Hello, welcome to the 30th Deutsche Bank Depositary Receipts Virtual Investor Conference, DBVIC. My name is Zafar Aziz from the DR Investor Relations Advisory Team at Deutsche Bank. I am pleased to announce our next presentation will be from Viomi Technology. Before handing over to our presenters, some points to note.
Please submit your questions at any time throughout the presentation. Finally, all of today's presentations will be recorded and can be accessed via Deutsche Bank website, adr.db.com. At this point, I am very pleased to welcome our speakers from Viomi Technology.
Thank you for having us. Hello everyone. Welcome to Viomi Technology business update session. Today, we have Mr. Sam Yang with us. I myself is Claire Ji, IR of the company. Sam is the Head of our Capital and Investment Department. I will first share the update financials as well as recent strategic developments of the company.
Mr. Sam will join us for the Q&A session. Before we continue, let's take a second to check out the safe harbor statement at the beginning of today's sharing. Here is the snapshot of the company. For the full year 2025, our core business remained solid, achieving total revenue of RMB 2.4 billion, representing a year-over-year increase of 14.6%.
Net income attributable to ordinary shareholders of the company stood at RMB 141.6 million, with a net profit margin of 5.8%. Diluted ADS was RMB 0.67. We maintain a healthy, strong cash position, with free cash assets totaling RMB 1.14 billion. As of today, we have built nearly 2,000 global patent applications, including nearly 700 inventions spanning 14 countries and regions.
We have built highly competitive technological capacities in areas such as AI-driven water quality algorithms, precision mineral control, and intelligent self-cleaning, laying out a solid foundation for the continued expansion of our global business. Let's take a deeper look at the financial performance of the year 2025.
Our sales fluctuation between the first and second half were primarily driven by the impact of the government's substitute policies, and with rapid growth in the first half, followed by a decline in the second half. Overall, our financial performance stayed resilient against the external fluctuation, and our gross profit margin will stay stable around 25%. Our revenue consists of three business segments.
First one is the home water system, which accounts for around 70% of our, of our total revenue. Then is the consumables, which accounts for about 10%. The kitchen appliance and others, which takes up around 20%. Among this, the home water systems is our core business segment. We believe that as the penetration rate of the water purifier continues to growth, the share of the consumables revenue will steadily increase, thereby driving an improvement in the overall profitability.
Under the current revenue structure, our net profit margin is around 6%. In 2025, due to the company's increased efforts in overall expansion, we saw a slight decline in the net profit, which compared to the pre-previous year. As of December, as of the end of 2025, the company's total cash assets on the balance sheet amounted to RMB 1.3 billion, which is equal to $188 million U.S. dollars. Here's the update for our recent dividends and the stock buybacks.
On March 2, 2026, we declared a special cash dividend of $0.066 per ADS, with an aggregate amount of $4.5 million. For the repurchase program, by the end of 2025, we have already purchased about 1.03 million ADS, amounting to approximately $2.5 million, reflecting our commitment to enhancing the shareholder's value.
Over the past year or so, we have continuously enriched our smart water purification solutions and developed a differentiated technology pathway for natural mineral water. Our strength in product technology innovation have been validated, and we have also made solid progress in extending overseas markets. Most importantly, despite internal and external uncertainties, we have been able to maintain a stable financial performance.
Viomi has been dedicated in the water purification industry for over a decade. Since 2014, when we partnered with Xiaomi to launch the first water purifier, which redefined the industry. Our renewed strategic refocus on water purification last year. We have built a solid moat in manufacturing, R&D, and innovation for home water purification.
Today, we are entering the second decade of global water. Viomi is striving to become a provider of smarter and healthier water solutions for users worldwide. Our solution mainly includes 3 product lines, which is the whole house water filtration system, and the under-sink RO products, and the countertop product series. Currently, the under-sink RO products make up for the largest share of our revenue.
We are further diversifying our product portfolio to offer customers in different countries and regions a wider range of the product series. Here is the new product series we launched in 2025. In May, we launched the Kunlun 4 Pro in the domestic market, which is the differentiation path we are focusing on in the domestic market.
