Hello ladies and gentlemen, thank you for standing by for Viomi Technology Company Limited's earnings conference call for the first half of 2023. At this time, all participants are in listen-only mode. Today's conference is being recorded. I will now turn the call over to your host, Miss Claire Ji, the IR director of the company. Please go ahead, Claire.
Thank you, Allison, and hello everyone, and welcome to Viomi Technology Company Limited earnings conference call for the first half of 2023. As a reminder, this conference is being recorded. The company's financial and operating results were issued in the press release earlier today and are posted online. You can download the earnings press release and sign up for the company's email distribution list by visiting the IR section of the company's website at ir.viomi.com.
Participating in today's call are Mr. Xiaoping Chen, the Founder, Chairman of the Board of Directors and the Chief Executive Officer, and Mr. Jinling Zhang, the Head of our Capital Market Department. The company's management will begin with prepared remarks, and the call will conclude with the Q&A session. Before we continue, please note that today's discussion will contain forward-looking statements made under the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements involve inherent risks and uncertainties.
As such, the company's actual results may be materially different from the views expressed today. Further information regarding this and other risks and uncertainties is included in the company's annual reports on Form 20-F and other filings as filed with the U.S. Securities and Exchange Commission. The company does not assume any obligation to update any forward-looking statements except as required by law. Please also know that Viomi's earnings press release and this conference call include discussion of unaudited GAAP financial information, as well as unaudited non-GAAP financial measures. In addition, Viomi's press release contains a reconciliation of unaudited non-GAAP measures to the unaudited most directly comparable GAAP measures. I will now turn the call over to our Founder and CEO, Mr. Xiaoping Chen. Mr. Chen will deliver his remarks in Chinese, followed immediately by an English translation. Mr. Chen, please go ahead.
大家好，感谢大家来参加我们2023年上半年的业绩电话会。上半年度受限于消费市场和环境以及公司战略的调整，在2023年上半年，我们完成总体收入RMB 1.3 billion，同比下降20%，毛利率也较去年同期下降1.9个百分点。同时，我们对组织架构进行了精简和经营效率的提升，整体的亏损较去年同期有较大的收窄，总体的经营费用率下降30.3%，净亏损率收窄1.4个百分点，内部的改革初见成效。 在过去的半年里，我们致力于改善经营的结果，聚焦核心的品类，做减法，对云米的产品结构进行了优化，使得上半年净水产品的营收占比从去年同期的17%提升到22%。我们相信品类结构的调整将有助于云米的长期可持续的发展。目前我们在净水品类上已经取得全行业领先的产业链能力，自主掌握先进的过滤技术和材料制造工艺，并拥有核心部件的生产和研发创新能力，以及包含整机组装、定制、自动化的生产线、全流程数据收集和分析在内的一整套的自主解决方案。 在今年七月份，集团子公司粒子科技凭借在净水品类出色的研发和创新能力，被评为中国国家级的“专精特新小巨人”企业，这是全国企业评定中，评定工作中最高级别、最具权威的先进称号之一，代表了我国工业主管部门对云米技术产业链实力的充分肯定。 针对公司在其他的品类，我们灵活运用OEM和自主产研相结合的模式来布局产品的矩阵，坚持不懈地加强对产品关键技术的投入和掌控，以此来打造具备差异化的全屋智能产品组合。 在4月28日召开的2023年线下春季新品发布会上，我们推出了一系列的高科技新品，比如说更加关注健康的除甲醛立式空调Master 3 Pro、新风立式空调Super 2 Pro等，引领家装新趋势的超薄平嵌冰洗套装Master 3、燃电混动的Master 3 Pro热水器，以及全新的智能照明套三系列，不断地完善和迭代我们的一站式全屋智能解决方案的能力。 在品牌端，我们首次入围了中国品牌五百强榜单，位列榜单的第443名，并获得RMB 13.385 billion的品牌估值。在全屋智能行业仅有两个品牌上榜，云米很荣幸地作为其中品牌之一，这是对我们品牌在行业内领先实力的认可。 在渠道端，随着线下消费的逐渐复苏，我们参加了多场的线下大展会，在四月份上海举办的中国家电及消费电子博览会AWE，五月份在深圳举办的时尚家居设计周，以及在七月份在中国举办的中国国际建材装饰博览会等。通过在这些活动当中，我们让更多的经销商看到了完整的一站式全屋智能解决方案的呈现，助力线下规模的恢复，同时吸引无数的消费者到场参观，体验触手可及的未来生活。 上半年，我们丰富了海外产品的产品品类，新品类收入在海外占比当中超过了60%，有效地弥补了我们智能清洁产品在海外市场的规模的波动。
