Thank you for standing by for Viomi Technology Company's Ltd. Earning conference call for the first quarter of 2021. At this time, all participants are in a listen-only mode. Today's conference call is being recorded. I will now turn the call over to your host, Ms. Cecilia Li, the IR Head of the company. Please go ahead, Cecilia.
Thanks, operator. Hello everyone, and welcome to Viomi Technology Co., Ltd earnings conference call for the first quarter 2021. As a reminder, this conference is being recorded. The company's financial and operating results were issued in a press release earlier today and posted online. You can download the earnings press release and sign up for the company's email distribution list by visiting the IR section at 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 Chief Executive Officer; Mr. Xiufei Bao, our new President; and Mr. Weicong Cai, the Head of Finance. The company's management will begin with prepared remarks, and the call will conclude with a Q&A session. Before we continue, please note today's discussion will contain forward-looking statements within 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 these and other risks and uncertainties is included in the company's annual report on Form 20-F and other filings filed with the U.S. Securities and Exchange Commission. The company doesn't assume any obligation to update any forward-looking statements except as required by law. Please also note Viomi's earnings press release and this conference call include discussions of unaudited GAAP financial information as well as non-GAAP financial measures. Viomi's press release contains a reconciliation of the 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 English translation. Mr. Chen, please go ahead.
[Foreign language]
Thank you, Mr. Chen. I will take any time for your founder's remarks before discussing our financial performance for this quarter 2021. Hello everyone, thanks for joining our first quarter 2021 earnings conference call. Leveraging the optimization made available product portfolio, new product sales growth and enhanced brand recognition. We delivered strong revenues that exceeded our previous guidance, increasing 64% from the same period in 2020 when our operations were impacted by COVID-19. Our gross margin recovered to 21.1% from 18.8% a year ago, primarily attributable to the product portfolio optimization. Our continued growth over the past several years has been driven by continuous optimization of our AIoT products and holistic solutions through innovation and integration of cross-boundary technology alongside a deep understanding of our users' needs.
This April, we hosted our strategic new product launching event with the theme of AI: Helpful , with introduction of a series of AI strategic new products, including the mineral water purifier EROx, an AI smart toilet, EyeBot equipped with sensors that is able to monitor human health data. An AI water heater, which is able to soften the water quality, new AI air conditioners, the range hood EyeBot 2, and the gas stove with AI-assisted cooking functionalities. Our products are designed with an emphasis on healthcare, smartification, home security and natural AI voice interaction. Some new products equipped with sensors and supported by AI algorithms are able to collect home and human health data with users' consent. In addition, we focused our resources on developing key product categories and rolled out more differentiated and industry-leading products.
For example, last year we introduced a series of premium water purifiers such as Super 1000 gal, 1200 gal, and Vision 1200 gal series, which realized large flux and low ratios of waste and purified water. Our PhD team has been working on research and development for three years based on tens of billions in pieces of water quality data to invent our mineral water purifier EROx, which retains beneficial minerals for human health during the purification process. Equipped with nine smart sensors, this water purifier product is also able to adjust water quality to meet high-end users' needs. We have been deeper in the water purification area and have accumulated a significant number of innovative technologies with more than 700 registered patents as of the end of the first quarter.
Some of these patents have been awarded the China Excellent Patent Award, authorized by China National Intellectual Property Administration and World Intellectual Property Organization, as well as recognized by China Association for Quality Inspection and other authorities. Our sweeper robot business represents rapid development as well, in particular in overseas markets, and has been one of the key drivers of our first quarter upside growth. Our sweeper robot export business, which launched in the fourth quarter of last year, has developed rapidly in Mid Europe, Southeast Asia, Korea, Australia and other regions, and has also expanded into North Europe and additional Asian countries this year. We are expanding to North American markets.
