. This allows us to cover a broader range of global customer, with more diverse developer products making the have a more user-friendly and open.

我們也根據客戶需求客製化我們自己的能力，提供各種產品，產生長期收入，這是我們的主要產品份額。這種方式不限於物聯網PaaS產品、我們的重點品類、物聯網設備解決方案中雲端授權模組的OS基礎模型，也不限於純粹呼叫快速開發或私有雲部署的開發能力。在收入模型數量和績效指標的限制下，塗鴉優先考慮平台生態系統和客戶服務策略。這使得我們能夠覆蓋更廣泛的全球客戶，擁有更多樣化的開發者產品使得產品更加人性化和開放。

And so we believe this has been our key positioning in the values in terms of on our accumulation in this industry for almost nine years. And regarding the second question for the use of capital, in terms of capital usage, we maintain a rigorous approach in our operations, managing our funds and the budget strictly and striving to preserve cash through safe, highly liquid fixed deposits or other monetary fund instruments, meeting the needs of daily operations and a long-term plan. Regarding capital expenditures, we were cautiously watched for suitable merger acquisition opportunities. Additionally, we may like other companies to invest in necessary fixed assets for long-term operations. That's my answers for Goldman Sachs question. Operator, you can move to next question.

所以我們認為，從我們在這個行業近九年的累積來看，這是我們在價值觀上的關鍵定位。關於第二個問題資金運用，在資金運用方面，我們保持嚴謹的經營態度，嚴格管理資金和預算，通過安全、流動性強的定期存款或者其他貨幣基金工具，努力保存現金。 ，滿足日常運營和長期計劃的需要。在資本支出方面，我們謹慎地專注於適當的併購機會。此外，我們可能希望其他公司投資於長期營運所需的固定資產。這就是我對高盛問題的回答。接線員，您可以轉到下一個問題。

Thank you. There are no additional questions at this time and I will now hand back to the management team for any closing remarks.

謝謝。目前沒有其他問題，我現在將交回給管理團隊以供結束語。

Okay, thank you again all for joining our call. If you have further questions, please feel free to contact us our request through our IR website. We look forward to speaking with everyone in our next earnings calls. Have a good day.

好的，再次感謝大家加入我們的電話會議。如果您還有其他疑問，請隨時透過我們的 IR 網站與我們聯繫。我們期待在下次財報電話會議上與大家交談。祝你有美好的一天。

Statements in English on this transcript were spoken by an interpreter present on the live call. The interpreter was provided by the company sponsoring this event.

本筆錄中的英語陳述是由現場通話中的口譯員說出的。口譯員由贊助本次活動的公司提供。