随着新能源汽车和智能终端设备的普及，以及生成式AI技术的突破性发展，智能化时代已经全面到来。AI的超能力融入全屋智能场景，不仅能够让用户获得颠覆式的体验，也为全屋智能行业带来前所未有的想象空间。小米的品牌定位科技潮牌，更是领先一步，通过提升对空间和环境的感知，以及不断完善的AI语音交互技术，将全屋智能由强调连接的控制时代，带入主动智能、主动服务的感知时代。接下来，我们将继续从以下三个维度聚焦核心，改善经营。首先，深耕技术产业链，以更优秀品质、更领先技术和更完善的服务去回馈消费者，打造行业爆品和领先的产业能力。第二，在持续优化产品结构的同时，不断完善和迭代全屋智能的产品组合，提升产品的智能体验，打造更有用更好用的一站式全屋智能解决方案。第三，深化产业布局，降本增效，提升产品的竞争力，提高经营的效益。同时，我们将维持充足的资金储备，助力品牌的发展，为用户、股东带来长期的回报。好，谢谢。
Thank you, Mr. Chen. I'll quickly translate our Founder's remarks before discussing our financial performance for the first half of 2023. Hello, everyone. Thank you for joining us today on our earnings conference call for the first half of 2023. Constrained by both the lukewarm consumer sentiment and the company's strategic adjustments during the first half of 2023, our total revenue recorded RMB 1.3 billion, representing a decrease of 20% year-over-year, while gross margin declined by 1.9 percentage points year-over-year. However, as we continue to streamline our organizational structure and enhance operational efficiency, our operating result is on a way of recovery. We see a year-over-year decline of 30.3% in operating expenses and a 1.4 percentage point decrease in net loss margin.
Over the past six months, we enhanced our product mix by focusing on core product categories, driving an increase in the revenue contribution of our water purification products to 22% from 14% a year ago. We believe that optimizing our product category structure will benefit the sustainability of our long-term development. Additionally, we have achieved market-leading industrial chain capabilities in the water purification products. We have independently mastered advanced filtration technology and the material manufacturing processes, empowering us to research, develop, and produce core components. Moreover, we have developed a comprehensive set of proprietary solutions, including the capabilities of complete machine assembly, customized automated product production lines, and end-to-end data collection and analysis. In July, Dongguan Liyi Environmental Technology Company Limited, one of our subsidiaries, was designated as a national-level specialized and innovative little giant enterprise.
Owing to its remarkable R&D and innovation capabilities in the water purification industry, as one of the highest level and most authoritative nationwide enterprise evaluating ratings. This honor recognized and affirms our comprehensive strength in the industrial chain of water purification. In regards to our other product categories, we utilize a flexible combination of OEM and independent R&D to lay out our product mix, and in the meantime, we constantly deepen our investment in and control over core technologies to develop differentiated, intelligent, and whole house products.