We recently registered our store on Amazon and plan to sell on Amazon in the second half of this year and will cooperate with some KA offline stores as well. In the competitive sweeper robot market, we found our niche with our differentiated products. We introduced a series of automatic adapted collection sweeper robot last year, and recently launched an AI laser radar sweeper robot, Alpha 2 Pro. Compared to the majority of high-end sweeper robots in the market, this product, equipped with four laser sensors and supported by AI algorithms for obstacle detection and avoidance, is able to identify very low obstacles, cover a wider range of angles and distances, as well as map rooms, and support OTA upgrades. We will continue to roll out more differentiated sweeper robot products and enhance our market shares in both domestic and global markets.
In addition to focusing on technology upgrades and product innovation, we also make efforts to enhance our AIoT holistic home solutions and provide related value-added services and content, including software updates, product maintenance services, repurchase discounts, and internet entertainment content, as well as strengthen our service capabilities on our offline channels. We think the offline experience and the landing capabilities are the keys to AIoT home industry. We have been vigorously promoting the offline comprehensive service model at one city, one store. We select high-quality stores in each region as our service allies and provide users with one-stop services, including sales, experience, after-sale, and installation services. With the rapid consumption upgrade and evolving user needs, users are keen on brands that are fashionable and have good quality.
In order to promote our 3.1.1 long-term strategy and further develop as the trending brand in the AIoT home area, we are pleased to warmly welcome Mr. Xiufei Bao as the company's President. Prior to joining us, Xiufei served as the general manager of BenQ and has extensive experience in the consumer industry with more than 20 years. We believe Xiufei will bring new energy and insight to our branding development. Looking ahead, we will execute on our growth strategy from three perspectives. First, we will construct our AIoT holistic home solutions through our 5G + AI+ A IoT product strategy. Second, we will develop related plans in improving brand influence and positioning us as the trending brand in AIoT home solutions area. Third, we will expand offline stores to integrate scenario-based experience and services.
We believe with the multiple upgrades of our product marketing channels, as well as increasing popularization of home modification, we will deliver sustained and healthy growth, maintain our uniqueness in AIoT home solutions area, and bring long-term shareholder value. That concludes our founder's remarks. Let's now turn to the detailed financial review of the first quarter of 2021, as well as outlook for the second quarter. The net revenues were RMB 1.26 billion, representing an increase of 64% year-over-year, primarily due to the continuous successful roll-out and significant increase in sales of new products, overseas market expansion, as well as a low base effect at the first quarter of last year due to the COVID-19. Revenues from AIoT@Home portfolio increased by 111.5% to RMB 919.2 million from RMB 434.7 million for the first quarter of last year.
The growth was primarily driven by sustained sales increases for certain new product series, in particular the Viomi branded sweeper robots and the smart kitchen products. Revenues from our home water solutions decreased by 4% to RMB 103.8 million. The decline was primarily due to the decrease in average selling prices of Xiaomi branded water purifier products. This was partially offset by the successful introduction and increase the sales of a new series of Viomi branded water purifier products, which narrowed the year-over-year decline for home water solutions compared to the previous quarter. Revenues from consumer goods were RMB 64.8 million, compared to RMB 65 million for the first quarter of last year. Revenues from smart counters and others increased by 6.4% to RMB 167.8 million from RMB 157.8 million for the first quarter of last year.
Gross profit increased by 84.1% to RMB 265 million, and gross margin was 21.1%, compared to 18.8% for the first quarter of last year. This is primarily driven by our efforts to shift the business and the product mix towards higher gross margin products, including the roll-out of new Viomi branded water purifiers and sweeper robots, alongside the optimization of margin across product lines and cost control measures. Total operating expenses increased by 63.8% to RMB 219.8 million, primarily due to the growth of our business.
R&D expenses increased by 10.7% to RMB 65.6 million from RMB 59.3 million for the first quarter of last year, mainly due to the increase of R&D experts and related salaries and expenses. Selling and marketing expenses increased by 110.8% to RMB 138 million from RMB 65.1 million a year ago, primarily attributable to the low base we set out the first quarter of last year due to the COVID-19, when the company entered very limited marketing and advertising activities. G&A expenses increased by 71.3% to RMB 16.2 million compared to RMB 9.5 million for the first quarter of last year, primarily due to the increase of personnel and related salaries and expenses. Net income attributable to ordinary shareholders of the company increased by 173.2% to RMB 49.1 million and non-GAAP income attributable to ordinary shareholders of the company increased by 106.8% to RMB 55.3 million.