In the U.S. Amazon, in September, we launched the premium flagship product, MASTER M1. To further deepen our strategic cooperation in Southeast Asia market, we launched the compact model, the countertop product, inno, which is tailored for the local market and featuring both mineralization and the cooling functions. In December, we released the leader series of the whole house filtration series. Which include integrates the filtration, softening, and mineralization functions. We use AI technology to make water better.
These innovations, including timely filter replacement reminders, one-click reordering, and DIY replacement options, make smarter water purification products a reliable, hassle-free, and affordable essential for daily life. Our water purifier Gigafactory is located in Foshan, Guangdong, with 80% of core components manufactured in-house. It features one of the industry's most integrated and highly automated production lines for water purifier.
We achieve key milestones in the global expansion of our Viomi Water Purifier Gigafactory, commencing full operations of our overseas premium product lines. This product production line integrates modular functions such as instant heating and cooling and ice making and providing agile supply chain support to meet the differentiated needs of markets in North America, Europe, and Southeast Asia. Different countries, actually, people have different drinking habits.
That's why we have this most automated and integrated in-house manufacturing to support our global expansion. Here is our distribution channel. We have the omnichannel distribution network to power our global market access and achieving international market penetration and comprehensive domestic coverage through strategic partnership with leading e-commerce platform, new media channel, and offline outlets covering the nationwide service center to support the after-sale services for our customers.
In 2025, we made remarkable progress in our overseas expansion. Our Vortex series achieved a breakthrough with sales on Black Friday in the U.S., and ranking 4th in the under-sink RO tankless segment on Amazon, and 19th in the sales volume among the entire water purifier sector.
We also held an online new product launch in Malaysia, where our brand ambassador, Sheila, attended in person to experience our new product and further enhancing our brand influence in Southeast Asia. The global market of the home water purification is entering a high growth area with different market penetration in major countries and regions. Currently, China is still on a low market penetration level, which has greater potential.
Also, the U.S. market is the largest market currently, but with different product formats. We think our current advantage in the product innovation can be a major competitor in the U.S. market. To conclude today's sharing, we will pursue our global water vision with greater determination, targeting breakthroughs in four key areas.
First, for overseas markets, we will deepen our presence in the core strategic markets such as North America and Southeast Asia, which we will bring different products to, more localized products to extending our brand influence in broader markets. Also, we will, to advance our differentiation in the domestic markets, we will further strengthen the health-centric position of the Kunlun series with its alkaline mineral concept.
Most importantly, we will continue to strengthen our collaborations with global strategic partnerships, fully leverage the scale effect of the water purifier Gigafactory to elevate both scale and efficiency. Through this committed long-term approach, Viomi will continue to create value for global users and deliver sustainable returns to our shareholders. This so much for the sharing part, we can go to the Q&A session now.
We apologize for the inconvenience. Claire will be right back. We are having a connection problem, and she will rejoin, and then she will go through the questions.
This is Sam. I think the investor may be interested on the question that about how the performance of our North America. Let me just give you a heads up about the North America. This year, for 26, our key performance actually, key focus is at the North America. That is at Canada plus U.S. We have already launched the sales in Canada and for the U.S., we have the Amazon sales and which is good and comparing to last year. Also we are going to launch the offline sales for the North America.
Sorry.
Yeah, we have the sales in the U.S. market and the offline, so it's right now we have a laboratory in Miami, and we welcome you guys to visit us in both.
Okay. Sorry, I just got disconnected. I think we are already in the Q&A session, and we have many questions. Do we have answers? What are the timelines and the risk for U.S. and the Malaysian market launches on platforms like Amazon?
Hey, Sam.
Yeah. Can you hear us?
Yeah, I can hear you. Yeah, I can hear you.
Okay. Talking about the product line, we have already launched for North America and Malaysia. Here it is. The main product we are launched to the two main markets, that is the under-sink. Let's talk about the U.S. market. We have the V6 and V8, and also this year we have launched the V6 Pro and V8 Pro.
They are selling well right now in Amazon. We are going to launch more products that is for the U.S. market, that is the countertop and also the ice coffee machine. It's going to be next year, the second half actually. Talking about the Malaysia, we have already launched the inno. That is countertop. Also we are going to launch the under-sink also. It will be a lot of choices for both market. Thank you.
Okay. Thank you. The next question is about the tariffs. What are the tariffs shaping your thoughts on global production locations? I think mainly focused on the U.S. and Southeast Asia. [Inaudible] .