On April 28, 2023, we introduced a series of high-tech products at our spring new product launching event, featuring enhanced integration of our one-stop IoT home solutions, such as our Master 3 Pro, the formaldehyde-removing AI vertical air conditioner, and Super 2 Pro AI vertical air conditioner equipped with a fresh air system, which improves the indoor air quality to protect users' health. We also debuted our Master 3 ultra-thin built-in refrigerator and washing machine set, which is currently setting a new trend in the home decoration industry, as well as Master 3 Pro gas/electric hybrid water heater. Our brand new intelligent lighting system within our smart home device category also made a debut.
Turning to our brand, we were proud to be included on the list of 2023 China's top 500 brands, ranked 443rd place with a brand valuation of RMB 13.385 billion . There are only two brands in the smart home sector that made their way on this ranking. We are honored to be one of them. This is a powerful recognition of our brand's leading position in the industry. As to our offline channels, with offline consumer market recovering gradually, we participated in several large-scale exhibitions, including the China Appliance & Electronics World Exp o, AWE, held in Shanghai in April, and Shenzhen Creative Week, held in May, and the China International Building Decoration Fair, held in Guangzhou in July.
During these events, we showcased our comprehensive whole health solution to our offline distributors and attracted consumers to visit and experience an immersive future future life, supporting the recovery of our offline sales. Furthermore, we enrich our product offerings for our overseas markets, with new categories accounting for over 60% of our revenues overseas, which effectively made up for the decline in sales of smart cleaning products in the overseas market. With the widespread adoption of new energy vehicles and smart terminal devices, as well as the breakthrough in generative AI technology, we believe the era of intelligence has arrived. Integrating AI superpowers into whole-house intelligence will not only enable a revolutionary user experience, but also inspire unprecedented creativity across the whole-house intelligence industry. With our high-tech and fashionable brand positioning, we see Viomi is at the forefront of this revolution.
By steadily improving our product perception of space and environment, and upgrading our AI voice interaction technology, we have successfully transitioned our whole house intelligence from the era of control, which emphasizes connectivity, to the era of perception, characterized with active intelligence and proactive service. Moving forward, we will continue to explore and capitalize on our strengths to optimize our operations, concentrating on the following three areas. First, we will further deepen our roots in the water purification industry and roll out more industry-leading products, creating value for consumers with high quality, more advanced technology, and comprehensive services. Second, we will remain focused on fine-tuning our product mix, and improving and integrating our whole-house intelligence product matrix to elevate our product intelligence experience, and deliver more helpful and user-friendly one-stop IoT home solutions.
Last but not least, we will deepen our industrial layout, heighten our cost controls, increase our operational efficiency, and strengthen our product competitiveness to further improve operational performance. At the same time, we will maintain sufficient capital reserves to support these goals and consolidate our brand to drive robust and sustainable growth, sparing no effort to create long-term value for all of our users and shareholders. Thank you. That concludes our Founder's remarks. I will now turn the call over to our Head of Capital Market, Mr. Jinling Zhang , to discuss our financial performance. Thank you.
Thank you, Mr. Chen and Claire, and thanks to everyone for joining us today. I will go over our unaudited financial results for the first half of 2023. Our net revenues were RMB 1,304.4 million, compared to RMB 1,665.4 million for the same period of last year. The decline was mainly due to a decrease in revenues from the IoT at home portfolio, as well as smart appliances and others. Revenues from the IoT at home portfolio decreased by 21.8% to RMB 691.7 million, from RMB 884.7 million for the same period of 2022. The decline was primarily due to the streamlining of SKUs in smart refrigerators and smart sweeper robots.
Revenues from home water solutions increased by 1.7% to RMB 286.6 million, from RMB 281.9 million for the same period last year. The increase was primarily driven by our efforts to focus on water purification products. Revenues from consumables decreased by 21% to RMB 135.9 million, from RMB 172.1 million for the same period of last year. The decrease was primarily due to the decrease in the sales volume of water purifiers filters sold to Xiaomi. Revenues from small appliances and others decreased by 36.1% to RMB 190.2 million, from RMB 297.6 million for the same period of 2022, primarily due to the ongoing product portfolio adjustment within this category.