Additionally, our balance sheet remains healthy. As of March 31st, 2021, we had cash and cash equivalents of RMB 906.3 million, restricted cash of RMB 45.2 million, short-term deposits of RMB 97.7 million, and short-term investments of RMB 596.9 million. Let's turn to our outlook. For the second quarter of 2021, we currently expect the net revenues to be between RMB 1.72 billion and RMB 1.85 billion, representing a year-over-year growth of around 2.1%- 9.8%. The above outlook is based on the current market conditions and reflects the company's current and preliminary estimates of market operating conditions and customer demand, which are all subject to change. Well, this concludes our prepared remarks. We will now open the call for the Q&A session. The Head of our Finance team, Weicong Cai, will join the session and answer the questions. Operator, please go ahead.
The first question comes from Lillian Lou with Morgan Stanley. Please go ahead.
Thanks a lot, management Mr. Chen . I have two questions. First is on the sweeper robots. What kind of growth are we looking for this year overall? Obviously in the first quarter it had very strong growth and momentum, and Mr. Chen just mentioned that we have the plan to expand the region overseas and in the second half we will get into the U.S. on Amazon. Any particular guidance or explanation of how we're going to grow the business overseas will be very helpful. The second question is on the raw material price increase impact. First Q, we already saw the gross margin decrease on a sequential basis versus fourth quarter last year. How are we going to look at the momentum or trends in the following quarters? Thank you.
Thank you for Lillian's question. The first question about the sweeper robots. Our sweeper robot business grows fast, in particular in the Viomi-branded sweeper robots, and we expect the rapid growth of own-branded sweeper robots will continue. The domestic sweeper robot market is an adjustable market. According to our data, the market size of the sweeper robot is expected to reach over RMB 10 billion by 2021 and close to RMB 20 billion by 2022. There are more players in the industry, and we observe the market shares of new brands has been increasing since 2020, and this trend is expected to continue. We also found our niche with our differentiated products, including a series of automatic dust collection sweeper robots and the AI laser radar sweeper robot we recently introduced.
Under such a situation and the observation of the market feedback of our sweeper robots, we are positive for our market shares in domestic market and in the following years. In terms of the global market, the market size is also huge and promising, we think. Per our research, we think there are a lot of potential opportunities, particularly in Europe and North America. We have sold our sweeper robot in Europe, Southeast Asia, Australia, and the sales growth of sweeper robot for this first quarter in overseas market exceeding our previous expectation. Next, we will expand to North America market. We recently successfully registered our store on Amazon. We start to sell sweeper robot products in the second half of this year. We also plan to sell our product on some offline channels in North America.
With expansion in North America and in additional regions and markets, we are confident the global market sales will become an important driver for our overall business. For the second question about the gross margin and the raw material prices rising. As we discussed, compared to 2020, our overall gross margin for 2021 would demonstrate a meaningful recovery. While we also experienced some seasonal fluctuations due to some promotional events, such as the coming June 18th campaign in the second quarter, which we expect to have some impact on our gross margin. The increase of this raw material cost would also be a factor that impacts the gross margin for the whole industry. As for this, we have taken some cost optimization measures to mitigate the impact from raw material costs, including price lock agreements with suppliers and some technical upgrade for cost saving.
Third, we noticed the latest news that the government plans to take measures to control the raw materials price uptick. We expect the pressure from this increase in raw material cost to be relieved under the government's involvement. Thank you.
[Foreign language]
Mr. Chen had some comments on your comments. I will just quickly translate. For the first question about development of our sweeper robot business. We have established an independent department for our sweeper robot category, and we have been attracting talents from our works applied from outside. The second, for the development of our sweeper robot business within two to three years. We regard it as one of the key categories of our strategy. We are very confident that this category will be one of the drivers for both our top line growth as well as to guide our profitability. That's the comments from Mr. Chen. Hope it's helpful.
