Tuya, Inc. (NYSE:TUYA) Q3 2023 Earnings Conference Call November 28, 2023 7:30 PM ET

Company Participants

Reg Chai - IR Director

Jerry Wang - Founder and CEO

Jessie Liu - CFO

Conference Call Participants

Mingran Li - CICC

Yang Liu - Morgan Stanley

Timothy Zhao - Goldman Sachs

Operator

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.

Reg Chai

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 Mr. Jessie Liu. The third quarter 2023 financial results and webcast of this conference called 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 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. Thank you.

Jerry Wang

Hello everyone. Thank you for joining the Tuya's 2023 Q3 earnings conference call. Total revenue for third quarter of 2023 reached $61.1 million, marking return to year-over-year gross since the industry and economic downturn at the end of 2021. Revenue grew an impressive 35.7% year-over-year, or approximately 14% when adjusting for exchange rate fluctuations.

We again achieved a record overall gross margin of 60 -- of 46.7% for the second consecutive quarter. Our firmly focus on cost reduction and operating efficiency improvements resulted in 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 $0.165 cents.

Net cash flow from operations improved both year-over-year and sequential was the net inflows of about $16.1 million. Our net cash position at quarter's coders and was a strong $961 million underpinning our long-term strategic development.

Overall, the third quarter saw robust improvements across all key financial metrics, signaling the positive turning point as we navigate out of the industry's cyclical downturn. Despite persistent challenges to like fluctuating exchange rates and subdued consumers spending, our impressive performance in Q3 underscores our readiness for the post-destocking cycle and a broader recovery in the IT sector. As we look ahead, we are committed to expanding our quality customer base enhancing productions and venturing into new markets beyond consumer electronics.