Gross profit was RMB 286.8 million, compared to RMB 391.5 million for the same period last year. Gross margin was 22%, compared to 23.9% for the same period of 2022. The decline was primarily due to a lower selling price of certain cleanup products, and was partially offset by increasing sales of higher growth margin products as a result of product portfolio adjustments. Total operating expenses decreased by 30.3% to RMB 361.8 million, from RMB 519.4 million for the same period of 2022.
Mainly attributable to the streamlined organizational structure and overall improved operational efficiency. In greater detail, research and development expenses decreased by 31% to RMB 109.5 million, from RMB 158.7 million for the same period of 2022. Mainly driven by a decrease in personnel costs and an optimization of our ongoing R&D projects. Selling and marketing expenses decreased by 33.4% to RMB 213.5 million, from RMB 320.7 million for the same period last year, mainly due to a decrease in marketing expenses, logistics expenses, and sale-related personnel costs. General and administrative expense decreased by 2.8% to RMB 38.8 million, compared to RMB 39.9 million for the same period of 2022.
Primarily due to a decrease in personnel costs, partially offset by an increase in the estimated allowances, allowance for accounts and notes receivables. Net loss attributable to ordinary shares, ordinary shareholders of the company was RMB 54.9 million, and a non-GAAP net loss attributable to ordinary shareholders of the company was RMB 53.7 million. Despite the decrease in revenue scale, our loss from operations narrowed by 43.6%, indicating an improvement in our operational efficiency. Additionally, our balance sheet remained healthy. As of June 30, 2023, the company had cash and cash equivalents of RMB 691.5 million, restricted cash of RMB 128.1 million, short-term deposits of RMB 260.2 million, and short-term investments of RMB 64.3 million.
Okay, this concludes our prepared remarks. We will now open the call for Q&A. Mr. Chen, our Founder, and Mr. Zhang will join this session and answer questions. Operator, please go ahead.
Thank you. We will now begin the question-and-answer session. To ask a question, you may press star, then one on your touchtone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star then two. For the benefit of all participants on today's call, if you wish to ask your question to management in Chinese, please immediately repeat your question in English. Our first question today will come from Jingxin Li of CICC. Please go ahead. Ladies and gentlemen, please stand by. If you wish to ask a question, please press star, then one. Once again, it is star and then one for questions, and please stand by. Once again, we have a question from Jingxin Li from CICC. Please go ahead.
Okay. Sorry. Thanks for the management. I'm Li Jingxin from CICC, and I have three questions about the results, and I will ask them one by one. So the first question is: How did the quarterly revenue perform in Q1 and Q2? And have we seen any improvement from the consumer demand? And what—which categories showed good sales in the first half of 2023? Thank you. That's my first question.
Thank you, Miss Li, for your question. As the first quarter always comes as a slack season with lower revenue scale, it takes around 40% of the revenue in the first half of 2023. In the first quarter, we pushed hard on SKU streamlining and down-market product clearance, which resulted in a lower profit margin than the same period last year. But on the bright side, the total SKU number decreased by 30%, and thus, the overall overall age of the inventory also decreased accordingly, which helped us get better prepared for the big promotion season. About the market demand during the 618 promotion season, we did observe a recovery of the consumption market, but such recovery is still subdued, and the overall sales did not meet our expectation.
With the competition on the e-commerce platforms getting fiercer, companies are driven to compete with one another with lower price in order to maintain their sales volume. At the end of the day, this competition further reduced the profit margin. Another observation is that the demand for good quality, durable, and differentiated products is increasing in the consumption market. Products with concepts such as ultra-thin, customized, built-in, healthcare, or, energy conservation, are becoming more popular among the young generation consumers. Therefore, in the future, we will keep focusing on optimizing our product mix, mainly by expanding the percentage of those products with better profit margins, such as our water purifiers and smart kitchen products, and lay out more products with trending and market-acknowledged features to meet the gradually recovering market demands. And back to your question on sales.
