Hello, and welcome to the Deutsche Bank Depositary Receipts Virtual Investor Conference, dbVIC. My name is Zafra Aziz from the Deutsche Bank team. I'm pleased to announce that our next presentation will be from Viomi Technology Limited from China. Before I introduce our speaker, a few points to note. Please submit your questions in the questions box to the right of the slides. Also, all of today's presentations will be recorded and can be accessed via the Deutsche Bank website, adr.db.com. At this point, I'm very pleased to welcome Claire Ji, Investor Relations Director, and Sam Yang, Head of Capital and Strategy of Viomi Technology, which trades on NASDAQ under the symbol VIOT. Over to you, Claire and Sam.
Thank you. Okay, thank you, DB, for having us. And hello, everyone. Welcome to Viomi Technology Business Update Session. Participating, I'm Claire Ji from Viomi, and participating today's sharing is Sam Yang, our Head of Capital and Strategy Development Department. Sam and I will share the recent strategic development, as well as updated financials of the company. Before we continue, please note that today's discussion will contain forward-looking statements made under the Safe Harbor provisions of the US 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. Now, I'll turn the call to Sam to briefly introduce the recent updates of Viomi.
Thank you, Claire. We announced a reorg organization in July, and then we completed it in August, actually, on August the thirty-first, 2024. We divested certain underperforming IoT business to further focus on water solution. By leveraging our extensive expertise in AI technology application, smart hardware, and software development, we aim to redefine the home water solution industry. Let's take a look at the snapshot of Viomi going forward. Global Water will be our new vision. Our mission is AI for better water. We use AI technology to provide better water solutions for household worldwide. Targeting young, modern, new class middle-class customer, we position our brand as a tech fashion, and ranked 439th place with a brand value over CNY 15 billion on the 2024 Chinese top 500 brand by World Brand Lab.
We implement strict focus strategy and had a net revenue over RMB 1 billion, returning to our net profit position of RMB 5.6 million net income in the first half of twenty twenty-four. We maintain a strong cash position with free cash asset totaling RMB 914.3 million. At the end of the first half of twenty twenty-four, there have been cumulative over 8.7 million household users globally, of which 67% users are using our home water solutions. Let's see the investment highlight of Viomi. Firstly, water is a good business. It's big, over $33 billion, and a five-year CAGR nearly 5%. The home water solution sector we are focusing on have great opportunity, and we are equipped with competitive advantages.
Secondly, we are unique with the AI-powered competitive capability within the industry, achieving comprehensive end-to-end product management, such as R&D, manufacturing, logistics, and after-sales services. Thirdly, as a hard tech company, we have the world leading Water Purifier Gigafactory, achieving optimal scale efficiency with its strong supply chain capability. Last, but not the least, we have unique business model. Always keep ample cash reserve and healthy cash flow. That's the fundamental of our future development. Next, I will turn the call to Claire to go through our AI water business.
Okay, let me introduce our holistic and intelligent whole house water solution. As you can see, it offers fresh drinking water at all times, leading healthy lifestyle with mineral water from the tap. Our solutions help improve the water quality from the point of entry, and with integrated functions like instant heating, cooling, ice making, and made to meet diversified global drinking demands. Our product portfolios, including Under Sink RO series on the left side, which is the mainstream purification product format in China, as most families live in apartments. We also provide upgraded products, not only make clean and fresh water, but also provides healthy mineral water.
Whole house water purification system in the middle, including central purifier, the softeners, and the water dispenser, point of entry purifiers, and installation-free products, which could be placed anywhere, like living room, bedroom, and outdoor scenarios. Our business model is unique and highly scalable, like the printer model. Our water purifier equipment sales brings continued household users. AI technology application helps to improve our user experience and bringing recurring revenues, as well as high margins from consumables sales. And as you can see, here is a demonstration on how the printer model works and brings a powerful snowball effect, keeping regenerating revenue streams across the entire whole product life cycle. As we founded in two thousand and fourteen, and invented the first intelligent water purifiers in two thousand and fifteen, we constantly redefine and leading water purification technology.
We successfully applied the ERO filtration technology, which is widely used in industry filtration area, with our consumable products. We're able to adjust the beneficial elements in water. Our newly launched products, the Kunlun AI Water Purifier series, equipped with an innovative mineralization filter technology, enables the sustained release of beneficial minerals, making compositions of these minerals in the water almost identical to that of natural mineral water, allowing our users to enjoy fresh mineral water at home. We are leading the healthy drinking trend by this next generation technology innovations. Our major competitive advantages are the outstanding R&D capability, as we accumulated for over ten years, our strengths in AI technology and application innovation, our integrated water purifier Gigafactory with strong supply chain capacity brings optimal scale efficiency, and all of which led by our visionary management team.