[Foreign language]
[Foreign language]
[Foreign language]
We already have some internal plans regarding our sweeper robot category in terms of product and the establishment of team development, both domestic and global markets. Our aim is to develop the top brand in sweeper robot category. Yeah, that's it.
The next question is from Wei He and Rudy Wei with CICC. Please go ahead.
Hello. Thank you very much for the management presentation. Actually I have two questions here. The first is about domestic market development. Since we know actually the profit margin of the businesses with Xiaomi is quite low. How the company plans to further promote the self-owned brand and the product in the domestic market, especially I suppose should be the water purifiers and the robotic vacuum cleaners?
The second question is about overseas. Are we going to promote more categories to overseas? Or currently we just limit the category to water purifiers and the robot vacuum cleaners? [Foreign language]
[Foreign language]
Okay, I want to quickly translate. For the first question about how to develop our own branded business in the mass market. We still focus on developing our AIoT@Home holistic product portfolio. We have expanded to around over 60 product categories and across almost the whole home scenarios. We also have the key categories and the SKUs that we aim to develop mostly this year to drive our branding influence, and the position as the trending brand in AIoT@Home holistic solution area. As widely know that in the past half to one year, the concept of AIoT@Home smartification has increased in domestic market. We are confident that we can have a better development in the domestic market with our advantages and differentiation.
For the two categories, we think the water purifier and sweeper robot business are two of the key categories for us this year, and we will develop and invest more R&D and marketing resources in these two categories. We believe these two categories will be also the drivers for our top line. For your second question about the overseas market expansion. This year we will still focus on the development of our sweeper robot business in the export market. So far we don't plan to expand the category, but we will expand the global market as well as the channels, and to increase our branding influence in overseas market in the sweeper robot category. Thank you.
Thank you. The next question comes from Roger Duan with Needham & Co.. Please go ahead.
Hi, thank you for taking my question. I have two questions here. First one is a follow-up on the raw material price increase. Can the management give us a sense of just how much the raw material increased in the last several quarters? Do you have any plan to increase retail prices like others have done in the industry? The second question is around the pricing strategy for sweeper robots internationally. Is the pricing strategy different internationally versus domestic? Will that continue to be a margin driver for the year? Thank you.
[Foreign language]
[Foreign language]
[Foreign language]
For the first question about impact from the increase of the raw material cost and the impact for our pricing strategy. We have seen that increase of the raw material cost. This is difficult last year. We have taken three measures to mitigate the impact. First, as some other companies in the industry that we increase the ASPs of some of our products to some reasonable extent. Second, we also optimize the sales and the product structures. We promote and sell more products with higher margins. For example, in the smart kitchen product, we sell more the mid to high-end refrigerators with higher growth margins. Third, we have been increasing the percentage, the revenue contribution from the bundle sales to mitigate the impact of the raw material cost price for single product. This answers your first question.
For your second question about the pricing strategy for our robot in domestic and global market. We position our robot as mid to high-end products in both the domestic and global markets. For the domestic market, most of our robot, the ASPs are around RMB 2,000-RMB 3,000, that's above the average ASPs of some robot brands in China. We have some differentiated functionalities, such as the robot that we introduced last year, which came to the automatic dust collection. This year we introduced a laser radar robot, which is also a differentiation for our robot category. For the global market, we also aim to position as the mid to high-end products for this category. The average selling price is above some of the global brands. Also that's the comments from Mr. Chen. That's helpful.
Thank you so much.
As a reminder, if you have a question, please press star then one to be joined into the queue. As there are no further questions, now I'd like to turn the call back over to Cecilia Li for closing remarks.
Thank you once again for joining us today. If you have other questions, please contact us through the contact information on our website or just reach out to Global Investment Relations down there. Thank you all. Have a good one.
[Foreign language]
This concludes this conference call. You may now disconnect your line. Thank you.