Our air conditioners and water purifiers achieved a quite good sales performance during the 618 season. As the peak season of air conditioners came in earlier than past years, we observed an increase in sales of air conditioners starting from March this year. And the revenue contribution of such products to the total revenue increased from 15% same period last year to 18% this year. In the meantime, as we put more efforts on promoting water purifiers products, the revenue contribution of large flux water purifiers increased to 22%, compared to 17% same period last year. Thank you.
Okay, thank you. And my second question is, what is the pipeline for the new products launched this year? And will the, the company launch any new category products? And what will be the business focus on the second half of this year? Thank you.
In the first half of 2023, we introduced a series of new products at the spring new product launching event, featuring enhanced iterations of our one-stop IoT home solutions, such as our Master 3 Pro formaldehyde-removing AI vertical air conditioners, and Super 2 Pro AI vertical air conditioners, equipped with fresh air system. Both of which improve the indoor air quality and benefit the health of our user's family members. We also debuted our Master 3 ultra-thin built-in refrigerator and washing machine set, which is currently setting new trends in the home decoration industry. With respect to the new product category, we recently launched a series of intelligent lighting system products.
We creatively empowered and will keep on the empowerment of the basic functions of lighting system with our software capability, enabling our intelligent lighting system products to satisfy different needs of our users in different scenarios, and easily go with the different or customized home decorating designs. We believe that the intelligent lighting system is an indispensable part of the whole house intelligent solutions, and will provide visible improvements to the smarter home experience of our one-stop IoT solutions. For second half of 2023, as Mr. Chen mentioned earlier, we will continue to explore and capitalize on our strengths and optimize our operations, focusing on the following three aspects. First, we will further deepen our roots in the water purification industry and provide the consumers with more products of higher quality, leading technology, and with more comprehensive services.
Second, we will remain focused on fine-tuning our product mix and iterating our whole house intelligent product matrix to deliver more helpful and user-friendly one-stop IoT home solutions, and improve our users' home experience. Third, we will keep deepening our industrial layout, strengthening our ability in cost control, increasing our operation efficiency, and expanding our operation channels to further improve operational performance. Thank you.
Okay, thanks. Thank you. My last question is about the robot, robotic, vacuum. As we all know that the competition of the robotic vacuum cleaner become very fierce this year. So how was this business performed in the first half of 2023? Thank you, and that's my last question.
Thank you. The business scale of our robotic vacuum cleaners has shrunk largely since last year. Such shrinking is mainly caused by the overdependence of our robotic vacuum cleaners in the overseas market, especially in the Europe. During the geopolitical crisis and the foreign currency fluctuations occurred in the first half of 2023 in the European market, our sales of sweeper robots suffered a significant drop, especially in the second quarter. In the second half of 2023, we expect the sales of sweeper robots to have a slight rebound, with the influences of these headwind factors gradually getting relieved since July this year. But to be frank, we haven't seen any clear signals of recovery in this product category, neither overseas nor domestic, and the competition is getting fiercer day by day.
But nevertheless, being an in-essential part of our one-stop whole house intelligence solution, we will keep this product line and provide several models, mainly through OEMs. In the meantime, to make up for the decline in overseas sales of our robotic vacuum cleaners, on one hand, we enriched our product categories offered in the overseas market, and the revenues brought about by these new categories accounted for over 60% of our overseas market revenues in the first half of 2023. On the other hand, we are also making efforts to explore our overseas markets, particularly seeking new commercial opportunities in the emerging markets, especially in the rapidly growing Southeast Asian markets. Thank you.
... For any additional or closing remarks.
Okay, thank you once again for joining us today. If you have any further questions, please feel free to contact us through the contact information on our website or our investor relationship consultants, The Piacente Group . Thank you.
Thank you.
The conference has now concluded. Thank you for attending today's presentation, and you may now disconnect.