Tuya (TUYA) Q1 2023 Earnings Call Transcript

For the period ending March 31, 2023

June 7, 2023 8:30 p.m. ET

Prepared Remarks

Questions and Answers

Call Participants

Prepared Remarks:

Operator

Good morning, and good evening, ladies and gentlemen. Thank you for standing by, and welcome to the Tuya Inc.'s First Quarter 2023 Earnings Conference Call. [Operator Instructions].

I will now turn the call over to the first speaker today, Mr. Reg Chai, Investor Relations Director of Tuya. Please go ahead, sir.

Reg Chai

Okay. Thank you, everyone. Hello, everyone. Welcome to our first quarter 2023 earnings call. Joining us today are Founder and CEO of Tuya, Mr. Jerry Wang; and our CFO, Mr. Jessie Liu. The first 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. Before we continue, I refer you to our safe harbor statement in our earnings press release, which applies to this call as well as we will make forward-looking statements.

With that, I will now turn the call to our Founder and CEO, Mr. Jerry Wang. Jerry will deliver his remarks in Chinese, which will be followed by corresponding English translation.

Jerry Wang

Hello, everyone. Thank you for joining the Tuya's Q1 2023 Earnings Conference Call. Our revenue in Q1 2023 was approximately $47.5 million, recording a sequential increase of 5% and a 14% decrease compared to the same period last year. This dip can primarily be attributed to 3 main major influences: a persistence lag in overall consumer spending, the continued cycle of inventory correction downstream, and a comparably high base from the previous year.

Furthermore, foreign exchange fluctuations accounted for a 6 percentage points year-over-year drop. Yet in spite of these challenges, our Q1 revenue exceeded our initial expectations set at the start of the year. And this is a milestone for us as for the first time since going public that our Q1 revenue, despite incorporating the spring festival holiday period where most business and production activities were suspended, has outpaced that of the traditionally strongest Q4. Moreover, our blended gross margin maintained a steady level of around 44%, the determination of our team, the resilience of our business operations and the strength of our customer base amidst a challenging macroeconomic environment.

Taking into account publicly available data, we have observed a consistent decline in inflation in both the United States and Europe. As of the end of March, the U.S. CPI reduced by 5% while Europe experienced a decrease to 6.9%. These figures indicated tempering of the previously severe microeconomic climate and an evolution, which, when coupled with the ongoing inventory reduction, has begun to bolster the confidence of some brands and customers.