These are the major breakthroughs we have achieved in technology and product innovations. Our tankless large flux water purifier provides pure fresh drinking water twenty-four seven, with a water flux up to 2,000 gallons, expanding the usage scenario of purified water from drinking to cooking, washing vegetables, and more. The DIY replacement of filters reduce the cost of maintenance. The application of ERO technology in household purification and mineralization filter technologies allows us to offer a range of water solutions, from pure water to natural mineral water, and promoting a new trend of healthy living. We emphasize the importance of research and development, and our efforts and strength in technology development has been widely recognized and awarded by national institutions. We have amassed over 1,500 patents and over 500 innovations in this area.
We use AI technology to make water better, and this is how we accomplished it. AI sensors are equipped on the hardware front, able to detect water data, collecting data of temperature, water pressure, entry point water quality, as well as water flow, and adjust the product functionality intelligently. All of our products are connected to the cloud system and make decisions proactively, such as the intelligent water with self-cleaning technology, significantly extends water filter's lifespan and reduces the cost of water purification. We also have proprietary platform to achieve remote real-time monitoring of water quality, usage, and provides timely filter replacement reminders, one-click reordering, and a DIY replacement options. These innovations makes my water purification products a reliable, hassle-free, and affordable essentials of our daily life.
Let's play, take a look at the video of our globally leading water purifier gigafactory, and which has high-level automation, high-standard hygiene production, and end-to-end traceable quality control system. So back to the slides. Our water purifier gigafactory is designated to have an annual water purifier production capacity of 500 million units, an annual filter production capacity of 30 million units. We have attracted numerous global top talents in management, marketing, product development, and quality control, with product and internet genes led by our founder, Mr. Chen, who has sophisticated experience in product innovation and large-scale management. As we mentioned earlier, the water purification market has great potential, with a current market size of over $33 billion worldwide, and with a nearly 8% five-year CAGR growth.
In the meantime, the penetration in China is under a very low level, around 20%, as compared to that of over 50%, like areas like Korea, South Korea, Japan, U.S., and European countries. The current forecast of the market scale in the near future is around $5.6 billion. We see growing public concerns about drinking water quality, increasing awareness of health and environmental protection, and the consumer's diversified demand in water, such as better taste, better quality. These are the driving factors for increasing market penetration. The United States market has been the largest market in water purifiers, with almost $6.7 billion market scale. However, the drinking water quality is still under pressure. We see potential demands in point of use purifiers to ease people's concern. Our growth strategy for the future includes these three steps.
First, further, we plan to deepen our roots in domestic market, fully leverage our water purification Gigafactory's competitive advantages to strengthen our brand influence, continue to lead at the healthy mineral water trend, and promote access for household users. Second, expand in key overseas markets like U.S., and broaden our footprints in Southeast Asia countries. Finally, we will continuously expand in global market to promote our global water vision and explore other water purification application areas. And Sam will go on to discuss our financial performance.
Thank you, Claire. Let's take a look at our latest financials for the first half of twenty twenty-four. We had net revenues over CNY 1 billion. Gross profit margin, 24.8%, representing a 2.8 percentage point increase year over year. Net income was five point six million RMB, and the cash asset balance is CNY 914.3 million. We optimized our revenue structure, strategically shifted in focus home water solutions. We achieved an increase in both revenue contribution and absolute amount in these categories, which lead to continuous gross margin expansion. If we talk about the core business, it's up, it's a 13% increase. Okay.
In the meanwhile, we implemented strict cost control measures, which led to a decline in operating expenses three periods consecutively, contributing a turnaround in net profit position with a non-GAAP net revenue of CNY 16.1 million. The difference between GAAP and a non-GAAP measure is the SBC expenses. We always maintain an ample cash position to provide sufficient support for sustainable development. After the reorganization, we anticipate the full year top line of continuing business to be between CNY 1.7 billion to CNY 1.9 billion, with an estimated income from operations between CNY 110 million to CNY 130 million. This one-time decrease in scale is in trend for the sustainable and high quality growth.
In conclusion, as we sharpen focus on this promising track, providing better water, which is fresh and healthy to global users, we are confident to maximize the competitive advantages of water purifier Gigafactory, promote our brand strength globally to guarantee a promising installed base, keep upgrading the AI features in our product to bring recurring revenue, optimize the overall operating results, and bring long-term returns for our users and shareholders. Thank you.
Thank you all for listening, and we can go on to the Q&A session now. I'm sorry. Okay, we have questions coming through. Our first question is: What are some of the ways AI can improve water solutions?
