Specialist
Former project director at Tuya Inc (Hangzhou Tuya Information Technology Co Ltd)
Agenda
- Tuya’s (NYSE: TUYA) development stages, market positioning and core development strategies, plus advantages and disadvantages compared with peers
- IoT PaaS, smart device distribution, SaaS and other business segments – business model, industry chain and profit model
- 2020 and Q1 2021 performance review, development momentum across segments, main growth drivers and risks
- IoT hardware factory supply chain management, overseas client software and hardware development processes, project cooperation models and charging models by client type, plus client feedback 5. Overseas client profile, revenue contribution and client development strategies
Questions
1.
Can you first outline the development history of Tuya? How has its market positioning changed throughout different development stages? Can you also explain its current development strategies?
2.
Tuya has shifted its attention from brand clients that offer customer-oriented products to professional clients that offer business-oriented products. What are its core competencies in technologies and operations? What advantages or disadvantages does it have in comparison with competitors such as Xiaomi, Huawei, Alibaba, Baidu and JD.com?
3.
What are the differences between Tuya’s and Xiaomi’s business models? Xiaomi also has a powerful supply chain and can empower third-party brands in its ecosystem. Can you compare Tuya and Xiaomi in terms of product networks or supply chain resources?
4.
Do you think Huawei will pose any competition or threat to Tuya in the IoT industry?
5.
Tuya reported USD 106m in operating revenue in 2019. In 2020, the number increased by about 70% YoY to USD 180m. According to its financial statements, Tuya generated an operating revenue of USD 56.9m in Q1 2021, an increase of 200.2% YoY. The increase came chiefly from its IoT PaaS business and SaaS business, both of which registered a YoY growth of over 200%. Can you comment on Tuya’s performance in 2020 and Q1 2021? Why did Tuya secure such a remarkable increase in operating revenue in Q1 this year? What do you think of its growth potential in the medium and long term?
6.
What will be Tuya’s main growth drivers in 2021 and the next 1-3 years? Perhaps overseas companies will contribute the majority to its business growth. How come they will have such a huge purchase amount? What will be the growth drivers of the shipment volume? Which risks deserve attention?
7.
Tuya has not only large clients but also small and medium-sized ones in the overseas markets. According to your observation, have overseas clients already begun to reduce reliance on Tuya by developing their own IoT services in 2020-21? Or do they need at least 3-5 years to get rid of reliance on Tuya and other third-party service providers?
8.
In 2020, Tuya served more than 2,700 brand clients, with 204.3 million smart devices in over 1,100 categories developed based on its IoT PaaS solutions. In Q1 2021, its brand client number further increased by 300 to 3,000, including 2,200 IoT PaaS clients, and the number of SKUs developed based on its solutions exceeded 310,000. Tuya defines high-quality clients as those who have contributed more than USD 100,000 to its revenue from the PaaS business for 12 consecutive months. Its high-quality client number has climbed by 28 from 188 in 2020 to 216. You just said Tuya divides its clients into classes A, B, C and D. Can you elaborate on its client profile based on industries, regions and the classification method? How do you view its clients in different classes? What are the KPIs Tuya sets for developing new clients? What is its penetration rate among clients? How large will its growth potential be?
9.
What’s the penetration of Tuya into large, medium-sized and small lighting and security product brands in overseas markets? Are there brands that Tuya hasn’t penetrated deeply or at all? What do you think of its growth potential?
10.
You mentioned Tuya’s penetration into Philips is lower than 20%. Will the figure rise? Will Philips maintain the proportion of smart lights among its output?
11.
Which segments of the overseas smart home appliance market will Tuya further penetrate?
12.
What’s the business model of Tuya? Can you give an introduction to its IoT PaaS and SaaS products? What are the contract signing, charging and cooperation models between Tuya and overseas clients?
13.
What are the key decisive factors that influence clients’ order amount? Is clients’ order amount decided more by module shipment volume? How to enhance the ARPC?
14.
What are the main reasons behind the continuous gross margin growth of Tuya’s PaaS business? Is it mainly owing to the cost reduction in upstream procurement or the strengthening of Tuya’s bargaining power with downstream clients?
15.
You have introduced a lot about the operating and maintenance fees of Tuya’s SaaS and PaaS platforms. How about their cloud subscription fees? How large are the platforms’ annual renewal and order increase rates? What about the client feedback?
16.
How much do Tuya’s KAs that might establish their own platform R&D teams contribute to its overall revenues?
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