Yeah. For the tariff. Right now we have the tariff, right? It is actually, it's not only to A. O. Smith. The tariff is applies to all the products that, coming from China to the U.S. Right now, the water purifier, the tariff is talking about a 35%, and it changed a lot of times.
Since the very beginning, it's low and then more, and the policy, I think it's 55, and now it reduced to 35%, actually. We have, we have already think about this and, considering the tariff is only on the cost basis. That is, if we talk about the whole sales price, that is, that impact can be manageable. Also we have considered the other choices which is our own brand. If we talk about the other countries, we think that is manageable. Thank you.
Thank you. Can you speak to your internal expansion partner with Xiaomi? How do you plan to address ongoing profitability challenges?
Talking about Xiaomi, this is a long strategy partnership with Xiaomi we have before and we have now, and we all have in the future. We have a very strong collaboration on the product R&D, and also we have very strong supply chain to support Xiaomi's worldwide growth and expanding. Talk about last year, 2025, we have a very strong growth with Xiaomi's business.
This year, considering about the subsidy of is kicking off in China, it required a little bit challenging the first half and we can foresee that it's going to come back in second half. If looking forward, we still think that this is a very strong performance partnership with Xiaomi, we can see a steady growth with Xiaomi. Thank you.
Okay. Thank you. The next question is about Viomi's balance sheet remains very solid after dividends and buybacks. How much financial flexibility do you have to keep rewarding shareholders while funding your global water plan?
Yeah. Very good question. Actually, if you look at the dividend plan we have for previous years, including this year, we have released three times the dividend repatriation. That is to return our shareholders. You can see if we consider the stock price, the return is about five right now.
It's about a 5% to 6% return. It's not 0. If we're looking forward, we are trying to make the company with the steady growth. That is, we are looking for bright future, actually, you know. We are expanding the global market and we are explore more opportunities in the product line.
We are trying to seek out the core market customer demands. We are studying, we are going to capture that opportunities that are in the global market. That is a sustainable growth for the investors. That's all the main thing are focusing right now to expand the global presence, also we are looking for a steady and strong growth in overseas market. Thank you.
Okay. Thank you. Viomi mentioned the cost option optimization following the end of subsidy support. What early evidence do you see that these measures are starting to work?
Talking about the earnings. Actually, we can see for the moments, if we look about the long-term development, that is, our strategy this year is that we care more about the growth. Once you have the growth, you have the future. We cannot afford that. Actually, we need to balance the growth and then the earnings.
This year, we care more about the growth. That's why we are expanding the global market. That's why we are put more product lines to be launched this year. Also, we care about the shareholders' return. Let's just focus on the growth. Thank you.
Okay. Thank you. Yeah. There's a question about the forecast. External forecast still see upside for earnings and the share price into late 2026. What are the key execution milestones you need to hit to realize that potential?
I think if we look about the, the China market share and the global market share, we can give you a heads up that, for the global market, especially for in the U.S. market, if you look at the Amazon's performance that, it's already delivered that, it's very strong growth comparing to last year.
We can foresee that with the new product to be launched in Amazon, it's going to be stronger. If we look at the offline channel that in the U.S. market, today and tomorrow is going to be WQA. That is the biggest, the show in the U.S. market. More and more customer are coming, they will prove our product.
And once continuing determining that we can just ship the products as per the orders they can give. That's the process we can foresee for the U.S. market. If we talk about Malaysia and even Singapore, we can foresee that for the Q1, we have a very good performance that more and more orders are coming, and we can support our customer needs.
Right now, the customers demanding actually are expanding. We are doing more and more effort to fulfill the orders that are coming from Singapore and also the Malaysia. If we talk about the China market. The China market, we have, because you know, the subsidy is taken off, is gone.
We can foresee that for the off-offline is growing right now. We have more and more orders is coming. Talking about the online sales, it's a little bit challenging. That's the whole picture. Hopefully that we can, just like I said before, for the first half, we have a little bit challenge. For the second half we can trip back. Thank you.
Thank you. I think we are running out of time, and we have answered almost all the questions. Thank you all for today's participation. For any further inquiries, please contact our IR team at ir@viomi.com. Thank you.
Thank you.