Actually, this is a very good question. We can see that in this way, AI is very important in producing the better water. Actually, right now, in the hardware side, we have the sensor equipment in the machine, and the data from the sensors is collected, and it's based on the cloud, and we just measure the temperature, the water pressure, and the flow, and the quality of the water, and then we produce the best water for the users, actually, so that's why we use the AI for this side, and also this AI is very important for the future. We believe that the AI will just give us the better solutions for all the global users, and it will be in the long run.
Okay. And the second question is: How does Viomi plan to sustain and enhance its profitability margins in the face of increasing competition?
This is a very good question. We can see for the first half of twenty twenty-four, we declared the continued business. It's talk about 800 million RMB, actually, and also it's profitable for the first half. And we believe that this is going to be continued. Because for the full year forecast, we have already give a number. That number is talk about 110 million RMB to 130 million RMB. So that's for the whole year, that this year, actually. We think that even the competition is fierce and we are still having the growth, and we are healthy. We have the profitability, and we are making money.
Yes. Okay. And, what is your geographic footprint? Do you have plans for international expansion and new markets? Yeah, as you can see in our growth strategy, and, for this year, and actually we are planning for the, two thousand twenty, twenty-five, to extend our footprint in the US market. And, the strategy we are planning to do is, first online markets like the Amazon's and so on. And as we mentioned, US market has great potential, and the people's concern about, healthy water is still increasing, and the point of entry from our products, and especially in the RO filtration technology, is still under fast development. And this is what our advantage is at. And also, our products is unique from what we can see from the current market. So we have the AI features, which people have...
can trust our product quality, the water coming from our product is transparent and has good taste and the good functions, and the people can rely on the products and their mobile phones directly. They don't need to rely on the door-to-door service. That's why we think our products is competitive in this new geographic market. And the next step is we are also targeting on the Southeast Asia markets. It is like Malaysia and these countries that under fast develop. I think we'll make further steps in 2025, and able to share with you more details later. Okay, and that's all for this question. And what is Viomi's capital structure and the level of debt?
Talking about the capital structure, which is actually we displayed in our financials. I believe you can find it there, and we can brief you our very simple answer. That is, talking about the level of debt. If we talk about the cash level, we have around $100 million. So that's out of the debt. We have no excessive debt. So that's a very simple answer.
We always maintain a prudent way on this cash basis and ample cash reserves. We can go to the next question: What are the primary drivers of your cost structure, and how you are managing this cost to maintain or improve margins?
This is a very good question, and for the time being, I think we have already established the world-class Gigafactory, which is actually an integrated supply chain, and we can find the cost saving here. Because we can save the logistics, and we can save the material, and we can save the semi-assembling cost, and so on. We are doing our self-branding, which is actually we. Right now, what we are doing is in China, we are selling our Viomi products. We are increasing the prices, so that will benefit us. We have more and more margins from the increasing pricing. Based on both, we can get more margins.
And to talk about the overseas, I want to add one more point. That is about the US market, because, you know, right now, China's efficiency, I mean, the supply chain efficiency actually is a world-class level. And once we ship that product to the overseas and normally, we can get a better price. That means we can get a higher gross margin for the overseas selling. So I hope that has already answered your question.
Next question: Can you discuss your sales channels in China? Are you selling through retail stores, partners, and so on?
Our sales in China, actually, it's pretty straightforward. We have online sales, and also we have offline sales. So the online sales, we have the main channel that is Taobao, Jingdong, something like that. And also for the offline stores, we have about several hundred stores in China, which can sell our own products. So I hope that answer your questions.
Yeah. Can you discuss your sustainability and the innovations... and sustainability innovations? Okay, I'll answer this question. Yeah, this is actually what we're doing. By focusing on the water business, especially, providing better water through this, intelligent products. As we discussed earlier, we use technologies to extend the filters' lifespan, which would be more environmental friendly and also reduce users' cost. And also, you know, you drink through the purified waters, through water purifiers, is much environmental from the bottled water and also more healthy. So, from these ways, and all our production process have qualified the environment protection standards in our local places. So all of this, we think our business is a sustainable, environmental, and environmental friendly, long-lasting, and also brings a good financial performance to the company as a whole.
Right.
Yeah. Okay.
Right. And also, water is actually essential for human beings. So we do believe that water is actually the sustainable business, so we keep our strength on our water solutions, and that is kind of the sustainability we can produce for the world and for the global users.
Okay. I think we are, we have answered all questions, and also we are, we are running out of time. Okay, thank you. Thanks, everyone, for joining us today. If you have further questions, I think we can still get your questions, and we can keep in touch further by emails, and yeah.